INDUSTRIAL AND PROVIDENT SOCIETIES (AMENDMENT) BILL (Hansard, 17 June 1954)

§ LORD KERSHAW
My Lords, I beg leave to move that this Bill be now read a second time. After the heat and bustle of a "non-controversial" Bill on Scottish business, I should be unwise to claim that this Bill was uncontroversial; it is never wise to claim that in this House. This is a small and useful Bill which has been completely agreed between the societies concerned and with the Government Department which is interested in the administration and control of those societies. There are one or two important matters dealt with, but in the main they are minor matters from any 1220 ordinary standard, though they have their importance to the organisations with which we are concerned. In accordance with the custom of the House, I ought to indicate that I have a small interest in a society registered under the Industrial and Provident Societies Act. Since for the moment I am speaking on a personal matter, I feel I should be ungrateful if I did not express to the noble Lord, Lord Hawke, my profound gratitude to him for making a suggestion immediately before the House met that he would undertake to do the work that now I am doing because he knows of my difficulty in reading at the moment. It was a gesture which I appreciate and in accordance with the best traditions of British politics.
I shall endeavour to deal generally with the provisions of the Bill, leaving it to the noble Lord, Lord Hawke, to look into the details, if he thinks and the House feels that more detail is necessary. Clause 1 deals with a well-known provision of the Industrial and Provident Societies Acts and other Acts—that is to say, members of these organisations can, up till now, nominate persons to receive their interest in a society to the extent of £100 in value. That £100 was fixed by the principal Act, which was passed in 1893, sixty years ago, and it is felt that the House would regard £200 as reasonably comparable with £100 of sixty years ago. Therefore, if the House passes the Bill, members of these societies will be able to nominate a person to receive their money in the society to the extent of £200. Clause 2 is a useful provision which enables the Registrar of Friendly Societies to refuse to register the name of a society where he thinks the name would be misleading. There have been quite a few cases in the past where such a provision would have been extremely useful and would have prevented people from being misled about the real purposes of a society. The same consideration applies to a change of name.
Clause 3 (1) gives the Registrar power to allow a society to omit the word "Limited" after its name, and subsection (2) enables him to withdraw that privilege if the society ceases to be qualified for that consideration. I ought to have said that the qualification is that a society must be carried on wholly for charitable and benevolent purposes. Clause 4 deals with annual returns and 1221 audits and brings these into line with those required under the Companies Act. Clause 5 makes for a simpler relationship between the societies and the Registrar of Friendly Societies. Under the principal Act societies are called upon to send to the Registrar every three years a complete list of their members. I understand that the real effect of that has been to create a lot of waste paper; it effected no useful purpose. This provision proposes that a society shall keep a register and that the Registrar shall be given power to inspect whenever he thinks proper.
Clause 6 refers to amalgamations and transfer of engagements. Societies have found some little difficulty in getting the required three-fourths majority in a few cases and they feel that in the circumstances and in accordance with what have been the actual facts of such transfers in the past, a bare majority would probably be all that is necessary. However, there has been a compromise and it is now proposed that, instead of a society having to get a three-fourths majority for the transfer of engagements, a two-thirds majority should suffice. Clause 7 refers merely to the appointing of a receiver or manager and enacts that such an appointment should be notified to the Registrar. Clause 8 is a simplification of the procedure under special resolutions. I do not think I need trouble the House with that, except to say that societies now incorporated under the Companies Act who wish to become registered under this Bill will have to comply with the Companies Act in order to take that step. Having taken it, they will, of course, come under this Bill.
Clause 9 relates to criminal proceedings against persons who may hold the property of, or who have perhaps been unable to account properly for, funds of the society. The clause provides that where the court are satisfied that there was no fraudulent intent, they may order the return of the property or money of the society without recording a conviction. Such proceedings have to be commenced within three years of the committal of the offence. Clause 10, the last clause of the Bill, merely allows societies to charge 2s. for a copy of the rules, as against the present charge of 1s. It is felt that everyone will agree that the cost of printing makes such an increase desirable. I beg to move.

