4 pm

The other driver behind the new clause was the evidence from Mr Holloway, which was received after the Committee concluded its deliberations. I thought it illuminating none the less, partly because it gave me an opportunity to get to grips with the details of payroll software—an expertise that I have not previously had the pleasure of enjoying in this House. Mr Holloway’s evidence, which was made available to the Committee and to the Minister, suggested that there were problems about the guidance not being available in sufficient time for developers to get their software ready. He indicated that, normally, three to six months is required for systems to be developed, including time for specification and documentation of the changes, development, testing and release to clients.

On new clause 3, the Minister said that the guidance was going to be available in January, which seems to put at risk the availability of the software being ready or, at least, software developers will be up against it in getting everything tested and working on time before the employment allowance comes into force. The purpose of the new clause is that, six months in, we will have an opportunity to make sure that software-type issues have been ironed out and that businesses are not reporting compliance or other administrative costs that we will not know about until it is rolled out. If they are, that gives an opportunity for MPs and the Government very early in the life of the allowance to consider what changes might be made to remove those issues.

Both clauses are designed to assist the Government from a perspective of support for the employment allowance, a desire to see it work effectively, a desire to make sure that every business that is eligible for it is able to take it up, and a desire to see that it has a positive impact on job levels and wage rates.

Mr Gauke: The hon. Member for Birmingham, Ladywood (Shabana Mahmood) said that she is not yet suffering from review fatigue; I wish I could say the same. I note that much of this debate also took place in Committee and I am tempted simply to refer the House to my speech on 21 November. However, I think that that would not be quite the appropriate thing to do, so let me address the points on the new clauses.

Let me make the case, as I did in Committee, for why new clause 1 is unnecessary. The tax information impact note already commits the Government to keep the scheme under review through ongoing communication with taxpayers’ groups affected by the measure. Moreover, in Committee on 21 November, I agreed that the Government should publish information twice a year about the overall take-up of the employment allowance, including by geographical location. I am happy to repeat that commitment today.

Nevertheless, as with the hon. Lady’s previous amendment in Committee, this new clause focuses in particular on the number of jobs created by the employment

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allowance. As I made clear on Second Reading on 4 November, and in the evidence session on 19 November, although the employment allowance will clearly reduce the cost of taking on new staff for small businesses and charities, it will be up to those businesses and charities to decide how they use the resulting national insurance contribution savings.

The hon. Lady will also recall the comments made by both the Institute for Fiscal Studies and the Federation of Small Businesses at the evidence session on 19 November that it is impossible to get precise numbers. We cannot conduct the equivalent of a randomised trial of tax policy to determine the number of jobs created because of the allowance because, as the IFS pointed out, there is no counterfactual, as there are a number of factors in the economy influencing the number of jobs at the same time. The Government have not set a target for the number of jobs we expect to be created, although as we have previously noted, survey evidence from the Federation of Small Businesses suggests that 28% of such businesses will use the savings to employ additional staff. Therefore, as I made clear in Committee, it would not be possible to provide information about the number of jobs created as a direct result of this measure.

Sammy Wilson (East Antrim) (DUP): Although I understand the Minister’s position, given all the variables that will determine the number of people employed as a result of any change, it will nevertheless result in about £1.75 billion left with employers and not coming into the Exchequer as tax. Does he not feel, therefore, that there is at least some need to judge the effectiveness of a policy that will release a substantial amount of money?

Mr Gauke: The hon. Gentleman is absolutely right: the measure will release substantial amounts of money and a considerable amount of revenue will be forgone. We believe that taking less from employers is likely to have an impact on employment, wages or investment, or a combination of the three, all of which will be welcomed. However, tempting though it might be to call for a particular number of jobs to be created from the measure, I do not believe, for the reasons I have outlined—because there are so many factors in play—that we could give such a number with the necessary degree of robustness. Some 28% of the businesses surveyed by the FSB said they would use the savings to employ additional staff, while 29% would use the NICs savings to boost staff wages. Again, it would be difficult to quantify the precise effect, given that wage levels are subject to many different pressures, which vary from business to business.

The new clause also seeks an assessment of HMRC’s strategy to promote the employment allowance. HMRC has already been proactive in promoting the allowance, having spoken to various interested parties over the summer, including representatives of software providers, charities and small and medium-sized enterprises about the design and operation of the measure. There is continuing engagement between HMRC and those interested parties on guidance for employers and publicity. As a result of those discussions, communications to raise awareness of the employment allowance will begin more widely in February and March 2014, to maximise the impact in

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the crucial period running up to the introduction of the allowance next April, using a range of HMRC publications and products and the Department’s national network of local “working together” groups. As a result, we are confident that employers across the UK will be ready to claim the allowance next April, and those efforts to support take-up will continue after April.

Sammy Wilson: Does the Minister accept that there is at least some value both in looking at the geographical take-up, especially given how patchy the national insurance holiday has been across the United Kingdom—indeed, take-up in Northern Ireland was quite disappointing—and in monitoring how effective the promotion of the scheme has been in different parts of the United Kingdom?

Mr Gauke: Let me return to my earlier remarks and the commitment I made in Committee, which I have repeated this afternoon, that we will publish take-up numbers twice-yearly. That information will be provided on a regional basis, which I hope reassures the hon. Gentleman that he will be able to monitor take-up in Northern Ireland.

The other point I would make—again, it is a point I made in Committee and on Second Reading—is that there are a number of distinctions between the employment allowance and the NICs holiday that we had in place earlier in this Parliament and, indeed, the Opposition’s proposals for a NICs holiday. What we are proposing is a much easier policy for employers to implement; in fact, it is largely automatic. Those with an up-to-date payroll—that essentially applies to nearly every employer—will find that the employment allowance is automatically applied. Those employers essentially just need to click on a box and then it should work.

Given those reassurances and in the light of my existing agreement to make information about take-up available twice yearly, I hope that the hon. Member for Birmingham, Ladywood will withdraw her new clause.

Let me deal with the hon. Lady’s new clause 2, which seeks to require HMRC

“after six months of the Act coming into force”

to “prepare a review” to be published in Parliament. Such a review should consider

“whether there are any administrative or compliance costs”

reported by employers claiming the employment allowance, and

“whether businesses, charities and sports clubs are having any problems in claiming the…allowance.”

The new clause is unnecessary for two reasons. As I have pointed out, the tax information impact note already commits the Government to keep the scheme under review through the communication of stakeholders affected by the measure. As part of this review, HMRC will speak to interested parties to gauge their view of the employment allowance and to ascertain the ways it has been used.

As I said, HMRC talked over the summer to various interested parties, including software developers, charities and small and medium-sized businesses, about the design and operation of the allowance, including the claims process. There are continuing discussions between HMRC and these groups around the guidance and publicity, and they will continue after the launch of the employment allowance next April. These contacts between HMRC

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and relevant representative groups will provide the basis for a continuous review of the way in which the allowance is working. I acknowledged in Committee that hon. Members will relay any concerns or thoughts about the allowance on behalf of employers in their own constituency. Hon. Members will also recall the commitment I gave in Committee to publish the information twice yearly, as I mentioned. That in itself will provide an indication of the ease with which employers are able to claim the benefit of this relief.

As I pointed out earlier this afternoon, the employment allowance will be very easy to claim. Employers will receive it through the routine operation of PAYE—pay as you earn. Employers will simply need to confirm their eligibility by their regular payroll processes. Enabling the employment allowance to be claimed by employers through the payroll software will ensure that it is straightforward to claim. Employers simply have to indicate yes once in their EPS—employer payment summary—and the claim will continue from tax year to tax year.

After making the claim, employers will not need to pay their first £2,000 of secondary class 1 national insurance contributions if their liability is lower than £2,000 in the first month or quarter—depending on whether the employer pays his PAYE liabilities monthly or quarterly—and any unused allowance will be carried forward to the next month or quarter until it is exhausted. If an employer does not have an employer payment summary on their software, the free HMRC basic PAYE tools package can be used. For the small number—about 2,000—of eligible employers who still submit their returns to HMRC on paper, there will be a paper process to mirror the IT process.

With those reassurances, I hope that the hon. Lady will withdraw her new clause.

Shabana Mahmood: I am grateful to the Minister for his comments on my new clauses 1 and 2, particularly for the additional information he made available on the issues raised by new clause 2. Given his explanation, I am happy to withdraw the motion.

Clause, by leave, withdrawn.

Clause 12

Alternative Investment Fund Mangers

Amendment made: 1, line 2, leave out Clause 12.—(Mr Gauke.)

