Co-operatives

Gareth Thomas Excerpts

Thursday 14th July 2016 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I beg to move,

That this House has considered the contribution of cooperatives to the economy.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to be here with colleagues from across the House, and with many fellow members of the Co-operative party, to discuss this important issue. I stand here not only as a member of the Labour party but as a Co-operative MP, along with many other colleagues here. I am pleased to work with colleagues across the legislatures, councils and different political institutions of the United Kingdom to stand up for co-operative values and the co-operative ideal in our politics, which enjoy support even from non-Co-op members. I am glad to see representatives from other parties here, and I am sure that they will make some excellent contributions. There are 25 Co-op MPs, 1,500 councillors, three police and crime commissioners, eight Members of the Scottish Parliament and 11 Assembly Members, but many others also share our ideals and interests.

Members may be aware that the timing of this debate is no coincidence. We recently celebrated Co-operatives fortnight, which ran from 18 June to 2 July. Co-operatives fortnight brings great attention to the issues every year, as do numerous other events throughout the country and indeed around the world. Co-operatives fortnight is a time when co-operatives up and down the country remind people of the many good reasons why we should all choose the co-operative model and of the significant impact that co-operatives have had for many years and continue to have on the British economy.

That is important to recognise, as we are going through difficult times both politically and for business and the economy. Unfortunately, as always, the difficult cases and mistakes made by some businesses tend to predominate. The BHS crisis, the scandals involving non-payment of tax and lots of other issues have dominated the business and economic agenda in recent months but, overall, we should be proud of the success story that surrounds the role of co-operatives and mutuals in our economy. That is what I wish to draw attention to in my remarks.

The movement has seen incredible growth over the past number of years. The number of people who own and control the UK’s co-operatives has grown by more than 10% to 17.5 million, nearly a quarter of the UK population, meaning that the number of co-operative members continues to outstrip the number of regular shareholders in the UK. The sector is set to benefit further from the recent Co-op Group announcement that it wants to add 1 million new members over the next five years. It is important to make it clear that, although the Co-op Group tends to dominate the news that we hear about the co-op sector in the UK, it is not the whole sector. The sector is much wider, more diverse and more extensive than just its most well-known brand name.

Overall, the co-op sector has grown by £3.5 billion over the last five years. That growth is accounted for by a combination of success among retailers such as John Lewis, the Midcounties Co-operative and the Central England Co-operative, and steady growth in the agricultural sector. It is worth noting some of the largest sectors within the co-operative economy by number of co-operatives and turnover: agriculture, which has 416 co-ops with a turnover of more than £5.8 million; retail, which has 505 co-ops with a turnover of £24.3 million; sports and leisure, which has 2,890 co-ops; and health and social care, which has 88 co-operatives and a very large turnover.

That is matched by more than 225,000 jobs created in the co-operative economy throughout the length and breadth of the UK. We should applaud and welcome that, recognising that many of those jobs are in thriving businesses that provide a huge role for employees as well as co-op members. They often offer excellent pay, conditions and involvement in the direction of where the co-operative goes, not just the employer/employee relationship of many traditional businesses.

Co-operatives and mutual societies play a pivotal societal, social and economic role throughout the UK. They are created, governed and run by members, and set up by members for members. The idea of membership-led engagement is the distinguishing element that makes co-operatives and mutual societies different from other legal entities, and it is unique as far as participation in economic life is concerned. It is important to recognise that because a mutual society is created and managed to fulfil its members’ needs, it inherently pursues long-term goals. That pursuit of long-term goals marks mutuals as reliable, stable and durable elements in many sectors of the economy.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I know that my hon. Friend was a strong supporter of the Co-op party’s successful campaign during the last Parliament for the Government to establish a military credit union to help protect our military personnel and their families from being exploited by payday lenders. Does he think that this debate might be a good opportunity to hear from the Minister about what progress there has been in terms of people joining the three credit unions established to help military personnel?

[Stephen Doughty]

That is a crucial point. My hon. Friend, who has been a leader on the co-operative ideal in this Parliament, across the country and within the Co-operative party itself, led the campaign for a military credit union. I would certainly be interested to hear from the Minister about that. As a member of a credit union myself—Cardiff and Vale Credit Union—I know that many Co-operative supporters also belong to and promote credit unions in their communities. I also recognise that fair lending and fair access to finance can help different sectors: particularly, as my hon. Friend pointed out, veterans and those serving in our armed forces. It is crucial that they do not fall prey to the payday lenders who create such a problem in our economy.

