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Column 1051co-operative movement. They suggested that the contracts, licensing function, agreements and the authority of the CDA should be passed to the Secretary of State.
How on earth can the Government envisage that a state Department could fulfil even tentatively or marginally the role of the CDA's professional advisers? That is a challenge that the Minister may like to consider. In years to come, he might suggest that this measure was a sort of apprenticeship for him. It is his first mistake, for the simple reason that he has parroted a brief which has been prepared for him for which he is not entirely responsible. It is his duty to do it, and I commend him for that.
The measure has been retailed because somewhere in the Government--probably in the Minister's Department--a decision has been made to lead the House of Commons to believe that the Government are still with the co-operative movement and that, under the Secretary of State's umbrella, the CDA can be dispensed with. That is utter nonsense. The Minister must find reasons which the House will understand substantially to support the Government's determination to wind up the CDA. He will not find any, because there is none. For the first time in the House, a statutory body has been disposed of without the Minister giving a reason for it. I have seen many quangos disappear. The argument that there were too many jobs for the boys was sound. That is a different kettle of fish. In this case, a substantial co- operative movement is doing remarkable work with people who have great enthusiasm and are producing results. Although there have been failures, the movement has a remarkable record. There is a healthy level of co- operation between the co-operative movement and industry in my region.
The challenge to the Minister is simple. Before we vote on this measure, can he find one reason why he has become the messenger boy of someone who has acted prejudicially in Government circles against the CDA?
Mr. John McFall (Dumbarton) : It is a privilege for me to speak tonight as the chairman of the parliamentary group on co-operatives. I note that the last opportunity that we had to debate the issue was on the Co- operative Development Agency and Industrial Development Act 1984.
The CDA was established by Act of Parliament in 1978 to promote the development of a co-operative sector of the economy. I pay tribute to several people who were wise and prescient enough to introduce the Act. They are my right hon. Friend the Member for Swansea, West (Mr. Williams), who was the Minister of State, Department of Industry at the time, my hon. Friend the Member for Bradford, South (Mr. Cryer), who introduced the Bill on the Floor of the House, and two deceased hon. Members, my friend Sidney Irvine and Laurie Pavitt, who played a great part in the 1978 debate and I record our appreciation of those deceased Members.
Another hon. Member who welcomed the Bill was the then hon. and learned Member for Rushcliffe (Mr. Clarke), now the Secretary of State for Health. He gave it a cautious welcome and said that if it adhered to the market economy he would welcome it. My friend the hon. Member for Orkney and Shetland (Mr. Wallace) should
Column 1052note that his colleague at that time, Richard Wainwright, made sure that it adhered to the market system and that guaranteed the Government's welcome for the Bill. Throughout its history the CDA has adhered to the market economy and it has been correct in all its dealings. We view its demise tonight with great sadness.
When the CDA was set up it had a grant of almost £900,000. In 1981 that grant was increased to £1.5 million and in 1984 it was further increased to £3 million. In the years since then, however, it has had not more than £200,000 to spend. It has done a lot in those years on a meagre budget.
It is worth noting the 1987 report of the Management and Personnel Office of the Treasury, which looks at non-departmental public bodies. That report was complimentary about the CDA and, although it recognised that closure was an option in 1990, it learned towards a more expanded role for the CDA. That report is a further reason for its retention. The report recommended that it should continue to encourage the development of co-ops as they contributed to employment opportunities. The report said that such co-ops had led to the growth of employee participation. It is important to recognise that. Since 1978 we have had a private sector, a public sector and, most importantly, a readily identifiable co-operative sector. With the demise of the CDA no recognition will be given to that third sector. As a result of the establishment of the CDA, opportunities were given to those who might otherwise have been disadvantaged in the labour market--that was also mentioned in the 1987 report. The CDA has done its job to help those who might be adversely affected by business closure. It has helped women, ethnic minorities and the disadvantaged of inner-city areas.
I have met with Ministers to plead with them on behalf of the CDA. After listening to the Minister tonight, it is clear that we are up against benign neglect on his part. Tonight no one could claim that the Minister knows thoroughly what the CDA is about. We could not put our hands on our hearts and say that the Minister, having looked at the problem and taken a caring stance towards employment and the third sector, was right to decide that there was an alternative. What has stood out tonight is that there is no alternative.
