Budget Resolutions

Stephen Doughty Excerpts

Tuesday 12th March 2024 Commons Chamber

[Laura Trott]

I will say to the hon. Gentleman that since 2010 we have grown faster than France, Germany and Italy, and we are predicted to do the same in the next five years.

It is no coincidence that between 2010 and 2019 the number of violent crimes and burglaries halved. Our reading standards in schools, which were previously behind those of France, Germany and Sweden, raced ahead. The latest technologies, such as the NHS app and virtual wards, are now used by patients across the country.

However, this is not a “once and done” situation. The effect of the pandemic on productivity was significant. Moreover, as Lord Maude has put it, the focus on productivity must

“never end. This will always be a work in progress. There never can be a steady state… The public, for whom public services exist, deserve nothing less.”

That is why this Conservative Chancellor is willing to invest once again to drive change.

The head of the National Audit Office has said that if we can improve public sector productivity, the size of the prize is tens of billions of pounds, and the Office for Budget Responsibility estimates that raising public sector productivity by 5% would be the equivalent of about £20 billion extra in funding.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

While the Chief Secretary is on the subject of the OBR, may I ask her whether the OBR is correct in saying that the target public sector debt measure is forecast to increase, or whether her own personal calculations continue to suggest that debt will fall?

[Laura Trott]

I am sure that the hon. Gentleman will see in the OBR figures that public sector net debt overall is expected to fall, and public sector net debt excluding the Bank of England is due to fall in the fourth and fifth year of the forecast. [Interruption.] No, that is just the overall public sector net debt figure.

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[Darren Jones]

Two short answers: first, we are not sticking to the Conservatives’ spending plans and, secondly, the OBR forecasts Conservative party failure, not the success that the Labour party will bring to this country and the economy.

I know that Conservative Ministers do not like to think about their fourth Prime Minister since 2010, who only recently crashed the economy off the back of unfunded tax cuts, sending mortgage bills rocketing, but they really do not need to look back far in history to understand the risks of a £46 billion unfunded tax cut promise. They do not even need to ask their predecessors about the consequences of such risky behaviour, because the British people are still paying the price today for their economic vandalism through higher mortgage and rent costs every single month. Conservative Ministers need to look at themselves in the mirror and ask whether they have learned anything from the last 14 years in office. I have given just a few examples of confusion, delusion, denial and risk-taking with the economy, which prove that the biggest threat to the economy is the Conservative party.

[Stephen Doughty]

On the subject of confusion and the unfunded £46 billion commitment on national insurance contributions, my hon. Friend will note that the Chief Secretary to the Treasury would not give clarity on the date for her Government’s promise, yet the Chancellor said in an email to Conservative party members that he wanted to make progress on that promise “in the next Parliament”. Other members of the Government are saying completely different things. Is this not an example of the chaos that the Conservatives are in?

[Darren Jones]

That is yet more evidence of the Conservatives’ ill discipline. Last time, they wanted to disregard the Office for Budget Responsibility, and announced unfunded tax cuts; now the former Chancellor supports these new, unfunded tax cuts, and yet again the Government are not giving the OBR the information that it needs to make policy forecasts.

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[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The speeches delivered from the Government Benches today have been a metaphor for this Government: they are out of ideas, out of time and out of touch. That says it all. Anyone listening to the Chief Secretary to the Treasury would have thought that everything in the country was rosy and we were in some sort of sunlit uplands. The experiences of my constituents in Cardiff South and Penarth are anything but rosy. Individual constituents who come to my surgeries are struggling to make ends meet because of sharp increases in their mortgages or rent, stagnant or declining wages, and the high price of food, fuel and the everyday goods and services they need.

Those struggles are the reason we see such amazing community responses. I spent last Friday at Splott Community Volunteers in my constituency, who provide warm hubs and a series of other advice and support services. Demand for those services is through the roof because of the experiences people are having in the economy and in society. I also visited the Salvation Army last Friday, which is doing fantastic work on housing and homelessness in my constituency. Why are people finding themselves homeless or in a housing crisis? Because of the shambolic record of 14 years of this Conservative Government.

I recently met businesses of all shapes and sizes in Grangetown, including the small and medium-sized enterprises that are the lifeblood of our economy. They told me that they want to see certainty, leadership and a solid environment for investment, but they have had exactly the opposite over the past 14 years. We have seen chaos and a revolving door of Ministers. Businesses have not had the confidence to make the investments they want to make to generate jobs and opportunities in our communities. They are coping with high inflation, which means their cost base has gone up substantially, so their ability to grow and generate more jobs and opportunities is limited.

What have we seen? We have seen debt up, taxes up, interest rates up and inflation up, yet we have seen the economy stagnating and now in recession. That is on top of the austerity and cuts in our public services and, indeed, to Wales, leaving us unable to invest what we want in our NHS, our education and our police, which has had a huge impact on the ability of the police to deal with antisocial behaviour and crime. Thanks to the Welsh Government, we have seen investment in police community support officers, in new schools and in new health facilities, but think of how much more we could do if we had a Labour Government in Westminster working with a Labour Government in Wales and our Labour councils making a difference.

