Co-operatives and Mutuals Debate

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Co-operatives and Mutuals

Gareth Thomas Excerpts
Tuesday 10th December 2013

(11 years ago)

Commons Chamber
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Gareth Thomas Portrait Mr Gareth Thomas (Harrow West) (Lab/Co-op)
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At the outset, let me declare that I am one of the 6 million ordinary members of the Co-op Group. I have accounts with Nationwide, and belong to the M for Money credit union in Harrow and the Rainbow Saver credit union. I am privileged to chair the Co-operative party and to be one of its MPs in this great House.

Unusually, the co-operative movement has been in the news on a sustained basis of late. Absent from much of the coverage has been any sense of the powerful contribution co-operatives and mutuals make in our communities. They could and should, with the right support, make even more of a difference, and it is on that point that I shall focus.

It would be wrong not to acknowledge the challenges faced by the biggest UK co-operative, the Co-op Group. I welcome the progress the group board and its new management team, led by Euan Sutherland, have made in addressing the problems the Co-op bank faces. There are, no doubt, long-term lessons to be drawn, not least on the checks necessary for those in key positions and on how mutuals raise finance. Other reviews and inquiries will focus on those issues, so I will not dwell on them.

The co-operative movement has had its challenges: wartime discrimination by the Government in the first world war over call-up arrangements; Neville Chamberlain’s efforts to get the Co-op divis axed in the 1930s; and, more latterly, the Thatcherite demutualisation of building societies and friendly insurers, the majority of which have not turned out well. The movement survived all those challenges and continued to grow. I have no doubt that it will survive and prosper after facing its current challenges.

The co-op sector in Britain grew by 20% between 2008 and 2012, while the economy as a whole shrank by 2%. Co-operative businesses in the UK together have a turnover of more than £37 billion a year. Those headline economic figures are striking, but it is the often unheralded work that co-operatives and mutuals do in our local communities that deserve a much greater focus. From the first store set up by the Rochdale Pioneers to the more than 6,000 co-operatives in the UK today, co-operative businesses have been at the heart of our communities for more than 150 years. Today, we have co-operative schools, farms, credit unions and shops; and co-operative housing, co-operative energy and even co-operative pubs. In London, if the Minister will forgive me for being parochial for a moment, co-operatives employ more than 8,000 people and have a collective turnover of more than £750 million.

Of the nearly 700 registered co-operatives in London, I draw particular inspiration from the four housing co-operatives established by Coin Street Community Builders to help to meet Londoners’ need for affordable housing; part of an ambitious refurbishment plan for London’s South Bank, including the famous Oxo tower. With the dream of home ownership out of reach for too many people, housing co-operatives could provide a new and innovative solution for a new generation. About 10% of the citizens of some European countries live in housing co-operatives, compared with just 0.6% of people in the UK. I gently suggest to the House, therefore, that housing co-operatives could make a much greater contribution to tackling our housing problems.

Perhaps the Minister, like me, might draw inspiration from the example of Brixton Energy, also in London, which comprises three energy co-operatives—community-owned solar power schemes taking inspiration perhaps from the better known Baywind and Westmill energy co-operatives in Cumbria and Oxfordshire. The Brixton solar-power initiative has created co-operatively and community-owned renewable energy, the revenues from which stay within the local community. It is an innovative energy solution leading the way in generating sustainable sources of energy and it is jointly owned and operated by people in the community for their mutual benefit. As democratic enterprises, they operate with a one member, one vote policy and are surely a great example of the kind of mixed economy of energy ownership that we need to challenge the big six and move on from today’s problems in our energy market.

The Minister and the House might also draw inspiration from the success of credit unions, which in many of our communities are increasingly taking on the Wongas of this world. They provide affordable credit, empowering many of the poorest people in our communities and helping to retain funds in the local economy. In Leeds, for example, Salford university found a £10 benefit for the local economy for every £1 invested in the credit union, and indeed the Department for Work and Pensions independent evaluation of the financial inclusion growth fund established by the previous Government found that the total loans made by credit unions under the scheme between 2006 and 2011 totalled £175 million and saved loan recipients between £119 million and £135 million in interest, which they would have had to pay had they taken out a high-cost alternative.