Mr. Michael : The Minister has said that a little money will be available on a pump-priming basis only hereafter. Does my hon. Friend agree, however, that Government encouragement is important for business generally? Aid to business generally has gone on for many years, but no one talks about tapering or stopping that aid. Support for the co-operative sector, an important business sector, should not be allowed to trail off. It should remain an important element for the long-term future.
Mr. McFall : Exactly. The figures available make a credible case for the CDA. In 1977-78 there were 180 co-operatives. Ten years later, in March 1988, there were 2,000. It has been estimated that 25,000 jobs have been created in workers co-ops since 1978, at an average cost of £3,500 a job. That is a matter for debate, but when the Minister sums up will he answer these points? Has he taken those issues on board when deciding to run down and wind up the Co-operative Development Agency? Many of those
Column 1053employed in the 25,000 new jobs would not have established any other form of business had it not been for co- operative enterprise, and that is important.
I wish to do the Minister justice and analyse the Government's case for closing down the CDA. I have looked through the Second Reading debates in 1978 and his predecessors' statements and I detect three main reasons for the Government saying that they will close it down. First, the CDA has done the work that Parliament asked it to do. That is an insulting answer because the CDA was obliged, under the 1978 Act, to make annual reports to Parliament, which was obliged to look at them. Not once in those 10 years has there been any criticism of the CDA and what it does.
The Minister says that the CDA has done its work and there will now be a network of local CDAs. However, will they still be in line and be able to maintain a strategic direction for their work? It must be remembered that those local CDAs have prospered over the years only because of the deep involvement of local authorities. I do not need to remind my hon. Friends that local authorities have been under tremendous pressure during the past 10 years, not least due to the introduction of poll tax. Therefore, local CDAs will not have recourse, through local authorities, to the pump priming that they require. Local CDAs cannot take over from where the national organisation has left off. If the Government still intend to wind up the CDA, would it not be sensible for them to support local co-operatives and therefore avoid duplication, and give the job to organisations with a track record and an expertise built up over 10 years?
My hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) mentioned the number of inquiries. The CDA received 2,754 inquiries in 1987-88, the last year for which figures are available. To where will those inquiries be directed? The Minister should consider that. Will the inquirers ring up the Department of Employment? If so, the phones will be red hot.
Mr. Michael : I am grateful to my hon. Friend for giving way because he is teasing out an important point. Two possible methods of inquiry were reflected in the Minister's speech. First, people could go to local CDAs and, therefore, the Minister should give a commitment to give assistance to widening the network of local CDAs. Secondly, as my hon. Friend has just mentioned, there is an obligation on the TECs to provide help. Will the Minister spell out an obligation on the TECs, and will he ensure, through his Department, that they have the necessary expertise for this specialised element of employment creation and business assistance? That element is important. It would greatly reassure us if the Minister were able to spell it out in that way.
Mr. McFall : I shall come to that point. Will the Minister be kind enough to leave his home telephone number so that the 2,754 inquiries can be directed there? That is as good a reason as any I have heard from the Minister, so I am looking for a response on that. The Government say that the financial arrangements for the CDA are more generous and available to enterprise agencies. As a constituency Member of Parliament, I say that my local enterprise trust could not have prospered had it not been for the good work of the district and regional councils. That position is mirrored throughout
Column 1054the country. Therefore, the new arrangements are not more generous and available to enterprise agencies. Because of the lobbying in 1978--
Mr. Turner : The Minister offered the opportunity for CDAs to respond at local level, but he must know very well what the experience of local government has been under this Government. He knows that section 137 has made it far more difficult for local authorities to respond to CDAs. The Minister must tell us tonight that he will allocate money to local government and to TECs if he wants to achieve the aims that he set out.
Mr. McFall : TECs are a virgin enterprise ; we do not know how they will perform, so how can the Minister be confident that they will look after the interests of the co-operative sector? The interests of this third sector of the economy have been looked after year in, year out by local authorities, which have provided the pump priming. That will now be taken away.
The Minister's last argument, by implication, was that the Government no longer support the idea of a Government-funded national agency. But the Government fund other agencies--Food from Britain, the Housing Corporation, and the Equal Opportunities Commission, for instance. I have not heard the Government argue for their dissolution, so if they are in favour of such organisations, why not the CDA? I ask the Minister seriously to consider the economic disadvantages if the co-operative enterprises go down. Co- operatives are different from companies. They have different constitutions and aims, but, like companies, they operate under the imperatives and within the restraints of the market. That was evident in 1978 and that truth stands today.
