Oral Answers to Questions
Gareth Thomas Excerpts(6 years, 7 months ago)
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John Glen
I acknowledge the difficult situation that my hon. Friend has in Bungay. The Government-established Payment Systems Regulator is closely monitoring developments in ATM provision and, as I said, there are mechanisms in place to intervene. I am very happy to meet him to discuss the application of those to the situation in Bungay.
Gareth Thomas (Harrow West) (Lab/Co-op)
Given that post offices and credit unions provide easy access to cash, is it not now time to offer business rates relief to both to enhance the provision of cash and other affordable financial services?
Co-operative and Mutual Businesses
Gareth Thomas Excerpts(6 years, 7 months ago)
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Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move,
That this House welcomes the contribution of co-operative and mutual businesses to the UK economy; notes that they provide substantial jobs in Britain, generate significant tax revenues and involve consumers and employees in decision making; and calls on the Government to review what further steps it can take to help grow that sector.
It is a pleasure to move the motion in this, the first week of Co-operatives Fortnight. Co-operative and mutual businesses—from retail giants such as John Lewis, Nationwide and the Co-operative Group through to social enterprises, credit unions, energy co-ops, community banks, childcare co-ops, friendly insurers and housing co-operatives—offer a route map to a more democratic and fairer economy. Co-ops and mutuals exist already in every sector of the economy, from financial services to housing, food retailing, public services and sport, supplying affordable and sustainable services to consumers, providing rewarding work and strengthening community enterprise.
Chris Elmore (Ogmore) (Lab)
My hon. Friend has mentioned financial services. Does he agree that building societies in particular provide an excellent service on the high street? High street banks have vacated many communities en masse, but building societies are a mainstay, and are gaining more business and better understanding from consumers because they are there to support them week in, week out.
Gareth Thomas
That is an extremely good point. Building societies are one part of a co-op and mutual movement that already has a combined income of more than £133 billion, with assets worth many billions more. It is a serious and significant part of our economy, yet all too often Government, regulators, policy makers and thinkers dismiss its huge potential for expansion—expansion that could help to challenge wage stagnation, widening inequality and our growing environmental crisis.
Co-ops and mutuals put economic power in the hands of ordinary people, and, remarkably, those ordinary people, supported by skilful management, can be entrepreneurial, highly productive, and visionary—who knew? There are those on the right who criticise co-ops and mutuals for being some sort of left-wing throwback to the 1970s, and dangerously radical; and there are those on the hard left who think that they are not public ownership at its best, but just a front for business as usual. More generous critics take a benevolent, paternalistic approach, tolerating co-ops and mutuals until bigger, more serious players in the City or the unions enter the room.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
My hon. Friend is making an excellent start to what I am sure is going to be a great speech, but may I suggest to him that co-ops are, in fact, dangerous? They undermine the existing order, and empower people to take charge of their own lives. They are dangerous, and they should be.
Gareth Thomas
I was about to say something that I hope my hon. Friend will be able to support even more wholeheartedly. I have always believed that co-ops and mutuals are the future: that they spread wealth and power more fairly, that they strengthen British-owned business, that they provide competition and choice for consumers in a range of critical markets, that they create diversity and enterprise, that they take a long-term view, and that they are a counter to the short-termist, riskier business models loved by City editors. We in this great Chamber should surely be able to allow our communities to direct and influence the economies that surround them and on which they depend.
Kerry McCarthy (Bristol East) (Lab)
Will my hon. Friend join me in supporting agricultural co-operatives, which play an important role in trying to bring about more sustainable, locally connected food and farming systems? Does he share my disappointment that countries such as the Netherlands and France have far more of them than we currently have in the UK?
Gareth Thomas
I absolutely endorse my hon. Friend’s comments. I know that fisheries co-ops are another part of the sector in which she is interested. They, too, make a huge contribution, and could do a lot more with a little more help.
The economy is not some separate space to be run only by so-called management experts on grotesque levels of pay who can continue to ignore the rest of the country. Why should our neighbours, our friends and those we see at the school gate not have a say in how businesses and services on which they depend are run? They are allowed a say in political decision making, so why should they not be allowed a say in the businesses that they work in or depend on? Co-ops and mutuals can be life-changing and transformative, and the Government and the other Opposition parties should join Labour in committing themselves to double the size of the sector from between 4% and 5% of GDP to 10%.
The Oxo Tower on London’s South Bank was redeveloped by the enterprise Coin Street Community Builders. It now contains five floors of social housing run by Redwood Housing Co-op, subject to some of the lowest rents in the capital while being in one of London’s prime spots. Armed forces credit unions are another powerful example of the difference that co-ops can make. They were established after a long campaign by the Co-operative party, and are helping to combat the problem of payday lenders who prey on our armed forces personnel. Those are two remarkable stories, in my view, but much more is possible. Access to capital, further legislative reform, better Government funding, more Whitehall efforts to raise awareness and more expertise on the sector in the civil service are the key asks of Britain’s co-op and mutual sector.
I appreciate that finance is not an issue or problem reserved to co-ops and mutuals, but because of their different ownership models they often have real difficulty in accessing finance for expansion, and indeed for getting started. Big corporations can access large investment through debt funding or, crucially, can create capital by selling shares. Co-operatives and mutuals cannot at the moment do the latter without demutualising. Clearly we need to protect this unique governance model but also allow mutuals to issue permanent investment shares— that is to say, create indivisible reserves—which cannot be distributed to members even beyond the lifetime of the mutual. The European Union states offer this already in their mutual and co-operative legal set-ups, and a further five EU states have it in a slightly different form, yet in the UK we do not offer this route to raising significant finance for co-ops and mutuals.