The Chancellor’s latest Budget simply lifted the lid on 14 years of Tory economic failure. When we lifted that lid, there was no rabbit, there was no hope. Many of us were left asking, “Is that it? Is that all they have to offer?” Again, the Conservative Benches are a reflection of that today. Instead, we saw more unfunded tax cuts —we all know where that got us last time. We have heard today of the £46 billion-worth of unfunded national insurance cuts, and also of the total chaos in the Government’s messaging about when those would come in—another stark reflection of where we are. Yet again, working people are left to pay the price of an underperforming Britain, with a high-tax, low-growth economy. Let us consider just how different things could be.

I am very clear about what Cardiff South and Penarth needs from what my constituents tell me. We need investment in our green transition. Places such as Sully and Dinas Powys have already seen the impact of flooding and climate change. A response is needed to that not only locally, but nationally and internationally. That is exactly why I am proud of the Labour plan to invest in our green transition, in green steel, in renewables, in nuclear, and of course in the high technology and green solutions that are being generated by our fantastic higher education sector. I am very proud of our university in Cardiff, which is doing fantastic work on this and putting some of those green ideas into action for our country.

I want to see support for our creative industries. We have seen huge investment by the BBC and other film and TV production firms locally, such as Netflix, but in other areas we are seeing that market contracting, which is having a big knock-on effect on smaller creatives and those who are commissioned to work on those bigger productions, so we need to invest in our creative economy.

Thirdly, we need to see crucial infrastructure investment. I have argued time and again for investment in the south Wales main line. We are seeing a really bad performance on the Great Western Railway. We all want to see St Mellons Parkway station built on the edge of Cardiff—my hon. Friend and neighbour the Member for Newport West (Ruth Jones), is nodding in agreement—but we will need to invest in those relief lines and that critical infrastructure to make sure that we can deliver growth through our infrastructure investments.

We need to see a proper reflection of Cardiff’s status as a capital city in the funding for our police. I raised this issue recently with the Minister of State for Crime, Policing and Fire. It is good to know that he is now talking with our police and crime commissioner and chief constables about this issue. We need to see that investment to reflect the challenges that we face as a capital city.

Crucially, we need to see certainty for businesses to be able to invest. We have seen some great success stories recently: Rolls-Royce coming into invest and our legal and financial services sector in Cardiff doing very well, but we also need an industrial strategy, tax certainty and a climate of leadership and ambition for this country, which we simply have not seen from the Government or in this Budget.

Commonwealth Parliamentary Association and International Committee of the Red Cross (Status) Bill (Money)

Stephen Doughty Excerpts

Money resolution
Wednesday 28th February 2024 Commons Chamber

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I rise to make a few brief comments about this money resolution. Let me begin by thanking all those who work with the Commonwealth Parliamentary Association. I know that I am not the only Member who has benefited from its expertise, experience, networks, contacts and global stature, which are recognised and valued both here in the UK and across the Commonwealth. I have relied on its support on many occasions. I have recently visited Ghana and Canada with the CPA, and I have worked closely with our overseas territories, Crown dependencies and other members of the Commonwealth family. It is crucial that we build those links and strengthen them. At a time of deep global uncertainty, our relation- ships through the Commonwealth, and indeed inter-parliamentary relationships, are crucial.

When it comes to both CPA UK and, as this money resolution applies to, the CPA as a whole, the secretariat, which is hosted here, plays a critical role; and I pay tribute to the former Member of this House, our friend Stephen Twigg, who is the Secretary-General. I also commend the work of the International Committee of the Red Cross, which obviously plays a critical role globally, working tirelessly and meticulously to support civilians working in conflict and war zones around the world, and to uphold key responsibilities in relation to the laws of war and humanitarian law. As we know, the ICRC has played a critical role for many decades.

On the substance of today’s money resolution, the Opposition fully support these moves. As I understand it—perhaps the Minister will correct me—the money resolution does not lead to any substantial expenditure. On the privileges and immunities that will be granted by the Bill, any expenditure will be covered in relation to the work that already goes on around similar international organisations. It is worth referencing that the CPA has experienced significant issues, with concerns being raised about whether it will receive these important privileges and immunities. Questions have been raised, including at recent meetings of the CPA, so it is important that we get on with this as soon as possible, and give it the support it needs in terms of a change of status. Otherwise, there could be a risk, for example, of the CPA secretariat being moved outside the UK, which would be a huge retrograde step.

It is critical that we give the ICRC the specific privileges and immunities that other states grant, so that its confidential and neutral, important work can be carried out. I have heard from both the CPA and the ICRC about these matters, and how important this small but significant change in legislation is to them. Indeed, I have visited the ICRC headquarters in Geneva and listened to important developments about its work in critical zones around the world. As I said, the Opposition fully support these moves. The money resolution is an important next step. We need these changes to the status and operations of these organisations, bringing us in line with other countries and allowing the organisations to do their work. Time is of the essence, so I hope that the Government can move swiftly.

