HL Deb 03 July 1986 vol 477 cc1036-50

3.40 p.m.

Lord Brabazon of Tara

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Brabazon of Tara.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [The Building Societies Commission]:

Lord Houghton of Sowerby moved Amendment No. 1: Page 1, line 11, leave out ("subject to subsection (3) below").

The noble Lord said: I beg to move Amendment No. 1. This amendment is linked with Amendment No. 4, which is the substantive amendment. This is not a very important point, but whenever I see a Bill making provision for someone to do as they may think fit, I view that with a certain amount of suspicion. Clause 1(3) of the Bill, which concerns size of the Building Societies Commission, states: The Treasury may, by order made by statutory instrument, increase the maximum number of members of the Commission to such number as they think fit".

The number provided for in the Bill is contained in subsection (2), which stipulates that not more than 10 and not less than four members shall be on the commission. So I wish to inquire why provision should be made to increase the number of members on the commission without, presumably, any limit being prescribed. I think there are reasons why the numbers may vary from time to time, but to have unlimited scope for increasing the number of members on the commission, when the Government are regarded as safeguarding the public interest on the size of quangos and similar bodies, seems to me to provide an undesirable flexibility concerning the size of the commission.

What I propose to do is to delete the proviso that the numbers may be increased by order. I have no doubt that the Minister will have reasons why that should not be done, but I fear at times that Bills are drafted with an eye on almost every conceivable possibility so that the administration may be free to go beyond the bounds of statute law if they so wish by means of statutory instrument. I am not sure that that is desirable, especially when one is fixing the size of a commission of this importance and standing and making provision for its duties. I think that the Government should be very clear about the numbers they want and that those numbers should be specified in the Bill and should not be exceeded. I beg to move.

Lord Brabazon of Tara

To begin with perhaps I should explain that as currently foreseen it should not be necessary to increase the number of members beyond the statutory limit set out in subsection (2) which specifies 10 members. In order to cater for the unexpected it was considered appropriate to provide the Treasury with the ability to increase the membership by means of statutory instrument. However, in the light of the points made by the noble Lord, Lord Houghton of Sowerby, with which I have a great deal of sympathy (particularly concerning the growth of quangos), I am able to say that the Government will accept his amendment in principle.

There is one slight problem, and that is that this amendment will also necessitate deletion of subsection (4) on page 2 of the Bill in order to make the amendment complete. I am advised that to fail to do that at the same time could cause difficulty, but I am able to give a guarantee to the noble Lord that I—or perhaps the noble Lord himself—will bring back amendments at the next stage of the Bill to deal with these points.

Lord Barnett

I am sure the Committee will be delighted with the response. If this is the way the Government propose to proceed with all or our amendments, we shall make very rapid progress.

Lord Brabazon of Tara

I hope we shall make rapid progress, but I cannot give a guarantee that we shall proceed along these lines all the way through the Bill.

Lord Houghton of Sowerby

I am very grateful for that response. May I make a comment in passing? I think it is always unwise for members of the Opposition, upon getting a concession, then to ask whether it is the first of many. It does not auger well upon getting one concession to ask for more. However, I am grateful for this one. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 2: Page 1, line 11, after ("members") insert (", of which 8 members are").

The noble Lord said: In moving this amendment I should like to speak also to Amendment No. 3. The Bill, as drafted, marks, as I think the Committee will recognise, a major step forward in legislation governing building societies. In particular, it extends the activities of building societies into sectors over which hitherto they have not been allowed to trespass. The problem that faces us is how building societies can be properly monitored in their activities.

The amendment seeks to ensure that the commission has in its membership two people, out of whatever the number may be as a result of the previous discussion, who are expert in two particular sides of the financial services business. One area is banking supervision and the other area is what might be broadly regarded as other financial services to be covered when your Lordships come to debate the Financial Services Bill. Because we have not had an opportunity of debating the Financial Services Bill, Amendment No. 3 specifically refers to two appointments to be made by the Bank of England. I had to use this expression because as yet the Securities and Investments Board—which is a preview, as it were, in terms of the Financial Services Bill—has not yet passed into any sort of statute and indeed has not been discussed in your Lordships' House. I hope the noble Lord the Minister understands the reasons for my use of the words "Bank of England" in both senses.

