Co-operatives

Stephen Doughty Excerpts

Thursday 14th July 2016 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I beg to move,

That this House has considered the contribution of cooperatives to the economy.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to be here with colleagues from across the House, and with many fellow members of the Co-operative party, to discuss this important issue. I stand here not only as a member of the Labour party but as a Co-operative MP, along with many other colleagues here. I am pleased to work with colleagues across the legislatures, councils and different political institutions of the United Kingdom to stand up for co-operative values and the co-operative ideal in our politics, which enjoy support even from non-Co-op members. I am glad to see representatives from other parties here, and I am sure that they will make some excellent contributions. There are 25 Co-op MPs, 1,500 councillors, three police and crime commissioners, eight Members of the Scottish Parliament and 11 Assembly Members, but many others also share our ideals and interests.

Members may be aware that the timing of this debate is no coincidence. We recently celebrated Co-operatives fortnight, which ran from 18 June to 2 July. Co-operatives fortnight brings great attention to the issues every year, as do numerous other events throughout the country and indeed around the world. Co-operatives fortnight is a time when co-operatives up and down the country remind people of the many good reasons why we should all choose the co-operative model and of the significant impact that co-operatives have had for many years and continue to have on the British economy.

That is important to recognise, as we are going through difficult times both politically and for business and the economy. Unfortunately, as always, the difficult cases and mistakes made by some businesses tend to predominate. The BHS crisis, the scandals involving non-payment of tax and lots of other issues have dominated the business and economic agenda in recent months but, overall, we should be proud of the success story that surrounds the role of co-operatives and mutuals in our economy. That is what I wish to draw attention to in my remarks.

The movement has seen incredible growth over the past number of years. The number of people who own and control the UK’s co-operatives has grown by more than 10% to 17.5 million, nearly a quarter of the UK population, meaning that the number of co-operative members continues to outstrip the number of regular shareholders in the UK. The sector is set to benefit further from the recent Co-op Group announcement that it wants to add 1 million new members over the next five years. It is important to make it clear that, although the Co-op Group tends to dominate the news that we hear about the co-op sector in the UK, it is not the whole sector. The sector is much wider, more diverse and more extensive than just its most well-known brand name.

Overall, the co-op sector has grown by £3.5 billion over the last five years. That growth is accounted for by a combination of success among retailers such as John Lewis, the Midcounties Co-operative and the Central England Co-operative, and steady growth in the agricultural sector. It is worth noting some of the largest sectors within the co-operative economy by number of co-operatives and turnover: agriculture, which has 416 co-ops with a turnover of more than £5.8 million; retail, which has 505 co-ops with a turnover of £24.3 million; sports and leisure, which has 2,890 co-ops; and health and social care, which has 88 co-operatives and a very large turnover.

That is matched by more than 225,000 jobs created in the co-operative economy throughout the length and breadth of the UK. We should applaud and welcome that, recognising that many of those jobs are in thriving businesses that provide a huge role for employees as well as co-op members. They often offer excellent pay, conditions and involvement in the direction of where the co-operative goes, not just the employer/employee relationship of many traditional businesses.

Co-operatives and mutual societies play a pivotal societal, social and economic role throughout the UK. They are created, governed and run by members, and set up by members for members. The idea of membership-led engagement is the distinguishing element that makes co-operatives and mutual societies different from other legal entities, and it is unique as far as participation in economic life is concerned. It is important to recognise that because a mutual society is created and managed to fulfil its members’ needs, it inherently pursues long-term goals. That pursuit of long-term goals marks mutuals as reliable, stable and durable elements in many sectors of the economy.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I know that my hon. Friend was a strong supporter of the Co-op party’s successful campaign during the last Parliament for the Government to establish a military credit union to help protect our military personnel and their families from being exploited by payday lenders. Does he think that this debate might be a good opportunity to hear from the Minister about what progress there has been in terms of people joining the three credit unions established to help military personnel?

[Stephen Doughty]

That is a crucial point. My hon. Friend, who has been a leader on the co-operative ideal in this Parliament, across the country and within the Co-operative party itself, led the campaign for a military credit union. I would certainly be interested to hear from the Minister about that. As a member of a credit union myself—Cardiff and Vale Credit Union—I know that many Co-operative supporters also belong to and promote credit unions in their communities. I also recognise that fair lending and fair access to finance can help different sectors: particularly, as my hon. Friend pointed out, veterans and those serving in our armed forces. It is crucial that they do not fall prey to the payday lenders who create such a problem in our economy.

We have seen progress not only in fair lending but in fair tax, an issue on which the co-operative movement has shown leadership. It is worth noting, and the House will be interested to know, that Britain’s top five co-ops pay more UK tax than Amazon, Facebook, Apple, eBay and Starbucks combined. That is very much in line with where the public stand. Only 34% of the British public believe that most big businesses in the UK pay their fair share of tax, and, sadly, just 6% trust a company of any size to provide accurate information on the tax that it has paid. Recent research undertaken by KPMG shows that trust in companies’ approach to tax is the fourth most significant factor in how much overall trust an individual places in a company or brand.

