Commonwealth Development Corporation Bill

Debate between Gareth Thomas and Stephen Doughty

Programme motion: House of Commons & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th January 2017 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

What my hon. Friend describes is, in civil service language, the ghastly phrase “absorptive capacity”. He will know that, unfortunately, the Department for International Development has allocated some funding into various World Bank trust funds that have not been fully spent with the originally envisaged timescale, suggesting that the Department is beginning to struggle to find suitable sources that can absorb its money as it wants. My hon. Friend is, in my view, right to worry aloud that this is a huge increase in money without any proven capacity to spend it.

[Stephen Doughty]

Indeed. My hon. Friend, one of the longest-serving Ministers at DFID, knows this only too well. He makes a very important point. I have spoken to other experts in the sector who suggest that to absorb that amount, even a doubling would be a struggle, so it certainly applies to the levels we are seeing. That is why it would be much more helpful if the Minister were clear about the schedule for this spending. What is his idea of the number of years over which this increase would be spent before we might require another Act to increase it even further?

We tabled some crucial amendments, as did SNP Members, in new clauses 3, 4 and 6 and my own new clause 9, emphasising the importance of focusing on the poorest, least developed and low-income countries and of ensuring that we remain coherent with the sustainable development goals—the global goals agreed by the UN—and focused on poverty eradication rather than other priorities.

--- Later in debate ---

[Mr Gareth Thomas]

Is my hon. Friend aware of comments made by the Secretary of State when she was a Treasury Minister about tax evasion and the need to limit the use of tax havens? Why does the Treasury seem to be concerned about the issue, and why is DFID suddenly not concerned about it? One would have thought that, when it came to such a crucial issue, there would be joined-up government.

[Stephen Doughty]

That was also a great surprise to me. I referred earlier to the letter that the Secretary of State sent to many of the other DFID contractors on 16 December. That letter was very clear about tax avoidance measures and tax havens. It contained a series of criteria, most of which I think are very reasonable, and which we should expect to be observed by organisations that are benefiting from our aid spending. My question is this: why are those criteria not being applied to CDC? The Secretary of State repeatedly refused to confirm that they would be. There seems to be one rule for one organisation and a different rule for others.

Eurodad research found that 118 out of 157 fund investments made by CDC went through jurisdictions that feature in the top 20 of the Tax Justice Network’s Financial Secrecy Index. That does not seem to me to be coherent with the other statements that are being made by the Government. Indeed, the will of the House has been shown by cross-party support for amendments to other Bills that would crack down on tax avoidance and evasion.

Lastly, I want to return to the issue of coherence, and I urge colleagues to support new clause 7. The hon. Member for Bedford (Richard Fuller) referred to this as some sort of laundry list and suggested I was creating hypothetical straw men that did not actually exist and was dealing with things that have happened in the past. That is not the case; I am talking about things that are happening now. It is a fact that, as data revealed to me since the Committee stage in parliamentary questions show, in 2015 alone CDC invested £56.9 million in private fee-paying education and £117.9 million in private fee-paying healthcare.

Savings (Government Contributions) Bill

Debate between Gareth Thomas and Stephen Doughty

3rd reading: House of Commons & Report stage: House of Commons
Monday 12th December 2016 Commons Chamber

[Mr Thomas]

I am grateful for the opportunity to speak not only to new clause 1, but to amendments 1 and 2. I should declare an interest as a member of the M4Money credit union and as chair of the all-party group on mutuals.

New clause 1 seeks to give a statutory right to anyone wanting to save with a credit union via payroll deduction. Amendment 1 would reduce to one year the two years that those who are just about managing will wait before getting the Government top-up under Help to Save, to better incentivise saving under the scheme. Amendment 2, about which I shall speak a little more first, seeks to allow credit unions to offer the Help to Save product.

