Co-operatives and Alternative Businesses: Local Authority Support

Tuesday 20th June 2023 Westminster Hall

[Peter Dowd in the Chair]

14:30

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

I beg to move,

That this House has considered the role of local authorities in supporting co-operatives and alternative businesses.

It is a pleasure to serve under your chairmanship, Mr Dowd. I am proud to declare my interest as a Labour and Co-op MP since 2005, and as a member of a co-operative society. I shall discuss the importance of co-operatives and alternative businesses. It is great to see the Minister here because I want to talk in particular about how councils have a role in promoting co-ops in their areas.

It is worth giving the basic background. Co-operatives are mutual societies, often locally based, that invest their profits with their members and services. That means that they are very much part of the local community, with their activity and finances in that local area. They put economic power directly in the hands of local people, ensuring that the benefits of economic growth are felt by those who create it.

As I said, I want to highlight the role of councils. There are now 41 councils up and down the country that are members of the co-operative councils’ innovation network. Those councils believe that traditional models of top-down governance and economic growth are not always fit for purpose. By being part of that network, they choose to reclaim the traditions of community action, community engagement and civic empowerment that can transform communities.

There were 7,200 co-operatives in the UK in 2021. Those include 2,500 social clubs in the trade union sector; 721 in retail; and 720 in housing, which is an area of particular interest to me. There are 14 million people in the UK who are members of co-ops. This is a significant sector that reaches into many areas of our lives. Co-ops directly employ 250,000 people. In 2015, co-ops produced 2% of the UK’s GDP. That is impressive enough but, compared with New Zealand where co-ops produce 20%, France and the Netherlands, where they produce 18% in each, and Finland where they produce 14% of GDP, there is still a lot of opportunity, to put it positively, for co-ops in the UK. There is also a lot of wasted opportunity, when considering what they could do to deliver for communities and the wider economy.

In 2021, UK co-operatives had an annual turnover of £39.7 billion, and they have grown every year since 2017. They are significant and important in economic terms. Some people might ask why promote co-ops rather than other businesses. Co-ops are more ambitious than other businesses, according to research by the Co-op party and its allies. As many as 61% of co-ops expressed ambitions to grow, compared with 53% of small businesses generally in the UK. That might be because some are smaller, so it is easier for them to have that ambition. Obviously, businesses are going through a difficult time at the moment. Nevertheless, that is a sign of people’s personal investment in co-operatives.

Co-operatives are more resilient. Co-op start-ups are almost twice as likely to survive the first five years of trading, compared with start-ups generally. Co-ops were more resilient in the pandemic, with the number growing by just over 1% between 2020 and 2021. It is interesting that co-ops have a smaller gender pay gap than other businesses: 9% compared with 12%, based on the median hourly wage in Great Britain, and covering Northern Ireland as well. That may be because co-ops have a flatter pay scale and less of a hierarchy, but that is nevertheless a significant fact when looking at that important issue.

I want to highlight what local government is doing to promote co-ops. I will start my canter around the country with Greater Manchester and its Co-operative Commission, which was established by the Greater Manchester Combined Authority and launched by Mayor Andy Burnham, to make recommendations aimed at enabling the co-operative and mutual sector to make the best possible contribution to Greater Manchester. Of course, that is very fitting considering where the Rochdale pioneers came from. Mayor Burnham is going back to the roots of his region.

The commission focused on recommendations in three sectors: housing, the digital economy and transport. They were all chosen because of their fit with the Greater Manchester strategy. The commission promoted co-ops to reduce inequality, improve education and employment. Its stated aim is

“To help co-ops to expand into other areas of the economy to make Greater Manchester the most co-operative region in the UK.”

I may have a bone to pick with Mayor Burnham, because I hope that east London might beat him to that title. Nevertheless, the Mayor accepted those recommendations by the commission, so that work is now under way to ensure that co-ops play an important role in the north-west.

Ownership hubs have been set up in several combined authorities across the UK. They began initially in South Yorkshire under the former Mayor, my hon. Friend the Member for Barnsley Central (Dan Jarvis). The ownership hub model has also been launched in Greater London. The aim of that is to promote both co-operative and employee-owned business growth. In South Yorkshire, the collaborative partnership works with the combined local authorities in the region and the South Yorkshire Growth Hub, where businesses can get support to set up or indeed convert their organisation to worker or employee ownership.