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024

Stephen Doughty Excerpts

Tuesday 6th February 2024 General Committees

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to serve under your chairpersonship, Sir Robert. I thank the Minister for setting out the regulations to the Committee.

Given the interconnected and increasingly precarious global context that we face, and the prevalence of financial impropriety as a key geopolitical dynamic, it is critical that the legislation that underpins our response to both money laundering and terrorist financing is fit for purpose. Labour has been consistent in its support for measures taken by the Government to tackle global streams of illicit finance and to respond boldly to states and other actors that seek to circumvent the rules and structures that are in place to ensure global transparency and good governance. We will not seek to divide the Committee today and we support the measures to be adopted in the statutory instrument.

We recognise the significance of the UK’s high-risk third countries list in countering money laundering, terror financing and other forms of illicit finance, and we recognise the necessity of timely and practical updates to that list and a streamlined decision-making process. We also recognise the Financial Action Task Force’s legitimacy as an authority when it comes to the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system, and, of course, the underpinning of many of the illicit activities the Minister referred to.

Providing businesses with the means to respond in real time to international findings and to highlight which jurisdictions are deemed to be high risk enables businesses to protect themselves, their employees and their customers more effectively from exposure. The regulations are therefore a common-sense step and we will support them. To elongate and delay the process could in some cases increase the risk of exposure and put businesses and affiliates in undue risk.

Will the Minister clarify in a little more detail how the change is being communicated to businesses and all those affected in order to explain how the measure works? We regularly deal with matters relating to sanctions in this place. The Treasury has a critical role in enabling companies to comply with measures such as this, yet unfortunately, when it comes to the sanctions we have debated, companies sometimes unwittingly find themselves in breach, and then voluntarily report themselves. It is critical that the Treasury communicates effectively and provides the appropriate guidance, and it is critical that we work in partnership with all those affected by measures such as these to ensure that they can comply in good time and in full.

There is a series of ongoing issues that are, unfortunately, raised regularly and, given the nature of this measure, I want to draw the Minister’s attention to a deeply concerning report in the Financial Times relating to the UK’s fight against illicit finance. It was reported at the weekend that Iran had allegedly used UK banks to covertly move money around the world as part of a sanctions-evasion scheme backed by Iranian intelligence services. The report alleged that banks

“provided accounts to British front companies secretly owned by a sanctioned Iranian petrochemicals company”,

which the United States

“accuses of raising hundreds of millions of dollars for the Iranian Revolutionary Guards Quds Force and of working with Russian intelligence agencies to raise money for Iranian proxy militias.”

Labour has regularly called for the proscription of the Islamic Revolutionary Guards Corps as a terrorist organisation, and we have raised again and again with the Government the need to work in lockstep with allies to cut off funding to hostile regimes, including Russia and Iran, that pose systemic challenges to the UK’s national security. The recent reports are deeply concerning, and I hope the Minister can set out what the Treasury and the Government as a whole are doing to respond. What conversations are being had with the financial institutions mentioned in the reports, and how will measures such as this ensure that we do not have a situation in which funds are allegedly getting into the hands of Iran or Russia, or indeed any of the other hostile states that threaten us and our allies?

Finally, while I agree with what the Minister said about streamlining processes and ensuring that they can operate in an effective way, the explanatory memorandum references a “burden on parliamentary time”; I hope that does not signal a broader intent on the part of the Government to avoid debates, scrutiny and accountability in Committees such as this. The debates that we have in this place provide an opportunity for the Opposition not only to show where there is unity in the House in taking measures such as these, but to ask important questions about both ongoing matters and the detail of regulations. I hope the Minister can assure us that the Government will not seek to truncate parliamentary scrutiny of such measures, which are often technical in nature but have significant implications for both our national security and the stability and functioning of our financial services and the economy.

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[Bim Afolami]

I thank the Committee for its broad support. Let me answer the questions that Members have put to me.

The first question was about how one practically manages the process of including countries or not. Broadly speaking, the Financial Action Task Force is the centrepiece for how most countries—all the G7 countries and many others—deal with illicit finance. We do it in such a collaborative way globally because, frankly, in the modern world we can tackle illicit finance only by working in strong, close partnership with other countries. It is quite important that we have a degree of alignment on how we do that, but we of course retain the right as a sovereign nation, as everybody in the House would agree, to individually put countries on the list if we choose to. The instrument is a common-sense measure that will make it easier and faster to do that, rather than our having to wait for gaps in parliamentary time. Recesses and various other things come up that could mean there is a critical gap and illicit finance could get through defences. That is why we are doing this.

In response to the point made by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East about writing to the House, we will deposit a notice in the Library when we have done so, so that the House is kept fully informed.

On how the change is being communicated to businesses, the Treasury has active and frequent discussions with the private sector on this and many other matters, so Members should rest assured that businesses and financial institutions are kept closely up to date with what is going on. That is in addition to the publication of an advisory notice, which will be made when any countries are or are not put on the list.

I will have to write to the hon. Member for Cardiff South and Penarth on his point about the situation in Iran. I do not want to inadvertently mislead the House in any regard—I want to be very precise in my answer—so I will write to the hon. Gentleman about his questions in that regard.

