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10.37 am
Phil Hope (Corby): As a long-standing supporter of the co-operative movement, I am pleased to have the opportunity to support the Bill. I join my colleagues in congratulating my hon. Friend the Member for Harrow, West (Mr. Thomas) on promoting the measure. His presentation was clear, persuasive and educative for those of us who are learning about the movement, and it was rooted in a proud track record of campaigning.
I welcome the cross-party support. The hon. Member for Epsom and Ewell (Chris Grayling) is worried about preventing carpetbaggers from taking over his Conservative club. Some Labour Members might believe that that has happened already. We hope that we can deal with his problem at the next general election.
The Bill is an important contribution to the Government's co-operative agenda, which is championed by many co-operators in Parliament. Like many other hon. Members who support the Bill, I have been a co-operator all my life. I am a member of the Co-operative group of Members of Parliament and I was elected as a Labour and Co-operative MP. It therefore gives me genuine pleasure to be here today.
My hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) talked about tackling poverty through local community endeavour. I believe that we are all beginning to realise the necessity for that. Money is crucial, but we must involve local people in their communities, and devolve power so that the people who are most directly affected make the decisions.
The Bill could be described as a technical measure. It includes technical provisions to protect specific forms of societies that benefit the community. However, it is much
more significant; it is about waking the sleeping giant and acknowledging the vital role of the co-operative movement, industrial and provident societies and so many other community organisations. The Bill will lead to genuine changes to benefit our communities.
Mr. Kevan Jones (North Durham): In my constituency, new credit unions are being set up—the Derwentside credit union, for example. They tackle the genuine poverty and misery that loan sharks cause. Does my hon. Friend agree that although the Bill is technical, it will help the people in most need in poor communities and on council estates throughout the country?
Phil Hope: I shall talk specifically about credit unions later, because—particularly in the poorest communities—the impact of debt on people's lives, and their vulnerability to loan sharks, can be devastating. The growth of credit unions in this country over the last 10 years has been spectacular. They provide a real way of providing people with access to finance and the ability to save, which they have not had in the past because of the behaviour of the financial institutions that have overlooked, ignored or rejected them.
The whole co-operative movement supports the Bill, because the values of the movement go hand in hand with the values of the Labour party. I want to remind hon. Members of the party's constitution, which states:
- "By the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential, and for all of us a community in which power, wealth and opportunity are in the hands of the many not the few."
The Bill, which has been so eloquently introduced today by my hon. Friend the Member for Harrow, West, incorporates a number of the recommendations made by the Co-operative Commission, and it has been widely welcomed both by co-operators and by members of the commission. It will strengthen an already strong and growing movement. Recent figures show that Britain's retail co-operatives have revenues of about £8.5 billion a year and employ 120,000 people.
In banking and insurance, co-operators employ another 15,000 people, and hold assets in excess of £23 billion. More than 500 farm co-ops play a valuable role in supporting agriculture. There are also about 1,500 worker co-operatives, and about 1,500 community co-operatives, credit unions and housing co-operatives. The source for those details of the strength of the co-operative movement comes from an excellent publication, "New Mutualism", published two years ago.
The new mutual movement is growing daily, with massive support from co-operators in the House. Indeed, the hon. Member for Epsom and Ewell expressed his surprise that the assets of the industrial and provident society movement totalled £56.5 billion. He was right to point out how diverse the movement is, comprising not only retail societies, agricultural and fishing societies, but all the clubs as well.
My hon. Friend the Member for Harrow, West mentioned a rugby club in the north of his constituency. I do not know whether he plays for that club, but if he does, it has real problems. I have seen him play for the all-party rugby team, and all I can say is that he is spectacular on the wing—mind you, we never gave him the ball.
