Co-operatives and Mutual Societies

Debate between Stephen Doughty and Mark Hendrick

Tuesday 14th December 2021 Westminster Hall

[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.

European Union (Referendum) Bill

Debate between Stephen Doughty and Mark Hendrick

Friday 22nd November 2013 Commons Chamber

[Mark Hendrick]

I rise to speak in support of amendment 35 and to oppose amendment 36. I, like my hon. Friend the Member for Ilford South (Mike Gapes), hold strong views about amendment 35, and it is important that the House expresses its view on the amendment, too. The wording should make specific reference to our remaining in the European Union. It should not give the impression to the public when they come to make their decision that we are not already in the European Union.

The past has shown us that the wording of the referendum question is important in that it not only frames the debate but affects voter understanding. If the wording of the question for a referendum in 2017 is left solely to the Government, and the Government have not taken sufficient notice of an independent body such as the Electoral Commission, the question could be misleading, deliberately vague or confusing, or reflect a bias leaning one way or another. In short, the wording of the question in a particularly close referendum could affect whether voters choose to remain in the EU or to leave it.

As my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out, we need only cast our minds back to the 1995 independence referendum in Quebec. After a failed independence referendum in 1980, the Parti Québécois was brought back into power in 1994 and quickly called for a fresh referendum. It asked the people of Quebec:

“Do you agree that Quebec should become sovereign, after having made a formal offer to Canada for a new economic and political partnership, within the scope of the Bill respecting the future of Quebec and the agreement signed on June 12, 1995?”

That is a long referendum question, which caused a great deal of confusion, to the extent that the referendum was taken again. Led by Federal Prime Minister Jean Chrétien of the Liberal party, the no campaign complained that the yes campaign’s approach of offering sovereignty and association with Canada was not clear enough, and federalists said that the word “country”, as in “sovereign country”, had been left out intentionally to confuse voters. It also complained that the wording of the question, particularly the phrase

“the agreement signed on June 12, 1995”,

might imply that the new economic and political partnership had somehow already been secured, in the same way as the question proposed by the Government gives the impression that the UK might not already be a member of the EU by omitting to mention that we are.

[Stephen Doughty]

My hon. Friend again mentions Quebec, which is an important issue that the Government and the promoter of the Bill need to consider. Another issue was that the period of uncertainty lasted for many years afterwards. The clarity Act was not passed until 1999, so the debate about whether the question was clear was wrangled over for four or five years. Many argued that the uncertainty created by the referendum and the question contributed to Canada’s poor economic performance in the 1990s. It had wider implications, not only legal and constitutional ones.

[Mark Hendrick]

I totally agree. Opinion research tended to bear out the federalists’ claim about the wording of the question. A poll conducted three weeks before the vote found that 28% of voters who had not yet made up their minds believed that a yes vote would simply mean negotiating a better deal within the federal system.

There were many other indications of the importance of the wording. Polls suggested that some 53% of those who supported sovereignty thought that it did not mean separating from the rest of Canada. Even more striking differences were shown: if the polling question was reversed and respondents were asked whether they wished to stay in Canada, 59% said yes; and a poll in 1994 suggested that 71% of sovereigntists wanted to remain part of the federation.

An in/out referendum is a huge issue as far as the UK’s membership of the EU is concerned. We need to make distinctions purely and simply by making it plain at the start that we are a member of the European Union and by asking the public whether they wish to remain as a member.

On the question of the alternative to EU membership, the Democracy Movement testified to Parliament:

“The danger of bias with ballot paper preambles not only relates to what is actually included in them but also to what is left out”.

I feel that any referendum on leaving Europe should allude to what being outside Europe would mean. The Government need to be clear on the choice offered. If it is a choice between being a member of the EU or a member of the European economic area or the European Free Trade Association, like Norway and Switzerland, that choice should be expressed if not in the question in the literature given out with the ballot paper or before the referendum takes place.

Signed in 1992 and operational from 1994, the EEA agreement extends the EU single market and free movement of goods, services, people and capital, together with laws in areas such as employment, consumer protection, environmental policy and competition. It includes Norway, Iceland and Liechtenstein, but not Switzerland. In practice, that means that the vast majority of the EU regulations that are identified as the most burdensome to business, including the working time directive, would still apply if the UK left the EU but remained a member of the European economic area. The UK would also be bound by future EU law in those areas, but would arguably have less influence over their content. Any question on European membership should therefore state clearly what the alternative to that membership should be.