Building Societies Act 1986 (Modifications) Order 2024
Debate between Baroness Kramer and Baroness Blake of Leeds
Baroness Blake of Leeds (Lab)
I was going to start by welcoming the noble Baroness, Lady Neville-Rolfe, to her place, but I see that she has moved along the Bench. However, I am sure that we will have the opportunity in future.
The Government have committed to modernising the Building Societies Act 1986 to ensure that building societies, which are mutually owned financial institutions, primarily offering savings and mortgage products to members, can compete effectively with retail banks. This order forms part of this commitment, by amending the Building Societies Act 1986 to remove some unnecessary burdens on the sector by aligning certain corporate governance requirements with the same flexibilities afforded to companies under the Companies Act 2006. This aligns within the Government’s wider ambition to unlock the full potential of the mutuals sector, recognising the sector’s potential to drive innovation and economic growth across the country through its emphasis on support for members and communities.
Specifically, this order modernises the 1986 Act by amending and deleting the relevant provisions in Sections 60 and 61, which currently impose a normal retirement age of 70 for directors, which in turn enables building societies to provide a compulsory retirement age for directors in their rules. By amending these provisions, this order will provide building societies with greater flexibility in appointing directors and end blanket age-based restrictions, modernising the 1986 Act in line with the Companies Act 2006.
Moreover, this order will amend Section 80 of the 1986 Act to alter the requirement for the balance sheet of a building society to be signed by two directors and the CEO and instead allow one director to sign the balance sheet on behalf of the board. This removes an unnecessary burden for building societies and aligns the legislation with that for companies, which requires only one director to sign their accounts.
Overall, these amendments make small but important updates to the 1986 Act by removing outdated corporate governance requirements and providing building societies with the same modern flexibilities as retail banks operating under the Companies Act 2006.
Furthermore, I understand that these changes will be welcomed by the sector. For example, the prospect of an amendment to allow one director to sign a building society balance sheet on behalf of the board was welcomed during a consultation published by the previous Government in December 2021. Although the removal of the retirement age for building society directors was not proposed in the 2021 consultation, it was suggested by the Building Societies Association and another large building society in their responses to the consultation, as published in the consultation response in December 2022.
Finally, I shall touch briefly on future considerations. Earlier this year, the Building Societies Act 1986 (Amendment) Act 2024 achieved Royal Assent. This allows for real-time virtual participation at building society general meetings and provides the Government with the powers to introduce subsequent amendments further to modernise the 1986 Act. The Government will introduce these remaining changes in due course.
In conclusion, and as I have outlined, this order makes necessary amendments to the Building Societies Act 1986. Crucially, it will support building societies by aligning certain corporate governance requirements with the same flexibilities afforded to retail banks. This is an important step in progressing the Government’s commitment to unlock the full potential of the mutuals sector. It is my pleasure to bring these amendments to the Committee, and I hope that noble Lords will endorse these important reforms.
Baroness Kramer (LD)
My Lords, I will make my comments brief. Like the Minister, I am a strong supporter of the mutual sector, but the values of many of our retail banks have sometimes sent them chasing profits when they should have been serving customers. Mutual societies at least argue that at their base there is a different ethos that makes them far more aware of the needs of both their members and the community. I would very much like to see a significant expansion of the mutual sector, particularly to try to deal with the many unmet needs in the financial services sector.
However, I am a little uncertain about these two changes, although I am not going to oppose them. I think it is a good idea for organisations to refresh, and by removing a retirement age, there may be a temptation, particularly because people develop a certain personal loyalty to particular directors who have been there for a long time, or a hesitancy to refresh than we would have seen if there were a retirement age. Will the Minister comment on that because it is generally good practice? I understand that a hard and fast retirement age creates all kinds of ageism issues, but is there is going to be any kind of mechanism to encourage that look at refreshment from a corporate governance perspective?
The other issue is having one signature rather than three. Again, I have some hesitancies here. In the modern era, it is so easy to provide a signature electronically that one wonders why it should be so desperately cumbersome. I am certain that most directors of mutual societies are people of great integrity and would never allow a falsified statement to go forward. Within financial services, however, we have all been disappointed from time to time by a sort of creeping abuse in one sector or another. I am just concerned that a very natural check may be removed by going from three signatures down to one.
United Kingdom Internal Market Act 2020 (Services Exclusions) Regulations 2023
Debate between Baroness Kramer and Baroness Blake of Leeds(1 year, 1 month ago)
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Baroness Kramer (LD)
My Lords, I was not involved with the legislation for the United Kingdom Internal Market Act 2020 and I have to admit that, even after reading the Explanatory Notes, much of this SI seemed to me more like a Rubik’s cube, so I was appreciative of the clarifications from the Minister.
To a non-expert like me, the SI appeared at first glance to be essentially technical tidying, but I can also see that it tangles with the underlying tensions between the UK Internal Market Act and the common frameworks—that is to say, the intergovernmental agreements that set out how the Governments of the UK nations will work together to manage regulatory divergence in policy areas that were formerly governed at EU level. That leads me to be a little concerned, at least, that the instrument before us received the formal consent only of the Welsh Government. I have no idea whether that is because of objections by Scotland and Northern Ireland, simple oversight or, perhaps, in the case of Northern Ireland, because its Assembly is unable to sit. Perhaps the Minister might expand on that and explain to us why that formal consent was not given, because on the surface it is certainly a little troubling. I remember warning some colleagues involved in the internal market Act when it was passed that it created the likelihood of confusion and tension between Westminster and the devolved authorities, so I am wondering whether this is an instance of that.