The Bill will provide support for small clubs such as that one, and for similar societies, in our constituencies throughout the country,
Mr. Dennis Turner (Wolverhampton, South-East): There are 200 members, drawn from both the House of Commons and the House of Lords, of the all-party parliamentary group on non-profit-making members' clubs. They represent something like 6 million members throughout the country in about 5,000 clubs. Those people have a vested interest in our debate. Conservative clubs, Labour clubs, Liberal clubs and ex-servicemen's clubs are all part of this great movement. I ask my hon. Friend to reflect on that large number of people in those institutions who are looking to us to make a positive decision on behalf of their organisations today.
Phil Hope: My hon. Friend has identified a central purpose of our being here today. The Bill is far more than a technical matter. There are thousands of clubs, with a great many volunteers. In my constituency, 2,000 children go out to play football regularly at the weekend, in small leagues and clubs, with coaches and parents all getting involved. That represents society working with children and young people, and providing them with opportunities. Each of those clubs will have the opportunity, through the Bill, to be strengthened and to find a stronger role to play in the community.
We must do all we can to recognise the role that they play, and to reinforce that role through technical measures, such as strengthening their constitutional support, and through funding—the sure start programme has been mentioned today. So much is going on to provide new community enrichment and enhancement, and we should never overlook the hours of contribution made to the community by volunteers in those clubs and societies. That is what makes our community the wonderful place that it is today.
Such clubs encounter some grief, however, when they try to sign up to become industrial and provident societies with the Financial Services Authority, and it costs a bit. The Bill does not tackle the issue of charges, but we should put down a marker about the level of charges for clubs that register in that way. It creates a barrier, and we are trying to remove barriers for small clubs and societies.
Mr. Drew: Does my hon. Friend agree that that process is not only expensive but very complicated? One of the problems is that it takes an undue amount of time to register as an industrial or provident society.
Phil Hope: That is absolutely right. A review of charitable law is being undertaken by the performance and innovation unit at the moment, although I am not certain how wide-ranging it is, or when the report will appear. Perhaps the Minister will be able to tell us that. We must
try to remove the bureaucracy, barriers and regulations that prevent organisations from forming themselves into such institutions and gaining protection so that they can carry out their good works in the community. The more we can do to reduce that burden of bureaucracy—such as paying expensive solicitors' fees or going through a process that takes months, registering with the Charity Commission, or registering with the FSA—the better it will be. Part of our role is to ensure that that regulation is kept to a minimum. I am sure that we have cross-party support on the importance of removing those burdens.Having said that the co-operative movement is so strong, I must add that it has, of course, been a mixed story over the last century. It has had to adapt to survive and remain strong. The battle between mutually owned building societies and their demutualised rivals is a case in point. We have seen how building societies have to maintain a first-class service to customers and high quality communication with their members, if they are to resist damaging takeovers, which are often led by carpetbaggers seeking to make a quick buck.
Those carpetbaggers abuse the democracy at the heart of the co-operative movement by offering the promise of share windfalls. It was not pointed out during the bad years when these battles were at their height that the long-term effect would be to remove from members the democratic right to control the capital of the co-operative—and, indeed, its policies—based on values of self-help, fairness and social responsibility.
It is encouraging that when a mutual society has performed well and put its case strongly, members have chosen to reject the short-termism of the carpetbaggers. The largest building society, Nationwide, provides one example of a demutualisation attempt being resisted; the defeat at Standard Life gives us another. I hope that we have now turned the corner in relation to that matter, not only because of the regulation that we are trying to introduce today but because of the positive way in which the building societies are now putting across those values. They were values that we took for granted; we thought that we did not need to repeat them because we all knew what they were. This is our opportunity to ensure that everyone knows what they are, and that such moves are resisted as much as possible in future.
We must protect the democratic principle so that people have the right to decide the future of their societies, which is the point of clause 1. All the Bill seeks to do is to bring protection for co-ops in line with that for the building society sector by ensuring that a decision to convert to registered company status is made by more than half a society's members. My hon. Friend the Member for Harrow, West made the crucial point that a minority or small group must not be able to turn up, vote and overturn a society's status. Clause 1 would prevent that.
