Oral Answers to Questions

Debate between Gareth Thomas and Kerry McCarthy

Tuesday 22nd September 2020 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

What assessment he has made of the effect of the backlog of cases in HM Courts and Tribunals Service on access to justice.

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

What assessment he has made of the effect of the backlog of cases in HM Courts and Tribunals Service on access to justice.

Co-operative and Mutual Businesses

Debate between Gareth Thomas and Kerry McCarthy

Thursday 27th June 2019 Commons Chamber

[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.

The Economy

Debate between Gareth Thomas and Kerry McCarthy

Wednesday 26th November 2014 Commons Chamber

[Kerry McCarthy]

I agree entirely with my hon. Friend. Nearly 20% of working people in Bristol East earn less than the living wage. According to the Joseph Rowntree Trust, two thirds of people who moved from employment into work in the last year are paid below the living wage. That is why in Bristol we have been running a living wage campaign. We have finally managed to persuade the mayor of Bristol to introduce that at the council level, and we want to encourage the organisations that do business with the council, with procurement contracts and so on, also to do that, and for the private sector to follow suit. That is incredibly important.

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

My hon. Friend is making an important speech about Bristol, and I was interested in her comments on the living wage. Will she accept that the living wage is equally important for seats such as mine in outer London, where those who travel into central London have recently been hit by a 38% increase in the cost of the tube as a result of the Mayor of London’s recent decision?

[Kerry McCarthy]

I entirely agree with my hon. Friend. I will come in a moment to some of the living costs that are hitting people’s pockets hard. In Bristol, First Bus announced this month that the price of a day rider ticket would increase by 10%. That may not seem a huge amount, but when people are squeezed to the last penny and are struggling to afford to go to work and for work to pay rather than being on benefits, such transport fare rises make a huge difference to their weekly outgoings. That is another part of the jigsaw puzzle of how people are struggling to make ends meet.

My hon. Friend the Member for Coventry South (Mr Cunningham) mentioned zero-hours contracts, and constituents have come to see me recently about the uncertainty in which those place them. Usually people would be added to the payroll in the middle of the month and paid at the end of the month, but if people do not know until the end of the month how many hours will have been worked, they end up being paid a month in arrears. I had a woman come to see me the other day who had started work in September just too late to get on the payroll for that month. She could not be paid for the full month in October because she would not know until the end of the month how much she had worked, so she would not be paid until the end of November. Not only did she have to cover the period without an income, but it was impossible to plan ahead. It was impossible to claim in-work housing benefit and difficult to asses what she was entitled to in child care tax credits and other tax credits. It meant that she had to employ a childminder without knowing whether she needed that or could look after her child herself.

My hon. Friend mentioned season tickets. How does someone know whether it is worth buying a monthly season ticket to travel into work without knowing how many hours they will be working? All these things add up to make life incredibly difficult for people on zero-hours contracts. It is exploitation and it has to stop. Workers are being underpaid and underemployed. They are being treated as just another inanimate resource rather than the human beings that they are.

Some 1.4 million contracts do not guarantee a minimum number of hours and 1.4 million adults are in part-time work because they cannot find full-time work. In the last year, not a single employer has been prosecuted for paying below the minimum wage. The last successful prosecution was in February 2013, which was only the second prosecution under the coalition Government. Last year, the TUC estimated that 350,000 workers were paid less than the minimum wage. Again, that has to stop. These laws are there to protect workers and to ensure that work pays, and they are simply not being enforced.

The Joseph Rowntree report

“highlights the way the housing market has had a negative impact on people in poverty. There is not enough social housing”—

as we all know—

“which means more people in poverty are living with insecure tenancies in the private rented sector. The number of private landlord repossessions is now higher than the number of mortgage repossessions.”

The number of working people claiming housing benefit is rising and the amount that they need to claim is increasing too. Last year, the south-west of England saw the biggest increases in rent, with a rise of nearly 5%. Bristol is second only to London in yearly house price growth, with average prices in our city increasing by more than 13% last year. On top of that are the increases in transport costs. Between 2010 and 2013 energy prices for households rose by 37%.

Finally, there is food poverty, which Madam Deputy Speaker will know is an issue dear to my heart. In the UK, more than 4 million people are affected by food poverty. UK food prices increased by 43% in the eight years to July 2013. We all know that more people are having to use food banks. According to the Oxfam and Church Action on Poverty report “Below the breadline”, the three main food aid providers gave more than 20 million meals in 2013-14, a 54% increase on the year before. Problems with the social security system, such as delays and sanctions, continue to be the biggest overall trigger for food bank use. About 45% of people who use the service do so because of problems with the benefit system. Despite repeated questioning of various Ministers, including even the Prime Minister, the Government refuse to accept that it is the failings of their own welfare system that are driving people to the food banks in poverty.

Another emerging trend is the 22% of Trussell Trust food bank users referred because of low income—compared with last year 51,000 more people were referred owing to low income. Again, this is in-work poverty. These are not people who are playing the system, who, as one Minister said, are making use of the food banks simply because they are there so that they can spend their money on beer and bingo. These people are doing their best to try to get by in work but simply cannot afford to feed their families without resorting to food banks.

My hon. Friend the Member for Nottingham East (Chris Leslie) has outlined some of the measures that Labour would take in terms of taxation and trying to raise incomes to address some of these problems, but above all it is a question of priorities. The Government have completely the wrong priorities—giving tax cuts to millionaires rather than tax cuts and support for people at the lower end of the income scale who are the ones who really need it. Cutting the 50p tax rate did nothing to help the people in my constituency who are struggling to get by. I urge the Government to rethink this because their priorities at this time are simply wrong.