House of Commons Hansard Debates for 10 Jan 1990

Mr. Bob Cryer (Bradford, South) : On a point of order, Mr. Deputy Speaker. I wonder whether you could draw to the attention of the Serjeant at Arms the difficulties created in New Palace Yard by the hordes of ministerial cars blocking the area and preventing easy access to it-- because of a Bill that is not supposed to be whipped but for which the payroll vote has clearly turned out to get it through.

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Co-operative Development Agency

10.14 pm

The Minister of State, Department of Employment (Mr. Tim Eggar) : I beg to move,

That the draft Co-operative Development Agency (Winding-up and Dissolution) Order 1989, which was laid before this House on 30 November, be approved.

The Co-operative Development Agency was established by the last Labour Government under the Co-operative Development Agency Act 1978-- [Interruption.]

Mr. Alun Michael (Cardiff, South and Penarth) : On a point of order, Mr. Speaker. This is an extremely important Bill that abolishes an important organisation. I want to hear what the Minister has to say.

Mr. Speaker : Order. I hope that hon. Members who are not listening to the debate will leave the Chamber as quickly and as quietly as possible.

Mr. Eggar : In 1977, a working party was appointed by the then Secretary of State for Industry to develop the idea of a CDA. One of the working party's recommendations was that the Government should bear the cost of setting up the agency and running it for a period of three years. After that, it was expected that the CDA would become self-financing.

The original remit of the CDA was a wide one--to promote the adoption and the better understanding of co-operative principles and to represent the interests of the co-operative movement. The Board of the CDA decided to concentrate on the worker co-operative sector and it has been successful in promoting the co-operative concept and encouraging the setting up of worker co-operatives. When the CDA was first founded, there were only 300 worker co-operatives ; today there are more than 2,000. The agency has also developed a set of model rules for registering co-operatives.

Plans for the agency to become self-financing have not been borne out by experience and it became clear that the CDA was unlikely to become self- sufficient. This Government extended the life of the agency through the 1981 Co-operative Development Agency (Grants) Order and allowed funding for the agency up to the maximum of £1.5 million provided for under the 1978 Act. That limit was extended to £3 million under the Co-operative Development Agency and Industrial Development Act 1984, which also gave the CDA greater freedom to act commercially to undertake training and to enter into partnership. The ceiling of £3 million set in the 1984 Act was due to be reached around the second half of 1990. The Government needed to decide whether to extend the life of the current CDA, to alter its functions or to propose its winding up.

My right hon. Friend the Member for Northavon (Mr. Cope) asked the chairman of the CDA to present proposals for its own future, including the feasibility of a wider remit covering alternative forms of work. Those proposals, received in June 1988, suggested refocusing the agency's activities on the areas of employee participation and employee share ownership through employee share ownership plans, with only a minor role for co-operative development.

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We accepted the CDA's case that the work of supporting and promoting co-operatives could be carried out by other organisations at local level. We could not accept the argument that the CDA's role should extend to ESOPs. After all, there is already considerable private sector activity in that area, and it would not be appropriate to give such responsibilities to a statutory body.

In January 1989, my Department issued a consultation letter throughout the co-operative movement proposing that the CDA should be wound up. The responses to the letter were evenly divided on the question of continuing to support the CDA. A factor that weighed especially heavily in the consideration of the responses was that the organisations that supported the proposal for closure were in the worker co-operative sector. There was a general impression in those responses that the CDA had done its job and that there was no continuing need for a statutory body to promote co- operative development.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : Is the Minister aware that the Co-operative Development Agency receives 2, 000 inquiries every year from people interested in setting up new co- operatives? Who will deal with those inquiries once the CDA is wound up?

Mr. Eggar : It is a pleasure to answer the hon. Gentleman and to speak to him across the Dispatch Box again. A number of queries that now go to the CDA will be dealt with by other bodies, be they local CDAs or other bodies that wish to set up a service of the kind that the CDA is now offering.

Mr. Foulkes rose --

Mr. Eggar : I hope that the hon. Gentleman will bear with me. I shall return to the matter when I reply to the debate, and I have news later in my speech which may reassure him.

