Farming and Inheritance Tax

Danny Kruger Excerpts

Wednesday 4th December 2024 Commons Chamber

[Maya Ellis (Ribble Valley) (Lab)]

I represent Ribble Valley in Lancashire, one of the most beautiful constituencies in the country and one of the most rural. There are 820 farms on my patch, including 121 dairy farms. I single out dairy farmers as probably the most passionate and dedicated farmers I have encountered.

The problem with this motion is that it ignores the wider context of what is happening in our rural economies, and I will briefly talk about how remarkable those rural communities are. Not only are our farmers vital to our food security, but they often do the intangible work that we do not see on a local authority balance sheet, including gritting and clearing smaller roads that councils cannot get to in winter, and maintaining all those beautiful countryside walking routes that we all enjoy for much-needed rest. There are endless examples of how farmers are the best examples of the community spirit that we are rightly so proud of in this country.

I will share a quick story about a farm company in my constituency called Butlers farmhouse cheeses. Butlers produces the famous Blacksticks blue cheese and, I believe, is the second largest producer of cheese in the UK. Last year it suffered a devastating fire that completely destroyed its packing and logistics hub. Remarkably, the company rebuilt a whole building in a few weeks by using all of its supplier networks, and that was based on the faith and goodwill that farming communities engender. Butlers was able to retain the 95 staff it had, as well as supporting jobs in 20 to 30 local suppliers. These are the kinds of farms we are supporting, and we must ensure that our strategies work for them in the long term. Butlers is a fourth-generation farm that would not be back on its feet today without the relationships and trust that are so embedded in our rural communities.

I am excited for what Westminster can do, and is doing, for farmers. We can provide clarity on the mission. One of the best things about this new Labour Government is our focus on overall missions for this country, to be able to be clear to farmers and farming communities about exactly what this Labour Government plan to achieve over this decade of national renewal, with a clear ask for farmers on how they can contribute to that mission and how they can benefit. I heard about the need for such clarity time and again while campaigning. For years, farmers lacked clarity under the Conservative party, and they desperately need it.

[Danny Kruger (East Wiltshire) (Con)]

I fully recognise how much the hon. Lady wants to serve her new constituents, and I hope she is right. Does she recognise how difficult it will be for farmers in her constituency, as it will be in mine, to pay the inheritance tax? Land values are very high and the abstract capital value can be in the tens of thousands, but the income that an acre of land generates can be in the hundreds, so there is an enormous disjunct between the value of the land in the abstract, as far as His Majesty’s Revenue and Customs is organised, and the actual money that the farm will generate. How does she think that farmers in her constituency are going to pay the inheritance tax?

[Maya Ellis]

I will come on to opportunities to increase the prosperity of farmers, which should be our mission.

The second opportunity for farmers is around procurement and trade, and using the Government’s own purchasing power to back British produce, so that 50% of food brought into hospitals, Army bases and prisons is locally produced. We can protect farmers from being undercut by low welfare and low standards in trade deals, and we are seeking a new veterinary agreement with the EU to get our exports moving.

I want to touch on devolution and its ability to empower local understanding. Anyone who lives in a rural community knows that part of its strength is a deep generational knowledge of the land and local area. Nowhere is that more evident than in generational farming. Indeed, it is that knowledge, passed down through generations and trained into children from the time they can walk, that ensures some of the efficiencies that keep our farms going. I am a huge advocate for devolution, especially for areas such as Lancashire, where Ribble Valley is located, that include vast rural areas, because it brings democracy and understanding closer to communities. That is a huge issue that the Government are progressing at pace in order to do right by rural communities.

I am grateful to all the farmers who have been having open conversations with me about how past and future policy has and could affect them. Any new Government will take some time to unpick how relationships have worked in the past, and how they might want to change them. I came to Westminster as someone who is passionate about local leadership and devolution, and there is much that this Government can do to help farmers by taking decisions.

Public Spending: Inheritance

Danny Kruger Excerpts

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

We have already introduced legislation to Parliament for a new fiscal lock. We will publish a new charter for budget responsibility at the time of the Budget on 30 October. I have set out new institutional changes to the Office for Budget Responsibility to ensure that never again can a Government withhold information from this House, the country and the Office for Budget Responsibility.