I am also trying to understand what the SI will do on a day-to-day basis for the workforces that it names and what the impact will be on their potential customers. I can understand the removing of the exclusions for financial services providers; I assume that it has a positive impact on competition. But I wonder if there was any consideration that it might have a detrimental impact on the provision of local services. We have always had a great problem in financial services stopping everything being either sucked into London or the major centres and in making sure there is local activity across the whole United Kingdom.
I am struggling to understand the consequences of amending social services exclusions. It is very hard to understand why the qualifications for someone who works in social services should differ and whether this reflects some deeper issues within social service provision.
But I am most mystified by the exclusions that have been introduced for what I will group together as qualified utility engineers. They are now excluded from mutual recognition and the non-discrimination principle. We are in a period where we know we have to focus on net zero. That creates dramatic change in the way energy is provided. There are issues of introducing insulation as rapidly as possible across the country and issues with utilities—for example, shortages of reservoirs and transport. All these individuals will apparently be excluded from mutual recognition and non-discrimination. Could the Minister explain what the day-to-day impact is of that exclusion decision?
I thank the Minister and once again apologise for my lack of familiarity with the underlying legislation. It would certainly help in some of these areas to have some further clarification.
Baroness Blake of Leeds (Lab)
My Lords, I thank the noble Baroness, Lady Kramer, for the image of a Rubik’s cube in looking at this legislation. I welcome the detail that has been provided; it has been very helpful and, as a result, I will keep my comments fairly brief. I thank the officials who have been involved in the process and the Minister for his detailed explanation.
The major concern I want to raise is that, despite the detailed consultation—I am very pleased to see the extent to which that was undertaken—it is troubling that consent was only achieved with Welsh Ministers and not Scottish Ministers. Obviously, the Written Ministerial Statement was laid before the Summer Recess, which was a significant time ago now, and I wondered whether there have been any more conversations between those bodies to seek further reassurance about the progress of this.
I have a specific question. The Scottish Government made a request in relation to heat network authorisations. Can I seek clarification that that has been incorporated into this SI?
I too would like to ask if the noble Earl is able to give us a more detailed explanation of why consent was not forthcoming. As we know, the Scottish Government did not consent to the UKIM Act. Could the Minister explain whether this is the reason? Has he had any explanation of the reasons? Is there a reflection of any concern with the content of the SI as a result? We obviously have to note the continued absence of the Northern Ireland Assembly and Executive. We want to explore with the Minister if that is seen as one of the reasons consent was not forthcoming.
This speaks to a broader concern, which we have expressed on many occasions, about the hoarding of power in Westminster. This is still seen as an issue. Perhaps the lack of progress on an agreement on a range of common frameworks with the devolved Administrations, and the failure to bring this forward, undermines the co-operative working with the DAs.
In terms of review, paragraph 14.1 of the Explanatory Memorandum mentions a review of the Act’s amendment powers, which “must take place” between the third and fifth anniversaries of the passing of the legislation. Could the Minister provide an update on this? Would it be reasonable to assume that there will be further review towards the end of the period stated? If this is the case, has work already begun to detail what further amendments might be required?
The Earl of Minto (Con)
I thank noble Lords for their valuable contributions to the debate on this instrument. I agree that it is a very technical SI, and I would like to answer some of the detailed questions properly in writing. I have a lot of the detail here, but I know that time is short, and we want to get on with it. A number of very valuable points have been made, and I will endeavour to answer them to the best of my ability.
The provisions of the UKIM Act naturally bring up historic opposition, but I hope that the legislation that we are looking to pass today will be considered on its own merits in relation to protecting the UK internal market. As a reminder, the instrument will enable the effective operation of services regulation in the UK by adding, amending and removing service sectors excluded from the market access principles in Part 2 of the UKIM Act to reflect current regulatory practice in the UK.
This instrument is a direct result of a public consultation and therefore a rare amendment to the exclusions list, following the intention to make the scope of the UKIM Act better support intra-UK trade. It continues to guarantee that services connected with the supply or production of gas and electricity can be regulated separately in the parts of the UK. This will ensure regulation, mainly in environmentally sensitive areas, can continue without the application of the UKIM Act’s market access principles maintaining how the service is provided or regulated in parts of the UK. It will also ensure the services excluded in Schedule 2 better reflect the UK’s circumstances post-EU exit by removing exclusions which are no longer necessary in this new context.
Road Fuel Prices
Debate between Baroness Kramer and Baroness Blake of Leeds(1 year, 4 months ago)
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Baroness Blake of Leeds (Lab)
My Lords, cost of living pressures are affecting people right across Britain. In that context, we welcome the Government commissioning the Competition and Markets Authority to investigate soaring fuel prices last July. The CMA has finally recommended measures to improve fuel price transparency and stop inflated fuel prices being passed on to hard-hit consumers. The fuel finder open data scheme is welcome, but given that retailers have been inflating the prices, how do the Government expect the CMA’s voluntary scheme to work? When will the Government end the painful wait for consumers and bring forward the legislation that is needed to enforce it?
Baroness Kramer (LD)
My Lords, the Government have stood for this gouging behaviour by the supermarkets over the past year. In rural areas such as Somerton and Frome, and Mid Bedfordshire, people find themselves facing the highest prices and the least competition, and will benefit the least from the comparison scheme. I have two questions for the Minister. Is it fair that supermarket bosses will get bonuses based on gouged profits, and will the Minister review the rural fuel duty relief scheme, which gives a 5p-per-litre reduction, to see whether it can be extended to rural areas not presently covered?