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In addition, the Bill allows the regulations to confer power to make further orders, regulations and subordinate legislation. I am most concerned about the ability to make further legislation without reference to Parliament. The order-making powers in the Bill are subject to the affirmative procedure, which is right and proper, but those orders can make provision for further secondary legislation and, as far as I can tell, that does not require affirmative approval or, indeed, any parliamentary process. I shall want to revisit that issue, too.
I have one technical question in connection with Clause 5, which allows the Treasury to make provision for credit unions corresponding to any provision relating to building societies. Will the Minister, or the noble Lord, Lord Tomlinson, confirm that this power can bring credit unions within the special resolution regime provisions in the Banking Act 2009? It was set up for banks but has already been extended to building societies by a statutory instrument. Is it intended that a further extension could or should be made to credit unions and, if so, what will be the conditions for a credit union to fall within the special resolution regime powers?
The Financial Services Secretary to the Treasury (Lord Myners): My Lords, I am very grateful to my noble friend Lord Tomlinson, of Walsall, for his support for the mutual sector and for the eloquent manner in which he has presented this Bill, and to other noble Lords for their participation in the debate. The Government are a strong supporter of the mutual sector. They welcome the important contribution that the sector makes in providing choice and diversity in financial services and fostering financial inclusion and social cohesion. This Bill is particularly relevant to industrial and provident societies, community benefit societies and credit unions.
It may be useful for me to explain why the Government believe that the Bill is both good and timely. The crisis in the international financial markets and its impact on the economies of every major nation has reinforced the need for countries to have diversified economies and financial systems with a variety of different types of economic models. In the UK, the proprietary company form is the predominant model of choice for many new enterprises, offering limited liability and the scope for involving external shareholders. However, an interesting and often overlooked fact is that the mutual structure, with more than 30 million members, is not only a significant provider of services and products to local communities but a most viable alternative to the proprietary company model. For example, in some communities, and for many who are excluded from mainstream financial services, credit unions continue to offer the only credible alternative to loan sharks and unscrupulous doorstep moneylenders.
Access to capital and funds, or rather, as we have seen in recent times, the lack of it, is crucial and can have very destabilising consequences for businesses, members and customers. The Government applaud
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The Government have displayed their commitment to the sector and in recent years have undertaken various policy and legislative initiatives aimed at enhancing the operational efficiency of mutuals. Recent legislation, such as the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007, which incidentally also started out as a Private Member's Bill initiated in the other place by Sir John Butterfill, has demonstrated how the sector can seize the opportunities offered. This recent piece of legislation has been credited with having made possible the merger between the Britannia Building Society and Co-operative Financial Services, creating what my noble friend describes as a super mutual, to the benefit of many thousands of members.
The Government have also set up an £80 million growth fund for credit unions and community development finance institutions to lend on to their members. A further £18.75 million has been announced as additional funding in the 2009 Budget, bringing the total funding to almost £100 million. More than 160,000 credit union members have so far benefited from loans since the start of the growth fund in July 2006. The Government recognise that one way of helping the sector is by ensuring that it has an enabling legislative framework. The Government are taking forward legislative and policy reforms for credit unions and co-operatives under the legislative reform order, on which the Government will shortly be reporting as it begins its parliamentary process.
The Bill, which complements the work in the legislative reform order, focuses on the linked objectives of modernising the legislation and further increasing member confidence in societies by bringing their corporate governance standards up to "best in class". It will give the Treasury power to make further changes to credit union law by importing building society law where appropriate. The sector has been seeking that to help it to move on to the next phase of development.
I shall address some questions that arose at Third Reading in the other place. The Bill gives the Treasury powers to apply to industrial and provident societies certain provisions of company law on investigation of company names and on dissolution and restoration to the register. In the other place, Mr Peter Bottomley sought an explanation of why that power had been conferred on the Treasury and not the Secretary of State. The simple explanation is that the Treasury does not have a Secretary of State. When power is conferred on the Treasury to make regulations by way of statutory instrument-as in the Bill-it is exercisable by the Treasury through the Commissioners of Her Majesty's Treasury, as set out in Schedule 1 to the Interpretation Act 1978.
Mr Bottomley also inquired whether the powers granted in the Bill would apply retrospectively to allow the FSA to disapply a name if a company had
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I thank the Delegated Powers and Regulatory Reform Committee for its consideration of this Bill, published yesterday in its 11th report of this Session. The Committee commented on Clause 4, which enables the Treasury to apply to industrial and provident societies provisions of the Companies Acts relating to investigations, company names and dissolution, and Clause 5, which enables the Treasury to apply to credit unions provisions of building society law. The Committee expressed concern that the provisions which may be applied include many which contain criminal offences, some of which carry up to seven years' imprisonment as a maximum penalty.
The Committee notes that your Lordships' House will wish to consider whether the Bill should be amended on that point. An amendment, should your Lordships consider it necessary, would provide that the maximum penalty for an offence created by regulations under Clauses 4 and 5 may not exceed that for the corresponding offence under the legislation being applied. I can confirm that the Government do not intend to use regulations under Clauses 4 or 5 to impose an increased penalty for offences. I hope that my statement will persuade your Lordships that there is no need for an amendment of the type described by the Committee.