[Danny Kruger (East Wiltshire) (Con)]

The Chancellor claims to have discovered a black hole in this year’s Budget, yet she is proposing to cut infrastructure investment for years to come. It makes no sense. One example is the Stonehenge tunnel, which was due to cost very little money this year, yet she has cancelled the whole thing. My constituents in Shrewton, Amesbury and all the villages around the A303 will be really disappointed to hear that news. What would she say to those residents? What will she do to relieve the traffic congestion that has blighted those communities for so long?

[Rachel Reeves]

The hon. Gentleman’s constituents will rightly be annoyed with the previous Government for saying that they would go ahead with the A303 work but not budgeting a single penny for it. That is where the responsibility lies for these failures and for the difficult announcements that I have had to make today.

Oral Answers to Questions

Danny Kruger Excerpts

Tuesday 6th February 2024 Commons Chamber

[Gareth Davies]

This Government are committed to levelling up by boosting growth, raising living standards and spreading opportunity throughout the country in several different ways. The hon. Gentleman talks about giving more power to local areas, and he will know that the Cambridgeshire and Peterborough Combined Authority is getting a £97 million devolution deal. He will also know that Cambridge received some £14 million as part of the shared prosperity fund to spend on local projects. I reject his assertion; the people of Cambridge are benefiting from this Government.

[Danny Kruger (Devizes) (Con)]

The way to reduce regional inequality is to ensure that growth happens everywhere across the country. One way to do that is to support small and medium-sized enterprises and community enterprises, which are particularly located in under-served regions. I commend the Government for the recovery loan scheme, which has been a lifeline to many small businesses and community enterprises. Can the Minister tell us whether that scheme is likely to be renewed? Hundreds of millions of pounds of private investment is waiting on the Government to make a decision.

Draft Postal Packets (Miscellaneous Amendments) Regulations 2023

Danny Kruger Excerpts

Monday 17th July 2023 General Committees

[The Chair]

Mr Wilson, your point has been noted by the Chair and will be fed back to Mr Speaker, and the Government Whips are listening. You refer to me. When it comes to this position of Chair and whoever sits in the Chair, the House convention, “Erskine May” and the rules and procedures of this House are greater than one individual, however flawed or not flawed the person who sits here, so this is not a matter for me. Whoever sits in the Chair is rightly guided and protected, as Members are, by those who have gone before us.

[Danny Kruger (Devizes) (Con)]

On a point of order, Mr Pritchard. First, may I say how well I think you are doing in this very difficult position? I just want to try to take some of the heat out of this. Although I agree fully with what my colleagues have so far said and their points of order, the fact is that a mistake has been made on the part of the Whips Office. I do not understand entirely the procedure by which this happened. Nevertheless, what clearly happened is that by accident—[Interruption.]

[The Chair]

Order. Will Members please listen? For the first Division, it will be 15 minutes and thereafter 10 minutes. Be aware that as soon as the Minister and shadow Minister are here, we can proceed, so if colleagues want to come and contribute through points of order or through the substantive debate, they should please come back as quickly as possible—[Interruption.] After all of the votes, of course. We are expecting nine.

--- Later in debate ---

[Danny Kruger]

On a point of order, Mr Pritchard. I apologise for not being back as fast as everybody else. The point I was trying to make before we broke is that it is a great shame that this situation has arisen, and I regret the hard words that have been passed.

Although I agree with the sentiment of my right hon. and hon. Friends that, in a sense, there has been an irregularity in the attempt to withdraw names from the Committee, I understand what the Government are doing. Fundamentally, a mistake was made on the part of the Whips—let us be frank about this—in appointing to the Committee a series of people who, on record, have voted against the Windsor framework, which we are implementing today. I understand that the Whips wanted to change the plan, and I have great respect for my right hon. and hon. Friends who have been appointed to the Committee today, but I do not think it is fair for them to be asked to fulfil the duties of the Committee at such late notice.

My simple suggestion is that, given the mistake that has been made by the Whips on our side and the frankly bad blood that is now in evidence across the Committee Room, it is not appropriate to try to continue. On your part, Mr Pritchard, and on the part of the Front Benchers, surely it should be recognised that the Committee has to be reconstituted, no doubt with Members who are more amenable to the Government than some of us, and to continue on another occasion.