The South Yorkshire Growth Hub has experienced and knowledgeable advisers, who can offer support on setting up new businesses, upskilling workers and gaining access to finance. In London and Greater London, the London Growth Hub, under Mayor Sadiq Khan, will be tasked with increasing the growth of co-ops across different London boroughs, replicating—we hope—the successes of the South Yorkshire Growth Hub. It is significant that the hubs provide knowledge and expertise, because sometimes one of the barriers to setting up a co-op is that, seen from the outside, there are some seemingly complex legal models that have to be established, but they are not so complex if a business has a helping hand to guide it through.

Moving to the west midlands, Birmingham City Council has taken a community economic development planning approach, which engages residents, community groups, local businesses and voluntary sector organisations as part of its economic development projects. For example, a community building has been built on a disused playing field next to Edgbaston reservoir, and the land is now used for growing food. Again, that project is very much rooted in the local community.

In January, Liverpool City Council adopted a community-led housing policy, which aims to unlock vacant land and properties for community groups to convert into new homes. The policy was devised in collaboration with local community groups. These groups are already forming land trusts and co-ops, and they will work alongside council officers and community-led housing advisers to build new houses.

In my own constituency, I know the vital importance of housing, the problem of shortage, the overcrowding situation and how little empowerment there is for many residents, whether they are private renters or council tenants. Co-ops are a really great way to give people control and power over their own homes.

I have mentioned east London. As the MP for Hackney South and Shoreditch, of course I will focus on what my own borough is doing, under the excellent leadership of Mayor Philip Glanville, a Labour and Co-op mayor who was directly elected by the residents of Hackney.

In setting its budget for the current financial year of 2023-24, Hackney set aside £70,000 to support the creation of co-ops, in order to deliver services where there is market failure and no business case for in-sourcing. Hackney has a good track record of in-sourcing many services, including our street sweeping and cleansing, but where there is not the right case—perhaps because the service is too small—Mayor Glanville wants to consider alternatives. At the moment, these include social care, affordable childcare and community energy. Where Hackney cannot in-source services and there are existing co-ops, it wants to look to local businesses, social enterprises and co-ops first, working across departments to ensure that contracts are designed to make it possible for co-ops to tender.

I should perhaps flag to the Minister one of the challenges. Sometimes in local government it is difficult for co-ops to meet the required threshold, because of some of the restrictions set at different times, in different eras and by different Governments, including different central Governments, which perhaps do not understand the benefit of a local community co-op.

[Jim Shannon (Strangford) (DUP)]

First, I commend the hon. Lady for securing this debate. I have apologised to her already and I apologise now to you, Mr Dowd, as I am afraid I cannot stay for the whole debate, because I have another meeting to attend at 3 pm.

I also commend the hon. Lady for her leadership of the Public Accounts Committee. We are all very glad that she is there, because we believe that she gives the leadership and direction that that Committee needs. Does she agree that in these times of financial crisis, a mutually beneficial co-operative has never been more important? I know that from my own constituency. A local social supermarket in Newtownards, in my constituency of Strangford, operates almost like a co-operative—it is not an actual co-operative, but almost operates like one—in order to provide food at a lower price. This is something that our local council also needs to sow into, in order to facilitate and encourage people. If a lower price can be obtained by that shop in my constituency, the saving can be passed on to those who need it most. Clearly, that is what we need to do. It is for that reason that this debate is so important and I once more congratulate the hon. Lady on securing it.

[Dame Meg Hillier]

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 (Glasgow South West) (SNP)]

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.

[Dame Meg Hillier]

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.

14:48

[Christina Rees (Neath) (Ind)]

It is always a pleasure to serve with you in the Chair, Mr Dowd. I congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate. I have been a co-operator for many years, because I believe that the only way to improve the quality of life of people living in the UK, Wales and my constituency of Neath is by working together.

I would like to pay tribute to some of my fellow co-operators who have encouraged and supported me in my co-operative endeavours over the years. Alun Michael, former MP and now police and crime commissioner in south Wales, introduced me to the co-operative ethos many years ago. Three of the four police and crime commissioners in Wales are Labour and Co-operative, which is a wonderful achievement. I thank all the current and past members of the Wales co-operative council, on which I have had the honour to serve for many years. A special mention goes to K. C. Gordon, secretary of the Wales co-operative council for nearly 20 years, my campaign manager when I stood for Arfon in the Senedd election in 2011, and a formidable mountain rescuer on Snowdon. Chair of the Wales co-operative council and former MEP Jackie Jones is an ambassador for co-operative ideals throughout Europe. The legend that is David Smith has campaigned for many years for the father of the co-operative movement, Robert Owen, a Welshman who was born in Newtown in Powys in 1771, to be part of the school curriculum in Wales. That will mean that children can learn that Robert Owen, who made his future and his fortune in the cotton trade, was unique among employers of that era because he believed in putting his workers in a good working environment with access to education for them and their children.

