Co-operative Sector: Government Support

Andrew Pakes Excerpts

Tuesday 21st October 2025 Westminster Hall

[Andrew Pakes (Peterborough) (Lab)]

It is a pleasure to serve under your chairship, Mr Turner, especially as some of my earliest co-operative meetings took place in what is now Kingston upon Hull East, your constituency. I thank my hon. Friend the Member for Oldham West, Chadderton and Royton (Jim McMahon) for securing this important debate.

One of the first visits that I undertook as a Member of Parliament was to 28 Long Causeway in Peterborough, home of my local Nationwide building society branch. It has been there since 1974 but it started its life in the city in 1954, a few doors down from its current location, as the Co-operative Permanent Building Society—at a time when Winston Churchill was the Prime Minister and the world was very different.

For a post-war generation, building societies and co-operatives were part of the new social contract—if they worked hard, they could get on in life, get a home and make a future for their children. The co-operative and mutual ideal has always been strong in the UK, but the idea of a purpose-driven economy feels even greater in today’s world. Against a backdrop of division, short-termism and populism, mutuals offer purpose and social value to our economy and communities. The co-operative and mutual sector is a vital part of the inclusive growth agenda of this Government, worth £93 billion in gross value added and £180 billion in turnover. Building societies have more than 27 million members.

Despite moves to demutualise the building societies in the UK—an act of economic vandalism by a previous Government—we still have more than 40 building societies holding nearly one third of UK mortgages. Nationwide, still standing strong in my city and many others, is the biggest lender to first-time buyers in the UK.

My constituency is home to the English Mustard Growers co-operative, which I often talk about. My constituency and that of my hon. Friend the Member for Norwich North (Alice Macdonald) supply the seed that goes into Colman’s mustard—many people will know the brand. I am pleased we have an agricultural co-op in Peterborough and our surrounding fenlands. It is an illustration that the mutual drive covers a wide range of industries, not just retail, as many will know.

More widely we see the return of co-operative ambition after a generation of consolidation. It is good to see that happening, with the Co-op Bank coming back into the mutual fold and merging with the Coventry Building Society; with Nationwide expanding with the takeover of Virgin Money; and with the Co-operative Group adding more members year on year. I join my hon. Friend the Member for Oldham West, Chadderton and Royton in paying tribute to my good friend Joe Fortune and also Shirine Khoury-Haq, chief executive of the Co-operative Group, for their sterling work on behalf of the movement.

We should all remember that the movement started many years ago from co-operative principles. A few months ago I attended the Co-op congress in Rochdale town hall with my hon. Friend the Member for Rochdale (Paul Waugh). Rochdale was the birthplace of a movement, with the power of 28 pioneers organising against the odds and today still a living force for social and economic justice in all of our communities. The Rochdale principles still stand tall in the world.

I am proud to be part of a Government with ambition for the co-operative sector: a clear commitment to double the size of the co-operative and mutual sector and to support social enterprises, as my hon. Friend the Member for Leigh and Atherton (Jo Platt) said. Such ambition has not been seen by Whitehall before. With ambition will come challenges. It is not the role of Government to build co-operatives, but it is the role of Government to ensure there is not a block to growth. Co-operative activity, as we have heard, spans many sectors and many Government Departments. With that ambition, we also know it will bring the challenges of how cross-Government working supports it. We know that sectors, which often work across Government Departments, struggle to find effective cross-Government working and effective time. So I welcome the announcement of a co-operative development unit as part of the Government’s pride in place plans.

Like my hon. Friend the Member for Leeds Central and Headingley (Alex Sobel), who is no longer in his place, I am an old lag of the movement who spent many years working in co-op housing and co-op development, so I welcome the fact that we now have something that will look at co-op development in housing and local government. But I say to the Minister that the unit needs to work with the Treasury, the Financial Conduct Authority and other Government Departments to deliver the reforms we need to support it.

Co-operation is living proof that our collective endeavour can be greater than our individual efforts. There is no stronger message for co-operation than the world we stand in today. We need to make sure that that message rings true in Whitehall, where all of these initiatives add up to something greater than their individual aims. These developments have happened as a result of the Government’s new focus, but it is up to all of us to ensure they deliver on those.

Finally, why does this matter? It matters because it is about ambition for our communities and also the kind of world and economy we want to live in. If this is the co-operative moment, as I believe it is, we also need co-operative ambition. We need to create the conditions in which mutuals can flourish and succeed, where communities can come together and start up their own ventures, and where destiny for our families and communities is not determined by shareholders or Government alone, but by the people themselves. This truly is a co-operative moment.

--- Later in debate ---

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Mr Turner. I thank the hon. Member for Oldham West, Chadderton and Royton (Jim McMahon) for his work in securing this important debate. It has been a real pleasure to hear contributions from all the Labour and Co-operative party Members this afternoon.

The current economic landscape is challenging for our businesses and industries. Years of dire economic mismanagement by the last Conservative Government have led to businesses, including co-operatives, facing huge challenges, ranging from recruiting and retaining staff to soaring energy costs. Those issues have been exacerbated by the increase in trading obstacles following the last Government’s botched trade agreement with the EU. However, many of those challenges are now being compounded by decisions taken by this Government.

