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Lord Graham of Edmonton: Hear, hear!

Lord Mackay of Ardbrecknish: My Lords, my right honourable friends the Chancellor of the Exchequer and the President of the Board of Trade are sorry that the noble Lord, Lord Carter, feels slighted by their not having replied to him. I cannot speak for the President of the Board of Trade because I am not responsible for that department. However, from time to time I come before your Lordships wearing a Treasury hat and I can assure the noble Lord that eventually the document reached the Treasury. I believe that it was lost somewhere in the postal services of the House of Commons. The noble Lord should not be too upset because my Christmas cards, which I ordered some time in November, arrived yesterday. I assure him that the two departments involved are studying the document most carefully. Indeed, they will soon begin to discuss the details of the proposals in the document, largely via the Registry of Friendly Societies, in order to allow us to come to a detailed conclusion. I shall return to the document and make a few comments about it.

The co-operatives have a valuable role to play in our modern economy. As I mentioned when I referred to the speech of the noble Lord, Lord Sewel, I appreciate their importance in many rural areas of the country where, for example, the village shop may no longer be the kind of economic proposition that would encourage someone to try to make a living out of it. We have heard examples of large and small co-operatives meeting a wide range of needs; for instance, social needs and economic needs. At the risk of going over some of the ground again, perhaps I may point to some excellent examples.

In many ways the biggest is the Co-operative Retail Society, which for many years has had considerable links with the party opposite. It is the biggest in the retail sector, which I suppose goes all the way down to many small shops. Indeed, I can think of at least one village pub which is a co-operative. The last time I visited it it appeared to be quite successful. Obviously it depends heavily on the owners taking a fair share of the space at the bar and a few visitors passing by. The noble Lord, Lord Graham of Edmonton, asked whether I got a dividend. I did not notice that drink was any cheaper in the co-operative but the surroundings were most pleasant--the geographical surroundings certainly were.

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Many organisations such as the Northern Clubs Federation Brewery, the Co-operative Press and even the Morning Star newspaper--I notice that no one on the Benches opposite mentioned that, and I am not surprised--are part of the co-operative movement. There is a wide range of co-operatives in agriculture and fisheries. There are co-operatives which provide goods and services to farmers and large co-operatives such as Milk Marque, the former Milk Marketing Board. There are also co-operatives such as the Rabbit Clearance Society and the like.

I know a little about the fishing societies from my former position as chairman of the Seafish Industry Authority. Up and down the country and in the ports there are co-operatives which supply gear and various equipment to the fishing industry. The largest society is the Shetland Salmon Group which has a turnover of £14 million. I hope that occasionally some of your Lordships help in the consumption of its product.

There are many other clubs. Indeed, I am surprised that the party opposite did not pull my leg by reminding me that the Association of Conservative Clubs is a co-operative, as indeed is Surrey County Cricket Club, and there are the credit unions, which play an important role in many parts of our country.

Most co-operatives in Great Britain chose to register under the Industrial and Provident Societies Act 1965. There are more than 11,000 industrial and provident societies. They have a total membership of 10 million and their assets are in excess of £30 billion. Retail societies provide services to almost 7 million members.

One of the important proposals made in the document referred to by the noble Lord, Lord Carter, and other noble Lords is that there should be new co-operatives' legislation. Noble Lords put the case for primary legislation for co-operatives. The UKCC has worked hard to produce a considered report as regards which new provisions would serve the societies that they represent. I understand fully the thinking behind that approach and I appreciate the amount of effort that has gone into formulating the report. However, as noble Lords will know, the Government have no proposals to introduce such primary legislation. But we shall consider very carefully indeed the contents of the council's proposals.

Perhaps I may address two particular issues that arise from the report. The first is the idea of a co-operatives commissioner. The UKCC has proposed the establishment of a co-operatives commissioner--originally as the head of a new statutory body but now, it seems, as someone who would continue to be served by the staff of the Registry of Friendly Societies. This commissioner would have one role supervising co-operative societies and another as the Government's chief source of advice on the sector.

It appears to the Government that the co-operatives sector already has such a figure in the Chief Registrar of Friendly Societies. The registry is itself a statutory body, with a registration and limited regulatory role

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which it exercises independently. It is also a department of government, advising my right honourable friend the Chancellor.

Since the UKCC published its proposals it has become clear that there is not a consensus within the sector on what new powers or responsibilities the commissioner should have. Until one has emerged it will be difficult for the Government to form a view on how to respond to the sector's concerns. For the moment, our attitude remains, "If it ain't broke, don't fix it".

