Co-operatives

Wednesday 3rd July 2013 Westminster Hall

[Mr Philip Hollobone in the Chair]

14:29

[Mr Philip Hollobone (in the Chair)]

I have a wealth of talent before me to debate the effect of co-operatives on the economy, and I call Chris Evans.

[Chris Evans (Islwyn) (Lab/Co-op)]

Thank you, Mr Hollobone; you are too kind. It is a pleasure to serve under your chairmanship once again.

It gives me great pleasure to have secured the debate right in the middle of co-operatives fortnight. I am a proud member of the Co-operative party and take great pride in sitting as a Co-operative Member of Parliament. The Westminster group of Co-operative MPs is the largest that it has been for 95 years. I am pleased to work alongside colleagues in the Scottish Parliament and the National Assembly for Wales, together with thousands of councillors around the country.

The purpose of this year’s co-operatives fortnight campaign is to focus on helping people to find co-operatives they love, whether they are providing sparkling wines or energy, and whether they are online or in-store. The campaign also gives Members from all parties in the House an opportunity to learn more about what is happening co-operatively in their constituencies.

Co-operation runs through the fabric of the south Wales valleys, where I was born and brought up, and which I am proud to call home. Indeed, family legend states that the last words of my great-grandmother, before she passed away at the age of 104, were, “It’s okay; I’m with the Co-op.” From Tower colliery in Cynon Valley to local corner shops, co-operatives permeate every strand of our society.

The debate affords me the opportunity to speak about the Islwyn community credit union, which offers saving accounts and small loans to members who, after a few months, become eligible for a loan at low interest rates. The great thing about the credit union is that its methods are working. In the past few days, the coalition has announced its intention to crack down on payday lenders. I am pleased that it is credit unions such as the Islwyn community credit union that have been at the forefront of the fight to turn households away from doorstep lenders and payday loan companies, which for too long have had a stranglehold on the type of valley community that I represent.

I feel extremely privileged to have been able to share a number of milestones with the Islwyn community credit union, most notably when it celebrated lending £1 million to families across my constituency of Islwyn. The credit union is an example of the impact that co-operative organisations can have on a local economy, which is why I am pleased that the co-operative sector has outperformed the rest of the UK economy since the financial crisis began.

With every pound spent in a co-operative generating an additional 40p for the local economy, the success of co-operatives can only be a good thing for the communities that we represent. Co-operatives are popping up all over the country, even in areas that do not have the history of co-operatives enjoyed by areas such as mine in the south Wales valleys. Since 2008, the UK co-operative sector has grown by more than 20%, and co-operative businesses in the UK now have a turnover of more than £36 billion a year.

As other industries and sectors feel the impact of the recession and the economic crisis, the number of co-operatives has increased in each of the past five years. There are now 6,169 co-operatives nationwide, 446 of which are based in Wales. Last year alone, the number of co-operatives throughout the country increased by 236, which was a rise of 4%. Membership of co-operatives is also growing month by month and now stands at more than 15 million, which is a 36% increase in membership since 2008.

The co-operative sector has also diversified over the past five years. More and more people understand that co-operatives are not just supermarkets or—as my great-grandmother understood—providers of funeral services. They also operate in other parts of the economy, from health care to housing, from farms to football clubs, and from credit unions to community-owned shops.

While preparing for the debate, I read about the increase in community-run shops. With more and more commercial shops struggling in the recession, communities are coming together to preserve stores that offer valuable services to a town or village, such as a local bakery. Food stores that can no longer cope with high rents or costs and therefore have to leave the local high street are being replaced not by new commercial businesses buying vacant units on the high street, but by local people who know at first hand how valuable local stores are to the communities in which they live. Some 6% of commercial village shops are being taken on by groups of residents who are determined to ensure that shop closures do not leave a gap in their community. These stores are not only having an effect on local life, but making a significant contribution to the UK economy.

The Co-operative Group has a work force of almost 100,000 people, which makes it one of the largest private employers in the UK. In 2012, community shops had a combined turnover of £49 million and more than 50,000 people were involved in some way in a community-run enterprise. The Plunkett Foundation reports that there are more volunteers working across co-operative community shops in the UK than there are helping national charities. Such co-ops are having a long-term impact on the economy; they are not a short-term fix to keep a store open temporarily before a commercial company can come in and take it over. Research by the Co-operative Group indicates that while only 65% of conventional businesses survive for their first three years, more than 90% of co-ops are still in business after their first three years. Those co-ops are local enterprises that create jobs and employ people on local high streets. In turn, those people are walking up the same high street and spending their wages in local shops. Co-ops and their staff are putting money straight back into the economy and the small businesses that make up our communities.

I was especially interested to read the results of a recent YouGov poll that asked people for their thoughts on co-operative businesses. Some 52% of respondents described co-operative organisations as “trusted”, compared with a figure of just 7% for plcs. We see that though the work done by societies all around the country. The top three words that came to people’s minds when they were asked their views on co-operatives were “fair”, “democratic” and “trusted”. That tells me that, unlike almost every other profession and institution in the UK, co-operatives still have one thing that the rest do not seem to have: that simple word “trust”.

Every Member will have felt the distrust that the public have developed for politicians, but we all know that it does not stop there. The police, journalists and bank managers—all good professions—have been damaged in the past decade, and the trust that people once had in them has all but gone. When I hear about community-run co-operatives, it says to me that they can fill the gap. Quite simply, people have to trust something, and if they do not trust businesses, banks or whatever, they can trust local co-operative organisations. In society, even outside co-operatives, it is important that people have trust, because without trust, people cannot believe in anything, and that brings about anarchy. However, if trust is still there for co-ops, it shows that they can fill the void so, quite simply, we have an opportunity.

I am saddened that the opportunity to promote co-operatives and mutuals as an alternative is not being exploited by the Government. I have spoken about the impact of co-operatives on the economy, but I am worried about how seriously the Government are taking them. We have a heard in the past few weeks from Government Members about the place of the Co-operative party in Westminster, but I know that a Conservative co-operative movement was recently established, and its members will appreciate some of the points that I am about to make.

Let us take the example of the Energy Bill. When the Secretary of State for Energy and Climate Change was appointed, we were promised a “community energy revolution”. My Labour and Co-operative colleagues on Labour’s shadow Energy and Climate Change team worked hard to make sure that he stuck to that commitment. Co-operative energy companies, such as the one created by the Midcounties co-operative, have an important role to play in the energy market. We all want to see large community projects such as the Westmill wind farm co-operative in Oxfordshire, but there will be less and less chance of such projects popping up across the country if the Government do not give co-operatives proper support.

I do not have to tell you, Mr Hollobone, that the energy industry faces a lot of challenges. There is widespread opposition to projects such as wind farms, which will become more and more of a reality in the coming years whether we like it or not. What frustrates me is that a lot of that opposition is completely unnecessary; it could be avoided if the Government further supported co-operatives and did not overlook them ahead of scrutiny in this place.

Research commissioned by the Co-operative party has shown that two thirds of people who would oppose wind turbines near their home would change their mind if the turbines belonged to the community. When people were surveyed on their perception of energy companies, the results showed that the public were 4.5 times more likely to “completely trust” a co-operative energy supplier than another energy supplier. This was what I was getting at when I spoke about trust: people instinctively trust co-operative projects. However, more has to be done if we want co-operatives to continue to stimulate the economy in sectors such as energy.

I have spoken numerous times in the House about housing, because we are facing a genuine housing crisis. There can be little doubt that investing in infrastructure is the way to stimulate and grow the economy, and the prime way of doing that is house building. If the Government are building new homes, it means that people are in work and that building firms can bid for contracts, and it also helps to bridge the gap that is starting to develop between supply and demand. I see that in my constituency surgery each week. When people affected by the bedroom tax ask me, “Where am I going to live? The council do not have any homes and I cannot stay where I am,” I am sorry to say that I do not have an answer for them.