What we are asking for is a commitment that the commission will itself contain one person who is expert in banking supervision and one person who is expert in the other financial services into which the building societies may feel they ought to enter. We are very pleased that Mr. Sidney Procter has been appointed, as the noble Lord, Lord Brabazon, mentioned on Second Reading. This seems to us to auger well for the banking side of the commission. We should like to see a similar appointment on the other, financial services, side of the commission. We should also like to see that enshrined in statute on the face of the Bill, as we believe it is only in that way that we will get a continuing and proper supervision of building societies in their new role. I beg to move.

Lord Brabazon of Tara

The noble Lord, Lord Williams, has rightly drawn attention to the need for the new Building Societies Commission and the Bank of England to co-operate closely over the general principles of the prudential supervision of deposit-taking institutions, and in the day-to-day course of business. Their paths will cross at working level on many occasions, and it is obviously right for there to be some formal link at the top. As the noble Lord pointed out, this has already been recognised by the appointment of Mr. Procter, and I am glad that the noble Lord has welcomed that appointment. It would certainly be the Government's intention that, when Mr. Procter retires, there should be a further appointment of somebody with experience of banking and banking supervision.

Nevertheless, it would be wrong, I believe, to build into statute a requirement for the bank to appoint part of the commission. The commission will be an important body and there should be direct answerability to Parliament for appointments to it. While that clearly points to the power staying with the Treasury, I have no doubt that there will continue to be informal consultation with the bank about those appointments. As to the other point the noble Lord made about a possible representative from the future SIB, I shall certainly draw the noble Lord's remarks to the attention of Treasury Ministers. It is, I know, their firm intention that the composition of the commission should reflect the close links between its functions and those of banking supervision and that sort of thing. I would not wish at the moment to build this rigidly into the legislation. I regret that on this occasion therefore I cannot accept the noble Lord's amendment.

Lord Williams of Elvel

I am most grateful to the noble Lord for his reply. Clearly, we have to be satisfied with ministerial assurances on this matter. I would ask the Minister to go a little further and to assure us that, assuming that the Securities and Investments Board is created, it is the intention of the Treasury to ensure that at least one member of the commisssion will be on the general financial services side, which is within the remit of the SIB, just as Mr. Sidney Procter is going to be on the banking supervision side. If the noble Lord will give that general assurance, I shall be happy to withdraw the amendment.

Lord Brabazon of Tara

I am afraid that I cannot give that specific assurance this afternoon. I said that I would draw what has been said to the attention of Treasury Ministers. I certainly undertake to do that. However, that is as far as I can go at the moment.

Lord Williams of Elvel

I understand that the noble Lord cannot go further at this stage. This is a matter to which we may wish to return on Report should there be no further progress in the interim. I hope, however, that there will be some further progress in the interim with new appointments. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

The Chairman of Committees (Lord Aberdare)

Amendment No. 4 is, I believe, not moved.

Lord Houghton of Sowerby

I beg to move Amendment No. 5.

The Chairman of Committees

I am dealing with Amendment No. 4 which is, I believe, not moved. I call therefore, the noble Lord, Lord Houghton, to move Amendment No. 5.

Lord Houghton of Sowerby

All right. We will get it right this time. Not moved.

Lord Brabazon of Tara

With respect, the noble Lord does, I think, wish to move Amendment No. 5.

[Amendment No 4 not moved.]

