I beg to move,
That this House has considered the contribution of cooperatives to the economy.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to be here with colleagues from across the House, and with many fellow members of the Co-operative party, to discuss this important issue. I stand here not only as a member of the Labour party but as a Co-operative MP, along with many other colleagues here. I am pleased to work with colleagues across the legislatures, councils and different political institutions of the United Kingdom to stand up for co-operative values and the co-operative ideal in our politics, which enjoy support even from non-Co-op members. I am glad to see representatives from other parties here, and I am sure that they will make some excellent contributions. There are 25 Co-op MPs, 1,500 councillors, three police and crime commissioners, eight Members of the Scottish Parliament and 11 Assembly Members, but many others also share our ideals and interests.
Members may be aware that the timing of this debate is no coincidence. We recently celebrated Co-operatives fortnight, which ran from 18 June to 2 July. Co-operatives fortnight brings great attention to the issues every year, as do numerous other events throughout the country and indeed around the world. Co-operatives fortnight is a time when co-operatives up and down the country remind people of the many good reasons why we should all choose the co-operative model and of the significant impact that co-operatives have had for many years and continue to have on the British economy.
That is important to recognise, as we are going through difficult times both politically and for business and the economy. Unfortunately, as always, the difficult cases and mistakes made by some businesses tend to predominate. The BHS crisis, the scandals involving non-payment of tax and lots of other issues have dominated the business and economic agenda in recent months but, overall, we should be proud of the success story that surrounds the role of co-operatives and mutuals in our economy. That is what I wish to draw attention to in my remarks.
The movement has seen incredible growth over the past number of years. The number of people who own and control the UK’s co-operatives has grown by more than 10% to 17.5 million, nearly a quarter of the UK population, meaning that the number of co-operative members continues to outstrip the number of regular shareholders in the UK. The sector is set to benefit further from the recent Co-op Group announcement that it wants to add 1 million new members over the next five years. It is important to make it clear that, although the Co-op Group tends to dominate the news that we hear about the co-op sector in the UK, it is not the whole sector. The sector is much wider, more diverse and more extensive than just its most well-known brand name.
Overall, the co-op sector has grown by £3.5 billion over the last five years. That growth is accounted for by a combination of success among retailers such as John Lewis, the Midcounties Co-operative and the Central England Co-operative, and steady growth in the agricultural sector. It is worth noting some of the largest sectors within the co-operative economy by number of co-operatives and turnover: agriculture, which has 416 co-ops with a turnover of more than £5.8 million; retail, which has 505 co-ops with a turnover of £24.3 million; sports and leisure, which has 2,890 co-ops; and health and social care, which has 88 co-operatives and a very large turnover.
That is matched by more than 225,000 jobs created in the co-operative economy throughout the length and breadth of the UK. We should applaud and welcome that, recognising that many of those jobs are in thriving businesses that provide a huge role for employees as well as co-op members. They often offer excellent pay, conditions and involvement in the direction of where the co-operative goes, not just the employer/employee relationship of many traditional businesses.
Co-operatives and mutual societies play a pivotal societal, social and economic role throughout the UK. They are created, governed and run by members, and set up by members for members. The idea of membership-led engagement is the distinguishing element that makes co-operatives and mutual societies different from other legal entities, and it is unique as far as participation in economic life is concerned. It is important to recognise that because a mutual society is created and managed to fulfil its members’ needs, it inherently pursues long-term goals. That pursuit of long-term goals marks mutuals as reliable, stable and durable elements in many sectors of the economy.
I know that my hon. Friend was a strong supporter of the Co-op party’s successful campaign during the last Parliament for the Government to establish a military credit union to help protect our military personnel and their families from being exploited by payday lenders. Does he think that this debate might be a good opportunity to hear from the Minister about what progress there has been in terms of people joining the three credit unions established to help military personnel?
That is a crucial point. My hon. Friend, who has been a leader on the co-operative ideal in this Parliament, across the country and within the Co-operative party itself, led the campaign for a military credit union. I would certainly be interested to hear from the Minister about that. As a member of a credit union myself—Cardiff and Vale Credit Union—I know that many Co-operative supporters also belong to and promote credit unions in their communities. I also recognise that fair lending and fair access to finance can help different sectors: particularly, as my hon. Friend pointed out, veterans and those serving in our armed forces. It is crucial that they do not fall prey to the payday lenders who create such a problem in our economy.
We have seen progress not only in fair lending but in fair tax, an issue on which the co-operative movement has shown leadership. It is worth noting, and the House will be interested to know, that Britain’s top five co-ops pay more UK tax than Amazon, Facebook, Apple, eBay and Starbucks combined. That is very much in line with where the public stand. Only 34% of the British public believe that most big businesses in the UK pay their fair share of tax, and, sadly, just 6% trust a company of any size to provide accurate information on the tax that it has paid. Recent research undertaken by KPMG shows that trust in companies’ approach to tax is the fourth most significant factor in how much overall trust an individual places in a company or brand.
The Fair Tax Mark campaign has been established to set a new standard in responsible tax practice, from the smallest shop to the biggest multinational. The pioneers of the campaign have, as we would expect, been co-ops and social enterprises. From the beginning, the Co-operative party, Co-operatives UK and Social Enterprise UK have been highly supportive of the fair tax mark. I am proud to say that the Co-operative party is the first political party to achieve the mark. That is something that we could all aspire to. Co-operative retail societies such as East of England, Midcounties, the Co-operative Group and Scotmid have also achieved the fair tax mark. It is clear and evident that co-operatives have seized the opportunity to benefit from the public’s willingness to punish tax avoiders.
The co-op movement’s enthusiasm for adopting fair tax policies further demonstrates that the co-operative model is an inherently social and responsible form of business. I would certainly be interested to hear from the Minister what lessons he thinks there are for the rest of the economy in the example being set by co-operatives and those leading the Fair Tax Mark campaign. Achieving the mark certifies that a company is making a genuine effort to be open and transparent about its tax affairs and pays the right amount of corporation tax at the right time and in the right place. I am proud of the work done on that.
Co-operatives clearly provide new and innovative solutions to some of the other challenges of our changing economy, one of which is the growing number of self-employed workers. There are now more self-employed workers than at any time since modern records began. Some 4.6 million people, around 15% of the workforce, are now self-employed. Data from the Office for National Statistics show that two thirds of new jobs created in the UK in recent years are down to self-employment. Current projections are that by 2018 self-employed people will outnumber those working in the public sector. That is a huge challenge for Government, for tax authorities and for trade unions, but a challenge that the co-operative movement has risen to. Self-employed workers often do not enjoy the employment rights and protections at work or any of the implicit services associated with being an employee, such as payroll or workplace insurance, let alone such things as pensions or sick pay. They also face additional challenges related to being paid on time, the right to contracts and so on. As we all know, self-employed workers often end up being some of the lowest-paid and most put-upon workers in the country.
With that in mind, it is particularly interesting to note that throughout the country freelancers and self-employed people are coming together to form co-operatives for shared services, in some cases with support from entrepreneurial trade unions that see the opportunity to support members who are self-employed, not just those who are employed in traditional workplace arrangements in larger businesses.