The majority of social tenants in Caerphilly county borough council are in two or three-bedroom homes, and there are no one or two-bedroom homes for them to move into. In parts of my constituency such as Crumlin, 70% of tenants are thought to be in under-occupation. In Newbridge, the figure is 60%. Everyone in the borough knows that there are no homes to move into, but what choice does the council have but to implement the policy? These families are victims of legislation—that is why they are suffering—yet the Government still do not build homes. That frustrates me, because the Government could look to co-operative housing to fill the gap.

Throughout Europe, 10% of people are in housing co-operatives, but the figure for the UK is only 0.6%. In Sweden, co-operative housing tenure has existed since 1920 and nearly one fifth of all housing is provided in this way. In Poland, 3.5 million homes, which account for almost 30% of the total housing stock, are managed by a housing co-operative.

Co-op housing works in different ways in different countries, but the basic principle is no different from that of credit unions or community-owned shops. Such housing providers are jointly owned and democratically controlled by their members. Community co-operatives have rescued pubs and shops in the UK, but we do not seem to think of the impact that they could have on the housing market and, subsequently, our economy, so an opportunity is being missed. David Rodgers, the current president of the International Co-operative Alliance, said:

“Britain has stood still for two and a half years and has failed to recognise the contribution co-operative housing can make”.

Such opportunities are not receiving the support that they should get.

My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) introduced the Co-operative Housing Tenure Bill last year, which would have had a real impact and improved the legislative framework for co-operative tenure. The Bill would have given people an alternative to owning and renting, but the Government did not support it. They like to talk about house building as a way of driving economic growth, and they went as far as explicitly saying in the coalition agreement:

“We will promote shared ownership schemes and help social tenants and others to own or part-own their home”.

However, it seems that co-operative housing is another area in which the Government talk a good game but fail to deliver.

In respect of financial mutuals, the Government could look at co-operative examples to help to stimulate the economy. After three years in this House, talking about the economy month after month, I have discovered a few things. First, it is fashionable to blame the bankers for everything. I admit that when I first came to the House, I was guilty of doing the same thing, like everybody else, even though I used to be one. Secondly, nobody seems to be coming up with any real alternatives to our financial system to avoid scandals such as Lehman Brothers in 2008 and more recently involving LIBOR.

It seems a while since the Prime Minister and Deputy Prime Minister stood together in the rose garden of No. 10, but it was only three years ago. Once again, the coalition offered high hopes to reform our banking sector, pledging to

“bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”

Yet when the Government had an opportunity to put these words into action, what did we see? Absolutely nothing. If the coalition had been serious about promoting mutuals in our financial sector, they could have re-mutualised Northern Rock. Instead, the Treasury sold the bank to Virgin in a deal that the National Audit Office has subsequently suggested did not give the taxpayer good value for money. Co-operative colleagues tabled a raft of amendments to the Financial Services Bill earlier this year that would have forced the Government to make good on their pledge by introducing financial inclusion, education and transparency, but once again the amendments were chucked out and the Government ploughed on with the same old approach.

Last year, I tabled a private Member’s Bill, the Banking (Disclosure, Responsibility and Education) Bill. It is based on the Dodd-Frank Act in America, which enables every bank transaction to be monitored. My Bill would require banks to produce a report specifying who they are lending to, to find out about those excluded from financial products from mainstream banks.

When we talk about people excluded from financial products, we are not just talking about those without complex bank accounts. We are talking about the 9 million people without access to any credit whatsoever from banks. These households have serious difficulty getting access to essential services such as energy, water, land lines and the internet. A situation like that creates a breeding ground for loan sharks and high-interest lenders.

Where I grew up in the south Wales valleys, we lived on an L-shaped street. On Monday nights we would see a white car come over the top—an XR3i, for hon. Members who remember those souped-up cars. I can remember a woman getting out of the car, and all the doors were slammed shut. All the kids were pulled in from the street. It was the woman from the Provident. My mother claimed that she smelled of cheap Estée Lauder perfume. I do not know what Estée Lauder smells like, but my mother said it was cheap. That woman would knock on someone’s door and shout, “You owe me £400”. That was wrong, but everybody in our street thought that person owed £400. “I’ll get you next week, love”, she used to say.

I remember my mother panicking about whether we had enough money for the Provident. We would get our hands down behind the settees, looking for spare change to get it together to pay the woman, because we did not want her shouting down at us. We felt that climate of fear at 6pm every week, on a Monday. The saddest thing is that I know that is still going on, not just in communities like mine, but in communities throughout the country.

[Andy Sawford (Corby) (Lab/Co-op)]

My hon. Friend rightly hits on one key benefit of co-operatives, which is their values. He also reminds me of my own childhood. I remember that Sid, who ran the Co-op at the bottom of the road, ran a book based on trust. Every so often, my dad would settle up. Occasionally, we hid in the kitchen from Tommy the milkman, because mum had not got enough money to pay him that week. In the end the accounts were settled, because the Co-op was part of our community and there was a relationship of trust between us. That is one of the key benefits of co-ops.

[Chris Evans]

That sums up the benefits of co-ops for so many communities, including mine, and those in my hon. Friend’s constituency. When we grew up in those communities, there was a level of trust. We trusted one another. We knew one another and we grew up in communities where we knew everybody. It sounds romantic to say it now, but we did know our next-door neighbour. I knew everybody in the street that I grew up in. I do not think that I do now. That is the saddest thing.

The important thing is that the co-operatives brought about trust and a sense of values and ethics, which we do not see in society very often. That is why it is important for people to support their local co-operative, such as the one run by Sid at the end of the street, who had a savings club for Christmas. My hon. Friend says that his family used to hide from Tommy the milkman behind the settee. I wonder whether his family still speak to him.

[David Mowat (Warrington South) (Con)]

Many Government Members accept the points being made about trust and the model of the co-operative. However, I hope that the hon. Gentleman will not conclude without considering the recent collapse of the Co-operative bank and the fact that the co-operative movement chose not to bail it out. The bond holders, many of whom are pensioners and not well off, are having to pay to deal with that. Does he consider that some points made about ethics and trust could be undermined by that? I am not asking that in a pejorative way, but because I am interested in the hon. Gentleman’s reaction.

[Chris Evans]

There is still a lot to work out with the Co-operative bank. These issues are serious. I am not going to deny those things, but the central thrust of what I am saying is that co-operatives have worked and there is still a lot to done about that.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is appropriate to raise the Co-operative bank in this debate, but when doing so we have to consider the Britannia takeover in relation to the situation that the Co-operative bank finds itself in. It would be wrong to besmirch the values or the running of the co-operative movement during this difficult time. Of course, that situation must be faced up to, but we should still consider that, considering the whole array of banking and financial institutions in this country, the co-operative movement—the Co-operative bank—is still very much up there in terms of best practice in this country, difficult as this time is.

[Chris Evans]

I agree with my hon. Friend; he is correct.

[David Mowat]

I thank the hon. Gentleman for giving way again; I shall not make another contribution after this. I accept that it was the Britannia. It was also mismanagement of a large IT project. I wonder whether one of the lessons to be learned is that there is a size issue in terms of types of activity: whether something that grew out of being a credit union into something much more than that did not have the management processes necessary. I wonder whether there is an issue there that the hon. Gentleman might consider.

[Chris Evans]

Not being a member of the management team myself or privy to decisions in the Co-operative bank, the best people to answer that are on the board of that bank. The Britannia takeover was particularly difficult for the Co-operative bank and has had a major effect.

We talk about IT projects, and we have seen such things happen in government as well. My predecessor in Islwyn served on the Public Accounts Committee, and when I worked for him I saw that a lot of problems reported by the National Audit Office were often to do with IT programmes. The lesson to be learned for the Co-operative bank, as with others, is that when investing in IT, if it goes wrong it really does go wrong.

