Alun Michael
Main Page: Alun Michael (Labour (Co-op) - Cardiff South and Penarth)Co-operatives and Mutuality
Alun Michael Excerpts(13 years, 5 months ago)
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Mr Bailey
The crucial difference is that the co-operative and mutual movement exists for the benefit of the participating consumer-members or worker-members. In the free market, the wider movement is the proprietary sector, with outside investors investing in, taking profits out of, and controlling the businesses. That is the crucial structural distinction, and there is also a huge difference in values and ethos.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
I am sure that my hon. Friend agrees that for many years there was confusion about what “the third sector” meant. It was often taken to mean the voluntary sector, but the third sector of the economy was always seen as the co-operative sector, a business sector aiming to be profitable but having, as he has indicated, a wider set of values than merely profit as the driver behind its engagement and success.
Mr Bailey
One thing that attracted me to work in the co-operative movement for so many years was that as a believer both in the market and the need to succeed in it, and in certain values, I felt that it was a model in which successful businesses could reconcile the two. That is clearly demonstrated, and is part and parcel of the reasons for today’s debate.
Chris Evans
As my right hon. Friend says, there was also the Principality. That backs up my point that we need a mutual element. We need something strong in the banking industry; we need a safety net.
I will conclude now, because I have spoken for a long time, including about the valleys. Co-operatives have a huge role to play in the economy. They are central to society, and I hope that, when the Minister sums up, he will give a strong commitment to ensuring that they have an important part to play in our future economy.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
Thank you for the opportunity to speak in the debate, Mr Amess. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on obtaining it. It marks co-operative fortnight and also comes at the 10th anniversary of the Co-operative Commission report.
I am delighted that the debate is so popular—something perhaps illustrated by the hon. Member for Hereford and South Herefordshire (Jesse Norman). I hope that he may be willing afterwards to look at the document that my hon. Friend the Member for Walthamstow (Stella Creasy) referred to. Often, good ideas in the co-operative movement do not reach a wider audience. If the hon. Gentleman has not yet had the opportunity to read those suggestions, I am sure that we can help him with that, especially as he responded so positively to the intervention.
Jonathan Evans
I am grateful to my parliamentary neighbour for allowing me to intervene. What has been put forward by the Co-operative party is not the only way in which Northern Rock might still end up with a mutual future. It is known that some mutual building societies are, in fact, interested in bidding, even through the Government’s proposed route. However, that will depend on the recognition of a capital instrument. Does the right hon. Gentleman hope, as I do, that we might hear something along those lines from the Government later this afternoon?
Alun Michael
I am not wedded to one particular proposal. The Co-operative party has put forward ideas but, as the hon. Gentleman has suggested, there are other options. A genuine will is needed to find a solution to overcome the problems that have been raised.
It is 10 years since the Co-operative Commission published its report on the co-operative movement, and it has come a long way in that time. If we went back further than that—perhaps 20 years—it would feel almost as if we were living in a different world. Then the retail co-operative movement was struggling, but now it is back in the top ranks; then the building societies were under pressure and were not very popular, but now their value is much more appreciated, as has been mentioned.
The creation of the Co-operative Commission was itself a landmark event that demonstrated the co-operative movement was important enough to be the subject of a Government-initiated commission. Virtually everything in that report, which contained some 60 specific recommendations, has been acted upon, mostly by the movement itself. The introduction of legislation during the past decade has assisted the movement’s development and success. As has been made clear in the debate, the name “co-operative” does not guarantee good governance, but good corporate governance has the capacity for business success and stability. Co-operative principles can also contribute significantly to public service.
Today, I want to celebrate the sheer energy and creativity of the movement, as well as its genuinely positive political impact. Politics is not just about narrow party interests; at its best, it is about people working together to change the world. Certainly, that is what drew our 29 Co-operative MPs into the political front line. It is worth noting that that is the largest group of MPs there has ever been in the history of the Co-operative party. In the past year or two, the co-operative movement has seized the opportunity to deliver on the concept of the co-operative school. In the past few days, Ben Reid has launched Co-operative Energy, and Supporters Direct is nurturing the growth of popular engagement with sport. On that point, I hope that the recent glitch can be overcome, so that Supporters Direct can continue and succeed.
