Ed Davey
Main Page: Ed Davey (Liberal Democrat - Kingston and Surbiton)Co-operatives and Mutuality
Ed Davey Excerpts(12 years, 10 months ago)
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Mr Bailey
One thing that attracted me to work in the co-operative movement for so many years was that as a believer both in the market and the need to succeed in it, and in certain values, I felt that it was a model in which successful businesses could reconcile the two. That is clearly demonstrated, and is part and parcel of the reasons for today’s debate.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
I hope that we are not bracketing co-operatives in the third sector; they work in the private and public sectors as well. They speak to all of our economy, and if we see them in that way we are much more likely to have an ambitious agenda for them.
Mr Bailey
The Minister can rest assured that I was going to come on to demonstrate the range of businesses in the co-operative sector. One problem that the mutual and co-operative sectors had in the ’80s and ’90s was that they failed to highlight sufficiently their difference, and a minority of co-operatives did not appear to be effective business models—being more charitable, for example—with the result that movement as a whole suffered.
Tracey Crouch
I am sure that the hon. Member for Harrow West will deal with those questions when he sums up at the end of the debate. I am proud to be a member of the Conservative Co-operative Movement in Parliament, which has only just been established.
Mr Davey
Without wanting to intrude on this debate, I will not suggest how many Liberal Democrat hon. Members are members of a similar co-operative movement. I will simply say that there are 12.8 million members of co-operatives in this country, and they are the ones on whom we should focus.
Tracey Crouch
I agree with the Minister. If I may continue with my speech, rather than getting into how many members we have in each political party—
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
This has been a very well informed and, mostly, consensual debate. There was a break-out of competition between the Conservative and Labour parties, but it obviously falls to a Liberal Democrat Minister to bring everyone back to real co-operative principles. It was good to see all contributors to the debate affirming their commitment to that. I can affirm my personal commitment, my party’s commitment and the coalition Government’s commitment to working for the co-operative movement and to developing the mutual sector more broadly.
If we look at the performance of the sector at the moment, we can see that it is in rude health. The turnover of the co-operative movement is slightly more than £33 billion and the turnover of the mutual movement rose to more than £100 billion last year, with more than 1 million employees. Interestingly, the Co-operative Financial Services won the FT sustainable banking award in 2010. Clearly, this is a sector that is doing well.
Another interesting fact is the Co-Operative Group’s takeover of Somerfield, which increased its overall turnover. If it was listed on the FTSE 100, it would be a FTSE top 30 company.
Despite the rather bizarre remarks by the hon. Member for Harrow West (Mr Thomas), there have been many strong developments under both Labour and Conservative Governments. I point, for example, to the Oxford Centre for Mutual and Employee-owned Business, which is developing a lot of the thinking and the research so that we can drive forward this agenda in a consensual way. Although this area requires cross-party support, a lot of good things have been happening to it for quite some time.
Let me try to answer some of the points that have been raised during the debate and then I will make some comments about the direction of Government policy. A number of speeches focused on credit unions. My hon. Friends the Members for East Hampshire (Damian Hinds), for Chatham and Aylesford (Tracey Crouch) and for North Swindon (Justin Tomlinson) and the hon. Members for Islwyn (Chris Evans), and for Rutherglen and Hamilton West (Tom Greatrex) spent a considerable amount of time talking about credit unions. This is an area in which the Government would like to see real progress.
My hon. Friend the Member for East Hampshire has been a champion of credit unions. I pay tribute to the work that he has been doing in that area. He mentioned that the Department for Work and Pensions has earmarked £73 million to invest in the sector. However, we are not spraying money around in the way in which we have seen in the past; we have done a feasibility study to see where that money can best be spent.
My hon. Friend referred to a proposal by the Association of British Credit Unions, which is one of the main associations that brings together credit unions, to build an IT platform to enable credit unions to work together potentially through the post office network. Such a move would be significant, and it picks up on remarks that hon. Members have made during the debate. There are two real challenges for credit unions. One is to get better access, so that people can access credit unions. Clearly, a better IT platform, particularly if it was linked to the post office network, would be a massive development in improving our constituents’ ability to access credit unions. The second issue is even more important: awareness. There needs to be awareness that this credit source is available and that it can compete with the high-cost merchants that are around.
