§ Considered on Report (according to Order).
§ Clause 1:
§ Designation of building societies for investment by trustees and government loans
§ 1.—(1) Where the Chief Registrar of Friendly Societies (in this section referred to as the Registrar) is satisfied that a permanent building society fulfils such requirements as to its assets and liabilities, liquid funds, reserves, and other matters, as the Treasury may by regulations prescribe, he may designate the society for the purposes of this section; and where a society has been so designated and the designation has not been revoked—
- (a) the powers of a trustee under section one of the Trustee Act, 1925, or section ten of the Trusts (Scotland) Act, 1921, shall include power to invest funds of trusts in his hands by depositing with the society amounts not exceeding five thousand pounds for any one trust; and
- (b) the Minister may make advances to the society in accordance with the provisions of section two of this Act.
§ 3.46 p.m.
LORD SILKIN moved, in subsection (1), to leave out "of this section" and to insert:
set out in paragraphs (a) and (b) of this subsection or either of them".
§ The noble Lord said: My Lords, I beg to move the Amendment standing in my name on the Paper. The noble Earl, Lord Dundee, will remember that on the Committee stage of the Bill my noble friend Lord Latham put down an Amendment which had for its object the granting to the Chief Registrar of Friendly Societies of discretion to give both trustee status or the power of making loans under this Bill to building societies whose assets were less than £500,000. In reply the noble Earl made a case against the Amendment and he may remember that I expressed my agreement with that part of his case which applied to trustee status; but I asked the noble Earl whether he would be good enough to refer to his right honourable friend the possibility of bringing in smaller societies as instruments for making advances under this Bill—societies which might have less than £500,000 of assets but which nevertheless were reputable and solvent and were carrying on a valuable and useful local business.1208
§ The Amendment which I have put down to-day is designed to give the Chief Registrar of Friendly Societies that particular power. He may designate a society for either of the purposes set out in paragraphs (a) and (b) of subsesction (1) or for both of them. I do not know whether my Amendment is drafted in the most satisfactory manner and I am perfectly prepared to be corrected on its drafting. If I were, I should be in very good company. But I believe the purpose of my Amendment is perfectly clear and I hope that the noble Earl may find that it is possible to give to the Chief Registrar this discretion to accept building societies with assets of less than £500,000 as instruments for making advances. I beg to move.
Page 2, line 1. leave out ("or this section") and insert the said new words.—(Lord Silkin.)
§ THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE)
My Lords, as the noble Lord, Lord Silkin has reminded your Lordships, the noble Lord, Lord Latham, in Committee moved an Amendment on this subject, and in our discussion the noble Lord. Lord Silkin, was good enough to say that he accepted the Government's case that societies with assets under £500,000 were not suitable to be designated as having trustee status, but he suggested that such societies might nevertheless be designated as suitable recipients for a Government loan under the Bill. He asked me whether I would consult my right honourable friend the Minister about it. I was, of course, very glad to undertake to consult the Minister, partly because I am always anxious to meet the noble Lord in any way I can and partly because the Minister and Her Majesty's Government, as a matter of general principle, certainly wish to encourage, and not to discourage, any kind of small business undertaking.
Although in replying to the noble Lord's suggestion I did not think it likely that we could meet his desire, because the adoption of his suggestion would introduce into the Bill and the White Paper an entirely new principle, it having been laid down that the societies designated as having trustee status shall be those with whom the Minister may deal in issuing these special loans for the purchase of older houses, nevertheless I was glad to talk to my right honourable friend the Minister about this suggestion, 1209 for we appreciate the noble Lord's motives in making the proposal. However, I am afraid that it is not possible for us to agree with it. I shall try to give the reasons as concisely as I can.
The first one is that we have an obligation not only to trustees and beneficiaries but also to public funds; and it would be a little difficult, I think, to argue that an undertaking which was not suitable to be designated as having trustee status should, nevertheless, be suitable for Government advances of public money for building society purposes. If the Government have a duty to safeguard the way in which funds of private trusts may be invested, they have no less a duty to safeguard public money. An argument that the Government ought to be satisfied on financial grounds with lower or higher standards when advancing public money is, I think, the same as asserting that the requirements for trustee status are too high or too low.