The issue is not just about setting up co-operatives. I want to touch on four important initiatives where the experience of co-operative governance is being applied to a much wider aspect of public policy and organisation. The first initiative relates to how British Waterways is organised. I chair the all-party group on the waterways and I am pleased that the Government have picked up on the Co-operative party proposal to move our canals into the third sector under a non-governmental organisation. That idea found its way into the Budget report before the election and has been described as seeking to create a sort of National Trust for the waterways. It has had a positive response from the public. The main aspect of co-operative governance that needs to be built into that new organisation is public engagement and involvement, so that people feel a genuine degree of ownership in the new organisation and are willing to contribute to it both financially and in terms of volunteering. The all-party group will produce a report shortly on the hearings we held in respect of governance and finance.
The second initiative is the idea of a co-operative council. That is not just about having a council that encourages people to consider setting up co-operatives and includes the co-operative model in options for change; it is about transforming the relationship between leadership and management of the council, those who work for the council and the public that the council exists to serve. The idea is powerful and will enable us to refresh how we do business locally.
The third area of initiative is internet governance. The internet offers enormous potential for co-operative solutions. I chair the UK Internet Governance Forum, which is leading the way in the UK in bringing together Government, business, Parliament and civil society to look for better ways of encouraging creative and positive human activity nationally and internationally. It was part of the 2010 Co-operative party manifesto, but we are co-operating across party. Ministers have been very supportive of delivering that approach, and it will be taken a stage further when the UN’s internet governance forum meets in Kenya in September.
The fourth area of initiative is the partnership approach to reducing local crime and disorder. That idea has flourished since I had the privilege of taking the Crime and Disorder Act 1998 through the House and has proved a success in reducing crime. However, the potential of such an approach has not yet been realised because the governance of local partnerships is not as well developed as it should be. In Cardiff, such an initiative reduced violent crime by about 25% more than in comparable cities. That shows the value of taking that approach to enable local partnerships to succeed. Methodology and governance provides the potential for greater success in that respect. Those are examples of areas where the co-operative model can contribute to the public and private sector.
In 2007, I did a piece of work for the Cabinet Office and the Treasury, which was commissioned by the then Minister for the third sector, who is now the Leader of the Opposition. That work was part of the preparation for the 2007 spending review and involved taking a wider, general look at the contribution that could be made by the third sector to social and economic regeneration. My report concentrated specifically on the evidence of what mutuals and co-operatives could contribute to that. It is fair to say that the Treasury officials in particular were genuinely surprised and impressed by what they saw across the country when we were undertaking that work. I personally found it an invigorating experience.
The report showed the contribution that is already being made in areas such as health, housing, child care, financial services and community cohesion. That potential has not yet been realised, partly because I discovered immediately after we published the report that the people on the team who had gathered all the information and worked with me so positively were sent back to their original places of work. I am not sure why, but some Departments have the capacity for getting rid of expertise as soon as it has been developed. I cannot blame the Minister for that, but I hope that he will have a look at the report and consider how its findings might be used by the current Government, because its proposals cross boundaries.
During that period, we saw how co-operative principles can transform an inner-city hospital—Homerton hospital, Hackney was the example we considered—and how co-operative initiatives, from credit unions to play groups and social groups, were transforming the lives of individuals and communities across the country. The co-operative movement and the application of co-operative principles in a whole range of areas—not necessarily just to things that would be described as an industrial and provident society—are probably one of Britain’s best kept secrets. I am glad that we are having this debate to highlight, however briefly, all the areas on which the movement is having an impact.
Co-operation and mutuality are alive and well in the sphere of political action, and the latest initiatives to create co-op councils will open up a new era of delivery to our communities locally. Change of power through an election should not just change the name plates at the Executive table; the relationships between the people who work for the council and the public they serve should also be changed. I hope very much that all the examples given during the debate will lead to a greater flourishing of the co-operative principle and will perhaps pick up the impetus that was given by the Co-operative Commission 10 years ago to refresh our activities into the next decade.
Tracey Crouch
I am grateful for that clarification. The hon. Lady may be interested to learn that members of the Conservative Co-operative Movement have been considering whether, perhaps at the next general election, we may do something radical and stand as Conservative, Unionist and Co-operative candidates. That is under active consideration.