Lord Houghton of Sowerbymoved Amendment No. 5: Page 2, line 8, at end insert— ("and the alleviation of hardship imposed upon borrowers by the unavoidable misfortunes of life or brought about by other adverse changes in their ability to fulfil their obligations under the mortgage deed ")

The noble Lord said: I apologise for what has just occurred. It is a very hot afternoon. The fact that the first clause of the Bill sets up the Building Societies Commission with wide functions and responsibilities is an indication of the need for some overall surveillance and, if necessary, control or regulation in order that the new powers of building societies may be exercised with a full sense of responsibilty and efficiency. The first of the general functions of the commission as set out in subsection (6) are to promote the protection by each building society of the investments of its shareholders and depositors

The amendment proposes to add at the end of that description of the first duties of the Building Societies Commission the words, and the alleviation of hardship imposed upon borrowers by the unavoidable misfortunes of life or brought about by other adverse changes in their ability to fulfil their obligations under the mortgage deed

This is a proposal to bring building societies into what I would describe as the poverty circuit. It can be related to the decision of the Government recently to alter the conditions upon which mortgage interest shall be covered by supplementary benefit for the first six months where borrowers are in need of help, get supplementary benefit and hitherto have got an allowance for their mortgage interest that could be regarded as the equivalent of the rent allowance for people in rented accommodation.

The restriction to one half of the mortgage interest payable by people who are to receive supplementary benefit can, of course, add to their difficulties. It seems to me that here the building societies should come in. In conditions where the Government are virtually making home ownership the only option for many people seeking accommodation and when the building societies, on the whole, are those who are providing the service to the borrower to acquire a home on a mortgage, then the state and the building societies jointly have some responsibility for what may happen to those who are suffering hardship. That is why I believe that part of the duties of building societies is to look after borrowers in trouble and relate their difficulties to what the state may be doing in the way of additional help through supplementary benefit or, later on, the social fund.

I am not at present bringing into the discussion the terms of Amendment No. 70 because I would like a response on the general approach to this matter. It seems to me that what I have in mind is not fully and clearly covered by subsection (6)(a) on page 2.1 want that to be made absolutely clear. We cannot envisage that this problem will become less difficult. It is likely to be the other way round. I cannot see that in the period ahead we shall have fewer cases of difficulty. It would be better therefore to formalise the position of the building societies in regard to the help to be given to their borrowers.

The debate that took place in another place on 25 th June covered a good deal of the ground here without any clear indication being given by the Government that to bring the building societies into this area was in their minds. There were, however, numerous references to what some building societies are doing in respect of insurance against redundancy and what insurance policies were available for cases involving this kind of difficulty. But the amendment is seeking that the commission should have a duty to make this provision general among building societies, to provide a scheme under which it can be done, and to make a levy on building societies to finance it. It would not require building societies to bear the cost wholly out of their own funds. They might very well impose a levy on borrowers as a form of insurance in their own scheme of things.

When, years ago, I was chairman of the Civil Service Housing Association we had the advantage of our arrangement with a building society to lend money at half per cent. lower than they were lending generally, because of the secure quality of civil servants as borrowers. With that half per cent. difference we were able to bring into the scheme of mortgages hedging arrangements to cover certain risks in life, and hardship was one of them. So it was really a social fund provided by the borrowers on a levy paid throughout their mortgage life and the building society's own resources where they were needed.

Something of that kind should be considered by the commission. I think it would be unsatisfactory to have a Bill of this importance, and this wide coverage of new duties and opportunities, without looking at this matter, because it is bound to be serious in many cases. So I sincerely hope that the Government will respond to this amendment.

Unfortunately, we are in what I saw described recently as a debtor culture, when it has never been easier for people to get money and never easier to get into debt. The Citizens' Advice Bureaux are talking about the number of cases that they have where there are money troubles, and the amount of indebtedness involved is very large indeed. We are therefore in a society where the borrowing of money is easy, creating financial difficulties, especially for young people, who may be induced to take on more than they really should.

A great many of the people who are borrowing money through building societies are comparatively young and some of them have family responsibilities with a mortgage on top. It is not surprising that, if they lose their jobs, fall ill or have an injury and there is a loss of wages they are soon in difficulties. The building societies find no difficulty in deferring repayments of capital, but the payment of interest is regarded by them, naturally, as of some importance.

Are we going to cover the borrower, in the same way as the person in rented accommodation paying rent? If social security is not going to do that, building societies should come in and discharge some responsibility of their own. So I beg to move this amendment and hope that the Government will respond to it. Whatever the imperfections in drafting, the whole spirit of the amendment must be clear. I beg to move.

