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11.10 am

Mike Gapes (Ilford, South): I do not intend to make a long speech, but this is an extremely important Bill. I have been a Labour and Co-operative Member of Parliament for almost 10 years and a co-operator for 30 years. I have seen worrying attacks on the principles of co-operation as a result of demutualisation, but I have seen the beginnings of a new debate.

That debate was mentioned in passing by my hon. Friend the Member for Corby (Phil Hope) when he quoted a sentence from the new Labour party constitution. The words are on the membership card in my pocket too, but I will not pull it out and read what it says. The Labour party constitution now specifically and explicitly emphasises the importance of co-operation. That was not part of the old clause IV, but it is on the cards that Labour party members now carry with them. However, co-operation is not just supported by members of the Labour party, and I welcome the fact that Members from other parties have spoken in support of the Bill.

There is a growing recognition and desire in society generally to move away from the selfish "me" values that so damaged our country from the late 1970s onwards. If

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we are looking for new approaches to what could be called a modern social democracy, we need to take account of practices in other parts of the world and learn from best practice in this country.

This Bill is about a complex and diverse range of organisations that have one common feature: they belong to their members. They do not belong to shareholders and they are not owned by an individual or a few individuals. They belong to their members, who have a right to have their assets protected. However, many attempts have been made—the internet makes this easier—to foster carpetbagging and asset-stripping operations.

Andrew Regan was mentioned earlier and I do not wish to refer to matters that might be sub judice. However, there are such people and they may not even be from this country. We have heard reports that Australians and people from other parts of the world have trawled around to find others to join them in carpetbagging and asset-stripping operations against mutual organisations.

Some of the reports involve high-profile cases and we have seen the effective way in which the Nationwide building society has fought to defend the mutual principle. Those of us who are members of the all-party group on building societies and financial mutuals have been pleased to give our support to the work that the Nationwide has done. I declare an interest: my mortgage is with the Nationwide and it gives me a good rate, much better than the one I would get from the demutualised societies.

We all know that the Nationwide has the resources, the calibre of management, the staff and the financial and technological base to be able to mount an effective defence against the attempts made by those who wish to demutualise it. However, some of the 9,000 smaller organisations that are in the industrial and provident society sector do not have such resources. They may be run entirely by volunteers and be entirely dependent on a few individuals. The vast majority of their membership may be happy because the organisations function well and have built up assets over time, but they may have no conception—or the expertise to help them—of how to resist when a malicious, determined, self-seeking, unrepresentative, carpetbagging and extreme capitalist comes into their midst to try to destroy the mutual organisation for his own interests.

We must provide a framework to assist such organisations. We need to find a way, through legislation, of shifting the balance in the interests of the ordinary members of those organisations. That is what the Bill is about. It is long overdue and very welcome.

Mention has been made of the variety of co-operative and mutual organisations. They can be found in my constituency and almost all Members could provide examples. In the medical sector, doctors' co-operatives provide out-of-hours services attached to accident and emergency departments. The doctors involved have other roles as members of the British Medical Association or in primary care trusts, but, at certain levels, they work within a co-operative framework. In time, that movement will grow. Similarly, people working in the employment industry have set up co-operatives for people with particular skills. They work together to provide work for their members in other sectors of the economy. That movement will also grow.

The more traditional co-operatives in my constituency include the Co-operative Funeral Service, co-operative chemists and the one remaining co-operative store. I say

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"one" but, when I was first active in politics in Ilford many years ago, there were several co-operative stores. However, that has changed in London. Several Members have mentioned the attack that the big retail companies, such as Sainsbury's, Asda and Tesco, mounted to gain a greater market share.

At one time, the public perception was that the co-operatives were found only in the retail sector. However, Co-operative Retail Services in London got into terrible financial problems that went on for many years and there was a resistance to change. Only now under the new structure involving the Co-operative Wholesale Society and the new Co-operative Group does the organisation have an invigorated and, I hope, more effective retail side. Co-operation and mutuality, however, are about much more than that. Many aspects have been mentioned already and I shall not repeat them.

Richard Younger-Ross (Teignbridge): The hon. Gentleman is making some good and interesting points. He talks about empowerment—disadvantaged people being able to take control of their lives—and about co-operative stores, one of the weaknesses of which was that they competed head to head with the supermarkets. Will not the Bill help co-operatives in the agriculture sector to start at the lower end, so that people get a fair deal and can protect themselves from what some people would call the abuse of power by the supermarkets?

Mike Gapes: I do not wish to get into a big discussion about the retail sector, and I suspect that you, Mr. Deputy Speaker, would not allow me to do so, but I agree that it is essential that an organisation is democratic and accountable. If an organisation is not democratic because of neglect or because that suits the people who control it, problems arise. That is when organisations become vulnerable to takeovers by unrepresentative groups.

The same applies to other organisations in society. I believe that this Bill is about democracy, accountability and revitalisation of democracy. If people want to bring about change, they will have to gain the wholehearted consent of the overwhelming majority of the members. That principle is valid not just here but in a general sense.

In my misspent teenage years and early 20s, I was involved in the student movement. At meetings that purported to represent 10,000 students, the quorum could have fit into four telephone boxes. Totally unrepresentative decisions were made with no contact whatever with the vast majority. They did not even know about the decisions taken in their name.

