I beg to move, That the Clause be read a Second time

This Clause is required for the purpose of consolidation. Section 44 of the Building Societies Act, 1874, which is referred to in the Clause, gives a power which is now vested in the Treasury to make regulations

"respecting the fees, if any, to be paid for the transmission, registration, and inspection of documents under this Act, and generally for carrying this Act into effect."

The use of this power has been virtually confined to the prescribing of forms and fees, but the scope of the Section is really unnecessarily wide for this purpose. Its wording, I am informed, would be totally out of keeping with modern legislation if it were to be included in a consolidating Measure in its present form. But some power is still required, and the Clause replaces Section 44 with a narrower power limited to what is really necessary. It transfers the exercise of the power from the Treasury to the Chief Registrar, but subject to Treasury consent and to the negative Resolution procedure.

The Clause also tidies up certain similar provisions in the 1894 and 1939 Acts.

I beg to move, That the Clause be read a Second time.

It seems to me that it might be convenient if discussion on this proposed now Clause were extended to cover discussion on the proposed new Clause "Officials not to accept commissions &c. on certain insurances"—

Section twenty-three of the Building Societies Act, 1894 (which prohibits the acceptance by certain officials of certain gifts and the like), shall apply in relation to any policy of insurance effected as security for or in connection with any loan made by a building society as it applies in relation to such a loan.

Do I take it, Mr. Speaker, that the Amendment in the name of my lion. Friend the Member for Brierley Hill (Mr. Talbot) to the Government's new Clause—in line 13, at end insert:

(2) Provided that this section shall not apply to a policy of insurance against fire risks.

—if it is to be called, should be discussed at the same time? I think it would be convenient. I do not know whether that is your intention.

Yes, it is my intention to call that Amendment. I am obliged. If the House so wishes, I think that course would be convenient.

This proposed new Clause follows an undertaking which I gave in Committee to consider points which were raised by the hon. and learned Member for Kettering (Mr. Mitchison). As you indicated, Mr. Speaker, lie and his hon. Friend the Member for Widnes (Mr. MacColl) have tabled a new Clause dealing with the same matter. The Government's Clause deals with the case which the hon. Member for Widnes mentioned in Committee. where a society nominates an insurance company with which a policy has to be taken out and the commission on the policy then passes to the directors. That is the point that he was making.

We agree that this practice seems in general—although, of course, there are exceptions—to be undesirable, and, as the hon. Member for Widnes pointed out. there may be a suspicion that the reason that a particular insurance company is nominated is because the directors or officers would receive a commission and not because it was in the financial interests of the society or that it was necessary for the society to be satisfied as to the soundness of the insurance company. There need, of course, be nothing morally wrong in an officer receiving such commissions. I do not think anyone in the House will dispute that. The society may know what is taking place and may take the commissions into account when fixing the officer's remuneration.

I was abroad yesterday and I have only this morning had an opportunity of considering the Amendment in the name of my hon. Friend the Member for Brierley Hill, although he was courteous enough to write to me at some length yesterday about it. I have considered it with care. Of course, I quite accept the view which, I imagine, he would express, that there is really nothing necessarily morally wrong in the sort of case he has in mind and which he wishes to cover by his Amendment. Having said that, however, I hope that the House will agree that, if we were to accept the Amendment, it would in certain circumstances be open to abuse. It is always possible for the commission to be paid direct to the society and for the remuneration of the secretary to be increased accordingly so that the secretary is no worse off. I hope that my hon. Friend will, after hearing those brief comments, decide not to press the Amendment.

I ought to say that the Government's new Clause differs from the hon. And learned Gentleman's new Clause in certain respects. In the first place, it defines

"insurance…in connection with any loan"

more closely. It is intended to cover three main classes. If the House wishes, I will go into them in detail, but I think they are fairly clear from the terms of the new Clause itself. There is a second difference between the two new Clauses. The Government's new Clause limits the prohibition to cases where the society effects the insurance on the borrower's behalf or nominates the insurer. I hope that the House will agree that the hon. and learned Gentleman's new Clause does go, perhaps, a little too wide. For example, a potential borrower might wish to take out a life insurance policy as additional security and might go off, with the society's concurrence, to approach an insurance company himself. He might by chance happen on a company the local agent of which was a part-time director of the building society. The borrower might well be ignorant of this fact and the insurance agent might equally be unaware of the purpose for which the policy was required. Therefore, even by taking the normal commission in good faith, the agent would commit an offence.

It might be possible by drafting to avoid that difficulty in the context of the hon. and learned Gentleman's new Clause, but even if the borrower or the agent is aware of all the facts, I suggest that it is not at all clear that it would be wrong for the agent in such circumstances to take the usual commission for carrying out his normal business.

There is a third difference between the two new Clauses. The Government's new Clause is not linked to Section 23 of the Building Societies Act, 1894. That Section deals primarily with cases of bribes given to officers to get an advance, and the assumption is that they are taken without the society's knowledge. The present proposal is rather different. For instance, in many cases the commissions are taken with the society's knowledge and approval, and I think this does not fit very well into the framework of Section 23 of the 1894 Act.

I hope that, after hearing that explanation of the Government's reasons for their new Clause, the hon. and learned Gentleman and his hon. Friend the Member for Widnes will feel that we have gone a long way to meet their point. I commend the new Clause to the House.

It is very pleasant to be able to start our consideration of the Bill in a warm and cordial atmosphere. It is very pleasant to find the Government going further than they had agreed. The Economic Secretary's undertaking, which was very carefully worded, left me rather doubtful whether or not they would really do anything on Report. That was really why my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and I thought it wiser to put down a new Clause ourselves. I say at once—I speak for my hon. and learned Friend as well—that, in view of the handsome way in which the Government have met us on the point, we shall not seek to press our new Clause. As the hon. Gentleman has said, there are certain differences between them. If I was in a niggling mood, I could pick some holes in the Government's new Clause, but, for all practical purposes, it meets our principal point.

As I said in Committee, we recognise that building societies are not the only sinners in this matter. It is a deplorable practice of landlords and mortgagees in general, including local authorities, to use their position and power, because theirs is the money to be lent or the property to be let, to interfere with free competition and to interfere with the freedom of the person dealing with them to choose among insurance companies. That is the general principle. I regard that practice as wrong.

If it is generally wrong, it is quite indefensible when it is accompanied by financial gain to the person exercising his power in that way. It is quite shocking that, in a negotiation of this sort, someone—in this case the person who is going to lend the money—should, knowing that he has the borrower at his mercy, seek to force him to go to a particular insurance company because he will receive a rake-off from the insurance company. No amount of equivocation can get over the fact that that is deplorable. As I say, I do not seek to dig at building societies, particularly because they are no worse in this respect than a great many other bodies which ought to know better.

The Government's new Clause meets our main point, which is that, where there is a nomination or selection of a particular person to do the insurance, no commission shall be obtainable by the officers of the society. I take it that that does not mean that, where a choice of reputable companies in which the society has confidence is offered, where a list is offered for the borrower to make a choice, that will be covered. I do not quarrel with that arrangement. It is the monopoly I complain about, not the general desire to ensure that property is effectively insured or that the person is effectively insured.

I hope that the Economic Secretary will hold his hand or his arm, harden his heart, or steel himself—whatever is necessary—to resist the Amendment to the Government's new Clause which stands in the name of his hon. Friend the Member for Brierley Hill (Mr. Talbot). It is, I think, quite inconsistent with the wording of the new Clause, which speaks specifically of safeguarding the security. The most obvious way in which one will want to safeguard a security is to prevent it from being burned down or to insure it if it is burned down.

Nobody would quarrel with the desire of a society to ensure that a property is adequately insured against fire risks and insured with a company which can act honourably and honestly, a company in which the society has confidence. The complaint arises where the society seeks to specify a particular company and, in addition, a commission is received as a result, because, although the society may be acting with the best possible motives, front the point of view of the ordinary person looking at the transaction, the thing stinks. A person in a position to exercise power over a borrower obtains private gain when he is ostensibly merely trying to safeguard the security.

My hon. and learned Friend and I thank the Economic Secretary very much for meeting us as far as he has. The new Clause will be a very valuable addition to the Bill, and it will put us in a good temper for the rest of the day.

I have put down my Amendment to the proposed new Clause for two reasons.

The first is to clarify beyond measure that the Clause itself did, in fact, apply to a fire insurance policy, because, in my view, the wording of subsection (3) might give rise to the possibility of an ejusdem generis construction and, in fact, a fire insurance policy would not come under the Clause. I think that this debate has created no necessity for a High Court action on that point.

My second reason was to rebut the suggestion of the hon. Member for Widnes (Mr. MacColl), who said in Committee:

"It is a most improper use of the power of a landlord or a lender, whoever it may be, to try to create a monopoly for a particular insurance company."—[OFFICIAL REPORT, Standing Committee D, 14th July, 1960; c. 311.]

I am perfectly certain that I am speaking for the whole building society movement when I say that that is not the reason. The reason for a tied insurance scheme required by anyone, whether by a building society, a local authority or a big landlord, is to save administrative costs. I should like to tell the hon. Member for Widnes that we did in fact in my small society at one time allow members to insure where they would, and also on the Kidderminster Corporation, where I was responsible for organising the scheme of lending, we allowed borrowers to insure where they would; but we had to abandon the practice because we could never find out whether the policies were being renewed. Letter after letter had to be written to borrowers asking them to produce renewal receipts for their policies, but they did not answer. Anyone with the slightest experience of operating a fire insurance agency must know how difficult it is to collect these small periodical payments.

If there is any suggestion that the commission of a fire insurance agency is a large, remunerative and secret means of acquiring assets, I can assure hon. Members opposite that the commission allowed barely covers the cost of the staff, paper and postages in getting the work done. The bogey which they so greatly fear is non-existent.

I am obliged to the Economic Secretary for, as it were, disclosing to me means whereby both he and I can feel happy about the matter. As he says, it is possible for societies allowing directors and managers to receive insurance commissions to alter their arrangements so that the same thing happens in another way. In view of that, and for the sake of the general approval, which I hope the Bill will receive in its final passage through the House, I shall not move my Amendment.

I beg to move, That the Clause be read a Second time.

We regard this as a new Clause of some importance. The proposed new Clause should be considered in conjunction with the first two Clauses of the Bill which deal with restrictions on certain types of advances and exemptions from restrictions on special advances. The exemptions relate to dwelling houses or flats which have recently been built, are being built, or are to be built and which are to be used for letting. The Chief Registrar has to be satisfied under Clause 2 that they will be so used.

We have adopted the language of the Clause in the Bill. A letting advance means an advance made on the security of houses or flats of that type. There are certain conditions. Not all such dwelling houses or flats are intended to be covered by the Clause. It is intended to bite on dwelling houses or flats of two kinds—first, the certified buildings, relating to their standard of construction which I will deal with later, or, alternatively, to dwelling houses or flats, built for a housing association or built by the housing association itself. When I say that the Clause "bites", I mean that the object of it is to ensure that some parts of any building society advances in a year shall be advances on that type of property—houses to let, limited in the way I have described.

I have mentioned certified buildings—buildings of a certain standard of construction—and there is provision in connection with what are called continuing arrangements in Section 5 of the Building Societies Act, 1939, about certified buildings. Certified buildings means buildings of a standard of construction which conforms with the requirements of some body set up for the purpose of keeping up or improving the standards of buildings and issuing certificates to that end. The body has to be approved by the Minister of Housing and Local Government. I believe that there are two such bodies in existence now. No doubt, the Parliamentary Secretary will tell me if I am wrong in thinking that, but they certainly have existed and I believe they still exist.

That provision is simply to ensure that these advances shall not be made in respect of what I call shoddy buildings. There are still some shoddy buildings going up in the country, as anyone who walks around can see. They are not what I have in mind here. There are also perfectly good buildings going up, and we hope that they are the majority. It is the traditional business of building societies to lend for owner occupation. Therefore, when we seek to see that some of their loans are diverted to this purpose we do not ask for any large fraction to be diverted to that end.

What we have put in subsection (3, b) of the Clause is one-tenth of their advances in the first year, one-fifth in the second, and after that one-quarter or such other fraction—which, of course, means more or less—as the Chief Registrar may prescribe from time to time. The order, if it is of general application other than as regards a particular society, is subject to affirmative procedure, or otherwise to negative procedure. In the new Clause the Chief Registrar is given power to make regulations and to apply some of the machinery, including the penalty machinery, of Clause 1, which is the Clause which restricts special advances.

Having explained the new Clause, I want to make one or two general remarks. I hope that the Government may, even now, see their way to accept the Clause. I say even now "because, although the Clause itself was not moved or discussed in Committee, some rather similar points arose in connection with Amendments and I did not regard the Government's attitude as too encouraging. I do not stand committed by the statement of my hon. Friend the Member for. Widnes (Mr. MacColl) that he will preserve a good temper throughout this morning. If the Government do not accept this proposal, my temper will be horrid.

11.30 a.m.

There is the strongest moral and social case for some provision of this kind. On Monday we had a debate in the House about the use and value of land, and one of the points raised concerned rising prices of land. Another matter which affects this problem is rising rates of interest on advances made by building societies and others. The long and short of it is that the number of people in the community who cannot afford to buy a house, even with the help of a building society or a local authority, is in present circumstances tending to increase. In addition, it is the case, as it has been the case for very many years, that there is a considerable movement of people from one part of the country to another, for employment and private reasons. A man may marry a girl in a place to which he has been. There are all sorts of perfectly good reasons for moving. On that account there is a great deal to be said for not being involved, especially when one is young, in the commitments of buying a house.

We on this side have done a very great deal in the interests of owner-occupiers. I think that we were responsible for the arrangements about improvements in their interest, and so on. We are, and we have always said that we are, anxious that they should have a fair deal and a chance to buy a house, and we have done our best to live up to that. The Bill and other legislation should be directed to that end. But we do not wish to exclude—and I trust that the party opposite does not wish to exclude—people who want to rent houses. I say this with some diffidence. After all, it is not so long since, if one wanted to rent a house, one kind which one could rent was a local authority house. The supply of local authority houses has been getting smaller and smaller. Whatever has happened to the total number of houses, the proportion of council houses has diminished. That has happened for two or three perfectly obvious reasons.

I wonder whether the hon. and learned Gentleman would amplify his statement that the supply of local authority houses is getting smaller.

If the hon. Gentleman will look at the figures in the Digest of Statistics he will find that that is so and that the number has been falling.

Is the hon. and learned Gentleman referring to the building of council houses?

I am talking about building council houses. The supply has been getting smaller and smaller. Fewer have been built. I trust that I have made myself clear.

The hon. and learned Gentleman is referring to the building of council houses and not the total supply, which is, in fact, increasing.

