Co-operatives, Mutuals and Friendly Societies Bill

Chris Clarkson Excerpts

Friday 28th October 2022 Commons Chamber

[Chris Clarkson (Heywood and Middleton) (Con)]

I congratulate the hon. Member for Preston (Sir Mark Hendrick) on bringing forward the Bill and I thank my hon. Friend the Member for North East Bedfordshire (Richard Fuller) for the amount of work he did on it —he has a lot to be proud of.

I should declare an interest: my Heywood and Middleton constituency is located in the Metropolitan Borough of Rochdale and includes the western third of the town. As Members will be aware, Rochdale is the home of co-operativism—I am almost certain I can hear someone furiously typing on Twitter to tell me that it did not start in my constituency, but we were certainly among the first—so this subject is very dear to me.

I have something else in common with the hon. Member for Preston: we are both alumni of Salford City Council, along with the much-missed Paul Goggins and the formidable Hazel Blears. Members can tell from that list that I am a bit of an outlier, as I sit on the Conservative Benches—

[The Economic Secretary to the Treasury (Andrew Griffith)]

For the moment!

[Chris Clarkson]

There is form now for Greater Manchester MPs. [Interruption.] No, you are welcome to him.

Having begun with the founding of the Rochdale Society of Equitable Pioneers in 1844, the Co-operative Group is now a major employer nationwide, and particularly in Greater Manchester. Co-operativism is at the heart of our town and plays an important part in our wider national identity. It gives agency to workers, ensures fair trade practices and drives up the quality of products and services. The Rochdale principles by which most co-ops are guided—equity, anti-discrimination, participation and democratic control—are fundamentally British principles. The co-op was the at the nexus of modern society in this country. It educated people, gave them a voice and treated them as partners in their endeavours at a time when most workers could only dream of that kind of relationship with their employer.

As I said, co-operatives are not the only thing the hon. Member for Preston and I share, and Salford City Council is actually now a co-operative council, as he will know. When we discussed how to bring the Government’s localism agenda to Salford, it was decided that the best way to proceed was as a co-operative council. That change has been hugely successful in including Salford’s citizens in the way we run things. It has created credit unions and given people control over things such as childcare by making it affordable and accessible. There is a huge amount of benefit in how co-operatives work.

I am pleased the legislation acknowledges that although the co-operative movement started in the 1840s and is still going in the modern era, it needs a bit more flexibility to operate in the society in which we now live. Collectively, co-operatives and mutuals are worth roughly £40 billion to the economy and represent 250,000 jobs; the sector is relatively small compared with some of its foreign cousins, so there is a bit of work to do. More co-operatives would bring huge amounts of extra economic benefits to this country. There is a traditional view that because the Co-operative party is associated with the Labour party, co-operativism is a left-wing ideal, but it is not: it is apolitical in its operation. It is just a way to ensure that people can participate fairly in their endeavours.

The Bill will give co-operative societies the option to adopt a statutory provision that guarantees that their residual capital surpluses are non-distributable among members, without interfering with co-operative societies’ ability to distribute profits to members or to pay interest on share capital. It also has the potential to enable significant new investment, innovation and development in a wide range of co-operatives. The hon. Member for Preston pointed out that that will be part of the review, and I would like to see that as well. It is a bit of a win-win: if we can make co-operatives more agile and economically flexible, that can only be a good thing. By creating more optimal conditions for investment and asset growth in co-operative societies, setting the right boundaries and engaging with the appropriate motivations of entrepreneurs, members and investors, and preventing perverse incentives to destroy co-operative values, such as unnecessary demutualisation, the position of existing co-ops will be enhanced, offering greater market agility, boosting business investment and committing more capital surpluses to reinvest in economically, environmentally and socially productive enterprise. The Bill will enable societies to issue equity shares that are repayable at the option of the society, rather than being withdrawable at the option of shareholders. At present, societies looking to raise equity are hampered by legal uncertainty as to whether they can repay non-withdrawable shares at their option. Again, this should enhance the position of co-ops by reducing financial costs in the sector.

I thank the hon. Gentleman for introducing the Bill and providing options for a modern, more agile framework for co-operatives and mutuals to operate. I am very much looking forward to supporting this Bill as it goes forward.

--- Later in debate ---

[Chris Clarkson]

Does my hon. Friend agree that anybody putting money into the local economy in my constituency is a good thing?

[Dr Evans]

It is absolutely fantastic, and even better when it is just down the road if you are in your pyjamas. The main thing is not to forget the card so you can support the economy.

It goes a little further than that. I began to think about the other things that could be tied up with mutuals. I was a doctor before I came to Parliament, and had a lot of dealings—I still do, and declare an interest—with them. I have investments with the Wesleyan Assurance Society, which began in Birmingham in 1841, supporting doctors with investments and financial products. Both professionally and in the local community, we can see the effect that mutuals have. It goes further than that. In my constituency, the Hinckley & Rugby Building Society was formed in 1983 when two societies joined, but there has been a society in place since 1961. It is in the top 20 building societies, with assets of £830 million, and more than 50,000 users and customers, many of whom are based in my local area. It emerged from the need to support our local industries, particularly lacemakers and shoemakers. It is still there today, providing products for people who might not be able to secure them on the open market.