I want to reflect on something that the hon. Member for Harrow West said. He was quite right to praise his predecessor, Sir Ian McCartney, on setting up the illegal money lending teams. As a Minister, I have ensured that our funding for those teams continues at the levels that we inherited. Given the cuts that we are having elsewhere, that was a significant decision. The reason that we continued their funding is that those teams are successful and they are curbing the criminals who prey on vulnerable people in our communities.
I urge Members to look at how illegal money lending teams are working. I have been privy to a video of their work, from which one anecdote emerged that shows the importance of increasing awareness of the availability of credit unions. A family had borrowed £200 from a “family friend” on their estate and 10 years later, after intimidation and threats of violence, the family had paid back £90,000. It was only when the illegal money lending teams came and helped them, prosecuted their “family friend” and then gave them support as victims of a crime that they became aware of the existence of credit unions. Now they are borrowing from credit unions and they have put their lives back together, which is a tribute to the work of the illegal money lending teams. However, that story tells us an awful lot about this area and how we should approach it; above all, it shows the need to improve people’s awareness of credit unions.
As my hon. Friend the Member for East Hampshire also said, we need reform in this area of credit unions. We have been waiting for a legislative reform order—I share colleagues’ impatience about that—but it is coming and I am sure that in the autumn we can get it through the House. I am glad that it will have such support and it will make the difference, as my hon. Friend said.
The hon. Member for Rutherglen and Hamilton West made an interesting point in relation to potential abuse of credit unions by people who then went bankrupt. If he can write to me about that issue, we will be responding—soon, I hope—to the consumer credit and personal insolvency call for evidence. Often, people have not focused on the personal insolvency side of the credit unions issue, and the hon. Gentleman was quite right to focus on it. The link between personal insolvency and credit unions is an important one to make and if there are problems we need to deal with them.
The hon. Gentleman also rightly raised another important issue; although it is not particularly germane to the title of this debate, it is important and I am glad to have the chance to speak about it. He raised the concerns that many of us have about the advertising of debt advice. Frankly, I think that I have broken a few radios as I have thrown things at them when they spew out these tempting adverts. We know that those adverts are a temptation that people should not go for. We need to address debt advice. In that regard, one of the issues also applies to credit unions: the importance of raising awareness so that people know that there is free, quality debt advice available. We must make sure that that is better known. The money advice service is doing some research on debt advice and considering how we can take it forward as a priority.
I want to go back to some of the other issues that were raised in the debate. The issue of Northern Rock raised its head. First, I want to say to some Opposition Members that the list of building societies that demutualised during the previous Labour Government is rather a long one. I suggest to those Members that they would be wise to press the Government very carefully on the issue, not least because my right hon. Friend the Secretary of State for Business, Innovation and Skills pressed the Labour Government to tie up some of the loopholes in that area, which they failed to do. I urge them to be a little more cautious as they approach the Northern Rock issue.
Mr Davey
I will give way to the hon. Gentleman in a moment, but I think that he should listen to my full response before intervening.
I can say something to those Opposition Members who raised the issue of Northern Rock. I think it was the Commercial Secretary to the Treasury, Lord Sassoon, who made a statement recently that we have launched a sale process for Northern Rock. He had written to the all-party group on building societies and financial mutuals, and he made it very clear that any interested parties can bid, including mutuals. That reaffirms the Government’s commitment to promote the mutual financial sector. Having said that, of course, we cannot rule out any other options at this stage. Members may be interested to know that two building societies have expressed an interest in taking over Northern Rock. Remutualisation is an issue that must be addressed in due course by UKFI, but I am not the Minister with responsibility for UKFI. Nevertheless, those remarks that I have just made should reassure colleagues.
Chris Leslie
I am very grateful to the Minister for his recollection of my constituency. He has talked about the trade sale route that the Government have announced for Northern Rock. Notwithstanding the fact that he has said that other building societies might be interested in a direct purchase of Northern Rock, can he say categorically that the member buy-out option, whereby borrowers and savers of Northern Rock might have the chance to enter into a member buy-out arrangement, is still on the table and is still being considered among the other options that he was talking about? I understand that my hon. Friend the Member for Harrow West (Mr Thomas) has written to the Treasury with the details of the member buy-out option.
