Asked by: Rachael Maskell (Labour (Co-op) - York Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the implications of the demutualisation of LV= for the mutual and co-operative sector.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The assessment and approval of the proposed sale and demutualisation of Liverpool Victoria is an ongoing and independent process, overseen and scrutinised by the financial services regulators, and subject to approval by the Courts.
Assessing the impact on the market of the demutualisation of LV= is a matter for the Financial Conduct Authority. Their assessment will include, among other things, implications for the mutual and cooperatives sector and the effect on competition. The FCA can engage and refer matters to the Competition and Markets Authority as they consider appropriate.
There are no plans to review current legislation at this time. We are, however, open to views and proposals and continue to engage with interested parties to explore ways of supporting mutuals as a key part of a diverse financial sector
Asked by: Rachael Maskell (Labour (Co-op) - York Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will review the proposed demutualisation of Liverpool Victoria.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The assessment and approval of the proposed sale and demutualisation of Liverpool Victoria is an ongoing and independent process, overseen and scrutinised by the financial services regulators, and subject to approval by the Courts.
Assessing the impact on the market of the demutualisation of LV= is a matter for the Financial Conduct Authority. Their assessment will include, among other things, implications for the mutual and cooperatives sector and the effect on competition. The FCA can engage and refer matters to the Competition and Markets Authority as they consider appropriate.
There are no plans to review current legislation at this time. We are, however, open to views and proposals and continue to engage with interested parties to explore ways of supporting mutuals as a key part of a diverse financial sector
Asked by: Steve Baker (Conservative - Wycombe)
Question to the Department for Digital, Culture, Media & Sport:
To ask the Secretary of State for Digital, Culture, Media and Sport, what steps he is taking to support public service mutuals and co-operatives within the public sector; and if he will make an assessment of the potential merits of reestablishing the Mutuals Support Programme.
Answered by Matt Warman
In recent years we have made a significant investment in the development of public service mutuals. We delivered a number of targeted support programmes, such as the Government’s Mutual Support Programme 2. We have also commissioned external research projects on Mutuals, the findings of which will be published shortly.
We have published tools and resources which replicate a number of the technical and legal consultancy services provided through the Government’s Mutual Support Programme 2. These will enable organisations and departments to explore mutualisation independently, where it aligns with their public service reform agendas.
These targeted programmes were always intended to be time limited and came to an end as of March 2020, and at this time the Mutuals Team, which led these programmes, was also disbanded. While we no longer have a team focused specifically on mutuals, we continue to be supportive of this model and will maintain an interest as part of our wider social enterprise agenda.
Asked by: Steve Baker (Conservative - Wycombe)
Question to the Department for Digital, Culture, Media & Sport:
To ask the Secretary of State for Digital, Culture, Media and Sport, for what reason his Department has abolished the Mutuals Unit.
Answered by Matt Warman
In recent years we have made a significant investment in the development of public service mutuals. We delivered a number of targeted support programmes, such as the Government’s Mutual Support Programme 2. We have also commissioned external research projects on Mutuals, the findings of which will be published shortly.
We have published tools and resources which replicate a number of the technical and legal consultancy services provided through the Government’s Mutual Support Programme 2. These will enable organisations and departments to explore mutualisation independently, where it aligns with their public service reform agendas.
