Co-operatives, Mutuals and Friendly Societies Bill (First sitting)

Peter Bottomley Excerpts

Committee stage
Wednesday 30th November 2022 Public Bill Committees

[Richard Graham]

Sure, but what I am trying to ensure is that that option is not ruled out where one small co-op could benefit from merging with a couple of others to remain mutual, rather than demutualising. That is the key point.

We have seen that in a slightly different way with credit unions. I helped merge a small credit union in Gloucester with a number of others in Gloucestershire to create one single Gloucestershire Credit Union. That enabled it to survive for another decade, although, sadly, it has now failed.

The key thing is that there are moments when even a mutual can benefit from additional scale by merging with other mutuals—specifically so that it does not need to demutualise. That is really my point, and I am sure the Minister will be able to shed light on the issue.

[Sir Peter Bottomley (Worthing West) (Con)]

I will raise a few points, but I am happy for the Minister to write to me afterwards, rather than trying to respond to them straightaway.

One question is whether the Bill applies to credit unions. I doubt it does directly, but I would say in parenthesis that the Minister ought to consider referring to the Law Commission the law on credit unions, to see whether there are ways in which we can fill the gap between credit unions, whose interest rates are strictly controlled, and other private lenders, whose rates can be enormously high. It seems to me that giving credit unions freedom to do more of their work more effectively and for a greater number of people is important. I also believe that it should be possible to confirm whether the law could be such that people could give money to credit unions as though they were giving to a charity.

Some of the questions that have been raised today are actually dealt with by the terms of friendly societies, co-ops and the like. They can transfer their assets to another one, if they fail. That is not covered in this Bill; this Bill gives permissive power, as the hon. Member for Preston told us. It does not deal with the challenge that it is possible to persuade members of a co-operative, mutual or friendly society to change their regulations to allow distribution—I think that is still within scope—but it means more difficulty.

In the LV= situation, members were asked to approve something; they could also be asked to change the rules. As far as I understand it, if a society, mutual or co-op uses this Bill when it is enacted, its provisions can be undone by the members. They are not fixed in concrete forever, but it means that those who intend to preserve the assets and stop them being given out can put a first roadblock in the way.