It has been accepted that the £500,000 limit is about as low as we could go in admitting societies to trustee status. I think I have already explained in Committee that there are ample societies with assets of over £500,000 to fulfil the purpose of the Bill. Altogether in the country there are 706 building societies, of which 243 would qualify on grounds of size, and of those about 170 would satisfy all the other requirements of Appendix II of the White Paper. I mentioned the figure of 170 in Committee. They are spread over the whole country in such a way that there would never be any difficulty in finding a society which would qualify to operate under the Bill.
In practice, we think it is doubtful whether the Amendment would benefit smaller building societies to the extent which the noble Lord hopes. We have made it clear that we do not want to discriminate against smaller societies as such; but if smaller societies were to be admitted to the Government's lending scheme, supposing this were feasible, rules would need to be very tightly circumscribed or the Chief Registrar's power of discretion would need to be very wide. I do not think it would be fair to the societies or to the Chief Registrar to delegate to him such extensive discretionary powers which he would have to exercise in the case of some 460 small building societies.
1210 I quite appreciate that the noble Lord would like to bring in societies which are (I think this was the phrase he used) valuable, reputable and serving a useful local purpose. But it is very difficult to say that the Chief Registrar, whose main purpose is to ascertain statistical facts, should have discretionary power to decide whether or not a small building society is serving a valuable, reputable and useful local purpose. He would have to decide that some were and some were not; or, if the decision were not placed with him, the rules that would have to be drawn up (and it would be very difficult to draw them up) would exclude some and include others; and it would be bound to happen that a great many of those excluded, either by the Registrar or by the rules, whichever it might be, would very often be perfectly good, well-managed, honest societies to which, perhaps, a certain stigma might be attached because they were excluded either by the judgment of the Registrar or under the rules.
There is nothing discreditable in running a business which is not quite appropriate either to have trustee status or to be the recipient of Government loans. One could be doing an excellent business and yet not be suitable for this purpose. It would be a little invidious, I think, to draw a distinction which would in many ways have to be an arbitrary one and which might have the effect of placing a certain stigma on a large number of perfectly innocent and good businesses. We do not think that it is possible to do without a certain limit of size somewhere, and we still consider that the limit of £500,000 is going as low as we reasonably can, both for the purpose of trustee status and for the purpose of receiving Government loans. I have given a great deal of thought to this matter, because as a matter of principle one never likes to do anything which may seem to be in any way to the prejudice of a smaller business; but I am afraid it is not possible for us to agree to go further than we have done in the Bill in admitting building societies for these fairly limited purposes.
§ LORD LATHAM
My Lords, I should like to ask the noble Earl two questions. I gather from his statement on Second Reading that the figure of £500,000 was settled rather arbitrarily on the footing that there must be one figure or another 1211 and £500,000 was thought to be appropriate, having regard (shall I say) to the pattern of the building societies throughout the country. The noble Earl has said that out of 706, no more than 170 would qualify for trustee status and, therefore, for Government loans.
The two questions I should like to ask are these. First, I assume that the settling of conditions for the grant of trustee status and the right to receive Government loans was done through consultation and negotiation with the Building Societies Association. If that be the case, and if the noble Earl feels that he can answer this, I should be glad if he can tell us whether the Building Societies Association did not press for a lower figure than £500,000 and whether they did not also press that the right should be alternative; that is to say, one could get a loan without necessarily having trustee status or one could have trustee status without necessarily applying for loans. If the noble Earl could answer those questions I think it would be helpful to those of us who are considering this Bill.
§ THE EARL OF DUNDEE
My Lords, I am grateful to the noble Lord. He is, of course, right in saying that there were discussions with the Building Societies Association. But I did not participate in these discussions, and I am afraid that I could not say, without notice, whether during those discussions either the Associations authoritatively as a whole, or any individual members who took part in the discussions, pressed my right honourable friend on the two points which the noble Lord has mentioned. I should need notice about that. And of course I could not say, either, whether any of the building societies asked for a higher limit than £500,000, which might also be possible. I should require notice.
§ LORD LATHAM
My Lords, I have no inside information, though I happen to be one of the Vice-Presidents (who are numerous) of the Building Societies Association. I have no inside information.
§ On Question, Amendment negatived.
§ Clause 6 [Amount of standard grant]:
THE EARL OF DUNDEE moved, after subsection (2) to insert:
(3) The reduction required by subsection (2) of this section in respect of any of the standard amenities shall not be made if part
of the cost incurred in executing the works was attributable to interference with or replacement of that amenity and the local authority are satisfied that it would not have been reasonably practicable to avoid the interference or replacement.
