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Lastly, it is important for the continuation of the development of the credit union movement that credit union and building society legislation is brought into line. It is symptomatic of how it is now regarded that people are looking to this sector as a way of strengthening post office services by aligning them with credit union outlets.
I emphasise those issues because they demonstrate the evolution in the perception of this form of corporate organisation and how important it will be in future. I thank my right hon. Friend the Member for Croydon, North for introducing this Bill to accelerate these much-needed processes.
11.34 am
The Economic Secretary to the Treasury (Ian Pearson):
I thank my right hon. Friend the Member for Croydon, North (Malcolm Wicks) for his eloquent and erudite introduction to the Bill. He set out the issues clearly and concisely, and his Bill certainly has Government support.
I thank hon. Members who spoke in the debate, because they all made important and valuable contributions. My hon. Friend the Member for Sheffield, Heeley (Meg Munn) spoke about the ethical values embedded in co-operation and the valuable work of co-operators in the community. She highlighted the activities of co-operative banking and its role in reducing greenhouse gas emissions and promoting women in business, both of which initiatives I strongly applaud.
My hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) referred to the 149-year history of the Plymouth & South West Co-operative Society and the Wolseley Community Economic Development Trust and others. I recognise, as do the Government, the important role that co-operation and community development has played in Plymouth. She rightly pointed out the strength of this sector in the south-west and mentioned the role of social enterprises in our economy and their resilience in difficult economic times—something that we all recognise.
Speaking for the Liberal Democrats, the hon. Member for Southport (Dr. Pugh) gave his party’s support to the Bill. He mentioned the risk of denaturing the sector, which I know it is aware of and am sure it will avoid. He also mentioned the sector’s important role in providing informal financial education. He will be aware that financial education is very high on the Government’s agenda. He will also know that, in tandem with the Financial Services Authority, we recently launched pathfinders in north-west and north-east England under the “Money made clear” brand to help promote greater financial literacy in education. We hope that they will be rolled out as quickly as possible, following the announcement in this week’s Budget.
My hon. Friend the Member for Edmonton (Mr. Love) supported the change in the name of the industrial and provident society Acts and, in particular, the creation of the level playing field that the Bill seeks to achieve. He pointed to the growth of credit unions and spoke about the level of ambition of the sector. I certainly agree with him in wanting to do more.
My hon. Friend the Member for West Bromwich, West (Mr. Bailey) talked about his 18-year career as a Co-operative party organiser. I well know from the fact that he is a constituency near-neighbour of mine that he
has been a long-standing champion of this sector. He quoted statistics about the people’s trust in mutuals and co-operation, which demonstrated a very important point. I am pleased that, although the historian in him might have had reservations about the changing of the name from industrial and provident societies, he nevertheless supports it, as the practical politician and experienced organiser in him probably recognises it is the right thing to do.
As has been noted, the Bill builds on a tradition of previous private Members’ Bills proposed by my hon. Friend the Member for Harrow, West (Mr. Thomas), my hon. Friend the Member for South Derbyshire, (Mr. Todd) and the hon. Member for Bournemouth, West (Sir John Butterfill), which sought to update legislation. The Bill contains measures for which the co-operative and credit union sector specifically asked. It will help to modernise the legislative framework for co-operatives and credit unions and put in place appropriate mechanisms to enhance their corporate governance. It will, I am sure, help the sector to continue to flourish, which we all want to see.
Co-operatives and credit unions make an important contribution to the UK’s economic and social well-being. Many people’s perception of a co-operative will be defined by the local Co-op retail stores that they know and shop at. My hon. Friend the Member for Plymouth, Sutton spoke about their pioneering promotion of Fairtrade products—again, the Government strongly support that. I might add they regularly have some quite stunning wine offers.
Linda Gilroy: The Minister should not forget the role of the Co-op in bringing Divine chocolate to many more customers in the UK.
Ian Pearson: Again, my hon. Friend makes a good point about how the ethical underpinnings of the co-operative movement drive the desire to introduce products that are fair trade and that benefit people in developing countries.
I want to stress, however, that co-operative retailing is only one small part of a bigger story in respect of the mutual sector. Co-operatives now operate in many different sectors of the economy. They are involved in a wide variety of businesses, such as banking, insurance, agriculture and food, livestock and grain marketing, the manufacture of surgical equipment, health food wholesale and distribution, telecoms, and even natural sciences research and development.
Several Members cited figures, and the figures I have show that in the UK alone more than 8,000 co-operatives are registered as industrial and provident societies, with about 19 million members and total assets of almost £120 billion. There are also more than 500 credit unions in Great Britain, with almost 700,000 members and total assets of more than £500 million. As my right hon. Friend the Member for Croydon, North said when talking about the Croydon Savers credit union, for those on low incomes credit unions continue to offer a viable alternative to the unscrupulous doorstep lenders, who often charge interest in excess of 200 per cent. APR. We must do all we can to ensure that credit unions thrive and play an even more important role in the economy. I agree with my right hon. Friend’s comment that credit unions are the “decent alternative”.
