Drawn first in the Private Members Bill ballot, Sunderland Central MP, Julie Elliott has introduced a bill to modernise the legislation for Building Societies. Her bill will level the playing field between banks and building societies, an important step towards doubling the size of the co-operative sector, and to supporting first time buyers.

The Bill, formally published this week, receives its second reading in the House of Commons on Friday 19^th January. You can ask your MP to show their support here.

Building societies were founded to help working people own a home of their own and for over 200 years they have proved to be an essential part of our communities across the UK.

While banks are closing branches in many communities, building societies are keeping them open, and now account for 38% of all branches in the UK – up from 17% ten years ago. As well as their visible roles in our communities, building societies help families across the UK get onto the housing ladder – directing a greater proportion of their lending to first-time buyers than banks.

A stronger mutual and building society sector, means more support for first time buyers, and that’s at the heart of why I am championing this legislation.

Doubling the size of the co-operative and mutual sector has been a longstanding ambition for the Co-op and Labour Parties. I am proud that co-operators are backing my bill and that longstanding Labour and Co-op MPs, Sir Mark Hendrick and Dame Meg Hillier, are two of the formal supporters on the face of the Bill, which also has cross-party support. and – after extensive consultations within the building society sector over the Parliament – the bill is ‘ready to go’.

Homeownership is an ambition that remains out of reach for too many families in my constituency of Sunderland Central. Far too often, I speak to young people who want to own their first home – and to their families who share that aspiration for their grown-up children and grandchildren but do not have the ability to help.

My Bill will help them do it. Building societies have been operating under different rules than high street banks for decades. By amending the 1986 legislation, building societies could increase lending, supporting more individuals in securing their homes.

In the first nine months of 2023, building societies played a crucial role in new mortgage lending, aiding over 70,300 first-time buyers. Over half (55%) of all building society lending for property purchases goes to first-time buyers.

Since 2020, building societies have lent over £63bn to 360,000 first-time buyers nationally, and in the North East and Cumbria – where I grew up and where I still live – that’s £2.4bn to more than 20,000 first-time buyers.

Safe and secure lending is a crucial part of the UKs economic growth

The current legislation for building societies imposes a funding limit, requiring building societies to secure at least 50% of funding from member deposits. The Bill aims to change some of the constraints imposed by this funding limit, making building societies more competitive and allowing them access to emergency funding on the same basis as banks, without compromising their status as mutuals.

This change will help to make building societies safe, more secure, and competitive long into the future, providing the extra security that banks have from the Bank of England in times of financial stress – without affecting their status as mutuals.

Ultimately, this legislation is a pivotal step toward levelling the playing field in financial services and creating a policy environment in which mutuals can thrive, taking us one step closer to the goal of doubling the co-operative and mutual sector.