Baroness Turner of Camden

I rise to support the amendment moved by my noble friend Lord Houghton of Sowerby, and I do so for a number of reasons. First, we are now contemplating legislation in this field under which building societies will be taking on a whole number of other financial services duties which they have never had before. This legislation, and other legislation in the financial field, will mean that everybody in the financial services area will be offering all kinds of financial services. This also means that building societies, which, of course, were built up originally as a movement to provide housing loans for people, will be providing a whole range of other services, and in those circumstances it is important that the social aspect of building societies' functions should be emphasised. As I understand it, this is what this amendment seeks to do. It would be a great pity if that were to be lost sight of; and for those reasons I commend the amendment to the Committee.

I think it would be a great pity if we were to pass this Bill without ensuring that there was in it something which emphasised the function of building societies to provide a social service to borrowers and ensured that if borrowers are in difficulty, there is some means by which that difficulty can, to some extent, be alleviated.

Baroness Gardner of Parkes

I rise to oppose this amendment, and I should begin by declaring my position as an honorary vice-president of the Building Societies Association, but that in no way influences what I intend to say on this matter. It would be quite impossible to build a social clause of this type into the building societies' future. I happen to be a member of the London Electricity Board and we went to France to see the situation there. They have none of the social problems attached to their energy authorities that we have in this country. The problems that are created by mixing a financial and business function with a social one are very great.

In this country in the past the building societies have always been very good and they will do whatever they can to help genuine cases of hardship. But to write an obligation into a Bill asking that this must be done, and without in any way quantifying the financial commitment involved, is quite wrong. We have to look at the other side of the building societies' issue.

Like many women in this country, I am a great believer in having my little bit of savings in a building society, and the people who rely upon the building society to give them their income in the form of interest might find that they suffered very badly if something of this type was built in. If it was something discretionary that the building societies could do, then I should hope that, so far as possible, they would do it. But to write something of this type on the face of the Bill is to demand an enormous financial commitment and I cannot support that.

Lord Shepherd

I rise to support my noble friend in regard to this amendment and perhaps I may initially reply to the noble Baroness. She, quite rightly, declared her interest. However, I think she would agree that in the past the building societies have been within the friendly societies legislation. That type of organisation has been seen, although it has been commercial—clearly, it has to be commercial—to be an organisation which is providing great service to the community. I agree with the noble Baroness that the building societies—certainly, all those that spring readily to mind—have an extraordinary reputation as regards the way in which they deal with their borrowers who temporarily fall into difficulties. They do it in a number of ways, usually after consultation and examination of the individual's position.

So my anxiety is not so much for the present; my anxiety is not so much for the new borrower who may go to a building society once this legislation has been passed; my anxiety is for the many millions of borrowers who have borrowed from a building society under the existing psychological approach of the managers, and those responsible within the building societies to the borrowers.

My noble friend said that there is a touch of indebtedness. My support for the concept that people should buy their own houses—and that is where building societies have played such a notable part—is based on the belief that this is one of the best forms of saving that is open to any individual. Certainly in recent years, taking account of the rate of inflation, the purchase of a house has probably been the best protection against inflation.

Borrowers have borrowed with the knowledge and experience of the building societies behind them. The Bill will change that situation, although building societies will be required primarily to raise money in most cases for the purposes of lending it to existing depositors. But the concept of the Bill and the new opportunities could well change the attitude of local managers or even the main board of building societies. We may then have a new situation which was not foreseen by the borrower when he took up the loan in the early stages with the building societies.

I think that the noble Baroness will agree that in the past—certainly 10 or 15 years ago—most young people when they went to a building society found it relatively easy to satisfy both themselves and the building society as to their ability to purchase and to take out a mortgage. Regretfully, it is not now assured to anyone that he will remain in employment. A man may be a first-class executive, who is performing with extraordinary success within an organisation, but it may be subject to a merger, and he may suddenly find that he has lost his post. There is a touch of instability. But at the present moment people feel that because of their reputation and past record if such circumstances arise, the building societies will take a lenient and humanitarian view of the situation.

