Co-operatives and Mutuality

Debate between Chris Leslie and Ed Davey

Thursday 30th June 2011 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

This has been a very well informed and, mostly, consensual debate. There was a break-out of competition between the Conservative and Labour parties, but it obviously falls to a Liberal Democrat Minister to bring everyone back to real co-operative principles. It was good to see all contributors to the debate affirming their commitment to that. I can affirm my personal commitment, my party’s commitment and the coalition Government’s commitment to working for the co-operative movement and to developing the mutual sector more broadly.

If we look at the performance of the sector at the moment, we can see that it is in rude health. The turnover of the co-operative movement is slightly more than £33 billion and the turnover of the mutual movement rose to more than £100 billion last year, with more than 1 million employees. Interestingly, the Co-operative Financial Services won the FT sustainable banking award in 2010. Clearly, this is a sector that is doing well.

Another interesting fact is the Co-Operative Group’s takeover of Somerfield, which increased its overall turnover. If it was listed on the FTSE 100, it would be a FTSE top 30 company.

Despite the rather bizarre remarks by the hon. Member for Harrow West (Mr Thomas), there have been many strong developments under both Labour and Conservative Governments. I point, for example, to the Oxford Centre for Mutual and Employee-owned Business, which is developing a lot of the thinking and the research so that we can drive forward this agenda in a consensual way. Although this area requires cross-party support, a lot of good things have been happening to it for quite some time.

Let me try to answer some of the points that have been raised during the debate and then I will make some comments about the direction of Government policy. A number of speeches focused on credit unions. My hon. Friends the Members for East Hampshire (Damian Hinds), for Chatham and Aylesford (Tracey Crouch) and for North Swindon (Justin Tomlinson) and the hon. Members for Islwyn (Chris Evans), and for Rutherglen and Hamilton West (Tom Greatrex) spent a considerable amount of time talking about credit unions. This is an area in which the Government would like to see real progress.

My hon. Friend the Member for East Hampshire has been a champion of credit unions. I pay tribute to the work that he has been doing in that area. He mentioned that the Department for Work and Pensions has earmarked £73 million to invest in the sector. However, we are not spraying money around in the way in which we have seen in the past; we have done a feasibility study to see where that money can best be spent.

My hon. Friend referred to a proposal by the Association of British Credit Unions, which is one of the main associations that brings together credit unions, to build an IT platform to enable credit unions to work together potentially through the post office network. Such a move would be significant, and it picks up on remarks that hon. Members have made during the debate. There are two real challenges for credit unions. One is to get better access, so that people can access credit unions. Clearly, a better IT platform, particularly if it was linked to the post office network, would be a massive development in improving our constituents’ ability to access credit unions. The second issue is even more important: awareness. There needs to be awareness that this credit source is available and that it can compete with the high-cost merchants that are around.

I want to reflect on something that the hon. Member for Harrow West said. He was quite right to praise his predecessor, Sir Ian McCartney, on setting up the illegal money lending teams. As a Minister, I have ensured that our funding for those teams continues at the levels that we inherited. Given the cuts that we are having elsewhere, that was a significant decision. The reason that we continued their funding is that those teams are successful and they are curbing the criminals who prey on vulnerable people in our communities.

I urge Members to look at how illegal money lending teams are working. I have been privy to a video of their work, from which one anecdote emerged that shows the importance of increasing awareness of the availability of credit unions. A family had borrowed £200 from a “family friend” on their estate and 10 years later, after intimidation and threats of violence, the family had paid back £90,000. It was only when the illegal money lending teams came and helped them, prosecuted their “family friend” and then gave them support as victims of a crime that they became aware of the existence of credit unions. Now they are borrowing from credit unions and they have put their lives back together, which is a tribute to the work of the illegal money lending teams. However, that story tells us an awful lot about this area and how we should approach it; above all, it shows the need to improve people’s awareness of credit unions.

As my hon. Friend the Member for East Hampshire also said, we need reform in this area of credit unions. We have been waiting for a legislative reform order—I share colleagues’ impatience about that—but it is coming and I am sure that in the autumn we can get it through the House. I am glad that it will have such support and it will make the difference, as my hon. Friend said.