Karen Wilkie, former regional secretary of the Wales Co-operative party, gave 20 years’ service to promoting and growing the co-operative sector all over Wales. The former MP and now Senedd member Huw Irranca-Davies has worked with me to have Marcora law adopted in the UK and Welsh Parliaments. I firmly believe that support for co-operatives and alternative businesses would be greatly enhanced if the UK Government created a Marcora law.

Those who missed my 20-minute speech in my Westminster Hall debate on Marcora law in September 2021 will be relieved that I am going to give the edited version today. I believe that a Marcora law is the answer to small businesses closing or where there is a lack of succession planning. Marcora law was created by the Industry Minister Giovanni Marcora in the Italian Government more than 30 years ago. Marcora law gives workers the right and, more importantly, the financial support to buy out all or parts of an at-risk business and establish it as a worker-owned co-operative. Italian workers are given the opportunity to rescue profitable parts of a business or an entire profitable business, and are each given a lump sum in advance of three years’ social security payments and redundancy payments, which they pool together to use for the buy-out.

Marcora law is run by the Cooperazione Finanza Impresa—I will call it the CFI—which was set up in 1986 by the Italian Government, who hold a 98.6% share of the capital investment and oversee the CFI board. The CFI assesses, supports and provides the finances for the buy-out, and it has invested over €300 million in 560 companies, saving more than 25,000 jobs and retaining the skills and experience of the Italian workforce.

The return to CFI is more than six times the capital it has invested in worker buy-outs, and the workers also benefit from co-operative values, safeguarding employment and guaranteeing fair workplace conditions. In my Westminster Hall debate, which seems like years ago now—it was September 2021—I asked the Minister whether the UK Government had

“conducted an assessment of…the existing co-operative sector”.

I asked whether his UK Government would

“increase the size of the co-operative sector”.—[Official Report, 8 September 2021; Vol. 700, c. 113-114WH.]

Had he considered the benefits of worker buy-outs for at-risk businesses? Would his UK Government provide financial support to workers looking to buy out their at-risk business? Unfortunately, the Minister was not too impressed, so I will ask the Minister today whether she will meet me to discuss the benefits of Marcora law.

I followed up my debate by introducing ten-minute rule Bill on a Marcora law, the Co-operatives (Employee Company Ownership) Bill. To my absolute astonishment, the CFI got in touch, having watched my Westminster Hall debate and my ten-minute rule Bill debate. I had the absolute honour of speaking at the CFI conference in Rome in November 2021. Unfortunately it happened virtually, so I have still never been to Italy, but it is on my to-do list.

In the Welsh Parliament, Huw Irranca-Davies introduced a legislative proposal for an employee ownership Bill to give workers support to buy out their workplace if it is at risk of failure. Huw’s motion, which received cross-party support, proposed

“that the Senedd:

1. Notes a proposal for an employee ownership Bill on promoting worker buy-outs and employee ownership;

2. Notes that the purpose of this Bill would be to:

a) legislate for a Welsh Marcora law to provide the legal framework, financial support and advice for worker buy-outs;

b) put in place a statutory duty to double the size of the co-operative economy by 2026 and to actively promote employee-ownership and worker buy-outs;

c) provide financial support and advice for workers to buy out all or part of a business facing closure or down-sizing and to establish a workers co-operative;

d) ensure that all companies in Wales in receipt of public funding or part of the social partnership and ethical procurement chains agree to the principles of worker buy-outs and employee ownership.”

Huw’s Bill is still awaiting legislative time, but although it would pave the way for a Marcora-type law in Wales, only this place has the financial power to truly provide what will be needed to make worker buy-outs a success. Welfare and benefits are not devolved. Even with a Welsh Marcora law, the Welsh Government would struggle to provide the funding needed. That is why we need the UK Government to commit to such a law for the UK.

Co-operatives and alternative businesses represent a departure from the traditional business model, emphasising principles of shared ownership, democratic decision making and the pursuit of sustainable development. By prioritising social and environmental wellbeing alongside economic growth, these enterprises encapsulate the values that we hold dear: equality, co-operation and resilience. These forward-thinking initiatives are reshaping our economic landscape, fostering inclusivity and empowering communities across Wales.

