Building Societies Merger (Hansard, 11 January 1995)

§ 8. Mrs. Mahon
To ask the President of the Board of Trade when he expects to receive the report of the Director General of Fair Trading into the proposed merger of the Halifax and the Leeds Permanent building societies.

§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Jonathan Evans)
My right hon. Friend the President of the Board of Trade announced on 21 December that he had decided not to refer the proposed merger of the Halifax and Leeds Permanent building societies to the Monopolies and Mergers Commission. That decision was in accordance with the advice of the Director General of Fair Trading.

§ Mrs. Mahon
The Minister will be aware that the Halifax employs more than 3,000 people in my constituency and that the Leeds Permanent employs more than 1,000 people in Leeds. What steps will he take to ensure that promises to myself and my hon. Friend the Member for Leeds, Central (Mr. Fatchett) that those jobs would be retained are kept? Will he further ensure that the strength of the proposed merger will not in any way disadvantage customers?

§ Mr. Evans
I think that the hon. Lady knows that the making of decisions about employment is a commercial matter, but that the parties have given reassurances—as she said—that any reductions necessary will be brought about only through voluntary redundancy and natural wastage.
However, I remind the hon. Lady that the decision that is made by my right hon. Friend the President of the Board of Trade relates merely to those factors concerning 141 this matter which relate to the Fair Trading Act 1973. The decision on merger is a matter for the members of the building societies themselves. The hon. Lady also knows that, according to the Building Societies Act 1986, the Building Societies Commission will ensure that all the requisite information is given to members when the voting process is undertaken, and that, in the case of investing members, the decision must be passed by a majority of 75 per cent. of the people who participate.

§ Sir Donald Thompson
I thank my hon. Friend for those answers. Does he agree with me that the people of Yorkshire welcome the building of a huge financial institution by the merging of the Halifax and Leeds Permanent building societies, which will be able to compete, not only in the United Kingdom but throughout Europe?

§ Mr. Evans
I am grateful to my hon. Friend for those remarks. I am aware that the Director General of Fair Trading has received several representations in the period since the merger was announced, many of which were along the lines that have been outlined by my hon. Friend, drawing on the great financial tradition that exists in Yorkshire, Leeds and Halifax.

Dr. John Cunningham
Is not it surprising and questionable that a merger of such significance, involving £90 billion worth of assets and creating one of the largest financial institutions in Europe, with more than 25 per cent. of the domestic mortgage market and estimated dealings with about 45 per cent. of households in the country, should be nodded through, and the announcement made the day after the House had risen for the Christmas recess?
The merger may well have great attractions—as the hon. Gentleman said—and I am not saying that it will prove to be a bad thing, but it is of such a significance and scale that the employees and customers of the two societies were entitled to expect the most thorough and rigorous examination of all the aspects of it. They did not get it.

§ Mr. Evans
All the relevant factors were considered in the most thorough detail. I find the right hon. Gentleman's remarks somewhat surprising, especially in the context that he would have been the first to complain if staff and the societies had been kept waiting inexorably for a decision once the President of the Board of Trade was in a position to reach a proper decision. My right hon. Friend received the papers from the Director General of Fair Trading and gave at least six days' consideration to the recommendation that was made by the director general.
Finally, the right hon. Gentleman is among the first to suggest that the observations made by the Director General of Fair Trading do not receive sufficient attention by the Department of Trade and Industry. I find it surprising that on this occasion he should challenge the very recommendation that the President of the Board of Trade has decided to endorse.