The hon. Member for Rutherglen and Hamilton West made an interesting point in relation to potential abuse of credit unions by people who then went bankrupt. If he can write to me about that issue, we will be responding—soon, I hope—to the consumer credit and personal insolvency call for evidence. Often, people have not focused on the personal insolvency side of the credit unions issue, and the hon. Gentleman was quite right to focus on it. The link between personal insolvency and credit unions is an important one to make and if there are problems we need to deal with them.

The hon. Gentleman also rightly raised another important issue; although it is not particularly germane to the title of this debate, it is important and I am glad to have the chance to speak about it. He raised the concerns that many of us have about the advertising of debt advice. Frankly, I think that I have broken a few radios as I have thrown things at them when they spew out these tempting adverts. We know that those adverts are a temptation that people should not go for. We need to address debt advice. In that regard, one of the issues also applies to credit unions: the importance of raising awareness so that people know that there is free, quality debt advice available. We must make sure that that is better known. The money advice service is doing some research on debt advice and considering how we can take it forward as a priority.

I want to go back to some of the other issues that were raised in the debate. The issue of Northern Rock raised its head. First, I want to say to some Opposition Members that the list of building societies that demutualised during the previous Labour Government is rather a long one. I suggest to those Members that they would be wise to press the Government very carefully on the issue, not least because my right hon. Friend the Secretary of State for Business, Innovation and Skills pressed the Labour Government to tie up some of the loopholes in that area, which they failed to do. I urge them to be a little more cautious as they approach the Northern Rock issue.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Will the Minister give way?

[Mr Davey]

I will give way to the hon. Gentleman in a moment, but I think that he should listen to my full response before intervening.

I can say something to those Opposition Members who raised the issue of Northern Rock. I think it was the Commercial Secretary to the Treasury, Lord Sassoon, who made a statement recently that we have launched a sale process for Northern Rock. He had written to the all-party group on building societies and financial mutuals, and he made it very clear that any interested parties can bid, including mutuals. That reaffirms the Government’s commitment to promote the mutual financial sector. Having said that, of course, we cannot rule out any other options at this stage. Members may be interested to know that two building societies have expressed an interest in taking over Northern Rock. Remutualisation is an issue that must be addressed in due course by UKFI, but I am not the Minister with responsibility for UKFI. Nevertheless, those remarks that I have just made should reassure colleagues.

[Chris Leslie]

rose—

[Mr Thomas]

rose—

[Mr Davey]

There are two colleagues who want to intervene. I will take the interventions in order, first taking the intervention from the hon. Member for Nottingham East (Chris Leslie)—I think that that is his constituency, these days.

[Chris Leslie]

I am very grateful to the Minister for his recollection of my constituency. He has talked about the trade sale route that the Government have announced for Northern Rock. Notwithstanding the fact that he has said that other building societies might be interested in a direct purchase of Northern Rock, can he say categorically that the member buy-out option, whereby borrowers and savers of Northern Rock might have the chance to enter into a member buy-out arrangement, is still on the table and is still being considered among the other options that he was talking about? I understand that my hon. Friend the Member for Harrow West (Mr Thomas) has written to the Treasury with the details of the member buy-out option.

[Mr Davey]

As the hon. Gentleman knows, I am not the Minister responsible for Northern Rock and my Department is not responsible for it either, so I would be ill advised to go into detail about it. I have tried to ensure that the Members attending this debate received some answers about that issue and I believe that I have fulfilled that obligation, but he may need to attend Treasury questions to probe further on the issue.

I will now give way to the hon. Member for Harrow West, although I hope that he will bear in mind the answer that I have just given to his hon. Friend.

Oral Answers to Questions

Debate between Chris Leslie and Ed Davey

Thursday 3rd June 2010 Commons Chamber

[Mr Davey]

Our commitment is for extensive consultation. I want to make it clear that my door is open to all business organisations and to the hon. Lady and hon. Members of the House. We will listen to those views and take them on board, but there is increasing evidence that flexible working arrangements are embraced by employers and employees and are welcomed in many businesses across the country.

[Christopher Leslie (Nottingham East) (Lab/Co-op)]

Many employers regard flexible working as involving the hiring of temporary staff—agency workers and so on. Will the Minister put it on the record today once and for all that there is no truth whatever in the reports in the Financial Times that his Government—the coalition—are planning to scrap protections for agency workers, for temporary workers, which give them rights to equal pay after 12 weeks?

[Mr Davey]

I welcome the hon. Gentleman back to the House; I remember sparring with him in previous Parliaments. As a former Minister, he will know not to believe everything that he reads in the papers.