Mr. Foulkes : I do not want the Minister's speech to be decimated, but he might be interested to know, bearing in mind his former incarnation, that Costa Rica is notable for the promotion of co-operatives. He might care to examine that situation. I trust that he is not saying that local agencies can provide the whole range of expertise, knowledge, understanding and experience that is provided by the national CDA, which can learn lessons from one part of the country and apply them elsewhere.

When inquiries come in to be dealt with--as I said, the CDA is dealing with 2,000 a year--they can be dealt with in a national perspective, with all the experience and understanding that is available from the CDA's national involvement. Is the Minister aware that no body will be fulfilling that function once he has wound up the CDA?

Mr. Eggar : I do not agree with the hon. Gentleman. There are already other bodies able to fulfil that function. Other bodies are doing it now. After all, it was the CDA's response to my predecessor's request for suggestions about the role that the CDA might play that showed that the CDA recognised that there was not a representative role to play with worker co-operatives.

A point of particular concern to Opposition Members is the role that might be played by an organisation after the CDA has been wound up in respect of registration because, as I said, the CDA has played an imaginative and critical role in helping worker co-operatives to set up.

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Discussions are continuing between the CDA and other bodies that might take on that role, and that role must be negotiated with the Registrar of Friendly Societies. There was, as I said, a general impression in the responses to the consultation document that the CDA had done its job.

My right hon. Friend the Minister of State, Northern Ireland Office, announced on 13 July the Government's decision that the life of the CDA should not be extended when the ceiling for funding was reached. We had asked the CDA to prepare plans for its closure.

The CDA proposes that the agency should cease functioning by the end of September of this year and that final closure, following a three-month winding up period, should be completed by the end of December 1990. The CDA has contacted organisations supporting co-operatives seeking views on which other organisations might wish to take over its existing activities.

Mr. Michael : The Minister referred to the likely role of local CDAs in taking up some of the work of the CDA, and he will have taken careful note of the points made by my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). We need assurances that local CDAs will be encouraged by his Department so that the burden may be picked up comprehensively, for some areas of the country are covered effectively by local CDAs while others have no such organisations.

Mr. Eggar : We have already discussed that together, as the hon. Gentleman is aware. I certainly see a role for assistance with the formation of co-operatives for the new TECs, the training and enterprise councils. As I have already told the hon. Gentleman, I shall point out to TEC boards and TEC chairmen that one of the things that I hope they will look at is local assistance for the establishment of co-operatives. The nature of that help will vary from one area to another, but I am sure that it will be available and I should like to see that.

Mr. James Wallace (Orkney and Shetland) : Can the Minister say whether the tender documentation for TECs makes any reference to co- operatives and co-operative development?

Mr. Eggar : The documentation has not been finalised. Obviously, it cannot cover every area, but I assure the hon. Gentleman, as I assured Opposition Members who came to see me about the matter, that I am convinced that worker co-operatives have an important role to play, especially in inner cities and in areas where traditional forms of business may not be appropriate. I shall draw that to the attention of TEC chairmen and TEC boards. I do not think that there will be any reluctance by TECs, especially those in the inner cities, to follow that through and try to be of assistance. They will be able to work with local CDAs where they exist. Where there are no CDAs, I am sure that TECs will seek to play an active role.

Mr. Tony Blair (Sedgefield) : I thank the Minister for giving way, because question and answer helps to clear up many points. I think that he is saying that either the local CDAs or the TECs will carry on the activities of the national CDA. Will the TECs have an obligation to encourage local co-operatives, or will they simply be able to if they want to? There is an important distinction. The CDA has an obligation. Will that be passed on to the training and enterprise councils?

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Mr. Eggar : There will be no legal obligation about encouragement, just as there will be no legal obligation on the TECs in other areas. There is no change to the local CDAs. I do not think that the national CDA is able to play the local role that the local TECs will be able to play. I shall refer later to other parts of the CDA's present role.

Mr. Richard Page (Hertfordshire, South-West) : I served on the Committee that examined the original Bill in 1978, and I can assure my hon. Friend that while I and my hon. Friends did not oppose that Bill, we were extremely doubtful that it would be successful on a national basis. We were interested in the local aspect, especially in the light of the Spanish Mondragon experiment. I urge my hon. Friend to encourage local co-operative agencies and developments in the way that we have encouraged small businesses. I remind the House that some 500 net small businesses are set up every week under the system that we have evolved. I am sure that local co-operatives and development agencies will be equally successful.