[The Chair]

I am grateful for that point of order. I remind the hon. Gentleman of my comments earlier about Mr Speaker’s ruling. It is not a one-off. Colleagues may not like it, but Mr Speaker has made his ruling.

As I set out just before the hon. Gentleman joined the Committee again, Standing Order No. 118(5) requires that the Committee debate the motion

“That the committee has considered”

the draft regulations. The Clerk read out the title earlier; I have already called the Minister, and the motion is already in progress. As I said earlier, colleagues, who have clearly been moved to make points of order with such strength, will have other opportunities to raise their concerns with the Government on the Floor of the House about the procedural events, shall we say, of the past few hours.

Silicon Valley Bank

Danny Kruger Excerpts

Monday 13th March 2023 Commons Chamber

[Andrew Griffith]

With the greatest of respect to the hon. Lady, the issue here was a subsidiary of a US bank, and I will not be commenting on US policy, interest rates or anything else from this Dispatch Box. The important fact is that we were able to restore the bank to viability and, over a small number of hours and days, to find a successful buyer. We did that because of the strength of the UK regulatory system, and because of the conviction of this Prime Minister and this Chancellor that this is a critical sector, and one of the ways that we will continue to grow the UK economy.

[Danny Kruger (Devizes) (Con)]

I pay tribute to the exemplary orchestration of all the different stakeholders and decision makers that the Minister led over the weekend. It is helpful to distinguish between decisions taken by the American Government and by ours in respect of this bank. The American taxpayer is guaranteeing the deposits of SVB account holders there; in our case, another bank has bought them and the taxpayer is safe. I pay tribute to the Government for that. I appreciate that the Minister cannot comment on American policy, but in the hypothetical instance of another bank in the UK failing, or another sector getting into trouble, will he give an indication of his thinking on whether the taxpayer would ever need to step in? Will he guarantee that that will not happen?

[Andrew Griffith]

I am not going to offer my hon. Friend that guarantee, as that would not be prudent or the right thing to do. I can guarantee that this Government will do everything possible to reconcile the needs of protecting customers, protecting financial stability and protecting the taxpayer. It is of great note that we were able to do that in this transaction, and if such an issue were ever unfortunately to reoccur, all our energy would be devoted to precisely the same ends.

Digital Pound

Danny Kruger Excerpts

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

No.

[Danny Kruger (Devizes) (Con)]

I have two concerns. The first is on privacy, which other Members have mentioned. The proposal is that the Bank of England can become your bank. The Minister says the currency will be private but not anonymous, but the reality is that in certain circumstances it could be neither. It should be possible for authorities to observe the transactions of any citizen if they have cause to do so. Will he confirm that? My second anxiety is on the implications for cash. Will the money used through this new digital mechanism require cash to be withdrawn from circulation in exact proportion? If not, his proposal to print new money will be a sort of cryptocurrency quantitative easing with inflationary implications. If cash will be withdrawn in proportion as the digital pound is issued, we are talking about the end of cash are we not? Progressively, the digital coin will replace the use of cash.

[Andrew Griffith]

I accept that the Command Paper has just been published, but when my hon. Friend has the opportunity, he will be able to look at the detail of the operation of such a scheme, which will reveal that there will be platform intermediaries. People will not have a bank account directly with the Bank of England, except in very narrow circumstances. I understand the concerns, and it is right that we debate the balance between freedoms and our duty to protect citizens from fraud and other things that this House, from time to time, will decide justify the piercing of that veil of privacy.

I want to reassure my hon. Friend on cash. By design, this proposal will not replace cash. From a monetary policy perspective—although that is something, as with all these questions, that Members may respond to during the consultation—it is envisaged that it certainly will not increase money supply, and the one-for-one nature I talked about earlier is important in that regard. To be clear to my hon. Friend, the arbiter of that decision will be individual citizens making the choice as to how they wish to use their money—how they wish to spend it and how they wish to store it.