In all this, the common thread of mutuality is that the business is owned by the members and run for the benefit of their members—the savers and borrowers of a credit union, or the farmers in an agricultural co-operative. These businesses have no external shareholders whose interests may be different from those of members. Often, this can give them the freedom to operate on long-term horizons without pressure for short-term gain or profit—something that other business models may not be able to do so easily. Having these different corporate forms enhances choice and competition, to the benefit of all consumers. To stress that mutuals operate for the benefit of members is not to say that only their members benefit from their activities; after all, we all know that not all Co-op shoppers are members. We should also recognise the wider community functions that mutuals often play—for example, the Co-op Group sponsoring the “Pride of Britain” awards and, as my right hon. Friend pointed out, the role of the sector in promoting social cohesion and entrepreneurship.
For all these reasons, it has been a long-standing aim of this Government to see a thriving and self-sustaining mutual sector. We have done a great deal in recent years to help the sector grow and fulfil its potential. We have done that partly through funding. For example, the Government have set up an £80 million growth fund for credit unions and community development financial institutions. A further £18.75 million was announced in this week’s Budget, to bring the total to almost £100 million. This fund is providing community-based lenders with additional capital to on-lend to those on low incomes in areas of high financial exclusion and the revenue support to cover the costs of the service. More than 160,000 credit union members have benefited from these loans since the start of the fund in July 2006.
The Government have also taken steps to ensure that the sector has an up-to-date regulatory framework within which to operate. We are taking forward important legislative reforms for credit unions and co-operatives, using a legislative reform order. We propose that the LRO will go through Parliament under the affirmative resolution procedure, so Members will have a further opportunity to debate this subject.
Before concluding, I want to respond to the comments of the hon. Member for Fareham (Mr. Hoban), who spoke on behalf of the official Opposition. He also spoke about the importance of the mutual sector and gave the examples of NHS foundation trusts and football supporters’ clubs in addition to the usual areas we talk about in respect of this sector. He mentioned on at least two occasions the renaissance of interest in mutuals, and he is right about that. He also talked about the benefits of democratic accountability and consumer focus, and I am pleased to hear that the Conservative party believes that they are important. I also agree that co-operative models can be applied to the delivery of public services. That is an important area where the Government have already taken action, but I believe that more can be done.
The hon. Gentleman mentioned the Presbyterian Mutual Society. As he is aware, the Department of Enterprise, Trade and Investment in Northern Ireland is the registrar. However, there is nothing in the Industrial and Provident Societies Act (Northern Ireland) 1969 about prudential regulation or hands-on supervision. The onus has been on a society to seek authorisation, in this case from the
Financial Services Authority, if it was planning to carry on business within the scope of that authority. However, as the legislation does not say anything about prudential supervision, we might need to review it. As he will be aware, in the 2008 pre-Budget report, we announced a review of the framework for credit unions and industrial and provident societies in Northern Ireland, working closely with the Northern Ireland Executive. I hope to be able to publish the findings of that review very shortly.
Mr. Hoban: Does the Minister not think, however, that there is an obligation on the Government here in London and on the devolved Assembly in Northern Ireland to understand why the Presbyterian Mutual Society seemed to disappear beneath the radar of the FSA as regulator of financial services and the DETI in Northern Ireland as the registrar for industrial and provident societies in Northern Ireland?
Ian Pearson: I certainly agree that it is important that we learn the lessons from what has happened with the Presbyterian Mutual Society. These will be considered as part of the review, and, as I have said, I hope to publish its findings shortly.
Mr. Hoban: Will the Minister confirm that those findings will explicitly refer to what happened with the Presbyterian mutual and why its problems were not spotted earlier by the relevant regulatory authorities?
Ian Pearson: At present we are still looking at a draft of the review. As the hon. Gentleman will be aware, it has a wider remit because it is looking at credit unions and industrial and provident societies and the framework of regulation, but we will certainly take on board the points he makes.
The hon. Gentleman also mentioned the powers in the Industrial and Provident Societies Act 2002, and electronic and electronic communications and the need not to hinder the sector in that regard. Those are issues that, if appropriate, we can consider in Committee.
I am pleased to confirm that the Government fully agree with the objectives of the Bill and we support my right hon. Friend the Member for Croydon, North in introducing it. He talked about the work of credit unions never being more important than it is now, and the ethos of co-operation in today’s climate is certainly strong and growing. I look forward to the smooth passage of this Bill and to debating the detailed provisions further in Committee.
