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10.22 am
Paul Goggins (Wythenshawe and Sale, East): As one of the Bill's sponsors, I am very grateful to have an early opportunity to contribute to the debate. I warmly congratulate my hon. Friend the Member for Harrow, West (Mr. Thomas) not only on introducing the Bill, but on his campaigning in Westminster and in the country for the changes that he proposes. I remember that he received a very warm Mancunian welcome back in November when he came to speak to the UK Co-operative Council at its meeting in Manchester.
My hon. Friend has spoken clearly and powerfully about the need to modernise the law in order to make it easier to ensure that legislation governing industrial and
provident societies remains in line with company law generally. He has also spoken wisely about the need to align industrial and provident societies to the rules that now apply to building societies in respect of turnout and majority when votes are taken on proposed constitutional changes—especially proposals to demutualise.I noted from the Library research paper on the Bill that the UK currently has 9,000 industrial and provident societies with assets worth £56 billion. It is essential that those assets and the people who own them are given adequate protection by the law. We saw what happened in the 1990s, when in only four years, nine building societies demutualised, completely removing two thirds of all the assets in the sector. My hon. Friend may not have convinced the hon. Member for Epsom and Ewell (Chris Grayling), but I think that he spoke persuasively about the need to give people who plan, develop and invest in new community benefit societies the power to put in place rules to ensure that those who establish such enterprises can do so without fear that the community assets that they create will be stripped away.
As we have heard, mutuals and co-operatives are not a new idea. Indeed, E. P. Thompson reckoned that in 1815, one in 10 people in this country belonged to a friendly society. In his book, "The Making of the English Working Class", he put his finger on the essential strength of such organisations when he said:
- "The fact that each brother had funds deposited in the society made for stability in membership and watchful participation in self-governance."
We all know how that Beveridge vision was undermined in the 1970s. First, it was undermined by economic changes and the mass unemployment that they caused. Apart from the poverty and exclusion that was created, millions of people lost all sense of being contributors to the welfare society. Secondly, the Beveridge vision was undermined by those who believed that market forces, consumer choice and the accumulation of personal wealth were the answer to all our needs—values that were exactly the opposite of those held by the people who created the friendly societies and the co-operative movement.
I would be the first to argue that the welfare state involved many good things such as access to health and education and the opportunity to escape poverty, but it also brought with it the expectation that all our problems can be solved from above. People might have argued for more money or different policies, but Governments were expected to find and deliver all the answers. Today, much of the political and media debate still reflects that mentality of wanting top-down answers. One of the most amazing experiences for me in my political lifetime was seeing among those who had suffered most in the 1970s and 1980s—those who had been excluded and were
without work or hope of work—the first signs of the rediscovery of the spirit of mutuality, solidarity and co-operation that we are debating.I remember visiting the Meadowell estate on Tyneside at the end of the 1980s, when I was director of Church Action on Poverty. I met a group of women who had formed a credit union and established the Cedarwood centre with a co-op shop and shared community facilities. No one gave those achievements to them, but with a little help and encouragement from some local churches, they had started to organise in order to meet their needs. I have seen that many times since, not least in my constituency, where three small community credit unions have now formed into one credit union for the whole of Wythenshawe. It has an office in the town-centre Co-op store, where it is easily accessible to people throughout the community.
Phil Hope (Corby): My hon. Friend mentioned the importance of community involvement and participation, especially among people who are socially excluded. Will he comment on the recent initiatives taken by the Government through the new deal for communities to establish new forms of local partnership between communities and statutory organisations to regenerate local communities? They use the same principles which date back so far and which we are now rediscovering as we try to tackle deep-rooted poverty and exclusion.
Paul Goggins: My hon. Friend reads my mind, as I intend to make a few comments along those lines. The most important thing is to recognise that poverty is not only about cash, although lack of money is clearly at its heart, but about powerlessness. It is always welcome when the Government seek to involve people in decision making and ensure that they have a greater stake and more power; indeed, it should be part of the strategy for defeating poverty.
It is impressive when we see in our communities organisations that have grown from the bottom up linking with Government initiatives and the serious investment of cash that that can often bring. In my constituency, Family Action Benchill was a small, church-based community project that is now at the heart of sure start in Benchill. Indeed, the credit union has been able to benefit from single regeneration funding, helping to create the new premises in the Co-op store, to provide training for staff and so on.