Stephen Doughty Portrait Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
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For the record, I am a Labour and Co-operative MP and a member of several co-operatives and the Cardiff and Vale credit union.

My hon. Friend is making a strong speech about the value that co-operatives and mutuals play in local communities. That is certainly what I have seen in Cardiff, whether in the work of the credit union or organisations such as the Wales Co-operative Centre, which is doing much to support the growth of co-operatives and mutuals across Wales. Is it not sad, then, that the wider co-operative and mutual sector has been swept up, unfairly smeared and mixed up in some of the media coverage and commentary around the concerning and disturbing events at the Co-op bank?

Gareth Thomas Portrait Mr Thomas
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That is an unfortunate consequence of some of the coverage, but I have no doubt that co-operatives can rise above it and continue to demonstrate strong support from their local communities. As I indicated earlier, I have no doubt that the co-op movement as a whole, be it in Wales, England, Scotland or Northern Ireland, will continue to prosper.

The London mutual credit union provides loans, savings and current accounts and insurance. It recognises that there is a market for short-term loans, but charges an interest rate of only 27% for a 30-day loan—a world away from the 5,600% annual percentage rate typical of the payday loan sharks against whom my hon. Friend the Member for Walthamstow (Stella Creasy) has rightly led the charge. Crucially, it also offers access to basic financial education and services, helping people to gain greater long-term control over their personal finances. Co-operatives and mutuals offer to local communities a crucial part of the mixed economy that our country surely needs. Of course we need a vibrant private sector and certainly a strong third sector, but surely we also need continued growth in the number of co-operatives and mutuals and their economic success.

To be fair to the Government, they have continued to support the strengthening and expansion of the credit union sector, although I hope they can be persuaded to be bolder on the idea of a military credit union. I draw the Minister’s attention to the example of the United States, where the biggest credit union in the world is Navy Federal Credit Union, the credit union for the American military. It has 4 million members and over $55 billion in assets. I gently suggest to the House that it is surely time to consider again how a British armed forces credit union could be made a reality to help our soldiers, sailors and air force personnel in our own communities. A British equivalent could help to protect service families from the scourge of payday loan companies and begin to tackle the worrying levels of financial difficulties experienced by some of our veterans.

The co-operative movement itself in the UK continues to support and encourage the development of new co-operatives and mutuals as part of the response to the needs of particular local communities. The excellent Co-ops UK—the “trade association” of the co-op movement in the UK—and the Co-op Group support the co-op enterprise hub. Examples of co-operatives that have been established and are running well thanks to their support including from—the Minister may be aware of this—Bristol ferry boats. In 2012, the previous operators went into administration and a group of determined locals approached the enterprise hub for support to launch a community share issue to raise the £250,000 needed to bring the ferries into community ownership. The share offer closed in July of this year having exceeded its target. Some 850 local people invested, therefore enabling the ferry service to continue, providing—crucially—employment for 20 local people.

Stella Creasy Portrait Stella Creasy (Walthamstow) (Lab/Co-op)
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Like my hon. Friend, I should declare that I am a proud Co-op as well as Labour MP and a member of the Waltham Forest community credit union. He is making an incredibly powerful case for the need for boldness in our public policy solutions and for the way in which the co-op movement can offer that, from ferries to energy to housing as well as community credit unions. Does he therefore agree that as the concept of co-ops perhaps is being questioned, this is now the time to strengthen our relationship and our work with co-ops because of all the benefits he has outlined rather than to walk away from them?

Gareth Thomas Portrait Mr Thomas
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My hon. Friend is absolutely right and part of the reason for wanting this debate was that I was encouraged by the fact that in the coalition document there is a commitment to supporting co-operatives and mutuals. One hopes that coalition Ministers will not draw back or resile from that commitment, weak as some of the delivery has none the less been on it. It would be good to hear from the Minister what further progress he intends to make to hold to that commitment.