I have some interesting examples. In Wales, the Oren Actors Management co-op allows actors to work between roles as agents for other co-op member actors, marketing their services—a two-way process in which they mutually support one another. That is a very good example of co-operative principles in practice. In Swindon, 50 music teachers have come together to form a co-op to market their services to schools with support from the Musicians Union, with which I enjoy a proud association—indeed, I should state for the record that my register of interests shows that I have enjoyed support from it in the past. The Musicians Union does an excellent job in that respect and I am very excited to see it working to help self-employed music teachers. In London, interpreters came together in a co-op in November 2012 after changes in their terms and conditions when the firm Capita took on the contract to provide interpretation services in judicial courts. I do not want to get into a lengthy debate about Capita and its good and bad aspects, but that is a fascinating situation of a co-op of interpreters coming together.
Compared with practice in some countries overseas, these initiatives are only in their infancy. They have to potential to grow tremendously, like other models witnessed in other parts of the world. I am certainly interested in whether the Minister thinks we could play a bigger role in promoting best practice and supporting such initiatives from other countries. In the United States, for example, Freelancers Union, which was formed for the self-employed, has attracted over 280,000 members. In the Netherlands and Spain, general unions for self-employed workers have emerged and developed since the late 1990s and provide a range of services as well as representation. The Assemblée Nationale in the French Parliament has also introduced legislation, which came into force this January, to recognise the role of 72 business and employment co-operatives, supporting members with accounting and access to the sickness pay and benefits of conventional employees.
It is worth highlighting that the Wales Co-operative Centre, another body with which I enjoy a close association—I work closely with its head, Derek Walker, locally—and Co-operatives UK have recently published the “Not Alone” report, which sets out some key findings on how the co-operative movement and trade unions can come together in the UK to build support for self-employed workers.
Does the hon. Gentleman agree that recent legislation that erodes travel and subsistence benefits for freelancers and that affects their tax reporting will hinder our freelancers and those working in the environments he describes?
I absolutely agree. The challenges, the additional pressures and the disproportionate impact that legislative and other changes can have on the self-employed are often not highlighted enough in this House; they can have a much bigger impact than they would have on a larger company, for example. We need to do all we can about that, and the co-operative movement is clearly playing an innovative and key role in trying to address those changes. The interests of self-employed workers are not well represented in our policy making, with the result that they face unnecessary regulatory burdens and barriers. I am proud that the co-operative movement is championing our self-employed, who make such an invaluable contribution to our economy and represent such a growing proportion of our labour market.
As a Welsh Labour and Co-operative MP, I want to highlight some of the work that is going on in Wales and the contribution that co-ops make to the Welsh economy. In 2015, the Wales Co-operative Centre launched its report on social businesses in Wales. That report outlined the scope and scale of the sector, its performance and the many opportunities for further development. The term “social businesses” includes social enterprises, co-operatives, mutuals and other employee-owned businesses. We have seen the statistics for co-operatives’ contribution to the UK economy as a whole; the report found that the total value of the social business sector in Wales is £1.7 billion and that it employs over 38,000 people. Social businesses tend to be more active in deprived areas than other small and medium-sized enterprises and to employ and procure locally, which suggests that they make an important economic contribution—perhaps a disproportionate contribution—in some of the poorest areas of the country.
Social businesses are a robust and dynamic sector, confident about the future. Indeed, 69% of social businesses in Wales expect turnover to increase in the next two to three years. Women are also keenly represented in leadership positions, with 35% of social businesses reporting a majority of women in leadership roles, compared with 19% of SMEs. Women’s leadership in business and the corporate sector is often discussed in this House, but here again we see the co-operative sector leading the way in putting principles into practice and ensuring that women are occupying a majority of roles. Some of the larger corporates and businesses in this country would do well to learn from that example of the benefits that come from ensuring that the equality that exists in the country is reflected in the boardroom, in decision making and in economic practice locally. It highlights how the co-operative movement is at the forefront of addressing some of the key problems that exist in our labour market as a whole and shows innovative practice in moving forward.
Does the hon. Gentleman support the work of the Wales TUC and the Wales Co-operative Centre, which is dealing with some of the challenges he describes in the labour market, including middle-aged unemployment, school drop-out rates and increasing youth employment?
Absolutely. As the hon. Gentleman rightly mentions, there is a strong link between the Wales Co-operative Centre and the Wales TUC, and indeed with other trade unions in Wales. It is that type of partnership and co-operation between those who share common aims and values that is driving forward some of these agendas that do not get a lot of attention but should. I know my colleagues in the National Assembly are driving this issue forward in the areas where Wales enjoys devolved responsibility. We often work closely together as Co-operative MPs and Assembly Members to address those issues and to ensure that we are doing what we can, both here in Westminster and in Wales. I am sure that is also the case elsewhere with our many councillors throughout the country.
I know other Members wish to make contributions—I am looking forward to hearing them. I believe that co-operatives are a great and important example of how people can come together to help each other. They are also a great example of self-reliance, which we should continue to support and celebrate. Co-operatives have brought about trust and a sense of values and ethics that we sometimes do not see in other parts of economy but, crucially, this is not about some slightly odd, unusual or marginal part of the economy. Co-operatives are a growing, vibrant and dynamic sector, creating jobs, delivering growth and providing opportunities in areas and sectors of the economy that are simply not being provided by other forms of business model. I hope the co-operative sector continues to grow and to have the support it needs from all levels of government in the UK to go forward in the years ahead.
Several hon. Members rose—
Order. The debate is due to finish at 3 pm; the guideline limits for the Front Bench speeches, assuming that Front-Bench personnel are the same at the end of the debate as they were at the beginning, are 10 minutes for the Scottish National party, 10 minutes for Her Majesty’s Opposition and 10 minutes for the Government. I shall call Front-Bench Members no later than 2.28 pm; even though I am a bear of little brain, I can see that that gives us 40 minutes, with seven Members standing. I shall not impose a time limit, because this is a debate about co-operatives. This is a test for all seven Members to share the time equally between themselves—otherwise, the last Member will not get to speak. I am putting the clock on to give you a guideline. Please make sure that everybody gets in. At the end, Stephen Doughty will have the chance for a two-minute wind-up.
You are a rock of stability on this turbulent day, Mr Hollobone. I am pleased to see that my hon. Friend the Minister is still in his post; I hope he is still there later.
“Society is co-operation; it is community in action”.
That is a pithy line from my favourite economist, and one of the most free-market writers. It not only encapsulates the essence of this debate but gives a key insight into the market economy. In a market economy, people should co-operate with one another to serve each other’s needs. It should not be a selfish process, even when it is competitive. It should be a process of service to other people. That plays into the recent speech by my right hon. Friend the Prime Minister. She has articulated clearly a sentiment that has come out of the EU referendum: the global economy is not working for ordinary, normal working people. Co-operatives can play a crucial role in reforming the institutions of the market economy, so that it works better for those people.
Our great challenge is to remake the institutions of a market economy, not to abolish them, whatever some may say. The only way to co-ordinate our economy and society is through the price system, which is why co-operatives are so important. The former Prime Minister, my right hon. Friend the Member for Witney (Mr Cameron), promised us a co-operatives Bill some years ago. Indeed, the Co-operative and Community Benefit Societies Act became law in 2014. I hope my hon. Friend the Minister will not mind my saying that unfortunately it was something of a disappointment, because it was only a consolidation Bill, so as it passed through Parliament it was not possible to consider, debate or amend it. We could have perhaps innovated on co-operatives.
I refer the Government to “The Co-operative Advantage”, a book edited by Ed Mayo of Co-operatives UK. It lists the areas in which co-operatives are being applied, to great social benefit: agriculture, community food, renewable energy, retail, insurance, banking, creative industries, sport, tourism, education, social care, health, housing, criminal justice and transport. There is huge scope in our lives and society to advance co-operatives, to general benefit. Indeed, one of the most inspiring people I met in the previous Parliament was a young women working as a careworker for an employee-owned co-operative. She spoke about issues of employee engagement, capital, administration and accounting as vibrantly as a venture capitalist might. She was fully engaged in what she was doing. More than that, the users of her service, as participants in the ownership of the service they used, were also fully engaged.