I hope that I did not mislead the hon. Gentleman. I did not intend to do so. I did not suggest that, even under this Government, the building of council houses had entirely stopped, that some of them were falling into decay and that no more were being built to replace them. What I said, and what I hope the majority of hon. Members understood me to say, was that council house building was decreasing, at any rate until quite recently. I am sure that the Parliamentary Secretary will produce some convincing figures for this year. That always happens. But when we come to the end of the year we find that the figures are down.

The broad point is that council house building has slowed down for two reasons. The first is that councils have to borrow and cannot build without borrowing. Councils are not bodies which have really good deals in land speculation or on the Stock Exchange and can pay for building out of their own pockets. They have to do more and more borrowing. Secondly, the general need housing subsidy has been abolished for some years. The Government, who used to recognise its imperative necessity, no longer think that it is required. These two measures and others have had their effect.

Next, we must consider the position concerning houses being built. I need say no more than this. At present the majority of them are being built for sale, because that is most convenient for many people who are engaged in developing and house building. I do not say that no houses are being built for letting. If that were the case, then a proposal such as the one which we are putting forward would not be very helpful.

Clause 2 as it stands, I am glad to say, recognises that there is an advantage in giving special encouragement to loans on houses to let. Accordingly, it exempts them from the restrictions on the special advances of building societies. We on this side welcome this Clause. We welcomed it on Second Reading, and we still welcome it, as a recognition of two things. First, that the Government realise that, whatever may be said about the merits of a property-owning democracy, if one wants to own property in this democracy one has to pay for it. But there are some people who are not able to pay for it, and they have to rent houses.

The Government recognised that, in the framework of building societies and their advances, there was a case for giving special encouragement to building societies to make these advances. It is true that most building societies make some advances on leasehold property, but not to a large extent. They grew up traditionally as bodies which assisted people to build their own houses.

The type of temporary building society which was exhausted when the houses contemplated in the original arrangement had been built has, on the whole, disappeared or survives only in Brierley Hill. But the modern building society makes some advances for letting purposes. This is intended to encourage them to leave what has hitherto been their traditional sphere and to operate on the broad social grounds which I have indicated.

I appreciate that one of the Conservative Party shibboleths at present is the owner-occupier. We have done as much for him as the party opposite, but we have not elevated him to a shibboleth. The party opposite has. I hope that hon. Members opposite will not stand by that today and say that there is no need for houses to let. I do not believe that they will. They will probably say, "This is not the right way to do it", or "It is too complicated", or "This presents administrative difficulties", or something of that sort.

I beg the members of the Government who are present to have a little courage and to recognise that, in a country with a population which shifts a great deal and which is likely to shift more as there are developments in the distribution of population and of employment, they must provide more than they are providing at present. In particular, they must make provision for the young who ought not to have the commitments of buying a house forced on them by their being unable to get any other house.

I ask the Government to remember that they are responsible for decontrolling a large number of houses and for allowing the rents of a large number of other houses to be raised. Consequently, it has become more difficult for young people to find houses to let at reasonable prices. I am not going back into all the debates about the Rent Act, but we have seen some of the consequences of it. We know perfectly well that in London and the large towns it is extraordinarily difficult to get a house to rent. In most of the large towns it is beginning to verge on the impossible for anyone to get a house to rent who cannot afford to buy a house or is not receiving a sufficiently big income to allow him to pay fancy prices.

I hope, therefore, that in the interests of young people, in the interests of those who move in the community and to show that the Conservative Party is not always tightly bound by shibboleths, the Government will accept the Clause.

The House will be aware that on Second Reading. I made a few remarks about housing standards and the need to improve them. It is for that reason that I rise briefly to support the new Clause of my hon. and learned Friend the Member for Kettering (Mr. Mitchison). My hon. and learned Friend has found a way of trying to jog building societies into taking a definite, positive interest in houses of good standard. Whether it is done by way of the new Clause or by my own exhortation in this Chamber, I hope that somebody will have the effect which we all seek.

I shall not repeat what I said on Second Reading, but I will say this much. From all the correspondence and comment ever since I made those remarks about the need to improve standards, I am convinced that I was justified in making them. I am convinced that, given the housing boom which ought to go on for the next couple of decades—I see no reason why it should not continue so long as we do not have too many credit squeezes en route—unless standards are improved the generation twenty years hence will look back with great regret on much of the housing building of today. As my hon. and learned Friend said, we are using up scarce land on houses which we shall be sorry about in twenty years' time. It is for that reason, trying to take the long view, that my hon. and learned Friend is justified in trying to rope in building societies actively to do something about the problem.

I do not want to be taken as saying that all houses built today are rubbish. As my hon. and learned Friend said, we are talking about a minority of houses. To indicate, however, that we are not voices crying in the wilderness, I want to quote what the President of the National Federation of Building Trades Employers has been saying this week, only two days ago. Speaking at the annual conference of the employers, he said:

"There has been a noticeable increase in shoddy building."

He went on to say:

"We have seen all the evidence of it in brickwork, plasterwork, painting and joinery…Most of it is perpetrated by firms and organisations which have no real roots in the building industry…They are concerned only with getting by with the lowest admissible standards of workmanship, with doing the job in the minimum time and with making the maximum profit, regardless of the plight in which the client or building owner may subsequently be left."

In other words, we on this side of the House are not talking a lot of nonsense. This is a matter which is being looked at actively and with great regard by the building industry itself.

This matter has been taken up in my own area of Birmingham. I noticed that a lady wrote to the local Press to say that within twelve months of buying a house, the tiles fell off the bathroom wall. She asked what would be done about it. This is a problem which I shall not elaborate. All I say is that the Birmingham newspapers then took it up and said that the question of structural standards, which my hon. and learned Friend is covering by his new Clause, and value for money are of growing importance and that if the building industry as a whole cannot give better guarantees, there will have to be Government action. That is the local Conservative Birmingham Mail saying to the Government exactly what we say in the Clause—that at some point, unless there is consistent improvement in these matters, there should be Government action to help them along.

11.45 a.m.

The Press finally points out that whereas a young couple paid one-seventh or one-eighth of their income for house room ten or twenty years ago, they now pay one-fifth of their income and that in these circumstances they need the utmost protection against jerrybuilders. That is what we are saying in the Clause.

The time has come to deal with what is, admittedly, only a minority of builders in any way we can in order to encourage a rise in building standards, so that in a couple of decades' time we shall not be ashamed of what we have built in 1960 and not be ashamed that we have used up scarce land on this kind of building. That is what my hon. and learned Friend is trying to cover in his now Clause. For that reason, I support it heartily.

I am in complete agreement with the powerful arguments put forward by my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) concerning standards of building, but I support the new Clause of my hon. and learned Friend the Member for Kettering (Mr. Mitchison) from a rather different angle: that is, from my great anxiety that there should be more houses available for rent.

Obviously, these questions arise from one's experience in a constituency such as my own, where the local authority is very limited in the extent to which it can build houses and flats because of the Government's subsidy and financial policy, which results in such high rates of interest. The outcome is that in the City of Salford the council can build nothing except for slum clearance, because it cannot afford to approach the task in any other way.

As a result, the people who, because of sickness or overcrowding or reasons of that kind, are in need of rehousing cannot possibly get a house. When, for example, people come to my "surgery" and complain that they have been on the housing list so long, I suggest to them that their wages might be higher than they used to be and I ask whether they could not possibly undertake the responsibility of buying a house through a building society. Invariably, the answer is that the responsibility is too great for them to undertake. Their great desperation is for a house that they can rent.

What my hon. and learned Friend's new Clause tries to do is to make it possible for organisations like housing associations to have money made available to them from building societies so that they can enter into this kind of work alongside, for example, the local authority. It is because of my knowledge, extending over fifteen years, of the problems of the masses of the people in my constituency in regard to housing that I enthusiastically support my hon. and learned Friend's new Clause, because it would be a gesture and a contribution in dealing with the problem. I hope that my hon. and learned Friend will press the new Clause.

Apart from the few political comments made by the hon. and learned Member for Kettering (Mr. Mitchison), I do not disagree with a single word he said or with the support given by his hon. Friends. Of course, the Government want more houses to rent. That is the very object, as the hon. and learned Member himself said, of Clause 2 of the Bill and the discretion given in that Clause to the Chief Registrar. It may be said that we cannot have too much of a good thing. Indeed, we would like to see a lot more houses to rent.

The reason I am not able to advise the House to accept the Clause, however, is simply because the hon. and learned Gentleman is seeking to require building societies to lend a proportion of their money for this purpose. As he himself said—I noted his words—and as his hon. Friend said, what we want to do is to encourage building societies to do this. We quite agree. It is proper for the Government to exhort, to encourage, even to induce, as we have done by the House Purchase and Housing Act, building societies to lend money on older property; but it is a quite different thing to require them, even for small people, to lend a proportion of their money for any particular purpose.

I wonder how the hon. Gentleman would suggest that the encouragement should take place otherwise than along the lines of the new Clause?

I think that this publicity is quite good encouragement. I mentioned, for example, a previous Bill by which the Government made available to selected building societies, or, rather, qualified building societies, facility to make advances on older. sound property. This is the form of encouragement which has been used before. It is not the one used here. The one used here is to extend the letting advances at the discretion of the Chief Registrar.

Of course, I realise that the hon. and learned Gentleman has not established the proportion to be lent under this scheme for the purposes of houses to rent. He is setting out the proportions he would like to see and leaving it to the discretion of the Chief Registrar, subject to the approval of this House; and to that extent he is himself giving the Chief Registrar a discretion, but he is giving it where the Registrar already has power to allow special advances for this purpose.

The hon. and learned Gentleman very correctly in Committee stressed that he wants building societies to borrow money from small men and lend it to small men. I want to point out to the House that if the hon. and learned Gentleman's proportions were to be followed and if building societies were to be obliged to lend 25 per cent. of advances for the purpose of housing to let, desirable as that might be, it would not be to a man of small means. We are dealing with very large figures. It would be something like £125 million worth of advances a year, and I doubt if that number of small men are engaged in building houses to let. It would go to companies, and large companies. We are three companies to go in for building to let. There is no difference between the two sides of the House on this. What we Are unwilling to do is to put an obligation on building societies that they must pay advances even for suitable applicants for this purpose and lend a set amount.

I hope, therefore, that I have satisfied the House that on the main purpose of housing to let there is nothing between the two sides. The one quarrel we have is that an obligation is to be imposed on building societies. It would not be right of me to neglect the extremely important point made about the standards of housing. Here again, there is no difference between us. We want to see design and construction standards at the best possible level, but to undertake an increase of control for this purpose in a Bill of this kind dedicated to other objects is really going too far. We already have inspection and examination by byelaws, and planning controls for both design and construction, and obviously building societies take some interest to see whether it will at least survive and be a good security. I am, of course, aware of the remarks of Mr. Woodbine Parish quoted by the hon. Gentleman the Member for Birmingham, Northfield (Mr. Chapman), and if he has correspondence on the subject of standdards I should be glad to have it from him to study it, but I would suggest to the House that it would be unwise to make a major change in the control of standards of design of building in a bill which is dedicated to a quite different purpose.

The Parliamentary Secretary, if he will allow me to say so, is a conciliatory, able and honest person. I cannot say the same for his arguments. Let us begin with Mr. Woodbine Parish. Why should the chairman or president, or whatever he is, of a collection of building employers say that there is a great deal of shoddy building going on if there is not? We all have eyes in our heads and have some idea of the difference between a shoddy house and a well-built one, even if we are not professional builders or surveyors. We know perfectly well that shoddy building is going on, and this is one of the points in the encouragements which we seek to give.

Substantially, the Parliamentary Secretary's argument is, "We are as anxious as you to encourage the building of houses to let. We recognise the need for more houses to let," but what do the Government do about it? Their answer is their usual answer, "We do absolutely nothing. We did something about our great baths and wash basins Bill which we all remember when arrangements were made to tinker with old houses." But if the Government are to find money for that, I should like them to come forward in this Bill and say that this is a social necessity but as they cannot ask building societies to do it they will do it themselves. The difficulty is that the Government in their actual dealings with the provision of houses to let, which are mainly council houses, instead of encouraging, they have discouraged it heavily. The result is that we are not getting as many as are required.

I want to take the matter a little more broadly. I am quite aware that in the eyes of every hon. Member opposite private enterprise has a sanctity which we on this side of the House do not altogether attribute to it. Therefore, we are told, we must not interfere with the discretion of building societies. But this is a Bill not merely to safeguard investors but to bring up to date building society legislation. These Bills are brought in from time to time, at intervals usually of twenty years, but sometimes longer, and they are not merely intended to safeguard the investors but to tidy up procedures and regulations and special advances and all the rest. They are also intended to see that building societies function in the community and perform the social purposes for which they were originally formed, and those purposes are adapted and enlarged according to the present needs of the community. There ought to be a positive sense of direction even in this Bill. When special advances are restricted, that is a restriction on the activities of building societies.

I fail to see the philosophical difference between saying, "You must have complete liberty to do this, that and the other, but we shall restrict it in certain respects" and putting the matter in the more positive form of this new Clause. We could say that-not more than 95 per cent. of the advances of building societies shall be made to owner-occupiers and that the remainder can be made in respect of houses to let. The form would have been a great deal clumsier, but the effect would have been the same. The negative and positive restrictions are both restrictions in the interests of society as a whole, and restrictions of what otherwise would be the absolute freedom of building societies.

I am disappointed that the Government have felt unable to do something themselves. There would be a good deal to be said for their doing something about this, if they showed signs of doing it beyond saying that it is a lovely

I beg to move, in page 1, line 9, to leave out paragraphs (a), (b) and (c) and to insert:

(a) an advance of any amount to any person or body corporate which exceeds one per cent., or such other larger percentage as may be prescribed under this section, of the total amount of advances which at that time have not been repaid to the building society, together with any arrears of interest in respect of those advances, or

(b) an advance of any amount to any person or body corporate, being a person or body corporate who is, after the advance is made to him, indebted to the building society (taking into account the advance in question and all other debts of any description. whether immediately repayable or not) in an amount exceeding one per cent. or such other larger percentage as may be prescribed under this section, of the total amount of advances which at that time have not been repaid to the building society, together with any arrears of interest in respect of those advances.

For the purposes of the application of this section a body corporate which is director controlled for the purposes of income tax and profit: tax regulations shall be deemed to be the same person as each one of its controlling directors and of any other body corporate of which any one of them is also a controlling director.

