Co-operatives

Steve Baker Excerpts

Thursday 14th July 2016 Westminster Hall

[Mr Steve Baker (Wycombe) (Con)]

You are a rock of stability on this turbulent day, Mr Hollobone. I am pleased to see that my hon. Friend the Minister is still in his post; I hope he is still there later.

“Society is co-operation; it is community in action”.

That is a pithy line from my favourite economist, and one of the most free-market writers. It not only encapsulates the essence of this debate but gives a key insight into the market economy. In a market economy, people should co-operate with one another to serve each other’s needs. It should not be a selfish process, even when it is competitive. It should be a process of service to other people. That plays into the recent speech by my right hon. Friend the Prime Minister. She has articulated clearly a sentiment that has come out of the EU referendum: the global economy is not working for ordinary, normal working people. Co-operatives can play a crucial role in reforming the institutions of the market economy, so that it works better for those people.

Our great challenge is to remake the institutions of a market economy, not to abolish them, whatever some may say. The only way to co-ordinate our economy and society is through the price system, which is why co-operatives are so important. The former Prime Minister, my right hon. Friend the Member for Witney (Mr Cameron), promised us a co-operatives Bill some years ago. Indeed, the Co-operative and Community Benefit Societies Act became law in 2014. I hope my hon. Friend the Minister will not mind my saying that unfortunately it was something of a disappointment, because it was only a consolidation Bill, so as it passed through Parliament it was not possible to consider, debate or amend it. We could have perhaps innovated on co-operatives.

I refer the Government to “The Co-operative Advantage”, a book edited by Ed Mayo of Co-operatives UK. It lists the areas in which co-operatives are being applied, to great social benefit: agriculture, community food, renewable energy, retail, insurance, banking, creative industries, sport, tourism, education, social care, health, housing, criminal justice and transport. There is huge scope in our lives and society to advance co-operatives, to general benefit. Indeed, one of the most inspiring people I met in the previous Parliament was a young women working as a careworker for an employee-owned co-operative. She spoke about issues of employee engagement, capital, administration and accounting as vibrantly as a venture capitalist might. She was fully engaged in what she was doing. More than that, the users of her service, as participants in the ownership of the service they used, were also fully engaged.

In deference to the Opposition Members who want to speak, I shall curtail my remarks and not talk about the particular advantages of employee ownership. This Parliament has almost four years left to run. Knowing that the Prime Minister intends to adjust the institutions of the market economy to make it work better for normal working people, I very much hope that we can do a little better than a consolidation Bill in this Parliament.

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[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

It is a pleasure to take part in this debate and I join my hon. Friend the Member for Redcar (Anna Turley) and other hon. Members in praising my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this Back-Bench debate. He and my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger), for Neath (Christina Rees) and for Redcar ranged strategically in their contributions across the co-op sector. I do not intend to do that, but hope to pick out one or two particular issues to press the Minister on.

I welcome the contribution of the hon. Member for Wycombe (Mr Baker). I am not sure I would have travelled the same path to get to the enthusiasm for co-operatives and mutuals that he described, but I recognise that his commitment to the sector is genuine. I will not say any more—I do not want to damage his prospects for advancement today—but it is good to have a Conservative speaking up for co-operatives as well. Normally, it is left to Labour Members, so it is a welcome change.

One area in which the hon. Gentleman and I have co-operated is advocating for co-operative change to the way that some of our major public service institutions are currently governed. I wonder if I might encourage the Minister and shadow Minister to take an open-minded view of the proposals to turn Channel 4 and the BBC into mutuals. What do I mean by that? I mean allowing those who watch Channel 4 and those who pay the BBC licence fee to become members and therefore to have a vote on who should sit on the board of those bodies—putting the public back into two critical public services.

I also hope that, in time, we will see the new Mayor of London seek to do the same with Transport for London, giving commuters the chance to vote on who should sit on its board alongside the Mayor. In that very direct way, people who depend on these vital public services will have more influence over their direction and future strategy.

[Mr Baker]

May I just assert my complete support for the idea of mutualising both Channel 4 and the BBC? Channel 4 would be an enormous mutualisation, but a much smaller one than the BBC. I would encourage the Government to look very seriously at recapitalising ordinary people by giving them the opportunity to take a real ownership stake in those very important public institutions.

[Mr Thomas]

Having ruined my own career, and probably his too, by praising the hon. Gentleman, let me move on to other areas that we have not discussed prior to the debate.

One of the things that many co-operative businesses active in their communities point out is the way that the internet is changing the nature of retailing. By definition, many internet retailers do not have large property footprints in particular communities and therefore pay substantially less in property tax than those who are offering a direct service on high streets in communities up and down the land. I support the call of many in the co-op retail movement for a review of the business rates they have to pay by comparison to the taxes that online businesses such as Amazon have to pay at the moment, which are substantially less.

In my earlier intervention on my hon. Friend the Member for Cardiff South and Penarth, I raised the potential contribution of the military credit union. I hope Ministers in the new Government will go further than just support for a military credit union and will recognise the huge benefits of trying to extend credit union membership. In particular, I would like to see a right to save, so that anybody who wants money deducted at payroll and sent to their credit union should be allowed to make that request and have that implemented without question. At the moment, it is at the discretion of the employer. Everybody knows that this is a service that can be offered incredibly cheaply by employers, but it is a matter of will. The very best employers do it, but sadly too many do not. Perhaps putting a right to save on the statute book could help to boost membership of credit unions.

I have always very much supported the idea of a British version of the Community Reinvestment Act, which would place a requirement on major banks to account for the services that they provide to the communities from which they take deposits. When those major banks leave those communities and shut branches, there should be an obligation on them to continue to work there, albeit perhaps through credit unions or other community banks operating there. That legislation works extremely well in the United States and is long overdue here in the UK.

I add my voice to those who have called for a profit-sharing requirement on big companies. There is merit in the French idea that 5% of profits should be shared among those employees who have helped to create that profit in the first place. That would seem to be one further way in which we could create an economy that works for all. I commend my hon. Friends and other hon. Members who have participated in this important debate.

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[Mr Baker]

The Minister is quite right: I was slightly harsh. He has reminded us of the Government’s spectacular achievements with co-operatives and mutuals. I simply look forward to us doing even better in this Parliament.

[Mr Wilson]

I have addressed that point, and I am sure that the Prime Minister will be thinking carefully about what she will do in the coming few weeks. To add to the success that my hon. Friend refers to, we have taken significant steps to support the credit union sector. We are running a credit union expansion project, backed by an investment of almost £40 million. That will help to create a tool to automate loan decisions and help credit unions to decide which loans to make and which to refuse, thereby speeding up that process, and a shared IT system and banking platform will be developed for credit unions to use. Overall, the project aims to help meet the growing demand for modern banking products for people on low incomes by modernising and expanding the credit union sector. Around 7 million people have fallen into the trap of high-cost credit. Some are charged more than 6,000% in interest on short-term loans. By helping credit unions to grow, we aim to save consumers up to £1 billion in loan interest repayments by March 2019.

In short, the Government see enormous value in the co-operative sector because of the contribution it makes not just to our economy but to our communities. That is why we have taken steps to support co-operatives of all kinds and will continue to look at further ways in which we can broaden that support.