§ The noble Earl said: I think I can best explain the effect of this Amendment by giving your Lordships an example. Suppose that an owner wants to install, let us say, a bath, a wash-hand-basin, a hot water supply, and a food store, in a house which has not these things but which already has a water closet. Under the Bill at present, he could not get a grant of more than £115, because £40 would have to be deducted from the maximum of £155 for the water closet which is there already. Now suppose that, in order to fit in the bath and the wash-hand-basin, he has to remove the existing water closet and put it somewhere else. That may be just as expensive as putting in a new water closet; and to provide against that possibility we have put down this Amendment, which provides that if the local authority are satisfied that it would not have been reasonably practicable to avoid the interference with or replacement of the existing water closet, or whatever it may be, then the maximum grant of £155 will not be reduced on that account.
§ Another possible example is this. Suppose the owner were converting a scullery into a bathroom, and the scullery had the larder in it. There would be a suitable food store already, so he could not get a grant, as the Bill is now, for the food store. But we think that if, in these circumstances, he uses up the existing accommodation to make a bathroom, he has to put in another food store somewhere, and he should be able to get the extra grant. This Amendment has been inserted to provide for cases of that kind. I beg to move.
§ Amendment moved—
§ Page 6, line 14 at end insert the said subsection.—(The Earl of Dundee.)
§ LORD LATHAM
My Lords, this Amendment seems quite innocuous. I should like the noble Earl to say whether it is not a provision to meet the situation of a mobile water closet.
§ LORD SILKIN
My Lords, if I may be allowed to say a few words, then perhaps the noble Earl can reply to both. I readily accept and agree with the purpose of this Amendment; and, the noble Earl having explained it, I fully understand it. 1213 But it did not seem to me entirely clear as drawn, and I wondered whether the noble Earl would be willing to look at the words again to see whether he could not make them somewhat clearer. "Interference with" is not a very clear or specific expression. The words "or replacement" I understand. When the explanation is given, I understand exactly what is intended, but I think that many people would not really understand it if they had not the advantage of the noble Earl being available to give that explanation.
§ THE EARL OF DUNDEE
My Lords, I must confess that I should be able to understand little of any Act of Parliament if I did not have someone to give me an explanation. I am always willing to look at the words of a Bill to see whether they can be improved—and sometimes, of course, they can. I do not think the word "interference", in this particular case, is at all ambiguous. The phrase is "interference with or replacement of": "interference" might describe a fairly extensive amount of work with regard to the shifting of one of these five standard requirements. I shall, of course, be delighted to look into it again to see if it could be made clearer, if the noble Lord would like me to do so; but I cannot accept that this is more obscure than the drafting of most Parliament enactments.
§ On Question, Amendment agreed to.
§ Clause 14 [Amount of contribution under s. 13]:
§ THE EARL OF DUNDEE
My Lords, I hope that the noble Lord is not equally puzzled by this Amendment, which does exactly the same thing as the previous one, It is a parallel Amendment relating to houses that are owned by local authorities who are entitled to receive the standard improvement grants from the Minister, and the arguments for it are exactly the same. I beg to move.
§ Amendment moved—
Page 10, line 38, at end insert—
("(4) The reduction required by subsection (31 of this section in respect of any of the standard amenities shall not be made if part of the cost incurred in executing the works was attributable to interference with or replacement of that amenity and the Minister is satisfied that it would not have been reasonably practicable to avoid the interference or replacement.")—(The Earl of Dundee.)
§ On Question, Amendment agreed to.1214
§ Clause 21 [Amount of standard grant]:
§ THE EARL OF DUNDEE
My Lords, on behalf of my noble friend Lord Forbes, I beg to move this Amendment. It applies to Scotland exactly the same change as that which your Lordships have already agreed should apply to England by passing the previous Amendment. I beg to move.
§ Amendment moved—
Page 14, line 22, at end insert—
("(3) The reduction required by subsection (2) of this section in respect of any of the standard amenities shall not be made if part of the cost incurred in executing the works was attributable to interference with or replacement of that amenity and the local authority are satisfied that it would not have been reasonably practicable to avoid the interference or replacement.")—(The Earl of Dundee.)
§ On Question, Amendment agreed to.