Mr Davey
As the hon. Gentleman knows, I am not the Minister responsible for Northern Rock and my Department is not responsible for it either, so I would be ill advised to go into detail about it. I have tried to ensure that the Members attending this debate received some answers about that issue and I believe that I have fulfilled that obligation, but he may need to attend Treasury questions to probe further on the issue.
I will now give way to the hon. Member for Harrow West, although I hope that he will bear in mind the answer that I have just given to his hon. Friend.
Mr Thomas
And I would have expected the Minister to have given a better answer than the one he has just given. At the very least, will he commit to write to those Members who have taken part in this debate with the answer to the question put by my hon. Friend the Member for Nottingham East (Chris Leslie)?
Mr Davey
I am quite surprised by the hon. Member for Harrow West, because he has been a Minister and he will absolutely know that there are areas that a Minister does not go into when they are the responsibility of another Department. As I instructed the hon. Member for Nottingham East, I believe that he needs to attend Treasury questions and ask Treasury Ministers about this matter.
Mr Davey
Let me help the right hon. Member for Cardiff South and Penarth and the hon. Member for Harrow West, who has twice interrupted me from a sedentary position, by saying that the decisions have not been made yet. If a lot of decisions had been made, I would be very happy to tell right hon. and hon. Members about them and let them ask questions about them.
Alun Michael
I will not go into point scoring of that sort. We know where the demutualisation exercise started and that piece of history is not a very good one.
I say to the Minister that it is normal in exchanges of this sort that, if a Minister is unable to answer a question, they offer to follow up the debate by providing an answer to that question. The difficulty that we have is that very often there is not a good understanding of mutuality within Whitehall; I am talking about official machinery now, particularly in relation to the Treasury. Therefore, there is a fear that a door has been closed that should be kept open. That is what the question is—is the door still open? It is a straightforward question and suggesting that people should attend Treasury questions is not really answering it.
Mr Davey
If the right hon. Gentleman is prepared to listen, I will bring his remarks and those of other Members to the attention of my Treasury colleagues.
Other general issues about mutuals and co-operatives were raised very pertinently by the hon. Member for West Bromwich West (Mr Bailey) and indeed by the right hon. Member for Cardiff South and Penarth. They asked how we can develop mutuals. The hon. Member for West Bromwich West made it very clear that we cannot impose mutuals. Mutuals have to take people with them and there cannot be a top-down approach. I absolutely agree with that. In addition, the right hon. Member for Cardiff South and Penarth talked about a sense of ownership. When we approach the issue of mutuals—whether that is developing more mutuals in the private sector or developing them through public sector reform—we have to learn those lessons.
I will give two examples, one from my constituency and one connected to my responsibilities. In my constituency, we have one of the first social enterprise mutuals in the health sector—Your Healthcare, which was spun out of a local primary care trust. It has slightly more than 450 employees, and will soon have local community members as well. It has been going for nearly a year, and is already a huge success. The employees feel a much greater sense of empowerment and feel relieved of bureaucracy. They elect their own managers, and have been driving efficiency and improving care. The enterprise is a key part of the reform agenda, and shows how powerful mutuals can be.
The notion of a health mutual in my constituency was first put forward about five years ago, and I pay tribute to the previous Government for being prepared to countenance such an idea. There was a lot of debate, because the Government could not quite agree on the issue, but at least they left the door open. Unfortunately, the PCT went too quickly and tried to tell the staff that they had to form a social enterprise, and from the start the staff were worried about pensions and terms and conditions. The local unions came to me, and I went to the PCT and said, “I think the idea is brilliant, but you have to take people with you,” for the very reasons that the hon. Member for West Bromwich Albion—[Laughter.]—West Bromwich West gave. The PCT stopped the process and re-consulted. It took a lot longer, but the local unions were then very supportive and the mutual has now gone forward very successfully. That is an example from the health sector of how important it is to involve people and to use a bottom-up approach.