There is a risk that I have appeared too urban in the examples I have offered, so perhaps I can draw attention to the example of—I hope Welsh listeners will forgive my pronunciation—Tyn-Y-Capel, an historic pub in North Wales that reopened in 2012 as a result of the efforts of a determined group of locals who formed a co-operative to resurrect their local. A community share offer raised nearly £40,000, enough to take over the leasehold of the pub and, again, as a result of support from the enterprise hub. The new co-operative is developing the pub’s potential as a community venue and I am told that numerous community events have been held there since its re-opening.

The last example I want to offer the House of the co-op movement’s initiatives to help local community co-operatives to continue to be established is Aberdeen Textiles and Workwear Services in Scotland. I understand that the co-operative was established in October last year, after the Remploy factory in Aberdeen closed down. It saved some eight jobs, with the co-operative successfully retaining most of Remploy’s former customers up there, as well as gaining new ones, too.

In football, too, the Co-op party’s original idea of fans’ co-operatives—now known as supporters trusts—has taken off in a big way since it was first suggested 10 or so years ago, from Swansea City in the premiership, with fans in the club’s boardroom, and Portsmouth more recently, down to local clubs in north London. For example, Enfield Town football club is owned by some 300 members, who keep the club running and elect their own board. As a result, they have kept a vital community asset going in Enfield.

Co-operatives and mutuals can make an enormous difference in our communities. With the right legislative support, access to sensible finance and shrewd Government encouragement, they could do even more. I therefore have a series of questions that I hope the Minister will begin to address today—if not, I will be happy to hear his answers in due course. What further support might the Government offer to encourage the growth of energy co-operatives? Will he seek to emulate the US, where 12% of the population get their energy from a co-operative, or Germany, where the figure is one in three people? How about a target to push the level of community energy ownership a stage further? What steps will he or other Ministers take to encourage local economic partnerships to support and develop co-operative, mutual or social enterprise businesses, creating local employment and growth in their communities, perhaps as part of future regional growth fund bids?

There has been some disappointment in the co-operative movement that the social investment tax relief, which was announced in the autumn statement and welcomed by many, will not cover investment in most co-operative societies or community credit unions. One of the biggest challenges facing co-operatives today is the ability to access finance to support growth, as I am sure the Minister is aware. Considering the important contribution that co-operatives and mutuals make to local communities, I hope that Ministers might be persuaded, even at this late stage, to intercede with the Treasury on this important point.

The Government have encouraged Britain’s banks to publish data on local lending patterns. I understand that the first comprehensive set of postcode lending data will be made available in January. I hope it will begin to expose the lending deserts that we know exist in the UK, where access to affordable credit for individuals and, crucially, to small and medium-sized businesses is particularly bad. I offer the Minister the example of Thamesmead in south London, which is an area of 55,000 households with no bank. Indeed, the nearest branch is some 35 to 45 minutes away by bus. Not surprisingly, there are high levels of payday loan usage and a high take-up of “Provy” loans. What provisions will Ministers put in place, once those data are made available, to encourage banks to work much better with local organisations, co-operatives, mutuals, social enterprises and even charities to respond to the needs of their areas?

What actions will Ministers take to encourage housing co-operatives? Will the Minister instruct the Homes and Communities Agency to allocate a proportion of its apparently considerable capital funds for new affordable housing to support housing co-operatives? Will the Minister particularly look at the suggestion advocated by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) that the Government adopt the approach taken by the Welsh Assembly and recognise co-operative housing in law, as it is in much of the rest of Europe? What action will Ministers take to encourage lottery operators to support a new strand of community resilience projects to help make start-up support available for new co-operative and mutual initiatives?

Those are the ideas and questions that I have gently offered to the House today, and I hope they will be seen by the Minister as a genuine attempt to encourage new ways of driving continued growth in the co-operative and mutual sector—a sector that I believe offers considerable benefit not only to my community, but to communities across the UK.

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Stephen Williams Portrait The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams)
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I do not think that any of us expected this debate to be taking place at 5.35 pm. Earlier today, I was told several times via the Whips Office that the House might sit late tonight, and my officials were told the same. I am sure that the hon. Member for Harrow West (Mr Thomas) asked many questions while I was not only listening to his speech but reading my own for the first time. I must confess that I was “Boxless”—I do not know whether there is such a word in the English language—and, although I do not think that I am technically Boxless any more, it is probably best for me to deal with some of the hon. Gentleman’s questions by writing to him. However, they will all be in Hansard and on the record.