In deference to the Opposition Members who want to speak, I shall curtail my remarks and not talk about the particular advantages of employee ownership. This Parliament has almost four years left to run. Knowing that the Prime Minister intends to adjust the institutions of the market economy to make it work better for normal working people, I very much hope that we can do a little better than a consolidation Bill in this Parliament.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I declare an interest as a proud member of the Co-operative party, the sister party to the Labour party. I am one of the 25 Labour and Co-operative MPs.
I am proud to be taking part in this timely debate on the contribution of co-operatives to our economy. For me, a co-op is about more than a collection of shops and companies and enterprises, brilliant though they are. For me, co-operation is a sign that there is a better world possible than the one delivered by pure free market and small-state ideology, and a better way to deliver social justice than overarching Government and state control.
Co-operation is about three things. First, it is about the best instincts of decent people: the desire to work together, play together and get along with one another. It is about the human instinct to band together, co-operate with one another and offer selfless, mutual support—proof that we achieve more together than we do alone.
Secondly, co-operation is an international creed. The co-operative movement is a truly international movement, because the values of decency apply across the continents, no matter which country one comes from.
Thirdly, the co-op has a celebrated history, but it is really all about the future. We know the story of the Rochdale pioneers who, all those years ago, started the first co-operative, but when it comes to the challenges of tomorrow—tackling global poverty, helping the poorest nations to build their economies and meeting the challenge of climate change—it is the co-operative ideal that best equips us to succeed.
When I look at a co-op, I see a glimpse of the future and get a sense of what might be. In so many ways, the co-operative movement prefigures the kind of society that I want to see: democratic, equal, fair, just, accessible to all and owned by everyone. That is especially true in the current economic climate. The economic impact of Brexit is just starting to be felt and there are very uncertain times ahead. There are big changes coming down the line, and there is fear—certainly in my constituency—that employers might move to Dublin, Frankfurt or Madrid. To survive Brexit, we will need new trading arrangements, access to new markets and new firms to fill the gaps. That is where the co-op and mutual sector, with its emphasis on fair trade and trade justice, can step in.
We wait to see what a Government led by the right hon. Member for Maidenhead (Mrs May) will bring. I hope she will maintain all the workers’ rights that are currently guaranteed by the EU. Again, the co-operative and mutual ideal can be made to work for workers who are self-employed or in small firms. As we heard from my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), freelancers in particular can form co-operatives to protect themselves. An exciting and important example is how the Musicians Union has worked with and supported 50 music teachers in Cardiff. I hope we will see more such cases.
Co-ops can provide greater stability and support in a post-Brexit world of insecurity and risk. It is a real shame, and a missed opportunity, that both the coalition Government and, more recently, the Tory Government have paid so little attention to co-ops. We have come a long way since the days of the Conservative Co-operative Movement—one of the more audacious pieces of repositioning by the former Prime Minister, the right hon. Member for Witney (Mr Cameron). The Conservative-led coalition was no friend to the co-op movement. Between 2010 and 2015, Ministers withdrew support for solar renewable energy co-operatives, forcing many to close down; took funding away from the co-operative schools project, which was making a real difference for many schools throughout the country; and shelved plans for more co-operative Sure Start centres and housing trusts. I am a passionate believer in education about alternative models of ownership. In too many schools throughout the country, from primary right through to secondary, young people are not learning about the co-operative and mutual alternative.
What about the current Government? It will be interesting to hear what the Minister has to say, but their record could be better. I welcome the new Prime Minister’s announcement that she intends to put employee representatives on company boards—a policy advocated by the Co-operative party. I sincerely hope that a workable scheme is brought forward that we can all get behind. I wonder what the new Prime Minister and the Minister will make of the other policies that we co-operators have been championing. They include having a proper scheme whereby all businesses with more than 50 employees are obliged to set up a profit-sharing scheme with their staff, with a minimum profit share pot set aside based on a calculation of annual profits. We know from the Office for National Statistics that approximately 36,000 companies would be in that bracket, affecting 12.9 million people. That would make a massive difference.
We co-operators want to introduce a duty to involve, with employees given a formal role in making decisions about how a company is run through works councils. The Co-operative party is calling for all publicly listed companies to have a duty to involve their employees. We want tax incentives for employee ownership. As it stands, the Government spend £615 million every year on tax incentives for employee ownership, but that is poorly targeted towards individual shareholdings and the remuneration of senior executives. That could be refashioned to ensure that all employees benefit.
We also want tax incentives for community energy. What could be better or more important than allowing communities to create energy and own it themselves? That would not only reduce our reliance on carbon sources and do more to meet our renewables target, but ensure that all the people in a community could own their own energy. Over the past two years, the Government have radically changed the regulatory environment for community renewable energy schemes and withdrawn tax incentives that encouraged community investment in those schemes. I sincerely hope that they will revisit that decision.
Tax incentives should also be used to ensure that sports clubs that meet stringent criteria for fan involvement and engagement can secure special tax status. If we reflect on the recent Euro 2016 championships, it is notable that many of the star players play for co-operative clubs such as FC Barcelona, Real Madrid and Bayern Munich. Indeed, in Germany, 33 out of 36 clubs in the Bundesliga are co-ops. As the new Prime Minister formulates her plans for Britain post-Brexit, I hope that she will look to the co-op and mutual model for ideas.
I am grateful to the House of Commons Library for putting together a really extensive list of all the different co-ops in my local area, including the Lodge Lane and District Credit Union in my own constituency, which I am proud to be a member of. However, the list did not include a new co-op, a café that is going to be situated on a road that goes through my constituency. I wish that co-op every success.
Co-ops and mutuals are about the future, not the past. I am proud to call myself a co-operator, and I will continue to campaign to ensure that we see more co-operatives and mutuals flourishing. I look forward to hearing the Minister’s response to the debate.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I note that, as yet, you have not received your phone call to go to No. 10. Good luck with that.
I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on securing this debate and on his excellent speech. I have always been a supporter of different ownership models within the economic sector, including co-operatives. Co-operatives should be encouraged. Furthermore, a clear indication of the co-operative model is when co-operatives work with the trade union movement. That should not come as any surprise to us, because the key goals of the trade union movement and the co-operative movement are very similar. They have mutual aims and deal with shared challenges in areas such as employment, innovation, education, lifelong learning for working people, social inclusion, equality and looking after our environment.
It comes as no surprise to me to learn that workers in co-operatives have good working conditions and that co-operatives act in the interests of workers’ experience and ensure that workers have strong labour rights. There is dialogue with workers, who are kept involved; co-operatives ensure that workers participate in decision making. As I have said, co-ops and unions share similar historic roots and common values and aims, including the social and economic wellbeing of the community and the promotion of economic sustainability and social innovation.
Of course, that work includes democratising the economy and making sure that there is a fair distribution of resources, because the economy cannot just be left to multinational companies, which do not often follow the aims of the co-operative movement.
There is high trade union membership in the co-operative movement. Therefore, workers are paid more in the co-operative economy than they are elsewhere; they have better contracts, such as open-ended employment contracts; and there is a low level of conflict between those working in the co-operative sector and those in management.