Financial Services and Markets Bill

Danny Kruger Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Caroline Lucas]

This Bill should be a once-in-a-generation opportunity to ensure a rapid, stable, co-ordinated and just transition to a low-carbon economy, to advance financial inclusion and to protect consumers, investors, banks, asset managers and other financial institutions against the catastrophic financial risks associated with climate and nature breakdown. Sadly, I believe that it fails to deliver on all those counts, and many others too.

I have signed a number of new clauses with the aim of improving the Bill, on matters such as free access to cash and better regulation of buy now, pay later credit. I also strongly support the new clauses tabled by the hon. Member for Sheffield, Hallam (Olivia Blake). However, I want to use my speaking time to focus on three new clauses in my name.

New clause 25 goes to the heart of what the Bill is about. It seeks to reposition the objectives of the regulator so that they are consistent with the future that we are facing. It would change the strategic objective so that it is no longer simply about ensuring that the relevant markets function well, but about ensuring that they deliver long-term economic resilience and prosperity. It would also create two new operational objectives. The first is a climate objective to facilitate the meeting of targets set out in the Climate Change Act 2008 and the 1.5°C temperature rise limit of the Paris agreement. The second is a nature objective, to facilitate alignment with the Government’s commitment to halting and reversing biodiversity loss by 2030.

Those changes matter on a great many levels. Most obviously, as the United Nations Secretary-General warned just last month:

“We are in the fight of our lives and we are losing…And our planet is fast approaching tipping points that will make climate chaos irreversible.

We are on a highway to climate hell with our foot on the accelerator.”

We therefore need to deploy every tool at our disposal to the task of creating an economy that reflects this new reality. There is no greater moral imperative, or indeed any greater financial imperative.

The Bank of England’s first climate stress test was published in May. It sought to understand how climate change would affect banks’ business models, and whether they held enough capital to cover climate-related risks. The results were clear: banks need to take climate action immediately, or face a hit to annual profits of up to 15%. If the net zero transition is delayed by a decade and global temperatures reach 1.8°, by 2050 banks will face losses of £225 billion. However, the banks are not alone in being exposed to huge climate risks. Investors, consumers, anyone with a pension, asset managers, savers, mortgage holders and other financial institutions are all threatened.

The Bill should provide an opportunity to meet those challenges and lay the foundations for a secure and stable future-facing economy, but I believe that without my new clauses, it simply does not do that. Leading financial institutions agree, including Aviva Investors, Phoenix, Hargreaves Lansdown and BUPA Insurance. They raised concerns with the Bill Committee, saying that

“the proposed regulatory principle will not provide a sufficiently strong legal basis for regulators to promote a thriving net zero financial sector. It certainly won’t encourage the regulators to ensure that the UK becomes the world’s leading green financial centre.”

Moreover, as it stands, nothing in the Bill acknowledges the crucial role of nature, although the Economic Secretary himself recognised in Committee that we could not achieve our climate goals without recognising and acknowledging that vital role.

New clause 25 would go further and remove the proposed competitiveness and growth operational objective for the FCA. The financial impacts of pursuing a climate-busting competitiveness and “growth at all costs” approach over climate action is clear. For example, it is estimated that the UK will lose 10% of GDP by 2050 if we do not tackle climate change, and that Europe will see a 30% rise in defaults on corporate loans to the most exposed companies. No wonder the Treasury Committee advised against a primary focus on competitiveness, warning that it could lead to weakening standards and a reduction in the UK’s financial resilience, and could undermine the reputation of the UK’s finance sector.

It is worth recalling that Parliament itself deliberately removed competitiveness from the mandate of the financial regulator just a decade ago, learning the lessons from the regulatory failure leading up to the global financial crisis of 2007-08, which saw millions lose their savings, homes, businesses and jobs. With so much at stake, I can think of no good reason why the Government is making such a reckless move, and no good reason why it could not instead support a focus on the creation of a wellbeing economy designed to foster long-term economic resilience and prosperity.

I have also tabled new clause 21, which mandates the introduction of a one-for-one capital requirement for the financing of new fossil fuels. In other words, for each pound that finances fossil fuels, financial institutions should have a pound of their own funds held liable for potential losses. It is a principle that is used elsewhere. In June 2021, for example, the Basel Committee on Banking Supervision—the global standard setter for the regulation of banks—recommended its application to some cryptocurrencies’ exposures. At present, however, the Government are not seizing these opportunities.

