FRIENDLY SOCIETIES BILL [H.L.] (Hansard, 17 December 1970)

§ THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE)
My Lords, I beg to move that this Bill be now read a second time. Some of your Lordships will already be familiar with the provisions of the Bill, which have been pressed for by the friendly societies for a long time. A Bill similar to the present one was introduced in the last Parliament and completed all its stages in your Lordships' House, ably piloted by two "Frank" supporters, the noble Lord, Lord Beswick, and the noble Lord, Lord Bowles. It reached the Committee stage in the other place when it was overtaken by the Dissolution. Since then the Bill has been slightly enlarged. It now contains provisions which confer powers on the Registrar to inspect societies and branches, to make orders forbidding them to contract new business, and to petition the court to wind them up. Otherwise, there are no substantial changes. In these circumstances, I am sure that your Lordships will not wish me to speak to the Bill at great length.
1528 The friendly societies have a long and honourable history. They were the forerunners of our present system of comprehensive National Insurance, but although they still have a very valuable part to play in our national life, they are to some extent fettered by the provisions of the Friendly Societies Act of 1896. To my mind, their most valuable contribution is their encouragement of self-help and mutual help within a comprehensive Welfare State. They allow many of the most provident and worthy of our citizens to save for their future welfare and to make provision for their old age. This old-fashioned virtue of thrift is surely one which all of your Lordships will wish to encourage, and it is undoubtedly true that the friendly societies embody it in their very essence.
The Bill has two purposes: first, to simplify the procedure for the merger of registered societies, which may take place either on amalgamation or by transfer of engagements of one society to another; secondly, to simplify the procedure for the dissolution of registered societies. It also makes a number of small amendments to the 1896 Act which prepare the way for consolidating legislation which we hope to introduce before too long. For some time the membership of the friendly societies has been slowly reducing, although it is worth noticing that they still have funds totalling over £800 million. This reduction in membership, together with a substantial increase in management costs, has meant that a number of the smaller societies have ceased to be economically viable. The answer is to amalgamate in order to form larger units, but with the law as it is at present this is a lengthy and an expensive process. The law compels a society wishing to amalgamate to obtain the support of five-sixths of its members and beneficiaries. It is most unlikely to gain this support, not because of active opposition but because of the indifference of what need only be a small proportion of the total membership, who will not trouble to respond or express a view. Only once this procedure has failed can a society apply to the Registrar to dispense with consent, which he may allow with the approval of the Treasury.
Clause 1 abolishes the present requirement to obtain the individual assent of five-sixths of all the members for the amalgamation of two or more societies. 1529 Instead, a special resolution has to be passed after full information regarding the terms of the proposal has been given to all members—and under Clause 4 a special resolution requires a majority of three-quarters of the members voting. Clause 2 gives to members or persons affected by the amalgamation rights of appeal to the Registrar. Clause 3 allows the dissolution of a friendly society with the consent of three-quarters of its members instead of five-sixths, but in this case it is three-quarters of the total membership who must consent. This will bring friendly societies into line with other registered societies. The clause also clarifies the right of a member who is dissatisfied with the terms of the dissolution to apply for relief to the county court.
Clauses 5, 6 and 7 are the new clauses which give power to the Registrar to inspect societies and branches and to petition the court for their winding up. He may also make orders forbidding societies and branches to contract new business and may require them to produce documents. The powers conferred by these clauses are not regarded as likely to constitute a major new sphere of operations for the Registrar, and their exercise will not require any increase in public service manpower or in staff costs. The powers are regarded as reserve powers to be used in those exceptional cases in which registered friendly societies get into financial or administrative difficulties and in which the interests of the members or the public call for action on the part of the Registrar.
My Lords, the remaining clauses consist mainly of technicalities. I hope that I have said enough to succeed in making clear the purpose of the Bill and that your Lordships will see fit to give it a Second Reading.

§ LORD BESWICK
My Lords, the noble Lord, Lord Aberdare, has moved the Second Reading of the Bill with commendable clarity and brevity. He will not be surprised to know that I support his proposition that the Bill be given a Second Reading, because I did spend a good deal of time helping to get it through 1530 this House against the assiduous efforts of his noble friend Lord Drumalbyn, who, I have no doubt, is now a 100 per cent. supporter of the Bill. There are the three clauses, Clauses 5, 6 and 7, which are new since the House gave it previous support in the last Parliament. The explanation which the noble Lord has given of the intentions behind these clauses seems to me entirely adequate, but, as he knows, there is a liaison committee of the friendly societies which has expressed anxiety about these intentions. I hope that they are satisfied with the explanation which the noble Lord has given. But I wonder if he can tell me whether any inquiry has been made, any consultation has taken place with them, and whether they have expressed to him or to his Department that they are satisfied with what is behind the new clauses? I hope he can assure us on that. At any rate, I am quite sure that the House will give this Bill a Second Reading.

§ LORD ROYLE
My Lords, before the noble Lord replies, I wonder whether he can tell me if, for these purposes, building societies come within the definition of "friendly societies".

§ LORD ABERDARE
I am most grateful to both noble Lords, particularly to the noble Lord, Lord Beswick, who I know did a great deal of work on the previous Bill. I am grateful to him for treating me with greater kindness than perhaps my noble friend Lord Drumalbyn treated him. May I say, on his point about the friendly societies liaison committee, that they have been consulted throughout and they have given a general welcome to these new clauses. They have raised just one point with us, on the question of the amount of notice that is given to a friendly society under Clause 6, where the Registrar has power to suspend the business of a registered friendly society and, before making an order, has to give 14 days' notice. They are anxious that this should be a longer period. We have undertaken to look into this point and, if necessary, to move an Amendment at the next stage. So far as concerns the inquiry of the noble Lord, Lord Rovle, the answer is that building societies are not covered by this definition.

§ LORD ROYLE
My Lords, the Registrar is the same.