The existence of the CDA gives co-operation a higher status. It shows people that the Government are interested in the third sector--
Dr. Godman : Is there nothing in the Enterprise and New Towns (Scotland) Bill, which had its Second Reading last night, that might provide the Scottish co-operatives with any comfort and compensation for this disgraceful action?
Mr. McFall : The Minister cannot come up with anything. Everything is still at the drawing board stage and up for bargaining. Co-operatives must take their chance along with others. The Government have the brass neck to get rid of the co-operative sector at the same time as going ahead with the TECs scheme in Scotland. The Government are showing that they are not interested in the 25,000 jobs that have been created in the past 10 years, or in any other jobs that might come from the co-operatives. If they were interested, they would encourage the CDAs--that would show that they were serious. I have had three meetings with Ministers in two Departments about this, which shows that the CDA crosses departmental boundaries. That does not happen in other areas. Now, however, we shall return to dealing with a single Department.
The co-operative sector--workers' co-ops, housing co-ops and so on--has widespread implications for the economy. Although the Minister was kind enough to give us the chance to discuss the matter, he showed no appreciation of how we feel about it, or of its economic consequences. Bearing in mind that the Government have
Column 1055not repealed the Co-operative Development Agency and Industrial Development Act 1984, or the 1978 Act, I look forward to the next Labour Government reconstituting the CDA. I only hope for the sake of the country, the economy and the people in these enterprises that that will be done within their first 12 months of office.
Mr. Alun Michael (Cardiff, South and Penarth) : I am glad to have an opportunity to speak briefly in this debate. I hope that the Minister will respond positively to the constructive comments about the way in which the functions of the Co-operative Development Agency should continue after the life of that body is ended, as the Minister clearly intends it to be.
I declare an interest as I am sponsored by the co-operative movement in which I have been involved for almost 20 years. It is something of a tradition in my constituency as my predecessor, now Lord Callaghan, together with my right hon. Friend the Member for Swansea, West (Mr. Williams), encouraged the original concept of an agency. I was a founder member of my local CDA and also of the local enterprise agency.
I commend to the Minister the model of the Cardiff and Vale CDA and the Cardiff and Vale enterprise agency, which work closely together. I think that the Minister would acknowledge that the enterprise agency is one of the most successful in the country. That might be because on its board are representatives from local authorities and other public sector bodies such as the Welsh Development Agency, together with representatives from private business, such as locally based industrialists who take an interest in the economy, and from the Co-operative Development Agency. That sort of strong partnership, where each of the models available can be used to the best advantage, is just what we should be encouraging.
Mr. Barry Sheerman (Huddersfield) : Too often we hear Ministers trying to put co-operatives into a tight category. I, too, am sponsored by the co-operative movement and together with my right hon. Friend the Member for Swansea, West (Mr. Williams) I played a significant role in starting the first Co-operative Development Agency in England and Wales--in west Glamorgan. Is it not true that all who have been involved in the great movement of small co-operatives know that many people who learn the lessons of enterprising co-operatives do not always stay with them, but take those lessons to every sort of enterprise? The damage that will be done tonight is that that will stop.
I was interested to learn of the results of a survey of the needs of business and the ways to develop business commissioned by the south Glamorgan local authority. The dynamic, entrepreneurial American who undertook the investigative work on behalf of an American company--who we thought would be unsympathetic to the co-operative model--in fact said that with computing and new technology developments it would be the most suitable form of management for small, entrepreneurial firms. He encouraged the idea of building in the support of co-operatives as being the cutting edge of the most appropriate form of modern management.
Mr. Turner : My hon. Friend makes an important point about the development of co-operatives and small businesses. Does he think that the Government have a grasp of the ethos of co-operatives? Are they prejudiced in favour of companies set up under the Companies Acts and against those set up by the Industrial Common Ownership Movement? Is that prejudice borne out by their constant consideration for enterprise agencies, which deal with conventional businesses? Does not the proposal to abolish the Co- operative Development Agency show their indifference to the development of co-operative businesses?
Mr. Michael : I understand my hon. Friend's point and agree that the proposed abolition of the CDA supports the concern that he has expressed. Recently, I and my hon. Friend the Member for Dumbarton (Mr. McFall), on behalf of the co-operative movement-sponsored Members of Parliament, held a meeting with the Minister. Although he has not moved tonight as far as we had hoped, I welcome the fact that he is obviously prepared to listen to our points. The development of co-operatives should not be a matter of controversy or dogma, so I hope that the Minister will consider with an open mind many of the points that have been made in the debate and will search for models that will enable proper support to be given to co- operative development.