However, as my noble friend said, things can change. We are moving into the commercial field where the interests of money become much more important. As the building societies develop into other forms of business, there may always be a clash within the organisation as to the best use of the money: "should we be tolerant to those who have fallen into difficulty or should we put on the squeeze in order to recover the money more quickly or, perhaps more harshly, in order to use the cash flow in other fields?".

It seems to me that the amendment does not lay down a fundamental duty upon anybody except the commission. It does not lay down a fundamental rule or place a duty on the building society. It is to be only a function of the commission. Truthfully, my only anxiety is whether the amendment is in the right place. I believe that it should have been a subsection on its own. Then it would have sat more easily within the framework of the clause. But as to my noble friend's purpose and intention, I think that he is entirely wrong.

Despite what the noble Baroness said, taking into consideration the record of the building societies, such a provision, which only calls for the function of seeking ways to alleviate the problem, would be in the long-term interests of building societies not only in their relationship to borrowers but in fairness to the many depositors who place money in the building societies for reasons other than interest. I hope that the Government will accept the spirit and purpose of the amendment. If they did that, they would be conferring a considerable favour on building societies as a whole; but in particular it would remove some of the anxieties among existing borrowers. I hope that the Government will feel able to accept at least the spirit and intention of the amendment.

4.15 p.m.

Lord Plummer of St. Marylebone

I hope that this amendment will be rejected. I should perhaps first declare an interest in that I am chairman of a building society, and I am also president of the Metropolitan Association of Building Societies.

The noble Lord, Lord Houghton of Sowerby, I shall not say gave the game away but at least made the point that he wanted to bring building societies into the poverty service. It is not the duty of building societies to act as a poverty service. As the noble Lord, Lord Shepherd, said, the building societies have for years taken a most sympathetic attitude towards people who find themselves in difficulty, and I am sure that they will continue to do so. But we are moving into a commercial world. There is great competition from bodies which will not, as I see it, be subject to the provisions in the amendment. If this provision is imposed on the building societies, I do not see where we stop. For that reason, I ask the Committee to reject the amendment.

Lord Campbell of Alloway

I apologise to the Committee for not being in my place at the time when the noble Lord introduced the amendment. These are words of exhortation—and what excellent words they are! They are noble sentiments, they are most beautifully expressed, and I wholeheartedly agree with them. But what is the effect? What will the courts make of it? Those are the questions that one has to ask before words of exhortation such as those are ever to be included in a statute.

With respect to the noble Lord, Lord Shepherd, it is not understood how, if those words were included, his anxieties would in any way be allayed. Perhaps in another form, perhaps in another place; but assuredly, with respect to the noble Lord, those words would achieve nothing and would not be appropriate for inclusion in the statute in the form in which they are.

Lord Barnett

I should also like to support my noble friend Lord Houghton of Sowerby. I think that it would be fair to say that he is not wedded to the words, and certainly I am not. I have rarely seen in legislation—indeed, I doubt whether they have ever been in legislation—such words as: "the unavoidable misfortunes of life". I am not sure how they would be interpreted. I am sure that my noble friend, and those who have supported him, like my noble friends Lord Shepherd and Lady Turner, do not want necessarily to go along with precisely that form of words. As they have all said, it is the spirit of the amendment that we should be concerned with.

Nobody has any doubt that building societies today are helpful and considerate to borrowers who get into difficulties because of the misfortunes of life or for other reasons. They may not be the misfortunes of life in the normal sense of the word, but they may be brought about through no fault of the borrowers, for whatever reason. In my experience, building societies have always helped in those circumstances.

My noble friend Lord Shepherd made an important point. We are moving into a very different era. Indeed, the whole objective of this major Bill is to allow building societies to deal with a whole new financial world into which they are moving. We cannot know how things will work in this new financial environ-ment. It is precisely for that reason that we should understand what underlies the spirit of the amendment. I hope that the Committee will support that spirit. I do not know whether my noble friend has in mind to divide the Committee, but I hope that the Minister, although perhaps not accepting the amendment as drafted, will be able to accept the spirit of what is being said by those who have supported it, including my noble friend. In that way I hope that we shall be able to give a lead in a form of words.

