Co-operatives, Mutuals and Friendly Societies Bill

Jo Gideon Excerpts

3rd reading
Friday 24th February 2023 Commons Chamber

[Jo Gideon (Stoke-on-Trent Central) (Con)]

I, too, commend the hon. Member for Preston (Sir Mark Hendrick) on his strong advocacy for co-operatives and mutuals, and on the progress that he has made with the legislation. I am delighted that the Bill has been supported by hon. Members on both sides of the House at all stages.

Mutuals and co-operative societies are distinctive organisations in that they are owned by and run for the benefit of their members. Whether employees, suppliers or the community and consumers that it serves, those who are actively involved in the business control decisions, rather than outside investors. Mutual ownership therefore helps to ensure that decisions are focused on the long-term sustainability of the business. Profits are not distributed among members but returned to the community, so such organisations provide a legal structure designed for social enterprise.

Indeed, co-operatives spring from local communities. They are bottom-up, grassroots organisations that are set up to provide goods and services for those who need them. Clearly, mutuals play a hugely important role in our local areas for education, engagement, charity and, fundamentally, the financial services that they offer. They provide a way for communities to come together to solve problems.

I have always been a strong advocate for the social enterprise movement in this country. Social businesses, including those that are community owned, are responsible for job creation in areas of deprivation—jobs that last and provide the crucial spirit of enterprise and innovation that our left-behind areas need. That makes the growth of co-operatives in the UK an integral part of the levelling-up agenda.

In 2021, co-operatives were five times less likely to permanently close than other UK businesses, and they were significantly more likely to tackle other important projects, such as decarbonisation, technology and the current cost of living challenges. Co-operatives have been incredibly resilient in the face of the pandemic, with the sector growing by an impressive £1.1 billion in 2020, despite the economic challenges resulting from national lockdowns.

On Second Reading, it was good to hear hon. Members acknowledging the start of the co-operative movement, so it would be remiss of me not to mention its history in Stoke-on-Trent. One of the earliest co-op traders was a potter called James Colclough, who opened Stoke-on-Trent’s first co-operative store, and the Birsle Co-operative Society was founded in north Stoke-on-Trent in 1901. It became one of the most successful mutual commercial enterprises that Stoke-on-Trent has known.

Originally, there were 200 members who each subscribed four shillings and promised to make those four shillings into £1 as soon as convenient. In the first balance sheet issued by the society in 1901, the amount of share capital plus interest was £175. By 1932, the amount of share, loan and bank capital of the Burslem and District Industrial Co-operative Society was £1,209, and it had 50,000 members and 112 shops.

This Bill is important to ensure that co-operatives and mutuals continue in the modern era. The increase in legal certainty that wealth built up over time will not be squandered by future members for short-term personal gain will encourage confidence, reassuring investors. This legislation is needed to help UK mutuals preserve their legacy for the purpose for which they were intended, which is making sure that additional available capital surplus can then be re-invested in economically, environmentally and socially productive enterprises. We should not allow capital to be blown at the whim of speculators and investors. It is important to lock capital in the places where it belongs for the benefit of the people it was invested for.

In the UK, the sector is relatively small compared with some European economies. Less than 1% of businesses in the UK are co-operatives. Germany’s co-operative economy is four times larger than the UK’s, and France’s is six times larger. Clearly there is some work to be done here, but this Bill provides an opportunity to rediscover and promote the co-operative model. I do not know if Members have seen the film “Bank of Dave”, but it is the very inspirational story of a gentleman from Burnley who set up a bank for the benefit of the community. I have been campaigning for this sort of thing in Stoke-on-Trent, because I think that a financial model enabling people to lend to each other, but also for them and community charities to benefit from the profits, is one we should all be looking at.

I just want to thank the hon. Member for Preston for giving us the opportunity to discuss these issues today. There is clearly a significant appetite for reforms of the mutuals sector, and I look forward to hearing about its success following his Bill.