On the Crown dependencies and overseas territories, we are committed to working with the overseas territories to tackle illicit finance, and we have long engaged with them on ways in which to do that. We continue to engage with the British Virgin Islands for its ongoing mutual evaluation, and we have supported it with its evaluation process. The BVI’s mutual evaluation report will be published after the quality and consistency checks required by the Financial Action Task Force. I cannot comment any further in relation to the BVI, but more broadly we are closely working with the overseas territories and Crown dependencies to ensure that they satisfy all the things that the Financial Action Task Force requires.

[Stephen Doughty]

In another capacity, I serve as the shadow Minister for the overseas territories. Will the Minister say a little about whether he will publish a list of how exactly the measures apply to all of the overseas territories, where compliance is and what governance mechanisms are in place? OTs and Crown dependencies obviously have different mechanisms for applying UK law; are they doing this by themselves or are we doing it for them? Will the Minister explain that in a bit more detail, perhaps in writing?

[Bim Afolami]

I am happy to follow that up, but I know that the Crown dependencies and overseas territories are subject to the same rules as any country in relation to the Financial Action Task Force, which is the centrepiece of the whole way in which we tackle this issue, so dealing with them is no different from dealing with any of the countries that are so listed—indeed, I have talked about the BVI. I am happy to follow up in more detail as the hon. Gentleman requires.

In conclusion, the Government are taking focused action to tackle economic crime. We know that the House is united on tackling illicit finance and we strongly support that. I have listened carefully to Members’ contributions, and it is the Government’s view that this statutory instrument will ensure that UK legislation remains up to date and best delivers on policy commitments. The new definition of high-risk third countries means that the UK automatically reflects changes to Financial Action Task Force lists, putting us entirely in lockstep with the international community on this issue while retaining the ability, if we so choose at any time, to put a country on or off our list.

[Stephen Doughty]

I appreciate the Minister’s generosity in giving way before he sits down. One issue that we have regularly raised regarding our sanctions regimes is the failure to actually prosecute or take forward implementation actions. I do not expect the Minister have the answer in front of him right now, but perhaps he could also outline in writing to the House—to myself and the Library—how many enforcement actions have been brought under the regime to date, and what the implementation mechanism will be for this measure. It is all very well to have the legislation and regulations in place, but unless we provide a deterrent effect against those who would seek to evade such measures, we are not going to be implementing the full picture.

[Bim Afolami]

I am happy to follow up with the absolute number—again, I do not want to get that wrong in Committee. The Financial Action Task Force takes the approach of working with countries to help to improve their systems. It is not an overtly punitive or aggressive approach; it is an approach that says, “How do we help to support you to make your systems less vulnerable to illicit finance and financial crime?” Of course, when we are dealing with private sector entities that seek to evade rules, they fall under the criminal sanction, as one would expect. I am happy to write to the hon. Gentleman about the precise number that he asks for; I would not want to get it incorrect. With that, I commend the regulations to the Committee.

Question put and agreed to.

Mortgage Charter

Stephen Doughty Excerpts

Monday 26th June 2023 Commons Chamber

[Jeremy Hunt]

My right hon. Friend is right to draw attention to the human consequences of any economic shock. I am extremely proud that, under the Government since 2010, 1.7 million people have been lifted out of absolute poverty, including 400,000 children. That is why in the autumn statement we prioritised those facing the biggest challenges with a £94 billion package of support to help people through the cost of living crisis. But one thing that can definitely happen better than it is now is passing on increases in the base rate to savers.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

One reason nearly 10,000 of my constituents will be hit by the Tory mortgage bombshell is that many deals ending in this 12-month period were taken out when interest rates were below 2%; they are now at 5%. Will the Chancellor set out clearly his private analysis of the likely rises in arrears and repossessions over the next few months?

[Jeremy Hunt]

I do not have any private forecasts that I have not shared with the House. What I can say is that about 0.9% of families with mortgages are currently in arrears, and that is nearly four times fewer than in 2009.

Non-domestic Energy Support

Stephen Doughty Excerpts

Monday 9th January 2023 Commons Chamber

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Businesses small and large in my constituency, from shops to my local steel plant, have raised very serious concerns with me, so they will no doubt look at the statement very, very closely. I have one group of constituents who have lost out on any support so far. The Minister mentioned the energy bills support scheme alternative fund. I have residents in an apartment block in Sully who have not yet received any support at all because they fall into that category. When will the website portal be open? Will they receive backpay? Why will they get only £400 of support, instead of £600 like everybody else? The Government website says it is because the overall block may have benefited from business support schemes, but if they believe that not to be the case—it has not been passed on or the apartment has not been eligible for one of those schemes—how will they get what they need? They are really struggling at the moment and they have not had any answers from the Government so far.

[James Cartlidge]

I totally understand the hon. Gentleman’s point. There are issues with people in apartment blocks in certain specific cases; I do not want to second-guess the case that he raises, because there are lots of different schemes. A £600 payment is going out in Northern Ireland: the £400 general support payment that everyone will have had this winter will be paid out together with the alternative fuel payment, because so many people in Northern Ireland use heating oil, whereas in this country it is less common except in rural areas and constituencies like mine.

