Co-operatives

Debate between Stella Creasy and Jonathan Reynolds

Wednesday 3rd July 2013 Westminster Hall

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute to my hon. Friend the Member for Islwyn (Chris Evans) for securing this important debate. In his speech, he not only highlighted some of the best practice in co-operatives but made a strong argument about how many current public policy problems in this country could be addressed by taking a more co-operative approach. In particular, I thank him for mentioning co-op housing and my Co-operative Housing Tenure Bill, which I believe has huge potential to address some of the housing challenges that this country faces.

It is with great pride that I sit in Parliament as a Labour and Co-operative MP. I am fortunate to represent a constituency steeped in the co-operative tradition. The first co-operative store in my constituency was opened in Mossley in 1856, and to this day there is a Co-op store on the same site. The co-op movement was active in parts of my area well before the Labour party even existed, and my constituency, of course, is only a stone’s throw away from the co-operative movement’s spiritual home in Rochdale. It would be wrong to claim that the values championed by the co-op movement—democracy, openness, trust and social responsibility—are characteristic only of areas such as mine or south Wales, because the modern co-op movement is nationwide, but it is not mere coincidence that we started it.

I cite these things not just as an amusing historical preamble to my speech, but because it is extremely important, particularly for those of us on this side of the political divide, to remember and stay true to the political tradition that the co-operative movement represents. For many reasons, not least the success of the 1945 Labour Government in creating national institutions such as the NHS, which celebrates its 65th birthday this week, the Labour party in modern times has prioritised a statist, top-down view of politics, but we should never forget to combine that with the earlier tradition of bottom-up, grass-roots and community campaigning.

It is interesting that in recent years, through the work of the co-operative movement and through things such as community organising and living wage campaigns, we have begun to get back in touch with that tradition, which is good. We should recognise that at times, domination by the state can be as detrimental as domination by the market. The co-operative movement is a fine example of something that has always been balanced between the two.

We are obviously still in a difficult economic situation, facilitated by the failure of the Government’s plans to get things going at any level. I am of the firm belief that co-operatives are vital to the economy of this country, not just for their economic value but for their social benefits. More than 15 million people in the UK—nearly a quarter of the population—are members of a co-operative. That is no small number. It is a sign to all of us that there is more to be explored in co-operatives and the value that they can bring.

I want to discuss how co-ops can have a positive impact on our economy and the social fabric of our communities. It is timely that in a week when the Government have organised a summit with the heads of payday loan companies, this debate gives us the opportunity to showcase the value of credit unions, which offer a brilliant example of how co-operative values can have a positive effect on local economies.

More than 1 million people in the UK use credit unions. Research by Salford university on behalf of Leeds city council found that for every £1 the council invested in credit unions, there was a £10 benefit in retained income for the local economy. Manchester credit union, which serves people in my constituency, can trace part of its roots to the Hattersley area, which I represent. Today it has more than 10,000 members and lends out more than £4 million a year. In a few weeks, Cash Box, a local credit union in Hyde, will open its first high street branch, which we should celebrate.

Yet credit unions account for only a small proportion of the total consumer lending market. Given that their average annual percentage rate is 26.8%, we must ask why people are attracted to payday loan companies that get away with APRs of more than 4,000%. Something has to change. Many of us believe that payday lending in this country is out of control.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I apologise for not being able to be here at the start of this debate. My hon. Friend is making a strong case about the importance of credit unions. Does he also agree that one thing that credit unions bring to the debate about the cost of living crisis in this country is how they help members, not just by giving loans but by giving debt advice? That is precisely the value of a co-operative mindset: to think in the long term and to think about the whole person and what they need from services. That is why credit unions are so important.

[Jonathan Reynolds]

I agree completely. We all pay tribute to my hon. Friend for her tremendous campaign against payday lending. My hon. Friend the Member for Islwyn discussed trust and the wider benefits to a person, rather than the exploitative relationship that many of us believe payday lenders have. My hon. Friend the Member for Walthamstow (Stella Creasy) is absolutely right to address the wider benefits of that approach for people and their communities.

I recognise that the Government have relaxed the rules on how credit unions can operate, allowing them to reach out to more of the community, but to echo the point made previously, I regret the Government’s refusal to accept the Co-operative party’s amendments to the Financial Services Bill, which would have helped promote mutuals and create a more competitive financial services industry. In a climate where people feel increasingly detached from the banks, credit unions based on co-operative principles help local people deal with everyday issues and make a positive impact on the local economy.

My second point involves the relatively new idea of co-operative councils and how they may be able to offer a new, innovative way of procuring local services to meet the needs of local communities in difficult financial circumstances. I read the Select Committee on Communities and Local Government report from 2012, “Mutual and Co-operative Approaches to Delivering Local Services”, particularly the evidence given by Lord Glasman, who said that giving users a stake in public services ensures that they feel that they are at the heart of local government, and that making people feel involved strengthens their relationship with their local economy.

Co-operative and mutual models help councils facilitate long-term jobs and investment and help ensure that long-term social benefit is prioritised over short-term gain. It is no coincidence that a majority of all the councils that have signed up to the co-operative council network already pay their staff a living wage, which is clearly of huge benefit to local economies.

The question that we should ask in debates such as this is how the Government can help organisations and local authorities deliver economic growth by building on best practice within the co-operative movement. One of the key conclusions of “Mutual and Co-operative Approaches to Delivering Local Services” is:

“The Government has a choice, if it wants more mutuals and co-operatives to develop: it must take action to provide support.”

Although a recent Co-ops UK report shows that the co-operative movement in this country is still growing, we would all say that the Government could do more to encourage that development. The Government talk a good game on mutuals, but in reality, many of their proposals for public services are joint venture spin-offs with private partners. Those may have merit, but they should not use the language and clothes of the co-operative movement unless that is truly what they are. The example often given is the behavioural unit in the Cabinet Office known as the nudge unit. It is often cited as a flagship Government mutual, but most of us, as well as most people in Co-ops UK and the Co-operative party, would barely consider it a mutual at all.

As we are in the middle of co-operatives fortnight, this debate is an excellent opportunity to promote the benefits of co-ops. I believe that they have a part to play in the economy of every society, from credit unions that lend to families to the running of core services and bigger ideas such as co-operative housing, which has been mentioned. The positive economic and social impact of co-ops should be celebrated, particularly after the financial crisis, when people are seeking to ensure that we never again get ourselves into the situation that we got into in 2008. I believe that all Members should do whatever they can to advance and promote the cause of co-operatives.