As has been said, we are not here imposing a burden on the building societies as such. We are talking about the functions of the commission. Speaking for myself, I should not be at all happy about the idea of cross- subsidisation of one borrower by another. Frankly, I do not think that it would ever be necessary. There is in normal circumstances ample equity in a house and the borrowing that is made against it. It would be a very rare circumstance indeed where a borrower who got into serious financial difficulties found himself in due course unable to meet the bill to the building society in full. In terms of the sale and purchase of houses and the involvement of mortgages in my experience we are talking of periods of six or seven years nowadays; or it may be even less. In those circumstances, and given the equity that exists in the house as security to the building society, it is extremely unlikely—if the societies are able to continue to alleviate hardship as they have done so far—that there would ever be a need for cross-subsidisation or that there would be a burden on building societies.

I recognise that many may feel that the wording of the amendment would seem strange in a piece of legislation—strange certainly to a legal mind, which I do not possess. I can well understand that as a lawyer the noble Lord, Lord Campbell of Alloway, may find unacceptable the words, the alleviation of hardship … by the unavoidable misfortunes of life". But I hope that he will accept the spirit of what is being said in this amendment. I hope that the Minister will, too, and that members of the Committee will not show themselves to be as hard-hearted as might otherwise have been thought.

Lord Brabazon of Tara

Perhaps I may start by explaining to the Committee what is the main purpose of the commission. The commission is essentially in the business of prudential supervision. Those who are putting their money into a building society need to be assured that the institutions in questions are solvent if their money is to be safeguarded and the integrity of the financial system is to be maintained. The supervisory function which Parliament has laid on the Bank of England in the case of banks, and which it will shortly give to the Building Societies Commission under this Bill, is directed to that end. Therefore the commission does not relate to borrowers. They are not at risk in the same way if an institution becomes insolvent. The protection of the borrower is hence not a matter for the commission.

However, that was not the main thrust of the argument which the noble Lord, Lord Houghton, introduced and on which we have had a very good debate this afternoon. It concerned the position of borrowers who are facing difficulty in making their repayments rather than the institutional arrange-ments. There are several avenues open to a borrower in this position. The first thing he should do is to approach his building society or other lender to discuss his position rather than to allow arrears to build up without explanation. I think that most noble Lords who have spoken this afternoon have reminded us—certainly my noble friend Lady Gardner of Parkes and the noble Lord, Lord Plummer have—of the building societies' excellent record in the sympathetic view which they take in these cases. I believe, for example, that they allow borrowers to suspend repayments of principal over a period, and the mortgage interest payments of anybody who has been receiving supplementary benefit for more than six months will be met in full. At the end of the day if a borrower cannot afford the repayments on his loan, he needs to consider very carefully whether he can continue to maintain the commitment.

Several noble Lords have raised the point that the building societies are in competition with a number of other lending institutions nowadays. To put a duty such as this on the building societies alone, where it did not fall on the banks or any of these other competitors now in the mortgage market, would be very difficult.

It is incumbent on building societies to follow prudent lending policies, since nobody benefits from a loan on which the borrower ultimately defaults. This point is particularly important at the present time when there is much more intense competition to lend money than there has been for many years past. Lenders should resist the temptation to advance money without considering properly the borrower's ability to repay. Following prudent lending criteria is the best way to prevent these problems from arising in the first place.

The noble Baroness, Lady Turner of Camden, said that building societies should provide a social service for their borrowers. I think that my noble friend Lord Plummer rejected that. I certainly agree with him that it is not the duty of the building societies to do that. As I have said, they have an excellent record, but it is not their duty to do that. It would be unfair on their other borrowers, or indeed their lenders, to expect them to provide this kind of social service.

For those reasons I am afraid that I am not able to accept this amendment—apart from the reasons given by the noble Lord, Lord Campbell of Alloway, which were very good reasons as to why the amendment was not very suitable. I do not think as a matter of principle that it is right to insist upon the building societies going into the social security field and I must ask my noble friends to reject the amendment.