Such a form of co-op and mutual share capital would offer stronger protection against demutualisation and therefore maintain and enhance corporate diversity. Above all else it would allow co-ops and mutuals to compete in the marketplace with other big businesses without one hand tied behind their back. In the UK building societies have a version of this already, called core capital deferred shares, which allows them to access capital markets without risking their mutual nature, but other financial mutuals and co-ops in the UK do not have anything like that.
Outside the EU, Desjardins in Quebec has raised more than $4 billion through this route, and Australia passed legislation on 5 April this year allowing its co-ops and mutuals to issue share capital while protecting their co-operative and mutual nature. If the Australians can do it, if most of Europe can do it, and if British building societies have it already, why should not British co-operatives and other mutuals also be allowed to raise finance in this way?
I recognise that the Minister and his officials have looked at this once already in the light of Lord Naseby’s successful Bill in the other place, and indeed my own and mutuals’ representations, but I hope he might be persuaded, particularly given that similar legislation is now on the statute book in Australia, to bring key experts in this area together with officials again to try to find a resolution to the problems that have stopped this method of raising finance being allowed in the UK. The Co-operative Group, other retail co-op societies, Co-operatives UK, friendly insurers and the Building Societies Association all support progress on this issue, and I urge the Minister, who has been sympathetic to co-operatives and mutuals in the past, to be willing to take a fresh look at this.
Britain’s co-op and mutual movement suffers from a lack of dedicated banking funds. Across Europe, dedicated mutual or co-op banks exist, are highly profitable and have been around for ages. I have long thought that the Royal Bank of Scotland could and should be converted into a mutual to help address this gap in the UK and to challenge the continuing big banking monopoly in the City. The Minister may not yet be ready to join me in making that jump, so perhaps I can ask him to explore whether the British Business Bank might begin to have a dedicated mutual growth fund to encourage the setting up of new mutuals.
Responsible Finance, an excellent organisation that champions Britain’s existing community banks, highlights the need for dedicated finance for start-up worker co-ops. There is at present an absence of patient capital or capital blended with grants to reduce investment risk for start-up worker co-ops. A dedicated fund would enable specialist co-op lenders to take a higher level of risk in this area and mean that more capital would be available.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Does my hon. Friend agree that almost all start-up businesses have difficulty in accessing finance but that, ironically, it is more difficult for co-ops, notwithstanding the fact that the survival rate of starter co-ops over five years is almost double that of other businesses? That is an anomaly that we would reasonably expect the financial services market to correct.
Gareth Thomas
My hon. Friend is absolutely right. I pay tribute to the work of programmes such as Co-op UK’s Hive programme, the resources that are available from Stir to Action, some of the local measures that we have seen in Manchester and Preston, and Social Investment Business’s mutual Reach Fund, but these are all relatively small-scale and need to be scaled up.
The Minister will not be surprised to hear me—and, I suspect, other hon. Members—urge the introduction of further legislative reform to help credit unions offer more services to their members and enable them to invest their members’ money in an expanded range of ways to generate a return for savers. Credit unions are the most active, responsible lenders to the poorest and most financially vulnerable and excluded people in the UK, but they are held back from doing more by outdated legislation and a digital approach to regulation by the Financial Conduct Authority.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I declare my interest as a former director of the Staffordshire credit union, which sadly went bump because the FCA’s misunderstanding of the difference between the capital reserves we had to hold and the sustainability of our loan book meant that we could never meet its ever increasing targets and thresholds. That has left a number of former consumers unable to access even the basic banking arrangements that we offered, and I wholeheartedly agree with my hon. Friend’s comments about the way in which the FCA regulates. It needs to better understand what credit unions are, and how they differ from commercial high street banks.
Gareth Thomas
My hon. Friend makes a powerful point. There needs to be a significant culture change in the FCA’s approach to credit unions and other financial mutuals. I recognise that there has been some Government support—indeed, the Minister has been helpful in ensuring more support for credit unions—but wholesale reform of the objects and powers of credit unions through primary legislation, providing a clear basis for innovation and development in the sector, is overdue.
Mr Sheerman
I do not usually stand up for the Financial Conduct Authority, but is it not in the interesting position where the rise of digital currencies, crowdfunding and all the new opportunities opening up to co-operatives mean that we are in a challenging and innovative but quite unstable situation?
Gareth Thomas
My hon. Friend seems to have gone from being dangerously radical earlier to being conservative within the space of about 10 minutes. He makes a reasonable general point about the changing landscape, but I am struck by the number of credit unions that have stories to tell of their difficulties with the FCA, and I believe that the point that my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) and I have made about the need for cultural change in the FCA’s approach to mutuals is justified.
As the Association of British Credit Unions Ltd and the Building Societies Association have noted, new primary legislation for credit unions could allow them the chance to offer additional services at an affordable price in areas such as house insurance, where consumers often pay a premium if they pay on a monthly basis. Under the Credit Unions Act 1979, credit unions are permitted to offer credit to their members in the form of a loan, but the Financial Conduct Authority has taken a strict and literal view of this, limiting credit unions to offering cash loans. ABCUL and credit unions such as Plane Saver and London Mutual have noted that credit unions could provide an affordable and responsible alternative to a number of other consumer credit markets, such as secured car lending. Indeed, one credit union highlighted to me that the FCA had effectively stopped it offering an alternative to the high-cost credit that BrightHouse locks its customers into when they cannot afford to pay outright for basics such as cookers and fridges.