Gareth Thomas Portrait Mr Thomas
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I entirely accept that the Minister will want to mull over some of my questions, but perhaps I can throw him another one to mull over. It concerns the future of the industrial and provident society legislation, which is, I understand, a Treasury responsibility. When the Minister writes to me, will he also check whether the Treasury has any plans to modernise that legislation further?

Stephen Williams Portrait Stephen Williams
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I thank the hon. Gentleman for his question, which is now on the record and will be added to the already fairly long list of items about which I shall have to write back to him.

I congratulate the hon. Gentleman on securing the debate, and thank him for his constructive speech. I also thank the hon. Member for Strangford (Jim Shannon) for his comments about the situation in his constituency, and for the intervention from my namesake the hon. Member for Cardiff South and Penarth (Stephen Doughty).

The Government are committed to opening up and transforming public services and giving communities an opportunity to take control of the places in which they live and which they may well love. Localism is fundamental to that, and the powers and opportunities that we have introduced to support it are already demonstrating their value. When I entered my Department and discovered the range of responsibilities that I would be taking on, I was, as a Liberal, genuinely excited by the whole localism agenda. This morning I visited Poplar—in the constituency of the hon. Member for Poplar and Limehouse (Jim Fitzpatrick)—to announce the next stage of the Our Place! programme, a community empowerment programme that is one of the many suites of powers introduced under the coalition’s Localism Act 2011.

Of course, this Government did not invent community action. As the hon. Gentleman rightly acknowledged, the co-operative movement has a long history in this country. He mentioned pioneers in Rochdale, but given his first name and surname I think that he must have some Welsh antecedents, and in that context I should mention Robert Owen. All those pioneers, whether they were in Montgomeryshire or in Rochdale, would have had in their hearts a vision in which they were made stronger by working together, and could achieve more together than they could individually. Together, they could raise their own aspirations and those of their communities. Let me put that into 21st-century language that may sound familiar to some people: it is not just about building a stronger economy, but about building a fairer society and enabling every person to get on in life.

The community rights introduced in the Localism Act—along with all the other rights that we introduced in that legislation—give new opportunities to co-operatives and mutuals. Let me mention a few that are relevant to the issues raised by the hon. Gentleman.

In London—in the constituency of the deputy leader of the Labour party, I think—the Ivy House Community Pub Ltd is now a co-operative. Using a right under the 2011 Act, the community got together to save the Ivy House pub from being sold and turned into flats. It has now purchased the pub, using the right to bid introduced under that Act. That is the first co-operative pub in London. If we are feeling the Christmas spirit, as we have plenty of time we did not know we would have this evening and it is not too far away, we should perhaps consider going for a drink there later on.

We are now seeing real growth in co-operative pubs. The overall number is 22 now, and half of them opened their doors this year. My Department is helping to fund the co-operative pubs advice line, launched at the start of April. Over 100 communities have contacted this service—which shows there is a thirst for accessing it.

There are also currently 318 community shops open and trading across the UK, all using a co-operative model. They are extremely resilient, as 96% of those that have ever opened are still open, so it is a much more successful and sustainable business model than, sadly, many other small enterprises.

My Department is supporting communities across England to take on assets and make them work for local people through our community ownership and management of assets programme. This is providing expertise, support and grants to groups to buy or manage a range of assets. Many community pubs and shops have successfully used community share offers to raise funds. Community shares is a sustainable social investment model that gives communities an opportunity to purchase a stake in their local community enterprise. Hastings pier is an example I am familiar with. People throughout the country are using these new rights to preserve things that are important in their community.

Another example of where community shares are helping industrial and provident societies to save assets is the first co-operative football club, FC United of Manchester. I am not a football expert, but I must confess that that is not a club I have heard of. Community shares have been used, too, to set up several renewable power generation projects. The hon. Member for Harrow West referred to the Brixton Energy company and schemes in Cumbria. There are also schemes in my constituency in Bristol, such as in Easton, that do similar things. The great thing about these community energy schemes is that they preserve money in the local community. That can be a very localist way of dealing with fuel poverty, which is something we are all concerned about.