We have seen progress not only in fair lending but in fair tax, an issue on which the co-operative movement has shown leadership. It is worth noting, and the House will be interested to know, that Britain’s top five co-ops pay more UK tax than Amazon, Facebook, Apple, eBay and Starbucks combined. That is very much in line with where the public stand. Only 34% of the British public believe that most big businesses in the UK pay their fair share of tax, and, sadly, just 6% trust a company of any size to provide accurate information on the tax that it has paid. Recent research undertaken by KPMG shows that trust in companies’ approach to tax is the fourth most significant factor in how much overall trust an individual places in a company or brand.

The Fair Tax Mark campaign has been established to set a new standard in responsible tax practice, from the smallest shop to the biggest multinational. The pioneers of the campaign have, as we would expect, been co-ops and social enterprises. From the beginning, the Co-operative party, Co-operatives UK and Social Enterprise UK have been highly supportive of the fair tax mark. I am proud to say that the Co-operative party is the first political party to achieve the mark. That is something that we could all aspire to. Co-operative retail societies such as East of England, Midcounties, the Co-operative Group and Scotmid have also achieved the fair tax mark. It is clear and evident that co-operatives have seized the opportunity to benefit from the public’s willingness to punish tax avoiders.

The co-op movement’s enthusiasm for adopting fair tax policies further demonstrates that the co-operative model is an inherently social and responsible form of business. I would certainly be interested to hear from the Minister what lessons he thinks there are for the rest of the economy in the example being set by co-operatives and those leading the Fair Tax Mark campaign. Achieving the mark certifies that a company is making a genuine effort to be open and transparent about its tax affairs and pays the right amount of corporation tax at the right time and in the right place. I am proud of the work done on that.

Co-operatives clearly provide new and innovative solutions to some of the other challenges of our changing economy, one of which is the growing number of self-employed workers. There are now more self-employed workers than at any time since modern records began. Some 4.6 million people, around 15% of the workforce, are now self-employed. Data from the Office for National Statistics show that two thirds of new jobs created in the UK in recent years are down to self-employment. Current projections are that by 2018 self-employed people will outnumber those working in the public sector. That is a huge challenge for Government, for tax authorities and for trade unions, but a challenge that the co-operative movement has risen to. Self-employed workers often do not enjoy the employment rights and protections at work or any of the implicit services associated with being an employee, such as payroll or workplace insurance, let alone such things as pensions or sick pay. They also face additional challenges related to being paid on time, the right to contracts and so on. As we all know, self-employed workers often end up being some of the lowest-paid and most put-upon workers in the country.

With that in mind, it is particularly interesting to note that throughout the country freelancers and self-employed people are coming together to form co-operatives for shared services, in some cases with support from entrepreneurial trade unions that see the opportunity to support members who are self-employed, not just those who are employed in traditional workplace arrangements in larger businesses.

I have some interesting examples. In Wales, the Oren Actors Management co-op allows actors to work between roles as agents for other co-op member actors, marketing their services—a two-way process in which they mutually support one another. That is a very good example of co-operative principles in practice. In Swindon, 50 music teachers have come together to form a co-op to market their services to schools with support from the Musicians Union, with which I enjoy a proud association—indeed, I should state for the record that my register of interests shows that I have enjoyed support from it in the past. The Musicians Union does an excellent job in that respect and I am very excited to see it working to help self-employed music teachers. In London, interpreters came together in a co-op in November 2012 after changes in their terms and conditions when the firm Capita took on the contract to provide interpretation services in judicial courts. I do not want to get into a lengthy debate about Capita and its good and bad aspects, but that is a fascinating situation of a co-op of interpreters coming together.

Compared with practice in some countries overseas, these initiatives are only in their infancy. They have to potential to grow tremendously, like other models witnessed in other parts of the world. I am certainly interested in whether the Minister thinks we could play a bigger role in promoting best practice and supporting such initiatives from other countries. In the United States, for example, Freelancers Union, which was formed for the self-employed, has attracted over 280,000 members. In the Netherlands and Spain, general unions for self-employed workers have emerged and developed since the late 1990s and provide a range of services as well as representation. The Assemblée Nationale in the French Parliament has also introduced legislation, which came into force this January, to recognise the role of 72 business and employment co-operatives, supporting members with accounting and access to the sickness pay and benefits of conventional employees.

