Co-operatives and Alternative Businesses: Local Authority Support Debate

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Department: Department for Levelling Up, Housing & Communities

Co-operatives and Alternative Businesses: Local Authority Support

Chris Stephens Excerpts
Tuesday 20th June 2023

(11 months ago)

Westminster Hall
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Meg Hillier Portrait Dame Meg Hillier
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I thank the hon. Gentleman for his kind comments and for that valid point. One of the many advantages of local co-ops is that they and the benefits are owned by the local population, and the profit is redistributed to the very people who helped to generate it. Although I have talked about small-scale co-ops, of course they can be larger; there are many such co-operative businesses up and down the country. I am focusing on how councils can facilitate co-operatives in their own areas, so by definition I am talking about the local.

Mayor Philip Glanville has established, among the elected councillors, a member champion for inclusive business, social enterprise and co-operatives. The role is held by Councillor Sam Pallis, who does an excellent job in promoting these issues. There have been some success stories in Hackney. Hackney Co-operative Developments, which has been established for a long time, is being supported by the council through the provision of properties at sub-market rent, capital investment in those properties—that can be hard for small co-ops—and targeted funding for business support and outreach projects so that that fantastic project can spread its expertise to other organisations in Hackney and help to build the co-op sector. Hackney Co-operative Developments understands the technical and legal aspects of setting up a co-op better than anyone, as do similar organisations in other areas up and down the country, so it is right that the council supports it in that way. That relates to the ask that I will have for the Minister in a moment.

Hackney has also set up a community energy fund. A few years ago, it established Hackney Light and Power, which is the energy services arm of the council, and that local company launched a £300,000 community energy fund last year, which aims to support innovative community-led energy projects that benefit Hackney. That amazing programme ensures that Hackney generates its own energy for local use. That reduces energy costs for many consumers; long may it succeed. We must see locally generated energy for local use as a way to tackle the challenge of climate change.

The first round of funding from that £300,000 community energy fund provided funding for solar panels on the Hackney Empire, our fantastic local theatre. I say “local”—it is nationally renowned, but we are proud to call it our local theatre in Hackney. I should declare, as an interest, that I am a friend of the Hackney Empire—that will hardly surprise Members—and a regular visitor to its fantastic pantomime. The fund also provided solar panels for the Mildmay club in north Hackney, in the constituency of my right hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), and Parkwood Primary School. Those panels provide enough electricity for one third of those properties’ energy use, equivalent to 35 homes. If the first round of funding can deliver that, it has real potential. The Minister is very welcome to visit if that would be helpful.

We need a real understanding in Government about what co-ops can deliver. Many years ago, when Labour was last in government—it does seem like a long time ago—I was looking to mutualise the then Forensic Science Service, and I asked for guidance from the Government. I was a Minister in the Home Office, which was, perhaps understandably, not an expert on co-operatives and mutual ownership, so it commissioned advice elsewhere in Whitehall. To my horror, what landed on my desk was a document about John Lewis. I feel no horror about John Lewis, I have to say, but its model of employee ownership was not what we were looking at. It was almost as if there was no real understanding of what mutualism was. Unfortunately, I was unable to get that mutual off the ground for various reasons—many co-ops face a challenge with capital funding—but that drove home to me the fact that we need a central hub in Government that can point people to advice about co-operatives, and I have been banging that drum ever since, in all these years in opposition.

The Treasury, the Department for Levelling Up, Housing and Communities, the Department for Business and Trade, and other Departments such as the Department for Environment, Food and Rural Affairs, would benefit from that understanding. We need a hub that is open to Departments so that when advice on alternative models is needed, co-ops are considered. The Minister making the decision must have full knowledge of the possibilities and possible challenges, and co-ops must be considered as part of the solution.

Chris Stephens Portrait Chris Stephens (Glasgow South West) (SNP)
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The hon. Lady is making a very important point about what central Government can do. Does she agree that that applies to measures to address food poverty? Co-operatives right across these isles are playing a vital role in ensuring people have affordable food during the cost-of-living crisis.

Meg Hillier Portrait Dame Meg Hillier
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Absolutely. As I have said, co-operatives invest back into their own communities, especially the small local co-ops—not every business does that. It is really important that we recognise what the benefits are. Like other hon. Members, I have community shops in my constituency as well as food banks, in which people can buy food and get double the value of what they paid. The fantastic community shop on the Kingsmead estate is staffed by local young people who volunteer their time. There is dignity there for the people who come into the shop; they pay for their shopping but get much more than they paid for. They can get fresh fruit and vegetables as well as other products. Community shops are an important and valuable resource.