The Fair Tax Mark campaign has been established to set a new standard in responsible tax practice, from the smallest shop to the biggest multinational. The pioneers of the campaign have, as we would expect, been co-ops and social enterprises. From the beginning, the Co-operative party, Co-operatives UK and Social Enterprise UK have been highly supportive of the fair tax mark. I am proud to say that the Co-operative party is the first political party to achieve the mark. That is something that we could all aspire to. Co-operative retail societies such as East of England, Midcounties, the Co-operative Group and Scotmid have also achieved the fair tax mark. It is clear and evident that co-operatives have seized the opportunity to benefit from the public’s willingness to punish tax avoiders.

The co-op movement’s enthusiasm for adopting fair tax policies further demonstrates that the co-operative model is an inherently social and responsible form of business. I would certainly be interested to hear from the Minister what lessons he thinks there are for the rest of the economy in the example being set by co-operatives and those leading the Fair Tax Mark campaign. Achieving the mark certifies that a company is making a genuine effort to be open and transparent about its tax affairs and pays the right amount of corporation tax at the right time and in the right place. I am proud of the work done on that.

Co-operatives clearly provide new and innovative solutions to some of the other challenges of our changing economy, one of which is the growing number of self-employed workers. There are now more self-employed workers than at any time since modern records began. Some 4.6 million people, around 15% of the workforce, are now self-employed. Data from the Office for National Statistics show that two thirds of new jobs created in the UK in recent years are down to self-employment. Current projections are that by 2018 self-employed people will outnumber those working in the public sector. That is a huge challenge for Government, for tax authorities and for trade unions, but a challenge that the co-operative movement has risen to. Self-employed workers often do not enjoy the employment rights and protections at work or any of the implicit services associated with being an employee, such as payroll or workplace insurance, let alone such things as pensions or sick pay. They also face additional challenges related to being paid on time, the right to contracts and so on. As we all know, self-employed workers often end up being some of the lowest-paid and most put-upon workers in the country.

With that in mind, it is particularly interesting to note that throughout the country freelancers and self-employed people are coming together to form co-operatives for shared services, in some cases with support from entrepreneurial trade unions that see the opportunity to support members who are self-employed, not just those who are employed in traditional workplace arrangements in larger businesses.

I have some interesting examples. In Wales, the Oren Actors Management co-op allows actors to work between roles as agents for other co-op member actors, marketing their services—a two-way process in which they mutually support one another. That is a very good example of co-operative principles in practice. In Swindon, 50 music teachers have come together to form a co-op to market their services to schools with support from the Musicians Union, with which I enjoy a proud association—indeed, I should state for the record that my register of interests shows that I have enjoyed support from it in the past. The Musicians Union does an excellent job in that respect and I am very excited to see it working to help self-employed music teachers. In London, interpreters came together in a co-op in November 2012 after changes in their terms and conditions when the firm Capita took on the contract to provide interpretation services in judicial courts. I do not want to get into a lengthy debate about Capita and its good and bad aspects, but that is a fascinating situation of a co-op of interpreters coming together.

Compared with practice in some countries overseas, these initiatives are only in their infancy. They have to potential to grow tremendously, like other models witnessed in other parts of the world. I am certainly interested in whether the Minister thinks we could play a bigger role in promoting best practice and supporting such initiatives from other countries. In the United States, for example, Freelancers Union, which was formed for the self-employed, has attracted over 280,000 members. In the Netherlands and Spain, general unions for self-employed workers have emerged and developed since the late 1990s and provide a range of services as well as representation. The Assemblée Nationale in the French Parliament has also introduced legislation, which came into force this January, to recognise the role of 72 business and employment co-operatives, supporting members with accounting and access to the sickness pay and benefits of conventional employees.

It is worth highlighting that the Wales Co-operative Centre, another body with which I enjoy a close association—I work closely with its head, Derek Walker, locally—and Co-operatives UK have recently published the “Not Alone” report, which sets out some key findings on how the co-operative movement and trade unions can come together in the UK to build support for self-employed workers.

[Hannah Bardell (Livingston) (SNP)]

Does the hon. Gentleman agree that recent legislation that erodes travel and subsistence benefits for freelancers and that affects their tax reporting will hinder our freelancers and those working in the environments he describes?

[Stephen Doughty]

I absolutely agree. The challenges, the additional pressures and the disproportionate impact that legislative and other changes can have on the self-employed are often not highlighted enough in this House; they can have a much bigger impact than they would have on a larger company, for example. We need to do all we can about that, and the co-operative movement is clearly playing an innovative and key role in trying to address those changes. The interests of self-employed workers are not well represented in our policy making, with the result that they face unnecessary regulatory burdens and barriers. I am proud that the co-operative movement is championing our self-employed, who make such an invaluable contribution to our economy and represent such a growing proportion of our labour market.