I am sure that your Lordships will agree that the proposed reforms in the Bill are both necessary and proportionate. They will help provide further confidence in this important sector and engender continuing improvement in governance standards.
The noble Lord, Lord Newby, asked about the timetable for the order. The Government intend to publish a draft legislative reform order by the end of July. We intend to lay the LRO before Parliament when the House returns from the Recess.
The noble Baroness, Lady Noakes, asked about the power to make further regulations in Clauses 4 and 5. Any further regulations-for example, prescribing fees-will use the same parliamentary procedure as the provision of company law to which they apply. The noble Baroness also asked whether the Bill will extend the SRR to credit unions. I am advised that it does not. One would need an order under the Banking Act 2009 to do that.
The noble Baroness also asked whether we could extend building society freedoms to credit unions. Clause 5 preserves key features of credit unions, as the key sections of the Credit Unions Act cannot be amended. The Building Societies Act does not contain restraints on what building societies can do. If I find that I can add helpfully to those answers, I will of
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The noble Baroness said that things can and do go wrong with mutuals. We know that to be the case with all forms of business ownership-incorporated, mutual and non-incorporated-but this timely and good Bill strengthens the governance of mutuals and, as such, deserves to be welcomed. Before I was a Minister, I produced a report for the Treasury on the governance of mutuals in the light of the failure of the Equitable Insurance Society, a failure which, as noble Lords will need no reminding, was determined by the judge to be a consequence primarily of bad governance and management of the society. I believe that the steps taken here will address some of those supposed weaknesses of the mutual model. Noble Lords will also need no reminding that Sir David Walker, who will be producing a report on governance of financial institutions fairly soon, was, after we gave him the original terms of reference for that review, asked to extend it to include mutuals, so he will be addressing some of the points raised by the noble Baroness.
The noble Baroness closed her remarks by saying that she was not always at ease with those who were delighted with modernisation for modernisation's ends in itself. I am sure that those comments will be noted by Mr David Cameron.
Lord Tomlinson: My Lords, I thank the three other participants in this short but very useful debate. I very much value the intervention of the noble Lord, Lord Newby, and I share his views. I also very much welcome the intervention of the noble Baroness, Lady Noakes, although with slightly less enthusiasm for parts of her speech; she will understand why if I mention a couple of them. She seemed to be unwilling to recognise that co-operatives can be efficient. I used to have my house insurance and car insurance with the Co-operative Insurance Society. I stopped for a number of years during a period of fairly substantial inefficiency. I market-tested both my car insurance and my house insurance last year, and I returned to the Co-operative because it was cost-efficient. I was very pleased last week, because not only had I taken out a cost-efficient form of insurance, I got my letter to tell me that for the past half-year, my dividend has been £88. That is a further cost reduction.
I understand the point that the noble Baroness made. She referred to the Dunfermline Building Society. We should look at the two different arms of the Dunfermline Building Society. I believe that I am correct to say-I tried to check this with the Treasury this morning-that the traditional mutuality role continues. The Dunfermline Building Society got itself into troubling by moving into non-traditional activity.
The noble Baroness clearly does not like the Co-operative having an association with the Co-operative Party any more than I like Marks & Spencer or any other company identifying with the Conservative Party when it makes a financial donation to it.
Lord Tomlinson: My Lords, I welcome that, too, but I can find many other companies that do make such donations. The Co-operative movement was not engaged in party politics at all until the outset of the First World War. When it found that the government distribution of groceries to members of Co-operative societies was discriminatory and that they could not get fair treatment, it decided that it had to engage in direct political activity; so it was an historical decision, taken nearly 100 years ago, to combat the discrimination of government in the distribution of scarce resources.
Finally, my noble friend the Minister replied every bit as efficiently as I would have done to the questions asked by the noble Baroness, Lady Noakes, and I agree with every word that he said. If anything leaves her unsatisfied, we will return to the matter in Committee.
Baroness Pitkeathley: My Lords, it is an honour and a pleasure to bring this Bill to your Lordships' House, and I know that the 500,000 people with autism in the UK and their families are watching its progress with great interest. I thank colleagues around the House for their support and interest. Although the number of noble Lords who will speak today is small, it is extremely select, and I am particularly pleased that the noble Lord, Lord Freud, has chosen this Bill on which to make his maiden speech. I know that we all look forward to that very much. I have been encouraged, too, by the good wishes of many Members of this House who have an interest in this issue and would have been here had their diaries permitted. The noble Earl, Lord Howe, and noble Lord, Lord Astor, for example, have a strong personal interest in the topic.
I also acknowledge the support of the National Autistic Society, which very much welcomes the Bill. This Bill is an excellent example of how relatively small changes in legislation can make huge changes in the lives of people with disabilities and their families-something that I have had the honour of doing before as a result of several Bills on carers. The Bill is also a marvellous example of cross-party working, and gives parliamentarians something to cheer about and be proud of: two things that may have been singularly lacking in our work in recent months.