There should be a legal right for payroll deduction to join a credit union to be available to an employee if they desire it. I hope the Minister will ask his officials to check that every branch of the Government offers payroll deduction to join a credit union if civil servants want that facility. There should also be a requirement for the Department for Work and Pensions, local authorities and housing associations to signpost those in need to credit unions to help them avoid the payday loan companies and illegal lenders who prey on our most vulnerable people. Further help to allow credit unions to invest in new technology, so that they can provide a good digital offer, is key.
Greater understanding of the needs of the co-op and mutual sector by the civil service, and across all parts of Government, is important, and the Treasury is in a good position to facilitate such an awareness-raising effort. In Homes England, for example, a dedicated group of staff could promote and help housing co-operatives. A co-operative development agency could be tasked with promoting interest in co-ops and mutual entrepreneurialism across the country. The Treasury should be able to check that Government funding announcements do not discriminate against co-operative and mutual models. Co-op schools and energy co-ops have not been helped at key moments. Finally, why oh why are the Government not doing more to promote employee ownership trusts—a move they announced in the 2014 Budget—as a way of enabling the owners of companies to get the exit they want, realising the value of their business while securing its ethos, values and employees for the future?
The Government have sought to dispose of unwanted buildings and other land, but some of that should be allocated for sale or transfer for co-operative housing. We need more community land trusts to lock down ownership of land for those who need it most, and I will give just one example, with Armed Forces Day this Saturday in mind. In the US, homeless veterans are being helped into homes built on donated Government land, subsidised by Government funding and run as housing co-operatives. That has given veterans the chance to take control of the environment, rules, regulations and rents that they live by and pay, while getting proper support to rebuild their lives.
Dr David Drew (Stroud) (Lab/Co-op)
My hon. Friend is making an excellent speech. Does he accept that community land trusts have a particular benefit in rural areas, where they can provide cheaper or affordable housing? Does he agree that we need to examine how planning rules can encourage, rather than disadvantage, community land trusts in such settings?
Gareth Thomas
I do agree, and I hope that my hon. Friend will catch your eye, Madam Deputy Speaker, to develop that point further.
Soldier On, a US veterans charity, opened the Gordon H. Mansfield veterans community in the autumn of 2017, with 51 homeless veterans moving in. Those veterans received not just the keys to their own apartment in a housing co-operative, but the keys to a new life away from the danger and insecurity of the streets. Soldier On has 14 new units under construction and is looking to develop 100 more units in New York and a further 70 in New Jersey. That model of housing co-ops on, probably, donated Government land could work in the UK and should be happening here. I gently ask the Treasury to encourage the Ministry of Defence to stop some of the sales of the almost 50 empty properties of which it is trying to dispose.
Co-operatives and mutuals are a great British success story, but they could be an even bigger one. I urge the House and the Government to embrace the sector and to champion the doubling in size of its contribution to our economy.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in support of the motion standing in the names of the hon. Members for Harrow West (Gareth Thomas) and for Wycombe (Mr Baker). I thank the hon. Member for Harrow West, in particular, for the massive contribution he has made, over the time I have been here but also long before that, to support co-operatives and mutuals. We all appreciate that greatly. I concur completely with the sentiments set out in the motion, especially those relating to the contribution that co-operatives and mutuals play in the economy of the United Kingdom, which I believe is much under-appreciated. I therefore want to add my support to co-operatives and mutuals, with a particular focus on credit unions, which I know best, as they feature greatly in my constituency.
Recent years have witnessed an increase in the number of co-operative and mutual businesses being set up in Northern Ireland, after many years when none was established. Analysis by Co-operatives UK in the early part of this decade found that co-operative enterprises in Northern Ireland contributed £35.6 billion to the UK economy—that is over a period of time, but it is still a massive amount of money.
I want to highlight a couple of examples to showcase the growing strength and vibrancy of the co-operative and mutual sector in Northern Ireland, because sometimes society does not appreciate what co-operatives do. The hon. Member for Stroud (Dr Drew) referred to agriculture. As a Member who represents a largely rural constituency, I know how crucial co-operatives have been to the size and success of our local dairy industry. One example is Lakeland Dairies, which has a factory in Newtownards, the main town in my constituency, and employs more than 220 people there. It is part of a cross-border co-operative business that processes 1.8 billion litres of milk a year. It has two factories in Northern Ireland and two in southern Ireland. The co-operative model has served the farmers, who are its members, well down through the years—they contribute to its policy and vision—providing them with an outlet for their production and, importantly, a say in the overall direction of the business. All that experience and knowledge points to the direction we need to go in.
Perhaps the single best example of the increasingly strong and vibrant co-operative and mutual sector in Northern Ireland is our credit union movement, which is massive. I will give some figures because I am not sure that all Members realise just how important credit unions are in Northern Ireland or the massive contribution they make. Credit unions are, of course, common to all parts of our United Kingdom, but they have woven themselves into the fabric of society in Northern Ireland in a way that has not happened elsewhere across our nation. Credit unions are a feature of my constituency, as we now have three or four of them. When one of the branches closed down in Greyabbey, a village just down the road from where I live—I opened accounts there for my three boys many years ago—it integrated with the branch in Newtownards.