I think it would be for the convenience of the House if we were to widen our discussion on this Amendment to include all the other Amendments which appear to go with it. They are the following Amendments:

I think I should draw to the attention of the House the fact that there are really two groups of Amendments in those to which you have referred, Mr. Speaker. The first group consists of the one which I have moved and the thirteen consequential Amendments which go with it, and the second group consists of the first two Amendments in page 2, line 45 and the Amendment in page 3, line 1. I will first concentrate on the first group, and subsequently deal with the second group, if that meets your wishes, Mr. Speaker.

The purpose of moving the larger group of Amendments is to draw the attention of the House at this stage to what I think is a major potential defect in the Bill. The defect is that, as far as I can see, in the Bill as at present before the House there is nothing which would prevent a building society from advancing the whole of the 10 per cent. special advance which it is permitted to one single individual or company. I think that this is a defect, although I appreciate that the alternative course which I have proposed in order to bring out discussion on this subject may itself be the subject of other defects. The point really is that this question arises and has any great significance only in the case of the larger building societies, and perhaps it does not have such great significance in the case of the smaller one.

The complaint that I made in the Standing Committee when we were discussing this Clause was that it seemed to me that the best method of regulating for the safety of the investor and the borrower any method by which loans and advances could be made by a building society was to bring into the regulations a restriction on putting too many eggs in one basket. The Bill as it now stands would enable 10 per cent. of the eggs to go into one basket. I felt that this was potentially a defect for the future.

The point was made during the Second Reading debate by the Economic Secretary that one of the reasons for the Bill was the possibility that a building society might have less than the most scrupulous control at any particular time and that the attractive words "building society" which encourage confidence and investments from the community might mean that those funds, unless properly regulated by a Bill of this type, could be wrongly used.

I am, therefore, bringing this point forward because in response to this question in the Standing Committee the Economic Secretary said that he felt that any well run building society would not place all the 10 per cent. of its advances in one direction. The Bill is not really aimed at the well run building societies, which constitute the vast majority; it is aimed at the others. That is why I thought it was important to draw attention to this weakness and, in giving an assurance that I have no intention of pressing the Amendment, to express the hope that this matter may have attention in the future and that the situation may be watched to ascertain what developments arise in this direction.

The Amendments in the second group concern the setting of the limit of £5,000 on the definition of a special advance. There has been a great deal of concern among my hon. Friends on this question and I believe that hon. Gentlemen opposite have felt a similar concern. It seemed that a fair compromise might be reached if it were possible to agree that, while the Registrar will have power to vary the figure of £5,000, his power to vary shall be limited only to increasing the figure and not to reducing it. The purpose of the Amendments in the second group is to enable the Registrar merely to vary the figure of £5,000, which constitutes a special advance, upwards and not to bring it down below £5,000. He may bring it down to £5,000, but he may not bring it below that figure.

I think I have been unduly generous to the Parliamentary Secretary on this occasion because the first two Amendments in this group are in very similar terms and I have really given him an option as to which one he would like in the great hope that he may be disposed to look favourably at the suggestion which I am making.

Perhaps it would be convenient if I dealt first with the second group of Amendments in the name of my hon. Friend the Member for Ealing, North (Mr. Barter). We feel that these are perfectly acceptable and that they leave the discretion for lowering the limit once again, should it be necessary, provided that the limit does not go below £5,000, and, therefore, we would advise the House to accept the second group of Amendments.

On the first group of Amendments, however, my hon. Friend himself acknowledges that his own proposals have certain defects. He rightly points out that it would be possible for a building society to put all the 10 per cent. of its special advance in the hands of one borrower. The Government have felt that they safeguard the investments of hose who lend to building societies sufficiently by ensuring that ordinary advances shall be in a ratio of at least 9:1 as against special advances, and, of course, as my hon. Friend points out, the Bill has really very little to teach the well-conducted building society. I therefore acknowledge that it would be possible for a building society to lend all its 10 per cent. to a single borrower, but I can give my hon. Friend and the House the assurance that the Chief Registrar would anyway have watched very carefully for just this sort of thing, and I am sure that my hon. Friend will agree that he has formidable powers in the Bill. Certainly, the Chief Registrar will watch this the more carefully since my hon. Friend has drawn such particular attention to the danger.

I do not want to take a lot of time in explaining the defects in my hon. Friend's proposals, but the defects are bases primarily on the difficulty of identifying the control of companies which might each, though nominally separate, be under the influence of a single borrower. My hon. Friend acknowledges this. I hope, therefore, that the House will feel that the Chief Registrar's supervision of these special advances, coupled with the 90 per cent.: 10 per cent. majority of ordinary advances, gives great security to the investors in building societies, and that my hon. Friend will, as he said, not press that group of Amendments.

I recognise that the Government are in a jam at the moment. They have lost control of the House. They are unable to move the Closure and are faced with a revolt from their own side. I was hoping to rise and offer the Government all the support of my hon. Friends mashalled behind me in enabling them to resist this revolt.

The hon. Member for Widnes (Mr. MacColl) is, apparently, offering all twenty-one of his hon. Friends.

Count.

In Standing Committee, the hon. Gentleman learnt a little simple arithmetic. We had a very interesting discussion about whether five into 100 equals twenty or about twenty. No, it was his hon. Friend the Member for Brierley Hill (Mr. Talbot) who was concerned in that. What I am suggesting is that, as an attentive pupil, the hon. Member for Ealing, North (Mr. Barter) must have benefited as a result. Simple addition would also teach him that 80 and 20 equal 100—a rather significant figure in this House.

Perhaps we can now get to the Question, which is "That the words proposed to be left out stand part of the Bill."

I was hoping to reopen the question by expressing great regret and sorrow that, instead of waiting to see whether we would support him, he has run away in this deplorable manner on the second group of Amendments.

I understand that these Amendments are designed to limit the Chief Registrar's discretion. We discussed this upstairs and on Second Reading. A number of my hon. Friends take the view that this limit ought to be imposed on the discretion. I and my hon. and learned Friend the Member for Kettering (Mr. Mitchison) take the view that the discretion should be both ways. We have always paid tribute to the Chief Registrar, to his wisdom, his detailed knowledge of what is going on, and to his sensitiveness to trends. But if all that be true, why is there this last minute decision that one cannot trust him to make a sensible decision on a question of this sort? It is unlikely that he would want to reduce the minimum below £5,000, but why should he not? As I understand these rather complicated Amendments, that is what the Government are now accepting. I was so staggered by the Government's complete volte-face that I could not believe it. I could not—

The hon. Gentleman is forgetting that my hon. Friend the Economic Secretary said in Committee that he could not conceive of a situation where the Chief Registrar would wish to reduce the £5,000 minimum. The only reason that he wanted to retain this power was in case, after raising the limit to £15,000, the Chief Registrar might want to lower it again to, say, £10,000. The Amendments would allow the Chief Registrar this discretion to reduce the limit provided that it is not below, say, £5,000.

I must apologise to the House for a slip of the tongue. I am advising the House to accept the Amendment to page 2, line 45, leave out "other" and insert "greater", and at page 3, line 1, leave out "(whether greater or less)". I should not have included the Amendment to page 2, line 45, after "other", insert "greater", since two of the Amendments are mutually contradictory.

I am at odds with the Parliamentary Secretary about what happened in Committee. The Economic Secretary said that it was most unlikely that the Chief Registrar would want to reduce it. That is a reasonable point of view. Our decision to leave this matter to the Chief Registrar was not in the original draft in the Bill but was an alteration introduced later and approved upstairs. We should keep to it.

I recognise the difficulty that the Parliamentary Secretary is in. He has been placed by his Whips in a most humiliating position. I am sorry for any Minister who finds himself suddenly recognising that he has to give way to back bench pressure because he does not control the House. I wanted to press my hon. Friends to give the Minister assistance, and I am sorry that he has run away. I shall not advise my hon. Friends to divide on this, but it is a deplorable surrender and I record my protest.

I share the views of my hon. Friend the Member for Widnes (Mr. MacColl). We spent a lot of time on this part of the Bill in Committee and I thought, at the end of that discussion, that what was then in the Bill had been more or less agreed by all as the commonsense thing to be there, and I am startled that the Parliamentary Secretary should come to the House today and agree to make changes, particularly in view of the fact that the hon. Member for Ealing, North (Mr. Barter) said that he was not going to press it to a Division.

indicated dissent.

He is going to press it to a Division. We will rally to the support of the Government on this occasion, much as we might dislike doing so. This suggestion is a retrograde step and we do not want to see it implemented.

The Parliamentary Secretary is an extremely lucid speaker and very often explains intricate points in a way which people like myself can understand them. But he did not give any real reason why the Government are giving way on this matter. Could he tell us what has happened between the Committee stage, when we dealt with this at great length, and now, when he is agreeable to making this change? What has happened in the interval? Has the Building Societies' Association asked for it? Has it re-read the Bill and talked to the Chief Registrar? Does he think that this is a desirable thing to do?

I realise that this is not the Committee stage and, therefore, that really only one Government spokesman is required, but I was referred to during this discussion. I have not the report here of the Committee proceedings, but my recollection is that I pointed out that I could not conceive of circumstances in which the limit would be reduced to below £5,000, and my hon. Friend the Parliamentary Secretary has explained the reasons why we wanted the power to reduce in the event of the limit having been raised.

Having said what I did in Committee, and then having thought about it, I came to the conclusion that there should not be power to reduce the limit below £5,000. I had in mind subsection (8) of Clause 1, whereby the Chief Registrar can make an order only with the consent of the Treasury. It seemed quite ridiculous not to concede the point of establishing in the Bill the provision that £5,000 was the lower limit if this was considered desirable by building societies so that they would know where they stood. It seemed a reasonable point. On a number of other matters we have thought it wise to defer the representations of Members opposite and we shall be coming to those in due course. On a small point of this kind, therefore, their attitude is a little trying to one's patience.

In view of the reply, Mr. Speaker, I do not intend to move the Amendment to page 2, line 45, after "other," insert "greater." Is it your wish that I should now move the other two that have been accepted?

When we get there, I wilt give the hon. Member an opportunity to move them.

I beg to ask leave to windraw the Amendment.

I beg to move, in page 1, in line 20, at end to insert:

For the purposes of paragraph (c) of this subsection, the amount in which a person is indebted to the building society shall be ascertained both immediately after the making of the advance and also at the end of a period of three months beginning with the date of the advance or (if sooner) at the end of the financial year in which the advance was made; and that paragraph shall not apply to an advance to any person so as to make it a special advance unless either the amount so ascertained on the first occasion exceeded ten thousand pounds (or, in a year for which references in this subsection to five thousand pounds are to be taken as references to a sum prescribed under this section, twice the amount of that sum) or the amount so ascertained on the second occasion exceeded five thousand pounds (or such other sum as may be prescribed under this section)."

Perhaps it would be for the convenience of the House to discuss with this Amendment the two Amendments in the name of the hon. Gentleman, in page 2, lines 34 and 38. We might thus extend the discussion a little.

That would be convenient, Mr. Speaker. This Amendment deals, with a point raised by my hon. Friend the Member for Ealing, North (Mr. Barter). When a person who has an advance from a building society moves, he generally repays the advance with the proceeds of the sale before being granted a further advance in respect of the second purchase. But if the borrower is unable to sell the house immediately, the society normally expects him to find a bank to provide the temporary finance, rather than itself have two advances outstanding for an indefinite period until a purchaser appears for the first house.

If a society were making a second loan in advance of repayment of the first, and if the sale of the first house were definitely going through and the only reason for the overlap were accounted for by the differing speeds of the legal procedures in the two cases then it might well be the case that in such circumstances, because at the time of making the second advance the total outstanding was more than £5,000, the second advance would be a special advance even though, in itself, it were less than £5,000. This might conceivably cause a society to send its existing borrowers to another society for a second loan if it thought it were at any risk in respect of special advances. This was obviously not the intention of the Clause or the understanding of any hon. Member who served on the Committee. This Amendment, with two being discussed with it, is designed to remedy that position.

May I express my appreciation to the Economic Secretary for the consideration given to this matter and for having reached what is so satisfactory a conclusion?

This seems to us to be a reasonable provision for what may well happen in some cases. As far as we can see, it does not provide any useful loophole to the ill-intentioned or improvident.

I beg to move, in page 6, line 45, at the end to insert:

"on an application in writing made in accordance with the following provisions of this section.

(2) An application for permission under this section—

(a) may not be made in the financial year in which the building society is incorporated or, unless it was incorporated on the first day of any year, in the financial year next following that in which it was incorporated; and

(b) may not be made at any time in any financial year before the building society has, in accordance with the provisions of this Act, sent to the Chief Registrar its annual return (with the auditors' report annexed) for the last preceding financial year, and a copy of the corresponding balance sheet, including every document required by law to be annexed or attached thereto.

(3) On an application under this section the Chief Registrar shall grant permission if all the requirements set out in the Schedule (Requirements to be met by a new society desiring to advertise) to this Act are fulfilled as regards the building society making the application".

Would it be convenient with this Amendment to take the appropriate Schedule?

I am in the hands of the House. I do not mind. Is it convenient?

We have no objection.

Then let it be so.

This insertion at the end of Clause 5 is in compliance with an undertaking given by the Economic Secretary in Committee. Hon. Members will remember that in Committee my hon. Friend did not find it possible to offer a right of appeal against the Chief Registrar's decision in several matters, including that dealt with in Clause 5, which is the authority to a new building society to begin advertising. But in substitution for a right of appeal my hon. Friend undertook to define the conditions under which the Chief Registrar would be obliged to give permission to a new building society to begin advertising, and it is the definition of those conditions which the insertion and the Schedule seek to set out.

The House will note that the Chief Registrar shall give permission to a building society to begin advertising subject to the conditions laid down in the addition to Clause 5. They are, roughly, that the applications shall not be made until after the society has been in operation for a year, and that there shall have been an annual return, together with an auditor's report. It shall also be necessary that every one of the conditions laid down in the Schedule—which deal, roughly, with the limitation on special advances, the liquidity position, the absence of any advances to officers and other items connected with the good standing of both the funds and the officers—shall have been complied with.

It would be possible under this new arrangement for any building society which thought itself aggrieved to appeal to the courts against the decision of the Chief Registrar, in so far as that decision has been made on facts, and if the building society were to find that the Chief Registrar were delaying in his decision unjustifiably, I am advised that the building society could seek a writ of mandamus.

There is only one point to which I wish to draw particular attention. It is that it may be thought unreasonable that a building society should have to wait for what might be as long as twenty-four months for permission to advertise. It might be asked how could a building society carry out its function if it could not seek money from the public. The fact is that many building societies, for their first months, rely on the funds of the directors and friends or associates and the Building Societies Association itself does not consider that to be unreasonable. I therefore hope that the House will find this arrangement, suggested by my hon. Friend, acceptable.