Alun Michael
It is important to emphasise that the Co-operative party is a separate party—it is a registered political party. A Co-operative and Labour MP has to be selected by the Labour party, and by the Co-operative party through a separate selection process. It is not just a question of the name; it has a very deep reality in our history.
Tracey Crouch
I thank the right hon. Gentleman for his intervention. The issue is under consideration by members of the Conservative Co-operative Movement. I think that we have just ruined any kind of cross-party consensus that we were having on the co-operative movement. The Conservative party should be congratulated on the fact that it has now established this movement in its own party, and I hope that Opposition Members will consider that to be an important step forward.
As I was saying before I was sidetracked, there are many reasons why co-operatives and mutuals are good for growth and for society. Hopefully, I shall cover those reasons in what was supposed to be a very short contribution to the debate. Having spent too much time talking about it recently, one area of co-operative success that I will not focus on this afternoon is football. There have been many debates in the Chamber and on the Floor of the House about football club ownership, so I shall surprise colleagues by avoiding my main non-political passion and concentrate on other issues today.
The co-operative movement has a far greater pedigree than perhaps people give it credit for. The first co-operative was established in 1844, and there has been a steady increase in numbers across the country, with some gaining a foothold and becoming cornerstones of local communities. Examples that have already been referenced this afternoon are, of course, the Co-operative Group and the John Lewis Partnership. Together, they have an impressive combined turnover of approximately £18 billion.
It is often the small co-ops, which do not have the big brand names, that make the biggest and best impact in our communities. As a relative newcomer to the Conservative Co-operative Movement—run impressively, if I may say so, by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman)—I have read with interest about the potential for co-operatives. Undoubtedly, they have intrinsic social benefits, promoting ethical, responsible, democratic and equitable ways of doing business. Inclusion, another positive contribution they make to society, ought not to be underestimated, not least at a time when we are asking individuals to do more for their communities. Co-operatives command cross-party support and that is to be welcomed. However, I believe that it is under this Government, with their desire for people to take up responsibility and seize the initiative, that they can really flourish as social enterprises and local providers.
We often hear co-operatives mentioned favourably in reference to their social, ethical and communal benefits, but many people who are not hugely involved in the movement will be surprised to learn of the enormous contribution that they make to the economy. In the south-east region, where my constituency is located, 328 co-ops now employ more than 13,000 people and generate more than £3 billion per annum. They take many guises, and I have read with interest about the coverage that they offer across a range of sectors, including housing, finance, agriculture and retail.
The Minister knows that I am heavily engaged in the debate about high-cost credit lending and debt management companies. I am therefore particularly interested in what co-operatives can offer the financial sector. My hon. Friend the Member for East Hampshire (Damian Hinds) and others who have already spoken have made the point that credit unions demonstrate particularly valuable and welcome traits. They foster a self-help and community ethos, while encouraging financial inclusion, affordable borrowing and prudent saving on a not-for-profit basis.
By law, each credit union must be founded with a common bond, which all applicants must satisfy before they can become members. In the case of the Medway Credit Union, which has a catchment area covering part of my constituency, the common bond is geographical. It restricts membership to those living and working within the union’s prescribed boundaries. It is seeing a steady increase on its 400 members. I appreciate that bonds are being considered as part of the legislative review, but the point is that each member is part of a community that has grouped together to offer a service that is independent of the state and is self-sustaining.
On top of the ability to promote saving and equity in an area such as Medway, where there is a significant personal debt problem, credit unions offer a very different and innovative approach to debt reconciliation, unique to their mutual nature. The advantage a credit union possesses over a high street bank or a loan company, for example, is its personal and flexible nature. Of course, someone can have a rapport with their bank manager, but he is ultimately concerned with generating profit. As part of a credit union, however, each loan that is taken out is given careful consideration by peers and fellow members who have one’s best interests at heart, and any loan taken out incurs a low rate of interest.
Mr David Amess (in the Chair)
All I say about hon. Members staying for the debate is that, when I made my announcement about the timing of things, there were 13 possible speakers. I hope I did not scare people off, because we seem to have lost a number of them. I am not referring to our current proceedings but, as far as the specific point made by the hon. Gentleman is concerned, Mr Speaker has said that it is certainly discourteous for a Member to arrive, make an intervention and not return. I cast no aspersions on what is happening at the moment.
