Co-operatives and Mutuality

Debate between Ed Davey and Alun Michael

Thursday 30th June 2011 Westminster Hall

[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.

[Alun Michael]

Will the Minister give way?

[Mr Davey]

In a moment. I think that I have given a good answer to the question that was put. I am happy to answer a question put by the right hon. Member for Cardiff South and Penarth (Alun Michael), as he is a very experienced former Minister.

[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]

rose—

[Mr Davey]

Before the right hon. Gentleman intervenes again, I urge Opposition Members to remember that Labour’s record on demutualisation was very poor. Does he want to apologise for Labour’s record in that area?

[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]

With respect, the right hon. Gentleman clearly did not listen to the answer that I gave, because I made it very clear that the door is open.

[Alun Michael]

I did listen.

[Mr Davey]

If the right hon. Gentleman is prepared to listen—

[Alun Michael]

That is better. That is not what you said, though.

--- Later in debate ---

[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.