I am most grateful to the Government for producing the Amendment, which is part of a general response in this and subsequent Amendments to the points which were made by hon. Members on both sides of the Committee about the need for some right of appeal. It might be some consolation to those who specialise in writing to The Times about the dangers of delegated legislation and the growth of arbitrary power in this country to see the great lengths to which we are going in this very small and humble Bill to cover those very matters which have been so much discussed in recent years.

The Government have done us proud in this and later Amendments, and I think that we should be fairly pleased with the results which they have produced. As the Parliamentary Secretary said, the Amendment specifies conditions so that there can be appeals to the courts on matters of fact if the building society is aggrieved. After all the discussions, which started in another place and continued here on Second Reading and in Committee, we have reached a fairly happy compromise on the whole situation and I am grateful for it.

Can the Parliamentary Secretary say whether it is the intention to keep any sort of register of these permissions which are to be given under the Amendment? The Amendment refers to the issue of advertisements by a building society, but there are other bodies concerned with the issue of an advertisement. It will probably go to advertising agents and thence to newspapers, periodicals and others. The people concerned may wish to check the permission of their client under this and Clause 7 and if some register is kept to which they can go without reference to the building society concerned, that will be of great assistance.

Like my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) and other hon. Members, I am grateful to the Government for the way in which they have solved this difficulty, which appeared to many of us to be almost insoluble when we dealt with it earlier. I am not entirely clear whether, when a notice is served on a building society by the Chief Registrar, it comes into force straight away, although the society has at least fourteen days to make representations against it in more than one direction. If it does not, it seems to me that certain building societies—not the majority but those for whom we are legislating—may find a loophole which certain individuals, who want to do something which should not be done, would be able to use. I would be grateful to the hon. Member if he could relieve our doubts on that matter.

I am not clear whether the right hon. Gentleman is dealing with this Clause. Perhaps he will give me the reference.

Is it not page 8, line 21, Clause 6?

No.

I am sorry.

I think that we on this side of the House all agree that if the very wide powers that were originally given to the Chief Registrar in the Bill can be limited or defined, that is a goad thing to do. On those grounds, I would welcome this Amendment and one or two others which seem to me to have the same intention.

There is, however, one point that puzzles me. I see the provisions in the new Schedule and the provisions in the Amendment itself, but there is nothing whatever about the size of the building society. Supposing that a building society is formed with a very small capital, these percentages, and so on, can of course be met, but I would have thought that there might have been a residual discretion vested in the Chief Registrar to refuse permission to a very small society with, say, a capital of £5 or something of that sort. It would comply with all this and could comply with it, I think, and I rather regret that that power to refuse in that case has disappeared, as it were, in the course of the Amendment.

I may be wrong; there may be some other provision somewhere else, but I have been unable to find it. This Bill originated in another place. I would not regard it as a contentious Bill or as one of the major Bills of the Session, but it is a Bill of some considerable importance. It has been amended a great deal not only in Committee but today, and there are further Amendments on the Notice Paper, many of which I feel sure we shall welcome.

This Government of all Governments are not immune from human error and the opportunities of rectifying it when so much has to be put in at a late stage are limited if the Bill has originated in another place. I hope that the Government will not do it again.

With the leave of the House, I should like to answer the two points raised. My hon. Friend the Member for Crosby (Mr. Graham Page) has made a very reasonable suggestion and I am glad to be able to assure him that the permissions will be on the file, which will be open for inspection at the Registry at a charge of 2s. 6d.

The hon. and learned Member for Kettering (Mr. Mitchison) has evidently omitted to bear in mind that under Clause 4 the building society must have a capital of at least £5,000, and he will also notice in the Schedule the references by way of percentage are to such things as assets and advances and not only just to the capital.

I beg to move, in page 8, line 21, to leave out from "and" to the end of line 27 and to insert:

"specifying the considerations which have led him to conclude that it would be in the interests of persons who have invested or deposited or may invest or deposit money with the building society to make the order, and shall also serve on every director of the building society a notice stating that he proposes to make an order;

(b) the Chief Registrar shall consider any representations with respect to the notice made to him by the building society within such period (not being less than fourteen days) from the date on which the building society is served with the notice as the Chief Registrar may allow and, if the building society so requests, afford to the building society an opportunity of being heard by him within that period;

(c) on making an order applying subsection (2) of this section the Chief Registrar shall serve on the building society, and on every director of the building society, a notice of the making of the order, and shall serve on the building society a notice specifying the considerations which have led him to conclude that it is expedient to make the order in the interests of persons who have invested or deposited or may invest or deposit money with the building society and the Chief Registrar shall not have power to make an order unless all of those considerations were those, or were among those, which were specified in a notice under paragraph (a) of this subsection;

(d) a notice under this subsection may be served on a director of a building society by sending it by post to his address, or latest address, as notified to the Chief Registrar or registrar by the building society or the director, and failure to serve a notice under this section on a director shall not affect the validity of an order under this section."

During our proceedings in Committee, I undertook to move on Report certain Amendments which would require the Chief Registrar to inform a building society of the reasons for his action both at the earlier stage when he serves notice of intention to make an order under either Clauses 6 or 7, and again, later, when he subsequently makes the order itself. I think it was agreed by everyone on the Committee that this would be in accordance with the broad principles of natural justice, that a person who is in any sense put on trial should know the charges against him.

I think it was accepted by the hon. and learned Member for Kettering (Mr. Mitchison) that this would go some way towards strengthening the procedure whereby a society might apply to the court for a writ of certiorari where the rules of natural justice had been disregarded. Later, the hon. and learned Gentleman raised a different point. He thought it desirable that the notice of intention to make an order, and, indeed, the order itself, should not only be served on the society but should be sent individually to each of the directors. He asked us to consider whether, in the particular financial and economic circumstances of today, we might be able to afford the necessary postage. We have given considerable thought to the suggestion which the hon. and learned Gentleman made and he will see that this Amendment covers both those points. Perhaps I might be allowed to say in passing that Amendment No. 27, Clause 7, page 9, line 40, really follows the same broad lines as the Amendment which we are discussing.

Thanking the hon. Gentleman as I do for meeting us on some of the points which we raised in Committee and recalling with gratitude his clear undertaking that there is going to be no further increase in postal charges, I see no objection to the Amendment.

May I raise on this Clause the point which I raised mistakenly on Clause 5, and may I again apologise for jumping from one Clause to the next and put to the Economic Secretary the question which I attempted to put to the Parliamentary Secretary to the Ministry of Housing and Local Government?

I think that I understand the Clause, but for the sake of the record perhaps the hon. Gentleman would be good enough to explain whether when a notice is served—and there are fourteen days during which the building society can raise objection and meet the Registrar—the order which the Registrar proposes to make or has made will be enforced, or is the position, as one way of reading the Clause would imply, that the order is not made until it has been definitely agreed between the parties or until the Registrar, failing to agree with the parties, decides to make the order any way?

As I understand the wording of the Clause, I find it difficult to see how the right hon. Gentleman's point arises. I should have thought it was clear that, in the first place, the Registrar gives notice by stating that he proposes to make an order and then there is a period, as laid down in this Amendment, during which he can consider representations from the society. If the society so wishes, he must afford it an opportunity of presenting its views to him and then, later, having satisfied the provisions of the Clause as to timing, he makes the order. If I may say so with respect, it is not until the Registrar makes the order that the order is made. Therefore, I do not think that there is any such difficulty as the right hon. Gentleman has in mind, always assuming that I have understood him aright.

In that case, is not fourteen days rather a long time? The building society has received notice and it is fourteen days, in which much can happen. The society has been notified by the Chief Registrar and it knows what is going to happen to it. It may well be that it can hurry up knowing that within fourteen days, or thereabouts, an order is going to be made. As I say, a good deal can happen in that period.

In Committee we dealt with this point, and I thought then that it was generally agreed that fourteen days was too long a time. My reading of the Clause is the same as the Economic Secretary's, but I can scarcely believe, in view of what happened in Committee that that was the intention.

May I recall to the memory of the Economic Secretary the discussion which we had in Committee when the Amendment which I moved about appeals to the court actually spec fled the words:

"provided that any such order shall remain operative pending an appeal by the court."?

In Committee we were proceeding on the assumption that any order, once agreed upon and once it became clear to the Chief Registrar that it should be made, should be operative forthwith, whatever the rights of appeal and the procedure to be followed. I recall that in Committee the hon. Gentleman said several times that speed is the essence of the matter in all these things, once the Registrar feels that he has uncovered some malpractice.

In view of those circumstances, is he satisfied that my hon. Friend's point is covered? Fourteen days might be a little too long to leave for people to start arguing when damage may already have been done.

The reason why we thought it necessary to provide for a period of fourteen days was that the powers under the Clause are very considerable. The raising of money by a building society is part of the essence of its actions, and to suspend the raising of money by a society is a matter of great importance. I can assure the House that we considered this matter carefully. Under Section 11 of the Prevention of Fraud (Investments) Act the period is one month, and when we were considering the new provision we decided to halve that period, and came to the conclusion—based partly on past experience of the difficulties which, in a perfectly genuine case, a building society might have in responding to the original notice of the Registrar that he proposes to make an order—that a period of a fortnight was necessary.

Under Clause 7, which is not so drastic, there is power to control the advertising of the society. There the period is one week. Therefore, some action can be taken within a week. It is a matter of judgment whether, in this Clause, the period should be a fortnight, or longer or shorter. We came to the conclusion, based on experience, that this was the right period.

Goodness knows why the Government have come to that conclusion.

Order. The right hon. Gentleman has made one speech which was out of order and two which were in order. He requires at least the leave of the House to speak again.

I should like to speak again, by leave of the House. I am quite dissatisfied with the explanation of the Economic Secretary. The Clause deals with the raising of money by a building society, and a society can raise a good deal of money in a fortnight. If there has to be a period of one week in one Clause and two weeks in another, I should have thought it would have been better to have it the other way round. Advertising is not so responsible a matter to undertake as is receiving money. If a building society wants to do something that it should not do it is quite wrong to give it a fortnight to collect such funds as it can under the Bill. In view of the arguments used in Committee, and, as we thought, the concurrence of the hon. Member, I am surprised that this Clause reads as it does.

I beg to move, in page 9, line 21, to leave out from "give" to the end of line 30 and to insert:

"a direction—

(a) prohibiting the issue by the building society of advertisements of all descriptions, or

(b) prohibiting the issue by the building society of advertisements of any description specified in the direction, or

(c) prohibiting the issue by the building Society of any advertisements which are, or are substantially, repetitions of an advertisement which has been issued and which is specified in the direction, or

(d) requiring the building society to take all practicable steps to withdraw any advertisement, or any description of advertisement, specified in the direction which is on display in any place, or a direction which contains two or more such prohibitions or requirements ".

It might be convenient for the House to discuss with this Amendment the Amendment in page 9, line 31, leave out from "may" to "be" in line 34.

Yes, Mr. Speaker. It has been pointed out in another place that, as drafted, the power to control advertisments in this Clause virtually empowers the Chief Registrar to draft a society's advertisements, which was certainly not the intention. I dealt with this matter at some length in Committee and undertook to introduce, on Report, Amendments which would have the effect of reducing the scope of this provision. The Amendment is to subsection (1), and the House will see that it deletes the powers originally proposed, which included the power to

"give directions as to the matter which shall or shall not be included in advertisements, and as to the form of any advertisements."

I do not wish to take up the time of the House unduly, and I do not think that we should divide against the Amendment, because we agree with its general intention, but I am not sure that it has not gone a little too far. It gives power to prohibit the issue of advertisements of all descriptions or of any specified description, and then deals with other cases. I should have thought that the Chief Registrar ought to have had power to say to a building society, "You shall make this, that or the other statement about liquidity of reserves." I wonder whether the Economic Secretary can assure us that that power will not be taken away from the Chief Registrar by the Amendment. If it will be taken away, have the Government considered the advisability of doing so?

There is a later provision, in Clause 10, dealing with the contents of advertisements, circulars and so on. I think the hon. and learned Member will find that under that provision the Chief Registrar has the power—in the Statutory Instrument which it provides he may make, with the consent of the Treasury—to lay down rules as to the matter to be included in advertisements.

Is that the same thing? Those are general regulations; this is action in the case of a society which has not reached the stage of what I might call Clause 6 action, but requires something to be done under this Clause.

The hon. and learned Member is correct. This Amendment is concerned solely with prohibitions. There is nothing in the Clause which would in law enable the Chief Registrar to insist upon a particular figure or matter being included in an advertisement. I have not had an opportunity of consulting the Chief Registrar on this point, but I should have thought that, in practice, he might well say to a building society, "Unless you include certain particulars which give the fair position of the company I will exercise my discretion."

I beg to move, in page 10, lin 21, at the end to insert:

Provided that the Chief Registrar shall not have power to require the production of documents which do not belong to the building society, and which are not deeds relating to property mortgaged to the building society, from a person who is or has been an auditor of the building society or from anyone other than a person who is or has been an officer or servant of the building society.

Subsection (1) in its present form would empower the Chief Registrar, if he considered it necessary for the exercise of his powers under the preceding two Clauses, to require any person, whether connected with a society or not, to produce

"any books, accounts, deeds or other documents relating to the business of the building society"

which a might be in that person's possession.

During the discussion in Committee on the Question, "That the Clause stand part of the Bill", the hon. and learned Gentleman suggested that this went too far, and he gave reasons why he took that view. He referred to the fact that the ordinary procedure in the courts was that only parties to suits could be required to produce documents, and he dealt with the case of the solicitor and the accountant and the rules relating to their working papers.

This new proviso in the Amendment will restrict the power to require the production of documents from auditors and persons not officers or servants of a society to documents belonging to the society and deeds of properties mortgaged to it. I hope that meets the point which the hon. and learned Gentleman had in mind.

I thank the hon. Gentleman for having substituted the ordinary order for discovery for the order for ships' papers, which was the original form.

I beg to move, in page 13, line 34, at the end, to insert

"(including, in relation to any rate of interest offered by such advertisement or invitation, a statement of the date up to which such interest is allowed on withdrawal of the investment or repayment of the loan)".

This is a small point. The provision at present is that regulations may provide for things to be put in the advertisement of a building society, and I think it is possible that what we intend to specify here may be capable of inclusion anyhow. Whether that is so or not, it seems to me to be advisable that it should be included, and I hope the Government may see their way to accept the Amendment.

The point is that building societies advertise the rates at which they will borrow money. They usually advertise the amount of notice required, but they do not always let the lender know up to what date the interest is allowed on a withdrawal. There was in the Press recently a letter that seemed to me to be an informed letter, pointing out, as I know is the case, that societies differ widely on this matter. It is a small matter, but it might result in the lender losing, say, a month's interest or two or three day's interest which he did not expect to lose, and I think that it is right that he should know about that when he makes the loan.