As a Welsh Labour and Co-operative MP, I want to highlight some of the work that is going on in Wales and the contribution that co-ops make to the Welsh economy. In 2015, the Wales Co-operative Centre launched its report on social businesses in Wales. That report outlined the scope and scale of the sector, its performance and the many opportunities for further development. The term “social businesses” includes social enterprises, co-operatives, mutuals and other employee-owned businesses. We have seen the statistics for co-operatives’ contribution to the UK economy as a whole; the report found that the total value of the social business sector in Wales is £1.7 billion and that it employs over 38,000 people. Social businesses tend to be more active in deprived areas than other small and medium-sized enterprises and to employ and procure locally, which suggests that they make an important economic contribution—perhaps a disproportionate contribution—in some of the poorest areas of the country.

Social businesses are a robust and dynamic sector, confident about the future. Indeed, 69% of social businesses in Wales expect turnover to increase in the next two to three years. Women are also keenly represented in leadership positions, with 35% of social businesses reporting a majority of women in leadership roles, compared with 19% of SMEs. Women’s leadership in business and the corporate sector is often discussed in this House, but here again we see the co-operative sector leading the way in putting principles into practice and ensuring that women are occupying a majority of roles. Some of the larger corporates and businesses in this country would do well to learn from that example of the benefits that come from ensuring that the equality that exists in the country is reflected in the boardroom, in decision making and in economic practice locally. It highlights how the co-operative movement is at the forefront of addressing some of the key problems that exist in our labour market as a whole and shows innovative practice in moving forward.

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

Does the hon. Gentleman support the work of the Wales TUC and the Wales Co-operative Centre, which is dealing with some of the challenges he describes in the labour market, including middle-aged unemployment, school drop-out rates and increasing youth employment?

[Stephen Doughty]

Absolutely. As the hon. Gentleman rightly mentions, there is a strong link between the Wales Co-operative Centre and the Wales TUC, and indeed with other trade unions in Wales. It is that type of partnership and co-operation between those who share common aims and values that is driving forward some of these agendas that do not get a lot of attention but should. I know my colleagues in the National Assembly are driving this issue forward in the areas where Wales enjoys devolved responsibility. We often work closely together as Co-operative MPs and Assembly Members to address those issues and to ensure that we are doing what we can, both here in Westminster and in Wales. I am sure that is also the case elsewhere with our many councillors throughout the country.

I know other Members wish to make contributions—I am looking forward to hearing them. I believe that co-operatives are a great and important example of how people can come together to help each other. They are also a great example of self-reliance, which we should continue to support and celebrate. Co-operatives have brought about trust and a sense of values and ethics that we sometimes do not see in other parts of economy but, crucially, this is not about some slightly odd, unusual or marginal part of the economy. Co-operatives are a growing, vibrant and dynamic sector, creating jobs, delivering growth and providing opportunities in areas and sectors of the economy that are simply not being provided by other forms of business model. I hope the co-operative sector continues to grow and to have the support it needs from all levels of government in the UK to go forward in the years ahead.

[Several hon. Members rose—]

--- Later in debate ---

[Stephen Doughty]

I thank all Members, including the Minister and the Front-Bench spokespeople, for a very co-operative debate. I know it is trite to say that, but we have had some excellent contributions and some significant ideas have been put forward. Whether the Minister continues in his role or someone else takes over, I certainly hope that those ideas are taken forward. According to the wires, we have a new Department for business, energy and industry. I would like co-operatives and driving forward the co-operative agenda to be not just some adjunct on the edge of a Department but at the heart of the Government’s forward strategy for business, the economy and industry. We must provide an environment that facilitates the role of co-operatives in all the sectors that we have discussed in the debate.

Co-operatives and the co-operative model have been an inspiration for many years. They are an inspiration across the world and in some quite difficult economic times. My family has even longer co-operative traditions than some Members might realise. My great-great grandfather, a Mr Wagstaff, actually worked in the co-operative bakeries in Hulme in Manchester in the mid-1800s, not long after the Rochdale pioneers. I was inspired by finding that out and also by joining a co-operative in Canada—the famous Mountain Equipment Co-op, which is one of the most successful in terms of its growth and the contribution that it makes to the Canadian economy—as a teenager.

We have talked about international examples, and it is important that we learn from the co-operative sector in other countries—particularly the United States, Canada and continental Europe. There are examples of where we could do more, particularly in financial services but also in certain other sectors. Facilitating co-operatives is about not just the legislative and regulatory environment but a cultural shift in the economy and society, and a recognition of the role that co-operatives play.

I thank all the Members who have participated in this fruitful and healthy debate, in which we have paid tribute well to co-operatives fortnight. My Co-operative party colleagues and I will continue to work hard with others across the House to pursue this agenda in the months and years to come.

Question put and agreed to.

Resolved,

That this House has considered the contribution of cooperatives to the economy.