People such as my old running mate Tommy Jeffers in Dundonald have given a lifetime of hard work to establish, run and expand credit unions across Northern Ireland. He was the instigation and strength behind that credit union, and although he is now in his mid-70s and no longer a councillor—that is how I first got to know him, as well as through party connections—he is still involved in it. The movement has been built by hundreds and hundreds of hours of work by volunteers. They have made a massive contribution.
Gareth Thomas
One credit union that spoke to me ahead of the debate wants to open more branches on the high street, to help plug the gap left by mainstream bank branch closures, and it wonders aloud whether the Government might be sympathetic to the idea of extending business rates relief to credit unions seeking to open business branches. Does the hon. Gentleman think that could also help facilitate the greater spread of the credit union movement in Northern Ireland?
Jim Shannon
I thank my honourable colleague for that intervention. I am sure that the Minister is listening and hope that he will take on board that suggestion, which could be very helpful. I wholeheartedly support that suggestion. This is not the Minister’s responsibility, but I have had discussions with other Ministers about help with high street rates.
It should be borne in mind that credit unions are for their members. The members invest their money to lend their money. It is a fantastic opportunity, and a fantastic example of how lending should be looked upon. The big banks should note that example. It should not be all about dividends for shareholders; it should be about the customers—those who are involved.
The Northern Ireland movement is massive in comparison with its counterparts in Great Britain. Statistics collated by the Bank of England in each quarter show the scale of credit unions in Northern Ireland in comparison with that of their counterparts in the rest of the United Kingdom. Of the 437 registered credit unions in the UK, 145 are located in Northern Ireland. A third of all adult credit union members in the UK are in Northern Ireland, and four in 10 juvenile members are from Northern Ireland. We are encouraging our young people to open accounts early—although, to be fair, that will probably be done by their parents or, perhaps, by their grandparents, who open accounts for them to start them off. It is good to encourage young people to be part of a bank, to save money, and thereby to see the benefits of credit unions. As I have said, it is a fantastic opportunity. If Members have not had an opportunity to investigate or gain knowledge of what is happening in Northern Ireland, I suggest that they should.
Gareth Thomas
I am grateful for the opportunity to wind up this debate and, in particular, to thank the Minister for three specific things. First, the winners of the additional funding to offer new credit union services will be delighted by his support for their work. I also welcome his interest in further proposals for the legislative reform of credit unions to help them expand, as well as his willingness to look again at finding a solution to help co-operatives and mutuals to raise new share capital.
Nobody would suggest that the hon. Member for Wycombe (Mr Baker) and I constitute any sort of dream team, but I am genuinely grateful for his support in making this debate happen. He, my hon. Friend the Member for Huddersfield (Mr Sheerman) and the hon. Members for Stafford (Jeremy Lefroy) and for Motherwell and Wishaw (Marion Fellows) rightly talked about how the philosophy of co-operation could help to address the loss of faith in markets and politics, as well as re-energising employees, exciting customers and helping to rebuild or build the social fabric of our country, which we all know is under pressure.
My hon. Friend the Member for West Bromwich West (Mr Bailey) rightly alluded to the considerably greater contribution made by co-ops and mutuals in America and Germany, and he also began to explore, as others did, the barriers in the UK to enabling the sector here to be as big and widespread.
My hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) rightly praised the Co-operative Group’s leadership on modern slavery, on preventing retail crime and on addressing the hunger in too many of our communities. It is good to hear the hon. Members for Argyll and Bute (Brendan O’Hara) and for Strangford (Jim Shannon) talk about the contribution of co-ops and mutuals in Scotland and Northern Ireland. I say in passing that I hope both Members and, indeed, the hon. Member for Motherwell and Wishaw are able to support my plan to turn RBS into a mutual.
My south-west Co-operative party allies, my hon. Friends the Members for Plymouth, Sutton and Devonport (Luke Pollard) and for Stroud (Dr Drew), along with my hon. Friend the Member for Oldham West and Royton (Jim McMahon), highlighted the huge potential of energy, agricultural and food co-ops.
Lastly, I welcome the contribution of my hon. Friend the Member for Redcar (Anna Turley), who I have no doubt will be a star as chair of the Co-operative party in pushing a co-op development agency. Time prevents me from referencing the huge contribution of my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), who is a current star of the co-op movement.
Question put and agreed to.
Resolved,
That this House welcomes the contribution of co-operative and mutual businesses to the UK economy; notes that they provide substantial jobs in Britain, generate significant tax revenues and involve consumers and employees in decision making; and calls on the Government to review what further steps it can take to help grow that sector.
Financial Exclusion: Access to Cash
Gareth Thomas Excerpts(6 years, 8 months ago)
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Gareth Thomas (Harrow West) (Lab/Co-op)
I congratulate my hon. Friend the Member for Feltham and Heston (Seema Malhotra) on securing this debate. I will echo one of her points, and then throw in two other issues.
First, credit unions represent a potential solution to financial exclusion, but they suffer from regulatory handicaps at the moment: they cannot offer a series of products that are clearly in demand, including car lending, insurance and credit card services, and they often cannot offer services to small businesses. It would be helpful to hear from the Minister what action the Government will take to sort out the problems in this area, which I know he is familiar with. Credit unions have been lobbying for some time for legislative changes, and to get a more sympathetic regulator. From what I can see, nobody on the FCA board has any credit union experience whatever. There was someone in the past, but there does not seem to be anyone with any awareness of credit unions, and that may explain why the FCA has interpreted the Credit Union Act 1979 in a particularly restrictive way to date.