The hon. Gentleman is absolutely right that there is a category of user who has not yet received the £400. They may be on a contract under which the energy provider is benefiting from the current EBRS and should be passing that benefit on. I am happy for the hon. Gentleman to write to me with details of his case. As for the website, we have said that the relevant link should be available this month so that people can go online and find it. If he writes to me with the details, I will push my officials on when we can expect it to be live so that his constituents can apply for the £400. He makes a good point.

Economic Update

Stephen Doughty Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

Absolutely. I am very pleased that my right hon. Friend has made that point. We should remember that Putin’s gain is to try to turn economic instability into political instability, and we must not play along with it.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The chaos in the bond markets impacting on pensions was a result of decisions by the right hon. Gentleman’s Government, his party and his Prime Minister. Can he now tell us whether all pension funds are secure, what is the value of the total losses, and what actions will he be taking to ensure that people can have confidence in their pensions? Why should they ever trust the Tories with their pensions again?

Oral Answers to Questions

Stephen Doughty Excerpts

Tuesday 11th October 2022 Commons Chamber

[Kwasi Kwarteng]

My right hon. Friend is a redoubtable and highly persuasive representative of his constituents. I would be happy to talk to him about what we can do together to help his great constituency.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Bank of England has had to intervene not once, not twice, but three times now. The impact on pension funds is very significant, and many of my constituents will be deeply worried. What assessment has the Chancellor made of the impact of potential additional pressures on the economy on public sector pensions and the damage to pension funds for pensioners up and down this country? Is that another reason why he did not want to publish the OBR’s forecast at the time of his mini-Budget?

[Kwasi Kwarteng]

The OBR will be fully scoring and giving a forecast ahead of the medium-term fiscal plan. I speak very frequently to the Governor of the Bank of England, who is absolutely independent and is very effectively managing what is a global situation.

Household Energy Bills: VAT

Stephen Doughty Excerpts

Tuesday 11th January 2022 Commons Chamber

[Mr Clarke]

The hon. Gentleman is right to say that we need to be moving towards technologies such as air source heat pumps. That is why our heat and buildings strategy sets out a plan to bring parity with gas boilers by 2030. That is precisely what we want to see, because those costs need to come down, and that is what we are enabling through our net zero strategy.

The Government are focused on protecting jobs, incomes and livelihoods through, by common assent, one of the most challenging periods in our lifetimes. Nineteen months of furlough protected almost 12 million jobs across the UK. The self-employment income support scheme, worth £28 billion, benefited nearly 3 million people. We significantly increased the generosity of the local housing allowance for housing benefit, and more than 1.5 million households are benefiting from an additional £600 a year. For those who need extra help with their housing costs, we provided £140 million for discretionary housing payments. Four million families are getting help with their council tax bills. We have provided nearly £5 billion for schools catch-up and we are rewarding our valued NHS and care workers, with more than 1 million NHS workers receiving a 3% pay rise in a year of otherwise wider pay restraint.

It has been a goal of successive Conservative Governments since 2010 to keep down the cost of living for working families. I mentioned the increase in the national living wage from April, which represents an increase of more than £1,000 in the annual earnings of a full-time worker on the national living wage. That sort of thing matters in places such as Stoke. We are committed to going further so that the national living wage reaches two thirds of median earnings for those over 21 by 2024, providing economic conditions allow.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Chief Secretary seems to be suggesting that everything is going fine, but the reality on the ground for many families is very different. The Trussell Trust had to give out nearly 1 million food bank parcels between April and September last year. That is an 11% increase on the same period in 2019. Why is that the case if everything that he is doing is working just fine?

[Mr Clarke]

I do not think anyone is saying that we are going through an easy time. We have just emerged from the teeth of an international pandemic, which is still causing major challenges. We have now got to a situation where, despite all the dire predictions, we are back at almost pre-crisis levels of economic activity, and unemployment is fully 2 million fewer than was forecast at the height of the crisis in 2020. That is thanks to the co-ordinated policy decisions of this Government and it is certainly why this situation has not been much, much worse in millions of homes across the country.

Co-operatives and Mutual Societies

Stephen Doughty Excerpts

Tuesday 14th December 2021 Westminster Hall

[Mr Steve Baker (Wycombe) (Con)]

I beg to move,

That this House has considered the contribution of co-operatives and mutual societies to the economy and public life.

I am delighted to serve with you in the Chair, Dame Angela, and I am very grateful to everybody who has attended. I am slightly conscious that today’s other business might have distracted some of my Conservative colleagues who signed up to the application. I lament the fact that they are not here, but there we are—I cannot think what else is going on at the moment. I am very grateful to Co-operatives UK for inspiring this debate and for providing an excellent brief, on which I will rely closely.

A free society—one based on a market economy—really must have within it a place for co-operatives, and the Conservative party might not always have embraced that idea as tightly as I might have liked. Given the length of time for which we have been in power, and given how long we will have been in power by the next general election, I hope that the Conservative party can champion and not merely embrace co-operatives as a really important part of a free society. Co-operatives can be harnessed as tools to expand opportunity, wealth, liberty, pride and aspiration more fairly in the UK, both geographically and socially. They are a powerful tool for funding and implementing the UK’s new net zero strategy.