Many local authorities in Wales, including my own in Neath Port Talbot, have recognised the potential of co-operatives and alternative businesses to drive positive change in their communities. They understand that these ventures not only provide valuable products and services, but generate meaningful employment opportunities and promote community engagement. By lending their support, local authorities are fostering an environment conducive to collaboration, innovation and empowerment.

A key way in which local authorities assist co-operatives and alternative businesses is through the provision of financial resources. They offer grants, loans and other forms of financial assistance to help those enterprises get off the ground, expand their operations or invest in sustainable practices. By leveraging access to funding, local authorities are reducing the barriers to entry and are levelling the playing field for aspiring entrepreneurs who wish to pursue a co-operative or alternative business model. In Neath Port Talbot, support is provided through a range of schemes targeted at the third sector, including the community regeneration fund, the Building Safe and Resilient Communities programme and community benefit funds linked to renewable energy products.

Moreover, local authorities play a pivotal role in facilitating networking and knowledge sharing among co-operatives and alternative businesses. They organise events, workshops and conferences at which entrepreneurs can connect with like-minded individuals, share best practice and learn from successful case studies. By fostering a sense of community and collaboration, local authorities are empowering these businesses to thrive and grow.

There are also examples of capacity-building initiatives to ensure the long-term viability of co-operatives and alternative businesses. They provide training programmes, mentorship opportunities and business-development support to enhance the skills and knowledge of entrepreneurs. By equipping them with the tools that they need to navigate the challenges of running a co-operative enterprise, local authorities are creating a sustainable ecosystem that fosters success.

I will finish by mentioning Cwmpas, a development agency working with local authorities, organisations and businesses for positive change in Wales, which has recently expanded to cover the UK—so look out! Cwmpas is a co-operative that was established in 1982 as the Wales Co-operative Centre. It focuses on building a fairer, greener economy and a more equal society in which people and the planet come first.

How we do things is just as important as what we do. Cwmpas works collaboratively, for mutual benefit, by providing support and encouragement, addressing inequality, valuing diversity and democracy, striving to be open and honest, investing in achieving positive outcomes and inspiring and empowering people, communities, and businesses to take control and reach their potential.

My good friend, Derek Walker, led Cwmpas for many years, and I was proud and honoured to speak at many of its events. Recently, Derek was made the Future Generations Commissioner for Wales, and I am sure he will do just as good a job there.

Cwmpas research found that small and medium-sized enterprises make up 90% of public sector and 62% of private sector companies in Wales, and that 20% face closure or succession in the next five years. A Marcora law has a place in improving the chances of succession, rescuing jobs and securing the future of many at-risk businesses across Wales and the UK. A Marcora law would allow organisations such as Cwmpas and local authorities to provide the financial support and expertise to deliver this.

Importantly, the support provided by local authorities and organisations such as Cwmpas is not limited to the start-up phase of co-operatives and alternative businesses. They recognise the need for ongoing support and aim to create an enabling environment for those enterprises to flourish. Local authorities work hand in hand with those businesses to identify opportunities, address challenges, and advocate for policies that promote their growth. By nurturing a long-term partnership, local authorities ensure the resilience and sustainability of co-operatives and alternative businesses.

Support for co-operatives and alternative businesses in Wales is an essential pillar of economic development and community empowerment. By championing those enterprises, local authorities are not only fostering inclusive growth and job creation but promoting the co-operative values that define us as a society—co-operative values that have stood the test of time. As we move forward, let us continue to embrace and support the co-operative spirit and its values, for it holds the key to a more equitable and prosperous Wales.

I invite the Minister to visit Neath and to see those wonderful co-operatives and alternative businesses in operation in every community of the Neath Port Talbot local authority.

15:03

[Beth Winter (Cynon Valley) (Lab)]

It is a pleasure to follow my hon. Friend the Member for Neath (Christina Rees). I also congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate during Co-operatives Fortnight.

The economic system under which we live is creating extreme levels of inequality, poverty, suffering and hardship, and the private profit motive is benefiting a tiny few at the expense of the majority of people in the United Kingdom. After a decade of Conservative austerity, public service cuts and the current cost of living crisis, we urgently need fundamental societal change to deal collectively with the social and economic crises that we face.

I genuinely and firmly believe that co-operatives—which are “people centred” to realise

“common economic, social, and cultural needs and aspirations”—

have a critical role in shaping the alternative economic system that this country urgently requires.