Mr. Eggar : I understand my hon. Friend's point. I hesitate to correct him, but I can tell him that some 1,200 net new VAT registrations occur every week, rather than the 500 that he quoted. That means that our policy on small firms is even more successful than he has outlined.

The relatively small number of staff of the CDA who will be made redundant will be offered redundancy on the main Civil Service terms.

I should stress again that the decision to wind up the CDA in no way reflects any criticism on the board or the staff of the agency, because we are very appreciative of the work of Mr. Ralph Woolf, the current chairman of the CDA, his predecessor, Lord Oram, and those who have served on the CDA board. I particularly mention George Jones, the present director of the agency, its former director, Dennis Lawrence, and the CDA staff and those who have worked as volunteers and seconders.

Our decision to wind up the CDA should not be interpreted as meaning that the Government do not support the co-operative concept. Co-operatives have an important role in the Government's housing and agricultural policies. Co -operative ideas are important for small ventures and have particular potential in enterprise as an alternative to conventional forms of business. Co-operatives have particular potential in inner cities and on housing estates.

Mr. Peter Thurnham (Bolton, North-East) : Is my hon. Friend aware that there has been contact between the CDA and Bolton Business Ventures with a view to the latter taking on a role as a centre of expertise for co- operative marketing in the north-west? Is not that a good way to develop the co-operative idea as part of the parcel of initiatives that can be offered through excellent enterprise agencies such as Bolton Business Ventures?

Mr. Eggar : I was aware of that, and I completely agree with my hon. Friend. That is the way that matters should proceed. I hope that other enterprise agencies, where there are no active CDAs, will take up that opportunity, as well as local TECs. It is particularly interesting that my hon. Friend mentioned the idea of co-operative marketing initiatives. That is an area where there may not have been as much development in the United Kingdom as in other countries.

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My Department is prepared to consider applications for financial support for innovative co-operative projects. There has been concern that closure of the CDA, which chaired the Co- operative Forum and provided its secretariat, will result in a general lack of leadership in the co-operative movement.

The need for leadership in the co-operative movement is really a question for the movement itself. It does not provide a case for a statutory body. The hon. Members for Dumbarton (Mr. McFall) and for Cardiff, South and Penarth (Mr. Michael) are worried that there will be no means to represent the movement to Government. The question of continuing the Co-operative Forum is being considered by a study group from among the co-operative movement's members.

As I have already said, I am prepared to consider an application for funding the costs of servicing a new co-operative forum, so long as it is understood that the Government's support will at least be matched by the co -operative movement and that it is on a short-term, pump-priming basis.

Mr. Dennis Turner (Wolverhampton, South-East) : If the Minister is to set up some structure in his Department to assist co-operative development and to find resources to help a new co-operative forum, why is he winding up the CDA, if not in a fit of pique? It is evident that it still has much work to do.

The hon. Gentleman must forgive us if we are sceptical about the Government's attitude. We saw the Prime Minister at the Dispatch Box holding up the Visa card. The whole idea of co-operative development and co -operative enterprise and its links with Socialism is anathema to the Government. That is the real reason why the CDA is being wound up. Co- operative developments are going on the length and breadth of the land. They need the CDA. The Minister cries crocodile tears at the end of the CDA, yet at the same time tells us-- [Interruption.] Let me ask the Minister a question. If the Minister supports co-operative development enterprises, why does he make difficulties--

Mr. Deputy Speaker (Sir Paul Dean) : Order. That is enough for an intervention.

Mr. Eggar : I am sorry, Mr. Deputy Speaker, that you had such a hard time as a result of that intervention. We have not acted in a fit of pique. The Government have come back twice to the House to extend the life of the CDA and the funding available to it. It was made clear in the working party established by the then Secretary of State for Trade in a Labour Government that central Government funding was to enable the CDA to get off to a good start, but that it would have to rely for its funding on the co-operative movement as a whole.

The present Government have twice gone out of their way to extend the CDA's life. When the 1984 Bill was introduced, we made it clear that we were looking to the agency to fund itself, and we extended the powers available to it so that it could develop into other areas and thus assist in its own funding. Although I understand the hon. Gentleman's strength of feeling, it is unfair of him to describe our decision--which has the support of a large part of the co-operative movement--as one made in a fit of pique. I repeat : the Government are prepared to

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consider funding an organisation that would represent the co-operative movement, provided that it is on a short-term, pump-priming basis and matched by funds from within the movement itself.