The Shadow Secretary of State for Wales, Cheryl Gillan MP, introduced the Autism Bill to the House of Commons in January this year. The original Bill required local authorities and their partners to take a strategic
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Even the clauses relating to adults have gone through quite a metamorphosis since their original drafting. The new Bill puts a duty on the Secretary of State to introduce an adult autism strategy for improving outcomes for adults with autism, accompanied by statutory guidance for local authorities and NHS bodies. The statutory guidance covers all the crucial parts, including access to diagnosis, needs assessments, transition planning, the strategic planning of support services for adults with autism, and local partnership and co-operation. That strategy is currently being consulted on. Everyone who works with those with autism and their families knows that that range of guidance is necessary to help them.
The Bill has six clauses. Clause 1 contains provisions on the duty to prepare and publish an autism strategy. Clause 2 covers the duty to issue guidance on implementing the strategy, while Clause 3 deals with the duty on local authorities and NHS bodies to act under the guidance. Clauses 4, 5 and 6 cover other aspects. The Bill, as amended in Committee in the other place, places a duty on the Secretary of State to prepare and publish, not later than April 2010, a strategy for the improvement of health and social care services for adults in England with autistic spectrum conditions. The Secretary of State is required to keep the autism strategy under review. He or she will be able to revise it, and has a duty to consult when doing so.
In addition, the Bill requires the Secretary of State to prepare and issue, not later than 31 December 2010, guidance to the NHS and local authorities on implementing the strategy, to keep the guidance under review, and to consult the NHS and local authorities in preparing it, particularly if he or she proposes to revise it substantially. The Bill also contains provisions that will create a requirement on NHS bodies and local authorities to act in accordance with the guidance issued by the Secretary of State.
The Government have made welcome public commitments to publishing an autism strategy by the end of 2009 and to issuing subsequent guidance with real power to local authorities and the NHS on how to implement that strategy. A full public consultation on the strategy was launched in April this year and is
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I want to draw a few things to your Lordships' attention. Clause 1 imposes a deadline for publishing the autism strategy of not later than 1 April 2010. Clause 2 imposes a deadline for issuing guidance on the implementation of the strategy of not later than 31 December 2010. It is quite unusual for deadlines as specific as these to be included in a Bill, but it responds to the need of Ms Gillan and the National Autistic Society to have concrete guarantees of action within a reasonable timescale. Commitments have been made to publish the strategy by the end of this year. I know that the intention is to stick to that timetable-I am sure that the Minister will confirm that-so the deadline in the Bill is a belt-and-braces one that gives additional leeway.
On the timing of the consultation on and publication of the strategy, Clause 1 provides for consultation on the autism strategy before the Bill comes into force to fulfil the Secretary of State's duty to consult on it. In the same vein, Clause 2 provides for consultation on the guidance on implementing the strategy before the Bill comes into force to fulfil the Secretary of State's duty to consult on it and to deal with what might seem to be a mismatch in timing between the implementation of the Bill and the ongoing consultation to which I have already referred. The consultation began in April and is expected to run until mid-September but it is unlikely that this Bill will complete all its stages before then. It may be that the strategy is published before the Bill comes into effect. It was therefore important to ensure that all the work being undertaken would count for the purposes of the Bill. Hence, the inclusion of these provisions.
I want now to draw your Lordships' attention to the mechanism by which the Bill will impose a duty on local authorities and NHS bodies to act under the guidance of the implementation of the strategy. This is rather an innovative procedure, which may not have been done before. For local authorities, specifying that the guidance is to be treated as Section 7 guidance under the Local Authority Social Services Act 1970-some of us may be old enough to remember the so-called LASS Act; I certainly am-means that they would be required to exercise their social services function in accordance with the guidance. A local authority which did not would be acting unlawfully. But for NHS bodies, there is no existing provision equivalent to Section 7 of that Act. Of course, it is very important for those with autism and their families to have equal attention from local authorities and NHS services. Most people are involved with both, but they do not know the difference between them-indeed, why should they?
The guidance will have the same force for NHS bodies as it will for local authorities. The Bill creates the same obligation on NHS bodies, which will be treated as local authorities, and their functions in relation to the relevant services will be under the provisions of the LASS Act. That was a key concern
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Finally, Clause 4 lists those bodies and agencies to which the Bill applies and for whose staff suitable training on the Bill and guidance should be provided. However, we should remember that other staff, with whom those with autism and their families may be in contact, can also play a significant role in their lives. I am thinking, for example, around such things as employment, the staff at Jobcentre Plus, the DWP and those who may act as gatekeepers to other services. It will be important to ensure that their input and training is kept under review. In fact, it is a very welcome provision that the Bill states that the Secretary of State must keep the autism strategy under review and revise it as necessary. The effectiveness of the strategy and the statutory guidance will ultimately depend not on their content, which we are debating today, but on how well they are implemented. I am sure that with the support that the Bill has received from several government departments, with the commitment of Ministers, the vigilance of the National Autistic Society and all those who have been involved, we can ensure that implementation goes ahead satisfactorily.
Like all Private Members' Bills, this Bill is modest in its aspirations, but it will certainly not be modest in the effect it has on the lives of those with whom it is concerned. I commend it to the House and I beg to move.
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