Building Societies Act 1986 (Amendment) Bill

Tulip Siddiq Excerpts

2nd reading
Friday 19th January 2024 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on bringing this important Bill to the House for debate. It is very lucky to get the first slot in the private Member’s Bill ballot, but it also takes a lot of work to find a Bill that generates such cross-party support and talks to such an important issue, as we have heard today. I hope you will indulge me for a minute, Madam Deputy Speaker, while I speak about the fabulous work that my hon. Friend has done in the House, because it is not often that we get to talk about and congratulate our comrades in quite this way.

My hon. Friend, who has been in the House since 2010, has done valuable work on the all-party parliamentary group on state pension inequality for women, which I am sure everyone will recognise. Before she was elected to the House, she worked closely with the National Asthma Campaign to ensure that life was easier for people who suffer from asthma, as I do. I commend her for that and for all the work she did with the GMB to change the law around the compensation paid to victims of asbestos-related diseases. This is, then, not the first piece of legislation she has worked on, but it is an important Bill and it shows how valued she is as a Member of the House.

I know how closely my hon. Friend has worked with civil servants, Ministers and the Treasury to produce a Bill that has such cross-party support and of which Treasury Ministers approve. From my dealings with them, I know that that is rare. I am delighted to say that the Opposition will back the Bill wholeheartedly today. I also acknowledge the important work of Labour’s sister party the Co-operative party, and the wider mutual sector, including the Building Societies Association and Nationwide. They have spent a great deal of time feeding into the Bill.

As has been said throughout the debate, building societies have a long and proud tradition of supporting working people to access affordable finance. The sector continues to play an invaluable role in promoting financial responsibility and resilience among its members, including by supporting young families to take their first step on to the housing ladder.

Building societies direct a greater proportion of their lending to first-time buyers than any other part of the financial services sector. They supported 70,000 first-time buyers in the first three quarters of 2023, and since 2020 building societies have supported 360,000 first-time buyers—that is more than £63 billion provided to help people to buy their first homes. The Bill is so important because it will empower societies across the UK to raise more funds and help our vulnerable constituents.

As my hon. Friend the Member for Sunderland Central set out in her compelling speech, her Bill could unlock significant additional lending capacity from building societies to support more working people to become homeowners. The hon. Member for Mid Norfolk (George Freeman) talked about how every £10 billion of new lending capacity, secured through the changes in the Bill, will potentially support an additional 20,000 first-time buyers. I agreed wholeheartedly with everything he said; dare I say, some of his comments sounded quite socialist—[Interruption.] I see he does not agree with me about that.

The debate has been interesting because I have agreed with lots of the Members who have spoken. In fact, the hon. Member for Dover (Mrs Elphicke) even quoted the first Labour Prime Minister favourably. There are plenty of spaces on the Labour Benches if anyone ever wants to come across.

Building societies have never been more important in the UK’s economy and public life. As a result of the cost of living crisis, many families have, as has been noted, been forced to use their savings in the face of rising energy prices and food prices. But building societies have continued to support people to save and to build financial resilience during this very difficult period. They attracted £18.9 billion in cash savings during the first nine months of last year. They are bucking the trend of the decline in savings balances that we have seen across the wider sector. Building societies have proven resilient in the face of hardship.

Lots of Conservative Members spoke about the role that the sector played during the pandemic. Leeds building society, finding that the requests for mortgage deferrals had increased to 2,000 a day, increased its use of robotic process-automation technology to create a fully automated web form for customers. At Nationwide, a team of mortgage, technology and AI specialists trained the society’s virtual assistant, Arti, to handle common covid-related mortgage queries.

Such resilience has allowed the sector to support its members, whether through covid or the current cost of living crisis, which is why clause 1 of the Bill is so important. It will allow building societies to exclude from the funding limit funds accessed from the Bank of England in stress scenarios, types of loss-absorbing debt instruments, and sale and repurchase agreements. That will level the playing field with banks and provide an extra level of protection for buildings societies during times of financial crisis, so that they can continue to support their members for many decades to come.

As I mentioned, in recent years we have seen many building societies adapt to new challenges and adopt exciting technologies and digital ways of working. Principality building society has delivered an online mortgage payment holiday service in partnership with the fintech company Podium Solutions. The service allows members to access a mortgage holiday repayment calculator and an online application process to better understand their mortgage outcomes.

The changes introduced by clause 2, which would allow real-time virtual participation in annual general meetings, are long overdue. Building societies have proven time and time again their ability to innovate and adapt to changing consumer behaviour. I agree with what the hon. Member for Dover said about other places having moved on, but in Parliament we do it face to face. We should cater to changing consumer behaviours, and there is no reason to subject the sector to outdated restrictions that do not apply to the wider financial services sector.

Clause 3 paves the way for reducing the administrative burden in respect of executing documents. Similar provisions are already in place for banks. That is why I will enthusiastically support the Bill. Labour believes that further legislation is needed to level the playing field, secure the future of the sector and achieve our ambition of doubling the size of the mutual and co-operative sector, in which building societies play a critical part. That is why Labour has committed to requiring financial services regulators to report annually to Parliament on how they have considered the specific needs of mutuals, including building societies.

Labour recognises the Bill as an important step forward and will give it our full support today. I look forward to being on the same page as the Treasury Minister, he will be pleased to know. And a final word of congratulations to my hon. Friend the Member for Sunderland Central, who has done a tremendous job of putting together this important Bill.