Job creation and protection is a key driver of joint work between the trade union movement and co-operatives. There is participation in co-operatives even in the building sector. I welcomed the dialogue in 2012 between Co-operatives UK and the TUC, which have a common agenda, to develop a common statement of best practice so that workers’ co-operatives can emerge from the public sector to deliver services across the UK. As I mentioned in my intervention on the hon. Member for Cardiff South and Penarth, work has also been done in Wales to tackle the issues affecting the Welsh labour market. Such work has to be encouraged, because we have middle-aged unemployment on the increase, we have to deal with those who have dropped out of school without qualifications, and of course we need to continue the work increase youth employment.
The Scottish National party manifesto in 2016 said:
“We will encourage and support third sector organisations, social enterprises, and credit unions to enter the market place to fill gaps in the provision of services or to offer alternatives to current providers that are not offering services people can access easily or affordably. This includes energy, banking, payday loans, debt management, and funeral planning.”
The most sensible decision that I have ever made about my finances was when I was an employee of Glasgow City Council and I joined the Glasgow Credit Union, the largest credit union in the UK. It was probably the best financial decision I have ever made, because membership of a credit union encourages sensible borrowing as well as saving. I would like the credit union movement to flourish over the next few years, because too many areas in our country are falling into bad debt and having to deal with the associated issues.
Research has shown that money worries and debt problems can lead to ill health, absence from work and low productivity. So just as I received an education when I was a young person entering the workplace and joining a trade union, we need to educate young people about money and make it easier for adults to save and borrow via credit unions. If we continue to promote credit unions, it will save public funds in the long term.
It also comes as no surprise to me that the co-operative model is a success story in these difficult times, when we see austerity across the EU. As someone who lives in Scotland—I assure you, Mr Hollobone, that Scotland will remain in the EU—I know that co-operatives add 5% to the GDP of every single EU nation, and so they are hugely important for economic and social development. I will support the motion this afternoon.
It is a pleasure to serve with you as Chair this afternoon, Mr Hollobone.
It is a great honour and privilege to give my maiden speech as a Labour and Co-operative MP; I am No. 25. I thank my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for securing this important debate. I am proud of what the co-operative movement has achieved in the UK, Wales and Neath.
The history of co-operatives in Wales is a rich one. Indeed, the father of the co-operative movement, Mr Robert Owen, was Welsh, as was William Hazell, a little-known but important figure to emerge from the south Wales coalfield. Typically for a man living in the valleys at that time, Hazell was a miner and endured much hardship. A modest and humble existence belies his great achievements, and it is in his deeds of promoting collective wellbeing and solidarity that we must seek inspiration for a modern world riven with individualism and self-interest. He may not have been born in Wales but his values are all Welsh—camaraderie, learning and success. I will take this opportunity to applaud my good friend Alun Burge on his excellent biography of William Hazell.
The need for co-operatives has never been greater than in the 21st century. Only eight years ago, we witnessed the deepest recession since the great depression and a banking crisis that almost brought an end to the world as we know it. Capitalism has lived through a 20-year victory crisis, during which the accepted model of societal organisation has continued to leave behind 20% of the population. Only three weeks ago, the UK voted to leave the European Union, which has been criticised for its contribution to globalisation but which actually offers a viable route to a united, socially just Europe, with workers’ rights, structural funding and the values of internationalism.
As we move through the early part of the new millennium, it is clear that business as usual simply will not do. Co-operation, consensus and community are notions that are the founding principles not only of co-operatives but of the Labour party, and it is by adhering to these shared values that figures from across the Labour and Co-operative movement have led the development of organisations that have anchored communities during difficult times and helped to create a buffer against global economic shifts.
I only have to look at my constituency of Neath for examples of such activism. If you will allow me to indulge myself for a moment, Mr Hollobone, I would like to take you on a tour of co-operatives in Neath—past, present and future. I will resist the temptation to furnish you with the details of the many employee-owned businesses that have formed in Neath during the last century, and instead share with you the stories of a few key organisations that have emerged since the dawn of deindustrialisation and that have provided us with jobs and services in places where they scarcely exist.
Dove Workshop and Glynneath Training Centre are two such organisations, operating in the more remote villages towards the north of my constituency. Those groups were established as community co-operatives to provide education and opportunities in places where those things would not otherwise happen. They run courses from unaccredited entry-level classes to part-time degrees, provide nursery places, operate cafes and develop community activities. Crucially, they employ more than 60 people and together turn over £1 million a year. That is a significant contribution to the local economy, and evidence tells us that that money and those jobs stay local.
Another example of the sophisticated simplicity of the concept is the humble food co-operative. We are well-versed in the best-known incarnation, and indeed I am sure many of us do our shopping there, but let us remember the most basic version, where groups of people get together for the benefit of collective purchasing or growing accessible and affordable fresh fruit and vegetables. I commend those who continue to operate across Neath.
Most recently, we have seen the rise of Neath Port Talbot credit union, a member-owned bank that provides affordable loans and savings accounts and delivers financial inclusion in practical terms. I am a member. We all know the benefits of credit unions, but we must not underestimate their ability to help to lift people out of real poverty. Co-operatives in Neath, Wales and further afield are demonstrating the stakeholder economy in action. While I have described organisations that have fought against hardship, co-operatives are not merely about progress in the face of adversity; they are a proactive substitute to the usual model of business, which is unpredictable and exploitative.
It is important to point out that William Hazell believed co-operation to be the alternative to capitalism. What we see in examples such as Tower Colliery, Welsh Water and John Lewis are businesses that work differently and put the customer, worker or stakeholder before any bottom line. Tower was bought out by workers and management through the sheer will of combined effort. They made a success of a mine in a community that had so heavily relied on it and from which the private sector had retreated. Welsh Water is a members co-operative set up by people driven by their passion to provide the people of Wales with the best possible services and not compromised by the need to maximise a profit on an essential utility. John Lewis is the company whose workers are all partners, where the chief executive’s pay is linked to that of the cleaners and whose employees share equally in any surplus, regardless of their position.
Co-operatives make a huge contribution to the economy, both financially and socially, and have done so for many years. Society is made up of stakeholders and partners, not shareholders and owners, and co-operatives offer an opportunity to build an economy on the values of collectivism, democracy and fairness.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I, too, am extremely proud to be a Labour and a Co-operative MP. I am grateful to my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for bringing this debate.
It is always a pleasure to talk about co-operative values and principles and the contribution that co-operatives make to our economy. It is not just a dynamic that we see today. The impact historically over a huge amount of time, going all the way back to the Rochdale pioneers, shows that co-operative principles were as relevant then as they are today. Those principles, which we see around the world, are voluntary and open membership, democratic member control, economic participation of members, autonomy, independence, education and training, co-operation and concern for community. Those principles all have a great deal to offer for the economic challenges that we face today. Never have the values of self-help, responsibility, democracy, equality, equity and solidarity been more important.
With those values in mind, it is incredible to reflect that we see more than 7,000 co-operatives in this country. Co-operatives make a huge contribution of £34 billion to the British economy and are a vital part of the economic picture. A quarter of the UK population are members of co-operatives, and the importance of those values should not be underestimated.
Those values are particularly important today because of the climate and the challenges we face with the global economy. Since the crash in 2008, we have seen a lack of trust in our financial institutions, growing insecurity and instability in globalisation, a wealth of unethical practices and a casino capitalism that brought the crash that has had such devastating consequences. The pressures of the global economy have brought huge opportunities as well as that great disruption. As a result and as the Brexit vote showed, particularly in my constituency, many people feel insecure and left behind by the benefits of globalisation.