As my hon. Friend the Member for Neath already outlined, Wales has a strong culture of co-operation, and many of the first co-operative societies were established in Wales. Indeed, the socialist Robert Owen is credited with inspiring and founding the co-operative movement in the UK. In my constituency of Cynon Valley, the first co-operative society in Wales—the Cwmbach co-operative—was established in 1859. It was founded to collectively alleviate the extreme poverty experienced by the community as a result of the miners’ strike back in 1857. Since that time, co-ops have had a growing presence in Wales with a wide variety of functions and, thanks to organisations such as Cwmpas, they now contribute £3 billion to the Welsh economy. That is no small change; that is a massive, significant contribution.

We are fortunate in Wales that the Welsh Government actively support the co-operative sector and are building an economy that prioritises wellbeing and resilience. Legislation like the Well-being of Future Generations (Wales) Act 2015 and the recently passed Social Partnership and Public Procurement (Wales) Act 2023 are models of facilitating that co-operative approach, as is the Welsh Government’s recently announced £1.7 million funding a year for the next two years to help businesses transition to employee ownership and help develop new social enterprises. Community energy projects will benefit from the Welsh Government’s publicly owned Ynni Cymru energy provider, which the shadow Climate Minister, my right hon. Friend the Member for Doncaster North (Edward Miliband), continues to champion in this House through GB Energy.

In addition to the Welsh Government, there is a significant role for councils. As Professor Neil McInroy of the Centre for Local Economic Strategies has said, we need

“a new conception of the local state”

that conceives

“the local state as a facilitating institution that empowers, coordinates and upscales social innovation from community organisation and social enterprises.”

I have been fortunate enough to do quite a lot of work with Neil and many of the trade unions in the UK to develop the building of a community wealth-building approach in the co-operative movement, which I will come to shortly.

Since I was elected to this House, given the horrendous impact of austerity, the cost of living crisis and the pandemic on people in my Cynon Valley constituency, I have prioritised working with the local council, other organisations and, crucially, local people to develop a co-operative and community wealth-building approach. I am truly determined that not only can we and should we create wealth in our communities, but we have to retain that wealth in our communities, unlike during the mining industrial revolution where we produced all the wealth in the south Wales valleys and other valleys and communities throughout the UK, but the wealth was extracted out of our communities. That cannot happen again.

My local authority, Rhondda Cynon Taf County Borough Council, and its community development team, with people like Simon Gale, have significant experience of working with and supporting co-ops and community-based enterprises. One example of how it recently worked was with the Coalfields Regeneration Trust opening a facility called Hwb Cana in Penywaun, where I used to work as a community development officer many years ago. It will function as a skills and training centre for local residents and will house Smart Money Cymru Community Bank, which will enable local people to access loans and other financial services and is similar to the credit union movement that has spread throughout the UK.

There is much more that can be done and, with that in mind, one of the first things I did when I was elected was to commission independent research by the Bevan Foundation think-tank in south Wales to assess how it is possible to transform the economy of Cynon Valley, taking a grassroots, bottom-up approach. The report produced around 17 recommendations, ranging from having a joint procurement strategy using local supply chains and bottom-up town centre regeneration to delivering a real living wage and a Cynon Valley-wide co-operative. To achieve each recommendation, we have set up a number of working groups to turn them into real action and change.

The purpose of the co-operative, which will be in the form of a development trust, is

“to stimulate community-based enterprises, with a strong focus on the green economy.”

Without a doubt, we are living in a climate crisis and notwithstanding the significant challenges and risks, we have many opportunities, particularly in Wales with our topography and green environment, to really develop grassroots, co-operative and community-owned initiatives to tackle that crisis.

We have secured funding from the Welsh Government to undertake a feasibility study into the Cynon-wide co-operative and we are currently considering that report’s findings. It is a really exciting time in the valley and there are lots of opportunities there. Indeed, there was overwhelming agreement that a development trust would play a critical role to assist the economic and social revival of Cynon Valley and its long-term sustainability, which is key to any developments.

I will finish by mentioning Tyrone O’Sullivan. He is a hero of mine, and I had the privilege of attending his funeral yesterday. He was a miners’ leader and a real giant of the trade union and Labour movement, but he also put co-operation into practice. His leadership and vision led to the miners’ buy-out of Tower colliery back in 1995, when miners used their redundancy money to purchase the mine. It was a huge success and made in excess of £11 million in profit in the first three years alone, so it was a brilliant example of worker ownership and the potential of co-operatives.