Clause 13

Members of Limited Liability Partnerships

Amendment made:2, page 11, line 8, leave out Clause 13.—(Mr Gauke.)



ThirdReading

4.14 pm

Mr Gauke: I beg to move, That the Bill be now read the Third time.

I thank all Members for the valuable insight that they have provided throughout the Bill’s passage so far. Their expert scrutiny has gone a long way towards ensuring that it reaches the statute book in good shape.

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Indeed, my officials suggested that I describe it as being “in good NIC”—[Hon. Members: “Oh dear!”]—but I thought better of it.

Such has been the level of scrutiny and insight contributed by Members that I shall give the House only a brief reminder of the five main measures in the Bill. The first is a measure to help both to remove barriers to growth for businesses and to equip the United Kingdom to compete in the global race. In this year’s Budget, my right hon. Friend the Chancellor of the Exchequer announced the creation of a new £2,000 employment allowance, which will come into effect on 6 April 2014. The objective is to help businesses with the cost of employing their staff. The allowance will help thousands of small businesses that aspire to grow, and is set to benefit more than 1 million employers.

The second measure was introduced this afternoon. In last week’s autumn statement, the Chancellor announced our proposal, in effect, to abolish employers’ secondary class 1 national insurance contributions on the earnings of any employee under the age of 21 up to the level of the upper earnings limit on 6 April 2015. That will substantially reduce the fiscal burden of secondary class 1 NICs, and thus support youth employment. As the figures in the autumn statement made clear, we estimate that about 340,000 employers could benefit to the tune of more than £450 million in 2015-16, and that the figure could rise to about £530 million in 2018-19. This is another measure that will make it cheaper and easier for businesses to employ young people, and I am sure that it will be welcomed, as a latecomer, by Members in all parts of the House. I appreciate the support that it has received this afternoon.

Thirdly, we have introduced provisions relating to the general anti-abuse rule, or GAAR. We announced in last year’s Budget that we had accepted the recommendations of the Aaronson review, and would introduce a GAAR targeted at abusive tax avoidance schemes. The GAAR was introduced in part 5 of the Finance Act 2013, and has been in force since July. The Bill ensures that it will apply to NICs. While the extension to NICs is a relatively simple measure, it is an important step because it makes it harder for individuals and businesses to avoid paying what they owe.

The fourth main provision concerns oil and gas workers on the UK continental shelf. In this year’s Budget, the Chancellor announced that the Government would strengthen legislation in respect of offshore employment intermediaries. The measure, which has been subject to consultation, is specifically intended to address the non-payment of employers’ national insurance in the oil and gas industry, involving the placement of employers of oil and gas workers who are working on the UK continental shelf outside the United Kingdom.

Fifth and finally, the Bill contains provisions relating to HMRC’s partnership review. The Government propose two sets of changes. The first is intended to address an issue that can arise from the interaction of the alternative investment fund managers directive and the existing partnership tax rules. The second reclassifies certain limited liability partnership members as employed earners for tax and national insurance purposes to tackle the disguising of employment relationships through LLPs. Together, those changes will ensure that the correct NIC consequences follow the planned changes in the taxation of partnerships.

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The Bill is both important and necessary. I am sure that all Members will recognise that every one of the measures that I have described will either make employing people easier, or will make avoiding taxes harder. The Bill will be good for growth, good for jobs, and hence good for the United Kingdom. On that basis, I commend it wholeheartedly to the House.

4.19 pm

Shabana Mahmood: First, may I join the Minister in paying tribute to all the members of our Bill Committee, who helped to scrutinise the Bill and provided valuable insight into its measures? If there was the occasional predictable question, it was always asked with good humour and good grace.

We have supported the employment allowance from the moment it was announced in the Chancellor’s last Budget. Our bone of contention with the Government has not been about the detail of the EA or who it applies to; rather, it has been about the time scales for its introduction. We believe that the Government should have changed course much earlier, particularly given what happened with the previous regional national insurance holiday scheme. Although that helped a lot of businesses, the number certainly fell far short of the 400,000 it was supposed to assist.

The Government say this Bill is about helping our country compete in the global race, but if we are going to compete in the global race, we will have to start getting out of the starting-blocks more quickly. I therefore say to the Minister that the Government should have acted more swiftly on national insurance. If the Government had changed course sooner, we may have been well into the take-up of the EA by now instead of having to wait for it finally to be introduced in April next year, and the country might already be enjoying all the good effects that all of us across the House hope will flow from it.

In last week’s autumn statement the Government introduced a new measure that we have also supported today: the abolition of employers’ NICs for all employees under 21 years of age. I repeat what I said to the Minister in our earlier debate, however: we would have liked bolder action from the Government in their autumn statement to help deal with the problems of youth unemployment. We do not think this measure, which will come into force only in 2015, goes far enough, nor will it stimulate higher levels of youth employment as quickly as we would like. The real bone of contention, which I fear we will continue to debate until this measure finally comes into force in 2015, is the delay. None of the reasons the Minister gave in his winding-up of the debate on new clause 3 for waiting until 2015 sounded sensible to me. He said that if the Government could have done so, they would, of course, have wanted to bring the measure forward in 2014. But the Government could also have got rid of the regional national insurance employers’ holiday scheme earlier when it was clearly failing, but they did not do so. I do not understand why it is impossible to introduce this measure earlier. I am sure we will examine that issue further when the Bill is debated in the other place and through oral and written parliamentary questions. The Minister and I will continue to debate the merits of the introduction of that measure in 2015, as opposed to the introduction of the new clause, which is what we would have liked.

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We have supported the EA in the Bill and we consider that the extension of the GAAR to apply to national insurance contributions is sensible, although we continue to have very real concerns about the extent of the GAAR.

Julian Smith (Skipton and Ripon) (Con): Does the hon. Lady wish to put on record in this Chamber that she regrets that Labour did not bring an anti-avoidance rule into law during its 13 years in government?

Shabana Mahmood: As the hon. Gentleman knows, we had exactly the same line of questioning in the Bill Committee and I remind him that the Labour Government brought in the disclosure of tax avoidance schemes, which has raised a hell of a lot more money than the Government believe the GAAR will. We have a proud and strong record on tax avoidance. Also, that does not get the Government off the hook in respect of their GAAR, which will not make quite the impact on the tax gap that everybody would like.

The measures relating to oil and gas workers and to limited liability partnerships have changed in order to clarify the Government’s intentions in the new clauses and the removal of old clauses 12 and 13, but they are both sensible measures that we are happy to support. So, although we have real concerns about the pace at which the Government are moving to deal with the challenges that this country faces—especially youth unemployment, which we are debating today as a result of the measure in the autumn statement—we support the measures themselves and will support the Bill’s Third Reading.


4.25 pm

Richard Fuller: I start by thanking the hon. Member for Birmingham, Ladywood (Shabana Mahmood), if I may, for her grace and courtesy in responding to my persistent and somewhat repetitive questions about her party’s commitment to the proposals on employment allowance, and on its continuing commitment to it in the lead-up to the next election. The reason for my persistence is that I think it is an absolutely fantastic measure. It will have a positive impact on employment, on wages and on the economy, and it should be embraced by all parties across the House, now and in the lead-up to 2015. I wish the hon. Lady every courage in talking to her colleagues to ensure that their support for it is maintained in the Labour party’s next manifesto. I wish her every success in that regard.

This small measure is so important because it has shone a light on a much broader and deeper issue—namely, the extent of Government intervention in the wages and living standards of people on low incomes. I should like to give the House some figures. Let us take the example of someone on the minimum wage earning £13,000 a year, and assume that they are the only earner in the household and have two children. Taking into account the impact of the tax and national insurance paid and the benefits received, that person’s take-home pay will be £25,000. Their wages will be £13,000, but their take-home pay including benefits will be £25,000, which is nearly twice as much. The difference will not be so significant for people without children, but even someone who is single and earning the minimum wage will see an increase on the £13,000 being paid by their employer to a total of £17,600 in pay and benefits.

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I do not want to question the level of Government intervention in the labour market, other than to say that a better outcome could be achieved if it were the employers who were paying the higher levels of wages that people need to achieve an adequate living standard. That outcome can be achieved in a number of ways. There will be uplift in the economy thanks to the measures that this Government are taking to encourage growth and boost the economy, and wages should increase over time as a result. It can be achieved through measures to increase the skills of our employees, to ensure that people can aspire to take on more complex tasks and earn higher wages as a result. It can also be achieved through innovation among our entrepreneurs as they create new higher sector employment, and through action on the minimum wage. I hope that all the political parties will think carefully about their policies on each of those points, so that we can make progress.