As we look forward, the technology-driven change that is reforming the world we live in is opening up exciting possibilities to improve the way we live and work, creating new industries and new kinds of work, and bringing down social barriers. However, it also poses real challenges, particularly in this transition period as the status quo in many areas of our society and economy is swept away. The job for life is now rarer, replaced with less secure work and more self-employment. The next generation of automation could see more jobs replaced by robots. For policy makers, that means grasping new means to manage the resulting economic and social change. For those on the centre left of politics, particularly those of us who are co-operators, the task is even greater, as our commitment to working for an equal and just world faces new frontiers. The need for progressive and co-operative policies—that ensure the gains from the changes of the technology revolution are shared, that people are empowered and that those at threat of losing out are protected—is greater now than ever before.
It is often said that globalisation diminishes the power of the state and renders the traditional levers available to Governments less effective. For the political right, that conforms with their deeply held belief that markets work best without state intervention. As a co-operator, my view is that a co-operative state can play an important role in supporting and encouraging better co-operation, more self-help, more mutual support and fairer regulation.
Co-operative and mutual ideals can help to tackle the growing inequality in the global economy and some of the global insecurities that are seeing communities left behind. As co-operators, we would like to see freelancers coming together to form co-operatives for shared services. Colleagues have given examples of music teachers coming together. We know of examples of co-operators in social care locally and in our co-operative councils movement. There is real flexibility and an opportunity for people to come together to share their services. Instead of being self-employed, with all the flexibility and insecurity that that involves, they have an opportunity to work together and support each other.
We would therefore like to see the Government recognise this growing self-employed workforce in an insecure world and develop organising strategies for self-employed workers, bringing together trade unions and the co-operative sector to find solutions. The development of organising strategies should involve consideration of key priorities for action, including the primary sectors, such as the creative industries, care services and the green economy. In primary services, that includes: credit unions for freelancers, the provision of micro-insurance and related services such as debt collection, tax accounting and legal advice, the scope for platform co-operatives and sources of capital for co-operative business development. Those are vital steps that the Government could support to create a better environment for local co-operatives to thrive.
We would also like to see more profit-sharing proposals. The Co-operative party calls on the Government to legislate to ensure that all businesses with more than 50 employees can set up a profit-sharing scheme with their staff, with a minimum profit share pot set aside based on a calculation of annual profits and financial position. We would like to see duty to involve, in which the European stakeholder approach to business would be embraced. Through duty to involve, employees are given a formal role in making decisions about how a company is run, with works councils operating in workplaces. We welcome the commitment and perhaps belated conversion of the former Home Secretary, now Prime Minister, to co-operative values and principles.
We would like to see employees on company boards. The Co-operative party is calling for company law to be modified to ensure that representation is given to employees and other identified stakeholders in all publicly listed companies. We would like to see tax incentives for employee ownership. As it stands, the Government spend £615 million a year on tax incentives for employee ownership, but it is poorly targeted towards individual shareholdings and the remuneration of senior executives. We would like to see tax relief offered to all-employee share ownership schemes, which require employees to purchase and hold shares for a number of years to benefit. That would save the Government £285 million a year. We are calling for £50 million a year to be invested in giving permanent employee benefit trusts the same tax treatment as other schemes, with the other £235 million targeted at schemes that give employees a collective, democratic voice.
We would also like to see tax incentives for community energy and supporter-owned sports clubs and the statutory right to request employee ownership. Employee buy-outs can often be an attractive route for business succession, because they transfer ownership to people with a genuine interest in an enterprise’s long-term success and can increase the likelihood of the enterprise continuing to provide trade and jobs locally.
Those are some of the proposals we would like to see. It is clearer than ever that the principles that we have seen over the last 100 years remain as relevant and vital today, as we face the future challenges of technology and an insecure globalised world, as they were at the time of those great pioneers back in 1844.
It is a pleasure to take part in this debate and I join my hon. Friend the Member for Redcar (Anna Turley) and other hon. Members in praising my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this Back-Bench debate. He and my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger), for Neath (Christina Rees) and for Redcar ranged strategically in their contributions across the co-op sector. I do not intend to do that, but hope to pick out one or two particular issues to press the Minister on.
I welcome the contribution of the hon. Member for Wycombe (Mr Baker). I am not sure I would have travelled the same path to get to the enthusiasm for co-operatives and mutuals that he described, but I recognise that his commitment to the sector is genuine. I will not say any more—I do not want to damage his prospects for advancement today—but it is good to have a Conservative speaking up for co-operatives as well. Normally, it is left to Labour Members, so it is a welcome change.
One area in which the hon. Gentleman and I have co-operated is advocating for co-operative change to the way that some of our major public service institutions are currently governed. I wonder if I might encourage the Minister and shadow Minister to take an open-minded view of the proposals to turn Channel 4 and the BBC into mutuals. What do I mean by that? I mean allowing those who watch Channel 4 and those who pay the BBC licence fee to become members and therefore to have a vote on who should sit on the board of those bodies—putting the public back into two critical public services.
I also hope that, in time, we will see the new Mayor of London seek to do the same with Transport for London, giving commuters the chance to vote on who should sit on its board alongside the Mayor. In that very direct way, people who depend on these vital public services will have more influence over their direction and future strategy.
May I just assert my complete support for the idea of mutualising both Channel 4 and the BBC? Channel 4 would be an enormous mutualisation, but a much smaller one than the BBC. I would encourage the Government to look very seriously at recapitalising ordinary people by giving them the opportunity to take a real ownership stake in those very important public institutions.
Having ruined my own career, and probably his too, by praising the hon. Gentleman, let me move on to other areas that we have not discussed prior to the debate.
One of the things that many co-operative businesses active in their communities point out is the way that the internet is changing the nature of retailing. By definition, many internet retailers do not have large property footprints in particular communities and therefore pay substantially less in property tax than those who are offering a direct service on high streets in communities up and down the land. I support the call of many in the co-op retail movement for a review of the business rates they have to pay by comparison to the taxes that online businesses such as Amazon have to pay at the moment, which are substantially less.
In my earlier intervention on my hon. Friend the Member for Cardiff South and Penarth, I raised the potential contribution of the military credit union. I hope Ministers in the new Government will go further than just support for a military credit union and will recognise the huge benefits of trying to extend credit union membership. In particular, I would like to see a right to save, so that anybody who wants money deducted at payroll and sent to their credit union should be allowed to make that request and have that implemented without question. At the moment, it is at the discretion of the employer. Everybody knows that this is a service that can be offered incredibly cheaply by employers, but it is a matter of will. The very best employers do it, but sadly too many do not. Perhaps putting a right to save on the statute book could help to boost membership of credit unions.
I have always very much supported the idea of a British version of the Community Reinvestment Act, which would place a requirement on major banks to account for the services that they provide to the communities from which they take deposits. When those major banks leave those communities and shut branches, there should be an obligation on them to continue to work there, albeit perhaps through credit unions or other community banks operating there. That legislation works extremely well in the United States and is long overdue here in the UK.
I add my voice to those who have called for a profit-sharing requirement on big companies. There is merit in the French idea that 5% of profits should be shared among those employees who have helped to create that profit in the first place. That would seem to be one further way in which we could create an economy that works for all. I commend my hon. Friends and other hon. Members who have participated in this important debate.
We now come to the first of the Front-Bench speeches. The recommended guidelines are 10 minutes for the SNP and for the Opposition, and if the Minister could end his remarks at 2.57 pm, we can then allow the hon. Member for Cardiff South and Penarth (Stephen Doughty) to wind up the debate.