Co-operatives are owned by and run for the benefit of their members. As the Liberal Democrats have always believed in empowering individuals to engage in decisions that impact their lives, we are supportive of the co-operative sector, credit unions and non-profit financial institutions owned by their members. The co-operative sector is made up of more than 10,000 enterprises across every sector and region, from local community pubs and credit unions to building societies, mutual insurers and retail societies. Together, they represent one of the most resilient and values-driven parts of the UK economy, rooted in communities and owned by their members.

The Liberal Democrats believe that employee participation in the workplace, together with wider employee ownership, is important for diffusing economic power, promoting enterprise, increasing job satisfaction and improving service to customers. Co-operative enterprises offer considerable potential for member and employee involvement and are an important part of a modern mixed economy.

In the recent “Backing your Business” plan, published in July 2025, the Government committed to growing the co-operative and mutual sector over this Parliament, and launched a call for evidence on how we can support the sector and its businesses to grow. The Liberal Democrats support that ambition, but will the Government be more decisive in their support by acting on some of the recommendations of Co-operatives UK, such as on access to finance, which would expand the possibility for many of these organisations to scale up. Co-operatives often struggle to raise capital because, by virtue of being member-run organisations, they are more limited than companies in issuing shares that are attractive to external investors.

Often, co-operative enterprises provide fairer workplaces; they are four times as likely to be living wage employers, and women lead nearly a quarter of the UK’s top 100 co-operatives—more than twice the proportion in the FTSE 100. Meanwhile, although women earn 12% less on average than men across the UK economy, that figure is reduced to 7.5% within co-operatives. Community-owned pubs are also on the up, with a 51% increase over the last five years, and a 13% increase in the last year alone.

However, training, hiring and retaining a skilled workforce are issues that affect businesses of all kinds across the country. The Liberal Democrats therefore welcomed the industrial strategy this summer and the commitment to an increase in skills and training. The apprenticeship levy does not work, and many businesses cannot get the funding they need to train staff, with hundreds of millions of pounds of funding going unspent. The Liberal Democrats have been calling for the apprenticeship levy to be replaced with a wider skills and training levy, which would give businesses flexibility over how they spend the money to train their staff. We therefore welcome the intention to reform the levy and replace it with a broader growth and skills levy, but we have concerns about moving funding away from level 7 apprenticeships, which we know increase social mobility.

[Andrew Pakes]

On the subject of apprenticeships, is the hon. Lady aware that the Co-operative Group is doing pioneering work at Highpoint Prison in Suffolk using some of its share from the levy? It is working with employers to ensure that offenders get on to an apprenticeship framework so that, when they have served their time in prison, they have a job to go into. That shows that the co-operative movement is leading the way on innovation in apprenticeships. Does the hon. Lady agree that we need to see more in the apprenticeship levy aimed at reducing reoffending and giving opportunities to young people?

[Sarah Olney]

That is really good to hear, as it is a good example of how the co-operative movement promotes innovation, particularly in promoting wider social participation. However, the fact that we have to have innovative schemes driven by the co-operative sector points to the challenges that so many people find in using the apprenticeship levy. The Liberal Democrats would like to see a much broader range of potential uses for the apprenticeship levy, which would benefit the co-operative sector as well as the rest of the economy.

More broadly, co-operatives, like many other kinds of business across the country, are struggling under decisions made by the Government, such as the increase in national insurance contributions imposed at the last Budget. Small businesses in particular have been left struggling under the heavy burden of this jobs tax. The Government must take steps to support those businesses, which are at the centre of communities and local economies. Thousands of local businesses, including many in the co-operative sector, which often provide community services, are feeling the damaging impact of the national insurance increase and many other changes. That is why I and all my Liberal Democrat colleagues have repeatedly called on the Government to reverse the employer NICs increase and will continue to campaign for them to scrap that damaging policy.

We also call on the Government to introduce vital reform to the business rates system. In 2019, the Conservative Government promised a fundamental review of business rates, but they failed to deliver it. Labour pledged in its manifesto to replace the system, but still no action has been taken. A year into Labour’s time in the power, will the Minister say whether the Government plan to keep their word on that commitment? Critically, as we look at measures that will boost growth, the Liberal Democrats will continue to be proud advocates for a closer relationship with Europe. Liberal Democrats want to see a bespoke UK-EU customs union to reduce red tape and allow all businesses the freedom to grow without heavy regulation and huge export costs.

The co-operative sector generates a combined annual income of £42.7 billion. Its significant contribution to the economy and defiance of current business trends highlights its resilience and stability in a challenging economic landscape. In 2025 there are 7,400 co-operatives in the UK, with 16.6 million memberships, employing around 240,000 people. I am glad that in my constituency of Richmond Park, co-operative enterprises exist not only for the services that they provide, but as community spaces to bring people together. I thank the hon. Member for Oldham West, Chadderton and Royton for securing the debate and hope the Government will go further in supporting the co-operative sector.