These targeted programmes were always intended to be time limited and came to an end as of March 2020, and at this time the Mutuals Team, which led these programmes, was also disbanded. While we no longer have a team focused specifically on mutuals, we continue to be supportive of this model and will maintain an interest as part of our wider social enterprise agenda.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to bring forward regulations for Mutual Deferred Shares under the Mutuals’ Deferred Shares Act 2015.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has consulted widely with industry representatives in considering whether to lay secondary legislation to enable mutual insurers to raise equity by issuing Mutual Deferred Shares. Mutual insurers and their representatives made clear that Mutual Deferred Shares would only be issued if they both qualified as Tier 1 regulatory capital and would not alter the tax treatment of the issuing mutual. The Government’s decision in 2018 not to lay secondary legislation was taken based on an assessment that it was not possible to design Mutual Deferred Shares to meet both these conditions. The Government is committed to supporting the mutuals sector, but continues to have no plans to bring forward such legislation.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will launch a review of the adequacy of legislation on friendly societies; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has noted the recommendations of the recent APPG for Mutuals report into the demutualisation of LV=Life and Pensions and will work with the regulators to ensure the market continues to function effectively. The Government currently has no plans to launch a review into the adequacy of legislation for friendly societies but will continue to monitor the situation.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether an assessment was made on the effect of the demutualisation of building societies and financial mutuals on the events leading up to the financial crash in 2007-08; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises the vital importance of having a strong and stable financial system. The Government also recognises the value that building societies and other mutually-owned organisations bring to the financial services sector.
The Government has not made a specific assessment on the effect of the demutualisation of building societies and financial mutuals on the events leading up to the financial crash in 2007-08.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions he has had with relevant stakeholders on the proposed demutualisation of Liverpool Victoria; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In my role as Economic Secretary I have been a champion of the mutuals sector. It is clear to me that mutuals bring something different to other forms of running a business, with their clear focus on delivering the services their members need.
However, assessing the impact of the sale of LV= Life and Pensions business to Bain Capital is a matter for the financial services regulators.
The sale will be supervised by both the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). As part of their work, the regulators will assess the overall suitability of Bain Capital to manage insurance business, including its financial position and the skills and experience of its workforce.
The proposed transaction also involves steps which require sanction by the Court. The Court processes involve a number of safeguards which are designed to ensure that policyholders are kept informed and their interests protected. These include appointment of an independent expert acting in the interests of policyholders and who will assess the impact on policyholders and report to them.
Asked by: Gareth Thomas (Labour (Co-op) - Harrow West)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of bringing forward legislative proposals to make it easier for cooperatives to access capital; and if he will make a statement.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises the value of the co-operative sector, and has taken significant steps to support the growth of co-operatives right across the country. In 2014 the Government passed the Co-operative and Community Benefit Societies Act, to reduce legal complexity for co-operatives and community benefit societies, and at the same time increased the amount of share capital an individual member can put into a co-operative society to £100,000.
HM Treasury officials also hosted a ‘Mutuals Workshop’ with representatives from the sector in 2019, to understand the challenges faced by mutuals, including those related to attracting capital, and how Government can help to address these.
We will continue to consider how we can best support the co-operative sector to reach its potential, and welcome the views of the sector as we do.
Asked by: Marion Fellows (Scottish National Party - Motherwell and Wishaw)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to allocate financial support for cooperatives; and what support his Department is making available to simplify the process for establishing such cooperatives.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises the value of co-operatives, and the contribution they make to all sectors of the economy. The first phase of our economic response has seen us take unprecedented steps to support the economy through the crisis; to keep as many people as possible in their existing jobs, to support viable businesses, including co-operatives, to stay afloat, and to protect the incomes of the most vulnerable. Co-operatives, like other businesses, have been eligible for a range of Government support schemes, including the Coronavirus Jobs Retention Scheme, grants delivered by Local Authorities and business loans.
The Government has taken significant steps to support the growth of co-operatives right across the country. In 2014 the Government passed the Co-operative and Community Benefit Societies Act, to reduce legal complexity for co-operatives and community benefit societies, and at the same time increased the amount of share capital an individual member can put into a co-operative society to £100,000.
HM Treasury officials also hosted a ‘Mutuals Workshop’ with representatives from the sector in 2019, to understand the challenges faced by mutuals and how Government can help to address these.
As we start to open the economy up and we look forward, we will consider how best to support the economic recovery. We will develop new measures to grow the economy, to back businesses, including co-operatives, and to help people thrive in the new post-Covid world. We will continue to consider how we can best support the co-operative sector to reach its potential, and welcome the views of Co-operatives UK and others in the sector as we do.