Thank you very much, Mr Hollobone. I will do my best not to take such an extensive amount of time. I am sure we would all agree that the last few days have felt like something of a marathon, so I will keep my remarks brief.
I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty). We have crossed proverbial swords in this Chamber recently, but I think today’s debate will be more conciliatory than previous ones. There have been many important and significant contributions today and I look forward to hearing the answers from the Minister on issues such as the mutualisation of Channel 4 and a public stake in Transport for London. There are many interesting ideas. I hope that we can work across the House on areas of mutual interest and agreement.
I am very happy to be participating today. My family have a great tradition in the co-operative movement. Both my grandmother and my great-grandmother travelled with the co-operative and I still remember some of the artefacts that my grandmother brought back from Russia in the 1920s.
It is particularly important to discuss and focus our attention on the role and benefit of co-operatives in our society at the end of the Co-operatives fortnight because of the Brexit vote and in the light of the Finance Bill. In this time of economic uncertainty, we would do well to highlight the contribution of co-operative, employee-owned businesses in our economy. Those employee-owned businesses contribute an estimated £34 billion a year to the British economy and there are nearly 7,000 independent co-operatives across the UK. I will not take hon. Members on a full tour of my constituency, but I would like to mention a couple: West Lothian Credit Union, of which I am a member, Pentland Garden Services, based in Kirknewton, and Eliburn Tenant Management Co-operative, all of which have an employee-owned structure and make a great contribution to the local and Scottish economy.
Two of the largest co-ops in the UK are the Co-op and John Lewis, of course. All co-operative retailers, including those two, account for £24.3 billion of the sector’s turnover. With the two strongest areas in the co-operative sector being retail and agriculture, Arla Foods and United Oilseeds contribute £5.8 billion. We cannot ignore their contribution to the economy. Nor can we ignore the co-operative sector’s contribution to the job sector. When John Spedan Lewis, the son of the founder John Lewis, handed the business over to his employees in 1928, he was driven by the desire to improve the working lives of his employees, shaking up the old ways of doing business. Today, the John Lewis Partnership is the largest employee-owned business in the UK. Its 91,500 staff members are partners in the business, and together they own 46 John Lewis shops and 349 Waitrose supermarkets across the United Kingdom, manage their respective websites and run a production unit and farm. That is a significant contribution to the United Kingdom.
John Spedan Lewis was ahead of his time. Studies now show that staff members who are also owners of their businesses are more motivated, engaged and productive. They also experience higher levels of wellbeing. In the John Lewis Partnership, absenteeism is at 3.4%, which is less than half the retail sector’s average.
Given the increasing demand placed on workers today and the impact that 24-hour access to work through phones and emails can have on employees’ mental health—I am sure we and our staff are all well aware of that—putting more ownership in the hands of employees is a model with a lot of merit. The numbers speak for themselves. The White Rose Centre for Employee Ownership, based at the universities of Leeds, Sheffield and York, found that 70% of companies that convert to an employee-owned model report an increased quality of goods and services, 57% report better productivity and 55% report better financial performance.
The co-operative sector currently employs 222,000 workers across the United Kingdom, and co-operatives affect even more of the population than they employ. There are 17.5 million members of co-operatives across the UK—about a quarter of the total population.
As my hon. Friend the Member for Glasgow South West (Chris Stephens) said, the co-operative sector has proven resilient during this period of austerity. Figures from the Cass Business School show that, in the recessionary period of 2008-09, job growth dropped 2.7% but rose to 12.9% in employee-owned firms. Their importance has endured among uncertain economic conditions. Given the current economic conditions and the recent Brexit vote, their importance to the economy is even greater. There is evidence that employee-owned businesses are more resilient and are able to create jobs at a faster rate than their non-employee-owned counterparts during periods of economic instability.
Successive Governments have consistently supported employee ownership. I pay tribute to the coalition Government, which in 2014 introduced a series of tax changes to level the playing field for employee-owned businesses. As a result, shares of profits in indirectly owned and employee-owned businesses are now income tax-free up to the value of £3,600. Business owners can also now benefit from capital gains release when they transfer control of their company to their employees.
However, we must ensure that that legislative support continues. Co-operatives are presently expressing legitimate concerns about details in the 2016 Finance Bill, specifically—I have spoken to a number of businesses that have this concern—that the calculation of the apprenticeship levy will leave employee-owned businesses at a disadvantage compared with conventionally owned businesses. Even worse, there is a real fear that that action could disincentivise the creation of employee-owned businesses in the future. I would be grateful if the Minister commented on that. There has been some speculation about the apprenticeship levy. Given the change in Government, he probably will not be able to clarify that, but any insight he can give will be of great help. A number of businesses, not all of them employee-owned co-operatives, have approached me recently with concerns about the apprenticeship levy. The recent example of BHS and the devastating impact that that has had on its workers shows how important co-operatives and employee-owned businesses are to our economy.
The numbers I have cited demonstrate how important co-operatives are to the economy and the job sector. I do not want their contribution to be diminished in any way by the apprenticeship levy. The present wording of the Finance Bill dictates that the apprenticeship levy does not include dividends to shareholders, but does include bonus payments to employee owners. That will affect about 70 employee-owned businesses across the UK, based on the criteria of companies with a payroll bill of £3 million and over.
In Scotland, the Scottish Government have pledged to encourage more challengers to mainstream service providers and to give consumers more options when choosing a loan or savings. In 2013, Alyn Smith MEP, who received a standing ovation in the European Parliament for his speech following the Brexit vote, said:
“Scotland has a long heritage in the cooperative movement.”
He noted that Scotland was home to the first co-operative—the Fenwick Weavers, in Ayrshire. It is a tradition that brings us great pride. Before I finish, I also want to mention the Edinburgh Bicycle Co-operative, which has a proud heritage in Scotland.
The message from both co-operatives and the statistics gathered by academics is clear: that alternative ownership structure makes an important and sustained contribution to the UK economy.
Before the hon. Lady finishes, will she give way?
I would be delighted to.
I congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on bringing this debate to the House. It is not anti-business to suggest that big business needs to change, and co-operatives are one way of doing that. I would like to make a plea for farming co-operatives, if that has not already been done. We have done that in my constituency. A single farmer by himself cannot make a change, but collectively, with a number of other farmers, they can secure contracts, move forward and employ more people. Does the hon. Lady agree that that is an example of how things can improve? Co-operatives can move things forward and make things happen that big businesses cannot. Sometimes a change is good.
I could not agree more. I am always interested to hear what the hon. Gentleman has to say. He is such a regular contributor here and in the main Chamber. The point he makes about being small and agile, and being able to respond and do things in a different way, can be applied to co-operatives—it can also be applied to small nations. I will leave that with the House.
It is a pleasure to serve under your chairmanship, Mr Hollobone, and to serve opposite the Minister in our first debate together. I thank my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for bringing this debate to the House and for his eloquent contribution. I thank all hon. Members for their contributions and their pertinent questions, which I hope the Minister will address in his response.
As a Co-operative party Member and the MP for Salford and Eccles, I am proud that the seeds of this radical movement began in my city, before the Rochdale pioneers set up shop. However, I will concentrate not on history, important though it is, but on our co-operative sector’s contribution to the economy.