There are also several community-led housing schemes that have taken advantage of the £25 million the Government have set aside for them in the affordable homes programme. One example is the Bomarsund Co-op, which started a scheme this year in Sedgehill in Northumberland. It will provide 12 two-bedroom apartments. Another is the community land trust in Queen Camel in Somerset—they have some splendid names—which is funding the development of 20 affordable homes.

The chair of the Confederation of Co-operative Housing, Mr Nic Bliss, has recently set out his experience of working with the coalition Government. He said that

“we are pleased that the Coalition Government has worked with our sector to demonstrate its ongoing support for community-led housing.”

The Government have also been public about our commitment to the creation and expansion of mutuals, especially by empowering public sector workers to become their own boss and help them deliver better public services.

Gareth Thomas Portrait Mr Thomas
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I genuinely do not want to chastise the Minister, because he is making a helpful and interesting speech, but will he take back to his Department my request for the Homes and Communities Agency to do more to encourage local authorities and housing associations to support housing co-operative initiatives? There are good examples of housing co-ops in the UK, but the number of people who are able to take advantage of them is dramatically lower than in some European countries.

Stephen Williams Portrait Stephen Williams
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I thank the hon. Gentleman for that helpful suggestion. I will certainly take it back to the Department and discuss it with the Housing Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins).

We genuinely want innovative models of delivery for housing provision on the ground, where we can work with social enterprises and charities and bring people together to achieve real regeneration in their area. A couple of weeks ago, as the Minister responsible for the empty homes programme, I handed over the keys to a house in Peckham. The number of people involved in that project was quite staggering: not only the formal delivery partners—the Government, Southwark council and the two housing associations—but 300 volunteers. Some had painted a bedroom, others had done the carpeting, and so on. The Government are genuinely open to innovative solutions that involve as many people as possible in shaping their own communities, and I certainly think that the co-operative model for providing new housing is something that ought to be explored a little bit further.

Returning to the question of employees who take over their own area of the public sector, our latest data show that absenteeism and staff turnover fall by 20% and 16% respectively after an organisation has spun out. Both are really impressive statistics that are surely reflective of staff having a greater sense of control and ownership. I could give the House further examples.

Stephen Williams Portrait Stephen Williams
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Oh dear! It’s Christmas! I was hoping we would not have to discuss the Co-operative party and the recent events—fun though that might be. A lot of us, myself included, would regard ourselves as fully supportive of the co-operative model, of mutuals and of social enterprises, and we have spent a large part of our political careers doing a great deal to encourage that agenda. We are now spending time in Government pushing that agenda forward. For some reason, the Co-operative party chooses to fund only candidates who are associated with the Labour party, and that is a shame. I am going slightly off topic here, Mr Deputy Speaker, but I was led astray. I wish that the Co-operative party would use its resources to fund candidates from any party, be they Labour, Liberal Democrat or even some of our coalition partners who are genuinely interested in pushing forward co-operative ideals. The people who founded the co-operative movement in the 19th century might be surprised to find that the Co-operative party in the 21st century is now allied solely to a Labour party and not to a Liberal party, because many of them would have been Liberals at that time.

Gareth Thomas Portrait Mr Thomas
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May I gently point out to the Minister that the Co-operative party was established in response to discrimination in the way in which staff were called up from co-operatives, as opposed to private businesses, by the Conservative and Liberal coalition Government during world war one? In the spirit of bringing a sense of Christmas back into the Chamber, let me say that if he were willing to defect, I would be willing to champion his membership of the Co-op party.

Stephen Williams Portrait Stephen Williams
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Even if the hon. Gentleman and I were to visit the Ivy House pub in Nunhead later and drink however much it took to get us both thoroughly inebriated, I do not think that my will would be so weakened as to accept that kind invitation, which I must admit has been offered by his colleagues many times over the years.

The hon. Gentleman also mentioned credit unions. I am a member of Bristol Credit Union—I am reminded that I need to top up my funds. The reason I became a member in the first place was to be able to use the Bristol pound. Local community currencies are another example of putting power in the hands of local people to keep more of their spending power in the local economy and to support businesses and the agenda he is putting forward.