The co-operative economy is diverse, resilient and growing. There are now more than 7,000 independent co-operative businesses in the UK, with a combined annual turnover of almost £40 billion and more than 250,000 employees. They trade in sectors as diverse as agriculture, renewable energy, retrofitting, the creative industries, manufacturing, distribution, wholesale, retail and finance. In 2020, the turnover of the co-operative economy grew by £1.1 billion, and twice as many co-operatives were created as dissolved. Most co-operatives in the UK are consumer-owned, but in recent years we have seen a marked growth in community ownership, worker co-operatives and freelancer co-operatives. Many of the UK’s largest co-operatives comprise other businesses, such as farmers co-operatives.

By international comparison, though, the UK co-operative economy is small and growing slowly. Less than 1% of businesses in the UK are co-operatives. Germany’s co-operative economy is four times bigger than the UK’s, and France’s is six times larger. That might well derive from history, but I say to the Government that now is a moment when we can choose positively to take a path that makes it more possible for co-operatives in the UK to grow. The UK’s co-operative start-up rate is also comparatively low. In recent years, South Koreans have created 12 times more co-operatives per head of population than we in the UK have. Perhaps the co-operative model is underused and is something of a best-kept secret in our society and economy.

Co-operatives are great vehicles for creating and sustaining decent, rewarding and empowering livelihoods. For example, after five years of trading, the average worker co-operative in the UK supports six times more livelihoods and is almost twice as likely still to be trading as start-ups generally. According to a multi-country study, although they are currently far fewer in number than businesses generally, worker co-operatives are on average larger and employ more people. There are examples of co-operative entrepreneurship, for example the taxi drivers in Cardiff who clubbed together to set up their taxi-hailing co-operative, and of participation in existing freelancer co-operatives, such as the new co-operative mutual aid platform, We-Guild, or the creatives’ co-operative Chapel Street Studio.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The hon. Gentleman mentioned the taxi co-operative in Cardiff. I was delighted to work with a number of local drivers who were dissatisfied with their working conditions in other firms and who got together, worked with the Wales Co-operative Centre—to whom I pay tribute—and set up the remarkable co-operative, Drive, which references the Welsh phrase “Thank you, Drive!” at the end of a journey. I wholeheartedly agree with what the hon. Gentleman said.

[Mr Baker]

Marvellous. I am looking forward to the hon. Gentleman’s contribution later, when I hope he will tell us all about that. It is wonderful to have cross-party agreement on some of these subjects, and I hope we can drive forward the agenda.

Large co-operative employers are at the forefront of good business behaviour when it comes to investing in people. I think that follows directly from the ethos of the co-operative movement—the idea of valuing everybody equally and having open and inclusive membership, for example. I will not go through all the details, because we will be here for an hour, but co-operative models can be used as tools for community-led economic development. There is a wide range of examples from right across the country—I hope Members will share some—which show how co-operatives can be at the heart of bringing people together.

What can co-operatives achieve? They can expand wealth and well-being. The efficacy of the model can lead to a proliferation of co-operatives that can help to strengthen the private sector, including in places that need it the most. That is because co-operatives are distributive by design. Value, wealth and well-being are shared more broadly through day-to-day activity.

A growing body of data shows that co-operatives are especially resilient businesses. At a time like this, resilience could not be more important. Official data in our country shows that co-operative start-ups are twice as likely as start-ups generally to survive the first five years of trading, for example, with similar findings in other countries. Separate research shows that co-operatives in the UK that raise equity via community shares—a crowdfunding model unique to co-operatives—are more resilient still, with a 92% survival rate.

Official data also shows that co-operatives were four times less likely to permanently close in 2020 than UK businesses generally. Research published by Scottish Enterprise shows resilience among employee-owned businesses in Scotland throughout the pandemic. The fact that twice as many co-operatives were created as dissolved in the UK in 2020, when there was a net reduction in the number of businesses in the UK overall, suggests that co-operative entrepreneurship was a comparatively resilient force during the economic and psychological shocks of the pandemic.

Why are co-operatives so resilient? They have purpose, and their ownership and governance dictate long-termism. In an economic shock, it is the members making the tough decisions in their collective, long-term interests; it is not investors demanding lay-offs to protect short-term returns. Co-operatives also patiently build up and re-invest reserves and use members’ capital wherever possible, rather than piling on debt to achieve faster growth. My hon. Friend the Minister knows some of my views about excess debt creation.

I am conscious of time, and I want to give way to other Members, but I will say that at a time like this, when we need to recover to from coronavirus, co-operatives can be an ever more important part of our society in bringing people together and giving them a shared purpose and an equal stake in the business in which they work.

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[Sir Mark Hendrick (Preston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Dame Angela. I congratulate the hon. Member for Wycombe (Mr Baker) on securing this important debate at such a critical time, when the economy and society should be in the throes of recovery from the covid-19 pandemic.

