Co-operatives, Mutuals and Friendly Societies Bill

Lord Naseby Excerpts

2nd reading
Friday 24th March 2023 Lords Chamber

[Lord Naseby (Con)]

My Lords, I rise to support the Bill and congratulate all those who have been involved in its passage thus far. Mutuals have been part of my political life ever since I got involved in politics: I am member of the Co-op and bank with the Co-op, the NFU looks after my woodlands, and I remain actively involved in other aspects.

I had the privilege of being chairman of the Tunbridge Wells Equitable Friendly Society from 1998 to 2005, along with a man called David White. He and I created the brand of the Children’s Mutual, which was, in my judgment, the most successful unit to sell child trust funds. I am saddened that that very successful concept was replaced by the junior ISA, which did not have the same vision and excitement for young people. That is part of the history, really. I am currently one of the vice-chairmen of the All-Party Group for Mutuals.

I look particularly at Canada, where I have a brother, and at the huge success of the mutual movement there: it is growing, dominating the insurance market there, with a real mutuality of work on the ground. In a lesser sense, one sees the same in Holland and in Europe. I would like to see that happen in my country.

In today’s world, the mutual movement faces two challenges. One is how to utilise retained capital, which is addressed in the Bill, and the other is raising capital. The latter element took me into the legislative process in 2015, when I took a Bill through both Houses with the support of my noble friend on the other Bench—he is now not on the Front Bench, but nevertheless he has been hugely supportive, and I underwrite his involvement in the mutual movement.

I previously had a Bill called the Mutuals’ Redeemable and Deferred Shares Bill. That was to address the issue of raising capital. At that time, you had a situation where, of the five elements that make up the mutual world, building societies, credit unions and co-operatives had already been helped by the Chancellor at that time, but two had not: the mutual insurance companies and the friendly societies. My worry and theirs was that, if we did not do something, they would wither on the vine. Indeed, when one looks back, it was not so many years ago that the mutual insurers had about half the market; today, it is 10%, and I suspect that that is a little generous.

At any rate, that Bill was supported by Her Majesty’s Government, and I still pay tribute to the then Chancellor, Sajid Javid, who helped in taking the Bill through Parliament. We hit certain problems, particularly to do with the requirements of Solvency II and whether the capital raised would be eligible for tier 1 capital, which was absolutely vital for development capital. However, after much negotiating, we got to a situation where we had to remove one element, the redeemable element, because, basically, an election was coming.

When we got that on the statute book, we thought we had got a long way and that it was all going to happen smoothly. Lo and behold, it never happened, because it required a statutory instrument to implement the Act, and that was not made due to concerns at the time that issuing these shares would alter the tax liability of mutuals. So the Bill is still there as an Act. It is still sitting there and I hope something will happen about it, but I will come back to that in a second.

I now turn to the current bill. It is not a huge Bill; it is very much a focused Bill, and that is to its great credit. I praise Sir Mark Hendrick and others who have taken it thus far. The interesting part of what has been happening in the team that has been working on it is the letter—I cannot see the date on it—from Minister Andrew Griffith MP to Gareth Thomas MP, who is chairman of the All-Party Parliamentary Group for Mutuals. The last paragraph is absolutely key. It says:

“Going forward, the Government aims to develop a modern and supportive business environment to set mutuals up for future growth and success and is currently exploring the options for reviews of key legislation underpinning the sector. This will allow the appropriate time and space for engagement with mutuals and regulators to ensure there is consensus on the best way forward.”


That is a very exciting prospect.

I see my noble friend on the Front Bench. It has been a privilege to work with her on the Bill we are doing in the House at the moment on financial matters.

We also have a practical problem. I think every one of us has probably shopped at John Lewis. It is interesting that the chairman, Dame Sharon White, was deeply involved in the early stages of the child trust fund, so she must feel quite strongly that somehow she needs to find a means of recapitalising John Lewis. That is another challenge. Speaking personally, I think John Lewis is part of life in the United Kingdom, and I would like to see that organisation prosper. I think that should basically be at the back of His Majesty’s Government’s review of this whole area.

I read economics at Cambridge—I found a subject I was reasonably good at, having not been terribly academic at school. I was reminded, as it was quoted in the papers recently, that John Stuart Mill hoped that employee ownership would end the standing feud between capital and labour. That is the driving element that I feel as well. I will give this Bill all possible support and do anything I can to help it move forward, and anything I can to help His Majesty’s Government as they look at the broader aspect mentioned in the letter I quoted. I just remind my friend the noble Lord, Lord Kennedy, that when he supported my Bill he said it was the second time. This time it will be third time lucky, I hope. With that, I offer myself as a servant to do anything I can to put this Bill on the statute book.