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The noble Lord, Lord Naseby, brings an additional insight into these issues—his long association with the mutualisation movement. I want to address the issues he has brought to the House. The noble Baroness, Lady Noakes, has spoken to the point and with her usual succinctness; she said that she agrees with the noble Lord, Lord Shutt. If these issues are put to the test I think I know the figures that might emerge. Therefore, I shall not deploy my full persuasive talents as I might be wasting them on the desert air with this amendment.

Suffice it to say that, if we accept the proposition of the noble Lord, Lord Shutt, we would be obliged to accept that all building societies—and the noble Lord, Lord Naseby, gave voice to the excellence of the mutualisation movement—look alike and that all have a pretty uniform relationship to local communities. The Government’s contention is that that is just not so. We recognise that—as the noble Lord, Lord Shutt, confessed—of the 59 building societies, 51 are small enough, local enough and limited in their ambition enough to play their full part in local areas. We know which local areas would benefit from their work, and rightly so, because they have built themselves up on the basis of the community, as indicated by the noble Lord, Lord Naseby.

The other eight are in an altogether different category. To which locality is a building society called Nationwide meant to be local?

A noble Lord: My Lords, many.

Lord Davies of Oldham: Many, of course, my Lords, but indefinable numbers would be involved, given the colossal assets of the society, its great reputation for effectiveness and its size. As the noble Baroness indicated, the eight represent a substantial proportion of the resources that are likely to emerge from dormant accounts. It is reasonable therefore for the Government to say that local societies can do an enormous job in their localities and should be encouraged to do so, and that we want to encourage that local activity by such

29 Jan 2008 : Column 574

local institutions. It is a different matter altogether with the eight that are truly nationwide—if not all by name; a relationship between location and point of origin has long been departed from because of the sheer size of the operation.

The noble Lord, Lord Naseby, has to face up to facts. Of course I enjoyed his exemplar of the best assets and virtues of mutualisation, but anybody would think that no building society had ever demutualised, that there had never been an occasion when people vested with these virtues had ever taken a different view about the role of the building society and its transformation. We have seen that occur; and the noble Lord knows a great deal more about it than I do.

4.45 pm

All I am indicating is that there is a difference between the commitment of a local building society and that of the large institutions. During consultation we were challenged to define the credible threshold. We defined it as assets of about £7 billion. Under the Bill, 51 out of the 59 building societies are defined as local. Only eight will be concerned with the wider distribution of resources. This is surely a perfectly reasonable position for the Government to adopt. The noble Baroness, Lady Noakes, was right to say that the Government were concerned about equity across the nation and about there being less money available for wider projects across the nation if all building societies were allowed to follow the local path and look to their local areas, if that could be defined in certain circumstances. Of course, she is right about that. That is the basis of the Government’s case. There is a difference between resources that ought properly to be determined locally and resources from nationwide institutions whose dormant account money could properly be directed towards the benefit of local communities, but be defined in terms of national priorities. We have been clear about the basis on which we think those resources should be allocated.

We shall debate these issues later. I hope that the House will forgive me if I have delved too far into issues concerning the Big Lottery Fund and its distribution role. Later amendments will require the Government to address themselves from the Dispatch Box to the pertinent points that will be made from the Opposition Benches in that regard. However, there is great advantage and fairness in distributing huge resources for the benefit of communities right across the nation as opposed to the arbitrariness that would flow from the amendment of the noble Lord, Lord Shutt. The small building societies are concerned and knowledgeable about their localities. They are constantly in contact with them and are able to distribute resources to them accurately and effectively, in ways which the Government and the whole House commend. The eight big institutions will generate a huge percentage of the dormant account resources, as we see from the figures, and therefore a different distribution mechanism will be necessary. I know that there will be criticism of the distribution mechanism the Government have chosen, but suffice to say that we have chosen one which is involved in nationwide distribution but has regional and local branches and, of course, understands the separateness of the nations

29 Jan 2008 : Column 575

of the United Kingdom in this regard. That is the basis of the role of Big with regard to distribution.