I hope that we have gone beyond that in that area and in trade union operations, because we must ensure that unrepresentative decisions cannot be taken by small groups of people with a dedicated, almost entryist agenda, such as the Trotskyists and fascists who joined political parties to pursue their own agendas. We must protect the mutual sector and all the organisations that are encompassed by the Bill by enacting the safeguards that my hon. Friend the Member for Harrow, West (Mr. Thomas) has ably introduced.

I congratulate my hon. Friend on the way in which he introduced the Bill. As one of the sponsors, I have already expressed support for it. I hope that the House can unite behind its very sensible proposals and get it on to the statute book as soon as possible.

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11.23 am

Mrs. Louise Ellman (Liverpool, Riverside): I, too, congratulate my hon. Friend the Member for Harrow, West (Mr. Thomas) on introducing the Bill, which emphasises the importance and value of mutuality and at the same time proposes practical measures to protect mutuality and co-operation from the asset strippers and carpetbaggers.

I remind the hon. Member for Epsom and Ewell (Chris Grayling). and other hon. Members that the Government have taken measures to support co-operation and credit unions. They have ensured that the remit of the regional development agencies includes specific reference to the need to support co-operative enterprises. In promoting and supporting the Co-operative Commission, they ensure that co-operation is seen as an essential part of our economy and society. The commission has made recommendations of great practical value, some of which are being put forward today.

Hon. Members have already indicated the wide scope of the co-operative movement: it is involved in retailing, banking—both conventional and community—insurance, housing, production, farming, leisure and many other aspects of life. It is also an international movement. The International Co-operative Alliance plays an essential role in bringing together co-operatives and mutual societies across the world, making it clear that co-operation and mutuality have value in all ranges of economies: in poor economies, in developing countries and equally in highly developed countries such as the United Kingdom which are struggling to redefine the value of community.

There is something special about co-operation and mutuality, and that is what makes the Bill so important. Co-operation and mutuality are about the economy and being efficient but they are also about ethics and quality: quality of life and valuing individuals.

In 1844, the Rochdale Society of Equitable Pioneers set up its Rochdale store to provide a service to the community. At the centre of that service was an identification of the importance of providing unadulterated, good-quality food and a service that gave value to the customer, did not cheat and promoted high quality and high ethics.

More recently, in the 1990s, it was the Co-operative bank under the leadership of its then chief executive Lord Terry Thomas which pioneered ethical banking, which has now been taken up across the banking sector. It was first in the field and led the way. In the same way, it pioneered the recognition of the importance to business of environmental concerns. It sponsored and supported the first environmental business centre, which opened in Manchester in the mid 1990s, showing that business too had a responsibility to the environment and that that responsibility could be met in giving economic benefits to banking and to business, as well as to the community. Throughout, co-operation and mutuality have shown not only that they were efficient and had economic benefits but that they were about ethics, showing initiative and taking the lead.

Co-operatives are important at a local level. They often take the initiative, develop pioneering projects and take the lead in a way that no other organisation is willing to do. In that respect, I pay particular tribute to the work of

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the Eldonians in Vauxhall, Liverpool They began in 1978 as a community response to local authority plans to clear tenement blocks and disperse tenants far away from where they identified their community to be. The Eldonian housing co-operative was set up. It comprised local people who came together with a common need, and designed and built new homes on what was then the derelict Tate and Lyle site in Liverpool.

The Eldonian co-operative has never stopped innovating, showing the way and meeting the needs of its local community. It moved from building and designing houses to building a village hall, a residential home for the frail elderly, a day nursery and a sports centre. It takes the lead in economic regeneration in its area and elsewhere. It pioneered a neighbourhood community warden scheme supported by Merseyside police and the Home Office: a pilot scheme to show how neighbourhood wardens working in co-operation with the police and community could enhance the security of local people.

The example of the Eldonians in Liverpool shows the value of co-operation and of local people coming together, identifying a need and working to meet that need. They use the large-scale resources that are available through European funding, single regeneration budgets and objective 1 funding. They also put small amounts of money together with initiative and determination to improve the lot of the local community. That is an example that could be emulated throughout the country. I know that the Eldonians have inspired other groups, as they have inspired people in Liverpool.

A number of hon. Friends have drawn attention to the increasing popularity of mutuality and the increasing importance attached to the significance of community and of collective action. I believe that much of what has been dubbed "the third way" in recent years has simply been a recognition, long lost, of the importance of collective action, community and individual self-help, all working together.

For the co-operative movement and mutuality to reach their full potential for the benefit of the whole community in the future, it is important to have support at all levels. There needs to be support through enterprise from the regional development agencies and local initiatives. We need to ensure that new funding made available by the Government, such as the Phoenix fund, is used to support the development of local co-operatives. For co-operation to develop, it needs support organisations. The Lancashire Co-operative Development Agency was set up by Lancashire county council more than 17 years ago. That excellent organisation, set up because a local authority believed in co-operation as it believed in enterprise and economic development, has supported a wide range of co-operative organisations, bringing employment and benefit to hundreds of people in the Lancashire area and more in the north-west as a whole.

For co-operation to flourish, it also needs the support of the Government. The Government have already given much of that support in encouraging co-operation, backing changes in regulations on credit unions and looking at financial regulations. They can give more support by supporting the Bill today so that co-operation and mutuality move forward as an ever-growing third sector in our economy, meeting the needs of local communities, supporting initiative, and showing the true value of collective action.

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