I took part in the Second Reading debate and raised the concern that credit unions would not be allowed to offer the Help to Save product. I have read through the transcripts of that debate and of the Committee proceedings and I can still see no good reason for the Government’s resistance to allowing credit unions to offer the Help to Save scheme. I recognise that Ministers want to ensure national coverage of Help to Save so that everyone who meets the criteria—the potentially 3.5 million people across the UK who Ministers think might do so—regardless of where they live can access the scheme. That clearly makes sense. I have no objection to the choice of National Savings & Investments as that national provider of choice. What I cannot see is any valid reason why credit unions cannot be allowed to complement the NS&I offer.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I too declare an interest as a member of the Cardiff and Vale credit union and I am also pleased to be, like my hon. Friend, a member of the Co-operative party. Does he agree that the Government need to be far more ambitious as regards credit unions playing a full part in financial services, and that, as I mentioned on Second Reading, we need to be heading in the direction of other countries, such as Canada, that have a much bigger credit union sector?

[Mr Thomas]

My hon. Friend makes an important point. We need much more ambition for credit unions and for financial mutuals and co-operatives more generally. I am thankful for his intervention.

Ministers claimed in Committee that a multiple provider model for Help to Save would not offer value for money, yet as far as I can see they have produced no costings to justify that claim. It is not as if Ministers are dealing in the case of NS&I with a private company demanding an exclusive arrangement as it feels threatened by the competition that credit unions can offer. NS&I is a state-owned bank, effectively, and is responsible to the Treasury. Indeed, I understand that the Minister responsible is the Economic Secretary to the Treasury, who is also responsible for policy on credit unions. NS&I has some 25 million customers and £135 billion in assets. By comparison, credit unions across the UK have £1.37 billion in assets, less than 1% of the value of NS&I’s investments. In short, credit unions are no threat to NS&I.

NS&I is under the control of the Treasury, as I have said, and it is in Ministers’ hands, or it was until the start of the House’s proceedings on this issue. The House now has the opportunity to decide whether credit unions should be allowed to offer the Help to Save scheme.

Savings (Government Contributions) Bill

Debate between Gareth Thomas and Stephen Doughty

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 17th October 2016 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure—on this occasion anyway—to follow the hon. Member for North West Hampshire (Kit Malthouse). I rise in particular to support the remarks of my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) and to dwell on a number of the points that I have made in interventions.

The hon. Member for Ross, Skye and Lochaber (Ian Blackford), who speaks for the Scottish National party, the hon. Member for Newark (Robert Jenrick) and my hon. Friend, in particular, addressed the scale of the savings crisis. In their own different ways, they underlined the need to do a lot more to encourage those on low and modest incomes to save. It is in that spirit that I gently underline, in this, I hope, more substantive contribution, the need for the Government to look afresh at their decision on Help to Save.

The Government have decided that they will make their bonus payment after two years, as opposed to 12 months. The hon. Member for Newark talked about the person who has only £100 in their bank account and dwelt on the difficulties they have saving. Two years is a long time. I think of a constituent of mine who does the right thing and is working. She is a teaching assistant and therefore on a low income. She has faced, given the scale of the housing crisis, to which my hon. Friend the Member for Salford and Eccles rightly alluded, significant increases in rent, and she struggles to manage her income and to pay all her bills. She is surely exactly the sort of person we would want to benefit from a scheme such as Help to Save, but I suspect that, if she thought that she was not going to get any benefit from her savings for two years, the struggle to make ends meet in the intervening period would be a significant disincentive to her setting even small amounts of money aside in a savings account. I share the concern of others that the scheme will benefit only those on in-work benefits. Again, I encourage the Government to be a little more imaginative on the scheme.

I understand and see the logic of the Government’s need to have a Help to Save implementer with national coverage. Clearly, the Government have failed to persuade traditional banks or big financial players to offer the scheme, so I can see the attraction of NS&I. What I fail to understand is why credit unions cannot be allowed to offer the service to communities in their areas alongside NS&I. I hope that the Government will reconsider that point.

I have the great privilege of chairing the all-party group on mutuals. I commend the contribution of the Building Societies Association which, in its comments on the lifetime ISA and its briefing for the debate, shares the concern that others have expressed about the risk of the lifetime ISA conflating savings for a house deposit and savings for retirement in one product. Again, there are concerns that the scale of withdrawal charges will be punitive. I hope that the Minister will pick up those two points.