In the proposals in the Bill for the employment allowance, the Government have found a tool to tackle the additional costs that we place on labour. The chart on page 18 of the autumn statement shows that, since early 2001, employers’ social contributions as a share of total employee compensation have increased from 13% to 17%. The employment allowance will start to make a change in that regard, and I encourage the Minister to see it as a first step, with more still to come.

4.29 pm

Sammy Wilson: I want to make a short contribution to the debate, because I think that the Government are introducing an important measure. In this House we often discuss the macro-economic steps that can be taken, such as huge injections of money for infrastructure development and so on, but often—we have certainly found this in Northern Ireland—micro-interventions can be very effective in creating employment, improving conditions for employers and giving them greater confidence to invest. I believe that the measure will have that impact.

I, too, am a little disappointed that the measure’s full impact will be delayed until 2015, because I believe that unemployment among young people, especially in Northern Ireland, is a huge problem that we are trying to tackle. Once the measure is fully in place by 2015, I think that it will have a dramatic impact and will provide a big incentive for employers to take on younger people.

We must not underestimate the importance of even small amounts of money—£2,000, for instance—in influencing the decisions of some employers. One measure that was introduced back home in Northern Ireland was a 20% business rate relief for employers with a net annual value of less that £15,000. The maximum amount of money any one business received was probably £3,000, yet the feedback from employers on the impact was quite encouraging. Therefore, although some people might say that it is a small amount of money per employer initially, nevertheless I think that it will have that positive impact.

I take the Minister’s point about the difficulty in measuring how many extra jobs and how many new businesses the measure will create, but it is bound to encourage employers to hold on to existing employees, to take on an extra employee, to have a better cash flow situation, which might get them over a particular difficulty, or to invest some more money in improving their business. That is the important point.

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There is one thing I am concerned about, because the national insurance holiday did not have the impact we had expected, certainly in Northern Ireland. Indeed, uptake was very low. I take the point that at least the process has now been simplified, which means that it will be much easier for employers to access it. Of course, the more universal we make these things, the wider their impact. However, I hope that the measure’s effectiveness will be monitored constantly and that, if it is seen not to have had the impact that the Government had hoped, there will be a willingness to look at what could be done to improve it.

I congratulate the Government on the measure, which I believe is another important tool in the economic toolbox. I believe that it will have a positive impact.

4.33 pm

David Rutley (Macclesfield) (Con): I, too, congratulate the Government on bringing forward this important Bill. It was a pleasure to serve on the Bill Committee. I believe that the measures it contains will make a vital contribution to helping a cause that I believe in passionately: helping more people take on employees for the first time.

We have to get more of the growing band of self-employed people in this country to want to take on an extra employee and we have to overcome the barriers to that. Some 4.2 million people in this country are self-employed, which is 14% of the population, up from 12% at the turn of the century. The good news is that part-time self-employment is down and full-time self-employment is up, which is a good thing, because people are finding that it is a worthwhile form of employment and are making a contribution to the economy. The push factors in driving people to that form of employment are on the way down and the pull factors are clearly on the way up, and more young people want to get involved in self-employment.

However, the real challenge and opportunity that the Bill addresses is that of encouraging more of the self-employed to want to take on their first employee and helping people to see the benefits of working in that environment. Sadly, the pace of improvement in that area is not keeping up with the increase in self-employment. We need to help the self-employed to nudge open the barriers to becoming first-time employers and feel confident to take on employees, whether they are tangible barriers in IT, legal matters or human resources, or perceived, more psychological barriers such as their concerns about dealing with HMRC or about getting rules wrong in employing somebody.

In the Adjournment debate I held on this subject at the beginning of November, I talked through a whole series of options that we could consider to help address this challenge, but the most important thing to do today is to acknowledge that this Bill takes some vitally important steps in doing so. It will be a boost to first-time employees, whether they are apprentices, long-term unemployed, those who are economically inactive, or those who are looking for their second, third, fourth or even fifth careers.

Ian Swales: The hon. Gentleman is making a good point. Does he agree that the businesses he is describing find it difficult to find the time to apply for complex reliefs, and does he therefore join me in welcoming the simplicity of these proposals?

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David Rutley: The hon. Gentleman makes a vital point. The great thing about this initiative is that it is very simple. The hon. Member for East Antrim (Sammy Wilson) also made the important point that we need to make every effort to communicate that to small businesses. I know that the Minister is working hard in that direction as we move the Bill forward.

We need to help smaller businesses—micro-businesses —in the task of taking on employees because they are often better at taking on the long-term unemployed or those who are difficult to employ. That is another reason to welcome the Bill. I am pleased that the autumn statement went further in scrapping employers’ national insurance for under-21s completely, as in new clause 3. That is a vital step. As many Members on both sides of the House have said, it is one of the ways in which we will be able to tackle youth unemployment more comprehensively in the longer term.

This Bill is not just about improving economic growth but about tackling youth unemployment and social mobility. I congratulate my hon. Friend the Minister on bringing it to the House, helping it to progress so speedily, and doing it all with his characteristic charm, wit and dexterity. I support it because of what it will do for employment in helping more people to take on employees for the first time, and what it will do to tackle youth unemployment and drive forward sustainable economic growth that is grounded in private sector employment rather than in the public sector that was so much a focus of the previous Government and that we need to move on from. As my hon. Friend the Member for Bedford (Richard Fuller) pointed out, the hon. Member for Birmingham, Ladywood (Shabana Mahmood) might want to consider not taking her flip-flops on holiday next summer. This might be a nasty reminder of where the Labour party once stood with its jobs tax. We need to move on from that, and this Bill takes us to a better place. I commend it to the House.

4.38 pm

Julian Smith (Skipton and Ripon) (Con): New clause 3 was a fantastic Christmas present to members of the Bill Committee and a big boost for youth employment across the UK, particularly in North Yorkshire, where I represent a very rural set of communities and where, although we have very low unemployment figures, young people still want jobs. This will be a big boost for them.

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During small business Saturday, Government Members and, I hope, Members across the House, were out seeing small businesses across the areas we represent. In the town of Settle in the Yorkshire dales, people were clamouring for more information on the Government’s policy on the employment allowance and their new policy on employing under-21s without paying tax. That makes a huge difference, as other hon. Members have said, to businesses with a small profit margin that have just been set up.

Such businesses include JW Garnett, which managed to sell me a toaster on small business Saturday; 3 Peaks Cycles, which is revving up for the Tour de France in Yorkshire, which the Government have backed with £10 million; the Talbot Arms, which is being funded by a parent of the publican who is anxious to get moving and employ more people; and the Three Peaks Gallery, which is run by Hazel, who lost her husband at the end of last year, has this year been trying to keep the business moving and is now planning to use the Government’s measures to expand and employ people.

The employment allowance and the removal of employers’ NICs for under-21s, along with the business rate announcement in the autumn statement, mean that this Government now have a bumper range of policies to ensure that we are the party of business. The policies also include start-up loans, apprenticeships, the boost to the funding for lending scheme and a tax reduction whereby we will have one of the lowest rates of corporation tax in the world and thereby one of the best places in the world in which to do business and invest. My hon. Friend the Member for Macclesfield (David Rutley) has mentioned how difficult it is to employ people, but our moderate measures on employment—which faced stiff opposition from the Labour party—will make it easier for businesses to take on people.

All those measures mean that the Conservative party is the party of business. We will ram that message home as we approach the next election, because anyone who wants to start a business, who is an entrepreneur, who is thinking about being self-employed, who wants to take a risk or who thinks it might be worth investing in an initiative, market or product has only one choice in 2015, and that is this party.

Question put and agreed to.

Bill accordingly read the Third time and passed.

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Prevention and Suppression of Terrorism

4.42 pm

The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire): I beg to move,

That the draft Terrorism Act 2000 (Proscribed Organisations) (Amendment) (No. 2) Order 2013, which was laid before this House on 2 December, be approved.

The Government are determined to do all they can to minimise the threat from terrorism to the UK and our interests abroad. Proscription is an important part of the Government’s strategy to tackle terrorist activities. In that regard, we propose to add Imarat Kavkaz, also known as the Caucasus Emirate, to the list of international terrorist organisations, amending schedule 2 of the Terrorism Act 2000. This is the 13th proscription order under that Act.