It has been 177 years since the since the pioneers successfully launched the co-operative movement in 1844 in Rochdale, Lancashire, which is not too far from my own Lancashire constituency of Preston. The movement has gone from strength to strength, and it has changed remarkably since then. As a Co-operative party MP, I have always believed that co-operatives and mutual societies are the future, not the past, and they are instrumental in creating a successful, democratic economy.

Co-operatives and mutuals contribute significantly to social integration, job creation, employment sustainability and the reduction of poverty, which makes them a serious player in the UK’s recovery from the pandemic. A key component in the make-up of co-operatives is the democratic ethos of fairness and inclusivity, where wealth and power are shared. Whether it is co-operative shops, funeral services, credit unions or, as has been mentioned, taxi firms, co-ops are owned and operated by the people closest to the business and are centred around their members and the community, rather than distant investors and shareholders focused solely on monetary returns.

When considering the impact of the covid-19 pandemic on our society, it is impossible not to acknowledge the glaring inequalities that have been exposed in our social and economic fabric. The poor of this country have borne the brunt of the devastation. The stark geographical and social divide is a clear indication that the current economic model is broken and not viable for the future.

If we are serious about levelling up the country and building back better, working people must be at the heart of economic recovery. Co-operatives and mutual societies provide a template for achieving success, where the principles of human and social capital are at the core of policy. There is no doubt in my mind that to achieve a stronger, sustainable and more resilient recovery from the covid-19 crisis, the Government must take steps to expand the co-operative sector. The evidence tells us that co-operatives are resilient; 76% of co-ops survive the first five years of business, compared with only 42% of other types of business in the UK.

I was interested to hear the points made by the hon. Member for Wycombe about whether LV= members should have gone with Bain Capital. Only time will tell whether that would have been a good move, but many of the building societies that demutualised and turned into banks were extremely vulnerable in the financial crisis some 15 or 20 years ago. I was a member of Leeds Building Society, and I tried to vote against demutualisation. In the end, I was given £2,000 and ended up with a bank I did not particularly want.

As has been mentioned, the trade body Co-operatives UK notes that about 1.5% of co-ops were dissolved in 2020, compared with 6.5% of businesses in general. Despite the pandemic, the number of independent co-ops has grown by 1.2% in 2020.

On the contributions of co-operatives to public life, the valuable and diverse sector has demonstrated its worth in meeting community need in the face of adversity, which it has done up and down the country in the last 21 months. I proudly note the co-operatives in my constituency of Preston, which led by example and contributed to the collective welfare of the local community during a time of great need. By investing in people from the start, co-operatives were able to defend workers’ wellbeing and livelihoods during the pandemic, while understanding the hardships that people faced and serving the community around them. Studies show that economies with a larger co-operative sector are more equitable, productive and accountable, with a narrower gap between rich and poor.

With all this evidence on the benefits of co-operatives, both before and during the pandemic, I wonder why there are not more of them. As the hon. Member for Wycombe said, in 2020 less than 1% of businesses were co-ops. Despite the evidence that they are nearly twice as likely as other types of businesses to survive their first five years, not nearly enough of them are being started. In the UK, more than 7,000 co-ops contribute roughly £40 billion to the economy, in spite of numerous financial and social barriers that hinder their ability to reach their full potential.

[Stephen Doughty]

My hon. Friend is making powerful points. I want to share another example of success that we can learn from. The Welsh Labour and Co-operative councillors in Vale of Glamorgan Council in my constituency have done remarkable work with Big Fresh Catering Company, a local authority trading company built on co-operative principles. In its first year, it has turned a £350,000 deficit into a £500,000 surplus, which is now being reinvested in our schools. That is an example of co-operative principles making a difference, led by Welsh Labour and Co-operative councillors.

[Sir Mark Hendrick]

I commend my hon. Friend on his involvement and the success that he outlines.

In developed countries such as our own, co-operatives play a much bigger role in GDP and cultural make-up, by design. As the hon. Member for Wycombe said, in Germany, the co-operative sector is four times bigger than in the UK. In France, 18% of GDP comes from its co-operative economy, which is six times larger than the UK’s. Unlike in those countries, our economy is tailored to the interests of private business, despite the overwhelming evidence of the co-operative sector’s success and resilience.

I believe that a strong and growing co-operative sector is key to creating a post-covid economy where wealth and power are shared, particularly in efforts to level up the regions of the country that have been worst hit by the pandemic. We cannot create such an economy by maintaining the status quo and hoping that more co-operatives and mutual societies will carry on as they have done—instead, co-operatives and mutual societies need the support that other business models receive, which is why the Government must urgently commit to bringing forward practical business support aimed at significantly growing the UK’s co-operative sector as part of our economic recovery. In their policy, the Government must enable a corporate framework that recognises and champions the success of co-operatives and mutual societies, and understands the value and mutual benefits of achieving that success.

As we rebuild today and for the future, we have an opportunity to create an economy of ambitious growth, wellbeing and social protection for all. That is why I believe that co-operatives and mutual societies are one answer to the problems raised by the current pandemic.

