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Ms Meg Munn (Sheffield, Heeley): Will my hon. Friend pay tribute to a co-operative that he and I know well—Wortley Hall, in the constituency of my hon.
Friend the Member for Barnsley, West and Penistone (Mr. Clapham), which is also used by many of my constituents and many other people in South Yorkshire? It is a co-operative holiday and conference centre which was taken over 50 years ago, and celebrated its 50th anniversary last year. It became known, not surprisingly, as the people's stately home.Wortley Hall provides conference facilities for much of the trade union movement, and holidays. It has been used for the benefit of local people for more than 50 years, yet how often do we go to a hotel or similar establishment in the private sector and find that it is now owned by someone different?
Mr. Bailey: I thank my hon. Friend for that information. Yes, I will pay tribute to Wortley Hall. I have spent many happy weekends there, and my hon. Friend's intervention reminded me that in addition to all its other achievements it has one above all: it is the place where my wife agreed to marry me, which I think everyone would agree makes it even more remarkable.
It is a testimony to the relevance and resilience of mutual and co-operative organisations that they have survived so long in a not very friendly legislative climate.
As the hon. Member for Twickenham said, mutuals and some co-operative societies have not always sold themselves very well. They have been happy to do their business, in some cases very successfully, but they have not conveyed to their members or the wider world the fact that they are a different type of business, and the merits of surviving as a different type of business. That omission was one of the factors that made them vulnerable to the predatory efforts of the carpetbaggers about whom we have heard so much this morning.
When the attacks on mutual societies were at their height, I read the financial pages of many newspapers, some of which should have known better, and I felt that the debate that went on failed to give a balanced perspective on the relevance and significance of the mutual sector in our financial set-up. All too often, many financial commentators were happy to go along with the tide of self-interest that dominated the debate.
That attack on the mutual sector highlights the need for the Bill, but I emphasise that it is not just a defensive Bill, designed to protect societies. It is a recognition that today's economy is more complex. The economy is no longer divided purely into the private sector and the public sector. The social economy is ever more important. In an increasing number of areas, although companies have to survive in the market, profit is not their main motive or driving force. Attempts to deliver many vital services by private shareholding companies have not worked. I could mention the water utilities and—dare I say it—Railtrack as classic examples.
Different forms of community-based business have proliferated. This morning we have heard about housing co-operatives, care co-operatives, football trusts, food co-operatives, credit unions, societies, clubs, and even the Women's Institute. My hon. Friend the Member for Ilford, South (Mike Gapes) has said that although those are different in so many ways, they all have one thing in common: they are owned by their members. For the most part, they also have other things in common. First, there is a degree of education in participation. Secondly, their success is measured by the quality of the service that they
perform. Thirdly, the assets that they build up are available to the community rather than going into the pockets of the shareholders.When I look around my constituency of West Bromwich, West, I see traditional and new co-operative and mutual endeavours. There is the West Midlands co-operative society, which still has many vital trading outlets, often in places where other multiples would not go. There is the Tipton and Coseley building society, which has survived the predatory instincts of certain people. It has not only provided many years of valuable service to the local community and the local economy, but been a linchpin in initiatives to regenerate the Tipton area.
There is also a housing co-operative at Cotterills Farm in Tipton, which works with the local authority and provides an excellent service to its tenants. We have a food co-operative, Sandwell Community Foods, which provides much needed healthy foods to people who otherwise would not have access to shops. It concentrates on delivering fresh fruit and vegetables at competitive prices to private homes, schools and nursing homes. It is funded partly by the national lottery board, partly by income that it generates itself and partly by the health authority through the health action zone. It is a clear demonstration of a community business complementing Government initiatives in the realisation of agreed social objectives.
These community-based companies are growing because the dividing line between the traditional public and private sectors is becoming blurred. Many services provided by national and local government have lacked flexibility and sensitivity to consumer needs. However, those services would suffer if they were delivered by private companies, where scarce resources would be diverted into shareholders' pockets. The co-operative or mutual alternative provides a solution that is as sensitive to consumer demand as the private sector, but which does not divert those much needed revenues into private shareholders' pockets.