Too often in the past, regeneration has been too short term and too professionally led. To be successful, it must build up people's capacity to fend and organise for themselves, and to develop what is now called social capital—something that is really quite simple. It is a mix of resources and talent that exists in any community and can underpin its sustainability and stability.
On Wednesday, my hon. Friend the Member for Corby (Phil Hope) and I attended a meeting of the all-party group on poverty, at which the Deputy Prime Minister talked about financial redistribution and the need to give people more power to make decisions that affect their communities. That is welcome.
The Bill is important, and its significance will go beyond its specific provisions and contribute to many of the key debates of our generation about the need to reduce
the gap between rich and poor, to reduce crime, to renew civil society and to modernise our public services. I believe that our schools and hospitals have improved in the past five years and that they will continue to do so in future. However, if we keep in mind only the traditional, top-down model of change, services will not improve as quickly or as fully as they otherwise could, and our constituents will not feel the difference. Local people must be engaged, and their ideas and energies must contribute to the process of reform.Organisations that benefit the community play a crucial part in change. The Bill will give community leaders the confidence to build up substantial and significant organisations without fearing that their value will be snatched away. We all know the gaps in our communities that such societies and organisations could fill. They include financial services, shopping, social activity, housing, health and social care and transport. All those needs can be fulfilled not only by initiatives that are top down and large scale but by those that are small scale and bottom up.
In the end, such organisations have the potential to improve the provision of services to our constituents and to renew civil society and people's engagement in decision making. When people have assets to protect that they own together, they are more likely to be involved in policy and decision making.
10.32 am
Mr. Michael Weir (Angus): I congratulate the hon. Member for Harrow, West (Mr. Thomas) on introducing the Bill, which is important because it strengthens the mutual sector, which has been under attack for the past 15 years. It may be considered surprising that the Bill is supported by the Scottish National party and the Conservative party as well as the Labour party, but the mutual and co-operative movement combines the best aspects of collectivism and self-help, so in fact the cross-party support is not surprising.
The co-operative movement and the mutual sector have a long history in Scotland. Life assurance was a big sector there, and small co-operatives grew to be large companies. Since the Building Societies Act 1986, the mutual principle in building societies and life assurance has been under continual attack. In the late 1980s, mutuality was regarded as old fashioned and Victorian—as something that should be done away with in the bright new world of entrepreneurialism.
Many traditional life assurance companies in Scotland have disappeared or been swallowed up by public limited companies. Standard Life, which has recently survived a brutal and expensive fight to retain its mutual status, is the last major mutual life assurer in Scotland. All the others, such as Scottish Amicable, have gone. I had a pension policy with that company, but I now find that I have a pension with the Prudential. I did not intend that.
Although the Bill does not cover life assurance, it strengthens the mutual sector. We need to get away from the position whereby mutuals and co-operatives are perceived as a means of making money through demutualisation and asset sales. Before becoming a Member of Parliament, I was a solicitor for many years. In the late 1980s, I regularly received phone calls or letters from finance advisers, tipping me off about the building societies that would next be ripe for
demutualisation, and telling me which insurance companies to take out a policy with to generate a windfall. That atmosphere destroyed much mutuality.In his opening speech, the hon. Member for Harrow, West showed the huge breadth of organisations that are involved in the co-operative and industrial and provident sector. It is important to remember that it is expanding. In Scotland, many people and communities are coming together to set up new co-operatives and mutual societies. I am sure that that also applies to the rest of the United Kingdom. In many deprived areas, food co-operatives are increasing as a counterbalance to huge supermarkets such as Tesco and Sainsbury's. Existing co-operative societies play an important role. There are still Co-operative stores or supermarkets in many small or deprived communities where Tesco and Sainsbury's will not go. Such stores are important and must be supported.
In Scotland, there is increasing interest in community land buy-outs among people who have traditionally worked for the estate and almost been bought and sold with it. The co-operative and mutual model can be important in ensuring that people who want to buy land and estates for community ownership and a stake in their future can do that. However, as many speakers have hinted, that will work only when there is clarity and certainty that when people invest in co-ops and set up organisations, they can control their assets to ensure that they are not attacked by carpetbaggers, and that their hard work is not sold from under them.
The Bill may not tackle all the problems, but it is an important step forward, and I offer it unreserved support.
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