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[Luke Pollard]

I thank the hon. Gentleman for his enthusiasm. I am really passionate about this issue, and people in Plymouth that have invested are passionate too. It is not just about investing. Co-operative share issues have not had the press they deserve, because it is not just that putting that 50 quid in a co-operative share issue or a mutual will return more financial benefit than leaving it in a bank where interest rates are low. It is about the social purpose—the social multiplier—and the economic multiplier that will come from that investment. It is taking place not only in Plymouth, but right around the country.

Plymouth Energy Community has funded solar panels on the roofs of our city’s primary schools and our largest leisure centre, as well as on the top floor of all our car parks. It has opened Plymouth’s first solar farm in Ernesettle and it is about to apply for planning permission for a second solar farm at Chelson Meadow—next to Saltram House—which is the scene of Plymouth’s largest landfill. I will support that share issue when it opens, too.

CATERed is another superb example of a co-operative in Plymouth. Faced with the challenge of poor school food, the Labour council brought together food provision into a co-operative, which our primary schools and some secondary schools have now bought into. That provides not only healthy, nutritious food but an investment in the staff who provide that food—in the kitchen and serving—which is unbelievable. What is important is that those staff feel valued, the food is healthier, the profits are reinvested and there is not a turkey twizzler in sight. It really is a model for others to follow.

[Stephen Doughty]

My hon. Friend’s example sounds very much like the Big Fresh Catering Company in the Vale of Glamorgan, which I mentioned. Does he agree that co-operative councils, such as in Cardiff—Plymouth sounds like a co-operative paradise; I assure him that Cardiff is too—are also making differences in other areas of public services by using co-operative principles? I think of our music strategy and the Cardiff Music Board, Cardiff Commitment, which is supporting young people back into education or training, and our race equality plan. All have co-operative principles at their heart, investing in that social capital in our communities.

[Luke Pollard]

My hon. Friend is exactly right. There is an energy around this policy area not only because it returns good outcomes but because it is the scene of so many good ideas and so much innovation. That innovation is often at the periphery, because co-operatives and mutual are not mainstreamed in the way that they really need to be. There is not an accelerator that moves those ideas into the mainstream. As co-operators, many of us are quite nice, decent people, and mutualism has a reputation of being nice and caring for and lovely, which often means that we are quite comfortable sitting in a corner. As an economy, we often say, “We have got a fair mutual side; it’s over there in the corner.” We know it is important because we put it in the corner where we put all our important things. It is time now to move mutual and co-operative policies into the mainstream, not only as niche providers but as an alternative to mainstream provision that would give those mainstream business models a run for their money. To do that, some of those legislative and, in particular, financial resourcing barriers need to be removed. There is an opportunity to go through them progressively and remove them, to make sure that we are getting there.

Creating a co-operative development agency in England, following the lead of Wales, would make a big difference. We could put new duties on Governments to promote the growth of co-operatives, not just of businesses. We could look at new capital instruments, such as a national co-operative-held investment bank, which would allow better investment in UK co-operatives. We could consider a new duty on banks to encourage greater lending to co-operatives and to ensure banks are held to account over the types of businesses they support. There is sometimes discrimination in funding to co-operatives because their corporate structures can be a little bit different, a little bit challenging. However, the social benefit and opportunities that come from that investment can be even bigger than investing in the usual type of business models. There is an opportunity there to make that happen.

Oral Answers to Questions

Stephen Doughty Excerpts

Tuesday 9th March 2021 Commons Chamber

[John Glen]

I note the hon. Lady’s long-standing interest in this subject, but I want to state clearly that the Government support the role of the low-income developing countries to be supported by the UK’s G7 presidency. We have made clear our expectation that the private sector and the firms she mentioned will offer debt treatment on at least as favourable terms as the official sector, under the common framework, as agreed by the G20 last November.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

What fiscal steps he is taking to help support people ineligible for his Department's covid-19 income support schemes.

[The Chancellor of the Exchequer (Rishi Sunak)]

In order to support people through the next stages of the pandemic, the Government have extended both the furlough scheme and the self-employment income support scheme through to September, which will help millions of people up and down the country.

[Stephen Doughty [V]]

I thank the Chancellor for his answer. The Welsh Labour Government this week announced a further £30 million to support hospitality and tourism, and freelancers working in our creative sectors are going to get a further round of support worth £8.9 million—this is targeting support to fill gaps left by the Chancellor. I accept that many people have had welcome support, but huge numbers of people are coming up to a year of little or no support because they have been excluded from UK Government support over the past year. What will the Chancellor do for all those excluded, left out and left behind the curve over the past year?

[Rishi Sunak]

I am glad the Welsh Government will receive more than £740 million in Barnett consequentials as a result of this Budget, which works for the whole United Kingdom. With regard to the self-employment scheme, what I can say is that we are now able to bring in those people who filed tax returns for the first time in the tax year 2019-20. That was something that many colleagues asked for. I am pleased that we were able to deliver that now that the tax deadline has passed, and it means that more than 600,000 more people will be able to benefit from this world-leading support for the self-employed.