Much has been made of the principle of mutuality in co-operatives. When people decide to set up a co-operative, or to join one, they have made a deliberate choice that this is the appropriate structure for the business they want to be in. Co-operatives are run for the mutual benefit of their members, who have a direct and equal say in decisions.

The UKCC has proposed making it possible for members setting up a co-operative to direct, in the society's rules, that the co-operative should never change its original, mutual form. This contrasts with current legislation which allows a society to convert into a company should 75 per cent. of members voting at a general meeting support such a change.

That is relevant to the regrets expressed by, for example, the noble Lords, Lord Carter, Lord Gallacher and Lord Sefton, regarding building societies and some of the "demutualisation" that has taken place. I believe that, as those changes can proceed under the law only if a substantial majority of members support them, that is mutuality--that people have reached a decision that they wish to change the form of a society. We are, of course, willing to consider detailed proposals for societies' constitutions, but there are difficulties in principle with allowing current members to limit so fundamentally the democratic rights of their successors.

There may be times when a co-operative structure, because of a changed local business climate or a reduction in the number of members, ceases to be the best option for meeting the needs of its members. In such a case a significant majority of members may consider that putting the business on a different footing is essential if it is to adapt effectively to the new environment.

In more extreme circumstances it may be that the natural life of an enterprise has expired. In these cases, the best course for the current members may be to wind up the co-operative before its business difficulties erode its asset base to the detriment of everyone involved. It would be most regrettable if the co-operative were bound by statute to continue into insolvency, so wiping out the worth it had built up over the years and to which current members had contributed.

Therefore, while the Government are willing to consider whether a co-operative might place limits on its eventual destiny, there are strong reasons for not trammelling unduly the freedom of current members. The rights of members is, after all, itself at the heart of mutuality. Future members, as much as present ones,

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should be free to exercise their democratic vote as the owners and ultimate custodians of the co-operative's identity.

But, although the Government have no plans for new primary legislation, much can be achieved by other means. The Deregulation and Contracting Out Act allows us to remove burdensome rules and regulations which stifle enterprise and initiative, provided we maintain necessary protection. We intend to make full use of this order-making power to improve the regulatory environment for co-operatives. Last year we completed a consultation exercise on proposed amendments to the Industrial and Provident Societies Acts 1965 and 1967. The measures will reduce the legislative burden on co-operatives registered under the 1965 Act, enabling them to make meaningful administrative savings. For example, the audit thresholds for non-deposit-taking societies will be raised in line with those for companies, easing the burden on societies with an annual turnover of less than £350,000.

The consultation period has been useful and constructive, and we will do what we can to accommodate the views of those who responded. We will announce our revised proposals when we bring a draft deregulation order before the House, which we intend to do shortly.

I know also that the comments of the UKCC and a number of organisations have been extremely helpful in formulating other proposals. Among the other proposals which have been suggested or supported by the co-operative movement is a proposal to reduce from seven to three the number of members needed to set up an industrial and provident society. We very much hope that that will be of assistance to the movement.

The noble Lord, Lord Rea, asked me about the scope for shared-profit community care schemes in a co-operative structure. One of the strengths of the Industrial and Provident Societies Act is its ability to encompass a wide variety of different types of organisations, as we have heard in all the speeches this evening. I do not wish to commit myself too far without checking, but I can see no reason why a number of people should not come together to do what the noble Lord suggests.

Secondly, he asked me whether such a body would be in a position to take payments under the Community Care (Direct Payments) Bill. The best person to ask may be my noble friend Lady Cumberlege during the next stage of the Bill. But I shall try to find out and write to the noble Lord with the answer to that question.

I believe that it was the noble Lord, Lord Gallacher, who urged encouragement of credit unions in order to facilitate their growth. Measures for the encouragement of the growth of the credit union movement are included in the draft Deregulation (Credit Unions) Order, which is another deregulation initiative. That was laid before the Parliamentary Deregulation Committee in July of last year and the committee reported on it in December last. That measure is expected to make further progress through the various deregulation procedures in the near future.

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I enjoyed many of the speeches. For a few moments, when the noble Baroness, Lady Nicol, mentioned Boston, I thought that she was going to claim that the Boston Tea Party had been a co-operative venture. But tea was not left out of the contribution of the noble Lord, Lord Taylor of Gryfe.

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