Section 3 of the Terrorism Act 2000 provides a power for the Home Secretary to proscribe an organisation if she believes it is currently concerned in terrorism. The Act specifies that an organisation is concerned in terrorism if it commits or participates in acts of terrorism; prepares for terrorism; promotes or encourages terrorism, including the unlawful glorification of terrorism; or is otherwise concerned in terrorism.

If the test is met, the Home Secretary may then exercise her discretion to proscribe the organisation. In considering whether to exercise this discretion the Home Secretary takes into account a number of factors, namely the nature and scale of an organisation’s activities; the specific threat it poses to the UK; the specific threat it poses to British nationals overseas; the organisation’s presence in the UK; and the need to support other members of the international community in tackling terrorism.

Given the wide-ranging impact of proscription, the Home Secretary exercises her power to proscribe only after a thorough review of the available relevant information and evidence on the organisation. This includes open-source material, intelligence material and advice that reflects consultation across Government, including with the intelligence and law enforcement agencies. The Home Secretary is supported in her decision-making process by the cross-Whitehall proscription review group. Decisions to proscribe are taken with great care by the Home Secretary, and it is right that the case for proscribing organisations must be approved by both Houses.

Having carefully considered all the evidence, we firmly believe that Imarat Kavkaz is currently concerned in terrorism. Right hon. and hon. Members will appreciate that I cannot comment on specific intelligence, but I hope to provide the House with a brief summary of its activities. Imarat Kavkaz or the Caucasus Emirate is a terrorist organisation that seeks a sharia-based caliphate across the north Caucasus. It regularly uses terrorist tactics, and has carried out attacks against both Russian state and civilian targets.

The organisation claimed responsibility for the January 2011 suicide attack on Domedodevo airport in Moscow that killed 35 people, including one British national, and a suicide attack on the Moscow metro in March 2010 that killed 39 people. Since, then, Imarat Kavkaz has continued its activities, including renewed threats of

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activity in Russia this summer. The organisation is designated by the US, and is listed by the UN under the al-Qaeda sanctions regime.

Subject to the agreement of this House and the other place, the order will come into force on Friday 13 December. It is, of course, not appropriate for us to discuss specific intelligence that leads to any decision to proscribe, but I hope that the House will agree that it is right to add Imarat Kavkaz to the list of proscribed organisations under schedule 2 to the Terrorism Act 2000.

4.46 pm

Diana Johnson (Kingston upon Hull North) (Lab): I thank the Minister for his statement and explanation, and for taking the time to talk to me about the order earlier today. There is a long tradition of cross-party co-operation on issues of national security, and the Opposition will support the Government’s motion.

Under section 3 of the Terrorism Act 2000, a group can be proscribed if the Home Secretary is persuaded that it

“(a) commits or participates in acts of terrorism, (b) prepares for terrorism, (c) promotes or encourages terrorism, or (d) is otherwise concerned in terrorism.”

In addition to the Minister’s speech, a wealth of publicly available evidence links Imarat Kavkaz to acts of terror.

Indeed, the United Kingdom is two years behind the United States in proscribing the organisation. The United States acted in 2011, after Imarat Kavkaz was linked to two deadly attacks in Moscow. In January 2011, the group was linked to an attack at Moscow international airport, in which 35 people were killed and scores were wounded. The group was also linked to an attack carried out by two female bombers in March 2010, which killed 39 people in the Moscow metro.

The State Department helpfully gave us background information on Imarat Kavkaz or the Caucasus Emirate, as it is otherwise known. The group was founded in late 2007 by the Chechen extremist Doku Umarov. It is an Islamic militant organisation based in Russia’s north Caucasus. Its stated goal is the liberation of what it considers Muslim lands from the control of Moscow. It regularly conducts attacks against Russian security forces in the north Caucasus. As the Minister said, Imarat Kavkaz is linked to al-Qaeda through its leader, Doku Umarov, who I understand is one of the world’s most wanted terrorists.

Terrorist organisations originating in that part of the world have been in the spotlight because of last year’s attacks in Boston in the United States. In the light of those attacks, it is appropriate for the Government to review the activity of related groups in the United Kingdom.

The Opposition are always limited in what they can say in such cases, because we do not of course have access to the same intelligence as the Home Secretary. It would therefore be helpful if the Minister commented generally on why the United Kingdom has decided to act now.

I also want to ask the Minister about the effects of proscription on social media. Imarat Kavkaz has a number of Facebook pages and a range of fan pages are directed towards Doku Umarov. I hope that the Minister will clarify whether Facebook will be prohibited from

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hosting such fan pages and allowing people in the United Kingdom to access them once the group is proscribed.

James Brokenshire: The Government take the misuse of social media and the internet extremely seriously. The group’s Facebook page has been referred to the Counter Terrorism Internet Referral Unit, which has responsibility for assessing such issues. If the site is assessed to be illegal, the CTIRU will flag that up with Facebook directly and have it taken down.

Diana Johnson: I am grateful to the Minister for responding on that point.

As I said earlier, the Opposition are always limited in what they can say about proscription because it is up to the Home Secretary to analyse the evidence and make a decision. However, that did not stop the previous Opposition calling for proscription. The former Leader of the Opposition, who is now the Prime Minister, said to the House that he wanted Hizb ut-Tahrir to be banned. I hope that the Minister will say what progress has been made in banning Hizb ut-Tahrir and that he will assure the House that he continues to keep the activities of that group under review.

Earlier this year, I raised in the House my concerns about the activities of Hizb ut-Tahrir on university campuses. It was singled out by the Prevent strategy review as a group that was active in radicalising students on university campuses. That concern is particularly pertinent given the current trial of Michael Adebolajo and Michael Adebowale, who were radicalised at the university of Greenwich.

Finally, I want to raise the issue of de-proscription and time limits. The Minister is well aware that the Home Affairs Committee has long asked the Government how a group can be de-proscribed. The only group ever to be de-proscribed sought de-proscription through judicial review proceedings. The Select Committee has been pushing the Government for some time to put a proper structure in place for making such decisions. Time-limiting proscription was recommended by the independent reviewer of terrorism legislation, David Anderson QC. He felt that a proscription order should be subject to a review after a fixed period, following which it could be renewed or it would lapse. The Minister has been pressed on that issue on previous occasions. I hope that he will update the House tonight on the Government’s position or at least give an indication of the steps the Government are taking towards reaching a conclusion on how to de-proscribe.

4.52 pm

Mark Field (Cities of London and Westminster) (Con): I rise briefly to support the Government motion.

I take on board the comments that have been made by the hon. Member for Kingston upon Hull North (Diana Johnson). It is right that we proscribe an organisation only after a great deal of thought and when there is a lot of evidence.

As a central London MP, I want to say how lucky we are that the relations between different cultures and races in this country are so good. We too often take that

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for granted, particularly given the situation in many other western countries, including in the United States and other European countries. The melting pot in my constituency and throughout London operates very well. There is very little evidence of home-grown terrorism, although we rightly clamp down on it where possible.

In such debates, it is right to consider with the utmost seriousness the suppression of such groups, but we must also recognise that community relations in this country are incredibly good. That is a credit to this Government, but also to the last Labour Government. The Prevent strategy has made a real difference to communities at large and within our campuses. It is in that context that I support what the Minister is doing.

4.54 pm

James Brokenshire: I will respond briefly to the short points that have been made. I welcome the support that has been offered for the motion this afternoon.

The proscription of Imarat Kavkaz will demonstrate our condemnation of that group’s activities. Proscribing Imarat Kavkaz will also enable the police to carry out disruptive action against its supporters in the UK and ensure that it cannot operate here. I strongly endorse the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field) about the strength of communities. The work of the Prevent strategy has been enhanced and taken forward through the extremism taskforce, and he will know that further steps have been identified through that work. One issue that we are examining further is whether there should be a requirement for banning orders that sit underneath proscription—in other words, proscription is focused on those who are actively engaged in terrorism, but we are considering carefully whether there should be a further order aimed at any group that undertakes extremist behaviour that is counter to our fundamental values. Following that reflection, we will bring further proposals before the House.

The hon. Member for Kingston upon Hull North (Diana Johnson) asked me about de-proscribing. There is a high bar for a decision to proscribe a group in the first place, so it is right to take a precautionary approach when considering any removal of groups from the list. As allowed by legislation, de-proscription should be considered on receipt of an application, which should set out the grounds on which it is contended that the group is no longer concerned in terrorism. The Home Secretary is required to determine the application within 90 days, and if she agrees to de-proscribe the organisation, she will lay an order before Parliament removing the organisation from the list of proscribed organisations. The order is subject to the affirmative procedure, as is the order being debated this afternoon. We believe, therefore, that there is an effective process for the Home Secretary to consider de-proscription on application from groups, and there is a right of appeal and challenge.

