Co-operatives

Debate between Andy Sawford and Gavin Shuker

Wednesday 3rd July 2013 Westminster Hall

[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.