I welcome the support of the hon. Member for North West Hampshire for the idea of making payroll deduction a statutory right. He is right to say that the Government have a statutory right to take tax through PAYE, so why should they not also support a statutory right to allow people, with their employers, to save through a credit union, a standard mutual or a mainstream bank product?

Giving people the right to payroll deduction would be of huge long-term benefit. Many of the credit unions that are highly successful underline regularly how important the facility of payroll deduction is to their ability to offer financial services, particularly in the savings context, to their members. For a while, one issue prevented an armed forces credit union from being established. When one considers that before credit unions came along often the only products that were available for those serving in our armed forces on comparatively low incomes were those offered by legal loan sharks—the payday lenders charging huge sums of interest—one understands the scale of the benefit that credit unions are beginning to offer to armed forces personnel.

The Financial Secretary to the Treasury has a reputation as a shrewd and effective operator around Whitehall. Now that she is in the Treasury, she has even more power at her disposal. Many parts of government, whether Whitehall directly, agencies outside Whitehall, the NHS, individual academies, academy chains or indeed some parts of local government, still do not offer payroll deduction services for credit unions that want to serve their employees. One thing the Minister could do if she is not immediately persuaded—I hope she will be by the time the Bill completes its passage—would be to use the weight of the Treasury to encourage all Whitehall Departments to check that every bit of government for which they are responsible allows payroll deduction and lets credit unions offer savings and other financial services to their employees. If the police can offer payroll deduction services—many police officers and other police staff are signed up to credit unions—and if our armed forces can do it, why cannot all of government offer this service? I therefore hope the Minister will not only lead a drive on allowing payroll deduction, but will be willing to contemplate amending the Bill to make payroll deduction a statutory right.

It is worth reflecting briefly on the appetite across the House for more diverse financial markets. Arguably, one of the reasons why organisations within the financial services community can sometimes make high charges for their services is that there is not enough competition. Encouraging more savings through building societies, and in particular trying to build up the credit union sector, is surely something that every Treasury Bill, and indeed every Government Bill, should have at the back of its mind. Might there be an opportunity to encourage more tax incentives for savers? The armed forces credit union has been established. Why should there not be tax incentives to encourage more of our soldiers, sailors and air force personnel to sign up and support that credit union, and benefit from its services?

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I thank my fellow Co-operative MP for giving way and apologise for not being able to be in the Chamber to hear the whole debate—I was at another debate in Westminster Hall. I wholeheartedly agree with my hon. Friend’s remarks and pay tribute to his work on the armed forces credit union. I will certainly support the amendment that he suggests tabling. Does he agree that we should also look at countries such as Canada and Germany, where there is diversity in savings, and where much stronger credit unions are available to a much wider group of the population?

[Mr Thomas]

My hon. Friend makes an important point. Many financial services markets around the world are far more diverse than the UK’s, and therefore far more competitive. We need to build up our building societies and other mutuals such as credit unions, and further tax incentives that encourage saving and taking up other financial services through mutuals can only be a good thing.

I have no intention of voting against the Bill, but I share the concerns of my hon. Friend the Member for Salford and Eccles. I hope that both Front-Bench teams will reflect on my suggested amendments and that we will see progress on the concerns that they address during the Bill’s passage.

Co-operatives

Debate between Gareth Thomas and Stephen Doughty

Thursday 14th July 2016 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I beg to move,

That this House has considered the contribution of cooperatives to the economy.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to be here with colleagues from across the House, and with many fellow members of the Co-operative party, to discuss this important issue. I stand here not only as a member of the Labour party but as a Co-operative MP, along with many other colleagues here. I am pleased to work with colleagues across the legislatures, councils and different political institutions of the United Kingdom to stand up for co-operative values and the co-operative ideal in our politics, which enjoy support even from non-Co-op members. I am glad to see representatives from other parties here, and I am sure that they will make some excellent contributions. There are 25 Co-op MPs, 1,500 councillors, three police and crime commissioners, eight Members of the Scottish Parliament and 11 Assembly Members, but many others also share our ideals and interests.