Even with no fossil fuel expansion, by 2025 global emissions from existing projects will be 22% too high to stay below 1.5° and 66% too high by 2030—all while the scientific reality makes it clear that fossil fuels assets are uneconomic and financially uncompetitive in a 1.5° or 2° world. Fossil fuel financing increasingly threatens economic stability. It increases the physical risks of climate change, thereby leaving the financial system exposed to significant losses from balance sheets and from environmental damage to the wider economy. That is why these amendments are so important and that is why we should get fossil fuels out of our financial sector now.

[Danny Kruger (Devizes) (Con)]

I am going to speak briefly to new clause 7 on access to cash, and to new clause 27 on access to banking services. I very much support the Bill and completely commend what the Government are trying to do. It is a source of great pride that they are bringing financial regulation home as one of the great benefits of Brexit. I applaud what they are doing and appreciate all the engagement that Ministers have had with colleagues on the new clauses that I am speaking to.

I understand that there is an intention not to push new clause 27 to a vote, and I intend to abstain on new clause 7 if there is a Division on it, because I look forward to the policy statement that the Government have promised. I support the principle behind both the new clauses. As Members have mentioned, we seem to be moving inevitably towards a cashless society, and we can all see the personal convenience of that. Like the royal family, I personally do not carry cash around. It is only embarrassing when I am in church and the platter comes around. That is pretty much the only occasion when I feel the need for it, but that is not the case for everyone.

For anyone using a digital payments system, the operator of the platform has potentially immense control over their life, in principle and in practice. That is why what PayPal did to the Free Speech Union and others a few months ago is so important. Yes, we can acknowledge that that event was an outlier. It was a rare and slightly inexplicable event and, yes, it was quickly corrected in some of the cases of the accounts that were closed, but the fact is that it happened. It was a straw in the wind, and the fact that individuals and organisations with heterodox political opinions found themselves unable to operate economically because of the decision of a private company acting entirely on its own initiative, possibly under pressure from external campaigns, is a troubling development. So it is vital that we send the strongest regulatory, and also cultural and political, signal to these private payment platforms that the opinions of their customers are none of their business.

Nor are private opinions any business of the state, and this is why the question of access to cash is about more than the important issue of protecting the vulnerable, although I agree with the points that have been made on that. It is also about liberty. Just now, behind the scenes, the Government and the Bank of England are developing plans for their own central bank digital currency. Again, we can see the practical appeal, but the threat is that the Government will have oversight of the economic activity of private citizens, which is something that no Government of this country have ever had in our history. It is therefore vital that the debate on a central bank digital currency has liberty front and centre. We can all say warm words about the importance of safeguards and freedoms, but the fact is that if the emergency is bad enough and the powers are available, those powers could well be used.

We saw this happening around the world, and to some degree in our own country, during the covid crisis. We have only to look at what the Canadian Government did to block access to the bank accounts of truckers protesting against the covid policy there to see what can be done in a modern liberal western country. It would be a shame if we took back control of financial regulation from the EU only to empower private payment platforms, or indeed our own central bank, in that way. Cash services and banking services are part of the infrastructure of our communities. They are also part of the infrastructure of liberty.

[Wera Hobhouse (Bath) (LD)]

I rise to speak in support of new clauses 34 and 35. Both are tabled in my name and deal with the rules and duties of pension schemes and investments.

This Bill could be a unique opportunity to develop the green economy we need by providing the finance required to support our net zero transition. Unfortunately, this Government might again miss the boat. The Bank of England recently warned that UK banks and insurers will end up shouldering nearly £340 billion-worth of climate-related losses by 2050. Such losses will be unrecoverable, so it is cheaper to save the planet than to destroy it.

The World Bank suggests that up to 216 million people could be forced to move within their countries by 2050, but immediate climate action could reduce that by up to 80%. Limiting global warming to 1.5°C instead of 2°C could result in around 42 million fewer people being exposed to extreme heatwaves. We have pensions to provide adequate quality of life after retirement. How absurd it would be if the climate catastrophe meant that there was little quality of life left.