I cannot go any further at this stage because there is an issue of principle between us. The noble Lord, Lord Shutt, made it clear right from the beginning that a building society is a building society, that it has strong local links and should be allowed to deploy whatever resources come out of its dormant accounts as it sees fit. We seek a clear differentiation between resources that would benefit discrete localities and bigger resources that could more effectively be distributed through another route. That is the bone of contention between us. I see that I have not persuaded the noble Lord, Lord Shutt, but I give way to the noble Lord, Lord Naseby.

Lord Naseby: My Lords, the Minister seeks clarity. Does he not understand that the Coventry Building Society is involved in an area round Coventry? I do not think that there is a branch of the Coventry Building Society in London. I do not think that the Chelsea Building Society has a branch in Coventry. These are primarily local societies. The one example the Minister gave was Nationwide. Nationwide did a marketing exercise. It is the old Co-op movement. If one analyses what happens to its charitable money, one sees that it is all geared to local former Co-op areas. It is time that the Minister recognised the history of that society.

Lord Davies of Oldham: My Lords, I accept what the noble Lord says—that the Coventry Building Society has a strong local base and that you will not find a branch of it in London. That might be the case with other big building societies. Is the noble Lord saying that because London does not have a local building society, it has no local communities? I refer not just to London—it may be the case that other significant cities do not have building societies with his mutualisation philosophy. For the Government, the process of mutualisation and the existence of the institutions are not sufficient guarantees of fairness to the people and communities of the United Kingdom. That is why we added an additional mechanism to the one favoured by the noble Lord, Lord Shutt.

Lord Shutt of Greetland: My Lords, I am glad that the Minister accepts where I stand. I thank the noble Lord, Lord Naseby, and the noble Baroness, Lady Noakes, for their comments. In an idle moment this morning, I looked at those building society websites that I could find. Without access to the registers, I do not know where the members live; but one way of looking at this is to find where the branches are. I looked at the websites of the Skipton Building Society and the West Bromwich Building Society. Most branches of the Skipton are in Yorkshire and most branches of the West Bromwich are in the West Midlands. Most branches of the Chelsea are in London and most branches of the Leeds Building Society and the Yorkshire Building Society are in Yorkshire. I did accept at the outset that the Nationwide was just that. But as the noble Lord, Lord Naseby, indicated, it was based on the old Co-operative Permanent Building Society, which decided in 1970 to cheer itself up with a new name. I would venture that the reason that it did not demutualise

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was because of its co-operative roots—it is the only one of the very big societies that did not demutualise, even though the rest of the big eight are far smaller. I would submit that since that wave of demutualisations, the mutuals—I have seen this on the websites—have said, “Look, we have got to be proud about being mutual, we have got to say there is something special about being mutual”. They say that their generosity is special—I refer, for example, to the percentages of profits that they put into charitable foundations and the fact that they bring in independent people to disburse these funds.

It was interesting that the Minister said, a few moments ago, that all building societies were “allowed”. Allowed? This is a voluntary act, we are told. But the building societies do not want to volunteer in that way. They are happy to volunteer in another way and to use the alternative scheme. On that basis, I believe that this is the time to test the opinion of the House.

4.53 pm

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

Their Lordships divided: Contents, 195; Not-Contents, 141.

Division No. 1


Addington, L.
Allenby of Megiddo, V.
Anelay of St Johns, B.
Arran, E.
Ashdown of Norton-sub-Hamdon, L.
Attlee, E.
Avebury, L.
Barker, B.
Beaumont of Whitley, L.
Best, L.
Blaker, L.
Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brittan of Spennithorne, L.
Broers, L.
Brougham and Vaux, L.
Burnett, L.
Byford, B.
Caithness, E.
Campbell of Alloway, L.
Carnegy of Lour, B.
Cathcart, E.
Chalker of Wallasey, B.
Chidgey, L.
Chorley, L.
Clement-Jones, L.
Cohen of Pimlico, B.
Colville of Culross, V.
Cope of Berkeley, L.
Cotter, L.
Craig of Radley, L.
Craigavon, V.
Crickhowell, L.
Cumberlege, B.
Darcy de Knayth, B.
De Mauley, L.
Dean of Harptree, L.
Dear, L.
Dearing, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
D'Souza, B.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elles, B.
Elliott of Morpeth, L.
Elton, L.
Erroll, E.
Falkland, V.
Falkner of Margravine, B.
Feldman, L.
Ferrers, E.
Finlay of Llandaff, B.
Flather, B.
Fookes, B.
Fowler, L.
Garden of Frognal, B.
Gardner of Parkes, B.
Geddes, L.
Glentoran, L.
Goodhart, L.
Goodlad, L.
Goschen, V.
Griffiths of Fforestfach, L.
Hamwee, B.
Hannay of Chiswick, L.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Home, E.
Hooper, B.
Howard of Rising, L.
Howe, E.
Howe of Aberavon, L.