Lord Houghton of Sowerby

I am very disappointed with that reply. The Government have precipitated this problem through their proposal to discontinue supplementary benefit to cover one half of the interest payments during the first six months. That has sparked off this problem. If people are not to get the full cover for the interest on their mortgages during the first six months, in the same way that occupants of tenanted accommodation get full cover for their rent, what are the borrowers expected to do? The Building Societies Association, in its evidence to the joint advisory committee, has suggested that the probability is that the borrower will want to capitalise the interest that is not being covered by social payment. The regulations apparently already made by the Government provide for benefit to cover interest on capitalised interest. That is a somewhat cynical way of dealing with the difficulties of the borrower. In many cases it will only pile up more indebtedness to the building society and leave him in difficulties later on.

We have to bear in mind that the incidence of this problem is very uneven because of the unevenness of unemployment. That is another aspect of the matter which makes it more difficult for some building societies to provide for it on their own than others in more prosperous areas with less unemployment. This was intended to be a mutual arrangement. I should like any noble Lord connected with a building society to say what is his understanding of the principle of mutuality in building societies. Where is the mutuality in building societies between the investor and the borrower if the investor does not urge his building society to take care of the borrower? If there is not mutuality in this situation, I should like to know where mutuality exists at all in the relationship between investor and borrower. The investor is not making money; he is lending money at a reasonable rate of interest. The mutuality is that any benefit should be shared between him and the borrower. When borrowers get into difficulties it is the clear duty of building societies to do all that they can to take care of them. This amendment is merely an extension of the spirit of the building societies which are already doing that; it is an extension of the spirit of those building societies which are recommending borrowers to take out an insurance policy against redundancies. In those circumstances, I am absolutely amazed at the rejection of a proposition of this kind to give the Building Societies Commission power—it does not say that it "shall"—to take this matter into their functions and to enable them to make arrangements as regards the whole of building societies, if they think fit.

Meanwhile, what will the Government do about the proposition in respect of half of the mortgage interest in the first six months? They are aggravating the difficulties of the borrower by their change in social policy. If the Government are to persist in making more difficulties for borrowers in these conditions, then the building societies, with their traditions of help and generosity towards their borrowers in difficulties, will want to do something themselves and not merely allow borrowers to capitalise interest, then pay interest on capitalised interest and then receive benefit from the social services for that. They want to do the job properly. It can be done properly under the umbrella of the Building Societies Commission. I know of no other way at present in which building societies can all co-operate together under a disciplined and well-organised scheme of this kind.

In the circumstances, I say to those who have interests to declare—as have a number of noble Lords—and who have responsibilities for building societies that they should be counted. Let us know where they stand so that we shall be able to say whether some building societies are not in favour of dealing with this problem in a reasonable manner. We should now strip away from the argument the bare indication of whether building societies are willing to do this or whether they are not. If they are not willing to do it, then it is an added argument for social benefit taking a different direction from that which it takes at present.

Therefore, in the circumstances I am bound to say that I must divide the Committee on this amendment.

4.32 p.m.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 81; Not-Contents, 119.