The vote to leave the EU was a stark confirmation that too many people in our country have been excluded from the fruits of economic growth for too long. Britain’s relationships with the rest of the world are now open for renegotiation, but so is our previous economic model, which was not working in the interests of many communities up and down the country. Labour’s red lines on the economy, which the shadow Chancellor, my hon. Friend the Member for Hayes and Harlington (John McDonnell), set out last week, made it clear that we will not allow any future renegotiation to damage the interests of people here. Equally, we should no longer think it is acceptable for the wealth of our society to pile up in the hands of just a few people or in just one corner of our country. We need an economic model that can deliver shared prosperity across the whole country. Business as usual is not an option any more.
Labour Members are clear that co-operatives must be a critical part of rebuilding a new, fairer and more prosperous economy. As we have heard today, the opportunity for co-operatives is huge. Our co-operative sector is currently worth £37 billion. That is substantial, but far smaller than that of similar economies such as Germany and the US. Our co-operative sector is just 20% the size of Germany’s, but it has grown by 15% since 2010—faster than the rest of the economy—and 15 million people now own a share in a co-operative, up 16% since 2010.
Growth is also occurring across different sectors. Co-operatives UK reports that large numbers of tech co-ops are now being established. The logic of supporting collaborative tech development with a collaborative business model is clear. Platform co-ops, which are online tools that provide collaborative working spaces, are spreading rapidly, especially connected to the work that is carried out in my constituency. Although it is still in its infancy, the co-operative internet is becoming a reality.
Community ownership of energy has boomed in the past five years. The number of community share offers per year increased fivefold between 2010 and 2015, and £60.8 million was invested last year alone. The expansion has been particularly striking in the renewables sector. One study by Cardiff University found that each megawatt of community-owned, small-scale hydrogenation created 10 full-time equivalent jobs. For rural communities with access to natural resources but isolated from other economic activity, that represents a huge boost.
Given the rise of precarious employment and the so-called gig economy, co-operatives have a clear role to play, as my hon. Friend the Member for Cardiff South and Penarth eloquently illustrated. Earlier this year, Co-operatives UK published an excellent paper making that case convincingly. By sharing the costs of necessary administration, co-operatives set up to support the self-employed and micro-businesses can play a vital role in reducing the risks of self-employment. For example, as we have heard, the Musicians Union organising music teachers into co-operatives, rather than letting them sink or swim as individual freelancers, is a fantastic idea.
On the economic case for co-operatives, the vote to leave has clearly brought some of the UK’s economic difficulties into stark, full view. The vote was about more than just the impact of six years of needless austerity. Too many places felt that they had been left to languish in economic and industrial decline, starved of resources and investment. Britain has worse regional inequality than any other EU member, and our economy has become far too dependent on poorly paid, insecure work. In fact, the stagnation in productivity since 2007 is clear macroeconomic evidence of a failing national economic model.
Britain’s output per hour now lags far behind comparable economies in the G7. Every hour worked in the UK produces about a third less, on average, than the typical hour worked in Germany, the US or France. The productivity gap, frankly, is now the worst it has been for a generation. That matters, because productivity growth is the engine of economic growth in a developed economy; without it, economic growth is harder to come by. A major part of the productivity problem is that investment in the UK is simply too low, and it has been for a long time. Boosting investment by both Government and business will be essential. Changing business models, however, can also boost productivity, and that is where co-operatives can play an important role.
Worker-owned companies have a clear productivity advantage over conventional businesses. Recent research by the Institute for Public Policy Research has highlighted the potential importance of co-operative business models in driving productivity in otherwise low-paid parts of the economy, such as retail. If we want a secure economy, we need businesses that can grow and succeed. Evidence also suggests that co-operatives are more resilient than conventional businesses. Twice as many co-operatives than other businesses survive the crucial first five years.
I hope the Minister is listening, because we should be more ambitious about what can be achieved through policy. We want to see resilient, high-productivity businesses in an economy that is fairer for everyone. My hon. Friend the shadow Chancellor has previously expressed his ambition to at least double the size of the co-operative economy, which would be a £40 billion boost to the economy, but too much existing Government policy works against that. Cuts to renewable energy, and community generation in particular, make little economic sense. The damage done to genuine community-owned energy schemes through the withdrawals of incentives to investment, such as the seed enterprise investment scheme, has been significant.
The consolidation Act—the Co-operative and Community Benefit Societies Act 2014—was welcome recognition of the importance of the sector, but it did not go far enough in actively promoting co-operative ownership. Opposition Members would like to see greater support for co-operative forms of financing in particular, and we would welcome the Minister commenting on that in his response. Our financial system is simply not delivering as it should be for small businesses. By pooling resources and risks for small business borrowing, mutual guarantee societies could help ambitious small and medium-sized enterprises access the funding they need. Helpful legislation to assist with the formation of such societies would be along the lines of enabling the mobilisation of funds for small businesses through them clubbing together to raise credit.
Another major challenge that has been touched on today is business succession. Large numbers of small business owners are coming up to retirement over the next few years. Family businesses in particular face what the press has described as a succession crisis. Preston City Council, in Lancashire, inspired by the example of Cleveland, Ohio, developed an extensive programme of work to support its growing co-operative economy. It is actively seeking opportunities to create local co-operatives as part of local business succession, working with the local chamber of commerce to inform local businesses. I point the Minister in the direction of that council if he is looking for ideas.
Labour’s firm belief is that the co-operative sector in general should, and will, continue to make a critical contribution to Britain’s future economic success. We face a period of uncertainty, and the renegotiation of the UK’s relationship with the world is one part of that, but so is the widely admitted failure of the previous six years of austerity policy. A future economic direction has not been set, so the opportunity is there to make a clear break with the failures of the past. Co-operatives, by helping spread the wealth and providing better incentives for investment in capital and in the skills we need for the future, will be an essential part of our new economic direction. What is needed now from the Government is a clear commitment to make that happen. I would appreciate it if the Minister outlined the Government’s future policy direction and tell us his thoughts on my comments and those of other hon. Members.
It is always a pleasure to serve under your chairmanship, Mr Hollobone. I hope you will indulge me today, because I feel slightly nervous, as I always do on the first morning of a test match.
I thank the hon. Member for Cardiff South and Penarth (Stephen Doughty) for securing this important debate. I also compliment him on his excellent timing for it, following as it does the International Day of Co-operatives only a couple of weeks ago.
I congratulate my new shadow, the hon. Member for Salford and Eccles (Rebecca Long Bailey), and I wish her the best in her new job. It is a bit disconcerting to have a new shadow here, but with an old shadow, the hon. Member for Harrow West (Mr Thomas), sitting just behind her.
We have heard some important things today. Certainly, everyone has commented on the huge value we all see in co-operatives in this country. We in the Government share that enthusiasm, because we believe that a balanced economy is the best way to create a healthy economy. That involves a number of different aspects, from rebalancing our economy across the various regions of the UK, to bringing in greater balance in terms of gender diversity in our industries, all of which means encouraging and supporting a diverse range of business models as well.
Co-operative enterprises have a proud history in this country, as a number of hon. Members have commented. Back in the 1760s, weavers in Fenwick were already forming a society to sell cheaper oatmeal and to help their members with savings and loans. Hon. Members might recall the famous work of the great Welsh reformer, Robert Owen, and the Rochdale principles agreed by pioneering artisans in 1844, which paved the way for the co-operatives that exist throughout the world today.
We want to uphold the co-operatives tradition and ingrain it ever deeper in this country. We have nearly 7,000 independent co-operatives across sectors and across the UK—my own constituency has the True Food Co-op, a not-for-profit community shop that has been selling local food at affordable prices since 2004. I hope you do not mind the constituency plug, Mr Hollobone, in particular today.