29 Jan 2008 : Column 577

Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Hylton, L.
Jay of Ewelme, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Kimball, L.
King of Bridgwater, L.
Kingsland, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Laird, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lindsay, E.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Lucas, L.
Luke, L.
McColl of Dulwich, L.
Macfarlane of Bearsden, L.
MacGregor of Pulham Market, L.
Maclennan of Rogart, L.
Maddock, B.
Maginnis of Drumglass, L.
Mancroft, L.
Mar, C.
Marlesford, L.
Masham of Ilton, B.
Mawson, L.
May of Oxford, L.
Mayhew of Twysden, L.
Miller of Chilthorne Domer, B.
Montrose, D.
Morris of Bolton, B.
Naseby, L. [Teller]
Neuberger, B.
Newton of Braintree, L.
Noakes, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Palmer, L.
Park of Monmouth, B.
Patten, L.
Perry of Southwark, B.
Platt of Writtle, B.
Plumb, L.
Prior, L.
Quinton, L.
Rawlings, B.
Razzall, L.
Reay, L.
Redesdale, L.
Richardson of Calow, B.
Roberts of Conwy, L.
Roberts of Llandudno, L. [Teller]
Rogan, L.
Roper, L.
Rotherwick, L.
Saatchi, L.
St John of Fawsley, L.
Saltoun of Abernethy, Ly.
Sandberg, L.
Scott of Needham Market, B.
Seccombe, B.
Selkirk of Douglas, L.
Selsdon, L.
Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shephard of Northwold, B.
Shutt of Greetland, L.
Skelmersdale, L.
Soulsby of Swaffham Prior, L.
Steel of Aikwood, L.
Stern, B.
Stewartby, L.
Stoddart of Swindon, L.
Swinfen, L.
Taylor of Holbeach, L.
Tenby, V.
Teverson, L.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Tonge, B.
Tope, L.
Tordoff, L.
Trefgarne, L.
Trenchard, V.
Trimble, L.
Trumpington, B.
Tyler, L.
Ullswater, V.
Verma, B.
Wade of Chorlton, L.
Wakeham, L.
Waldegrave of North Hill, L.
Walker of Worcester, L.
Wallace of Saltaire, L.
Walmsley, B.
Walpole, L.
Warsi, B.
Wilcox, B.
Williams of Crosby, B.
Williamson of Horton, L.
Wolfson, L.


Acton, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L. [Teller]
Barnett, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Bhattacharyya, L.
Billingham, B.
Bilston, L.
Birt, L.
Boothroyd, B.
Borrie, L.
Boston of Faversham, L.
Boyd of Duncansby, L.
Bradley, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Christopher, L.
Clinton-Davis, L.

29 Jan 2008 : Column 578

Corston, B.
Crawley, B.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L.
Desai, L.
Dixon, L.
Donoughue, L.
Dubs, L.
Eatwell, L.
Elder, L.
Elystan-Morgan, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Filkin, L.
Ford, B.
Foulkes of Cumnock, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Griffiths of Burry Port, L.
Grocott, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Janner of Braunstone, L.
Jay of Paddington, B.
Jones, L.
Jones of Birmingham, L.
Jordan, L.
Judd, L.
King of West Bromwich, L.
Kinnock, L.
Kirkhill, L.
Layard, L.
Lipsey, L.
Lockwood, B.
Lofthouse of Pontefract, L.
Macdonald of Tradeston, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mason of Barnsley, L.
Maxton, L.
Meacher, B.
Morgan, L.
Morgan of Drefelin, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Yardley, B.
O'Neill of Clackmannan, L.
Parekh, L.
Patel, L.
Paul, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Prosser, B.
Prys-Davies, L.
Puttnam, L.
Radice, L.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Scotland of Asthal, B.
Sewel, L.
Simon, V.
Smith of Gilmorehill, B.
Smith of Leigh, L.
Snape, L.
Soley, L.
Stone of Blackheath, L.
Strabolgi, L.
Sutherland of Houndwood, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Truscott, L.
Tunnicliffe, L.
Turner of Camden, B.
Vadera, B.
Wall of New Barnet, B.
Warner, L.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
West of Spithead, L.
Wilkins, B.
Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.