[Andy Sawford]

I sense that my hon. Friend has many other important issues to address, but does he agree that it is important that we use the right language to describe what has happened at the Co-operative bank in recent months? Terms such as “collapse” are not helpful in assuring savers of the bank’s future. We ought to recognise that, unlike other banks and financial institutions, the Co-operative bank has not sought a bail-out from the Government but has righted itself, and we all should support it in what I hope is a sustainable future.

[Chris Evans]

My hon. Friend is absolutely right. The Co-operative bank—along with other mutuals—is the only bank that did not take a bail-out from the Government. If we have learned anything from the financial crash of 2008, it is that the language we use can have a serious effect on consumer confidence. I do not think any of us will forget the queues outside Northern Rock on that Saturday, which all came from a few misjudged words. The Co-operative bank is still on the high street, is still flourishing and has righted itself. We all have to be careful in the language we use. As the hon. Member for Warrington South (David Mowat) said, there are lessons to be learned, and I am sure they will be learned in the next couple of years.

We do not want to create a breeding ground for loan sharks and high street lenders. Sadly, Provident, Wonga, Cash Converters and Shopacheck are now household names. When people have nowhere else to turn, and when there is no food in the fridge or money left in the electric, where are they going to go? I spoke earlier about Islwyn community credit union, and I am pleased that in Wales everyone has access to a credit union. I have spoken previously about expanding the role of credit unions, which do not have to lend solely to individuals; they can lend to businesses, too, whether they are micro-businesses or small businesses that cannot get money elsewhere. We need to see more from the Government to promote co-operative finance and mutuals so that they live up to the promises they made when they came into office.

It is worth remembering that conventional banks used £60 billion when they were bailed out, but the mutual sector did not use any money at all. Bradford & Bingley operated as a building society for 150 years, yet it lasted only 10 years as a bank. I hope that the Minister will explain exactly what the Government are doing to encourage mutuality in the banking sector. I also hope he will address the potential for co-operatives in the energy and housing sectors, because I believe they could form the basis for real and lasting economic growth.

I will end by citing a statistic that demonstrates the potential of a co-operative economy. The UK is ranked 15th in global GDP, but the UK co-operative economy is the eighth largest globally. We are clearly doing something right, but with more than 1 million co-operatives in the world serving 1 billion members, we have the potential to do a lot more. There is growing consensus on the factors that serve business excellence—a clear mission, better customer service and, above all, fairness and transparency. At the heart of the success of the co-operative movement are the fundamental values of equality, democracy and participation, and therefore co-operatives should be encouraged and adopted.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

Order. I will call Members in the order on my list. I do not want to call Front-Bench Members any later than 3.40 pm, but I would prefer to call them before. I have four people on my list, and I will take them in this order: Simon Danczuk, Jonathan Reynolds, Tom Greatrex and Andy Sawford. If they are all fair to each other in a co-operative way, everyone should be able to speak.

14:49

[Simon Danczuk (Rochdale) (Lab)]

It is a delight to serve under your chairmanship, Mr Hollobone. I also thank my hon. Friend the Member for Islwyn (Chris Evans) for securing this important debate, which is very much appreciated.

Members present do not need me to tell them, although I will tell them anyway, that I am very proud and pleased to say that Rochdale was the birthplace of co-operatives. I think I am right in saying that the Minister hails from Rochdale, so he will have a good understanding of what I am about to say. The Rochdale pioneers established the very first co-operative on Toad lane in 1844. The building is still there, and it has just been renovated with money from the Heritage Lottery Fund. It is a great museum, and I urge hon. Members to pay it a visit whenever they get the opportunity. My reason for mentioning the Rochdale pioneers is that they are the people who made this debate possible. They established and pushed the first co-operative, and co-operatives have now been taken up across the world. People visit the museum from Japan, Canada, America and all over the world to honour the concept of mutual organisations, of which Rochdalians are rightly proud.

Yesterday, I spoke about the importance of self-reliance and about how Governments can encourage people to do things for themselves. Co-operatives are a great and important example of how people come together to help each other. They are a great example of self-reliance, and one that we should continue to support and celebrate.

In Rochdale alone there are co-operatives of many different shapes and sizes that have a real, positive impact on our economy, the community and the town overall. We have just established the largest housing co-operative in the United Kingdom, Rochdale Borough wide Housing. I spoke to its chairwoman, Lynne Brosnan, earlier today. It is owned by its tenants and employees, who have a major say in how the organisation operates across the town. We are proud of that organisation.

Rochdale has a variety of Co-operative Group stores, travel agents and banks, as would be expected, but it also has a number of smaller co-operatives that have an impact on the economy and the community. I particularly want to mention Sunshine Care. Local authority care workers, all women, came out of the local council in 2009 and came together to establish a home care co-operative. I have met those ladies over the years from before they started to where they are now, three or four years later. They have been through some really tough times and challenges in establishing their co-operative. I spoke to one of the founding members, Christine Bailey, just before this debate, and I asked her how the co-operative is progressing. It now has 34 staff, which is fantastic, and it provides 600 care hours a week to older people. Ideally, older people would want services delivered by people coming into their home to be delivered by a mutual—by those women who have come together to develop this fantastic co-operative.

Sunshine Care is great. As Christine says, there are no directors creaming money off the top of the organisation, so everything the organisation earns goes right back to the workers, who each have a stake—they get voting rights after working for the organisation for six months. Sunshine Care is also a Cabinet Office pathfinder, and the ladies who work for it are proud of their co-operative status, which is important to them.

The Government are considering whether to dilute the value of the term “co-operative.” In their red tape challenge, the Government have been talking about removing “co-operative” from the list of sensitive words, which would be a big mistake. We need to protect, not diminish, the good name of co-operatives. I hope the Government will think twice before doing anything that damages the co-operative brand in that way.

My final point is on Government support for co-operatives. I am a member of the Select Committee on Communities and Local Government, which took evidence on mutual and co-operative approaches to delivering local services—I have the report here. The Minister for the Cabinet Office, the right hon. Member for Horsham (Mr Maude) gave evidence to the Committee. Although I got a good sense that the Government are keen on co-operatives and see them as having a role in the economy, I am a bit concerned about the Government’s response to some of the Committee’s recommendations. There are opportunities for the Cabinet Office, the Department for Communities and Local Government and the Treasury to work better together on promoting and helping co-operatives. There is also an opportunity for the Government to push the banks and other financial institutions, including Big Society Capital, to lend to mutuals and co-operatives.

There is probably an opportunity in tax incentives for co-operatives. We also need to look at the procurement rules, particularly for local government, which could be of added benefit to co-operatives. To give the Government some credit, they established the mutuals taskforce and the mutuals support programme, but there is still more to be done to help co-operatives develop.

Co-operatives make a fantastic contribution to our economy. They are just one of the great things to come out of Rochdale.

15:00

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute to my hon. Friend the Member for Islwyn (Chris Evans) for securing this important debate. In his speech, he not only highlighted some of the best practice in co-operatives but made a strong argument about how many current public policy problems in this country could be addressed by taking a more co-operative approach. In particular, I thank him for mentioning co-op housing and my Co-operative Housing Tenure Bill, which I believe has huge potential to address some of the housing challenges that this country faces.

It is with great pride that I sit in Parliament as a Labour and Co-operative MP. I am fortunate to represent a constituency steeped in the co-operative tradition. The first co-operative store in my constituency was opened in Mossley in 1856, and to this day there is a Co-op store on the same site. The co-op movement was active in parts of my area well before the Labour party even existed, and my constituency, of course, is only a stone’s throw away from the co-operative movement’s spiritual home in Rochdale. It would be wrong to claim that the values championed by the co-op movement—democracy, openness, trust and social responsibility—are characteristic only of areas such as mine or south Wales, because the modern co-op movement is nationwide, but it is not mere coincidence that we started it.