The strongest form of machinery for co-operative development is probably at local level. Groups trying to set up often do not have experience and need help over a period of time. They do not need a quick, sharp bit of advice but assistance over time. We need a network of local CDAs, and with the abolition of the national CDA, its function could be filled by some other body at the centre which could help the local network to do a good job throughout the country.
The Minister will appreciate our concern about the training and enterprise councils. These bodies have not yet established a life and expertise, yet they may be the only organisations on which co-operative development can take place in future. The Minister should do everything possible to enable the TECs to gain the necessary expertise to function properly.
Experience shows that time invested in helping groups is repaid well, as my hon. Friends have pointed out. The American expert of whom I spoke made that clear to me. That proves that the expertise of the national CDA should not be lost and that local CDAs and the TECs should be encouraged to take on a positive role. They will need help in the coming years from those who have developed a knowledge of what is required to achieve a successful, small CDA network and for successful co-operative businesses to be developed.
Mr. Dennis Turner (Wolverhampton, South-East) : In the few minutes available to me, I make a final appeal to the Minister to think again on this issue. It has been made clear in the debate that a great deal of work remains for CDAs to do. If the Government wish to avoid being charged with not being interested in co-operative development and with having a prejudice against that form of business, they should be prepared to re- examine the matter.
Before coming to the House I was a member of a large workers' co-operative in the west midlands. It has a large
Column 1057turnover and is a successful business. It was started by eight people who were made redundant from the steel works and who invested their redundancy pay to set up a business. To be truthful, we did not on that occasion need to consult the national CDA. But throughout the country, many businesses have depended on assistance from the agency. The success of a business depends upon its integrity and it must be efficient. It is in the market place and must make sound commercial judgments about the way in which it is run. A co-operative does not depend on being able to call upon a dividend but has to rely on the surpluses that it develops to pay the wages of its workers. The Government should laud such principles.
For years we have had high unemployment and people have languished on the dole and have had to suffer the frustration of not being able to contribute to their community and to the benefit and welfare of their families. We should encourage the kind of development that allows people to set up in business and pay themselves wages, thereby having the independence of a wage packet and the privilege of running a business. That is what co- operative development agencies are assisting thousands of people to do every week.
In the interests of the thousands of people who still want to make a commitment to co-operative development, I ask the Minister to think again about this matter. He should take it back and have another look. Let us keep our co-operatives alive.
Mr. Alan Williams (Swansea, West) : I was the Minister responsible for the development of the concept of the co-operative development agency. The Bill was a consensus measure when it went through and the present Secretary of State for Employment, who was a Back-Bench Member at the time, commended it to the House when he was speaking to an intermediate Bill after 1978.
We have had incredibly good value from the concept because its cost over the years has been negligible. It is important to bear in mind the fact that the benefits given to the co-operative movement are minute compared with the cost of schemes that have been introduced to help small businesses. By the nature of their structure, co-operatives have been excluded from those schemes. For example, the business expansion scheme was a good and valuable one in its time, but it was equity based and co- operatives, because of their constitutional and financial structures, were unable to apply to the scheme. The money that the Government spent on that project would finance a co-operative development agency for a century with change left over.
It is important to remember the original concept. As my hon. Friends have said, the co-operative sector is the third element in our commercial operations, the other two being the private and public sectors. The aim was to try to develop this intermediate sector as it has been developed elsewhere in Europe. The co-operative movement is diverse and has a range of activities and, therefore, concentration is difficult. Similarly, a range of Government Departments have responsibilities that impinge upon the co-operative movement, and concentration is difficult there. At negligible cost we provided a focal point for the co-operative movement and for Government
Column 1058which has facilitated ease of consultation for over a decade. That has benefited the co-operatives and the Government. Sadly, it is being unnecessarily destroyed.
Mr. Eggar : We have had a good and well-informed debate. I have listened with considerable care to the experiences of Opposition Members and I have taken on board the detailed points that they have made.
I repeat the assurance that my Department will look at innovative proposals and we will consider whether we can fund them. I also repeat that we are prepared to help the co-operative movement by part funding, pump-priming, a secretariat for a short period until it can fund itself fully, as long as those funds are matched by the co-operative movement.
I agree with the hon. Member for Dumbarton (Mr. McFall) when he says how sad it is that the late Laurie Pavitt and the late Sydney Irving could not be present. During their time in the House they made a tremendous contribution to the cause of the co-operative movement in the House and more widely. In addition, my friend, the noble Lord Graham, still plays a considerable role in the other place on behalf of that movement.