--- Later in debate ---

[Andrew Griffith]

He does indeed understand that. We are addressing legal challenges to data sharing in the Economic Crime and Corporate Transparency Bill, which will introduce provisions to protect firms from civil liability. As was discussed earlier, it is important to regulate the online world, which my colleagues in the Department for Digital, Culture, Media and Sport are doing in the Online Safety Bill.

[Danny Kruger]

Will the Minister give way?

[Andrew Griffith]

I will not give way to my hon. Friend this time.

To conclude, financial and related professional services play a crucial role, as we have heard from many speakers. They contribute nearly £100 billion in taxes and, as my right hon. Friend the Member for Chelmsford reminded us, that pays for more than the cost of the salaries of every nurse in this country. The Government have an ambitious programme for an open, outward, sustainable, technologically advanced and internationally competitive sector that will unleash the most opportunities not just for those who work in it, but for communities across the United Kingdom.

Co-operatives, Mutuals and Friendly Societies Bill (First sitting)

Danny Kruger Excerpts

Committee stage
Wednesday 30th November 2022 Public Bill Committees

[Sir Mark Hendrick]

Good morning, Mr Mundell. It is a pleasure to serve under your chairmanship. I am grateful to you and to Committee members for joining me to look at the detail of the Bill.

Co-operatives, mutual insurers and friendly societies have an important part to play in the biodiversity of our economy. These businesses share their origins in self-help movements that are relevant to the economic and social challenges faced by people today, and they need a business environment that facilitates their activity. I have therefore introduced a Bill to make long overdue changes to the legislation that governs co-operatives and mutuals and to create a more modern and supportive business environment for them to operate in.

Members on both sides of the House agreed on Second Reading that a strong network of co-operative and mutual businesses can play an important role in a diverse and modern economy. Co-operatives and mutuals represent a serious contribution to the UK economy, accounting for more than £133.5 billion of income annually.

The Bill will ensure that Government policy understands and supports the difference of mutual businesses. It will also create legislation that permits co-operatives, mutuals and friendly societies to undertake their business purpose of serving their members’ needs in the best way possible. Crucially, it will give co-operatives and mutuals the opportunity to opt into a framework providing greater safeguards for their assets and more protection against demutualisation.

The Bill does that by proposing simple voluntary legislation that would give every mutual the right to choose a constitution—either at the point of establishment or thereafter, with an appropriate level of member approval—that preserves legacy assets for the purpose for which they were intended. As witnessed in 2021 with Liverpool Victoria, or LV=, mutuals remain a target for asset-stripping demutualisers attracted by legacy assets built up over generations. That is unfortunately incentivised by the legislation governing mutuals and remains a real and present threat to the mutual sector.

The Bill is about giving mutuals the option to maintain mutual capital for the purpose for which it is intended. Legacy assets have been built up over generations of membership and often constitute a significant part of the working capital of the business. Current members typically have not contributed to that capital base, but have enjoyed the benefits of previous years of successful trading. The Bill disincentivises the raiding of legacy assets through legislation. Voluntary legislation will ensure that legacy assets are preserved for the purpose for which they were intended.

The Bill empowers mutual members to decide what should happen to assets on a solvent dissolution. It would match the best legislation that exists in many countries. The Bill achieves that by introducing a voluntary power to enable a mutual to choose a constitutional change so that its legacy assets would be non-distributable; to detail precisely the destination of any capital surplus on a solvent winding-up; to outline the procedures necessary to include such provisions in a mutual’s rules; and to insert a statutory provision for the relevant rules to be unalterable.

The Bill defines the capital surplus as the amount remaining after deducting a mutual’s total liabilities from its total assets, including repayment of members’ capital. The Bill introduces new provisions to maintain the destination of the capital surplus. It ensures that, where a mutual’s rules make the capital surplus non-distributable, any resolution to convert into, amalgamate with or transfer engagements to a company shall also include a provision to transfer the capital surplus, as provided by the rules, in the event of a solvent winding-up.

[Danny Kruger (Devizes) (Con)]

May I say how much I appreciate the Bill? I am pleased that the Government are supporting it. Does the hon. Member agree that the value of the asset lock he proposes for mutual funds will enable places that have suffered from deindustrialisation and globalisation to have a base of capital with which to build the local economy, and that what he is doing very much supports the wider levelling-up agenda?