Alun Michael
Further to that point of order, Mr Amess, as we are having this discussion about courtesy, has not Mr Speaker also ruled more than once in the past that, if a Member intends to make a critical comment about another Member, he should first have spoken to that Member, to apprise of his intention and to see whether there might have been good reason for any action that had provoked him to intervene?
Mr David Amess (in the Chair)
Order. I am advised that that is generally the case. Rather than prolong the matter, and as the right hon. Member for Cardiff South and Penarth (Alun Michael) and the hon. Member for Hereford and South Herefordshire (Jesse Norman) have made their observations, we will see what happens.
Mr Davey
I am quite surprised by the hon. Member for Harrow West, because he has been a Minister and he will absolutely know that there are areas that a Minister does not go into when they are the responsibility of another Department. As I instructed the hon. Member for Nottingham East, I believe that he needs to attend Treasury questions and ask Treasury Ministers about this matter.
Mr Davey
Let me help the right hon. Member for Cardiff South and Penarth and the hon. Member for Harrow West, who has twice interrupted me from a sedentary position, by saying that the decisions have not been made yet. If a lot of decisions had been made, I would be very happy to tell right hon. and hon. Members about them and let them ask questions about them.
Alun Michael
I will not go into point scoring of that sort. We know where the demutualisation exercise started and that piece of history is not a very good one.
I say to the Minister that it is normal in exchanges of this sort that, if a Minister is unable to answer a question, they offer to follow up the debate by providing an answer to that question. The difficulty that we have is that very often there is not a good understanding of mutuality within Whitehall; I am talking about official machinery now, particularly in relation to the Treasury. Therefore, there is a fear that a door has been closed that should be kept open. That is what the question is—is the door still open? It is a straightforward question and suggesting that people should attend Treasury questions is not really answering it.
Mr Davey
If the right hon. Gentleman is prepared to listen, I will bring his remarks and those of other Members to the attention of my Treasury colleagues.
Other general issues about mutuals and co-operatives were raised very pertinently by the hon. Member for West Bromwich West (Mr Bailey) and indeed by the right hon. Member for Cardiff South and Penarth. They asked how we can develop mutuals. The hon. Member for West Bromwich West made it very clear that we cannot impose mutuals. Mutuals have to take people with them and there cannot be a top-down approach. I absolutely agree with that. In addition, the right hon. Member for Cardiff South and Penarth talked about a sense of ownership. When we approach the issue of mutuals—whether that is developing more mutuals in the private sector or developing them through public sector reform—we have to learn those lessons.
I will give two examples, one from my constituency and one connected to my responsibilities. In my constituency, we have one of the first social enterprise mutuals in the health sector—Your Healthcare, which was spun out of a local primary care trust. It has slightly more than 450 employees, and will soon have local community members as well. It has been going for nearly a year, and is already a huge success. The employees feel a much greater sense of empowerment and feel relieved of bureaucracy. They elect their own managers, and have been driving efficiency and improving care. The enterprise is a key part of the reform agenda, and shows how powerful mutuals can be.
The notion of a health mutual in my constituency was first put forward about five years ago, and I pay tribute to the previous Government for being prepared to countenance such an idea. There was a lot of debate, because the Government could not quite agree on the issue, but at least they left the door open. Unfortunately, the PCT went too quickly and tried to tell the staff that they had to form a social enterprise, and from the start the staff were worried about pensions and terms and conditions. The local unions came to me, and I went to the PCT and said, “I think the idea is brilliant, but you have to take people with you,” for the very reasons that the hon. Member for West Bromwich Albion—[Laughter.]—West Bromwich West gave. The PCT stopped the process and re-consulted. It took a lot longer, but the local unions were then very supportive and the mutual has now gone forward very successfully. That is an example from the health sector of how important it is to involve people and to use a bottom-up approach.
The other example is the Post Office mutual proposal, contained in part 1 of the Postal Services Act 2011. If it is appropriate, we can move Post Office Ltd from being Crown-owned to a mutual model, and the hon. Member for Harrow West is absolutely right that we could do that only if the Post Office became commercially viable. The post office network relies on subsidy at the moment, but we are turning that situation around. I refer the hon. Gentleman to our policy paper published in October last year, which contains a whole set of serious business changes that will ensure that the post office network can go forward, wash its face and approach mutualisation. Those proposals are in stark contrast to how the network was run by the previous Government. For all the hon. Gentleman’s big words about mutuals, when we debated the relevant clauses on the mutualisation of the Post Office, neither Labour Front Benchers nor Labour Back Benchers asked a single question or tabled a single amendment. That is how interested they were when a major proposal on mutualisation was introduced to Parliament. It therefore ill behoves the hon. Gentleman to make such criticism when Labour Front Benchers did not even bother to ask questions in Committee or on Report about such a significant mutualisation. The hon. Member for West Bromwich West and the right hon. Member for Cardiff South and Penarth were right to make the points they did about mutuals having to work bottom-up.