Going back to where I started, co-operatives must be part of a much wider transformative change and must be placed in the wider context. Tyrone really did have a clear vision of the need for that societal change to give young people a future and to build and develop our communities. He showed that change can happen and that people can take control of the wealth in their communities and make sure that that wealth stays there. That vision remained part of Tyrone. I was privileged to have met him in recent weeks, when we had a long discussion about politics, socialism and the need for societal change. He spoke about the power that lies in our working-class valley communities to effect the change required to achieve—for me and for Tyrone—a socialist society.

The south Wales valleys have been at the forefront of change in the past and we can, and will, be at the forefront of change again. Co-operatives, with the co-operation of councils, have a fundamental role to play, turning that vision—and in his memory, Tyrone’s vision—into reality. Diolch yn fawr.

[Peter Dowd (in the Chair)]

Just to alert people, there are likely to be a number of votes. If that is the case, we will adjourn for 35 minutes.

15:14

[Chris Stephens (Glasgow South West) (SNP)]

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]

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]

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.

15:24

[Alex Norris (Nottingham North) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Dowd. I refer colleagues to my entry in the Register of Members’ Financial Interests, as I am a Labour and Co-op Member of Parliament and because my wife is the assistant general secretary of the Co-operative party.

I commend my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) for securing this debate and for her leadership of it. She started by saying that there is a great need and enthusiasm in this country to move to more local models and away from top-down planning to local delivery. That was really on the money, as was her point about the huge input that the co-op sector already makes to our economy. She also referred to the frankly unrealised potential of the sector, which I will talk about shortly. However, as the theme of the debate is the role of local authorities, I thought it was wonderful that she pulled out examples from across Greater Manchester, South Yorkshire, Birmingham and her borough of Hackney where local, regional and sub-regional leaders are taking ownership and putting co-ops at the heart of their local economy and their local economic development.

I believe, and this came through in what my hon. Friend said, that we are at a co-op moment. We are showing that leadership is local and developing, but that needs to be matched—perhaps this is a theme of today’s debate—with a national commitment.

My hon. Friend was ably supported by my hon. Friend the Member for Neath (Christina Rees), who, in my head, is synonymous with her 100-plus appearances for Wales in squash, as well as with the co-operative movement in Wales. She listed a number of people who have been the backbone of that movement, but she ought to have her place in that pantheon. I knew that she would not disappoint us and would talk about the Marcora law, which is particularly germane to today’s debate.

Whether a Member is from the north-east, like the Minister, from the east midlands, like me, or from south Wales, like my hon. Friend the Member for Neath and my hon. Friend the Member for Cynon Valley (Beth Winter), a common theme is that, in recent decades, we have felt the huge loss of businesses, industries or enterprises that are at the heart of our community, and we know the absolute hole that that creates. My hon. Friend the Member for Neath, building on the Italian example, suggested a way that we can perhaps fill that hole and stop that happening. I am interested to hear the Minister’s reflections on that. Whether she is addressing the current Government or a future one, my hon. Friend will continue to press that case hard. In giving the example of Cwmpas, she made a case—this was picked up by my hon. Friend the Member for Cynon Valley—about the impact of support and input at a national level to help different models of enterprise to develop, and that that can be highly effective.

My hon. Friend the Member for Cynon Valley picked up on that theme by talking about the work of the Welsh Government and Cwmpas. However, what I also took from what she said is that the co-operative economy and co-ops’ place in the economy are as a deliverer of really important social programmes. She mentioned net zero and energy, as well as the cost of living and tackling poverty. I believe that co-ops are at the root of tackling those challenges, which is why I am a Co-operative Member, and that local authorities should act as a facilitator. I associate myself with everything that she said about Tyrone O’Sullivan. I know that a lot of pain has been felt by Welsh colleagues at his passing. For all the reasons she mentioned, his place is very much in a co-op debate, and I am glad we have had the chance to recognise that.

I will make a couple of points of my own. Efforts to support the growth of co-ops and alternative businesses are vital, because we know the difference that those business forms can make. Co-operatives, for example, put economic power in the hands of local people, and ensure that the benefits of economic growth are felt by those who help to create it. I will be interested to hear the Minister’s reflections on that, because I think that is what we are talking about with levelling up. I know that, perhaps politically, the Minister is not co-operative, but I suspect that she is by instinct. I am interested to hear her views.