LORD HAWKE
My Lords, it would probably be convenient for me to intervene now to indicate the attitude of Her Majesty's Government towards this Bill. I should first like to congratulate the noble Lord, Lord Kershaw, on having presented the Bill to the House in so lucid a manner, in spite of the difficulty under which we know he labours at the moment. He has dealt with most of the Bill and has left little for me to say. The Bill affects widespread interests. We are here providing legislation which affects co-operative societies with 11 million members or so, and sales of over £7 million, and also over 3,000 clubs which are registered under these Acts; their sales of refreshments, I may add, are of a value of more than £25 million a year. Therefore a wide section of the population is affected by legislation, dealing with these industrial and provident societies.
This particular Bill is a Private Members' Bill, but it does incorporate a number of provisions which are likely to be most helpful to the Registrar of Friendly Societies, and for that reason it has the support of Her Majesty's Government. The Bill received little attention in another place and is practically a virgin ground for debate in your Lordships' House. We should, therefore, be failing in our duty if we did not put on record its virtues, or its vices—though I personally have not managed to find any vices in it. Generally speaking, it brings up to date some of the provisions of the law affecting co-operative societies, and removes several anomalies in the position of the Registrar vis-à-vis the societies.
The noble Lord, Lord Kershaw, has dealt with Clauses 1, 2 and 3 in comparative detail, and I will not go over that ground again. However, when we come to Clause 4 there is a little more that can be said. First of all, it allows for a variation in the date of closing the accounts from that specified at present in this set of Acts. That is of particular help to the agricultural societies, who like to close their year some time before the new crops come in. Subsection (2) closes a gap in the existing law, because at present when a society dissolves the, Registrar has no power to insist that accounts be filed 1223 for the period subsequent to the last annual accounts. That is rather an important period in the case of a society that possibly has not been managed to the best advantage. Now he must have accounts right up to the end. At present every society have to send to the Registrar their annual accounts, together with the auditor's report; they also have to hang this up in a conspicuous place in their office; and further, on application, they must supply to every member or interested person a copy of the balance sheet. There is no compulsion at the moment to attach to this latter copy a copy of the auditor's report; nor, if the society choose to issue a balance sheet quarterly or half-yearly, is there any compulsion for that balance sheet to be an audited one. Under this Bill that position is put right. The final subsection of that clause is to make clear that an auditor is not an officer under the Bill. Special liabilities attach to officers, and it is clear that they should not attach to the auditor.
The noble Lord has to some extent dealt with Clause 5. At the moment the societies have to send to the Registrar every three years an annual return of their officers, their members, the addresses and their holdings. This has been found, in practice, to be quite useless, and, therefore, is abolished. Instead, the societies are required to keep a register in their office in such a way that members can inspect the list of other members and the addresses of other members, but not their holdings; and, of course, the Registrar can send a man to inspect everything. We consider this to be a much more practical method of achieving the right purpose than the existing one. The noble Lord has dealt with Clause 6.
With regard to Clause 7, at the moment there is power in the Registrar to call upon a receiver to send interim accounts to himself—that is, the receiver—or to the other members. Under this clause the Registrar gets this power, and, of course, in practice, if he thought that the members should be circulated with interim accounts, he would ask the receiver to do this. The noble Lord has dealt with Clause 8. There is one subsection of Clause 9 with which the noble Lord did not deal—namely, that which gives the Registrar more time to take proceedings against a possibly defaulting officer 1224 of the society. He does not obtain knowledge that anything is wrong until the accounts are with him and he has seen the auditor's report. The existing six months' period during which he has to take action is considered to be too short; in fact, I have heard stories of breathless journeys ending up at nine o'clock at the magistrate's house on the last day of the six months. Under this Bill the Registrar can act with a little more leisure. The rest of the Bill contains minor amendments with which I will not weary your Lordships. On the whole, the Bill helps the friendly societies and at the same time brings up to date the powers of the watchdog exercised by the Registrar, and the Government recommend that your Lordships give it a Second Reading.

LORD SALTOUN
My Lords, there is a question that I should like to ask on one point in this interesting Bill. It arises on Clause 5, which alters the duty on the society of sending, in to the Registrar every three years a list of members to that of keeping up to date a proper register of the members. That is probably a good and a wise provision, and it will diminish the paper work in connection with the societies, but there is one point that occurs to me. I would remind your Lordships that we must not assume that everything always goes right and well; we must take into consideration that things may go wrong. It appears to me that it may be possible, in one of these friendly societies, that one of the members may fall foul of the other members. He may quarrel with them, and the question may arise as to his position in the society some years ago. If registers are kept in ordinary bound books, the evidence with regard to that is fairly good; but if loose-leaf books are used for the register, the evidence may not be so good. It appears to me, without having examined the whole matter and gone into the position of these societies (which I used to understand a great deal better than I do now), that there is a loophole which might be considered when we come to the Committee stage. I do not ask for an answer now. I ask only for the point to be considered, and I am quite ready to support the Bill.

LORD HAWKE
My Lords, perhaps I may answer the noble Lord now. If the 1225 noble Lord reads the last sentence of Clause 5 (2) he will see that it says: adequate precautions shall be taken for guarding against falsification and facilitating its discovery. I think that covers the noble Lord's point.

LORD SALTOUN
Thank you very much.