It is worth highlighting that the Wales Co-operative Centre, another body with which I enjoy a close association—I work closely with its head, Derek Walker, locally—and Co-operatives UK have recently published the “Not Alone” report, which sets out some key findings on how the co-operative movement and trade unions can come together in the UK to build support for self-employed workers.

--- Later in debate ---

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to take part in this debate and I join my hon. Friend the Member for Redcar (Anna Turley) and other hon. Members in praising my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this Back-Bench debate. He and my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger), for Neath (Christina Rees) and for Redcar ranged strategically in their contributions across the co-op sector. I do not intend to do that, but hope to pick out one or two particular issues to press the Minister on.

I welcome the contribution of the hon. Member for Wycombe (Mr Baker). I am not sure I would have travelled the same path to get to the enthusiasm for co-operatives and mutuals that he described, but I recognise that his commitment to the sector is genuine. I will not say any more—I do not want to damage his prospects for advancement today—but it is good to have a Conservative speaking up for co-operatives as well. Normally, it is left to Labour Members, so it is a welcome change.

One area in which the hon. Gentleman and I have co-operated is advocating for co-operative change to the way that some of our major public service institutions are currently governed. I wonder if I might encourage the Minister and shadow Minister to take an open-minded view of the proposals to turn Channel 4 and the BBC into mutuals. What do I mean by that? I mean allowing those who watch Channel 4 and those who pay the BBC licence fee to become members and therefore to have a vote on who should sit on the board of those bodies—putting the public back into two critical public services.

I also hope that, in time, we will see the new Mayor of London seek to do the same with Transport for London, giving commuters the chance to vote on who should sit on its board alongside the Mayor. In that very direct way, people who depend on these vital public services will have more influence over their direction and future strategy.

[Mr Baker]

May I just assert my complete support for the idea of mutualising both Channel 4 and the BBC? Channel 4 would be an enormous mutualisation, but a much smaller one than the BBC. I would encourage the Government to look very seriously at recapitalising ordinary people by giving them the opportunity to take a real ownership stake in those very important public institutions.

[Mr Thomas]

Having ruined my own career, and probably his too, by praising the hon. Gentleman, let me move on to other areas that we have not discussed prior to the debate.

One of the things that many co-operative businesses active in their communities point out is the way that the internet is changing the nature of retailing. By definition, many internet retailers do not have large property footprints in particular communities and therefore pay substantially less in property tax than those who are offering a direct service on high streets in communities up and down the land. I support the call of many in the co-op retail movement for a review of the business rates they have to pay by comparison to the taxes that online businesses such as Amazon have to pay at the moment, which are substantially less.

In my earlier intervention on my hon. Friend the Member for Cardiff South and Penarth, I raised the potential contribution of the military credit union. I hope Ministers in the new Government will go further than just support for a military credit union and will recognise the huge benefits of trying to extend credit union membership. In particular, I would like to see a right to save, so that anybody who wants money deducted at payroll and sent to their credit union should be allowed to make that request and have that implemented without question. At the moment, it is at the discretion of the employer. Everybody knows that this is a service that can be offered incredibly cheaply by employers, but it is a matter of will. The very best employers do it, but sadly too many do not. Perhaps putting a right to save on the statute book could help to boost membership of credit unions.

I have always very much supported the idea of a British version of the Community Reinvestment Act, which would place a requirement on major banks to account for the services that they provide to the communities from which they take deposits. When those major banks leave those communities and shut branches, there should be an obligation on them to continue to work there, albeit perhaps through credit unions or other community banks operating there. That legislation works extremely well in the United States and is long overdue here in the UK.

I add my voice to those who have called for a profit-sharing requirement on big companies. There is merit in the French idea that 5% of profits should be shared among those employees who have helped to create that profit in the first place. That would seem to be one further way in which we could create an economy that works for all. I commend my hon. Friends and other hon. Members who have participated in this important debate.

[Mr Philip Hollobone (in the Chair)]

We now come to the first of the Front-Bench speeches. The recommended guidelines are 10 minutes for the SNP and for the Opposition, and if the Minister could end his remarks at 2.57 pm, we can then allow the hon. Member for Cardiff South and Penarth (Stephen Doughty) to wind up the debate.