[Sir Mark Hendrick]

Yes, I totally agree. The Bill is consistent with the levelling-up agenda. It is meant to ensure that the assets remain in place for the purposes for which the asset base was originally intended.

Let me set out the detail of the clauses and the amendments. Amendment 1 addresses an inconsistency in the legal text in clause 1(2)(a), which results from trying to capture the varied range of entities that make up the mutuals sector. As I said, there are co-operatives, mutuals and friendly societies—different types of organisation and company. In its current form, the Bill proposes an asset lock for a purpose that is for the objects of a mutual entity. The purpose of a co-operative is often seen as one that is for the benefit of its members. It could be argued that demutualisation, which involves distributing surplus funds to members, is for the benefit of members. However, given that the Bill aims to reduce incentives for demutualisation, the amendment is needed to close that loophole; otherwise, the ultimate purpose of the Bill risks being defeated. The amendment also ensures that the Bill is sufficiently broad that it is future-proofed and works for the wider mutuals sector.

The other two amendments are technical changes to ensure that the long title reflects the current contents of the Bill—namely, that the purpose of the Bill is to permit the capital surplus of mutual entities to be non-distributable. They leave out the words from “Make provision” to “to permit” and the words “; to amend the Friendly Societies Act 1992”.

I would like to express some disappointment that the overall ambition of my original Bill is not included in this version. In addition to allowing co-operatives, mutuals and friendly societies to safeguard their legacy assets to disincentivise demutualisers, the Bill’s initial proposals addressed some other issues: co-operatives needing the ability to issue perpetual capital to fund investment and growth—that would have meant a new type of share—and mutual insurers and friendly societies needing to be able to issue mutuals’ deferred shares to fund investment and growth without suffering disproportionate tax penalties. I discussed that issue in some detail with Ministers—both the current Minister and the former Minister, the hon. Member for North East Bedfordshire, who is on this Committee. The initial proposals also dealt with friendly societies needing an updated legal framework to facilitate their contribution as modern businesses working to help level up and promote economic prosperity. Friendly societies have not seen their legislation updated for quite some time; that is long overdue.

The Bill does not cover the whole scope of what I wanted it to achieve, but I am extremely pleased that the Government are backing a key aspect of my proposals concerning mutual assets. They have also given assurances that they plan to conduct a wider review of key legislation underpinning the co-operatives, mutuals and friendly societies sector with some firm proposals, instructing the Law Commission to conduct a review as part of that process. That is major progress and a step forward for the sector.

Co-operatives, Mutuals and Friendly Societies Bill

Danny Kruger Excerpts

Friday 28th October 2022 Commons Chamber

[Danny Kruger (Devizes) (Con)]

I am delighted to have the opportunity to speak on this important Bill. I congratulate the hon. Member for Preston (Sir Mark Hendrick), who is, as he said, a member of the Co-operative party. I wish I could be a member of the Co-operative party; I do not see why that should be confined to Labour Members. I would love there to be a Conservative and Co-operative Member, because the Conservative and co-operative tradition is very good and honourable.

The hon. Gentleman mentioned Rochdale, and I have visited the home of the Pioneers. He talked about the existence of predatory mill owners in the 19th century—the sort of capitalists who gave capitalism a bad name and have become caricatures. There was another tradition, of course, of a different sort of mill owner and capitalist, which was the Tory tradition that recognised that labour and capital were not equal in their relations and that labour did need some protections. Part of that was the tradition of the Earl of Shaftesbury and other reformers who legislated to protect workers against outrageous working conditions, but it was also Conservatives who legalised trade unions, mutuals, friendly societies and co-operatives. Disraeli’s Government did that, because they recognised the importance, which my hon. Friend the Member for North East Bedfordshire (Richard Fuller) just mentioned, of enabling people to co-operate, to come together and to bargain together.

Both Labour and the Conservatives have a common heritage in this space, and a common enemy, the Liberal party, which in the 19th century was the party opposing factory reform and the legalisation of trade unions. They do not seem to be here today to discuss this important Bill.