Members may be aware that the timing of this debate is no coincidence. We recently celebrated Co-operatives fortnight, which ran from 18 June to 2 July. Co-operatives fortnight brings great attention to the issues every year, as do numerous other events throughout the country and indeed around the world. Co-operatives fortnight is a time when co-operatives up and down the country remind people of the many good reasons why we should all choose the co-operative model and of the significant impact that co-operatives have had for many years and continue to have on the British economy.

That is important to recognise, as we are going through difficult times both politically and for business and the economy. Unfortunately, as always, the difficult cases and mistakes made by some businesses tend to predominate. The BHS crisis, the scandals involving non-payment of tax and lots of other issues have dominated the business and economic agenda in recent months but, overall, we should be proud of the success story that surrounds the role of co-operatives and mutuals in our economy. That is what I wish to draw attention to in my remarks.

The movement has seen incredible growth over the past number of years. The number of people who own and control the UK’s co-operatives has grown by more than 10% to 17.5 million, nearly a quarter of the UK population, meaning that the number of co-operative members continues to outstrip the number of regular shareholders in the UK. The sector is set to benefit further from the recent Co-op Group announcement that it wants to add 1 million new members over the next five years. It is important to make it clear that, although the Co-op Group tends to dominate the news that we hear about the co-op sector in the UK, it is not the whole sector. The sector is much wider, more diverse and more extensive than just its most well-known brand name.

Overall, the co-op sector has grown by £3.5 billion over the last five years. That growth is accounted for by a combination of success among retailers such as John Lewis, the Midcounties Co-operative and the Central England Co-operative, and steady growth in the agricultural sector. It is worth noting some of the largest sectors within the co-operative economy by number of co-operatives and turnover: agriculture, which has 416 co-ops with a turnover of more than £5.8 million; retail, which has 505 co-ops with a turnover of £24.3 million; sports and leisure, which has 2,890 co-ops; and health and social care, which has 88 co-operatives and a very large turnover.

That is matched by more than 225,000 jobs created in the co-operative economy throughout the length and breadth of the UK. We should applaud and welcome that, recognising that many of those jobs are in thriving businesses that provide a huge role for employees as well as co-op members. They often offer excellent pay, conditions and involvement in the direction of where the co-operative goes, not just the employer/employee relationship of many traditional businesses.

Co-operatives and mutual societies play a pivotal societal, social and economic role throughout the UK. They are created, governed and run by members, and set up by members for members. The idea of membership-led engagement is the distinguishing element that makes co-operatives and mutual societies different from other legal entities, and it is unique as far as participation in economic life is concerned. It is important to recognise that because a mutual society is created and managed to fulfil its members’ needs, it inherently pursues long-term goals. That pursuit of long-term goals marks mutuals as reliable, stable and durable elements in many sectors of the economy.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I know that my hon. Friend was a strong supporter of the Co-op party’s successful campaign during the last Parliament for the Government to establish a military credit union to help protect our military personnel and their families from being exploited by payday lenders. Does he think that this debate might be a good opportunity to hear from the Minister about what progress there has been in terms of people joining the three credit unions established to help military personnel?

[Stephen Doughty]

That is a crucial point. My hon. Friend, who has been a leader on the co-operative ideal in this Parliament, across the country and within the Co-operative party itself, led the campaign for a military credit union. I would certainly be interested to hear from the Minister about that. As a member of a credit union myself—Cardiff and Vale Credit Union—I know that many Co-operative supporters also belong to and promote credit unions in their communities. I also recognise that fair lending and fair access to finance can help different sectors: particularly, as my hon. Friend pointed out, veterans and those serving in our armed forces. It is crucial that they do not fall prey to the payday lenders who create such a problem in our economy.

We have seen progress not only in fair lending but in fair tax, an issue on which the co-operative movement has shown leadership. It is worth noting, and the House will be interested to know, that Britain’s top five co-ops pay more UK tax than Amazon, Facebook, Apple, eBay and Starbucks combined. That is very much in line with where the public stand. Only 34% of the British public believe that most big businesses in the UK pay their fair share of tax, and, sadly, just 6% trust a company of any size to provide accurate information on the tax that it has paid. Recent research undertaken by KPMG shows that trust in companies’ approach to tax is the fourth most significant factor in how much overall trust an individual places in a company or brand.