Co-ops are grounded in shared values that put communities, members and workers together in the driving seat of a fairer, more ethical way of doing business, where issues such as paying a fair share of tax and protecting our natural environment are at the core of how things are done. Co-operatives are good not just for those who depend on them, but for business. They are shown to be more resilient. Co-ops are twice as likely to survive the first five years of trading than other start-ups. As my hon. Friend the Member for Hackney South and Shoreditch said, they are more ambitious, with 61% expressing a desire to grow, as opposed to 53% of businesses more generally. Where workers and members of the co-operative have a true stake and say in the success of business and, crucially, have a share in the rewards, they are more productive.

So co-ops are resilient, ambitious and productive—qualities that we so badly need in our economy, especially in these uncertain times, and also to smooth out and avoid uncertain times in future. As colleagues have said, this is already working, with 7,000 co-operatives across the country turning over around £40 billion a year. We believe that the sector can grow and that its benefits can be felt more widely by more people.

This is about a change of focus from economic growth built around low-paid insecure work that does not ride out economic uncertainty well and is concentrated in certain regions of the country. Instead, we are talking about an “everyone in” approach, providing grassroots growth, created everywhere, by everyone, for everyone, but that will not happen by chance. Colleagues have used good examples of where it has worked well. At the root of that, there has been a degree of national, regional, sub-regional or local leadership, and it requires that proactivity. I hope we will hear some of that in the Minister’s response.

For our part, we as the Opposition have an important ambition, shared with the Co-operative party, to double the size of the co-operative sector, to help build that sustainable growth. Colleagues will also have seen that our local power plan was announced by the Leader of the Opposition on Monday. Co-operation lies at the heart of that plan, which will put money and power—literally and figuratively—into people’s hands. We believe that when more people have a say and a stake, and greater ownership of the issues and decisions that matter to them, the balance of economic power shifts back in favour of people and communities—and my goodness, do we need some of that!

We have heard that local authorities and local government are taking a lead across the country. We have also heard from colleagues that local elections saw a record number of Labour and Co-op councillors elected. There are more than 1,500 such representatives across 80% of local authorities, so the case is being made at a local level more and more. However, we need to see that matched at a national level. When the Minister makes her contribution, I will be interested to hear what work her Department is undertaking, not just to support co-ops and alternative businesses in the here and now, but going forward, in terms of its ambition and belief for the sector. On levelling up, if there is anything the Minister could deliver in her role, it would be to help those sub-regional bodies—perhaps combined authorities and mayors—to deliver ownership hubs. There is clearly enthusiasm to do that.

What more help does the Minister envisage giving local authorities to ensure that they can play their role? There has been a pattern over the past decade or more of not prioritising alternative models. It has been the same old models delivering the same old outcomes. As a result, we have pent-up potential—we really need to realise that—and that plays out in Government focus and in a policy and regulatory framework that often inhibits the development of alternative models.

I hope that the Minister has heard, in contributions from colleagues and me, about the ambition and the potential, and the difference that it would make to the UK economy to unleash co-ops. We see the local leadership of this, and we now need to see some national leadership to match it.

15:35

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)]

It is a pleasure to serve under your chairmanship for what I think is the first time, Mr Dowd—what a very sound time it is. First, I congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this incredibly important debate. We in Government share her desire to expand our understanding of what more can be done to support growth in different sectors and to learn from successful examples of best practice, as mentioned by hon. Members today. When I walked in, I admit that I was not expecting to go all the way back to 1777, which the hon. Member for Glasgow South West (Chris Stephens) mentioned, but it is always important to take on that historical perspective.

In looking at best practice today, I am grateful to the hon. Member for Hackney South and Shoreditch for her canter through the country’s co-ops and the excellent work that they do to support their local communities. I am also grateful to the hon. Member for Cynon Valley (Beth Winter) for outlining the work that she is doing across the valley to develop a local co-operative; I am interested to hear how that work progresses in the months and years to come. I am also grateful to the hon. Member for Neath (Christina Rees) for highlighting some key Welsh co-operative champions, such as Robert Owen, and for her overview of the Italian experiences of the Marcora law. I would be delighted to meet her to discuss that, perhaps in Neath; I thank her for the kind invitation to visit her in her constituency.

We recognise that co-operatives and alternative businesses can and do play a vital role in boosting growth and opportunity, at both a local level, as the hon. Member for Strangford (Jim Shannon) highlighted, and a national level. For instance, Co-operative UK’s 2021 report estimates that the UK’s co-ops have a combined turnover of almost £40 billion and employ around 250,000 people. It is also important to note the role that they have in supporting their local communities, as the hon. Member for Glasgow South West highlighted with regard to food poverty—an issue that he is incredibly passionate about and on which he is a vociferous campaigner. As for his private Member’s Bill, I do not want to give a commitment today, given that it does not sit within my brief, but I will certainly ask the relevant Minister to follow up on that point and have a discussion with him.

