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9.59 am
Mr. Thomas McAvoy (Glasgow, Rutherglen): First, I declare an interest as a Co-operative party-sponsored Member of Parliament with, as outlined in the Register of Members' Interests, no personal gain.
I congratulate my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) on securing this debate. Since coming to the House, he has been a consistent advocate of the principles of co-operation and we in the co-operative movement have every respect for his efforts in that respect. They are much appreciated.
I welcome this debate because it provides me and other hon. Members with an opportunity to speak about the co-operative movement. I shall concentrate on its contribution to the economic and social life of Scotland. Not only do co-operatives make a major contribution but they are innovative and responsive, often developing products and services in sectors of the economy and parts of the country where their capitalist-based competitors fear to tread. The co-operative retail sector, for example, could be regarded as a misnomer as it includes the funeral undertaking service, travel concessions, agriculture, insurance and banking.
Last year, the co-operative movement contributed more than £700 million to the Scottish economy. More than 80 per cent. of that trade came from the two largest
societies, CWS and Scottish Midland, both of which show a remarkable resilience to the threats posed by their competitors and the increasing concentration of the major players in the sector. The co-operative movement welcomes competition because, ultimately, it is a consumer movement and competition provides a service to consumers.
The co-operative movement does well in Scotland partly because of the strong relationship between those organisations and the communities that they serve. Long before most of the major retailing groups had established a presence in Scotland, Scottish CWS had committed itself to serving the more remote communities of the highlands and islands. That culminated, earlier this year, in the opening of the first super-store in the Western Isles. Situated in Stornoway, the development will make a major contribution to the local economy, employing 160 staff and providing a wide range of services, with 12,000 different products on offer.
Similarly, Scottish Midland, with some 20 per cent. of co-operative trade, has expressed its confidence in the Scottish economy by re-opening a former super-store in Dundee and purchasing a new fast-growing retail business in the profitable toiletries market. Both organisations considerably increased their investment in new stores and other facilities and are confident that they can continue to improve services and benefits to members in all parts of the country.
Latest estimates suggest that there are some 400 agricultural co-operatives and a multitude of fishing and other related co-operatives in Scotland. Those contribute to the strength and vitality of the farming and fishing industries, which are vital to the Scottish economy's success.
As my hon. Friend the Member for Wolverhampton, North-East said, one of the fastest-growing sectors of co-operative enterprises is the credit union movement. In the past two years, it has grown by 18 per cent. and 15 per cent. respectively. It has 113 member organisations in Scotland, which was more than 20 per cent. of the UK total at the end of last year. Those provide much-needed credit facilities to some 70,000 members. The concept of mutuality suffered a severe blow in the 1980s, which, in years to come, will be regarded as a selfish decade. The credit union movement is a demonstration of practical mutuality, which is commercially successful but also contributes to the social and cultural benefits of those involved.
In the 19 years since its launch in 1977, the Scottish Co-operative Development Committee, recently renamed Employee Ownership Scotland, has played a major part in the creation of some 100 worker co-operatives of which almost half are in the Greater Glasgow conurbation. Its decision to refocus its activities following a major review is a recognition of the new funding regime following changes in Scottish local government and the Scottish Development Agency. It reflects the growing attraction to both sides of industry of giving employees a stake in the workplace and it forms a sensible partnership with its continuing work as a development agency for worker co-operatives. I emphasise the principle of co-operation. Neither side of industry and commerce has anything to fear from advocating the principle of co-operation because everybody then feels that he or she has a stake in the business or enterprise and contributes accordingly.
Scotland is also the home of the business community movement in Britain. That originated from an initiative of the Highlands and Islands development board to set up a community co-operative programme in the mid-1970s. Similar developments followed through the establishment of a specialist unit by Strathclyde regional council, followed by similar units in other regions of the country. As a former member of Strathclyde regional council, I was well aware of that work and participated in it. Obviously, the work ceased with the unfortunate demise of that council, which, in years to come, will be regarded as an act of vandalism.
Although no official statistics exist on the extent of the community business sector--the matter has been raised in questions to the Minister--rough estimates suggest that there are some 400 training enterprises in the United Kingdom and that, remarkably, more than half of those are in Scotland.
My hon. Friend the Member for Wolverhampton, North-East mentioned the lack of adequate sources of capital for the development of co-operatives. The high street banks, with the obvious and honourable exception of the Co-operative bank, do not really understand co-operatives or the motivation of those who set them up. The conventional view is that, with no equity, the balance sheet looks decidedly risky, even when members' financial commitment to the co-operative is substantial. Unreasonable demands for security are often made on members and there is the risk that the bank, through some misunderstanding, will pull the plug in circumstances where the co-operative is still viable. As one would expect, that has led to many co-operatives, even when they have a strong case for support, to be wary of approaching their local banks for loan finance. The venture capital companies are all but cut off from the co-operative sector as they cannot take an equity stake in the enterprise. The experience of convertible preference shares or other quasi-equity has been fruitful for neither party.
Co-operatives do not have access to the long-term capital markets. As a result, a number of co-operative organisations, mainly in the agricultural sector, have converted to company status. But that is not a solution for those committed to the principles and ethos of co-operative enterprise. The picture is similar in the public sector. Last July, I raised the related issue of support for co-operatives in Scotland in a question to the Scottish Office Minister and was referred to Scottish Enterprise. On 18 July 1995, I received a reply from the chairman, Professor Donald MacKay. Although he said that he encouraged
I fully understand the pressures on Scottish Enterprise and Employee Ownership Scotland to increase Scotland's business birth rate, which languishes at the bottom of the national league tables. However, that could be helped by a more flexible approach that respects the differences in ethos and structure of co-operatives by working with
members to achieve joint objectives. Most of my constituency has now moved into the geographical area of Lanarkshire development agency. I certainly detected a more aware and more flexible approach to the principles of co-operative business in my earlier relationships with Lanarkshire development agency and I look forward to a long and fruitful relationship with that agency. Attitudes to co-operatives, in both the public and private sectors, must become more enlightened if co-operatives are to make a more substantial contribution to employment in Scotland.
The recent publication of a resource pack by the United Kingdom Co-operative Council, which my hon. Friend the Member for Wolverhampton, North-East mentioned earlier, describes how to set up and run a co-operative. The pack will be circulated to every Department of Trade and Industry office and business link office and should go some way to breaking down the present barriers of incomprehension.
Mr. Mike Gapes (Ilford, South):
Does my hon. Friend agree that attitudes in this country are way behind those in many other European countries, which have a much more positive approach to financing and supporting co-operatives? The international aspects of the co-operative movement are not properly understood in this country. Tens of millions of people, in Europe and in other continents, are involved in co-operatives, including producer co-operatives and other co-operatives that are at the fore of the economies of those countries, especially those in Europe. We should give greater emphasis to that in our discussions in this country.
Mr. McAvoy:
The European Union is having an increasing effect on attitudes in this country and certainly many lessons can be learned from European Union countries from their attitude to the principles of co-operation. I agree with my hon. Friend.
"the creation and growth of businesses",
he saw no difference between co-operatives and what he termed
"a whole range of structures that can be adopted by businesses".
Sadly, that approach is all too common among development agencies, which seem ill at ease with structures that deny them control in circumstances where investment has gone sour.
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