The hon. Lady highlighted Hizb ut-Tahrir, which is not currently proscribed. Proscription can be considered only when the Home Secretary believes an organisation to be concerned in terrorism, as defined by the Terrorism Act. However, that group is an organisation about which the Government have significant concerns, and we will continue to monitor its activities very closely. Individual members of Hizb ut-Tahrir are, of course, subject to the general criminal law.

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We are taking action now in response to continued activity by Imarat Kavkaz and renewed threats in Russia during the summer. We believe that it is appropriate to bring the order before the House this afternoon, and I hope the House will support it.

Question put and agreed to.


Humber Bridge Bill

Consideration of Lords amendments

Lords amendments 1 to 22 agreed to.

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City of London (Various Powers) Bill [Lords]

Third Reading

4.59 pm

Mark Field (Cities of London and Westminster) (Con): I beg to move, That the Bill be now read the Third time.

The Bill makes relatively small but important changes to controls on street trading in the City of London, and liberalises controls to enable temporary licences so that street trading can take place outside the one area in which it is currently permitted—Middlesex street, commonly known as Petticoat lane. It will also enable ice cream and similar confectionary to be sold outside food premises—at least when the weather is slightly more conducive than it is at the moment to people wanting to buy such things.

I am pleased to report that since Second Reading in February, the last remaining issue concerning the services directive has been resolved, and the Department for Business, Innovation and Skills has no further objection to the measure. Indeed, BIS has accepted that the City of London Corporation’s justification for clause 9, which sets out how ice cream may be sold outside food premises, provides reasonable grounds that the clause is compliant with the EU services directive.

A number of important amendments were made to the Bill in an Unopposed Bill Committee—which I believe you chaired, Mr Deputy Speaker—in response to points made during a full Second Reading debate on provisions related to the sale of ice cream. The substantive amendments have been the subject of letters from the City of London Corporation to my hon. Friends the Members for Christchurch (Mr Chope) and for Shipley (Philip Davies), and I hope they provide reassurance on those points—the absence of my hon. Friends from the House today is perhaps a sign that silence is golden on that matter.

The amendments are to provisions inserted into the City of London (Various Powers) Act 1987 by clause 7(2), and I shall briefly outline their effect. The first amendment makes a change to new section 16A(1), which sets out preconditions for the exercise of the power to seize goods or vehicles in the City of London. Concern was expressed on Second Reading by my hon. Friends that the “reasonable suspicion” test was too subjective and laid too low and narrow a bar as a test. The requirement for reasonable suspicion that a person has committed a street trading offence has therefore been amended to one of reasonable belief. The new test will narrow the circumstances in which that power can be exercised, and will make it easier to claim compensation when proceedings are not brought or fail to result in a conviction.

On Second Reading my hon. Friend the Member for Shipley noted an apparent contradiction between the requirement in paragraph (c) of proposed new section 16B(4) for the City of London Corporation to obtain the best possible price that can reasonably be obtained for items it disposes of following a seizure, and the entitlement in paragraph (a) of that subsection, as presented on Second Reading, for the corporation to dispose of such items in any way it sees fit. As presented, the power of sale arose when the court made an award of costs that had not been complied with. To avoid any suggestion that the provision would justify the City of

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London Corporation in not seeking the best possible price, the reference in paragraph (a) to the corporation’s entitlement to dispose of items

“in any way it sees fit”

has been removed.

On Second Reading, my hon. Friends also raised new section 16B(6), which provides exceptions to the requirement for a seized ice cream van to be returned to the owner within three days of a request being made to the City of London Corporation. Objection was made to two of those three exceptions—first, where the owner is being prosecuted for a previous alleged street trading offence, and, secondly, where the vehicle has been used for a previous or alleged offence—as they were felt to conflict with the presumption of innocence. In recognition of that heartfelt concern, both those exceptions have been removed from the Bill. There is now only one exception—which the hon. Member for Christchurch felt to be justified—and arises when the owner of the vehicle has been convicted of a street trading offence within three years of the vehicle’s seizure.

The seizure of perishable goods is provided for in new section 16E. This reflects the current position in the rest of the metropolis of London. It was suggested on Second Reading that the seizure of such goods would be unfair. It is likely, perhaps inevitable, that if an ice-cream van is seized it will contain some perishables. The Bill was previously silent on how the corporation would look after any perishable goods. It now contains new section 16E(3), which imposes an obligation on the corporation to store any goods at an appropriate temperature.

Mike Freer (Finchley and Golders Green) (Con): I have shepherded one of these Bills through Parliament, so I gently suggest to my hon. Friend that—given that the Bill’s opponents are not here—we move on and give the Bill a Third Reading.

Mark Field: I take my hon. Friend’s point, but I have spoken to my hon. Friend the Member for Christchurch and his absence is not one of omission—more a recognition that the changes that have been made are in keeping with the points he made on Second Reading and in subsequent debates.

Two new sections were added in Committee. The first, new section 16H, provides for the Corporation to publish on its website information about the street trading regime in the City so that street traders and potential traders can readily access the rules and their enforcement. The second, new section 16I, requires the corporation to ensure that any officer authorised to exercise seizure or fixed penalty powers under the Bill receives adequate training. Both requirements reflect what the corporation already practises, but these have been made explicit statutory requirements.

My hon. Friends have rightly been concerned to test the necessity for any increase in powers and to ensure that there are adequate safeguards. I hope that they feel that the City’s response meets their concerns and strikes the right balance between street-trading activities and effective administrative and enforcement processes.

The measure is intended to bring some additional enterprise to the City of London—a place I have always regarded as the heart of enterprise for our nation—to

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add to the vitality which is an essential element of its attraction. The provision for temporary street licences will be a useful way to add to the appeal of seasonal and commemorative events in the City. The ability to license the sale of ice cream and other confectionery outside food premises will, at least in warmer seasons, be welcomed by the increasing number of visitors to the Square Mile and add to its general ambience. I therefore hope the Bill will be allowed to pass today.

5.7 pm

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): As hon. Members will be aware, the Government traditionally do not support or oppose private Bills unless, for some reason, they contain provisions contrary to public policy. In such a case, the Government bring those concerns to the House. In February, I raised such concerns on behalf of the Government, including in particular whether the draft Bill was compatible with the requirements of the European services directive. That concern related to clause 9, which seeks to allow only those with business premises engaged in the production and distribution of food to sell ice-cream from a receptacle outside those premises. It was the Government’s view that the clause failed to comply with the services directive by appearing to discriminate indirectly against non-UK nationals without justification.

Since that debate, I am delighted to be able to tell the House that my officials have engaged with the City of London to better understand the basis of the drafting of the clause, and to consider the issue and the policy justifications in more detail. In the light of that, we have concluded that clause 9 is not discriminatory from the point of view of nationality. This conclusion rests on two grounds. The first is public health, because persons having food premises are more likely to comply with good hygiene practices and regulations, and the second is protection of the urban environment because sites not adjacent to such premises are more likely to be in locations that could cause pedestrians to be put at risk. On balance, these justifications appear to meet the requirements in article 16(3) of the directive, so we are now satisfied that the Bill is compliant with the directive and should be allowed to proceed.

Question put and agreed to.

Bill accordingly read the Third time and passed, with amendments.


Business without Debate

political and constitutional reform

Ordered,

That Robert Neill be a member of the Political and Constitutional Reform Committee.—(Mr Evennett.)

Backbench Business

Ordered,

That Mr Marcus Jones and Mr Mark Spencer be discharged from the Backbench Business Committee and Oliver Colvile and Alec Shelbrooke be added.—(Mr Alan Campbell, on behalf of the Committee of Selection.)

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finance and services

Ordered,

That Mr James Gray be discharged from the Finance and Services Committee and Mr Robert Syms be added.—(Mr Alan Campbell, on behalf of the Committee of Selection.)

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Co-operatives and Mutuals

Motion made and Question proposed, That this House do now adjourn.—(John Penrose.)

5.10 pm

Mr Gareth Thomas (Harrow West) (Lab/Co-op): At the outset, let me declare that I am one of the 6 million ordinary members of the Co-op Group. I have accounts with Nationwide, and belong to the M for Money credit union in Harrow and the Rainbow Saver credit union. I am privileged to chair the Co-operative party and to be one of its MPs in this great House.