I cite these things not just as an amusing historical preamble to my speech, but because it is extremely important, particularly for those of us on this side of the political divide, to remember and stay true to the political tradition that the co-operative movement represents. For many reasons, not least the success of the 1945 Labour Government in creating national institutions such as the NHS, which celebrates its 65th birthday this week, the Labour party in modern times has prioritised a statist, top-down view of politics, but we should never forget to combine that with the earlier tradition of bottom-up, grass-roots and community campaigning.

It is interesting that in recent years, through the work of the co-operative movement and through things such as community organising and living wage campaigns, we have begun to get back in touch with that tradition, which is good. We should recognise that at times, domination by the state can be as detrimental as domination by the market. The co-operative movement is a fine example of something that has always been balanced between the two.

We are obviously still in a difficult economic situation, facilitated by the failure of the Government’s plans to get things going at any level. I am of the firm belief that co-operatives are vital to the economy of this country, not just for their economic value but for their social benefits. More than 15 million people in the UK—nearly a quarter of the population—are members of a co-operative. That is no small number. It is a sign to all of us that there is more to be explored in co-operatives and the value that they can bring.

I want to discuss how co-ops can have a positive impact on our economy and the social fabric of our communities. It is timely that in a week when the Government have organised a summit with the heads of payday loan companies, this debate gives us the opportunity to showcase the value of credit unions, which offer a brilliant example of how co-operative values can have a positive effect on local economies.

More than 1 million people in the UK use credit unions. Research by Salford university on behalf of Leeds city council found that for every £1 the council invested in credit unions, there was a £10 benefit in retained income for the local economy. Manchester credit union, which serves people in my constituency, can trace part of its roots to the Hattersley area, which I represent. Today it has more than 10,000 members and lends out more than £4 million a year. In a few weeks, Cash Box, a local credit union in Hyde, will open its first high street branch, which we should celebrate.

Yet credit unions account for only a small proportion of the total consumer lending market. Given that their average annual percentage rate is 26.8%, we must ask why people are attracted to payday loan companies that get away with APRs of more than 4,000%. Something has to change. Many of us believe that payday lending in this country is out of control.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I apologise for not being able to be here at the start of this debate. My hon. Friend is making a strong case about the importance of credit unions. Does he also agree that one thing that credit unions bring to the debate about the cost of living crisis in this country is how they help members, not just by giving loans but by giving debt advice? That is precisely the value of a co-operative mindset: to think in the long term and to think about the whole person and what they need from services. That is why credit unions are so important.

[Jonathan Reynolds]

I agree completely. We all pay tribute to my hon. Friend for her tremendous campaign against payday lending. My hon. Friend the Member for Islwyn discussed trust and the wider benefits to a person, rather than the exploitative relationship that many of us believe payday lenders have. My hon. Friend the Member for Walthamstow (Stella Creasy) is absolutely right to address the wider benefits of that approach for people and their communities.

I recognise that the Government have relaxed the rules on how credit unions can operate, allowing them to reach out to more of the community, but to echo the point made previously, I regret the Government’s refusal to accept the Co-operative party’s amendments to the Financial Services Bill, which would have helped promote mutuals and create a more competitive financial services industry. In a climate where people feel increasingly detached from the banks, credit unions based on co-operative principles help local people deal with everyday issues and make a positive impact on the local economy.

My second point involves the relatively new idea of co-operative councils and how they may be able to offer a new, innovative way of procuring local services to meet the needs of local communities in difficult financial circumstances. I read the Select Committee on Communities and Local Government report from 2012, “Mutual and Co-operative Approaches to Delivering Local Services”, particularly the evidence given by Lord Glasman, who said that giving users a stake in public services ensures that they feel that they are at the heart of local government, and that making people feel involved strengthens their relationship with their local economy.

Co-operative and mutual models help councils facilitate long-term jobs and investment and help ensure that long-term social benefit is prioritised over short-term gain. It is no coincidence that a majority of all the councils that have signed up to the co-operative council network already pay their staff a living wage, which is clearly of huge benefit to local economies.

The question that we should ask in debates such as this is how the Government can help organisations and local authorities deliver economic growth by building on best practice within the co-operative movement. One of the key conclusions of “Mutual and Co-operative Approaches to Delivering Local Services” is:

“The Government has a choice, if it wants more mutuals and co-operatives to develop: it must take action to provide support.”

Although a recent Co-ops UK report shows that the co-operative movement in this country is still growing, we would all say that the Government could do more to encourage that development. The Government talk a good game on mutuals, but in reality, many of their proposals for public services are joint venture spin-offs with private partners. Those may have merit, but they should not use the language and clothes of the co-operative movement unless that is truly what they are. The example often given is the behavioural unit in the Cabinet Office known as the nudge unit. It is often cited as a flagship Government mutual, but most of us, as well as most people in Co-ops UK and the Co-operative party, would barely consider it a mutual at all.

As we are in the middle of co-operatives fortnight, this debate is an excellent opportunity to promote the benefits of co-ops. I believe that they have a part to play in the economy of every society, from credit unions that lend to families to the running of core services and bigger ideas such as co-operative housing, which has been mentioned. The positive economic and social impact of co-ops should be celebrated, particularly after the financial crisis, when people are seeking to ensure that we never again get ourselves into the situation that we got into in 2008. I believe that all Members should do whatever they can to advance and promote the cause of co-operatives.

15:08

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship again, Mr Hollobone. I declare my interest as a Labour and Co-operative Member of Parliament. As I will speak about football co-operatives and mutuals, I should put on record that I am the founding chair of the Fulham Supporters Trust.

I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on securing this debate during co-operatives fortnight, as my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) said, and on giving a good and comprehensive summary of a range of current co-operative and mutual issues. I will not repeat the points that my hon. Friend the Member for Islwyn made, but I will touch on a couple of the issues that he raised.

First, my hon. Friend rightly highlighted what the Secretary of State for Energy and Climate Change said about the need for a co-operative energy revolution. It was a cause of some frustration during consideration of the Energy Bill that we were unable to convince him to turn his words into action on a community energy strategy and regarding the threshold for the feed-in tariff for community energy projects. My hon. Friend talked about the extent to which people have an interest in energy, and feel a sense of ownership towards it, as a result of community energy projects. There are a number of such projects across the country, but most are relatively small, and if we are to develop them further, we need to change the threshold.

When the Secretary of State was asked about that during the Bill’s pre-legislative scrutiny, he said, “There aren’t any community energy projects above 5 MW.” Well, that is because that is the threshold, so his argument is self-defeating. Earlier in the debate, I was looking at the amendments that the Government have tabled to the Energy Bill in the House of Lords—obviously, I was listening intently to what everybody was saying, but I was multitasking—and I am pleased to say that there is one that will increase the threshold for community energy projects from 5 MW to 10 MW. Those of us who sought to persuade them can reflect on the fact that our argument was well made and will have an impact, unless the Government decide to vote against their own amendment. The change will be a significant step towards helping to meet the challenge that was rightly identified earlier in the debate.

I also want to touch briefly on housing and housing co-operatives. I am pleased and proud to have the West Whitlawburn housing co-operative in my constituency. Obviously the Minister is familiar with Rochdale, but I would not necessarily expect him to be familiar with parts of Cambuslang, in my constituency. On all the neighbourhood statistics available, Whitlawburn is among the most economically deprived neighbourhoods in Scotland. Figures on health conditions, educational attainment, employment and income are collected slightly differently in England—and, I presume, in Wales—but Whitlawburn would probably also come pretty high up any list measuring those things across the UK.