The role played by co-ops locally and nationally is why I am really pleased that the Department for Culture, Media and Sport recently launched the social enterprise boost fund, which will see £4.1 million of Government funding invested across six local authority areas to support the creation of new social enterprises and boost early-stage organisations. The fund will run until March 2025, and we expect local delivery partners to involve local authorities over the course of the programme.

In my Department, our £150 million community ownership fund allows community groups to bid for up to £1 million of match funding to help them to buy or take over local community assets at risk of being lost and to run them as community-owned businesses, supporting that sense of co-operative entrepreneurship. That important fund helps to safeguard the small but much-loved local assets that, frankly, we cannot put a price on, such as pubs, sports clubs, theatres and post office buildings. So far, £23.9 million has been awarded to 98 projects across the UK. I have had the pleasure of visiting a number of such projects and seeing the vital roles that they play locally. One of my highlights from my early visits was a visit to the Old Forge pub in Inverie, otherwise known as the mainland’s remotest pub. Certainly for the people in that community, it is more than a pub; it is very much a central pillar of their community, right at its heart.

In addition to those funds, the Government have supported a private Member’s Bill: the Co-operatives, Mutuals and Friendly Societies Bill. The Bill would grant His Majesty’s Treasury the power to introduce regulations to give mutuals further flexibility in determining for themselves the best strategies for their business regarding their surplus capital. The Bill completed its Third Reading in the House of Lords on 16 June and is entering its final stages. Hon. Members may recall that on the same day, the Economic Secretary to the Treasury announced that the Government will launch reviews of the Co-operative and Community Benefit Societies Act 2014 and the Friendly Societies Act 1992, conducted by the Law Commission. Those comprehensive reviews aim to identify essential updates to legislation, thereby developing a more modern legal structure in which mutuals can be supported to take advantage of opportunities to grow.

We should also recognise the work of the local growth hubs across England, as outlined by the hon. Member for Hackney South and Shoreditch. I must say, as a Yorkshire-born lass, that I was delighted to hear that Sheffield is taking lessons to London, not the other way round. That is always very refreshing for me to hear in my levelling-up role. There are currently 37 local growth hubs, which are backed by Government funding, with each delivered by a local enterprise partnership or an upper-tier local authority. They provide local businesses of any size, any sector or any ownership status with advice and access to support for any stage of their business journey through a free and impartial single point of contact.

Growth hubs bring together the best of national and local business support from across the public and private sectors. They work with key partners and funding bodies, including local authorities, to shape provision around local needs, meaning that businesses can find the right support for them at the right time. I am pleased to tell hon. Members that funding for growth hubs of up to £12 million in 2023-24 is confirmed.

It is important that co-operatives and alternative businesses are seen as valued members of their community by local authorities. That is why, as part of the antisocial behaviour action plan, the Government announced a high street accelerator pilot programme. Accelerators will incentivise and empower local people to work together to develop ambitious plans to tackle vacancy and reinvent their high streets so that they are fit for the future. I really hope to see co-operatives and alternative businesses in pilot areas joining the accelerator to ensure that we continue to learn how to better support their growth in our town centres and high streets.

I thank the hon. Member for Hackney South and Shoreditch and all Members for their contributions to this important debate. While I am unable to make promises today, as I hope hon. Members will appreciate, some key issues that I will take back to my Department, and more widely to Government, include assessing the barriers for co-operatives in accessing local and national government contracts; whether there is an opportunity to create a central hub for co-operative advice in Government; and whether there is an opportunity for a regional co-operative development agency. I will take those away and follow up with the hon. Lady. In the meantime, if there are more examples of ways in which local authorities can support co-operatives and alternative businesses, I will be very happy to receive them.

15:41

[Dame Meg Hillier]

I thank all hon. Members who have contributed. The House has heard the passion that we all have for co-ops and how they can invest wealth back into the communities that generate that wealth, as well as the vital role of local authorities in championing that in their areas. We need to see co-ops go from strength to strength. It is appropriate that we have had this debate in Co-op Fortnight, so I thank Mr Speaker for granting it, and I thank all hon. Members, you in the Chair, Mr Dowd, and officials for the support.

Question put and agreed to.

Resolved,

That this House has considered the role of local authorities in supporting co-operatives and alternative businesses.

15:42

Sitting suspended.