As the Minister responsible for small firms, of course I represent the interests of all forms of smaller enterprise to my colleagues within Government, and I shall continue to do so on behalf of the co-operative movement. I and my officials are willing to pursue any points of Government policy that affect co-operative enterprises. I emphasise that, as the Government's enterprise policies will be increasingly delivered by training and enterprise councils, local CDAs and other co-operative organisations should be directing themselves at the boards of the emergent TECs. They will need to demonstrate what they and the co-operative movement have to contribute to local economic development.

In general, we do not intend to tell the TECs how to run their affairs, but, as I have already made clear, I shall point out to TEC chairmen and board members the important contribution that co-operatives can make, especially in inner city areas.

The Government are happy to support the co-operative concept and are prepared to contribute to the funding of innovative projects. The Government have, after consultation, concluded that there is no continuing need for a statutory body to promote the concept of co-operatives, and therefore we are not seeking legislation to prolong the life of the Co- operative Development Agency or to increase the ceiling for funding. The order thus proposes that the Co-operative Development Agency should be wound up.

10.37 pm

Mr. Tony Blair (Sedgefield) : It is a pleasure to speak on the subject of the Co-operative Development Agency, especially as I am the president of a local agency in my own northern region. The Minister concedes that the CDA has done good work and that that work must continue. The only question that the House must decide tonight is whether, on the basis of the Minister's comments, there is any realistic possibility of the CDA's functions continuing under the type of institutions that he favours. Any reasonable person listening to the Minister's speech would conclude that the answer to that question is, at worst, no--and that, at best, it is a doubtful yes. The CDA was established in 1978 after a long debate within the co-operative movement and elsewhere. The idea was to establish a sole agency to provide leadership in the co-operative sector, co-ordinate the activities of co-operative development, and allow and facilitate the exchange of the best ideas and practices within the movement. At that time, there were only about 150 co-operatives operating in the United Kingdom, employing 4,000 to 5,000 people. The Bill to set up the Co-operative Development Agency was given an unopposed Second Reading. Therefore, it was established by consensus, and because there was a powerful case for it.

In 1981, the working of the CDA was reviewed and, on the whole, it was found to be successful. In 1984, we debated in detail whether to extend its funding for a further period and the argument that it should be extended

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was accepted. The present Chief Secretary to the Treasury, who at that time was the Minister in charge of these matters, said : "We are convinced that the CDA represents a useful means of promoting employment and is a small but significant addition to our general policy towards small business."--[ Official Report, 7 February 1984 ; Vol. 53, c. 778.]

In 1984 there were some 1,200 inquiries a year coming to the CDA, and there were 700 co-ops. The CDA continued to develop the co-operative movement and to increase the number of co-operatives and the number of people employed in them--so much so that, in 1987, the Department of Employment published a survey of the CDA, and again accepted the case for its continuing role.

Today, we have reached the stage where the CDA receives about 3,000 inquiries a year, and some 2,000 co-operatives are in existence. Some people believe that as many as 25,000 jobs have been created within the co- operative movement. Of course, that was also a result of the work of many other bodies, but it is reasonable to assume that the CDA played some part in the process. There are also about 100 local development agencies, the majority of which are assisted by local government--indeed, they would not exist were it not for local government, and I shall explain the importance of that in a moment. From my own experience in the northern region, I know that the nature of co-operatives also has changed. The conventional idea of a co-operative is a health food shop, but there are now light engineering co-operatives and catering and security service co-operatives in the northern region. They cover a range of worthwhile activities.

The CDA has extended its activities. Worker co-operatives now form only about 70 per cent., at the best estimate, of their functions. There are 70 marketing co-operatives operating in the United Kingdom to help companies and others to realise the best advantages in marketing. There are community co-operatives and equity finance co-operatives.

The Government's position on the future of the CDA, which has been explained in brief answers, can be summarised as this : the CDA has outlived its usefulness and there are now other agencies that will perform its tasks.