Unusually, the co-operative movement has been in the news on a sustained basis of late. Absent from much of the coverage has been any sense of the powerful contribution co-operatives and mutuals make in our communities. They could and should, with the right support, make even more of a difference, and it is on that point that I shall focus.

It would be wrong not to acknowledge the challenges faced by the biggest UK co-operative, the Co-op Group. I welcome the progress the group board and its new management team, led by Euan Sutherland, have made in addressing the problems the Co-op bank faces. There are, no doubt, long-term lessons to be drawn, not least on the checks necessary for those in key positions and on how mutuals raise finance. Other reviews and inquiries will focus on those issues, so I will not dwell on them.

The co-operative movement has had its challenges: wartime discrimination by the Government in the first world war over call-up arrangements; Neville Chamberlain’s efforts to get the Co-op divis axed in the 1930s; and, more latterly, the Thatcherite demutualisation of building societies and friendly insurers, the majority of which have not turned out well. The movement survived all those challenges and continued to grow. I have no doubt that it will survive and prosper after facing its current challenges.

The co-op sector in Britain grew by 20% between 2008 and 2012, while the economy as a whole shrank by 2%. Co-operative businesses in the UK together have a turnover of more than £37 billion a year. Those headline economic figures are striking, but it is the often unheralded work that co-operatives and mutuals do in our local communities that deserve a much greater focus. From the first store set up by the Rochdale Pioneers to the more than 6,000 co-operatives in the UK today, co-operative businesses have been at the heart of our communities for more than 150 years. Today, we have co-operative schools, farms, credit unions and shops; and co-operative housing, co-operative energy and even co-operative pubs. In London, if the Minister will forgive me for being parochial for a moment, co-operatives employ more than 8,000 people and have a collective turnover of more than £750 million.

Of the nearly 700 registered co-operatives in London, I draw particular inspiration from the four housing co-operatives established by Coin Street Community Builders to help to meet Londoners’ need for affordable housing; part of an ambitious refurbishment plan for London’s South Bank, including the famous Oxo tower. With the dream of home ownership out of reach for too many people, housing co-operatives could provide a new and innovative solution for a new generation. About 10% of the citizens of some European countries live in

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housing co-operatives, compared with just 0.6% of people in the UK. I gently suggest to the House, therefore, that housing co-operatives could make a much greater contribution to tackling our housing problems.

Perhaps the Minister, like me, might draw inspiration from the example of Brixton Energy, also in London, which comprises three energy co-operatives—community-owned solar power schemes taking inspiration perhaps from the better known Baywind and Westmill energy co-operatives in Cumbria and Oxfordshire. The Brixton solar-power initiative has created co-operatively and community-owned renewable energy, the revenues from which stay within the local community. It is an innovative energy solution leading the way in generating sustainable sources of energy and it is jointly owned and operated by people in the community for their mutual benefit. As democratic enterprises, they operate with a one member, one vote policy and are surely a great example of the kind of mixed economy of energy ownership that we need to challenge the big six and move on from today’s problems in our energy market.

The Minister and the House might also draw inspiration from the success of credit unions, which in many of our communities are increasingly taking on the Wongas of this world. They provide affordable credit, empowering many of the poorest people in our communities and helping to retain funds in the local economy. In Leeds, for example, Salford university found a £10 benefit for the local economy for every £1 invested in the credit union, and indeed the Department for Work and Pensions independent evaluation of the financial inclusion growth fund established by the previous Government found that the total loans made by credit unions under the scheme between 2006 and 2011 totalled £175 million and saved loan recipients between £119 million and £135 million in interest, which they would have had to pay had they taken out a high-cost alternative.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): For the record, I am a Labour and Co-operative MP and a member of several co-operatives and the Cardiff and Vale credit union.

My hon. Friend is making a strong speech about the value that co-operatives and mutuals play in local communities. That is certainly what I have seen in Cardiff, whether in the work of the credit union or organisations such as the Wales Co-operative Centre, which is doing much to support the growth of co-operatives and mutuals across Wales. Is it not sad, then, that the wider co-operative and mutual sector has been swept up, unfairly smeared and mixed up in some of the media coverage and commentary around the concerning and disturbing events at the Co-op bank?

Mr Thomas: That is an unfortunate consequence of some of the coverage, but I have no doubt that co-operatives can rise above it and continue to demonstrate strong support from their local communities. As I indicated earlier, I have no doubt that the co-op movement as a whole, be it in Wales, England, Scotland or Northern Ireland, will continue to prosper.

The London mutual credit union provides loans, savings and current accounts and insurance. It recognises that there is a market for short-term loans, but charges

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an interest rate of only 27% for a 30-day loan—a world away from the 5,600% annual percentage rate typical of the payday loan sharks against whom my hon. Friend the Member for Walthamstow (Stella Creasy) has rightly led the charge. Crucially, it also offers access to basic financial education and services, helping people to gain greater long-term control over their personal finances. Co-operatives and mutuals offer to local communities a crucial part of the mixed economy that our country surely needs. Of course we need a vibrant private sector and certainly a strong third sector, but surely we also need continued growth in the number of co-operatives and mutuals and their economic success.

To be fair to the Government, they have continued to support the strengthening and expansion of the credit union sector, although I hope they can be persuaded to be bolder on the idea of a military credit union. I draw the Minister’s attention to the example of the United States, where the biggest credit union in the world is Navy Federal Credit Union, the credit union for the American military. It has 4 million members and over $55 billion in assets. I gently suggest to the House that it is surely time to consider again how a British armed forces credit union could be made a reality to help our soldiers, sailors and air force personnel in our own communities. A British equivalent could help to protect service families from the scourge of payday loan companies and begin to tackle the worrying levels of financial difficulties experienced by some of our veterans.

The co-operative movement itself in the UK continues to support and encourage the development of new co-operatives and mutuals as part of the response to the needs of particular local communities. The excellent Co-ops UK—the “trade association” of the co-op movement in the UK—and the Co-op Group support the co-op enterprise hub. Examples of co-operatives that have been established and are running well thanks to their support including from—the Minister may be aware of this—Bristol ferry boats. In 2012, the previous operators went into administration and a group of determined locals approached the enterprise hub for support to launch a community share issue to raise the £250,000 needed to bring the ferries into community ownership. The share offer closed in July of this year having exceeded its target. Some 850 local people invested, therefore enabling the ferry service to continue, providing—crucially—employment for 20 local people.

Stella Creasy (Walthamstow) (Lab/Co-op): Like my hon. Friend, I should declare that I am a proud Co-op as well as Labour MP and a member of the Waltham Forest community credit union. He is making an incredibly powerful case for the need for boldness in our public policy solutions and for the way in which the co-op movement can offer that, from ferries to energy to housing as well as community credit unions. Does he therefore agree that as the concept of co-ops perhaps is being questioned, this is now the time to strengthen our relationship and our work with co-ops because of all the benefits he has outlined rather than to walk away from them?

Mr Thomas: My hon. Friend is absolutely right and part of the reason for wanting this debate was that I was encouraged by the fact that in the coalition document there is a commitment to supporting co-operatives and

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mutuals. One hopes that coalition Ministers will not draw back or resile from that commitment, weak as some of the delivery has none the less been on it. It would be good to hear from the Minister what further progress he intends to make to hold to that commitment.

There is a risk that I have appeared too urban in the examples I have offered, so perhaps I can draw attention to the example of—I hope Welsh listeners will forgive my pronunciation—Tyn-Y-Capel, an historic pub in North Wales that reopened in 2012 as a result of the efforts of a determined group of locals who formed a co-operative to resurrect their local. A community share offer raised nearly £40,000, enough to take over the leasehold of the pub and, again, as a result of support from the enterprise hub. The new co-operative is developing the pub’s potential as a community venue and I am told that numerous community events have been held there since its re-opening.

The last example I want to offer the House of the co-op movement’s initiatives to help local community co-operatives to continue to be established is Aberdeen Textiles and Workwear Services in Scotland. I understand that the co-operative was established in October last year, after the Remploy factory in Aberdeen closed down. It saved some eight jobs, with the co-operative successfully retaining most of Remploy’s former customers up there, as well as gaining new ones, too.

In football, too, the Co-op party’s original idea of fans’ co-operatives—now known as supporters trusts—has taken off in a big way since it was first suggested 10 or so years ago, from Swansea City in the premiership, with fans in the club’s boardroom, and Portsmouth more recently, down to local clubs in north London. For example, Enfield Town football club is owned by some 300 members, who keep the club running and elect their own board. As a result, they have kept a vital community asset going in Enfield.

