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Vol. 709 Wednesday No. 54 25 March 2009 PARLIAMENTARY DEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT ORDER OF BUSINESS Questions Building Societies Supreme Court: Retirement Age Israel: Arms Embargo Privacy: Government Databases Coroners and Justice Bill First Reading Tax Credits Up-rating Regulations 2009 Guardian’s Allowance Up-rating Order 2009 Guardian’s Allowance Up-rating (Northern Ireland) Order 2009 Renewable Transport Fuel Obligations (Amendment) Order 2009 Occupational Pension Schemes (Levy Ceiling) Order 2009 Pension Protection Fund (Pension Compensation Cap) Order 2009 Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 2009 Occupational Pension Schemes (Contracting-out) (Amendment) Regulations 2009 European Parliamentary Elections (Northern Ireland) (Amendment) Regulations 2009 European Parliamentary Elections (Amendment) (No. 2) Regulations 2009 Motions to Approve Borders, Citizenship and Immigration Bill [HL] Report (First Day) Corporation Tax Bill Second Reading and remaining stages Borders, Citizenship and Immigration Bill [HL] Report (First Day) (continued) Grand Committee Local Government (Structural Changes) (Miscellaneous Amendments and Other Provision) Order 2009 Cornwall (Electoral Arrangements and Consequential Amendments) Order 2009 Systematics and Taxonomy (S&TC Reports) Debated Written Statements Written Answers For column numbers see back page £3·50 Lords wishing to be supplied with these Daily Reports should give notice to this effect to the Printed Paper Office. 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All prices are inclusive of postage. © Parliamentary Copyright House of Lords 2009, this publication may be reproduced under the terms of the Parliamentary Click-Use Licence, available online through the Office of Public Sector Information website at www.opsi.gov.uk/click-use/ 651 Building Societies[25 MARCH 2009] Building Societies 652 Lord Myners: My Lords, there is a great deal in my House of Lords noble friend’s comments with which I agree. The demutualisation of building societies, approved, supported Wednesday, 25 March 2009. and encouraged by the members of those societies, has had regrettable conclusions. I, for one, regret that 3pm mutuals are less significant in the financial services sector, both in insurance and in banking, than they Prayers—read earlier at the Judicial Sitting by the were originally. Mutual building societies exhibited a Lord Bishop of Chester. sense of community responsibility, attachment to their geography and, above all else, prudence and responsibility which is so different from the greed and self-serving Building Societies motivation of those who have led some of our banks Question which have got into so much difficulty. I deeply regret the fact that the prudence of building societies did not Asked By The Lord Bishop of Chester remain in the ascendancy and instead became subservient To ask Her Majesty’s Government what plans to those who led our banks so monstrously badly. they have to support and develop mutual building Lord Newby: My Lords, given the noble Lord’s societies. support for the concept of mutuality, will he consider remutualising all or part of Northern Rock? The Financial Services Secretary to the Treasury (Lord Myners): My Lords, the Government are committed Lord Myners: My Lords, it is too soon to consider to developing the mutuals sector. They supported a that issue but I very much welcome anything that can Private Member’s Bill, which will, among other things, be done to encourage the co-operative movement, the facilitate transfers between one type of mutual and credit union movement and mutuality. If, out of this another. This has recently been implemented for building disastrous affair, which has afflicted a small number of societies. our major banks, some opportunity for promoting In addition, building societies are eligible for assistance mutuality can be identified, I would be the first to under the Government’s recapitalisation and credit endorse it. guarantee schemes, and the Banking Act 2009 contains provisions which will help building societies to access Lord Trimble: My Lords, I welcome very much liquidity support and ease legislative restrictions on what the Minister has said about the mutual sector, their business. particularly his desire to support it, but is it not rather unfortunate that in recent months a mutual society The Lord Bishop of Chester: My Lords, I am grateful has collapsed because of the current financial problems to the Minister for his Answer, but may I press him on and has not had any significant help from the one point? Is it fair that the mutual societies, which on Government? I am referring of course to the Presbyterian the whole have conducted themselves in a fairly cautious Mutual Society which, alone among all the financial and risk-free way, should be required to pay such large institutions in trouble in the United Kingdom in recent contributions to the Financial Services Compensation months, has received no help at all from the Government. Scheme to make up for the failures of Icelandic banks I wonder what it is that the Government do not like and similar institutions? Is this consistent with the about it; is it perhaps because it is in Northern Ireland? Government’s support for the mutual societies? Noble Lords: Oh! Lord Myners: My Lords, the right reverend Prelate Lord Myners: My Lords, I think that the reaction is not the first to make that point to the Treasury. The from noble Lords would affirm the fact that this has allocation of constituencies through the Financial Services nothing to do with the location of the society.Discussions Compensation Scheme was the subject of consultation are continuing with the Presbyterian Mutual Society and the current arrangement was welcomed by the and I am very aware of the concerns that have afflicted building society movement. However, it is based on that particular society. The Financial Services Authority retail deposits and it is recognised that this means that and the Treasury are in continuing discussions in a heavy burden is falling on building societies. The respect of the Presbyterian. I do not think that it Financial Services Authority is consulting on the proposals would be appropriate for me to say anything further at for allocation although I do not think that an this stage. announcement is imminent. Lord Forsyth of Drumlean: My Lords, when the Lord Tomlinson: My Lords, does my noble friend Minister answered the right reverend Prelate, he said agree that the demutualisation of building societies that he was not the first to make the point about the was a major contributory cause of the crisis in the unfairness of the depositors’ protection scheme. Why banking sector, that in most cases where greed motivated can the Government not come forward with a new demutualisation the relevant demutualised societies proposal? As I understand it, the Government have collapsed, and that we now need to see the Government’s lent the money. This money is going to be paid back. It promise put into practice so that we can re-establish a will be paid through higher mortgage payments by wide range of mutual societies to strengthen the regional people who have mortgages with building societies base of our financial services? and lower interest payments for people who are depositors 653 Building Societies[LORDS] Supreme Court: Retirement Age 654 [LORD FORSYTH OF DRUMLEAN] Lord Pannick: My Lords, I thank the Minister for with building societies. Why do the Minister and the that slightly encouraging response. When he looks at Government not come forward with an alternative this matter again, will he agree that special consideration proposal that is fairer? Why do they keep hiding should apply to judges of the Supreme Court, in that behind consultations and the FSA and not actually they are the cream of the judiciary and inevitably take come forward with a policy that is fair? time to rise to the top, normally after serving for several years in the High Court and then in the Court Lord Myners: My Lords, we as a Government think of Appeal? Is it not therefore a terrible waste of our that consultation is the right way to proceed. It is most valuable judicial resources to dispose of them entirely consistent with mutuality, which is members after a short stay in the Supreme Court? expressing views having appraised themselves of the situation. The Financial Services Authority is consulting, Lord Bach: My Lords, as the House would expect, and we shall await the outcome of that consultation.