The other example is the Post Office mutual proposal, contained in part 1 of the Postal Services Act 2011. If it is appropriate, we can move Post Office Ltd from being Crown-owned to a mutual model, and the hon. Member for Harrow West is absolutely right that we could do that only if the Post Office became commercially viable. The post office network relies on subsidy at the moment, but we are turning that situation around. I refer the hon. Gentleman to our policy paper published in October last year, which contains a whole set of serious business changes that will ensure that the post office network can go forward, wash its face and approach mutualisation. Those proposals are in stark contrast to how the network was run by the previous Government. For all the hon. Gentleman’s big words about mutuals, when we debated the relevant clauses on the mutualisation of the Post Office, neither Labour Front Benchers nor Labour Back Benchers asked a single question or tabled a single amendment. That is how interested they were when a major proposal on mutualisation was introduced to Parliament. It therefore ill behoves the hon. Gentleman to make such criticism when Labour Front Benchers did not even bother to ask questions in Committee or on Report about such a significant mutualisation. The hon. Member for West Bromwich West and the right hon. Member for Cardiff South and Penarth were right to make the points they did about mutuals having to work bottom-up.
I want to talk a little more about the Government’s approach. The hon. Member for Harrow West criticised us for not doing anything. Let me be rather more balanced and pay tribute to the previous Government for some of the things they did. The establishment of the new governance model of the community interest company has been very successful. When I recently went to see the community interest company regulator, who is based in Companies House, I heard about many successful CICs that are setting up. The previous Government’s decision to have the NHS right to request in community health care, again was a good thing, as was the development of co-operative trust schools, and we will support those types of initiative. The hon. Member for Harrow West, from a sedentary position, says “How?” He ought to wait a bit and let me finish the list of positive things. I was being positive about the previous Government and therefore he ought not to intervene at this point.
The hon. Gentleman mentioned legislation. The previous Government, through private Member’s Bills with cross-party support, improved the legislative framework. This Government are modernising that framework and taking it forward. We have heard about the legislative reform order. It is currently before Parliament and we hope to debate it in early autumn. We have also enabled greater electronic communication by mutuals, which is a very good deregulatory measure for them, and we will commence shortly the Co-operative and Community Benefit Societies and Credit Unions Act 2010. We are consulting on the future registration and regulation of mutual societies as part of Treasury reforms to the landscape of financial services regulation. The Cabinet Office will give public sector workers new rights to form employee-owned mutuals and co-operatives, going much further than the previous Government and generating a huge amount of interest in many areas of the public sector.
In February 2011 we established the mutuals taskforce to advise the Government and to help drive the process forward, finding a way around some of the technical problems that were completely ignored by the previous Government. The right hon. Member for Cardiff South and Penarth said that this is not understood; we have set up the mutuals taskforce to drive the process and to get external advice so that we can deal with some of the problems with pensions and other regulatory or technical problems. The mutuals taskforce has already met five times, and is a key development in driving the process forward.
Alun Michael
I am encouraged by what the Minister has just said. Can he assure us, though, that whoever is dealing with that process in the Treasury and the Cabinet Office will not be dismembered and sent off to do other things as soon as they have developed the expertise that is needed? In my experience, once officials grasp the contribution of mutuality they become great enthusiasts, and we need that in Whitehall.
Mr Davey
I am sure that we will learn the lessons from the previous Government’s mistakes.
We have also launched 20 pathfinder mutuals in areas including health, education and housing, to test some of the issues that went untested under the previous Government. The Localism Bill, which we will soon be considering, will give voluntary and community groups the right to challenge local authorities to take over delivery of local services. This is a rich picture of action, and therefore far from not delivering on rhetoric, as the hon. Member for Harrow West tried to maintain, we are indeed delivering.
There are one or two other questions that it would be remiss of me not to answer before I sit down, but I am conscious that I have been speaking for slightly longer than 20 minutes. There were a few questions about Supporters Direct. The Government are actively engaging in talks with the premiership in the hope of resolving the matter. The new head of Supporters Direct will, I hope, smooth some of the ruffled feathers, and perhaps with his efforts and those of the Government some moneys can be unlocked. I think that Members will understand why I cannot say too much more about that.
The hon. Member for East Hampshire asked about social ISAs, and the hon. Member for Harrow West took up the issue. The hon. Member for Harrow West will no doubt be delighted to know that I was not briefed on that question. I am very much in favour of social finance initiatives, such as social impact bonds, community development finance institutions and the big society bank, and think that the Government have been very creative in this area. My colleagues in the Treasury and the Cabinet Office will get a lot of support from the Department for Business, Innovation and Skills in taking the issues forward.
I welcomed this debate, and it has been a good one. I wish the hon. Member for Harrow West had not brought so many partisan things into it, such as mentioning Swansea and Arsenal, but apart from that I am sure that collectively, as a Parliament, we will take forward this very important agenda.