However, under existing legislation there is a problem. The irony is that the more successful a mutual or co-operative becomes, the more vulnerable it is to privatisation. The richer it becomes in assets, the more likely it is to become a target for carpetbaggers.
Once privatisation takes place, the assets that have been built up by individuals on behalf of the community are lost, the service that the mutual or co-operative has delivered to the community is all too often lost—and, perhaps most worryingly, it provides a tangible disincentive for the other organisations that seek to do that work to organise on a mutual or co-operative basis. The fear of having the assets built up by a co-operative initiative taken over and privatised is still a definite disincentive in some areas.
The provisions in the Bill to ensure that any privatisation of a society will require a higher threshold of membership support should act as a deterrent; I welcome them. The clauses are designed to ensure that the society's assets continue to be used for community or other benefits will remove that incentive for carpetbaggers.
I recognise the point made by the hon. Member for Epsom and Ewell (Chris Grayling), who is not in his place at the moment, that the provisions could present difficulties in certain circumstances. I believe that most of
us who have been local authority representatives have come across that problem when trying to realise the aspirations of charitable trusts that were designed in previous centuries. However, I do not regard that as an insurmountable obstacle; I simply think that it requires an appropriate level of legislative flexibility.The clauses that would provide for the updating of society legislation in line with other forms of company law are very welcome. They are welcome, above all, because they represent a recognition that industrial and provident society law is as important and significant as other forms of company law—that it is not just an archaic relic left over from the Victorian era, but a living and dynamic form of corporate legislation that plays, and will continue to play, a vital role in a modern, socially sensitive market economy. I therefore ask all hon. Members to support the Bill.
Mrs. Ellman: On a point of order, Mr. Deputy Speaker. I note that several of my hon. Friends, as Labour and Co-operative Members of Parliament, have declared their membership of the co-operative group. I was not aware that that was a requirement in this debate. If it is a requirement, I wish to declare my membership of that group, as a Labour and Co-operative Member of Parliament, and I apologise for not doing so when I made my speech.
Mr. Deputy Speaker (Sir Michael Lord): That is not really a point of order for the occupant of the Chair, but the hon. Lady has made her point, and it is now on the record.
12 noon
Jim Sheridan (West Renfrewshire): May I say from the outset that I am not a member of the Co-operative party, but that I will still endeavour to co-operate and keep my contribution brief?
I congratulate my hon. Friend the Member for Harrow, West (Mr. Thomas) on introducing the Bill. It is a breath of fresh air for me that the Bill contains social values that are consistent with my own values, when this society is one of personal gain and personal greed. The values in the Bill are consistent with those that brought me and a number of my colleagues into politics—social responsibility, accountability and the fundamental recognition that the more vulnerable people in our society depend on such organisations to enhance the quality of their lives.
I can think of no other recognised organisations—other than the Labour party and the trade union movement—that have the absolute commitment to democratic member control and participation that is apparent in the constitution of the co-operative societies. They have one member, one vote—as opposed to registered companies, where each share has a vote.
Co-operatives work for the benefit of their communities in a way that other financial institutions choose to ignore. Likewise, I also want to mention the good work done by credit unions, which has been mentioned already. A number of local credit unions in my constituency do sterling work day in, day out.
I am fortunate to represent a constituency that is diverse and somewhat complicated. In West Renfrewshire, many people live comfortable lives and operate within the established financial institutions, but there are those who, through no fault of their own, are unable to do so, or are uncomfortable in that environment. That is why the Bill is important. It would protect the interests—and, more importantly, the assets—of the societies from the carpetbaggers, whose only interest is self-interest; they have no interest in our communities. There is clear evidence that the financial predators are in the vicinity. That is why we must get the wagons in a circle now and legislate to protect those valuable and socially inclusive societies.
Industrial and provident societies have a crucial role in monitoring and delivering our public services—an issue of particular interest to me. Trying to deliver good quality transport is a particular problem in the rural communities in my constituency, and such societies could play a role in solving that problem.
We often refer to those societies as friendly societies, which is exactly what they are. They are user-friendly and their members feel comfortable participating in their structure, which strikes a proper balance between prudence and the needs of the community. On that basis, I am absolutely delighted—as a non-member of the Co-operative party—to support the Bill, which offers tangible legislative protection to those who have a social conscience in our society.
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