Why use 75 per cent. and 25 per cent. as the figures? There is no generally accepted mathematical basis for saying, "This is a legitimate democratic process and that is not." However, the co-operators who support the Bill believe that clause 1 strikes the right balance between protecting co-operatives from carpetbaggers and preserving members' rights to make democratic informed choices. That is a difficult balance to strike, but the Bill gets it right.
My hon. Friend the Member for North Durham (Mr. Jones) referred to credit unions. Although the co-operative movement has been successful in the financial sector—
the growth of credit unions is an example of that—people have still suffered. Credit unions are protected by the Credit Unions Act 1979, which in effect prevents their demutualisation, and they are an important means of tackling financial exclusion.I know from my constituency experience that some people cannot borrow money at an acceptable rate or even hold a bank account. If they cannot get access to a bank account but live in the cash economy, gaining access to credit is so much harder. People excluded from the financial services that we all take for granted usually have only one option—a loan shark. They find themselves in huge debt and unable to pay, then the situation goes from bad to worse until they cannot cope with the burden.
Many Members will have met, as I have, constituents who have fallen into the trap and the exploitation that goes with it, but there is an alternative—the credit union. The number of members has grown to about 220,000 from about 70,000 only a decade ago, and there are 450 members of the Association of British Credit Unions, which is a huge step forward. As well as having an attractive savings option—people can get up to 8 per cent. in a good credit union—members receive low-interest loans, which is why they do not have to rely on the loan sharks.
A successful credit union operates in my constituency of Corby. It is run by volunteers based at Corby's volunteer bureau and it has 400 members, 80 of whom are under 16. As young people enter adulthood, do they understand finance and budgets and how to open a bank account? They do not. It is important that we provide youngsters, particularly those in school, with that information, and joining a credit union is a safe and reliable way to find out how to manage money.
I am sure that hon. Members will join me in welcoming the growth of credit unions and congratulating all those throughout the country, including Corby credit union, on their success. As my hon. Friend the Member for Harrow, West said, the Bill has the full backing of the Association of British Credit Unions. Indeed, the range of support that he has managed to drum up is particularly impressive, and it is important for what we want to achieve.
Other Members have referred to housing, and I want to mention housing co-operatives. This week many Members will have read The Guardian obituary of Harold Campbell, written by Lord Graham. It is an excellent tribute to a co-operator who played an important role in the Co-operative Wholesale Society and the Co-operative Development Agency. Most significantly, he was a champion of housing co-operatives and the role of tenants in housing management.
The Bill is important because it would support and raise the profile of new ways of working—the new mutualism—not least in the housing sector. About 5 per cent. of tenants live in co-operatively managed homes and more live in homes managed by housing associations, which have grown considerably in recent years. Co-operative housing ownership gives tenants more responsibility for their living conditions and helps them to acquire a greater sense of control over their own lives, homes and neighbourhoods.
Tackling the problems of the most run-down estates and providing more control and ownership to the people who live there, which are core elements of regeneration, will be important in the next four years of this Parliament.
The co-operative movement and the housing co-operative movement have a vital role to play in that, so legislation such as this, which would provide greater security for community assets, is essential if we are to pursue that approach.We have not mentioned the health sector, but there is a model in my constituency, as general practitioners have formed a co-operative to share medical services and work together. Every sector—housing, finance and health—is open to such development and all the advantages it brings.
I must mention charitable law, which the performance and innovation unit is reviewing. There are parallels between the legal protections for charities and for industrial and provident societies, and there are models that we can use. I hope that the PIU report recognises the value of those protections for the wider voluntary sector, and that the model in the Bill, but not necessarily the charitable model, has wider application.
I again congratulate my hon. Friend the Member for Harrow, West on introducing this welcome Bill. He is a committed co-operator and we all pay tribute to his work as an MP and chair of the Co-operative party. I am enjoying the debate. We are learning a lot, and I wish his Bill every success.
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