§ Mr. Eggarasked the Chancellor of the Exchequer if he will make a statement about the Government's plans for new building society legislation.
§ Mr. Ian StewartThe Government have now considered the representations they have received on the Green Paper. Decisions have now been taken on many of the issues raised in the Green Paper. Early legislation to give effect to them will be introduced, I hope in the next Session of Parliament.
The Government's proposals will in general follow the Green Paper, which has been widely welcomed. The prime function of building societies will continue to be to provide a secure home for people's savings and to finance home ownership, but the present statutory constraints on their powers will be loosened. The legislation will confirm the structure of assets and liabilities set out in the Green Paper. At least 90 per cent. of "commercial assets" will 249W be in the form of class 1 loans — that is, loans on security of freehold or leasehold estate for the residential use of the borrower. This definition will extend to occupation by the borrower's dependants and to property which is not the borrower's main residence, if he lives in job-related accommodation. Up to 60 per cent. by floor area may be put to other residential or business uses without affecting eligibility for class 1.
All societies will be given new powers to offer financial and housing-related services, including money trans-mission, full insurance brokerage services, and the ability to act as agents for others in payments services and consumer credit. They will be empowered to provide access to the services of authorised investment businesses, whether or not members of the Stock Exchange; to offer structural survey services; and to set up estate agency subsidiaries.
Those societies with commercial assets in excess of a stated figure (propably £100 million) will in addition be able to hold residential land for sale, rent or development and to lend money other than on security of mortgage. They will also be able to set up, or invest in, subsidiary companies for carrying on business in other member states of the European Community.
The Green Paper proposals on the constitution of building societies will be confirmed, with some detailed modifications in the light of comments received. A
1980=100 1973 1979 1980 1981 1982 1983 1984 *1985 Manufacturing output 114.3 109.6 100.0 93.9 94.5 96.9 100.3 101.8 Industrial production less oil and gas† 111.5 108.4 100.0 94.6 94.8 96.9 96.7 98.4 Gross domestic productless oil and gas† 98.8 103.2 100.0 97.7 99.1 101.7 103.9 105.5 *1st Quarter †Class 13 of the Standard Industrial Classification 1980–extraction of mineral oil and natural gas. ‡The output based measure of GDP, which is the appropriate measure for comparison by industry