However, I am afraid to say that it is also our two parties, Labour and the Conservatives, who are between them responsible for the sad decline in the 20th century of the co-op and mutual movements. One reason was the creation of the welfare state, which crowded out and effectively abolished many of the friendly societies and mutuals that had provided welfare and mutual support to working people, and I am afraid the other was my party, which in the 1980s and 1990s was responsible for the great demutualisation of building societies. I regret that.

There was a very interesting interview with Maurice Saatchi today in The Times, in which he reflects on what he thinks Margaret Thatcher would think of what has become of her great drive for competition in the finance sector and across industry, with the development of cartels in place of competition. This debate on this important Bill is an opportunity to remind ourselves of a different Conservative tradition, where we support these other forms of capital and enterprise.

Social enterprises are part of this, and community-owned businesses play a crucial role in our society. I put on record my appreciation for the social enterprise movement in this country, supported in its development, in many cases, by mutuals and friendly societies. Social enterprises and community-owned businesses are responsible for job creation in areas of deprivation, the jobs last and they provide the crucial spirit of enterprise and innovation that our left-behind areas need. There is an important role for social enterprise.

Also in pride of place, I am pleased to see my hon. Friend the Member for Bury North (James Daly). His role in saving Bury Football Club from liquidation in recent years is commendable, and that happened because of the efforts of people in Bury to form a new co-operative structure to take over the ownership of that football club that enabled it to be saved—as well as the role of the Government, of course, in providing capital for that and subsequently in the creation of the community ownership fund, inspired by what happened to Bury FC, which businesses in my constituency and across the country have benefited from.

I must briefly mention the role of mutual finance: there is a tremendous new bank being developed called Avon Mutual, serving the west of England. It is a modern, 21st-century mutual bank. I also place on record my delight that my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake)—he is not here today; presumably he is taking up a role in his new office—has been appointed to the Business Department. He is a great champion of the mutual tradition—[Interruption.] There he is. I thought I was praising him behind his back, but he is here to listen. I am very pleased that he has that role, because he is a tremendous champion of the importance of regional banks in supporting local economies, and I hope that is something he will take up in his new role.

I welcome the Bill, particularly the role it will play in creating an asset lock for mutuals. That is a crucial point, and an important lesson for those of us who believe in capitalism and the importance of free enterprise: not all capital is fungible. It is not appropriate to allow all capital to be blown to the four winds at the whim of speculators and investors. It is important sometimes to lock capital in the places where it belongs, for the benefit of the people it was invested for.

Oral Answers to Questions

Danny Kruger Excerpts

Tuesday 1st February 2022 Commons Chamber

[Tom Randall (Gedling) (Con)]

11. What assessment he has made of the progress of the kickstart scheme.

[Danny Kruger (Devizes) (Con)]

16. What assessment he has made of the progress of the kickstart scheme.

[The Chief Secretary to the Treasury (Mr Simon Clarke)]

We know that young people have been disproportionately affected by the pandemic. I am delighted that, to date, more than 122,000 kickstart jobs have been started by young people across Great Britain, including in the constituency of my hon. Friend the Member for Gedling (Tom Randall). Youth unemployment fell by 11.1% in the three months to November 2021 and is lower than it was prior to the pandemic, and in December there were half a million more employees aged under 25 than in December 2020.

[Mr Clarke]

I completely agree with my hon. Friend. Kickstart is delivering valuable jobs and work experience to young jobseekers at risk of long-term unemployment. Although kickstart closed to new applications on 17 December, we are genuinely delighted at the response from employers. As I noted, more than 122,000 kickstart jobs have been started so far, and we expect more between now and the end of March. Employers should continue to engage with Department for Work and Pensions jobcentres and support the new way to work campaign to get more people into work.

[Danny Kruger]

In my constituency, 130 new jobs for young people have been created. A group of young people started this week at Ball Aerocan in my constituency. The company is very pleased with the scheme and the young people it found but said it took a little while to get through the system. What can the Government do to encourage businesses to make use of the scheme before it ends in March?

[Mr Clarke]

My hon. Friend is absolutely right that we want to encourage maximum uptake. Kickstart is only one part of the comprehensive package of support available to young people and, following the closure of this scheme, young jobseekers will still be able to benefit from the DWP’s wider youth offer, while work coaches across the country are working to support young people into jobs.