Commons Sense

House of Commons · Westminster Hall

Co-operatives and Mutual Societies

14 December 2021 · 8 other contributors · 13,145 words

Opened by Steven Baker Con Wycombe

Responding minister: John Glen

Business & Trade

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Steven Baker raised concerns about co-operatives and mutual societies in Westminster Hall. A government minister responded.

Key points

  • The UK's co-operative economy is smaller compared to international counterparts, with less than 1% of businesses being co-operatives.
  • The start-up rate for co-operatives in the UK is relatively low, with South Koreans creating 12 times more co-operatives per head of population.
  • Christina Rees called for the UK Government to introduce legislation similar to Italy's Marcora law to support worker buy-outs during economic crises.

Key requests to Government

The Government should champion and support co-operatives more actively as they expand wealth, well-being, and opportunities more fairly in the UK. Specific asks include better tailored business support, enterprise finance for existing and new co-operatives, a corporate framework that provides enabling law and regulation, and tax incentives to encourage investment. Rees urged the UK Government to introduce legislation similar to Italy's Marcora law to give workers an adequate opportunity to request ownership during business succession and provide an early-warning system. She also asked if there were any plans to introduce a UK version of the Marcora law, which would sustain businesses and help shift towards a fair economy.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Steven Baker Con Wycombe

The UK's co-operative economy is small compared to international counterparts. Less than 1% of businesses in the UK are co-operatives, while Germany's co-operative economy is four times bigger and France's six times larger. The start-up rate for co-operatives in the UK is also relatively low; South Koreans create 12 times more co-operatives per head of population compared to the UK. Co-operatives are resilient businesses with a higher survival rate, especially during economic shocks like the pandemic. Christina Rees highlighted the founding principles of Robert Owen's co-operative movement and praised the Co-op group's local community fund for providing £100 million to over 20,000 local good causes. She expressed concern that decisions are often made with the benefit of a few investors rather than communities, workers, consumers, and the environment. Rees called attention to Italy's Marcora law, which enables worker buy-outs during economic crises by providing financial support for at-risk businesses.

Other contributors (8)
  • Chris Stephens SNP Glasgow South West

    Mr Stephens highlighted the importance of co-operatives and mutual societies, particularly in Scotland. He mentioned Glasgow Credit Union as an example with over 50,000 members and urged the Minister to help credit unions grow by pushing for changes in capital requirements. He also praised co-operative models for protecting community services that benefit local economies, noting their resilience during the pandemic. The hon. Member for Strangford and I raised concerns regarding the Prudential Regulation Authority's work and capital requirements placed on credit unions, urging the Minister to encourage changes that could help successful credit unions.

  • Christina Rees Lab Co-op Neath

    Suggested a business model incorporating co-operatives' share in private or public enterprises to raise awareness of shared ownership benefits. I thank the Minister for his offer to have further discussions and request to bring more information about the success of the Marcora law in Italy.

  • Gregory Campbell DUP East Londonderry

    The hon. Member spoke about co-operatives and Gregory Campbell agreed that mutual societies such as LV= have demonstrated the power going to members rather than shareholders for quick profit. Gregory Campbell supported co-operatives across the United Kingdom, emphasizing their professionalism and adaptability in the modern marketplace. He stressed the importance of community support for these groups.

  • Jim Shannon DUP Strangford

    Jim Shannon praised the work of co-operatives, mutual societies, and credit unions in Northern Ireland, highlighting their role in providing affordable financial services. He mentioned specific examples such as Newtonards Credit Union and emphasised the importance of exploring how these organisations can contribute to social housing initiatives. Shannon also discussed challenges faced by credit unions, including regulatory compliance and adapting to changing customer expectations. Asked if the possibility exists for smaller credit unions to be amalgamated with larger ones, following his previous contribution about credit union closures.

  • Luke Pollard Lab Co-op Plymouth Sutton and Devonport

    Mr Pollard discussed the importance of co-operatives in fostering sustainable, greener jobs and empowering workers. He highlighted successful local initiatives such as Nudge Community Builders and Plymouth Energy Community that are transforming communities through co-operative share issues. He also mentioned the closure of Plymouth credit union, which could limit access to finance for marginalised individuals.

  • Mark Hendrick Lab Co-op Preston

    Emphasised the importance of co-operatives and mutual societies for economic recovery, noting their resilience with 76% surviving five years compared to 42% of other businesses. He called on the Government to support the growth of this sector. The Minister praised Government efforts on credit unions but was also asked about building societies and regulations regarding demutualisation, highlighting past vulnerabilities during the financial crisis due to leverage from previous demutualisations.

  • Stephen Doughty Lab Co-op Cardiff South and Penarth

    The hon. Member mentioned the taxi co-operative in Cardiff, to which he added that local drivers who were dissatisfied with their working conditions in other firms had worked together with the Wales Co-operative Centre to set up Drive, a remarkable co-operative. My hon. Friend highlighted the success of Big Fresh Catering Company in Vale of Glamorgan Council, which turned a £350,000 deficit into a £500,000 surplus in its first year, reinvested in local schools. Agreed with his friend's example of co-operative councils, highlighted Cardiff's music strategy and race equality plan as examples of using co-operative principles in public services.

  • Tulip Siddiq Lab Hampstead and Highgate

    Siddiq highlighted the importance of co-operatives and mutual societies in fostering equality, productivity, and resilience. She noted that despite their significant economic contributions, these organisations face challenges due to a lack of supportive legislative framework, leading to a decline in credit unions by over 20% since 2016.

Government Response

John Glen

The Minister highlighted the Government's strong support for co-operatives and mutuals across various sectors. He mentioned measures such as the Co-operative and Community Benefit Societies Act 2014, easier capital attraction, financial assistance during the pandemic, and the £150 million community ownership fund. The Minister also discussed credit unions' potential to provide affordable finance and financial stability for people around the country. He outlined plans to introduce legislation next year to address outstanding concerns within the sector and praised the success of initiatives like the no-interest loans scheme and prize-linked savings scheme. Additionally, he addressed building societies' role in mortgages and green additional borrowing mortgages, as well as proposals to update their corporate framework.

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