The right hon. Member for Swansea, West (Mr. Williams) was, as he said, involved in the initial Bill. He referred to the relatively small sum of money involved. However, I must refer him to the remarks of the hon. Member for Bradford, South (Mr. Cryer), who, sadly, is not in his place, when he announced the Labour Government's intention to set up the CDA. He said :
"After this formative period, during which the Agency should develop its own sense of corporate purpose, its finances will be expected to derive essentially from voluntary contributions from the co-operative movement and income generated by the charging of fees for the Agency's services."--[ Official Report, 6 April 1978 ; Vol. 947, c. 756.]
At that time the hon. Gentleman gave an assurance that public funding for the entire agency costs would not be necessary after the initial three-year setting-up period.
Immediately this Government came into power, we realised that there was no short-term chance of the CDA becoming self-financing and in 1981 we made available another £1.5 million. That was a considerable contribution and there was another contribution in 1984. No one can say that the Government have not made finance available over a considerable period.
Mr. Alan Williams : The Minister must be careful not to misrepresent what my hon. Friend the Member for Bradford, South (Mr. Cryer) said. It was never envisaged that the CDA would be self-financing after three years. In the original financial provision, which I made when I was in Japan on an inward investment programme at the time of the Second Reading debate, we made an initial provision of £1.5 million, of which £0.9 million was available in the first three years. Therefore, we had already made provision in the original Act to go beyond three years and, as I said in Committee or on Third Reading, we intended to review that at the end of the three years and extra financial provision was built into the Bill.
Column 1059Opposition Members, many of whom are sponsored co-op members, will be close readers of the Co-operative News and will have read the comments that appeared in its editorial on 19 December 1989. It said :
"The Co-operative Movement is also being called upon to put up money for the Co-operative Forum, to help with the transitional period that will follow the end of the CDA-- and so it should. Sadly, however, this seems to evade the real question, which is : what is the Movement doing to recreate, from its own resources, a body that will continue the work of the CDA? With the hindsight of the last decade, it can be seen that it was an error to allow the Co-operative Development Agency to become dependent on Government largesse." The last paragraph of the editorial says :
"The threat to the future of the CDA has, in fact, provided an opportunity for the traditional Movement to pull back the worker co-operatives into the mainstream. Hands would have to dig into pockets--but the rewards would be the dignity of self-help instead of the humiliation of passing the begging- bowl round Whitehall." It being one and a half hours after the commencement of proceedings on the motion, Mr. Deputy Speaker-- put the Question, pursuant to Standing Order No. 14 (Exempted business).
The House divided : Ayes 191, Noes 180.
Division No. 33] [11.44 pm
Arnold, Jacques (Gravesham)
Arnold, Tom (Hazel Grove)
Banks, Robert (Harrogate)
Bennett, Nicholas (Pembroke)
Blaker, Rt Hon Sir Peter
Bonsor, Sir Nicholas
Boscawen, Hon Robert
Bowden, A (Brighton K'pto'n)
Boyson, Rt Hon Dr Sir Rhodes
Brooke, Rt Hon Peter
Brown, Michael (Brigg & Cl't's)
Buck, Sir Antony
Carlisle, John, (Luton N)
Carlisle, Kenneth (Lincoln)
Clark, Sir W. (Croydon S)
Coombs, Simon (Swindon)
Currie, Mrs Edwina
Davies, Q. (Stamf'd & Spald'g)
Davis, David (Boothferry)
Evans, David (Welwyn Hatf'd)
Field, Barry (Isle of Wight)
Fishburn, John Dudley
Forsyth, Michael (Stirling)
Glyn, Dr Sir Alan
Goodson-Wickes, Dr Charles
Gorman, Mrs Teresa
Grant, Sir Anthony (CambsSW)
Greenway, John (Ryedale)
Hamilton, Hon Archie (Epsom)
Hamilton, Neil (Tatton)
Howarth, G. (Cannock & B'wd)
Hunt, David (Wirral W)
Hurd, Rt Hon Douglas
Johnson Smith, Sir Geoffrey
King, Roger (B'ham N'thfield)
Knight, Greg (Derby North)
Lamont, Rt Hon Norman
Lee, John (Pendle)
Leigh, Edward (Gainsbor'gh)
Lennox-Boyd, Hon Mark