Several years ago, the West Whitlawburn bit of the housing estate in Whitlawburn became a co-operative, and there is a striking contrast between the standard of the housing in that co-operative, given the capital and energy-efficiency improvements that have been made, and the standard of the other housing, which is literally across the road. That is partly because of the real impetus that has come from those who came together to form the co-operative, which is about not only the mechanisms involved in driving investment but, just as importantly, the attitude and ethos that have become apparent. Just last week, along with a colleague from the Scottish Parliament, the local MSP James Kelly, I was pleased to be able to talk to the members of the very engaged management committee, who are all tenants and members of the co-operative. They take their work very seriously, and their attitude is all about what they can do to improve housing in their co-operative and to maintain that improvement, as opposed to expecting somebody else to do things for them. That makes an important point about the ethos of co-operatives.

The area is relatively small, however, and the co-operative is not immune from the impact of Government policies. The bedroom tax or the spare room subsidy—whatever label the Minister uses—is having a considerable impact in West Whitlawburn, where 67% of tenants are on housing benefit. The housing association has found—it has been able to do so because it is relatively small— that 30% of its tenants, or 200 people, are affected by that measure. Its housing stock consists mostly of accommodation with two or three bedrooms, and there is a problem of people needing to move from three bedrooms to two, or from two bedrooms to one. People of pensionable age are not impacted, however, so we have the bizarre situation of the housing association almost considering seeing whether people who are in receipt of state pension and live in one or two-bedroom accommodation will swap with working-age tenants living three or two-bedroom accommodation. The policy will have a significant impact on the housing co-operative as a result of rent arrears. The co-operative does not want to evict its members—nobody wants that—but the financial effects of the policy could have a significant impact on what it is trying to do.

The third issue I want to touch on is football supporters’ trusts, which are an important form of mutual activity. People will be aware that the trusts were born out of the co-operative movement with the support of Supporters Direct. There are now several supporters’ trusts throughout the country, and there are good examples of trusts that are completely or partly in control of running clubs in Wimbledon, Portsmouth, Swansea and Manchester. In other cases, football supporters’ trusts are trying to take a role in running clubs, including Heart of Midlothian in Scotland. In every case, supporters’ trusts have tried to take a role in the ownership and running of clubs when those clubs have been in crisis and everyone else has walked away.

However, I want to draw the Minister’s attention to the example of the trust in Swansea, given its economic impact. Swansea was basically a bankrupt club, and it was sold on for £1. The supporters’ trust was formed and took a role in the club’s ownership, and it has been an integral part of the club since then. Over a couple of seasons, the club has gone from 90th out of 92 in the league to being an established premiership club. It has won the league cup, and it will be playing in Europe next season. All that involved a role for supporter ownership and supporter control, which is a form of co-op.

There have been many debates about football governance—I have spoken in most of them—so I do not want to repeat any points about that, but I do want to talk about clubs’ economic impact. Football clubs have a significant local economic impact—directly and indirectly. When Hull was first promoted to the premiership, people there would have talked about the impact on the city of visiting supporters and the attention that comes with having a top-level club. The same happened when Blackpool was in the premiership, and the same has happened with Swansea. However, when clubs are driven and run by people who are involved in the local community, they are more inclined to ensure that some of their spending power and economic activity benefits that community. Trusts reinforce local economic activity, so they should be encouraged, treasured and nurtured.

Although this is not part of the Economic Secretary’s brief, he will know that the coalition agreement included a commitment to encourage and foster fan involvement in, and ownership of, football clubs. The Minister for Sport, the right hon. Member for Faversham and Mid Kent (Hugh Robertson), has mentioned that commitment a number of times, and he has tried to persuade football authorities to act on it, although I think we are getting towards the end of that road, given the intransigence of the authorities. If the coalition wants that commitment to come to fruition, it might have to take action by forcing the football authorities to do what they seem not to want to do. The coalition should encourage fan involvement for the good reason that it will not only sustain football clubs, but encourage the economic activity that happens when trusts are involved in the management structure, as we can see from the examples I cited. I hope that the Economic Secretary will reflect on that, even though it is not his direct responsibility.

[Mr Philip Hollobone (in the Chair)]

Our next speaker might be dangerously overqualified because he comes from Desborough, one of the famous co-operative towns in Northamptonshire, which now lies in the Kettering constituency.

15:19

[Andy Sawford (Corby) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, as you are my near neighbour. I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on securing this important debate and on opening it in such great style. He covered a broad range of issues relating to how the co-operative movement benefits our economy.

Hon. Members have made many claims regarding the strong co-operative traditions of their constituencies, and I do not dispute the fact that Rochdale is the home of the co-operative movement. I can say, however, that my constituency, with its previous boundaries—you, Mr Hollobone, will understand this, because the Kettering and Corby constituencies were combined at that time—elected the first ever Co-operative MP. Alf Waterson was elected in 1918. Samuel Perry, the father of the tennis legend Fred Perry, was subsequently elected to be the Co-operative MP several times. Samuel Perry was a key mover in joining the forces of the Labour and co-operative movements around the UK.

The driving forces behind the radicalism of people in my constituency, in electing the first Co-operative MP, were the chapels, the boot and shoe workers and, in particular, the blast furnace men’s union at Corby, which adopted Alf Waterson as its candidate. The political movement was connected to an economic movement at the time, as ordinary working people in Northamptonshire came together through co-operatives to try to make a better life for themselves. Their values still hold true today in the co-operative movement—values of self-help, self-responsibility, democracy, equality, equity and solidarity.

In the tradition of the founders of the co-operative movement, co-operative members today—and I am one, and should declare an interest on that account, and as a Labour and Co-operative MP—believe in the ethical values of honesty, openness, social responsibility and caring for others. The co-operative principles are guidelines by which all co-operatives today put their values into practice. Those seven principles are voluntary and open membership; democratic member control; member economic participation, empowering those members; autonomy and independence; education, training and information; co-operation between co-operatives; and concern for community.

There are many benefits to the way in which co-operatives put their values into practice today, in addition to what we might see as core economic benefits. There are thousands of community initiatives around the country, including some in my area. The co-operative movement in the UK has been a leading force for sustainability. There is a significant focus in the Co-operative retail group at the moment on reducing waste. The movement has been a leading force in promoting fair trade in Britain, and I am pleased to say that fair trade sales in co-operatives are rising year on year. Indeed, the Co-operative helps us to celebrate Fairtrade fortnight across the UK.

The co-operative movement has championed staff volunteering. Co-operatives UK, which is one part of the movement in the UK, estimates that the staff time it donates each year is worth about £1.7 million. There are programmes such as the Skills4Schools campaign, which helps to promote numeracy in primary schools and financial literacy in secondary schools. The initiative Farm to Work has led to thousands of primary schoolchildren visiting co-operatives at working farms. There are many ways in which the values of education, training and information are still at the heart of the co-operative movement. Co-operatives are engaged in the education system not only through Skills4Schools but in many other ways. I am pleased with the increase in the number of schools opting to become co-operative trust schools and co-operative academies.

Today’s focus is, rightly, as we seek to get the economy growing again, on the economic benefits of co-operatives. The number of entrepreneurs, employers and communities in the UK that own and control their businesses through co-operative enterprise has reached an all-time high, with a record 15.4 million membership of co-operatives. That is an increase of 36% since 2008 and 13.6% in the past year. The number of co-operative businesses in the UK has also risen by 28% since 2008 or the onset of the recession. The recent report published by Co-operatives UK, entitled “Homegrown: The Co-operative Economy 2013”, shows that co-operatives have a £37 billion turnover in the UK economy.