Airedale, L. John-Mackie, L.
Ardwick, L. Kagan, L.
Aylestone, L. Kaldor, L.
Banks, L. Kilbracken, L.
Barnett, L. Kilmarnock, L.
Belhaven and Stenton, L. Leatherland, L.
Birk, B. Listowel, E.
Boston of Faversham, L. Llewelyn-Davies of Hastoe, B.
Bottomley, L. Lockwood, B.
Brockway, L. Lovell-Davis, L.
Bruce of Donington, L. Mackie of Benshie, L.
Carmichael of Kelvingrove, L. McNair, L.
Cledwyn of Penrhos L. Mishcon, L.
Crawshaw of Aintree, L. Molloy, L.
David, B. Morton of Shuna, L.
Dean of Beswick, L. Mulley, L.
Denington, B. Nicol, B.
Diamond, L. Ogmore, L.
Elwyn-Jones, L. Oram, L.
Elystan-Morgan, L. Parry, L.
Ennals, L. Phillips, B.
Ewart-Biggs, B. Ponsonby of Shulbrede, L.
Ezra, L. Rochester, L.
Fitt, L. Ross of Marnock, L.
Foot, L. Scanlon, L.
Gallacher, L. Serota, B.
Gladwyn, L. Shepherd, L.
Graham of Edmonton, L. Silkin of Dulwich, L.
[Teller.] Stallard, L.
Grey, E. Stoddart of Swindon, L.
Hampton, L. Strabolgi, L.
Hanworth, V. Taylor of Blackburn, L.
Harris of Greenwich, L. Tordoff, L.
Hatch of Lusby. L. Turner of Camden, B.
Hayter, L. Underhill, L.
Houghton of Sowerby, L. Wallace of Coslany, L.
[Teller.] Wells-Pestell, L.
Hunt, L. White, B.
Irving of Dartford, L. Wigoder, L.
Jacques, L. Williams of Elvel, L.
Jeger, B. Winstanley, L.
Jenkins of Putney, L.
Ailsa, M. Denham, L. [Teller.]
Aldington, L. Denning, L.
Alexander of Tunis, E. Dilhorne, V.
Allenby of Megiddo, V. Drumalbyn, L.
Alport, L. Dundee, E.
Ampthill, L. Ellenborough, L.
Annan, L. Elles, B.
Auckland, L. Elliot of Harwood, B.
Beloff, L. Elliott of Morpeth, L.
Belstead, L. Elton, L.
Bessborough, E. Faithfull, B.
Boyd-Carpenter, L. Fortescue, E.
Brabazon of Tara, L. Fraser of Kilmorack, L.
Brougham and Vaux, L. Gainford, L.
Broxbourne, L. Gardner of Parkes, B.
Bruce-Gardyne, L. Gisborough, L.
Cameron of Lochbroom, L. Glenarthur, L.
Campbell of Alloway, L. Gray of Contin, L
Campbell of Croy, L. Gridley, L.
Carnock, L. Hailsham of Saint
Cathcart, E. Marylebone, L.
Cross, V. Halsbury, E.
Cullen of Ashboume, L. Hardinge of Penshurst, L.
Davidson, V. Henderson of Brompton, L.
De Freyne, L. Henley, L.
Hill of Luton, L. Renton, L.
Hooper, B. Richardson, L.
Hylton-Foster, B. Ridley, V.
Ilchester, E. St. Aldwyn, E.
King of Wartnaby, L. St. Davids, V.
Kinnaird, L. Saint Oswald, L.
Kitchener, E. Sandford, L.
Lane-Fox, B. Savile, L.
Lawrence, L. Selkirk, E.
Layton, L. Sempill, Ly.
Lloyd of Hampstead, L. Shannon E.
Long, V. Shaughnessy, L.
Lothian, M. Sherfield, L.
Lucas of Chilworth, L. Shrewsbury, E.
McFadzean, L. Shuttleworth, L.
Macleod of Borve, B. Skelmersdale, L.
Mancroft, L. Stamp, L.
Maude of Stratford-upon- Strathcona and Mount Royal,
Avon, L. L.
Merrivale, L. Sudeley, L.
Mersey, V. Swinton, E. [Teller.]
Morris, L. Teviot, L.
Mountgarret, V. Thomas of Swynnerton, L.
Mowbray and Stourton, L. Thorneycroft, L.
Murton of Lindisfarne, L. Torrington, V.
Newall, L. Trenchard, V.
Norfolk, D. Trumpington, B.
Nugent of Guildford, L. Ullswater, V.
Pender, L. Vaux of Harrowden, L.
Peyton of Yeovil, L. Vickers, B.
Plummer of St Marylebone, Vivian, L.
L. Whitelaw, V.
Porritt, L. Wise, L.
Portland, D. Young, B.
Quinton, L. Young of Graffham, L.
Rankeillour, L. Ypres, E.
Reigate, L.

Moved accordingly, and, on Question, Motion agreed to.

4.40 p. m.

Lord Skelmersdale

I think that this is an appropriate moment to take the Statement I beg to move that the House do now resume.

House resumed.