Co-operative and Mutual Businesses

Debate between David Drew and Gareth Thomas

Thursday 27th June 2019 Commons Chamber

[Gareth Thomas]

My hon. Friend seems to have gone from being dangerously radical earlier to being conservative within the space of about 10 minutes. He makes a reasonable general point about the changing landscape, but I am struck by the number of credit unions that have stories to tell of their difficulties with the FCA, and I believe that the point that my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) and I have made about the need for cultural change in the FCA’s approach to mutuals is justified.

As the Association of British Credit Unions Ltd and the Building Societies Association have noted, new primary legislation for credit unions could allow them the chance to offer additional services at an affordable price in areas such as house insurance, where consumers often pay a premium if they pay on a monthly basis. Under the Credit Unions Act 1979, credit unions are permitted to offer credit to their members in the form of a loan, but the Financial Conduct Authority has taken a strict and literal view of this, limiting credit unions to offering cash loans. ABCUL and credit unions such as Plane Saver and London Mutual have noted that credit unions could provide an affordable and responsible alternative to a number of other consumer credit markets, such as secured car lending. Indeed, one credit union highlighted to me that the FCA had effectively stopped it offering an alternative to the high-cost credit that BrightHouse locks its customers into when they cannot afford to pay outright for basics such as cookers and fridges.

There should be a legal right for payroll deduction to join a credit union to be available to an employee if they desire it. I hope the Minister will ask his officials to check that every branch of the Government offers payroll deduction to join a credit union if civil servants want that facility. There should also be a requirement for the Department for Work and Pensions, local authorities and housing associations to signpost those in need to credit unions to help them avoid the payday loan companies and illegal lenders who prey on our most vulnerable people. Further help to allow credit unions to invest in new technology, so that they can provide a good digital offer, is key.

Greater understanding of the needs of the co-op and mutual sector by the civil service, and across all parts of Government, is important, and the Treasury is in a good position to facilitate such an awareness-raising effort. In Homes England, for example, a dedicated group of staff could promote and help housing co-operatives. A co-operative development agency could be tasked with promoting interest in co-ops and mutual entrepreneurialism across the country. The Treasury should be able to check that Government funding announcements do not discriminate against co-operative and mutual models. Co-op schools and energy co-ops have not been helped at key moments. Finally, why oh why are the Government not doing more to promote employee ownership trusts—a move they announced in the 2014 Budget—as a way of enabling the owners of companies to get the exit they want, realising the value of their business while securing its ethos, values and employees for the future?

The Government have sought to dispose of unwanted buildings and other land, but some of that should be allocated for sale or transfer for co-operative housing. We need more community land trusts to lock down ownership of land for those who need it most, and I will give just one example, with Armed Forces Day this Saturday in mind. In the US, homeless veterans are being helped into homes built on donated Government land, subsidised by Government funding and run as housing co-operatives. That has given veterans the chance to take control of the environment, rules, regulations and rents that they live by and pay, while getting proper support to rebuild their lives.

[Dr David Drew (Stroud) (Lab/Co-op)]

My hon. Friend is making an excellent speech. Does he accept that community land trusts have a particular benefit in rural areas, where they can provide cheaper or affordable housing? Does he agree that we need to examine how planning rules can encourage, rather than disadvantage, community land trusts in such settings?

[Gareth Thomas]

I do agree, and I hope that my hon. Friend will catch your eye, Madam Deputy Speaker, to develop that point further.

Soldier On, a US veterans charity, opened the Gordon H. Mansfield veterans community in the autumn of 2017, with 51 homeless veterans moving in. Those veterans received not just the keys to their own apartment in a housing co-operative, but the keys to a new life away from the danger and insecurity of the streets. Soldier On has 14 new units under construction and is looking to develop 100 more units in New York and a further 70 in New Jersey. That model of housing co-ops on, probably, donated Government land could work in the UK and should be happening here. I gently ask the Treasury to encourage the Ministry of Defence to stop some of the sales of the almost 50 empty properties of which it is trying to dispose.

Co-operatives and mutuals are a great British success story, but they could be an even bigger one. I urge the House and the Government to embrace the sector and to champion the doubling in size of its contribution to our economy.