The sort of transaction which the hon. and learned Gentleman has in mind, or the advertisement which he has in mind, might well be misleading as to the sort of thing which might well be covered by the regulations. As the hon. and learned Gentleman fairly said, the Clause is already sufficiently widely drafted to cover regulations of the type which I think are envisaged in the Amendment. I hope that he will not press this Amendment, as I can assure him that the Chief Registrar will give very serious consideration to the point which he has raised when he comes to draft the actual regulations.

If it will be of any assistance to the hon. and learned Gentleman, I would add that there is a limit to the way in which one can particularise in drafting or to which it is desirable to do so. Having given him that assurance. I hope that he will withdraw his Amendment.

Sometimes, we become almost human on a Friday, and the hon. Gentleman said earlier in the proceedings that, for reasons of State, he had been unable to consult the Chief Registrar recently. I appreciate the difficulty of saying specifically that this kind of matter will be included, and therefore I welcome the hon. Gentleman's assurance that serious consideration, as he said, would be given to this not very considerable point. In view of that, I beg to ask leave to withdraw the Amendment.

The next two Amendments in the name of the hon. and learned Member for Kettering (Mr. Mitchison) to page 14, line 41 and to page 15, line 1, may conveniently be discussed together.

I beg to move, in page 14, line 41, at the end, to insert:

(2) Without prejudice to the generality of the foregoing subsection, the said first order shall include provisions authorising the application of funds of building societies to assist or promote building societies in any British Commonwealth countries or British colonial territories:

Provided that no funds shall be so applied—

(a) without the consent of the Treasury or

(b) without the consent in relation to British Commonwealth countries of the Secretary of State for Commonwealth Relations or in relation to British Colonial territories of the Secretary of State for the Colonies; or

(c) if the funds to be so applied by a building society would, with any other funds of the society so applied, amount to more than five per cent. of its total assets; or

(d) otherwise than subject to such conditions as the Chief Registrar may prescribe, whether in the said first order or otherwise and either generally or in relation to any particular case or cases; and that the said provisions shall limit applications accordingly.

(3) In considering whether to give or withhold his consent under the last foregoing subsection, a Secretary of State shall have regard to the security of the funds proposed to be applied by a building society, to the relevant laws of the country or territory in which it is proposed to assist or promote a building society and especially to the need for any such assistance or promotion and to the sufficiency or insufficiency of the resources of the country or territory for the purpose.

I will avail myself, Mr. Deputy-Speaker, of your permission to discuss these Amendments together, and say that the second one, to page 15, line 1, is merely a drafting Amendment which would follow if the Amendment which I am now moving were accepted.

I must go back for a moment to the proceedings in Committee. A New Clause was put down in the name of the hon. Member for Wimbledon (Sir C. Black) and some of his hon. Friends providing, in effect, that building societies should be enabled to use a part of their funds, with Treasury consent, to assist or promote building societies in the Commonwealth, the Dominions or in British colonial countries. To that new Clause, my hon. Friends and I added an Amendment specifying that in cases of that sort, the consent of the appropriate member of the Government, that is to say, the Secretary of State for Commonwealth Relations or the Secretary of State for the Colonies, as the case may be, should be required and particularly should be required to give his consent and, even more important than that, in giving that consent, the Secretary of State should have regard to certain matters.

The Government objected to the hon. Gentleman's new Clause and to our Amendment to it, and, without going in detail into their objections, one was that this could be done already under Clause 11 of the Bill. If I may now summarise the Government's objections, they were the se. This can be done under the Bill anyhow; we dislike the Amendment and refuse to accept it; and, in no circumstances, whether the Amendment be passed or not, since Treasury consent is required, shall we do anything about it. These were a magnificently inconsequent collection of objections to that new proposal.

I hope the Government will by now have thought of something at any rate a little more logical. To help them to that desirable conclusion, we now put this down in the form of an Amendment to Clause 11. This is a Clause which empowers the Chief Registrar to stipulate how the liquid funds of building societies shall be invested. It is in very wide and general terms indeed, and this is a mandatory addition to these wide terms, saying that the order to be made by the Chief Registrar shall include provisions on the lines that I have already indicated; that is to say, on the lines of the amalgamation, if I may so put it, of the hon. Member for Wimbledon's new Clause and our proposed Amendment to it.

It is mandatory in the sense that the order must contain the provision. It is not mandatory in the sense that the consent of the Treasury is dispensed with. On the contrary, it is still required in every single case, and the safeguards in the Clause against any misuse or excessive use of building society funds in this direction now stand as follows. First, Treasury consent, with the added safeguard that, as we are told, the Treasury will never give it, which is something; secondly, the consent of one or other of the two responsible Ministers; thirdly, that no more than 5 per cent. of the total assets shall be involved; and, fourthly, a very wide power of imposing conditions is conferred on the Chief Registrar. The hon. Member for Wimbledon was responsible for two of the safeguards, and I have added two more. If this is not ample protection, all I can say is that no Act of Parliament can do any more than this.

If the Treasury will never do this, if it says that in all the circumstances and in all cases this will never be done, we are beating thin air and it seems a waste of time to do anything about it. That kind of answer, however, is never accepted from a Government and in this case it certainly ought not to be accepted. I doubt whether, on further consideration, the Government will make it in quite that form.

Let us see in substance what we are on. This is not dealing with advances made by a building society established and carrying on business in this country directly to people borrowing abroad on the security of their houses. It relates to something different. It relates to the diversion, subject to the many safeguards, of a small part of their funds to assist or promote the development of a local building society. There are a number of these local building societies about. I said in Committee, and I repeat it generally again, that they have had varying fortunes. Some of them have had great success. Others have had much less success.

The difficulty, I am told, is that in the case of those which have had less success, they have not had the "know-how." In consequence, they have not been able to raise local funds sufficiently and they never got started. It is not that they have started and have gone wrong; they simply have been unable to start properly. I am not saying that something has not been done, but they have been unable to make any effort commensurate with the requirements of the Colony or Dominion.

I rule out for the moment another type of case. In most, if not all, of the older Dominions there are already prosperous and successful building societies which need no assistance from anyone and which no building society would be likely to try to promote a rival building society. To do so would be to work under considerable difficulties. Accordingly, one of the things to which the Secretary of State is required to pay attention when considering the matter is the sufficiency or insufficiency of the resources of the country or territory for the purpose.

Accordingly, if, in this case, the Secretary of State for Commonwealth Relations were invited to start a building society in, say, Africa, where, I believe, there is already a large and successful one, he would say, "Why do you want to do that? What is the reason for it?" I imagine that he would refuse his consent on that ground alone, if not on other grounds.

That leaves us with cases where there is need for assistance in what may be the Dominion or Colony concerned. That leads me to the answer which was given on Second Reading to this point when it was put up in the course of debate. The answer was that there was no need for building societies to do anything in this matter and that the Colonial Development Corporation can do it. I am informed that there are considerable difficulties about this, difficulties with which the Treasury is well acquainted. That is to say, the Colonial Development Corporation does not have money to spare for the purpose, or, at least, not much money.

The Corporation has recently had the Sinclair Report, which is a report on its accounting methods and its resulting obligations. Broadly speaking, the Sinclair Report directs the attention of the Colonial Development Corporation to the future course of its accounts rather than to its present or immediate cash position. Without wishing to state it in any controversial way, it enjoins the Corporation to make careful provision for the future. Accordingly, the strings are being tightened a little.

1.15 p.m.

So far as I know, the Treasury has never given to the Colonial Development Corporation funds adequate for the sort of purpose which we have in mind, and there are two further objections to the use of the C.D.C. for this purpose. One is that the Corporation and the Government have refused to introduce legislation which might allow it to work in Dominions of recent origin. Accordingly, it would get into considerable difficulty in places which are Dominions but which require assistance, some of them at present Dominions and others at present Colonies but likely to become Dominions shortly. If we look, for instance, at the political map of Africa, it is obvious that there are countries there where assistance of this kind would be very useful and that those countries include both Colonies and Dominions of the type I have indicated. It should not depend on that point.

There is, however, another objection, too. Although it has done a great deal—as much as it could—in this direction, the Colonial Development Corporation is not sufficient for the purpose, not only for the amount of funds, but also because an advantage lies in getting the technical know-how of building societies in this country directed to helping in these, I will not say backward countries, but countries which do not have such adequate resources. If one were to investigate—I cannot claim to have done it—the cases of difficulties, one would probably find that that was one of the reasons for the lack of technical knowledge.

There is another point about it, too. The Colonial Development Corporation is primarily an investing body and so, of course, in a sense, is a building society. I was, however, impressed, as, I am sure, all hon. Members were, by what was said by the hon. Member for Wimbledon on Second Reading. That was, that there were many cases where money of building societies could be used to promote or assist a local building society but that once the local building society was started, there would not be the same need for keeping funds there. I had a beautiful and rosy picture—I should have thought there was something in it—of the funds of building societies being used first in one place and then in another and, therefore, having an effect in assisting these countries quite beyond the amount involved. The funds could be turned over again and again. All this, I repeat, is contingent on consents.

Both sides of the House say that they are concerned with giving all the assistance they can to countries which need it. I do not like using the word "backaward"— it is not the right word for those countries; let me refer to them as countries in need of help in matters of this sort. I do not want to use that term to countries which have passed beyond the stage with which we are concerned today. Places like the countries in the Caribbean would welcome assistance of this sort.

It is said that the laws of those countries are not suitable for the purpose. We have had it quite clear in the course of debates here—there is no reasonable doubt about it—that some, at least, of these countries are perfectly willing to make alterations in their law to conform with the degree of protection that is provided in English law for building societies. That is one of the points to which the Secretary of State would have to have regard when considering the matter. Generally he is asked to consider the security of the funds proposed to be applied. I cannot believe that there is any risk in the matter. This seems to me to be a real test of what the Government's intentions are with regard to helping Dominions and Colonies that stand in need of help, and helping them to start a venture of their own which obviously might be of real and lasting assistance to them.

If the Government say "We cannot do it in this case," or "We will not do it," I would say this to them: "Even if you say that now—and I do not for a moment accept that you are right in saying it—why do you resist putting into this Bill power to do it—that is to say, a provision in the Bill for arrangements of this kind? You can go on refusing your consent for as long as you feel obstinate, narrow-minded and purblind in the matter. When you wake to a more real sense of your responsibilities to those countries that stand in need of help, and when for once you are prepared to mobilise the resources of the knowledge and funds of private enterprise, if I may so call the building societies, to assist you in that respect, then you will be able to avail yourselves of the opportunities presented by the provision that we wish to see inserted."

I beg the Government not to take a short-sighted view of this, but to remember that we have very great responsibilities as a country towards these Dominions and Colonies whose future in this respect we are now considering. I ask them to remember, too, that if the number of immigrants coming into this country goes up sharply, as it has gone up according to recent figures, one of the reasons for it is that those people, or many of them, think that they are not doing too well at home and can do better somewhere else, and it is our responsibility and duty so far as we can to see that they do better at home. That is the real answer to the difficulties about immigration, or emigration, according to whichever way one looks at it.

Accordingly, from a broad point of view, there is everything to be said for having a provision of this sort, and there is everything to be said for the Treasury for once taking off its blinkers and taking a rather wider view of the world than from time to time it does take. There are moments when the Treasury state of mind exasperates me wildly, and if the Economic Secretary intends again to make the sort of speech he made in Committee, I warn him that my temper will again be horrid.

I want to add my appeal to that which has been made by the hon. and learned Member for Kettering (Mr. Mitchison) that we may get a more forthcoming and more progressive reply from the Economic Secretary than has so far been forthcoming in the discussion of this proposal.

I suppose it is true to say that some little progress has been made since the Second Reading of the Bill, because at that time I think all hon. Members assumed that it was not possible for building societies to operate in any form in Commonwealth countries apart from some specific change in the legislation of this country. But it has now been discovered, and was pointed out to us by the Economic Secretary in Committee, that that is not so.

If this Bill becomes an Act, as no doubt it shortly will, then under Clause 11 further legislation would not be needed for Commonwealth operations but they could be made by administrative action on the part of the Chief Registrar and the Treasury. I suppose that we may perhaps hail that as some small improvement on the position as we formerly understood it.

But when we come to the practical issue of what the Treasury propose to do we are, as the hon. and learned Gentleman has pointed out, completely up against a brick wall. The Economic Secretary said in Committee:

"I must tell the Committee frankly that at present we have no intention of authorising investment in a Commonwealth building society."—[OFFICIAL REPORT, Standing Committee D, 14th July, 1960; c. 304.]

I should have thought that on considering this matter since the Committee stage, on a matter on which the Chief Registrar and the Treasury have to exercise a discretion in the power given them under Clause 11, it could at any rate be argued that in the exercise of that discretion they are, in fact, acting as it were in a semi-judicial capacity. For the Economic Secretary to tell us in Committee that although the Chief Registrar and the Treasury have this power, they have no intention at all of acting under the power which they possess, seems to me to be, at any rate, a strange procedure, on the one hand to confer a power but on the other hand to make it quite clear at the same time that the exercise of that power will not be permitted.

I do not blame the Economic Secretary entirely for the position in which we find ourselves. On all matters other than this question of Commonwealth operations, if I may say so with respect, he has, I think, handled this Bill at its various stages with outstanding courtesy and skill, but on this issue the real trouble is that while the voice is the voice of the Economic Secretary, the hand is the dead hand of the Treasury. While the Economic Secretary has to come to this House and defend the policy of the Government in this respect, the real people whom we would like to have before us and on whose stony hearts we would like to endeavour to make some impression are those figures in the Treasury who exercise an altogether too decisive influence in matters of this kind.

The reasons behind the unwillingness of the Government to contemplate this proposal have now been greatly clarified as the Bill has gone through its various stages. Only one reason was given to us by the Economic Secretary in the Committee stage when he said:

"I hope that the Committee will take my word for it that we have reached this decision"—

that is the decision not to permit Commonwealth business—

"on the basis that our duty is to consider primarily the protection of the investor in a United Kingdom building society."—[OFFICIAL REPORT, Standing Committee D, 14th July, 1960; c. 305.]

If I can summarise the hon. Gentleman's argument, what he said was this. Money invested in the Commonwealth would be subject to a far greater risk and jeopardy than money invested in this country, and therefore it would be wrong to authorise that use of building society funds inasmuch as the security of small investors might be imperilled. But surely, unintentionally I am sure, that is really a rather grave reflection on some Commonwealth countries and their citizens. What the Economic Secretary is saying is that in, for instance, Australia, Canada, New Zealand or Rhodesia the house property is of such a doubtful value, the legal system is so questionable and the integrity of potential borrowers ought so much to be called into question, that money invested in first mortgages to enable people to buy their own homes in those countries would be subject to a degree of risk and jeopardy which would not apply to similar business in this country. That seems to me to be an argument that this House ought not to accept and which, so far as I have experience of these territories, has no justification in fact.