We have to accept that there is a significant market failure in the provision of financial services, but we should also accept that the big banks still have a responsibility to help tackle the problem. They should be held to account for who they are lending to and in which districts. In that sense, they should support a campaign that the Centre for Responsible Credit is particularly vociferous in. It demands that banks publish what they lend down to postcode level in an anonymous way. Through that, we could track the areas that are genuinely being supported by the bigger players in the financial services industry and the areas with a need for charitable activity or more support for credit unions.
Lastly, if someone is looking for financial services products in media and advertising terms, they are deluged with services offered by the big banks or the payday lenders. Credit unions and other charitable and not-for-profit lenders are not given anything like the same attention. There needs to be a significant effort by Government at all levels to promote alternative sources of lending, with a particular focus on credit unions.
Oral Answers to Questions
Gareth Thomas Excerpts(6 years, 9 months ago)
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John Glen
I am grateful to my hon. Friend for that question and for his work as chair of the all-party parliamentary group on financial technology over the last four years. The regulator is the UK’s leading authority for interchange fee regulation, as he knows, and it is conducting a review into the fees that businesses face when accepting card payments. I acknowledge his concern, and we are open to hearing views on this issue, and on digital payments more broadly, as part of our call for evidence.
Gareth Thomas (Harrow West) (Lab/Co-op)
Can the Minister think of one independent trade expert who thinks FinTech in the UK will do better once Britain has left the European Union?
John Glen
As the hon. Gentleman knows, it is the Government’s policy to have an orderly exit from the EU. However, we know that FinTech has proved to be very resilient in all circumstances. We had record investment of £15 billion last year. That is testimony to the creative power of that industry, working in the financial services sector in the City.
Oral Answers to Questions
Gareth Thomas Excerpts(6 years, 11 months ago)
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John Glen
I can confirm that the national living wage will rise again this year, to £8.21. I can also tell my hon. Friend that later this year the Low Pay Commission will be set a new remit for beyond 2020. We want to be ambitious, with the ultimate objective of ending low pay in the UK while protecting employment for lower-paid workers.
Gareth Thomas (Harrow West) (Lab/Co-op)
I suspect the Minister knows that it will be more difficult to increase jobs in services businesses if we replace single market membership with a free trade agreement. Will he set out for the House what estimate he has made of the scale of the difficulty, particularly that facing financial services businesses that want to increase jobs in the current Brexit situation?
John Glen
Financial services are well protected and ready to engage on arrangements for beyond the implementation period, but the Government are not complacent in respect of the whole economy. We have made a series of interventions through our productivity fund to meet the challenges of the next generation.
Sport in the UK
Gareth Thomas Excerpts(7 years ago)
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Mims Davies
My hon. Friend tempts me on that point—he knows it is very tempting and I have recently been hoping to visit his constituency—but that is not fully down to me. However, I have made it very clear that participation, particularly of women, and broadcasting opportunities are absolutely vital, so this is on my radar.
Gareth Thomas (Harrow West) (Lab/Co-op)
Does the Minister think that in the 21st century it is a scandal that only 10% of television sport coverage is dedicated to women’s sport? If she does share that view, what will she and the Secretary of State do to get Ofcom to take action against the free-to-air broadcasters on this issue?
Mims Davies
I spoke to the Rugby Football Union just this afternoon, praising it for its women’s Six Nations opportunities and for making sure that there is a chance for women to be seen doing that sport. We also talked about the events list. If we want to inspire people, it is absolutely right that we get chance to see them on the telly or indeed that we can see them play and take part in our local communities. The Secretary of State is sitting next to me and we are very keen—he has had meetings with broadcasters and I have some coming up—that the elite are seen on our TVs and ultimately, that people feel that they can aspire to be part of sport.
Dr Rosena Allin-Khan (Tooting) (Lab)
I would like to begin by sending all our best wishes to Cardiff City FC and its fans, who sang continuously throughout the match against Bournemouth on Saturday, in memory of Emiliano Sala. There is no doubt that he will for ever remain in their thoughts.
With your permission, Mr Deputy Speaker, I would like to put on record my disgust at the situation of Hakeem al-Araibi, the footballer who fled Bahrain and appeared in court today in Thailand, facing forced extradition. The Opposition strongly urge the Government to lean on Thailand and Bahrain with maximum force to drop those charges. The United Kingdom has a proud history of assisting those fleeing political persecution, and we should not stay silent on this matter.
Supporters should always be at the heart of sport. Sport should be run in the interest of fans, not the privileged few, which is what I want to focus our debate on. In a world of ever-growing commercialisation, fans are rarely part of the decision-making process; instead, money talks. Nowhere is that more apparent than in our national game—football. The premier league has undergone a transformation in the past three decades, and without a doubt is now the best sporting league in the world, admired around the globe. Wherever we travel, whether Hollywood Boulevard or refugee camps in Bangladesh where I have worked, premier league football shirts are commonplace. It is incredibly moving to know that the UK football scene has such an incredible fan base, which we must nurture.
Fans are desperate for small changes: they want a better atmosphere in stadiums; they do not want to be at the mercy of billion-pound TV deals; they want a say in how their club is run; and they do not want their children to be bombarded with betting adverts. Those form our pledges for supporters, because we believe that fans must have a greater say in the sport that they love.