We might wonder why co-operatives have grown, at a time when little seems to be growing in this country. I think that it is because of the tough economic trading conditions, which have encouraged more and more Britons to turn to co-operatives to take greater control of their destinies and grow their own way out of recession. The Co-operatives UK report highlights the fact that co-operative shops had a combined turnover of £50 million in 2012, with more than 50,000 members. Those who have chosen the co-operative option, who are growing their own co-operative enterprises, include entrepreneurs, employers who share ownership of their firms, communities, customers and even sports fans, as my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) highlighted, who want to own and run their clubs. The growing appeal of sharing ownership, profits and control in line with the traditional values—democratic member control, voluntary and open membership, and autonomy and independence—has, in a diverse co-operative economy, brought about community pubs, foster care and child care providers, and multi-million pound co-operatives such as Co-operative Energy. In the energy setting, in addition to Co-operative Energy, we want many more mutual, local community co-operatives. That is why I support the strong points that my hon. Friends have made about amendments to the Energy Bill. I hope that the Government will now see sense on that matter, as I understand amendments have been made in the Lords.

People are taking action to form co-operatives because they want a say in what matters to them. In a time of limited economic growth and social challenges, people’s appetite is to seek independent control, to run a fair organisation that benefits all, and to put increasing importance on planning for the long term.

The recent study of the effect of co-operatives on local economies carried out by the independent economic analyst K2A showed that money spent by customers increases in value as it goes to local suppliers, to customers as a dividend, and to employees in wages; they in turn spend a proportion of their money locally. The estimates, using the benchmarks that are accepted around the world for examining the value of business in local economies, are that co-operatives generate an additional £40 for the local economy for every £100 spent by a customer. Overall, that means that co-operatives, rather than generating profits for outside investors or national or even global suppliers, generate £100 million for local economies.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Does my hon. Friend agree that the impact of co-operatives in the economy is felt not only locally but in tax revenues to the Exchequer, which pay for public services? To cite a simple example, there has been concern about the levels of tax paid by some water companies. In comparison, Welsh Water is a co-operative that does extremely well on that front and on environmental sustainability.

[Andy Sawford]

My hon. Friend is right to highlight the importance of Exchequer receipts from co-operatives, not only through business rates and other forms of taxation paid by those businesses, but also because co-operatives in the UK employ so many people who are economically active and who contribute to tax returns. That is one of the benefits of co-operatives, and I am pleased that my hon. Friend brought it up.

As for local co-operatives, the secretary-general of Co-operatives UK describes the effect of keeping so much money in the local economy, and generating additional value there, with the term “sticky money”. Co-operative money is sticky money: I think it is a good term. He says:

“It stays local, because co-operatives employ local people, are owned by local people and try to source from local firms that do the same. Every pound spent in a co-operative shop is a real boost to the local economy.”

Co-operatives are known as trusted local businesses. Indeed, my hon. Friend the Member for Islwyn has told the Chamber about his experience of that. I share that experience of growing up, and the values that can be seen in co-operatives. Today, the value that they offer to communities is incredibly important.

In my community, the main co-operative is the Midlands Co-operative. It is one of the largest independent retail co-operative societies in the UK. It employs 7,000 staff, is member-owned and has a board of directors, one of whom—I should declare an interest—is my father. It had gross sales of £670 million and a profit of £24.3 million in 2012-13. It operates across a wide range of sectors—food, funeral services, crematoriums, transport—and has more than 300 trading outlets in 12 counties. I want to highlight its achievements.

The Midlands Co-operative Society was recognised as co-operative of the year, which I am sure you welcome, Mr Hollobone, as you must shop, as I do, in a Midlands Co-op in your constituency. It has the highest trading profit of all independent co-operatives, and it rewarded its members with a £4.3 million payout; it created 300 additional jobs in its trading area; it invested more than £0.5 million to help its employees develop their skills; it funded local community projects to the tune of £1.5 million; and it has refurbished many of its outlets to make them energy-efficient, reducing energy consumption.

All the Midlands Co-op stores have a locally sourced range—I have already referred to the initiative to take primary school children to the co-operative’s working farms—and the supply chain benefit of sourcing locally from firms that are less than 50 miles away is incredibly important. In my area, and yours, Mr Hollobone, the supply chain benefit is known as a “Taste of Northamptonshire”. The Midlands Co-op helps vital community initiatives, so I was pleased to support the Corby women’s choir recently at a great local event, and I welcome the news that the co-operative is backing grass-roots football in Thrapston in east Northamptonshire. The benefits are enormous.

I want to say a few words in support of the comments made by my hon. Friends about co-operative housing. I was pleased to hear David Rodgers mentioned in his role in the International Co-operative Alliance, but I have known him for some years as the former chief executive of the Co-operative Development Society, which I think would lay claim to being the largest co-operative housing organisation in Britain—we can have that debate with my hon. Friend the Member for Rochdale (Simon Danczuk) another time—not only for owning many thousands of units of housing directly, but for supporting co-operative housing organisations throughout the UK. The CDS has been a pioneer in introducing new models of intermediate market housing—desperately needed in this country—by looking at examples in north America, especially Vermont, where co-operative housing makes a huge contribution to the housing supply and in particular to intermediate market housing, but also in northern Europe. In cities such as Oslo in Norway, more than half the housing in the city is co-operative housing.

We need to look at the real potential offered by co-operative housing models in this country. In particular, we could link co-operative and mutual models with community land trusts—for rural as well as urban areas—to engage communities in bringing forward significant new developments. Community land trusts offer real potential to capture land values—for example, exception sites can be made community land trusts—and that is something we ought to look at. Using the mutual models, benefits such as corporate mortgages and so on can reduce the cost to people of purchasing their own home. In particular, under flexible models of share ownership, people can buy equity shares in the overall housing trust, which they take on with an element of housing equity growth, if that happens over the time that they are in the housing. That is much better and more flexible for people than traditional ways of getting a foot on the housing ladder or a stake in the housing market.

The community mutual model, as developed in particular by organisations such as Mutuo, has been taken up in Wales. There are community mutuals in Rhondda, in Torfaen and elsewhere in Wales, but I want to see more in England. I also want to see more community gateway models in England, such as those developed by the Confederation of Co-operative Housing; community gateway housing mutuals exist in Preston, Watford, Lewisham and Braintree. On hybrid mutual schemes, Rochdale Boroughwide Housing, which has 14,000 units—I understand why my hon. Friend the Member for Rochdale says that it is an incredibly large and important co-operative—is using an innovative new membership-based model of housing provision.

Those are real opportunities, but I hope that the Government will look at some of the legislative opportunities that might be available in the next few years, including the important Bill to support co-operative housing introduced by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), to better support the development of co-operative models in the UK economy. Co-operatives can provide enormous benefit and could prove to be as strong in this century as they were in the last.

[Stella Creasy]

rose—

[Mr Philip Hollobone (in the Chair)]

A last-minute entry from Stella Creasy—I thought you would not be able to resist as soon as payday loans were mentioned.

15:39

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Thank you, Mr Hollobone, for your kindness in letting me speak in the debate.

I pay tribute to my hon. Friend the Member for Islwyn (Chris Evans) for securing a debate that is incredibly important to us all in the co-op movement. I want to make a plea for the Minister to understand why it is so important for us in the co-op movement—those of us who have worked in co-operatives—to start from the mindset of co-operativism, rather than models.

It seems that the debate requires us to put on record the co-operative history of our constituencies. I am afraid that Walthamstow cannot—unusually—claim to be first in this matter. We can trace our co-op history back to 1840, and the former national offices of the co-operative movement are in Walthamstow—we have a beehive on Hoe street to prove it.

Walthamstow has a strong co-operative concern because we recognise what my hon. Friend the Member for Corby (Andy Sawford) was setting out: the powerful case, especially in recent economic times, for co-operative values and how they work. Why has the co-op economy grown by nearly 20% in the past five or six years compared with what we have seen in our national economy? In Walthamstow, we would argue that it is precisely because of the mindset that co-operativism brings with it—the idea that we work for a broader set of values, and that what we do together, through democratic participation, can reap rewards well beyond mere financial profits. I am disappointed that the hon. Member for Hereford and South Herefordshire (Jesse Norman), the founder of the Conservative co-op movement, is not present in the Chamber, because we are concerned that it has a preference for considering the technicalities of how people work together, rather than why they work together.