I want to talk a little more about the Government’s approach. The hon. Member for Harrow West criticised us for not doing anything. Let me be rather more balanced and pay tribute to the previous Government for some of the things they did. The establishment of the new governance model of the community interest company has been very successful. When I recently went to see the community interest company regulator, who is based in Companies House, I heard about many successful CICs that are setting up. The previous Government’s decision to have the NHS right to request in community health care, again was a good thing, as was the development of co-operative trust schools, and we will support those types of initiative. The hon. Member for Harrow West, from a sedentary position, says “How?” He ought to wait a bit and let me finish the list of positive things. I was being positive about the previous Government and therefore he ought not to intervene at this point.
The hon. Gentleman mentioned legislation. The previous Government, through private Member’s Bills with cross-party support, improved the legislative framework. This Government are modernising that framework and taking it forward. We have heard about the legislative reform order. It is currently before Parliament and we hope to debate it in early autumn. We have also enabled greater electronic communication by mutuals, which is a very good deregulatory measure for them, and we will commence shortly the Co-operative and Community Benefit Societies and Credit Unions Act 2010. We are consulting on the future registration and regulation of mutual societies as part of Treasury reforms to the landscape of financial services regulation. The Cabinet Office will give public sector workers new rights to form employee-owned mutuals and co-operatives, going much further than the previous Government and generating a huge amount of interest in many areas of the public sector.
In February 2011 we established the mutuals taskforce to advise the Government and to help drive the process forward, finding a way around some of the technical problems that were completely ignored by the previous Government. The right hon. Member for Cardiff South and Penarth said that this is not understood; we have set up the mutuals taskforce to drive the process and to get external advice so that we can deal with some of the problems with pensions and other regulatory or technical problems. The mutuals taskforce has already met five times, and is a key development in driving the process forward.
Alun Michael
I am encouraged by what the Minister has just said. Can he assure us, though, that whoever is dealing with that process in the Treasury and the Cabinet Office will not be dismembered and sent off to do other things as soon as they have developed the expertise that is needed? In my experience, once officials grasp the contribution of mutuality they become great enthusiasts, and we need that in Whitehall.
Mr Davey
I am sure that we will learn the lessons from the previous Government’s mistakes.
We have also launched 20 pathfinder mutuals in areas including health, education and housing, to test some of the issues that went untested under the previous Government. The Localism Bill, which we will soon be considering, will give voluntary and community groups the right to challenge local authorities to take over delivery of local services. This is a rich picture of action, and therefore far from not delivering on rhetoric, as the hon. Member for Harrow West tried to maintain, we are indeed delivering.
There are one or two other questions that it would be remiss of me not to answer before I sit down, but I am conscious that I have been speaking for slightly longer than 20 minutes. There were a few questions about Supporters Direct. The Government are actively engaging in talks with the premiership in the hope of resolving the matter. The new head of Supporters Direct will, I hope, smooth some of the ruffled feathers, and perhaps with his efforts and those of the Government some moneys can be unlocked. I think that Members will understand why I cannot say too much more about that.
The hon. Member for East Hampshire asked about social ISAs, and the hon. Member for Harrow West took up the issue. The hon. Member for Harrow West will no doubt be delighted to know that I was not briefed on that question. I am very much in favour of social finance initiatives, such as social impact bonds, community development finance institutions and the big society bank, and think that the Government have been very creative in this area. My colleagues in the Treasury and the Cabinet Office will get a lot of support from the Department for Business, Innovation and Skills in taking the issues forward.
I welcomed this debate, and it has been a good one. I wish the hon. Member for Harrow West had not brought so many partisan things into it, such as mentioning Swansea and Arsenal, but apart from that I am sure that collectively, as a Parliament, we will take forward this very important agenda.