Gareth Thomas
Does my hon. Friend accept that many fans want to see premier league football clubs doing the right thing by all their staff? Does she share my view that it is highly disappointing that only four premier league clubs pay the living wage?
Dr Allin-Khan
I thank my hon. Friend for his excellent intervention, and I share his thoughts, views and feelings that everyone should be paid the wages that they deserve, particularly when they work hard, out of hours, supporting the beautiful game of football.
Returning to football supporters in stadiums, the current system simply is not working and is not safe. Standing happens frequently, sometimes in steep tiers where the seat in front barely goes above the ankles of the person who is standing behind it. When I brought together 50 supporters’ trusts for a parliamentary roundtable, they made clear what they were asking for: small sections of a stadium that can be converted to accommodate those who want to stand, allowing them to stand safely, while giving those who want to sit the enjoyment of watching a game without people standing in their way. I am a football fan, and I attend matches regularly. I know the dangers that can arise for a young family when there are people standing in front of them. Children often have to stand on their seats to watch the game.
Gareth Thomas (Harrow West) (Lab/Co-op)
It is a pleasure to follow the hon. Member for Moray (Douglas Ross). Many community organisations in England would recognise his concern about funding cuts. I come from the constituency that produced Sir Roger Bannister. Members of organisations such as Harrow Athletic Club, Metros Running Club and Jetstream Tri Club pound the paths in Harrow that Sir Roger once trod. I am only too well aware of the funding constraints facing Harrow Council and, indeed, other local authorities.
I want to concentrate the bulk of my remarks on two issues, and if time allows, I will raise one other issue at the end. The first issue is the one I raised in my intervention on the Minister, which is the coverage afforded on television and in the media more generally to women’s sport. As the father of a four-year-old daughter, I have been struck by how little coverage of women’s sport there is on mainstream television. There has been some improvement of late, and it is certainly true that there is a spike whenever a major women’s championship takes place. However, the highly commendable organisation Women in Sport, which did research into this issue, notes that only 10% of TV sports coverage is dedicated to women’s sport at the moment, compared with 7% across all media. When it looked at a number of countries, it identified that there were more hours of women’s sports coverage in the media in Romania than here in the UK.
It is not as if there is not substantial interest in seeing more coverage of women’s sport. Recently released figures show that there is a growing appetite for watching women’s sport. Indeed, research from specialist data measurement company Nielsen shows that almost 50% of people would watch more women’s sport if it were accessible on free-to-air television, while almost 40% would watch it if it were available online.
If we are to see a significant change, it will come down to Ministers holding the feet of the free-to-air broadcasters to the fire. It would be good to hear more about what the Minister is willing to do in that area. If the free-to-air broadcasters are not willing to move quickly, changes to the licence arrangements may be required to apply the appropriate financial pressure.
I share the view of my hon. Friend the Member for Tooting (Dr Allin-Khan) that reform of the premier league is overdue. There is not enough financial transparency. Our fans do not have enough power to hold owners to account. There certainly is not enough investment from premier league revenues into grassroots sport. If the Football Association has to think about selling our greatest sporting asset—Wembley stadium—to get substantial investment into grassroots sport, that is an indicator that the Premier League is not doing enough. A 10% share of the TV rights that the Premier League secures every year would have raised more than the amount of money that the Football Association hoped to generate for grassroots sport from the sale of Wembley stadium.
My hon. Friend the Member for Cardiff Central (Jo Stevens) is right to say that not only the Welsh rugby union but a whole series of premier league and championship football clubs could do a lot more to tackle the issue of paying the living wage to the poorest paid workers in sport.
Lastly, there are Indian elections coming up shortly. I raise that in a debate about sport because it would be wonderful to see an Indian premier league match hosted here in the UK. Many of my constituents would welcome the opportunity to see that just as much as American football is enjoyed at Wembley stadium.
Oral Answers to Questions
Gareth Thomas Excerpts(7 years, 1 month ago)
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Mr Hammond
That is certainly one of the levers that we can pull, and I am happy to look again at how we support home energy efficiency.
Gareth Thomas (Harrow West) (Lab/Co-op)
When will the Government bring forward proposals to allow well-funded credit unions to provide low-cost credit cards and low-cost car loans, and to invest in other social programmes such as energy co-operatives and housing schemes?
Oral Answers to Questions
Gareth Thomas Excerpts(7 years, 3 months ago)
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Mel Stride
I recognise the huge amount of work my hon. Friend has put into the issue of revitalising our high streets, and his representations to me and other colleagues. The £675 million future high streets fund will be bid for on a competitive basis through local authorities, so it is very important that all Members encourage their local authorities to come forward with their bids.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Economic Secretary to the Treasury (John Glen)
As the hon. Gentleman knows, the co-operative movement is very important to our economy; we have met to discuss various aspects of its future. I am happy to meet him again to discuss the matters that he wishes to bring forward.
Oral Answers to Questions
Gareth Thomas Excerpts(7 years, 7 months ago)
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Robert Jenrick
We are investing significant funds, including £92 million to tackle congestion in the south-west and a portion of a £200 million fund for full fibre, and we are providing £40 million for small and medium-sized enterprises through the British Business Bank, which will go to Cornish small businesses.
Mr Speaker
There is a lot to be said for the London Borough of Harrow—I used to live near it myself—but it is a considerable distance from Cornwall. We will get to the hon. Gentleman in at a later point in our proceedings.