Co-operatives and mutuals can make an enormous difference in our communities. With the right legislative support, access to sensible finance and shrewd Government encouragement, they could do even more. I therefore have a series of questions that I hope the Minister will begin to address today—if not, I will be happy to hear his answers in due course. What further support might the Government offer to encourage the growth of energy co-operatives? Will he seek to emulate the US, where 12% of the population get their energy from a co-operative, or Germany, where the figure is one in three people? How about a target to push the level of community energy ownership a stage further? What steps will he or other Ministers take to encourage local economic partnerships to support and develop co-operative, mutual or social enterprise businesses, creating local employment and growth in their communities, perhaps as part of future regional growth fund bids?

There has been some disappointment in the co-operative movement that the social investment tax relief, which was announced in the autumn statement and welcomed by many, will not cover investment in most co-operative societies or community credit unions. One of the biggest challenges facing co-operatives today is the ability to access finance to support growth, as I am sure the Minister is aware. Considering the important contribution that co-operatives and mutuals make to local communities,

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I hope that Ministers might be persuaded, even at this late stage, to intercede with the Treasury on this important point.

The Government have encouraged Britain’s banks to publish data on local lending patterns. I understand that the first comprehensive set of postcode lending data will be made available in January. I hope it will begin to expose the lending deserts that we know exist in the UK, where access to affordable credit for individuals and, crucially, to small and medium-sized businesses is particularly bad. I offer the Minister the example of Thamesmead in south London, which is an area of 55,000 households with no bank. Indeed, the nearest branch is some 35 to 45 minutes away by bus. Not surprisingly, there are high levels of payday loan usage and a high take-up of “Provy” loans. What provisions will Ministers put in place, once those data are made available, to encourage banks to work much better with local organisations, co-operatives, mutuals, social enterprises and even charities to respond to the needs of their areas?

What actions will Ministers take to encourage housing co-operatives? Will the Minister instruct the Homes and Communities Agency to allocate a proportion of its apparently considerable capital funds for new affordable housing to support housing co-operatives? Will the Minister particularly look at the suggestion advocated by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) that the Government adopt the approach taken by the Welsh Assembly and recognise co-operative housing in law, as it is in much of the rest of Europe? What action will Ministers take to encourage lottery operators to support a new strand of community resilience projects to help make start-up support available for new co-operative and mutual initiatives?

Those are the ideas and questions that I have gently offered to the House today, and I hope they will be seen by the Minister as a genuine attempt to encourage new ways of driving continued growth in the co-operative and mutual sector—a sector that I believe offers considerable benefit not only to my community, but to communities across the UK.

5.30 pm

Jim Shannon (Strangford) (DUP): Thank you, Mr Deputy Speaker. I asked for your indulgence and appreciate the opportunity to contribute to the debate. I congratulate the hon. Member for Harrow West (Mr Thomas) on making such a valuable contribution on the importance of co-operatives and mutuals.

I would like to make a few quick points—they will be quick—about co-operatives in Northern Ireland. The hon. Member for Harrow West outlined the importance of co-operatives for England, Wales, Scotland and Northern Ireland, so I shall follow that up in respect of the benefits for Northern Ireland. The benefits of co-operatives could be seen when workers in Northern Ireland decided it was time to do something and they got the expertise they needed. The Belfast Cleaning Society was set up by six cleaners, and the company, established as a social co-operative, is now winning contracts, including from local councils. That happened after help from the co-operative enterprise hub with legal and business advice—the very advice to which the hon. Gentleman referred earlier. That is what led to this company starting

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up with just six workers. The success of the Belfast Cleaning Society has been tracked by other groups of cleaners, frustrated by an industry that typically pays the people who do this work only the minimum wage. That illustrates why it is important to have a co-operative that works for the people and benefits the people and all involved.

Many more examples could be cited. The hon. Gentleman referred to some examples in England and Scotland. I am aware of one example in Clevedon in Somerset, where the town’s bookshop was threatened with closure. A community share issue was raised, and the 600 people participating raised the £20,000 needed to buy the shop. The “Clevedon Community Bookshop” has since gone on to advise other communities about how to keep vital local businesses going. There are two examples—one in Belfast and one in Clevedon, Somerset—and the hon. Gentleman put forward many other examples of where co-operatives can be of great benefit.

Let me deal briefly with a new initiative for Northern Ireland that is coming off the backs of the co-operatives and the mutuals. I refer to the Building Change Trust and the Co-Operative Alternatives, which are leading the way in developing a community shares programme in Northern Ireland. This project is the first initiative of this kind, proposing to make community shares more known and understood in Northern Ireland and identifying and selecting a sample of local enterprises and initiatives with community investment potential to help them to become community share investment ready. These are the very businesses to which the hon. Gentleman referred in respect of ferries, for example. These community shares will enable people who collectively want to ensure that co-operatives and mutuals can happen to initiate business opportunities.

Community shares are a unique form of share called a “withdrawable share”, which can be issued by co-operatives and community benefit societies. A withdrawable share is very different from an ordinary share. A withdrawable share can be cashed in or withdrawn, subject to the rules of the society, and is not tradable on the stock exchange. The co-operative societies are for the mutual benefit of all their members, while community benefit societies are for the broader benefit of the community. Both legal structures uphold the principles and values of co-operation.

I believe that these community shares provide long-term risk capital that can leverage further funding. Societies can use community shares to raise finance, but also to recruit members and to initiate business opportunities for collectives across the whole of Northern Ireland. I believe that these opportunities will support the social aims of the community enterprise concerned by investing the money, purchasing these shares, making the community investor a part owner in the community initiative, able to have a democratic say and further social aims, as the principle of one vote per shareholder implies.

I have given just a small synopsis of what is happening in Northern Ireland, but I wanted to put it on record and ensure that it appeared in Hansard. I think that this evening we should concentrate on the pluses, for there are many pluses involved in what co-operatives do throughout the United Kingdom. They provide an opportunity for those who might not have had it in the

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past to start businesses and to come together and benefit the community as a whole, which is what many people want to do. All that is needed is a wee push, a wee nudge, a wee bit of legal advice and a wee bit of support—and then, hopefully, co-operatives and mutuals throughout the United Kingdom of Great Britain and Northern Ireland will be able to continue to grow.

5.35 pm

The Parliamentary Under-Secretary of State for Communities and Local Government (Stephen Williams): I do not think that any of us expected this debate to be taking place at 5.35 pm. Earlier today, I was told several times via the Whips Office that the House might sit late tonight, and my officials were told the same. I am sure that the hon. Member for Harrow West (Mr Thomas) asked many questions while I was not only listening to his speech but reading my own for the first time. I must confess that I was “Boxless”—I do not know whether there is such a word in the English language—and, although I do not think that I am technically Boxless any more, it is probably best for me to deal with some of the hon. Gentleman’s questions by writing to him. However, they will all be in Hansard and on the record.

Mr Thomas: I entirely accept that the Minister will want to mull over some of my questions, but perhaps I can throw him another one to mull over. It concerns the future of the industrial and provident society legislation, which is, I understand, a Treasury responsibility. When the Minister writes to me, will he also check whether the Treasury has any plans to modernise that legislation further?

Stephen Williams: I thank the hon. Gentleman for his question, which is now on the record and will be added to the already fairly long list of items about which I shall have to write back to him.

I congratulate the hon. Gentleman on securing the debate, and thank him for his constructive speech. I also thank the hon. Member for Strangford (Jim Shannon) for his comments about the situation in his constituency, and for the intervention from my namesake the hon. Member for Cardiff South and Penarth (Stephen Doughty).

The Government are committed to opening up and transforming public services and giving communities an opportunity to take control of the places in which they live and which they may well love. Localism is fundamental to that, and the powers and opportunities that we have introduced to support it are already demonstrating their value. When I entered my Department and discovered the range of responsibilities that I would be taking on, I was, as a Liberal, genuinely excited by the whole localism agenda. This morning I visited Poplar—in the constituency of the hon. Member for Poplar and Limehouse (Jim Fitzpatrick)—to announce the next stage of the Our Place! programme, a community empowerment programme that is one of the many suites of powers introduced under the coalition’s Localism Act 2011.