As well as a central unit, it is important that the Government ensures that procurement opportunities are open and available to alternative businesses, so that we do not just set up a central procurement model that allows the big beasts—the big strategic suppliers of Government—to bid, without taking into account options for smaller businesses, including co-operatives, to bid. That may be beyond the Minister’s personal gift today, but I am sure she can take it back to relevant Ministers. It is important that we consider what co-operatives can bring to the table.

There is a requirement to have social value in a number of contracts now, but we cannot have co-ops as an added-on extra to a big contract from one of the big strategic suppliers, there to salve Government or community conscience. In that respect, if they are involved they need to be involved properly but, better still, they can actually bid. Greenwich Leisure Ltd was a co-operative social enterprise, but it is now running leisure centres across London and elsewhere as Better Ltd. That is a mutual that is delivering for local people, and it is now big enough potentially to bid for bigger contracts. From small co-ops these larger opportunities grow.

There may be work that needs to be done to provide additional support to those businesses, such as open roundtables, discussions or opportunities for drop-ins for those businesses to come and talk to Government about what they need to do to meet Government procurement requirements. I have highlighted some of the regional and local government support that goes on. If we look at regions—this is very much in the Minister’s bag—if co-operative development is a central strand of economic development outcomes for combined local authorities, then there will be more than what has been happening in Greater Manchester and elsewhere. It is something that could be used to drive up economic growth in the country. The mutual route is an entry-level way for a lot of people to get into business opportunities.

A regional co-operative development agency, to model, co-ordinate and support the co-op sector, would be an excellent initiative. It would not be massively resource intensive; in fact, if the Minister took one of the big, regional local authorities—for example, Greater Manchester —and boosted it, that could be the hub. It does not need to be in Whitehall; I am all for having those provisions outside of London. Although I am a London MP, I think it is important that we support those sectors across different parts of the country. I really want to see a central Government unit set up to support co-ops.

I hope the Minister will take those points on board. I know that she cannot answer them all. Co-operatives cover every sector of the economy and every part of Whitehall’s responsibilities. I know that she is a champion within Whitehall for local government, so I hope that she will pass on these thoughts and comments to her fellow Ministers.

--- Later in debate ---
Chris Stephens Portrait Chris Stephens (Glasgow South West) (SNP)
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It is a pleasure to see you in the Chair, Mr Dowd. I commend the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) for leading this debate with an excellent speech. I commend the speeches of my good friends, the hon. Members for Neath (Christina Rees) and for Cynon Valley (Beth Winter).

I completely agree with the hon. Member for Cynon Valley: the ongoing cost of living crisis has clearly demonstrated the inherent dangers of communities being reliant on companies motivated by profit for essentials like food and housing. It is vital that co-operatives and social enterprise organisations, which prioritise supporting communities, receive adequate funding, not just from local authorities and devolved Administrations, but central Government, too.

I listened intently to the colleagues who provided a bit of history on co-operatives, which have existed for centuries. The co-operative movement predates the British Labour party. In Govan in Glasgow South West, in 1777, the Govan Victualling Society became Scotland’s second co-operative—it was pipped to first place by the village of Fenwick. The book on co-operatives describes Govan in 1777 as a pretty village on the banks of the Clyde just outside Glasgow. Of course, some of the people of Govan still deprecate the decision of 1912 to bring Govan into the city of Glasgow for local authority purposes. I am not here to describe that part of Govan’s history, but to demonstrate that we can learn lessons from the past. The memory of that society founded in 1777 lives on today in my constituency.

I am privileged to be the chair of Good Food Scotland. That organisation, along with a number of others, assisted the great organisation Govan Home and Education Link Project—Govan HELP—which transitioned during the covid pandemic away from emergency food parcels to become a co-operative pantry. The work of Good Food Scotland is thriving, with the help of both the Scottish Government and Glasgow City Council. We now have six, and rising, larders run by Good Food Scotland, with a membership so far of 1,500, which is also rising.

How vital is that service? The saving for a weekly shop using one of these Good Food larders is on average £20 a week, but we had an example just this week from the Linthouse Larder. A couple who go to a regular supermarket calculated their weekly shop at £80; using the larder, their weekly shopping is now £30. We not only need to promote the great work of co-operatives, we also need to look at supermarkets’ excess profits, and we should be debating whether companies that are making excess profits should perhaps be contributing a bit more in the taxation system.

The work we are doing on eliminating food poverty backs the principles of my private Member’s Bill, the Food Poverty Strategy Bill, in which I ask the Government to produce a food poverty strategy to eliminate the need for food banks by the year 2030. If Joe Biden’s America can look at producing a food poverty strategy to eliminate food banks in America by 2030, we can learn lessons in this nation state and do that as well.