I am pleased that the model is increasing further in popularity, with the co-operatives sector growing by 6% a year—that is about 250 new co-operatives every year. Together, as others have said, they make a huge contribution to our economy, worth more than £30 billion and owned by about 17.5 million of our citizens. What makes co-operatives so unique is the democracy that runs through their core: they are run by their members, for their members. From farming co-operatives to football club co-operatives, they are all about their members working together to shape their own service, and their own success.
I noted the interest of the hon. Member for Cardiff South and Penarth in the armed forces credit unions. To remind him, the Government gave £0.5 million from LIBOR funds to establish payroll deductions to allow armed forces personnel to access credit union savings and loans. I understand the project is up and running well, with members joining in large numbers. In due course, it will also serve people in receipt of an armed forces pension. I hope that deals with his concerns.
It is the fact that the co-operative model gives members a stake in their futures that makes it so powerful. A study by the industry trade body Co-operatives UK found that that stake gives members of co-operatives much more motivation and boosts the UK’s productivity to the tune of almost £60 billion. The model is not only productive but highly resilient, as was shown by the financial success of the co-operative sector in the years following the economic downturn of 2008, when it continued to increase its average turnover.
Co-operatives are more productive and more resilient, but they also give their members more control over what matters to them. It is not distant shareholders who have a say; the customers, residents, suppliers or fans that own those businesses set their direction and priorities. Therefore, co-operatives often have a real focus on the social and environmental benefits that those owners want to see. That is why they should undoubtedly be seen as a force for enormous good, not just here in the UK but across the world.
I was asked about learning from overseas. Officials have met the leaders of the co-operative movement in the US to learn about how they have achieved a thriving co-op sector. The Government’s mission-led businesses review, which I commissioned at the turn of the year and co-ops are considered part of, will draw on best practice from around the world.
[Ms Karen Buck in the Chair]
The Minister is making some interesting and important points. I hope that he will come on to the apprenticeship levy, which businesses have raised with me. I would be grateful to hear his thoughts and reflections on that and the point about not discouraging apprenticeships in the current business environment.
I will certainly come to that if I have time, but I have several questions to address, so I will write to the hon. Lady if I do not.
It is important that we create the right kind of environment to help co-operative businesses to flourish, and in 2014 we introduced several measures to do just that. My hon. Friend the Member for Wycombe (Mr Baker) raised the question of further ambition for the sector. He was a bit harsh on what we did in 2014. With those measures, we started by consolidating laws to make it easier for societies to understand and apply the legislative framework and rules governing them. We also simplified the electronic registration process to help new societies get going, and more importantly, made it easier and cheaper for them to raise capital by increasing from £20,000 to £100,000 the withdrawable share capital an individual member may invest. To ensure that any business claiming to be a co-operative functions properly and lawfully, we gave the Financial Conduct Authority further powers to investigate any suspicions of impropriety.
The new Prime Minister has set out her commitment to public service mutuals and co-operatives as a means of safeguarding public services. I was interested to hear the views of the hon. Member for Harrow West. I know that many hon. Members would support the notion that he raised about Channel 4 and perhaps the BBC, but we will see in due course what the Prime Minister has to say about that. The Department for Culture, Media and Sport has published its White Paper on the future of culture in the UK, and the Government will consider the future of key public bodies in light of consultation responses. That will ultimately be for the new Secretary of State at DCMS to consider, but I am sure that the hon. Gentleman will want to get his views heard in that consultation.
I want to say a few words about the important role that co-operatives play in the social investment market. The Government are committed to helping to develop the retail social investment market, which allows people to invest in causes that they really care about. Community shares, which enable local people to buy shares in local assets and invest in causes that they care about, are a great example of social investment models in action and make up an estimated 6% of the overall UK social investment market. We are excited to see large-scale community share-raising by organisations such as FC United of Manchester, which raised £2 million from 2,000 local people. The Government support such share offers through the social investment tax relief, the second anniversary of which we recently celebrated. Several community share offers have benefited from that relief, which has allowed local people to buy shares in Clevedon pier, Portpatrick harbour and Burley Gate community shop and post office.
We have also taken specific measures to support credit unions, which are financial co-operatives. We have around 500 credit unions in the UK, ranging from large and complex financial institutions to much smaller organisations run by volunteers for just a few hundred members. British credit unions combined have a membership of 1.6 million, more than £2.8 billion in assets and more than £1.2 billion in outstanding loans to members, and play an essential role in broadening the range of financial services on offer to customers in the UK. They aim to promote savings and provide an alternative source of finance. That is good for competition, and it is good for customer choice when it comes to the question of whom to bank with.
The Minister is quite right: I was slightly harsh. He has reminded us of the Government’s spectacular achievements with co-operatives and mutuals. I simply look forward to us doing even better in this Parliament.
I have addressed that point, and I am sure that the Prime Minister will be thinking carefully about what she will do in the coming few weeks. To add to the success that my hon. Friend refers to, we have taken significant steps to support the credit union sector. We are running a credit union expansion project, backed by an investment of almost £40 million. That will help to create a tool to automate loan decisions and help credit unions to decide which loans to make and which to refuse, thereby speeding up that process, and a shared IT system and banking platform will be developed for credit unions to use. Overall, the project aims to help meet the growing demand for modern banking products for people on low incomes by modernising and expanding the credit union sector. Around 7 million people have fallen into the trap of high-cost credit. Some are charged more than 6,000% in interest on short-term loans. By helping credit unions to grow, we aim to save consumers up to £1 billion in loan interest repayments by March 2019.
In short, the Government see enormous value in the co-operative sector because of the contribution it makes not just to our economy but to our communities. That is why we have taken steps to support co-operatives of all kinds and will continue to look at further ways in which we can broaden that support.
I thank all Members, including the Minister and the Front-Bench spokespeople, for a very co-operative debate. I know it is trite to say that, but we have had some excellent contributions and some significant ideas have been put forward. Whether the Minister continues in his role or someone else takes over, I certainly hope that those ideas are taken forward. According to the wires, we have a new Department for business, energy and industry. I would like co-operatives and driving forward the co-operative agenda to be not just some adjunct on the edge of a Department but at the heart of the Government’s forward strategy for business, the economy and industry. We must provide an environment that facilitates the role of co-operatives in all the sectors that we have discussed in the debate.
Co-operatives and the co-operative model have been an inspiration for many years. They are an inspiration across the world and in some quite difficult economic times. My family has even longer co-operative traditions than some Members might realise. My great-great grandfather, a Mr Wagstaff, actually worked in the co-operative bakeries in Hulme in Manchester in the mid-1800s, not long after the Rochdale pioneers. I was inspired by finding that out and also by joining a co-operative in Canada—the famous Mountain Equipment Co-op, which is one of the most successful in terms of its growth and the contribution that it makes to the Canadian economy—as a teenager.
We have talked about international examples, and it is important that we learn from the co-operative sector in other countries—particularly the United States, Canada and continental Europe. There are examples of where we could do more, particularly in financial services but also in certain other sectors. Facilitating co-operatives is about not just the legislative and regulatory environment but a cultural shift in the economy and society, and a recognition of the role that co-operatives play.
I thank all the Members who have participated in this fruitful and healthy debate, in which we have paid tribute well to co-operatives fortnight. My Co-operative party colleagues and I will continue to work hard with others across the House to pursue this agenda in the months and years to come.
Question put and agreed to.
That this House has considered the contribution of cooperatives to the economy.