We must ask searching questions, in the light of what the Minister accepts is the good record of the CDA, on whether its work will continue. There is apprehension in the co-operative movement, even among those sectors of it that may have had doubts about the CDA, as to whether the work of the agency, valuable though it is acknowledged to be, will continue as it should.

I do not think that anyone can say that the role of a national body has become otiose. Perhaps the most important reason for saying that is that elsewhere in Europe co-operative development activity is expanding. In Spain, Mondragon has assets worth more than £5 million.

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In France, 5 per cent. of activity is carried on in co-operatives and in Italy the co-operative movement is growing and is at about 7 per cent.

Mr. Thurnham : Is the hon. Gentleman aware that the co-operative movement in Italy is subsidised by the Government in a way that will have to cease before 1992, as it will contravene the Single European Act?

Mr. Blair : The contingency plans recognise the need for a central body to co-ordinate that activity. With respect, I think that Italy makes our case rather than the hon. Gentleman's.

Part of the Government's case is that the work done by the national CDA will continue to be done by the local CDAs. As the Government accept, local CDAs are largely dependent on local authority funding, and I do not think that any local authority member whom I have consulted believes that the Government can be sanguine about the prospect of that funding continuing. Last year saw the closure of a number of local CDAs : indeed, the umbrella CDA for the northern region has had to be wound up.

The burden of the Minister's speech was that we should rely on the training and enterprise councils to do the job. That is a remarkable proposition. The TECs are a largely unknown quantity even in respect of training, let alone looking after co-operatives, and no one could reasonably say that co- operatives will be a priority for them. When my hon. Friends and I asked whether the TECs would be under an obligation to assist co-operatives, the Minister effectively said that they would not ; there would merely be a ministerial desire for assistance to be given. He must forgive us for desiring something a little more concrete to bolster the co-operative movement, especially as it will lose some of the private sector European funding that it currently receives.

As it has been accepted that the CDA does a good job and that its function is still required, I feel that we are entitled to some sound guarantees before we take the step of winding it up : we must be sure that that function can be properly performed by other bodies. As matters stand, it is impossible to be at all confident that the support enjoyed by co-operatives during the CDA's tenure can be realistically expected to continue. If it does not, many thousands of co-op workers--who want to be their own bosses and keep the profits that they make, and who enjoy the co-operative spirit- -will be put at risk.

This may not be a central sector of the United Kingdom's economy, but it is a vital one. With the degree of Government commitment that we require, the sector could grow. I ask the Minister to think again, even at this late stage. It would be tragic if, casually--for I think that the Government's attitude is casual--we allowed an opportunity to build up such a worthwhile part of our economy to pass us by. If we let the co-operatives suffer, the country will suffer, too, and the Labour party will not agree to that without protest.

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10.48 pm

Mr. Peter Thurnham (Bolton, North-East) : I welcome the opportunity to speak on an employment subject, given my new-found freedom on the Back Benches. I also welcome the Government's decision that the time has come to move on from the CDA concept. The CDA was a quango set up by the Labour Government--although the present Government have given it their support during the 12 years of its existence, and have allowed it every chance to develop in new ways by means of local enterprise agencies, as I mentioned in an earlier intervention. I must take up the point made by the hon. Member for Sedgefield (Mr. Blair) about Italy. Italy--where the co- operative idea is as well developed as it is anywhere--recognises the need to move away from state backing. The report, headed "Joint Enterprise Groups in Italy", produced by the CDA study group which visited Italy, points out that existing aid amounts to as much as 40 per cent. rebate of expenses within the Italian co-operatives. However, it recognises that after 1992 aid will have to cease, because that would be against the EEC's anti-competitive laws. The report continues :

"With the expected ending of state aid after 1992, some consorzi directors felt that they should go into trading, buying and selling on behalf of members, for which a commission would be charged and thus becoming financially independent. It seems therefore that post-1992, United Kingdom marketing groups (which are not receiving any state aid)will be on equal footing to their Italian counterparts".

If the hon. Member for Sedgefield is looking to Italy, he is looking at exactly what is being done in this country now. We are ahead of the Italians.