11.48 am
Malcolm Wicks:
This has been a very well-informed and thoughtful debate and, from my point of view, an entirely agreeable one. There has been a remarkable outbreak of consensus, not least with the Conservative spokesman, the hon. Member for Fareham (Mr. Hoban), following a prompt earlier, almost becoming Prescottian in his advocacy of traditional values in a modern setting. May I say to the hon. Gentleman that when I urged him to sit down earlier, I was not being rude? I urged him to do so because he was at the point in his speech where he said that he could find nothing to disagree with, and as
I could see that he had a few more pages to go, I thought that they might involve disagreement. However, he continued in his very positive way. Indeed, he was so agreeable that I am tempted this evening, notwithstanding the mentions of Presbyterianism, to open a bottle of Wine Society liquid. Some hon. Members will know that the full title of the Wine Society is the International Exhibition Co-operative Wine Society Ltd. I have never thought of myself as a champagne socialist, but on this brief occasion I am happy to become a chianti co-operator.
Mr. Hoban: I should, of course, have referred to my membership of the Wine Society earlier. The Wine Society demonstrates some of the benefits of mutuality, in that it offers very good quality wine at a lower price because it is not seeking to make a profit from its members. That is a very good example of the practical benefits that many members of the Wine Society enjoy.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I should observe for the benefit of the House, lest the wrong impression be given, that this is, of course, a temperate Chamber.
Malcolm Wicks: Absolutely, Mr. Deputy Speaker. Harold Wilson once said that the Labour party perhaps learnt more from Methodism than from Marxism, and temperance is something that all of my colleagues in the Chamber today have learnt—certainly in theory.
I shall not respond to every point that has been made today. We heard some very good speeches from my hon. Friends the Members for Sheffield, Heeley (Meg Munn), for Plymouth, Sutton (Linda Gilroy), for West Bromwich, West (Mr. Bailey)—he treated us to some good history—and for Edmonton (Mr. Love), and a very important intervention from my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael).
My hon. Friend the Member for Edmonton talked about the importance of the Rochdale pioneers—those on the Conservative Benches of course know the details of those pioneers—and the short answer to his question whether those principles will be reflected in the Bill is yes. Clause 1 states:
“A society may be registered as a co-operative society only if it is shown to the satisfaction of the Authority that the society is a bona fide co-operative society.”
No doubt we will be able to look at some of those issues in some more detail—I hope not in great detail—in Committee. The question that he raised was important.
The hon. Member for Southport (Dr. Pugh), who speaks for the Liberal Democrats, made a thoughtful speech. He urged us not to be complacent on some of these issues, and I can see the point that he is making: there will always be a tension between the virtues of smallness—small can be beautiful when it comes to credit unions—and, because many are seeking to expand, enabling modernisation and, in some respects, expansion.
How do we hold on to the virtues of the self-help nature of the credit union? I have mentioned that I attended the annual general meeting of the Croydon Savers credit union, where I saw for myself the 40 to 60 people in that room discussing for an hour and a half or so the nitty-gritty details of a very local, 1,000-member credit union. We need to hang on to those principles.
Indeed, despite the fervour of many of us in favour of mutuality and co-operation, we should remember that we must put those principles into practice.
When one looks back at the demutualisation of part of the building society movement, one finds that it has had catastrophic effects. How many of those demutualised building societies are now independent banking entities? They have been taken over and nationalised. That demutualisation was able to take place—people agreed to take a few hundred pounds to vote for it—because some of those mutuals had lost contact with their members; they were mutual in theory but not in practice. The hon. Gentleman’s thoughtful speech reminds us that we must not be complacent and get too carried away with mere rhetoric.
I am very grateful for support from the Liberal Democrats and, indeed, from the hon. Member for Fareham, who made a very good speech. He rather reminded us that sometimes great support for a private Member’s Bill can evaporate. He referred to the private Member’s Bill promoted by his colleague, the hon. Member for Bournemouth, West (Sir John Butterfill), and that was an important warning. I shall ensure that, with my colleagues in the Treasury, we will scrutinise my Bill most thoroughly to ensure that the Croydon credit union cannot make a late takeover bid for Lehman Brothers. I think that that was the gist of the hon. Gentleman’s warning.
The hon. Gentleman also reminded us, from his vantage point in Fareham, that although we often associate the history and much of the strength of the co-op movement with the north, there is a strong southern tradition too. He may note that under my Bill, through an Order in Council, it might be possible for the legislation to apply to the Channel Islands. As someone who is married to a Channel Islander, I know that both Guernsey and Jersey have a thriving co-operative sector. If my geography is right, both are somewhat south of Fareham.
We have had a useful debate, with support across the Chamber. A spirit of consensus has broken out, and we are all co-operators now. That may have something to do with the fact that while those of us on the left in politics are proud of the origins of the co-operative movement as part of a wider labour movement, there is a sense in which many of the virtues of mutuality, thrift, self-help and responsibility strike chords on the other side of the Chamber. That is perhaps the reason for the wide support for the Bill. I look forward to further exchanges in Committee, should that be the will of the House.
Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63) .
Palliative Care Bill
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