1.30 p.m.

I do not wish to prolong my speech unduly, having regard to the amount of business we have to do today, and I shall, therefore, conclude in this way. During the past ten years, the number of families enabled to own their own homes in this country, largely as a result of the operation of the building societies, has increased by 50 per cent., from 4 million families to 6 million families. This has been done to the tremendous benefit of the political stability of the country, of the housing standards of the nation and of the happiness of the families concerned. These benefits which we have beef able to enjoy in this country for more than 100 years are benefits in which the Commonwealth countries want to share and in which they can share on an adequate scale only if we help them with our "know-how" and our funds.

This proposal has been supported by the Building Societies Association. It has been warmly commended in the Press. No convincing and valid objections have been advanced against it. If the matter were determined by a free vote in the House, the proposal would be endorsed by the overwhelming majority of hon. Members of all parties. If the Economic Secretary wishes to rely on the legal point that the Amendment is not necessary because the power already exists in Clause 11, that is an argument which he may fairly deploy, but earnestly hope that, in what he has to say about the exercise of the powers conferred by Clause 11, he will be more forthcoming than he was in Committee and more forthcoming than any Government spokesman so far has been on this matter. I hope he will indicate that, subject to suitable safeguards being provided, of which the Chief Registrar and the Treasury may be the judge, the door is not slammed, locked and barred but it is, at least, ajar.

It was not my intention to intervene in this debate at Indeed, I confess that I have not followed the passage of the Bill in great detail through its various stages. It was not until I came and listened to what has been said on this matter that I realised, with horror, I confess, that it was not intended to give power to building societies either to assist other building societies or to promote new building societies in the Commonwealth and the Colonies. I say at once that this leaves me somewhat amazed.

Time and time again, when dealing with matters of emigration—bere, unlike the hon. and learned Member for Kettering (Mr. Mitchison), perhaps, I am thinking more of those of our people who wish to go and settle in other countries of the Commonwealth—difficulty always arises because of the problem of finding suitable housing overseas. Time and time again, one finds that people who wish to go and settle in, shall I say, Australia, New Zealand or Canada are forced to return to this country because they cannot find suitable homes. I appreciate that part of this is due to the lack of sufficient skilled labour and other causes of that kind, but it is due also to the problem of financing the purchase of a house.

I should have thought that if the party on this side of the House believes in a property-owning democracy, we, the members of it, should believe in that principle sufficiently sincerely to wish to see it exported. I should like to see property-owning democracy spread throughout the British Commonwealth. I cannot really see any danger to the depositors in building societies in this country if, with all the safeguards which are included in the Bill and the Amendment, building societies are given the right to invest either by themselves or through other building societies in the various countries of the Commonwealth.

I shall not elaborate the matter, because I do not feel qualified to comment very much on a Bill, which, as I have said, I have not followed with very great attention, but I, too, hope that my hon. Friend the Economic Secretary will consider the matter again and see whether we can through the Bill give an opportunity to our building societies, through their great resources and experience, to help to develop similar organisations throughout the Commonwealth.

If my hon. Friend the Member for Wycombe (Mr. John Hall) wishes to study this matter, I can refer him to the two occasions when it was discussed recently in another place and to our proceedings on Second Reading and in Committee when it was discussed at great length. Also, there are several hon. Members on both sides who will be able to tell him of what transpired at an all-party meeting we had to discuss it.

Not all-party.

Well, representatives of all parties. The hon. Member for Sheffield, Hillsborough (Mr. Darling) will be able to explain about that.

No one can pretend that the utmost consideration has not been given to this matter. I say at once, in the light of its great importance, that I appreciate very much the way in which the hon. and learned Member for Kettering (Mr. Mitchison) and my hon. Friend the Member for Wimbledon (Sir C. Black) have spoken about it. There are, however, certain aspects which I should make absolutely clear at The outset which, I think, anyone who has not read the report of our previous discussions on the matter might well misunderstand.

I accept without qualification the contention of the hon. and learned Gentleman that there is a considerable demand in many parts of the Commonwealth and the Colonies for funds for housing projects. No one in his right mind would dispute that, nor would anybody dispute that it was highly desirable that, in the proper and appropriate way, we in this country should do everything we can to help. But I cannot stress too strongly that the question here is not really whether it is desirable for us to assist Commonwealth countries to raise their housing standards. The question with which we are concerned is entirely different, namely, whether at this time it is right that the funds of United Kingdom building societies should be used for this purpose.

The hon. and learned Member, I thought, seemed to think that this was something to do with what he called Treasury policy.

I think I referred to blinkers.

I will come to the blinkers in a moment. It really is nothing of the sort. From the point of view of the overseas territories concerned, any plan such as the one the hon. and learned Gentleman and my hon. Friend the Member for Wimbledon have in mind has very great attractions. However, there is, surely, no one in the House who would disagree that that cannot be the only consideration. As the hon. and learned Gentleman pointed out, during the past few years, the Colonial Development Corporation has been providing finance for overseas building societies. I take his point that he considers that, in the future, it will not have sufficient funds to be able to do this adequately. No doubt, there are many hon. Members who think that the C.D.C. should do more.

In this Bill, we are considering the function and safeguards of building societies in this country. I beg the House to believe me when I say that I only wish that, consistent with those functions and safeguards, something on the lines suggested could be done at this time. The Amendment follows broadly the lines of the new Clause originally moved by my hon. Friend the Member for Wimbledon together with the Amendments to it in the name of the hon. and learned Gentleman. I believe that many of the arguments which I adduced in Committee are equally relevant to this Amendment today, but I am sure the House will not wish me to go over all the ground again.

I do not think anyone who heard what I said in Committee or who has since read it will dispute that to invest in an overseas building society, as does the Colonial Development Corporation, involves at least a greater element of risk than the general run of investment in United Kingdom building societies. I agree, of course, that there is nothing wrong in taking risks, especially when one takes them for such an admirable and desirable objective as providing the housing which—goodness knows—is needed in the countries we have in mind. It is important, none the less, to bear in mind that building society investors have deliberately invested in the societies because they know that their money will be safe. They, after all, have no chance, as I have pointed out—and I do not want to speak at length on this particular aspect—by investing in a building society, of capital appreciation, and, equally, they run or should run no risk of capital loss. I explained at some length in Committee what I considered to be a prudent practice of building society investment. I would draw the attention of the House to the opening words of Clause 11:

"The manner in which a building society may invest any part of the funds of the building society which are not immediately required for its purposes.…"

I am much obliged to the hon. Gentleman. I hope that before he leaves this matter he will deal with one aspect of the question which perhaps modesty prevented his hon. Friend the Member for Wimbledon (Sir C. Black) from developing. Does he not think that the directors of building societies, subject to all the safeguards in the Clause, could be trusted to look after the safety element?

I am certain that the vast majority of them could be so trusted. But, as has been said again and again during the discussion of this Bill, we are concerned with a small group of societies and a small group of directors, and when one is considering the attitude of directors one has to bear in mind these people as well as the general run.

With respect to the hoi. Gentleman, I think that he has it quite wrong. Treasury consent is required. If there is any doubt about the standing of a society, let the Treasury refuse consent, but do not make that an occasion for refusing it to all societies.

I am sorry. I thought the hon. and learned Gentleman asked me a straightforward question, whether I thought that directors, speaking generally, were capable of making a decision on these matters. It depends on the directors, and for the vast majority it would not even be necessary to have any form of control or Treasury consent.

It was for that reason that I expressly and carefully mentioned the safeguards. Subject to the safeguards, surely they can be trusted.

I appreciate that point. I will come in a few minutes to the Amendment itself, but I think it is important that the House should appreciate the principles involved.

The investment we are concerned with is of funds not immediately required for building society purposes. One proposition, which I am sure will be accepted by all, is that the funds which are surplus to a building society's requirements at any moment, in the words of the Clause,

"… which are not immediately required for its purposes…"

must be held or invested in a liquid and easily realisable form until they are required. They are the society's liquid reserves. If a new building society in a Commonwealth country is to raise any significant part of its capital from a United Kingdom society—this is an important point, and I must repeat what I said in Committee—it is almost certain to need it in a form in which it cannot be called in without a reasonably long notice; in other words, it will be a liquid investment.

It is attractive to suggest, as the hon. and learned Gentleman has done, that what are wanted are no more than short-term funds for a year or two—and this was also mentioned by my hon. Friend the Member for Wimbledon—after which the local funds will take over. I must repeat again that I made inquiries about the experience of the Colonial Development Corporation, which I believe has about £9 million involved in advances to building societies, and I am told that it is the general rule that overseas building societies have to rely for quite a number of years on their initial capital, rather than 'on local savings. That is a point which I made in Committee, and I am repeating it almost word for word because it is very important.

To lend long is a prefectly proper function of other institutions. I appreciate the interest of my hon. Friend the Member for Wycombe (Mr. John Hall), and I hope that he will look at our debates in Committee, because I gave the Committee, and I have a list here, a number of examples where real help is given to the Commonwealth in this direction. I am referring not only to the C.D.C. or to the provision of "know-how" by United Kingdom building societies but to the provision of finance. I would mention, in passing, that in Kenya financial support comes from a British insurance company. The same thing has happened in several societies in Northern Rhodesia and, as I have told the Committee, know-how is being provided on a considerable scale. I thought that the hon. and learned Gentleman seemed to assume that technical knowledge and the capital for new enterprises should come from the same source. That is surely not so. Again and again they are split.

1.45 p.m.

While it may be perfectly proper for a bank or an insurance company to provide those sort of finances, as they are doing, it does not follow, as night follows day, that it is a proper form of investment of building society surplus funds. Indeed, one of the reasons for this Bill of 70 or 80 Clauses is the fact that building societies are in a unique position and, therefore, the same considerations which apply to companies, banks and insurance companies do not apply.

The world of finance is not a static world. As I have said before, there may well be changes which would make it reasonable and proper to permit a United Kingdom building society to invest in a Commonwealth society. In Committee, I threw out the possibility that an overseas government might guarantee the repayment of loans at short notice. I explained that if circumstances changed and it was appropriate to authorise such investment it could be done quite simply by Clause 11 without further legislation, and that the power is there without this Amendment.

The hon. and learned Member for Kettering referred to the Treasury being in blinkers and my hon. Friend the Member for Wimbledon referred to it as a brick wall which he was up against.

Before the hon. Gentleman gets to these personal references, will he deal with this point? I agree that Clause 11 gives general powers but these are more restricted in this case because they provide for the consent of the Secretary of State and for other matters to which he has to have regard. If one attaches importance to that, it is true to say that Clause 11 does not cover that kind of case.

No. The Amendment as I read it is more restrictive than the Clause as it stands. I say this in no spirit of frivolity, because I realise that this is an important matter, that I do not think it is necessary to have restrictions of that kind which are included in the Amendment. I would have thought that it was sufficient to have the restrictions and safeguards which are in Clause 11 and which provide for the Chief Registrar, according to the provisions of the Bill, deciding on the investments which are to be authorised.

The hon. Gentleman thinks that that would be safe enough?

I believe that would be safe enough. I can go further. Each time we have discussed this we have given more thought to it.

Go a little further.

It is not a question of going a little further. If the hon. Gentleman does not wish me to say something which I hope will please him, it is a very strange way of carrying on when considering one of the most important Amendments to the Bill. This is not a change that has come about as a result of our discussions but is something as a result of this Amendment being put down which was decided previously but which I did not know about and on which I can now inform the House. I am told that it is, and was before our last discussion, the Chief Registrar's intention that loans guaranteed by a Commonwealth Government shall be included in the list of authorised investments provided that they meet the requirement on the period of repayment, which is, as I think every hon. Member agrees, a matter of importance in respect of the building society's surplus funds.

Previously we considered my hon. Friend's proposed new Clause on the mistaken assumption that, if no change were made in the Bill, there would be no power, without further legislation, to permit investment by a United Kingdom society in a Commonwealth society. We were all wrong there. We now accept that at any time an order can be made to permit such investment. It can be made under the Clause as it stands without the Amendment. I want to assure the House that if circumstances change, as well they might, and if it were proper to authorise the kind of investment which we have been discussing, no one would be better pleased than I.

I assure hon. Members that I am in no sense a brick wall with blinkers on, if I may so put it. Furthermore, it is right, because of the interest taken in this matter, that I should tell the House—and I do not think that my hon. Friend the Member for Wimbledon meant us to take his words literally—this is not something which is, as it were, a Treasury matter as opposed to a Ministerial matter. I assure the House that this is something which my right hon. Friend has considered personally.

In all the circumstances, as the door is still open, if I may adopt my hon. Friend's phrase, I hope that, in view of what I have said, the hon. and learned Gentleman will not press the Amendment.

The Economic Secretary showed a certain amount of irritation at being interrupted as he came to the grand climax of his speech. But he must not be so sensitive. After all, he has—-I say this with the utmost good will—been playing ducks and drakes in this matter. Every time this point comes up he produces a new rabbit from the hat. When it came up in Committee we all waited breathlessly for a terrific announcement that in the watch of the night he had discovered something which solved the problem. He then produced Clause 11. Today he has spent a lot of time telling us that Clause 11 is not much use and that under it building societies could not invest in overseas countries. He has produced an assurance from the Chief Registrar that certain loans will be made on the guarantees of a Commonwealth Government. The short answer is that, if those are to be as effective as my hon. and learned Friend's Amendment, then we might as well have the Amendment because at least that brings in the responsibility of the Government of this country. I think that that is a most important aspect.

We have been told about the importance of safeguarding the interests of the small investor in building societies. That is precisely what the Amendment does. It provides that the people who are in a position to make a dispassionate assessment of the situation in a Commonwealth country—for instance, on the state of land legislation, the degree of security, the possible risks of disorder, or whatever it might be—namely, the Government through the Secretary of State, are the people who should authorise these advances. I should have thought that that was a very considerable safeguard.

Then I think that my hon. and learned Friend played his trump card, which was the lion. Member for Wimbledon (Sir C. Black). Speaking of the hon. Member for Wimbledon, I am reminded of the remark which Mr. Kramer made about one of the tennis players at Wimbledon this year—he had been around a long time. I think that the hon. Member for Wimbledon has been around a long time. I should like to feel that any money used for the purpose of encouraging investment in houses had the suport of someone like the hon. Member, who has great experience behind him. There is power in the Amendment to prevent spivs and adventurers using it. It should be used and restricted by consent to societies which had the kind of background and experience behind them represented by the hon. Gentleman.