Co-operatives are business organisations that are owned and controlled by members to meet their shared needs. Members can be customers, employees, residents or suppliers, and they have a say in how the co-operative is run. In 2020, just 1% of UK businesses were co-ops, but more co-ops are opening in response to the ongoing cost of living crisis, and a vital job they are doing, too. In January 2022, Cooperation Town had six co-ops in its network, and that has now more than tripled to 21.

Co-operatives provide a vital service to those struggling through the crisis. The soaring food prices in supermarkets are a clear example of why we need organisations that prioritise fairness and support local communities. This cost of greed crisis is a stark reminder of the danger of companies that sell essential supplies prioritising profit margins above all else.

Christina Rees Portrait Christina Rees
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The hon. Gentleman really is a friend of the workers. What I find so inspiring about this debate—I am sure he will agree—is that Wales, Scotland and England have come together to show the value of co-operation and the amazing impact that co-operatives have across the UK.

Chris Stephens Portrait Chris Stephens
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The hon. Lady, too, is a friend of the workers. In fact, I once said that to her when she was in your very spot, Mr Dowd, in a debate on workers’ rights. She is correct that the co-operative movement, which is doing a vital job, needs to grow in this country.

I would argue that credit unions are based on the co-operative model, and they too are playing a vital role in helping people with their finances. They help people to save and take out affordable loans. The credit union movement, which is doing great work, should be congratulated. The less I say about some of the bigger banks, the better, because I would probably veer into using unparliamentary language, and I am sure you would not allow me to do such a thing, Mr Dowd.

According to the House of Commons Library, in 2021-22 4.7 million people, or 7% of the UK population, were in food poverty, including 12% of children. In 2022-23, the Trussell Trust supplied the highest recorded number of three-day emergency food parcels. It is hardly surprising that the number of co-operatives in the UK is growing to meet the challenge of soaring levels of food poverty.

FareShare, the largest distributor of charitable and surplus food in Britain, supplies about 9,500 groups, including food banks, co-ops, community cafés and school clubs, but it currently has a waiting list of 1,500 organisations. That shows the challenge of dealing with the cost-of-living crisis. Its head of marketing noted:

“We believe this is just the tip of the iceberg for the number of charities and community groups needing more support… We do not have enough food to meet this soaring demand, so we’re asking the government to provide us with £25m to help us unlock an additional 42,500 tonnes of surplus food, the equivalent of 100m meals, to the people worst hit by the cost of living crisis.”

That shows the very real challenge facing citizens across these islands. The idea that the growing demand for affordable food is an indictment of the lack of action in providing adequate support through the cost of living crisis is echoed by other stakeholders.

Co-ops have the potential to offer a real, sustainable solution to the ongoing housing crisis. It is not just in the context of essentials like food that we are seeing companies take advantage of the ongoing crisis to disguise hiking their prices; increasingly, landlords are also taking advantage of the cost of living crisis to charge exorbitant prices for accommodation. Although the Scottish Government have taken decisive action to support people through the housing crisis by introducing a rent freeze and a moratorium on evictions, I am afraid that the UK Government have taken no action to protect people from the crisis. As with food prices, soaring housing costs do not impact everyone equally.

Chloe Field, the National Union of Students’ vice-president for higher education, has said that the “unprecedented” housing shortage is

“jeopardising students’ university experience and forcing them to make difficult decisions.”

She also noted:

“Without urgent action to increase the amount of affordable housing, it is inevitable that both dropouts and student homelessness will increase.”

Those on low incomes are paying a hefty price for the lack of action to tackle our housing crisis. One charity has warned that student housing is reaching a “crisis point” not seen since the 1970s. As a result, housing co-operatives are becoming increasingly popular, particularly among students, who have set up student co-operative homes. The Student Co-op Homes organisation notes that

“We know from elsewhere in the world this model works and is replicable at scale...There are now four such co-ops in the UK (housing over 130 students) in Birmingham, Edinburgh, Sheffield and Brighton, plus active groups looking to secure property in Belfast, Bristol, Glasgow, Manchester, and Nottingham. Further enquiries are coming in every month.”

Such co-op homes are a solution for people who have been priced out of buying a home in their local communities.

I hope that when the Minister responds to the debate, we will hear about what the Government are doing to help these housing co-operatives ensure that there is affordable housing, about how we are very much having to deal with food poverty, whether or not the Government will support my private Member’s Bill, what action the Government are taking to address food poverty, and about the support that they will give food co-operatives.