Mr Philip Hammond
That consultation was announced by the Secretary of State for Housing, Communities and Local Government. I am acutely conscious of the risks that my right hon. Friend sets out. I assure him that I have looked very carefully at the wording of the consultation and I am confident that we will not fall into the trap that he suggests. We are looking at making a three-year term the default option for private sector renting.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Economic Secretary to the Treasury (John Glen)
I held a workshop with representatives of various credit unions this week, and one with community development financial institutions last week. I have convened a working group from the financial inclusion taskforce, which will meet in September to consider urgently expanding access to credit options on better terms than the high-cost ones that exist in the market. We are doing all that we can to incentivise growth in that sector.
Capital Needs of Co-operatives
Gareth Thomas Excerpts(7 years, 9 months ago)
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Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move,
That this House has considered capital needs of co-operatives.
It is a privilege to serve under your chairmanship, Sir David. It is a particular delight to be able to talk co-operatives with the Treasury Minister twice in two days. For those of us who want the co-operative and mutual sector of our economy to double in size, fixing the difficulties that co-operatives have in accessing the capital they need to expand is critical. Co-operatives UK, the co-operative movement’s trade body, has done an excellent job in recent years of championing community shares as one way for local co-operatives to raise significant but comparatively small amounts of capital to grow. Lottery money is currently being used by Co-ops UK’s community share unit to support community shares offers, but more could be done if the Government renewed their previous interest in this area. It would be good for Ministers to explore what else they can do to encourage the further expansion of community shares.
More recently, Co-ops UK, working with retail co-op societies, has begun to explore whether fixed-term withdrawable share capital could be developed, allowing more established societies to raise patient and engaged equity finance from members and non-member investors, up to a £100,000 maximum individual shareholding limit. The Financial Conduct Authority does not always get a good press, but it has been very supportive of that work, and I hope the Minister will encourage the FCA and Co-ops UK to continue to champion that new potential source of capital for many co-operatives. The chief executive of Co-ops UK, Ed Mayo, deserves praise for his skill in getting this work so far down the road.
Other parts of the co-operatives and mutuals sector of our economy—notably building societies, friendly societies and mutual insurers—have been subject to legislative changes permitting them to raise much larger amounts of additional capital. These reforms are yet to apply to the co-operative world.
Jim Shannon (Strangford) (DUP)
I thank the hon. Gentleman for allowing me to intervene—I sought his permission to do so beforehand. Does he agree that co-operatives should be allowed to invest in social housing? It is the very essence of what a co-operative seeks to do. Benefits are involved. I gently suggest that the Minister should consider revisiting the ability of co-ops to invest capital funds directly in social housing.
Gareth Thomas
The hon. Gentleman makes an extremely good point. If he can use his not inconsiderable influence on the Minister to support what I will say, we might be able to accelerate the addressing of some of the problems co-ops face in investing in social housing. Unless co-operatives can raise additional capital, they cannot expand or develop to their true potential. At worst, they are at risk of demutualisation, as I will set out. Co-operatives do not issue shares in the same way as investor-owned companies—to do so would mean demutualising—so bigger co-operatives can face considerable difficulties raising additional capital at the level they need. Their growth inevitably is limited and their ability to compete on equal terms is reduced.
In short, legislation is needed to fix this problem—legislation that protects that unique governance model of co-operatives, but allows them to issue permanent investment shares. Such shares could allow consumer co-ops to grow by acquisition and by developing new business offers for their customer members. Football supporter-owned clubs could fund the development of new stadium facilities, grow their businesses, serve their communities and consolidate their income streams. Co-operative-owned energy generators could attract long-term investment to build even more energy infrastructure of the sort we need in this country. A lack of capital limits a co-operative’s growth and ability to develop new services. The growth rate of that co-operative is constrained by its relative inability to add significant capital through retained earnings.
Alex Sobel (Leeds North West) (Lab/Co-op)
In my constituency, the Headingley Development Trust is doing its second community share offer. It has already managed to raise £232,395 from individuals—I declare an interest as an investor in that share scheme. That money is being matched by £100,000 from the community shares booster programme from Co-ops UK, Locality and Power to Change. The trust can have only £100,000 because of the cap. Energy, community facilities and social care can all be aided by lifting the cap.
Gareth Thomas
My hon. Friend raises a good example of the difficulties that co-operatives face. I pay tribute to his work championing the co-operative he mentioned. He also underlined my point about the good work that Co-ops UK has done in championing community shares. His fundamental point is absolutely spot on: there is a limit to the amount of capital that co-operatives can raise because they do not have the instruments available to them that are available to many of the non-co-operative businesses that operate in our economy.
Like all businesses, co-operatives need to be able to benefit from the economies of scale that are often available only by growing their businesses. They need to gather sufficient capital to serve their members well, to extend services to new members and to expand their services. Without new capital, many co-operatives could be driven into inappropriate corporate forms through demutualisation. Many of us in the co-operative movement can think of many examples where that has already happened. If co-operatives convert to other corporate forms, consumer choice in our economy is reduced and large numbers of consumers would no longer have non-listed, member-owned options in the marketplace. That reduces competitive pressure from the operation of different business models in the same market and adds to systemic risk to the economy.
There is inevitably a limit to the amount of debt that can or should be raised by any business. Mutual shares would present an opportunity for small mutuals to raise funds that they may not be able to raise otherwise, and for larger co-operatives to raise funds that subordinated debt does not provide.