Without a doubt, the enterprise agencies can do the job much better than any national co-operative development agency. I am pleased that when Bolton Business Ventures was set up in 1983 the Prime Minister paid it a visit. It has gone from strength to strength. It is a great tribute to the partnership between central Government, local government and private business. It is a great credit to Mr. Derrick Warburton and Mr. Roger McMullen in particular, who played such an important part in setting it up. The present director, Mr. Paul Davidson, supplies the leadership that is so important an ingredient in any partnership or co-operative. The Minister referred to the importance of leadership in the co-operative movement. It must come from within the movement. It should not be forced upon it by means of a quango.

Mr. Michael : Does the hon. Gentleman accept that enterprise agencies need help from public funds? It is that, as well as the partnerships that they create, which enables them to help businesses to develop. I am the director of a successful enterprise agency. Does he accept that the integrated nature of the co-operative work that is available within the agency is a strength that is recognised by other sectors? However, special skills, advice and knowledge are needed if the agency is to be able to assist co-operatives to develop.

Mr. Thurnham : The hon. Gentleman makes a very good point. The success of enterprise agencies depends on the development of a spirit of partnership. However, nothing remains static. Organisations must develop. Enterprise agencies should become much more self-sufficient and less dependent upon Government funding.

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That is needed when new businesses agencies are set up, but it should not be so necessary for businesses that are already well established.

Bolton Business Ventures is discussing with the Co-operative Development Agency the possibility of establishing a centre of co-operative marketing expertise in the north-west to take over the role that formerly was partially played by the CDA'S office in Manchester. There have been moves to set up a new body--Co-operative Enterprise North-West--to take over the work that is done by the Manchester office. I wish any future organisation well, but it must stand on its own feet and not look to the Government for support. Leadership is all important in any co-operative. The individual members of the co-operative must decide among themselves what their responsibilities should be. The success of any organisation ultimately depends either on a single leader or on a very small team who are able to assume the full leadership role that is so very much needed.

I welcome the remarks of my hon. Friend the Minister about the possible role of training and enterprise councils in helping to continue the work of the CDA in providing encouragement to co-operatives. I am sure that we should look in an all-embracing way at co-operatives as just one initiative, one venture, among many alternatives in which business enterprises can develop. Individuals should consider all the alternatives that they can adopt in developing their own businesses.

Mr. Foulkes : The hon. Gentleman is wrong in saying "all the alternatives". There can be only two alternatives. The hon. Gentleman should refer to "all the options".

Mr. Thurnham : I assure the hon. Gentleman that there is an infinite number of options and different ways in which businesses can organise themselves. The eastern European countries see the United Kingdom Government as an outstanding example of how an administration can help small businesses. I look forward to the continuing success of all the Government's initiatives in this sector.

10.55 pm

Mr. James Wallace (Orkney and Shetland) : If one is allowed to be sentimental on these occasions, it may be worth reflecting that, while the 1978 legislation was unopposed, my former hon. Friend the Member for Colne Valley, Richard Wainwright, was influential during the Lib-Lab pact in pushing it forward. That might be acknowledged by the occupants of both Front Benches. Despite the rhetoric that often comes from the Government Front Bench about the horrors of the Lib-Lab pact--

Dr. Norman A. Godman (Greenock and Port Glasgow) : What of your ex- right hon. Friend, Jo Grimond?

Mr. Wallace : My predecessor, who is now Lord Grimond, with his particular references to the Mondragon experience, raised this issue on many occasions in the Chamber, and he continues to do so in another place. The 1978 Act was a worthwhile product of that period of government, and that has been recognised by the Minister this evening. Indeed, that also was recognised when the 1984 legislation was passing through the House. The CDA has fulfilled an important role in the development of co-operative enterprises in Britain, and there is still much more that could be done.

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The hon. Member for Sedgefield (Mr. Blair), from the Opposition Front Bench, spoke of the 5 per cent. contribution which co-operatives make in France and the 7 per cent. that they achieve in Italy. I do not know what the United Kingdom figure is, but I suspect that it does not even make the statistics. I am sure that there is still considerable room for expansion.

I do not necessarily believe that co-operative ventures the length and breadth of the country offer a universal panacea, but they are one of many forms of ownership and management that can be appropriate in many circumstances. They have a worthwhile contribution to make to the economy.

The Minister referred to the appropriateness of co-operative ventures in inner-city areas. I represent a constituency of remote rural areas where co -operatives, including co-operative shops, have been developed. For example, on the Isle of Eday, in Orkney, and on Papa Westray, a hostel and a guest house have been developed. These co-operatives have been most important in maintaining the social fabric of the communities. In disparate geographical areas, there is clearly a role for co-operatives.