Of course, this Government did not invent community action. As the hon. Gentleman rightly acknowledged, the co-operative movement has a long history in this country. He mentioned pioneers in Rochdale, but given his first name and surname I think that he must have some Welsh antecedents, and in that context I should mention Robert Owen. All those pioneers, whether they

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were in Montgomeryshire or in Rochdale, would have had in their hearts a vision in which they were made stronger by working together, and could achieve more together than they could individually. Together, they could raise their own aspirations and those of their communities. Let me put that into 21st-century language that may sound familiar to some people: it is not just about building a stronger economy, but about building a fairer society and enabling every person to get on in life.

The community rights introduced in the Localism Act—along with all the other rights that we introduced in that legislation—give new opportunities to co-operatives and mutuals. Let me mention a few that are relevant to the issues raised by the hon. Gentleman.

In London—in the constituency of the deputy leader of the Labour party, I think—the Ivy House Community Pub Ltd is now a co-operative. Using a right under the 2011 Act, the community got together to save the Ivy House pub from being sold and turned into flats. It has now purchased the pub, using the right to bid introduced under that Act. That is the first co-operative pub in London. If we are feeling the Christmas spirit, as we have plenty of time we did not know we would have this evening and it is not too far away, we should perhaps consider going for a drink there later on.

We are now seeing real growth in co-operative pubs. The overall number is 22 now, and half of them opened their doors this year. My Department is helping to fund the co-operative pubs advice line, launched at the start of April. Over 100 communities have contacted this service—which shows there is a thirst for accessing it.

There are also currently 318 community shops open and trading across the UK, all using a co-operative model. They are extremely resilient, as 96% of those that have ever opened are still open, so it is a much more successful and sustainable business model than, sadly, many other small enterprises.

My Department is supporting communities across England to take on assets and make them work for local people through our community ownership and management of assets programme. This is providing expertise, support and grants to groups to buy or manage a range of assets. Many community pubs and shops have successfully used community share offers to raise funds. Community shares is a sustainable social investment model that gives communities an opportunity to purchase a stake in their local community enterprise. Hastings pier is an example I am familiar with. People throughout the country are using these new rights to preserve things that are important in their community.

Another example of where community shares are helping industrial and provident societies to save assets is the first co-operative football club, FC United of Manchester. I am not a football expert, but I must confess that that is not a club I have heard of. Community shares have been used, too, to set up several renewable power generation projects. The hon. Member for Harrow West referred to the Brixton Energy company and schemes in Cumbria. There are also schemes in my constituency in Bristol, such as in Easton, that do similar things. The great thing about these community energy schemes is that they preserve money in the local community. That can be a very localist way of dealing with fuel poverty, which is something we are all concerned about.

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There are also several community-led housing schemes that have taken advantage of the £25 million the Government have set aside for them in the affordable homes programme. One example is the Bomarsund Co-op, which started a scheme this year in Sedgehill in Northumberland. It will provide 12 two-bedroom apartments. Another is the community land trust in Queen Camel in Somerset—they have some splendid names—which is funding the development of 20 affordable homes.

The chair of the Confederation of Co-operative Housing, Mr Nic Bliss, has recently set out his experience of working with the coalition Government. He said that

“we are pleased that the Coalition Government has worked with our sector to demonstrate its ongoing support for community-led housing.”

The Government have also been public about our commitment to the creation and expansion of mutuals, especially by empowering public sector workers to become their own boss and help them deliver better public services.

Mr Thomas: I genuinely do not want to chastise the Minister, because he is making a helpful and interesting speech, but will he take back to his Department my request for the Homes and Communities Agency to do more to encourage local authorities and housing associations to support housing co-operative initiatives? There are good examples of housing co-ops in the UK, but the number of people who are able to take advantage of them is dramatically lower than in some European countries.

Stephen Williams: I thank the hon. Gentleman for that helpful suggestion. I will certainly take it back to the Department and discuss it with the Housing Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins).

We genuinely want innovative models of delivery for housing provision on the ground, where we can work with social enterprises and charities and bring people together to achieve real regeneration in their area. A couple of weeks ago, as the Minister responsible for the empty homes programme, I handed over the keys to a house in Peckham. The number of people involved in that project was quite staggering: not only the formal delivery partners—the Government, Southwark council and the two housing associations—but 300 volunteers. Some had painted a bedroom, others had done the carpeting, and so on. The Government are genuinely open to innovative solutions that involve as many people as possible in shaping their own communities, and I certainly think that the co-operative model for providing new housing is something that ought to be explored a little bit further.

Returning to the question of employees who take over their own area of the public sector, our latest data show that absenteeism and staff turnover fall by 20% and 16% respectively after an organisation has spun out. Both are really impressive statistics that are surely reflective of staff having a greater sense of control and ownership. I could give the House further examples.

Stella Creasy: The Minister is making a powerful case for the way in which co-operative models and values have informed new solutions to a range of society’s

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problems. Will he put on record his support for the role of the Co-operative party in promoting those ideas and bringing them to the House’s attention?

Stephen Williams: Oh dear! It’s Christmas! I was hoping we would not have to discuss the Co-operative party and the recent events—fun though that might be. A lot of us, myself included, would regard ourselves as fully supportive of the co-operative model, of mutuals and of social enterprises, and we have spent a large part of our political careers doing a great deal to encourage that agenda. We are now spending time in Government pushing that agenda forward. For some reason, the Co-operative party chooses to fund only candidates who are associated with the Labour party, and that is a shame. I am going slightly off topic here, Mr Deputy Speaker, but I was led astray. I wish that the Co-operative party would use its resources to fund candidates from any party, be they Labour, Liberal Democrat or even some of our coalition partners who are genuinely interested in pushing forward co-operative ideals. The people who founded the co-operative movement in the 19th century might be surprised to find that the Co-operative party in the 21st century is now allied solely to a Labour party and not to a Liberal party, because many of them would have been Liberals at that time.

Mr Thomas: May I gently point out to the Minister that the Co-operative party was established in response to discrimination in the way in which staff were called up from co-operatives, as opposed to private businesses, by the Conservative and Liberal coalition Government during world war one? In the spirit of bringing a sense of Christmas back into the Chamber, let me say that if he were willing to defect, I would be willing to champion his membership of the Co-op party.

Stephen Williams: Even if the hon. Gentleman and I were to visit the Ivy House pub in Nunhead later and drink however much it took to get us both thoroughly inebriated, I do not think that my will would be so weakened as to accept that kind invitation, which I must admit has been offered by his colleagues many times over the years.

The hon. Gentleman also mentioned credit unions. I am a member of Bristol Credit Union—I am reminded that I need to top up my funds. The reason I became a member in the first place was to be able to use the Bristol pound. Local community currencies are another example of putting power in the hands of local people

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to keep more of their spending power in the local economy and to support businesses and the agenda he is putting forward.

John Woodcock (Barrow and Furness) (Lab/Co-op): I thank the Minister for giving way and hope that both he and my hon. Friend the Member for Harrow West (Mr Thomas) will accept my apology for arriving late—I, too, was surprised by how early the debate started. Will he agree to look at the financial regulations for credit unions? Barrow-in-Furness now has a credit union and has done very well to establish it, but it is dealt with in the same way as some much larger institutions even though they have nothing like the same level of financial risk.

Stephen Williams: I suspect that the regulations for credit unions are the responsibility of the Treasury, so I will ensure that a note of the hon. Gentleman’s point is sent to Treasury colleagues and that he receives a reply.

The hon. Member for Harrow West questioned why there is no military credit union and gave the example of north America. I was unaware of that and will raise it with colleagues in the Ministry of Defence to see whether complementary provision already exists in the United Kingdom or whether we should look at that model seriously to see if it would work in this country.

I was pleased that the hon. Gentleman mentioned the Bristol Ferry Boat Company share offer. Mr Deputy Speaker, I do not know whether you have made your life even more complete by journeying to Bristol West to see the yellow boats that plough their way around the harbour, but you are very welcome. People visiting Bristol are often surprised to see ferry boats in the heart of a city centre that they thought was well inland. Unfortunately, the company that owned them failed last year, but it has now been saved through a community share. All of us in Bristol were delighted to see that.

In conclusion, I think that all the Members who were watching the Annunciator screens carefully and managed to get into the Chamber for this debate have made useful contributions. I will ensure that the hon. Member for Harrow West receives responses to the questions he asked. I thank him for securing the debate. To end on a note of Christmas unity, I am sure that co-operatives and mutuals have a great future in this country, as do social enterprises. The coalition Government are determined to ensure that that is the case.

Question put and agreed to.

5.53 pm

House adjourned.