Additional capital helps in a number of ways. It could be used in tactical acquisitions, which would help businesses’ competitiveness. They could also look at local infrastructure development potential. There are a number of examples overseas of similar co-operative share offerings. Examples from Canada, the Netherlands and across the European Union show how mutuals can enlist their members in raising capital through the issue of new deferred shares. In summary, the benefits offered provide evidence that Government support for such a Bill would create a viable new opportunity for mutuals to attract new capital and deliver positive outcomes for mutuals and consumers.
Currently, co-operatives largely have to generate capital for growth internally. They have no shares to sell and hence no access to equity markets. Ongoing capital in co-operatives consists of retained earnings and bank borrowing, with some smaller co-ops also raising withdrawable share capital. The lack of access to reliable capital can be a serious limiting factor on the growth and development of consumer mutuals. How these businesses are constructed means that the introduction of external capital without additional safeguards, such as limits on voting rights and distributions, would water down the mutual purpose of the organisation. The International Co-operative Alliance said that co-operative capital needs to offer
“a financial proposition which provides a return, but without destroying co-operative identity; and which enables people to access their funds when they need them. It also means exploring wider options for access to capital outside traditional membership, but without compromising on member control”.
Consolidation between mutual businesses has been the short-term response to pressure in the past. That has created a small number of firms of critical size that are better able to compete in their markets. Without access to new capital, however, organic growth has remained a difficult challenge. In staying true to their business purpose, customer mutuals are therefore limited by their options to access capital for growth. Some external capital instruments do exist in mutuals. In building societies, more than a billion pounds of deferred shares have been issued. Nationwide building society and Cambridge building society have issued core capital deferred shares. That new capital instrument is designed for mutual building societies and enables them to raise common equity tier 1 capital to supplement retained earnings and diversify their capital base.
The Government supported legislation for mutual insurers and friendly societies to issue deferred shares in 2015, although I note that the restrictive position of Her Majesty’s Revenue and Customs has prevented its full implementation and the relevant orders from being laid before the House. It would be good hear whether the Minister can unlock that particular blockage.
The mechanisms for funding co-operatives are more restricted than those for companies. It is not possible for co-operatives to have equity share capital, as understood in the company law context, because equity ownership is incompatible with the co-operative principles and would therefore be prima facie unregistrable. It is also not possible for societies for the benefit of the community because distributions of income and capital are not permitted.
Co-op societies, like building societies, were historically funded by their member customers, who were required to subscribe a minimum amount of share capital in order to be afforded full membership rights. That might be built up over a period of time, including by leaving undrawn dividends. Subject to the minimum capital requirements, therefore, members were permitted to withdraw funds from their account, and share capital was typically withdrawable. One of the consequences of that was that members’ share capital remained static in value. Although it was risk capital in the sense that it could be lost on insolvency in paying debts owed to creditors, it did not give members an undivided share in the value of the underlying business.
While the co-operative carried on trading, members therefore had no expectation of any entitlement to more than the repayment of their original capital. Their real interest was in the continuity of the existence of their society, providing goods and services to meet their needs. As a direct result of that approach to funding and ownership, any undistributed surplus was retained as reserves and shown as such in the accounts, and although such reserves constituted members’ funds for accounting purposes while the society remained a going concern, they did not belong in a traditional ownership sense to the members. They were more like assets currently being held by the body of members, almost as trustees for the purposes of the society.
An appropriate and sustainable basis of funding is a prerequisite for any business if it is to start up and survive, and the requirements for funding are likely to change or evolve over the life of the business. The restrictions in relation to the funding of co-operatives, which are created by legislation, are therefore fundamental to the future use of the co-operative form, and to the future viability of co-operatives.
I do not expect the Minister to give a guarantee of support today for the new form of investment capital for co-operatives, but I hope he will take time to reflect. Although I appreciate he has committed to meet me on another issue, perhaps he will be willing to meet me with Mutuo, the think-tank in the co-operative world, which has been developing this instrument, and which supported Lord Naseby when he introduced similar measures in 2015 which, as I said, are currently held up as a result of the unfortunate attitude of HMRC.
Another new type of raising capital that I want to put on the table comes from Italy. Worker co-operatives can play a significant part in rejuvenating firms that would otherwise close in places where there is a supportive policy and business infrastructure to facilitate that. It can act as an essential component of a progressive employment policy. Perhaps the best example of this is the so-called Marcora law from Italy, where conversions take place as negotiated employee buy-outs between workers, the exiting owners, the co-operative sector, the nearby local authorities, and bankruptcy courts. Under a legal framework—the Marcora law—an infrastructure of support has been created to assist the worker buy-out of firms. State funding that would otherwise be spent on unemployment benefits is used to finance the new co-operatives. It has been remarkably efficient for the Italian taxpayer. It is estimated that that investment has safeguarded nearly 14,000 jobs in 270 businesses and generated an economic return for the Italian state of almost seven times the capital invested.
The Italian method of creating staff buy-outs is essentially a negotiated conversion and business restructuring mechanism, with a unique set of supportive policies and a financing structure facilitated by a collaborative approach between staff, the co-op sector and the Government. Some resources are provided by the Italian state Treasury. Again, I do not expect the Minister to commit to this measure today, but in due course it would be good to hear his reflections on that example.
Perhaps on another occasion it would be good hear what further steps the Minister will take to try to encourage the expansion of the credit union sector, where capital remains a significant issue. The lack of resources for marketing is probably one of the biggest things holding back that sector’s development.