If an agency is right and proper in 1978, it does not automatically follow that it should be fulfilling a similar role in 1990. Before the CDA is wound up, however, we should surely be satisfied that something else will take its place to fill the gap. I was not persuaded, and I do not think that many others were--I do not think that the Minister himself was--when he advanced the various ways in which the gap would be plugged. There are other relevant bodies. For example, the Industrial Common Ownership Movement has a national role and it is widely recognised nationally in its promotion of the co-operative ideal and its advice, and references have been made to the local CDAs, but I do not think that anyone feels that the entire country will be adequately covered if the CDA is wound up. The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) mentioned the many inquiries which were received in the past year--I think that there were over 2,000--by the CDA. Where are those inquiries now to be referred? I suspect that if people bother to inquire, they will not be answered.

Mr. Ted Leadbitter (Hartlepool) : The hon. Gentleman raises a serious matter. Under the vesting provisions, every contract, agreement, licence and authority of the CDA passes, with modifications, to the Secretary of State. It is clear to the House--the hon. Gentleman might like to develop this theme--that this is hardly encouraging, because the CDA has the expertise but the Secretary of State has nothing. I therefore pose a question arising from that : why have we heard acclamation of the co- operative movement and every reason, even from the Minister, for retaining the CDA yet not one good sound reason for winding it up?

Mr. Wallace : The hon. Member makes our point well. It is right to say that the CDA's expertise could be dissipated or lost. We heard that the training and enterprise councils may be able to take on the role of the CDA, and no doubt as he goes round the country the Minister will encourage chairmen to do so. However, as he said, there is no requirement for them to do so and it is not written into the

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tender documentation. Even with the good will of TEC chairmen and board members--in Scotland, one assumes that the local enterprise companies will be given similar encouragement--where will they obtain expertise or advice to support co-operative ventures? It was accepted that local CDAs by no means cover the country, so again there would appear to be a gap.

We cannot depend on TECs or local organisations to fulfil the role of the CDA in a number of other specific matters such as making people aware of the possibility of a co-operative venture. Much has been said about the European Community. I understand that the European social fund has provided a considerable amount of money that the United Kingdom has been good at tapping to train people in co-ops. I am not saying that if the CDA goes all that money will be lost--the Industrial Common Ownership Movement has done very well in attracting such funding--but much of it could be. Clearly hon. Members have not been satisfied tonight that there will be sufficient bodies with expertise prepared to pick up the pieces after the CDA is wound up.

Tonight we heard the Government support the co-operative venture. I have a book entitled "Small Firms in Britain", which has a fine picture of the Minister at the front, page 18 of which says : "The Government also supports the development of the co-operative sector."

Only one sentence on the subject appears in a large glossy pamphlet on small businesses.

We are entitled to ask, how are the Government supporting the co-operative sector? We have received no answer this evening to that fundamental question other than a hope and a prayer, and that is not sufficient to merit the winding up of the CDA.

11.2 pm

Mr. Ted Leadbitter (Hartlepool) : I shall be brief, because other hon. Members want to speak.

The challenge posed by the hon. Member for Orkney and Shetland (Mr. Wallace) on the winding up of the Co-operative Development Agency and by my intervention suggest that the Minister is in an exceptionally weak position. One of the penalties of being a Minister is that he has had to come to the House like some courier from a higher authority to pass on the message that the Government have decided to wind up the CDA. Whatever else is said about the CDA, the Minister has conceded that the co-operative movement has an essential part to play in the economy of the nation.

My hon. Friend the Member for Sedgefield (Mr. Blair) mentioned the changing pattern of the co-operative movement. He mentioned its responsiveness to innovation and to the challenges of the regions in which it works and the co-operation that it enjoys with other industries. Busy as it is at regional and local level, its need for professional advisers was answered by the development of the CDA. The CDA could sit back and give the professional advice that was essential to the development and investment projections of a wide range of co-operatives.

When the House has before it an order such as this at this late hour, it is entitled to be given substantive reasons why the CDA must be wound up. More than that, the House is considerably discouraged that the Government are winding up the CDA while paying lip service to the

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