I liked the phrase “sticky money” that my hon. Friend the Member for Corby used. A fantastic study from Lincoln shows that co-operatives bring about a multiplier effect that is around six times that of ordinary organisations in a community, so they bring resources into an area. The co-op mindset brings unparalleled creativity to thinking, and I urge the Minister to look at the work of some of our co-op councils. On a recent visit to Oldham, I was particularly struck by the council’s work on debt and financial difficulties. The co-op council negotiated a 30% discount on bus passes for those who joined the credit union. The scheme has been a fantastic success: the number of people joining the credit union has increased massively, thus increasing the amount of money available to lend, while the scheme has been cost-neutral for the bus company and has helped to get the city moving, so it is win, win for everyone. Such creative thinking takes place when our bottom line is the people we serve, meaning that we see people as part of the co-op, rather than just customers. The danger of looking only at employee co-ops—the John Lewis model—is that we miss out on the vital impact of working with the users of our services.

I am also struck by the work that is being done in Lambeth. My community in Walthamstow has a big problem with gangs, and the work that Lambeth is doing on youth services and co-ops is fantastic, as is the response from the local community, so I encourage the Minister to look at that. I also encourage him to go to see the energy co-op in Brixton. I am sure that my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) was talking about such co-ops earlier, as well as about the work of Supporters Direct and especially the “Show Wonga the Red Card” campaign. Whether on housing, social care or energy, co-op solutions are bringing a new creativity to all our public services that is benefiting users and reducing costs.

We know that the market alone cannot provide, which is the problem that we have with payday lenders. As you suggested, Mr Hollobone, I cannot go through the debate without talking about that problem, because the market is failing consumers. Co-op solutions are providing the answers in communities such as Walthamstow, where we have 18 of those lenders on our high street alone. I encourage the Minister to think again about his opposition to a cap on the cost of credit, because only when the cost of credit is capped and we examine how to lend to people responsibly, as social finance models and credit unions do, will a difference be made.

We need co-operative thinking not only in the credit union movement and on payday lending—we need the cap and an expansion in affordable credit—but in our social care. The Minister should look at Nottingham Circle’s adult social care or at co-operative schools. When we work together as a society, and as the co-op movement is ingrained in us from the grass roots up, we deliver the kind of future in which everyone can prosper. When we do not work in such ways, we can learn a lesson from New Harmony, which was the fantastic co-op that was set up by Robert Owen in America, but that fell apart after 25 years because although it had the co-operative model, it did not have the co-op mindset.

The difference that co-op members and co-op thinking bring is an understanding of not just how people work together, but why they work together and in whose interest, so that is what I challenge the hon. Member for Hereford and South Herefordshire and the Government to learn from this debate. I thank everyone who has taken part in it, and I am grateful to my hon. Friend the Member for Islwyn for securing it. I look forward to many more co-operative debates in the House.

15:40

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Islwyn (Chris Evans) on securing the debate, which is extremely timely, given that it is being held during this year’s co-operatives fortnight. My hon. Friend is well known and respected for his staunch support of the co-operative movement, and he serves as one of 32 Labour and Co-op Members, some of whom are members of the shadow Treasury team. The debate has included several excellent contributions that put the case for co-operatives and their impact on the economy, and I will mention a few of the most powerful points that were made.

My hon. Friend the Member for Islwyn made a characteristically passionate speech about rebuilding trust in our society and the role that the co-operative movement clearly plays and can play in future. My hon. Friend the Member for Rochdale (Simon Danczuk) rightly and proudly proclaimed the historical roots of his constituency as the birthplace of the co-operative movement. My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) talked about not just the past and the present but the future of the co-operative movement, while my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) touched on the potential for the co-operative movement to make a real contribution to many of the challenges that we are facing—not just regarding our energy solutions for the future, but in housing.

My hon. Friend the Member for Corby (Andy Sawford) referred to “sticky money”, which is a useful way of thinking about the contribution that co-operatives make to the economy and the issue of trust to which my hon. Friend the Member for Islwyn so poignantly referred. My hon. Friend the Member for Walthamstow (Stella Creasy) made a late but welcome contribution on the many benefits that the co-operative movement brings in finding innovative solutions to the challenges facing us.

I want to add my wholehearted support to this year’s co-operatives fortnight, the theme of which is “Choose co-operative”. It seeks to raise consumers’ awareness and understanding of the diversity and benefits of co-operatives, most of which are local, loved and trusted firms. The co-operative movement employs almost 100,000 people in 2,800 food stores throughout the country, and I declare an interest as a regular shopper at my local Co-op store, which never fails to impress me with its contribution to the local community and its clear desire to put something back. The Co-op also has a significant work force and a dramatic impact on local economies. The Co-operative Group estimates that it contributed £2.2 billion to national wealth in 2012, while co-operative businesses turn over more than £37 billion a year.

We should focus on what makes the Co-operative Group, one of the UK’s largest private employers and the country’s largest mutual business, different. What makes co-operatives—to use the theme of co-operatives fortnight—local, loved and trusted? The speeches made by all hon. Members have provided the answer: the ethical values and principles underpinning those businesses of honesty, openness, social responsibility and caring for others. My hon. Friend the Member for Corby referred to the clear principles on which the co-operative movement bases its approach. They are powerful in themselves, and together they make an important contribution to the economy.

The co-operative movement is about a different way of doing business. It puts sustainability, the welfare of local communities—in the UK and overseas—and its members at the heart of everything it does. The co-operative sector has grown by more than 20% since 2008, despite turbulent economic times, and has around 15.4 million members. It demonstrates that is possible to run a viable, thriving business while staying true to all the social values and principles that saw the Co-operative Group supporting 12,000 community initiatives. My hon. Friend the Member for Corby referred to some of its important work in that regard.

Under the “farm to fork” programme, more than 17,000 primary school pupils were invited to visit Co-op working farms in 2012 alone. The Co-op plays an important role in meeting the rising challenge of childhood obesity and the importance of linking where our food comes from and how it is produced.

An issue that is close to my heart and that was key in bringing me into politics in my youth is fair trade, and the Co-op is delivering record sales of Fairtrade products. Indeed, with sales up 20% over the past 12 months, the Co-operative Group is the UK’s leading Fairtrade retailer, selling three times the volume of such goods that would be expected for a business of its size.

Crucially for the UK’s current and future economy, the co-operative enterprise hub is a nationwide programme that delivers support and assistance to up-and-coming co-operative businesses. It provides advice, skills and support for co-operatives that want to start trading, that are in their first year of trading, that are experiencing rapid growth, that are planning to move premises, that are developing a new product service or market, or that want to change their management structure. The valuable support of the enterprise hub has helped more than 1,000 co-operatives. I am sure that the Minister will want to commend the hub on that impressive figure and that he will suggest how the Government will support its important work.

I would be remiss if I did not mention that 37% of directorships in co-operatives are held by women, which contrasts starkly with 13% in leading companies. Will the Minister comment on that and explain what the Government are doing to learn from the work of co-operatives in supporting women to get to the very top of decision making?

Let me turn to financial services and the Co-operative bank. My hon. Friend the Member for Islwyn explained that his co-operative values and principles, combined with his background in the financial sector, led him to campaign on the need for greater transparency in banks’ activities and transactions through his Banking (Disclosure, Responsibility and Education) Bill. Sadly, it ran out of parliamentary time last year, but it would have ensured that everyone, regardless of their background, would have equal access to routine affordable financial services and credit. He said that it was time that banks started serving society, rather than the other way round, and we should all support that.

The shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna), has said that co-operatives are not guarantees of special wisdom or perfect foresight. It is still too early to make a proper assessment of what went wrong at the Co-operative bank that led to the bail-in that was announced last month, but I want to echo the views of hon. Members, including the hon. Member for Warrington South (David Mowat), that it would be incredibly disappointing if the Co-operative bank’s ethos was lost because of a slight change in the way its shares are bought and sold. I would be grateful for an update from the Minister on that important issue for those Members who expressed concern about it.

I finish by again thanking my hon. Friend the Member for Islwyn for securing this important debate and giving Members the opportunity to mark co-operatives fortnight in a very apt way. I look forward to hearing the Minister’s response to the positive solutions that we have heard today.

15:50

[The Economic Secretary to the Treasury (Sajid Javid)]

It is always a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate the hon. Member for Islwyn (Chris Evans) both on securing this very important debate and on putting forward his case so eloquently. He entered Parliament in May 2010 and he has already made an outstanding mark. I would like to respond to the issues raised by hon. Members, and I will try my best to capture them all, including some of the questions from the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell).

As many hon. Members will be aware, the Government’s approach to mutuals was set out in the coalition agreement, where we committed to “promote mutuals” and “foster diversity” in the UK economy. That commitment, made in the Government’s founding document, underscores the importance that we attach to the sector. I would like to talk this afternoon about the contribution that the co-operative and mutual sectors make to the economy, and, I hope, to reassure all hon. Members of our determination to support them in their efforts.

First, however, I turn to the Co-operative Group itself, as raised by the hon. Member for Islwyn and other hon. Members. As the hon. Gentleman will be aware, the Co-op is at the forefront of the mutuals sector, with more than 4,800 retail trading outlets and an annual turnover of more than £13 billion. Clearly, the Co-operative bank is an important part of the Co-operative Group. I was pleased to see last month that the group has committed to strengthening the bank’s position, including through a commitment to inject capital. It would not be appropriate for me to say more, other than that the group is rightly taking action and strengthening its banking arm through that recapitalisation.

I turn to the co-operative sector as a whole. The Government have made it clear that the co-operative sector is of great importance to the UK economy. That case was made especially well by the hon. Member for Corby (Andy Sawford). In fact, co-operatives are ingrained in our culture. As we have heard, the first recorded co-op in the world was set up in Scotland in 1761. Building on those foundations, the birth of the modern co-operative movement can be credited to the Rochdale pioneers, no less, in the mid-19th century, as we heard so well from the hon. Member for Rochdale (Simon Danczuk). He correctly said that I am a Rochdale boy, and it is something that fills me with great pride. There are people in this world who do not know where Rochdale is—however shocking that sounds—but when they are told that it is the home of the co-operative movement, they immediately recognise the town’s importance. I am sure that the hon. Gentleman would agree.

From those humble beginnings, a thriving co-operative sector has blossomed. The UK now has more than 6,000 independent co-ops, and there is a co-op in every single postcode area. Those organisations provide valuable services across a wide variety of industries, including agriculture, finance and energy production. However, we should also remember that although co-operatives focus on serving their members, they are also businesses. The co-op sector in the UK had an overall turnover of well over £36 billion in 2012, which is why, in line with the Government’s commitment to promote mutuals, we have taken steps to support the sector and to enable it to thrive further.

Last January, my right hon. Friend the Prime Minister announced the co-operatives consolidation Bill, which will be introduced to Parliament in December this year. Although the Bill will not contain any new legislation, it will put all co-op legislation in one place, reducing complexity and making it easier for new co-operatives to be set up. I know that that will be welcomed by the co-operative movement.

In addition, we will consult very shortly on a further package of measures to support the co-op sector, including making insolvency procedures available to co-ops, so that a troubled co-op has more chance of being rescued. The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) rightly raised the issue of football supporters’ trusts. As he will know, the Football Association is concerned about the inability of those trusts to go into administration. The changes that we propose in the consultation will hopefully help to satisfy that requirement, and help that sector of mutuals—football supporters’ trusts and others—to thrive further. We will also consult on raising the amount of withdrawable share capital that an individual member can invest in one society, so that co-ops can more easily raise capital from their members.

A very important subsection of co-ops, as we heard, is the credit union sector, which provides a mutually owned option for customers looking to save, take out loans, or, in some cases, to get current accounts and even mortgages. We have heard many Members today speak about the sector eloquently, including the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), the hon. Member for Islwyn, and the hon. Member for Walthamstow (Stella Creasy).

We have taken a number of specific measures to support the sector. Most visibly, the Department for Work and Pensions co-ordinated a recent feasibility study to examine the future of credit unions. It was announced only last week that the Government will take forward the study’s findings. That includes the Department for Work and Pensions making a further investment of up to £38 million over the next three years in credit unions, with the aim of supporting the credit union sector to provide sustainable financial services for up to 1 million additional people.

The feasibility study also proposed raising the maximum interest rate that a credit union can charge to 3% a month. The Government have announced that we will take that proposal forward, and it will apply from April 2014. That will enable credit unions to break even on the low-value, short-term loans that are the most expensive to issue, and to become more stable over the long term. That will be an alternative, as we have heard from some hon. Members today, to other avenues for borrowing for short-term loans, such as payday loans.

[Stella Creasy]

It is fantastic to hear the Minister supporting credit unions doing short-term lending. If he recognises that credit unions can do short-term lending at capped rates, why does he not think that payday lenders could lend at capped rates and introduce a cap on the cost of credit?

[Sajid Javid]

The hon. Lady will know that we have rightly given the power to an independent regulator to set capped rates, if it thinks that is appropriate in future. That is the correct way to deal with the issue.

In the interests of time, I must plough on. If we are to consider the wider mutuals sector, we should also consider building societies, which remain another key focus for the Government. We set out our approach to applying the recommendations of the Independent Commission on Banking on building societies in “The future of building societies” consultation paper. The consultation closed last year, and we are now considering how best to treat building societies in line with our aims. We will set out our proposed approach in due course.

Several other questions were asked, and before I conclude, I will try to answer some of them as best I can. A number of hon. Members raised the issue of co-ops in the energy sector. The Department of Energy and Climate Change published a call for evidence on community energy in June 2013, and it will publish a community energy strategy for autumn 2013. That highlights the Government’s commitment to supporting community energy projects.

A number of hon. Members raised the issue of housing. I agree that the co-operative sector has an important role to play in housing, particularly because, between 1997 and 2010, we saw a decline in social housing in our country of more than 421,000 units. I think that the co-operative sector can make a contribution to turning that around, and it will benefit from Government funds that have already been made available, in particular, for affordable housing.

The hon. Member for Islwyn raised the issue of Northern Rock. We believe that the sale was in the best interests of the taxpayer, securing the long-term future of Northern Rock plc and increasing competition in the banking sector. The decision to proceed with the sale was based on the advice that the Government received from United Kingdom Financial Investments Ltd and independent advisers, having considered all bids and all other potential options.

Finally, in the interests of time, I will just address one more issue about the use of the name “co-op”, which was a good point made by the hon. Member for Rochdale. That is something, as he rightly identified, that is being looked at by the Department for Business, Innovation and Skills. I am aware that very strong representations have been made to the Secretary of State for Business, Innovation and Skills, not least by Ed Mayo of Co-operatives UK. The Business Secretary has committed to looking into the matter further and to making an announcement shortly.

In conclusion, I reiterate the Government’s support for the co-operative sector, and I thank all hon. Members who have taken part in today’s debate, especially the hon. Member for Islwyn for making his case so well.

[Mr Philip Hollobone (in the Chair)]

Order. All good things must come to an end. I thank all hon. Members who took part in the debate and I ask those who are not staying for the next debate to leave quickly and quietly, because we are moving on to the important topic of selective licensing of landlords on the basis of poor housing standards.