I hope that the hon. Gentleman will not think it offensive if I say that I feel that his wisdom and judgment would be stimulated if some of his own money were involved. I do not think that it is a good thing to separate know-how from investment. The two things should go together. That is a very good Conservative principle. If money is to be invested abroad and if there are to be people advising on investment abroad, their own financial resources should be at risk. That is a point of view which ought favourably to present itself to the hon. Gentleman.

The Economic Secretary produced the Colonial Development Corporation as another rabbit out of the hat which could do this job instead of building societies. There are two points here. First, in that case Government money would be involved, and we are here dealing with private investment. I should have thought that one of the things which the party opposite most wanted to do was to reduce the burden below the line of Government investment and instead to encourage private investment in the Commonwealth. I should have thought that that was an impeccable Conservative principle. Surely my hon. and learned Friend's proposal would do precisely that, and this is another reason for preferring it to the Colonial Development Corporation.

I now return to the hon. Member for Wimbledon. He probably knows a bit more about lending money on real property securities than the Colonial Development Corporation, and I think that he would probably invest it rather more shrewdly and effectively. People get a curious ambivalence about the Commonwealth. We had a debate in the House not long ago on the adoption of children. When we were considering whether English-born children should he adopted in the Commonwealth, some hon. Members painted the most bloodcurdling picture of the Commonwealth countries consisting of baby farmers and assassins who would persecute and maltreat children in a most astonishing way. On that occasion the Government were firm, and, with the support of some of my hon. Friends, including myself, said that that was nonsense and a lot of hysteria. There are many homes in the Commonwealth which are much better for children than many in this country. In spite of all these miserable forebodings, the adoption of children was extended to the Commonwealth.

Today precisely the same kind of rather hysterical picture of life in the Commonwealth is being painted, but not this time by a few people a little out of date with the development of the Commonwealth, but officially by the Government. We have this extraordinary situation in which the Home Office thinks it perfectly all right to export babies to the Commonwealth but the Treasury thinks it all wrong to export money to the Commonwealth.

This will all make very good headlines, but what the hon. Gentleman has said is far from the truth. No one is suggesting for one solitary moment that the Treasury wants to prevent finance going to the Commonwealth for this purpose or any other useful purpose. The whole question is—and I hope that the hon. Gentleman will direct his attention to it—whether it is appropriate in present circumstances for a United Kingdom building society to do this. All that I am saying is that it would be quite wrong to say that, within the next few years, or even in the near future if certain developments take place, some of which have been referred to by my hon. Friend, this sort of thing will not happen and that finance will not be made available by a United Kingdom building society to a building society in the Commonwealth. This must depend on the operation of Clause 11, and I should have thought that that was reasonable.

My hon. Friend said in the early part of his speech that he thought that there was a greater risk in investing building society funds in Commonwealth countries than over here. That has given rise to a misunderstanding. Does he regard investment in, for example, Australia or Canada as providing an element of greater risk than investing the same funds in this country?

I hope that my hon. Friend will not think me discourteous, but we dealt with this matter at some length in Committee. It is all there if my hon. Friend cares to read it.

It is not convincing anybody, is it?

I hope that the Economic Secretary is right in saying that my remarks will make the headlines. If they do, it will be for the first time, and it will be an important day in my life. In his interruption, the hon. Gentleman has run away from my point, which is that the people who understand the market of investment in real property, freehold or the like, are the building societies.

They are not, therefore, the second-best alternative to these other bodies, but are the people who can most effectively do this work, and they will never do it if they do not know that they can do it safely. They are responsible people, as we all know, and as we have been told continuously. There will be available to them the best possible advice from Her Majesty's Government on the conditions and circumstances in each individual country of the Commonwealth.

I sympathise with the hon. Member for Wycombe (Mr. John Hall) who was rebuked by the Economic Secretary for coming in when he had not done his homework. I see that he has now left the Chamber, no doubt under the lash of the hon. Gentleman's tongue. I would not interfere with that little fracas, but I sympathise with him when I think of anybody coming to the House for the first time and hearing that the proposition was that responsible, experienced, sober people running building societies, who want to provide the funds that would help people in the Commonwealth to get decent homes for themselves, and to help meet the housing conditions, not of the large numbers, perhaps, of those who may be subject to Government schemes, but, as we have been told by the Government, of people who have not the money, are not to be allowed to do so.

Bearing in mind that one of the greatest problems in the Commonwealth is shortage of capital, it seems almost inconceivable that the hon. Gentleman should have so turned the arguments round that he has managed to convince himself that he has a defensible case at all If the hon. Member for Wycombe intends to read the OFFICIAL REPORT of our Committee proceedings on this subject, I hope that he will read the speech of my hon. and learned Friend the Member for Kettering (Mr. Mitchison), that of my hon. Friend the Member for Miming-tam, Northfield (Mr. Chapman),

I beg to move, in page 16, line 23, at the end to insert:

"and a trustee savings bank or other savings bark established under any Act of Parliament whether public or local".

Clause 11 requires a building society to hold its funds only in a bank authorised by the Chief Registrar. Of course, most societies keep their main accounts with one of the clearing banks. Naturally, they will be authorised under this provision, but some societies also have deposits in a savings bank, and, therefore, it is desirable to widen the definition since the Post Office Savings

I beg to move, in page 18, line 10, after "(2)", to insert "or subsection (3)".

May we, as I think it would be for the convenience of the House if we were to do so, take with this Amendment my next two Amendments, Mr. Deputy-Speaker?

Yes, if it is for the convenience of the House.

The effect of these Amendments is to modify the provision of Clause 14 prohibiting directors or managers and secretaries of building societies from carrying out valuations by creating an exception in favour of existing directors in the next ten years. When we discussed this at some length in Committee I explained that the Government did not feel able to compromise on the principle that valuations and the assessment of the adequacy of the security were distinct functions to be carried out by different people and that the second and not the first was the proper rôle for the directors of a society. However, I promised to introduce at this stage an Amendment allowing for a transitional period of ten years for those directors, managers and secretaries holding office at the time of the passing of the Bill. These Amendments give effect to that undertaking. I shall not go into details unless that is the desire of the House.

You know, Mr. Deputy-Speaker, that I never miss an opportunity of being gracious in this House even towards a Government of this character, but as one who raised this matter on Second Reading and, again, at some length I am afraid, in Standing Committee I want to express my gratitude and appreciation. Of course, this does not go as far as I should like the Government to have gone, and this is nothing like as good as what I suggested, but one has to compromise in this House, and, therefore, I just want to say to the hon. Gentleman that I personally am deeply obliged. I know from correspondence I have received the satisfaction this gives to directors of small societies.

My hon. Friend the Member for Salford, West (Mr. C. Royle) interrupted me just as I was about to be ungracious. I was about to say that I think this ten years is too long. However, as he says, we have got to compromise. We had one or two other suggsetions which were put forward. We think they would have been a better solution of the problem. This is the way the Government have chosen. I would not quarrel with it.

I beg to move, in page 18, line 18, to leave out "has made or" and to insert "makes or has ".

I move this Amendment merely to ask the hon. Gentleman whether it can now be accepted as I outlined it in Committee, or whether he is satisfied that the Clause as at present drafted covers the point I made in Committee.

As a result of what the hon. Gentleman said in Committee I went into this matter again, and I had consultations with those who advise on drafting matters. We are satisfied that the Bill should be left as it is. I can assure the hon. Gentleman that we have wherever possible acceded to requests which have been made to us in connection with this Bill, but in this case we came to the conclusion that it would be best left as it is.

I shall not press the point. I beg to ask leave to withdraw the Amendment.

I beg to move, in page 18, line 44, to leave out "if" and to insert "(b)"

I think that with this Amendment we can conveniently discuss the next four Amendments in my name.

The effect of these Amendments is to make the subsection on penalties, at present subsection (4) of Clause 14, read as follows:

"If a director of a building society fails to carry out his duty under subsection (1) of this section, or any person prepares a report on any estate with respect to which he is disqualified for reporting by virtue of sub-sec ion (2) or subsection (3) of this section, knowing or having reason to believe that it will be used, or is likely to be used, for the purposes of paragraph (b) of subsection (1) of this section, he shall be liable on summary conviction to a fine not exceeding two hundred pounds or to imprisonment for a term not exceeding six months."

It goes on to deal with the position of a building society failing to comply with the subsection under which the society and every officer of the society in default are guilty of an offence under the Bill.

This series of Amendments results from two points which were discussed in Committee. The original draft of the Bill suffers from the serious defect that a person who is disqualified from making a valuation report used for the purposes of subsection (1, b) may make a report for a completely different purpose and then find he has committed an offence, because the society has subsequently used it unknown to him for purposes of the subsection. The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) quite rightly pointed out in Committee that this really was not satisfactory and that the point should be covered by some such words as quoted, and we have brought forward this series of Amendments which, I hope, will meet the case.

The hon. Gentleman the Member for Birmingham, Northfield (Mr. Chapman) suggested that the penalties would be more appropriately like those in Clause 1. He will see that, while we do not feel it right to go as far as he wanted us to do, we have brought the penalties into line with those for other failures by directors to carry out their duties under Clauses 38, 39 and 40.

I wish briefly to say that I am very much obliged and that my point is met quite satisfactorily.

This is a case where the Government threw the baby out of the bath water and put the baby back in the right place. I am grateful to them for having done so.

I beg to move, in page 19, line 42, to leave out from the beginning to "the" in line 7 on page 20.

The Amendment removes from the Clause the Chief Registrar's power to vary the list of charges in the Second Schedule, that is to say charges the existence of which need not debar a society from making an advance, despite the fact that the existence of a charge makes that advance a second mortgage. The hon. and learned Member for Kettering (Mr. Mitchison) pointed out in Committee that the power of variation was unlimited. I do not know whether I should go into great detail now, but I think that the purpose of the Amendment is quite clear.

The intention in including the power of varying the Schedule in the Bill as originally drafted was to prevent recurrence of the present position in which some charges are exempted and others are not. After discussion in Committee we considered whether it would be possible to qualify the power of variation in the subsection, as I think was suggested by the hon. and learned Member for Kettering, but we found it impossible to devise a limitation which would be at once real and not too restrictive.

The alternative is to remove the power of variation altogether, which we have done by virtue of the Amendment. This means that in future there will have to be examination of all Bills, public and private, which may involve powers to take a prior charge, to see whether that charge should affect the powers of building societies to make an advance, and, if not, whether it would be covered by the terms of the Second Schedule or whether appropriate amendment of the Second Schedule should be included in that Bill. This may seem a formidable task but it seems the only way to meet the hon. and learned Member's point. We do not believe that it will be an impossible or unreasonable administrative task.

This seems right.

I beg to move, in page 23, line 35, to leave out "makes" and to insert:

"shall have this right so long as the building society is satisfied that the applicant requires access to the register solely in order to communicate with members of the society for the purpose set out in subsection (3) of this section. If the society refuses access, a member may make".

It would be convenient to take with this the Amendment in page 23, line 36, after first "Register", insert "and".

I must be a little less brief than was my hon. and learned Friend the Member for Kettering (Mr. Mitchison) in his last remark. I must explain briefly how the Amendment has come about. The House will recall that on Second Reading there was a great clamour, particularly from hon. Members opposite, that members of building societies should not have unimpeded access to registers of members of the societies even though they might require it for quite legitimate purposes. It was felt that there might be abuse. People might easily get to know whether a relative or somebody else had money in a building society. The Government were under great pressure to make these registers less accessible to individual members of the building societies.

We then reached the Committee stage when the Government spokesman completely gave way to this pressure and introduced a Clause so substantially altered that what we are now considering as Clause 27 is very different from that with which we started. It has gone right to the other extreme, as we warned the hon. Gentleman in Committee. It now means that, except when a building society is in the gravest difficulties and has not been paying interest and has not allowed a member to withdraw his shares, members will still not be able to get at the register for quite legitimate purposes.

This really goes too far, as I said in Committee. The Amendment provides that instead of having to go to the Chief Registrar on every occasion other than those emergency occasions the individual should have the right of access to the register as long as a building society, that is the board of directors, is satisfied that he requires such access for a legitimate purpose—the same purpose that is set out in an earlier subsection, which is of communicating with individual members on a subject concerning the affairs of the society. If the board of directors refuses access on the ground that it is frivolous, that it is prying into the register for no good purpose, and is not for any legitimate reason, the Amendment safeguards the individual member by providing that he can go to the Registrar as a court of appeal.

My Amendment, therefore, gets rid of the need to go to the Registrar on every occasion other than the emergency ones and states that there can be legitimate occasions in between where the board of directors should give the individual member access to the register. I am sure that this is a reasonable thing to ask and that, as the Clause is now drafted, it has gone too far to meet the earlier objections on Second Reading.

The hon. Member for Northfield (Mr. Chapman) has made his Birmingham, Northfield (Mr. Chapman) has made his object very plain, but I have to tell him that his Amendment will not help to achieve that object in substance and in fact may do actual harm. He wants to revert some way to the original position, except that the 'Amendment requires a building society to be satisfied—and "satisfied" is the word he uses—whereas before a member had the right of access for the purpose of communicating with other members. The hon. Member is now requiring the building society to be satisfied, and this gives less unrestrictive right of access than was originally in the Bill. I accept that the hon. Member is trying in this way to seek an acceptable compromise, but from the point of view of the desire for privacy on the part of members of building societies his reversion to the original proposal will still be offensive.

Oh.

I do not think that the hon. Member will want to fight all this out again. Members legitimately wish to remain private as far as possible. They wish to retain the privacy of their membership and they would still fear that this right might be used for solicitation for the legitimate objects of the society or perhaps for the sale of coupons. In the form which the Amendment takes, it would be extremely easy for a building society genuinely to find that the member's object was not solely for the purpose which be declared. Nobody can prove a negative. Nobody can be forced to accept that the motive which is said to animate a member is the sole and exclusive motive. It will be only too easy for societies to refuse the right of access, and in some cases to refuse it genuinely.

2.30 p.m.

But I must point out that if there were an unscrupulous building society that wanted to avoid access to the Chief Registrar the effect of application, arising out of the Amendment, to the building society would enable it, if it came within its lilies, to use its right to repay that member straight away and so remove the right of the member to take his grievance to the Chief Registrar. I suggest that the position under the Bill as it now stands, that every member shall have a right of access to the Chief Registrar to ask for access to the register, protects the membership quite as much as, and, in fact, rather better than, the hon. Member's Amendment.

I must finish by saying that there is absolutely nothing in the law to prevent the member applying to the building society first if he wishes to do so and then retaining the right to go to the Chief Registrar. I hope I have been able to show the hon. Gentleman that, while not being able to accept even the main purpose behind his Amendment, I de not think his Amendment would serve his purpose.