5.07 pm

Lord Shutt of Greetland moved Amendment No. 6:

On Question, amendment agreed to.

Clause 3 [The assets-limit condition]:

Lord Shutt of Greetland moved Amendments Nos. 7 and 8:

On Question, amendments agreed to.

Clause 5 [Functions etc of a reclaim fund]:

[Amendment No. 9 not moved.]

29 Jan 2008 : Column 579

Lord Shutt of Greetland moved Amendment No. 10:

(a) a copy of its annual accounts and reports prepared in accordance with Part 15 of the Companies Act 2006 (c. 46), and(b) a copy of any information published under paragraph 3 of Schedule 1 to this Act.(a) any directions issued to a reclaim fund under section 5(4) of this Act, and(b) any accounts, reports or information received from a reclaim fund in accordance with subsection (1).”

The noble Lord said: My Lords, we come to parliamentary accountability. One feature of the Bill that was not to my liking right at the start was that I would much have preferred a statutory scheme. That was not to be—neither of the other Front Benches warmed to it—and I have to accept that. However, if we are not to have a statutory scheme, at least let us have some parliamentary accountability, because the Government and the Treasury are involved. Amendment No. 10 would introduce a new clause providing for parliamentary accountability of the reclaim fund. It says:

other information. It continues:

that it has given to the reclaim fund, as well as accounts and other information. As I said, if we are not to have a statutory scheme, it is important that we make certain that there is real accountability to Parliament.

Amendment No. 17 is about the accountability of the general scheme. It was interesting that, in Committee, my noble friend Lord Newby and I were berated by the Minister for not enthusing about the devolution elements. I put that right, right now: I enthuse. Looking at Clause 18 for the Welsh, Clause 19 for the Scots and Clause 20 for Northern Irish, one finds that after some Barnett formula-type split, the devolved Ministers can put an order to those devolved Assemblies, after consultation with the Big Lottery Fund and others, and the orders then have to be approved by resolution of the devolved Assemblies on how the money is spent. But what about England? What we know about the Bill is that the resources that go via the Big Lottery Fund have to be used for young people or for financial inclusion or for the social investment bank. However, there is no order to come back to Parliament; there is no consultation; and there is no suggestion about the disposition of resources between the three types of expenditure. Is it any wonder that some people here think that there is something called “the English question”?

The amendment would bring Parliament back into decision-making for England. We had ripples about this in Committee, particularly about the social investment bank, for which, we are told, there needs

29 Jan 2008 : Column 580

to be a serious slab of money. It is clear that the Government are not certain whether they want to go that far, but, if the amendment is passed, the matter will be brought back to Parliament, and Parliament can have its say. I beg to move.

Baroness Noakes: My Lords, our names are to the amendments in this group, and we strongly support them. Parliamentary oversight and transparency are ingredients that are largely missing from the Bill. These amendments, together with amendments that I shall move later, are essential to underpin the dormant-account scheme. In Committee, we were repeatedly told that it was to be a voluntary scheme and that the Bill merely facilitated that. However, there is huge public interest in the success or otherwise of the scheme, and Parliament is being asked to set up the structure without being given any way of tracking the scheme as it goes forward—it is just written out of the script.

The reclaim fund will publish important information about the work of the scheme in its annual report and in the list required by Schedule 1. Do the Government expect individual parliamentarians to search out that information all the time in case they miss something? It seems to me to be a no-brainer that the information should be laid before Parliament as soon as it is available. The reclaim fund is being set up as a statutory body; it could as easily have been a public body because it is channelling money towards the Big Lottery Fund. If it were a public body, it would have had accountability arrangements set out for it. In truth, because of the involvement of the Treasury and the oversight of the FSA, this is a hybrid body, and we need to reflect Parliament's natural interest in that.

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