The Fair Tax Mark campaign has been established to set a new standard in responsible tax practice, from the smallest shop to the biggest multinational. The pioneers of the campaign have, as we would expect, been co-ops and social enterprises. From the beginning, the Co-operative party, Co-operatives UK and Social Enterprise UK have been highly supportive of the fair tax mark. I am proud to say that the Co-operative party is the first political party to achieve the mark. That is something that we could all aspire to. Co-operative retail societies such as East of England, Midcounties, the Co-operative Group and Scotmid have also achieved the fair tax mark. It is clear and evident that co-operatives have seized the opportunity to benefit from the public’s willingness to punish tax avoiders.

The co-op movement’s enthusiasm for adopting fair tax policies further demonstrates that the co-operative model is an inherently social and responsible form of business. I would certainly be interested to hear from the Minister what lessons he thinks there are for the rest of the economy in the example being set by co-operatives and those leading the Fair Tax Mark campaign. Achieving the mark certifies that a company is making a genuine effort to be open and transparent about its tax affairs and pays the right amount of corporation tax at the right time and in the right place. I am proud of the work done on that.

Co-operatives clearly provide new and innovative solutions to some of the other challenges of our changing economy, one of which is the growing number of self-employed workers. There are now more self-employed workers than at any time since modern records began. Some 4.6 million people, around 15% of the workforce, are now self-employed. Data from the Office for National Statistics show that two thirds of new jobs created in the UK in recent years are down to self-employment. Current projections are that by 2018 self-employed people will outnumber those working in the public sector. That is a huge challenge for Government, for tax authorities and for trade unions, but a challenge that the co-operative movement has risen to. Self-employed workers often do not enjoy the employment rights and protections at work or any of the implicit services associated with being an employee, such as payroll or workplace insurance, let alone such things as pensions or sick pay. They also face additional challenges related to being paid on time, the right to contracts and so on. As we all know, self-employed workers often end up being some of the lowest-paid and most put-upon workers in the country.

With that in mind, it is particularly interesting to note that throughout the country freelancers and self-employed people are coming together to form co-operatives for shared services, in some cases with support from entrepreneurial trade unions that see the opportunity to support members who are self-employed, not just those who are employed in traditional workplace arrangements in larger businesses.

I have some interesting examples. In Wales, the Oren Actors Management co-op allows actors to work between roles as agents for other co-op member actors, marketing their services—a two-way process in which they mutually support one another. That is a very good example of co-operative principles in practice. In Swindon, 50 music teachers have come together to form a co-op to market their services to schools with support from the Musicians Union, with which I enjoy a proud association—indeed, I should state for the record that my register of interests shows that I have enjoyed support from it in the past. The Musicians Union does an excellent job in that respect and I am very excited to see it working to help self-employed music teachers. In London, interpreters came together in a co-op in November 2012 after changes in their terms and conditions when the firm Capita took on the contract to provide interpretation services in judicial courts. I do not want to get into a lengthy debate about Capita and its good and bad aspects, but that is a fascinating situation of a co-op of interpreters coming together.

Compared with practice in some countries overseas, these initiatives are only in their infancy. They have to potential to grow tremendously, like other models witnessed in other parts of the world. I am certainly interested in whether the Minister thinks we could play a bigger role in promoting best practice and supporting such initiatives from other countries. In the United States, for example, Freelancers Union, which was formed for the self-employed, has attracted over 280,000 members. In the Netherlands and Spain, general unions for self-employed workers have emerged and developed since the late 1990s and provide a range of services as well as representation. The Assemblée Nationale in the French Parliament has also introduced legislation, which came into force this January, to recognise the role of 72 business and employment co-operatives, supporting members with accounting and access to the sickness pay and benefits of conventional employees.

It is worth highlighting that the Wales Co-operative Centre, another body with which I enjoy a close association—I work closely with its head, Derek Walker, locally—and Co-operatives UK have recently published the “Not Alone” report, which sets out some key findings on how the co-operative movement and trade unions can come together in the UK to build support for self-employed workers.