If I may speak again by leave of the House, I suppose I must be satisfied. I do not even understand what the hon. Gentleman was saying in the second part of his remarks. Frankly, what I save suggested seems to me to be a legitimate compromise. Also, I do not see the hon. Gentleman's point about proving that the word "solely" is in operation. Surely, if the board of directors is satisfied that that is the member's sole purpose, that is the decision for it to make, and, having made that decision, it can give the member access to the register. The board of directors does not have to be able to prove it; it merely has to be satisfied.

If I may speak again by leave of the House, I am assuming that most 'building societies will, at the wish of their members, desire to keep the register private as often as possible. Secondly, if they are given a legitimate reason for refusing access, they will probably do so. I am saying that the right of the member to apply to the Chief Registrar is a far more effective right since most buildings society directors would refuse access.

I shall not press this point at this late hour on a Friday, but I think that the Government are being most wooden on this issue and have unduly succumbed to all the pressure for complete privacy. It is most reprehensible. The whole thing has gone much too far and become quite ridiculous. Anybody would think that we were dealing with a private company and not a voluntary organisation. Time and time again we have had to remind the Government that building societies are voluntary organisations of voluntary members and are supposed to be run in a democratic fashion. The hon. Gentleman's words almost indicated that the Government have forgotten that and that they are determined to keep these rules so secret that the building societies, as democratic institutions, are no longer likely to exist. I must protest very strongly at the way the Amendment has been dealt with.

I rise only to say that I have been reading the speech that I made in Committee. It was so good and so long that I do not propose to repeat it, and I could not improve on it. Further, I agree with my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman) that this business of secrecy really is a rather bogus affair in these circumstances. The Bill as originally drafted would not have interfered in the least with any reasonable feelings on the matter or any reasonable requirements of building societies, and I disagree with what the Government are doing. We divided on this matter in Committee. Perhaps we need not do so again now.

I beg to move, in page 25, line 7, to leave out from "society" to the end of line 11 and to insert:

"of which notice specifying the intention to move the resolution as a special resolution has been duly given."

It might be for the convenience of the House if we were to discuss at the same time the following Amendments:

This group of Amendments meets the criticism raised during the Committee stage that it would be possible for the directors of a building society to avoid having to give notice of any special resolution by so organising their meeting. The proposed Amendments require that a building society shall be obliged to give notice of any special resolution to all those who have a right to vote on a special resolution in the same notice which conveys information that a meeting at which that special resolution is to be discussed is to be held.

The machinery for this is that a building society may not give longer notice of a meeting than 56 days and that notice of a special resolution must be given 56 days before the meeting at which it is to be discussed is to be held. The final part of the machinery is that 21 days' notice of a meeting must be given and that if a special resolution is to be discussed at that meeting the notice must contain the special resolution which is going to be discussed.

A further point that was raised in Committee is also now included, namely that a failure to comply with this by the building society and its officers is made an offence. I hope that the House will feel that this meets the criticism levied during the Committee stage in a satisfactory manner.

This meets our views aril meets, I think, the point raised by the hon. Member for Wimbledon (Sir C. Black) about the time by altering the 28 days to 56.

I must thank the hon. Gentleman for having removed subsection (4), which put in certain circumstances, the expenses of circulating the notice on a member of the building society. That was the point to which we objected most strongly in Committee. I am glad that it has been met and that our own proposals have been superseded by what the Government have done.

I thank my hon. Friend for having met the points which other hon. Members and I raised during the Committee stage. These various Amendments seem to me to cover extremely neatly and conveniently the difficulties we then foresaw. I am grateful to the Government for having met the points.

I beg to move, in page 26, line 14, after "society", to insert:

"and provided that the resolution is signed by at least ten members of the building society".

We are here talking about the circulation of special resolutions sent in by individual members of building societies. In the Bill as originally drafted this was covered in the Third Schedule. There the Government laid it down that any resolutions submitted by anyone would be circulated. To that Schedule I tabled precisely this Amendment to provide that when ten members signed the resolution the society should be obliged to circulate it.

That part of the Schedule disappeared in the course of redrafting and substitution by this Clause and I now find that the Government have swung from the extreme position which they took to the position of requiring that the member himself should pay for the circulation and have now come right back again to the position that formerly applied in the Third Schedule.

Having listened to the hon. Member for a moment, I think it would be convenient for the House to discuss with this Amendment the Amendment in his name, to page 26, line 32, after "shall", insert:

"unless the resolution is signed by not less than ten members of the society, and"

That would be convenient, Mr. Speaker. We are now back with the position in the Third Schedule of the Bill as originally drafted, namely, that any special resolution must be circulated at the expense of the society. This matter requires some Amendment. I am informed that societies are quite fearful that if this stands they will have some cranks who will use this power to put down "nuisance" resolutions of no great importance and circulated to meeting after meeting at the expense of the society.

In some societies, thousands, if not hundreds of thousands, of members are involved. The expense of circulating them is considerable. In these circumstances it would be wrong to insist that any crank can have any special resolution circulated year after year at the expense of the society. It is not unreasonable to say that he must produce nine other members of the society who will support him. This is a matter of great importance. My Amendment would save societies a good deal of nuisance, and is a reasonable one to press.

I do not want unnecessarily to bring up the rather sore point about the privacy of the registers. The hon. Member speaks with great authority, but he is not at one with the majority of people in the building society movement, who welcome the privacy of the register. If the moving of a special resolution is to be dependent upon having nine supporters, that will almost certainly mean that members must be given a less restricted right of access to the register.

The movement has welcomed the maintenance, in broad principle, of the privacy of the registers. It must, therefore, accept the consequences of that. If one of the consequences is that it will expose societies to occasionally cranky special resolutions, then that must be borne by them as a minor result of their own desire to keep the registers as private as possible. This Amendment should not be accepted by the House.

It serves them right.

I beg to move, in page 27, line 43, to leave out "fifteen" and to insert

"two years and three".

I take it, Mr. Speaker, that it would be convenient to take with this Amendment the next two in my name, in page 28, line 3, to leave out "fifteen" and to insert

"two years and three".

and in line 3, after "months", to insert

"the Chief Registrar may, after consultation with the building society, direct that".

That would be for the convenience of the House.

This again arises from a point I raised in Committee about the precipitate speed that may be involved for some building societies in adapting all their rules to take notice of what is set out in the Bill. I raised the point that no one will know until there have been consultations with the Chief Registrar what particular existing rules are in accordance with the requirements of the Bill, and what leeway can be offered and expected. It may take some time to build up case law on which guidance can be given to societies which have need to alter their rules. In these circumstances I suggested that it would be appropriate to give building societies a little more time to carry out this part of the Bill.

My second Amendment to page 28, line 3, provides, in effect, an alternative, if the Government are willing to accept it. It would provide that after the end of the period, whether it be fifteen months or two years and three months, it shall be the Chief Registrar who may

"…after consultation with the building society, direct that the provisions of the Third Schedule …"

come into effect in default of the society altering its rules.

This is better than having a simple guillotine procedure after a period when some model rules are deemed to have effect. It would be better if the Chief Registrar were able to consult with the building society concerned to explore with it the reasons why any of its rules might still not be quite acceptable, to take into account that it may be in the process of actually altering them in order to meet his requirements, and, generally, to let the initiative and some discretion to that extent lie on the Chief Registrar. This, again, is not an unreasonable thing to suggest in order to take care of what was a legitimate point that I made in Committee. I hope that on this last time of asking I might get an Amendment accepted today.

I am extremely sorry that the hon. Member always seems to be left out, but the same thing must happen again on this occasion if my advice is accepted. He has clearly explained the purposes of this Clause and of the Amendments and I need not take up the time of the House by going over the same ground.

I undertook in Committee to look again at the period provided for in this Clause. I have done so and have also sought the advice of the Chief Registrar. Those hon. Members who were on the Committee will recall that the hon. Gentleman referred to the case of a particular society. I have been in touch with that society in order to see whether there were any difficulties with which it was faced which we had not previously considered and which ought to cause us to change our minds.

With all those considerations in mind, the difficulties are not sufficiently great to provide for a period longer than that set out in the Bill. After all, the requirements are not very great and the societies will have the rules in the Third Schedule and will also, no doubt, have the model rules drawn up by counsel and so on and perhaps by the Building Societies Association.

I assure the hon. Member for Birmingham, Northfield (Mr. Chapman) that the Chief Registrar will certainly be pleased to advise any society which is in difficulties and that he is considering whether he might prepare a complete set of model rules as a guide to societies. It is only when a society is deliberately trying to make the absolute minimum provision required by Statute that any doubt is likely to arise about whether the new rules provide for the matter or not.

We are still not convinced that the present proposal for the timetable will cause the societies or the Chief Registrar any difficulty. I am informed that the Building Societies Association—I appreciate that it does not cover everybody—is content with the timetable and that the Chief Registrar does not expect any difficulty. In view of what I have said about the Chief Registrar being only too happy to advise any society which considers itself likely to find itself in difficulties, I hope that the hon. Member will not press the Amendment.

Will the hon. Gentleman answer the question about giving more discretion to the Chief Registrar instead of having the guillotine fall by law?

That is covered by the same argument, because if we thought that there was any danger that this period of fifteen months was not long enough, there would be much to be said for accepting the Amendment, but we are firmly of the opinion that that will not be necessary and, therefore, it would not be right to advise the House to accept the third Amendment. I repeat that the Chief Registrar will be available to help those societies who think that they might have difficulties.

In view of that assurance and the fact that the information available to the hon. Gentleman is wider than mine, I beg to ask leave to withdraw the Amendment.

I beg to move, in page 33, line 40, after "year", to insert:

"by way of investments in or loans to the building society."

It may be convenient with this to discuss at the same time the Amendment in page 33.

That will be convenient.

These two Amendments are largely drafting Amendments intended to deal with a flaw in Clause 43. As the Clause stands, the directors' report would be required under subsection (3, c) to show the total amount received from members of the society during the financial year. Strictly speaking, that would include repayments by borrowing members in respect of advances made to them. That is clearly not the intention, and I hope that the House will agree to the Amendment.

I beg to move, in page 38, to leave out lines 29 to 31 and to insert:

Provided that a person who is an auditor of a building society at the commencement of this Act shall, notwithstanding that he not art the time a member of any of the said bodies, be qualified for appointment or re-appointment as an auditor of that building society at any annual general meeting of the building society if he is at the time of the said meeting authorised under paragraph (b) of subsection (1) of the said section one hundred and sixty-one to be appointed as auditor of a company.

Section 161 of the Companies Act, 1948, prescribes certain qualifications which a person must have if he is to be eligible for appointment as auditor of a public company, and subsection (1, b) goes on to say that if a person has a qualification of a similar kind, obtained outside the United Kingdom, he shall be eligible for such an appointment. The subsection continues further to say that if a person who is not himself a member of a body of accountants approved for the purposes of that Section has none the less obtained adequate knowledge and experience in the employment of a member of a recognised body of accountants, he, too, shall be eligible for appointment as auditor of a public company.

Membership of one of the bodies which have been approved for the purposes of Section 161 involves as passing of professional examinations. As a member of such a body but still speaking with due diffidence, I suggest that they are of the highest standard and that it is quite wrong to treat as the equal of a person who has passed difficult professional examinations a person who has not passed any such examinations, but who has merely had some years of experience in the service of a person who has done so.

Every Act which Parliament has passed in the last three years which has included a Section referring to the quail- fications of auditors has required that a person appointed as an auditor under that Act should be a member of one of the recognised bodies. I mention the New Towns Act, 1946, the Local Employment Act, 1960, the Horticulture Act, 1960. There were many other similar Acts, all of which included those requirements. It seems a pity, in a Bill which in broad terms has received a widespread welcome as a tightening up of the administration of building societies, that there should appear to be a lowering of the standard required of persons who are to be employed as auditors of building societies.

It may be that when in Committee my hon. Friend moved the Amendment to add the lines 29 to 31, he had in mind what I can call "sitting tenants." It may be that there are persons employed as auditors of building societies who are not members of a recognised body. It might be harsh if, by an Act of Parliament, we suddenly deprived those people of what in some cases might be a substantial part of their income.

The Amendment takes that situation and preserves the status quo for people now employed as auditors, but it maintains the standards for future persons to be appointed as auditors of building societies. For that reason, I very much hope that the Amendment will prove acceptable in the eyes of my hon. Friends.

In moving his Amendment, my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) has quite accurately forecast, or surmised, the reasons for which I moved an Amendment on the subject in Committee. While I should like to take him up on some of his observations, I do not think that this is either the time or the place to do so.

The essential difference between the Bill as at present drafted and the Amendment proposed is that under the Bill it would be open in future for any person not a member of any of the recognised bodies to compete with a member of a recognised body for the appointment as auditor of a building society.

Under my hon. Friend's Amendment, no such competition would be possible. It would merely offer the opportunity of continuation for, as he describes it, a "sitting tenant." Of course, I recognise that any undue competition would be most unwelcome to the institute which my hon. Friend represents. From my point of view, I am prepared to accept the Amendment.

Since the object of the Amendment is to avoid hardship while preserving standards, I hope that the House will accept it.

I wish simply to protest that I see no reason why a person qualified to act as auditor of a company should not be qualified to act as auditor of a building society. If the Govern-meat think that the qualifications for auditing the accounts of a company are too wide, then it is high time that they altered them.

I beg to move, in page 41, line 19, to leave out "fourteen days" and to insert "one month".

This Amendment increases from a fortnight to a month the period in which a society must inform the Chief Registrar of any change in the appointment of a director, manager or secretary. It follows the Amendment moved by my hon. Friend the Member for Brierley Hill (Mr. Talbot), and we think it a good one.

I beg to move, in page 45, line 7, leave out from the second "the" to "for" in line 12 and to insert

"words 'required by the Building Societies Acts to be sent to the registrar' there shall be substituted the words 'sent to the Chief Registrar of Friendly Societies or the registrar under or in pursuance of the Building Societies Acts, 1874 to 1960', and".

This Amendment widens the scope of the offence in Section 22 of the Building Societies Act, 1894. At present, the offence relates to wilfully making a false statement in any document required to be sent to the Registrar by building societies. Therefore, it would cover false statements in the annual return, because that has to be made, but not false statements, for instance, in an application to the Registrar, which a society could make or not as it chose, for a relaxation of the 10 per cent. on special advances. I think the House will agree that that sort of application should be covered. That is the purpose of the Amendment.

I beg to move, in page 61, line 1, at the end to insert:

In subsection (2) of section six, for the words "the Gazette" substitute the words "the London and Edinburgh Gazettes".

This and the following Amendment are required as a preliminary to consolidation.