Friendly Societies Bill (Hansard, 22 November 1984)

§ Dr. Oonagh McDonald (Thurrock)
As we said on Second Reading, the Opposition do not oppose this measure. It has the agreement of the friendly societies and merely ensures that life policies which have already been issued are legal. The Bill arose from the changes that were made during the Finance Bill to friendly societies' limits, when the Government saw fit to make life less comfortable for the 4,000 pre-1966 friendly societies by lowering the limits of their tax-exempt business on the grounds that there was abuse or fiddling—a claim which was later withdrawn in Committee—[Interruption.]

§ Mr. Robin Corbett (Birmingham, Erdington)
On a point of order, Mr. Deputy Speaker. I am sorry to interrupt my hon. Friend the Member for Thurrock (Dr. McDonald), but for those who wish to hear what she is saying, is it within your powers to ask those hon. Members standing behind the Chair to conduct their conversations elsewhere?

§ Mr. Deputy Speaker (Mr. Harold Walker)
I understand the hon. Gentleman's point, and I find it difficult to hear the hon. Lady. I hope that hon. Members leaving the Chamber will do so quickly and quietly and that other hon. Members will listen to the hon. Lady's speech.

§ Dr. McDonald
Thank you, Mr. Deputy Speaker. Perhaps I may now conclude the enthralling points that arise from the Bill.
During the Finance Bill Committee stage the Opposition tabled amendments to reverse the Government's decision, which was debated fully and adequately. Similar amendments were tabled on Report, but were withdrawn in the interests of hastening the Report stage of the Bill. We believed that we had already warned the Government in Committee. We were then a little surprised to learn that the Minister, in the correspondence with the friendly societies that he had to have to sort out their legal position, was unkind enough to suggest that the Opposition were unwilling to do anything to protect the friendly societies, such as tabling and debating amendments on Report. I am sure that that was an aberration on the part of the Minister and he did not mean to be quite as unkind and unfair to the Opposition. I am sure that, when he replies to the debate, he will make that point clear.
It is necessary for the Bill to go through, to protect current policy holders. We cannot have any objection to that as we also wish to protect their interests.

§ The Economic Secretary to the Treasury (Mr. Ian Stewart)
There are two main aspects to the proposals in the Bill. The first concerns the validity and tax treatment of policies taken out in good faith by 300,000 policyholders in recent years. The second concerns the business that friendly societies will be allowed to do in future, and the limits applicable to tax-exempt policies. The Government decided that it was right to act promptly to solve the problems that had arisen in these areas. Let me emphasise that the policyholders affected have, and have had, no cause to worry. The legislation includes provisions that place their policies in the same position as they have previously believed them to be. Therefore, policyholders and friendly societies will continue to receive the favourable tax treatment that they expected when the policies were taken out.
As regards the future, it is necessary to remove doubts that have arisen about the legitimacy and tax treatment of various kinds of policies issued by friendly societies. In particular, the application of the tax-exempt limits is now to be clearly defined. One consequence is that it will no longer be necessary to restrict the business of societies established since 1966 so tightly, and they will now be permitted to issue endowment as well as whole life policies. They will be able also to offer policies to all adult members, and not just to those with dependants, as has been the case up to now.
As I explained on Second Reading, many of the consequential provisions that are suitable for a Finance Bill will be included in the Finance Bill next year. The hon. Member for Thurrock (Dr. McDonald) mentioned the debates that we had in Committee on the Finance Act 1984. These problems are not entirely related to the change of the tax-exempt limit and some of the provisions of the Bill will be of benefit both to the traditional friendly societies as well as those that have been established since 1966.
I take this opportunity to express my approval of and support for, the friendly society movement which, for 200 years or more, has made a valuable contribution to society, combining philanthropic and social purposes with financial provisions. I also express my thanks to the Opposition for the passage of the Bill, enabling a helpful measure to get on to the statute book as fast as possible.
I also thank the chief registrar and his staff arid members of the Inland Revenue for the speed and efficiency of their response 'when this problem came to light. In particular I mention Mr. Alec Wilson, the assistant registrar, who was closely involved in this process and in the preparation of the Bill. Mr. Wilson, who was on duty for the Second Reading debate last Friday, has fallen seriously ill since then. On behalf of the House, I convey to him a message of gratitude and of good wishes for his recovery.