Co-operative and Community Benefit Societies and Credit Unions Bill [HL]

My Lords, it is a great pleasure to follow the noble Lord, Lord Tomlinson. I fully support everything he said. The House owes him a debt of gratitude for picking up this Bill and having the presence of mind to persuade the usual channels to give it a fair wind and an early start. It will need them if it is to reach the statute book in good order and due time. I hope it will, and I pledge myself to do everything I can to assist that progress. I have two preliminary points. First, it is reassuring that the processes in this House have so acutely picked up any potential defects in the legislation. We should take some comfort from the fact that this place works so well. The committees that work behind the important considerations given to these issues in the Chamber do valuable work and we owe them a debt of gratitude. Secondly—perhaps the Minister can help me understand this; I freely confess that I have stolen the point from my noble friend Lord Newby’s speech on a previous Second Reading—I do not understand why this important tranche of financial legislation is left merely to Private Members’ consideration. I do not mean to say that Private Members’ consideration is not important, but if we think that this element of the nation’s financial provision is as serious as some of us think it is, is it any longer safe to leave it to them? Members have difficulty in ensuring that they get all the provisions right. Perhaps it is just convention and practice. If so, perhaps I may simply make a plea that the Treasury should think about taking the matter in-house, looking after it and doing it as government business in future. I hope that this business will prosper and develop; and if it becomes much bigger, the legislative framework should be undertaken by the Government. I declare an interest. I am a non-remunerated, non-executive director of the Wise Group, a social enterprise that provides intermediate labour markets in Glasgow. Part of that experience has reminded me of the issues that the noble Lord, Lord Tomlinson, referred to at the end of his excellent speech. These organisations are qualitatively different for a series of reasons. My Co-operative divvy number was 22919; I bet that the Minister cannot remember his. There are two types of person in this debate today: those who remember their divvy numbers and those who do not. Maybe he does not have one, or maybe memory loss affects us all as we advance. I used to use it as my computer password because it was the only number that I could ever remember. These are important matters. As well as congratulating the noble Lord, Lord Tomlinson, I must say in passing that the excellent Mr Malcolm Wicks, who is a serious player, did the issue splendid service in the House of Commons. I enjoyed and learnt a lot from reading his speeches. He has had a deep interest in this matter for a long while. There is a renaissance available to us. This is a technical Bill. The noble Lord, Lord Tomlinson, has explained exactly what it seeks to do. It is right that it should and important that it does, but it is not sufficient to leave it there. We need to understand, again as the noble Lord, Lord Tomlinson, said, that there is a timing issue here. It is apposite for this House to pass the Bill, but in passing it we must recognise what contribution we can make in the circumstances in which we will find ourselves in the future. Mutuality is based on 19th century philosophy, which I will not go back to. It underpins local loyalties and enhances the idea of collectively owned assets. These organisations are basically run democratically. They meet mutual needs and have no requirement to make a return on capital. All these things make them special and apposite for the financial circumstances that we face as a country at the moment. In addition—I have learnt this from my experience in the Wise Group—they generally operate at lower cost because they can galvanise volunteer activity very positively, which helps, they serve specialist markets, but more than anything else they promote local loyalty. My interest in this House is low-income families and low-income communities, and more than anything I think that promoting an attachment to people’s local circumstances is missing from the work that is being done to increase the amounts of money available to low-income households. Actually, you need to do more than that, which is what the mutuality of co-operative credit unions and other organisations of that kind does. There is an urgent and important need to promote and develop these organisations right now as we go into the three-year public sector spend period, which will be very difficult, during the next Comprehensive Spending Review. I agree with the noble Lord, Lord Tomlinson, that one of the most important things that this Bill will promote is a new image, a refreshing of the brand, an intelligent encouragement of the thought that this is useful and compatible with the internet age, because it can be if it is promoted properly. It is also a very good fit with a lot of other government policy goals. The consultation was referred to earlier. I acknowledge that the Government have done a lot of work in this area, and I do not think that anyone can deny that, but it needs further promotion and development. An example of an important government policy fit is the important work that the FSA is doing on financial capability and the pilot projects on face-to-face financial advice. Another thing that credit unions do is to enhance greatly people’s understanding of what financial arrangements they need to make for themselves in future. It is self-help in the very best sense and it is needed now more than ever. Credit unions are very important. They have developed very positively, but they need further attention and support. Importantly, as the recent Joseph Rowntree Foundation report said, credit unions are not just for poor communities. They are for communities across the board, and if they become organisations that are exclusively for the poor they will become poor organisations as a result. We need to bear that in mind. All sorts of communities throughout the length and breadth of the United Kingdom should consider promoting the interests of credit unions more generally. The Government are in the very important position of being able to offer contracts to some of these new community-benefit organisations and mutuals. As an organisation and a service provider, the Government can offer service deals to a lot of these companies. I know this from the Wise Group, because we are applying for some of the Flexible New Deal contracts. These are very big contracts. These are not penny numbers, or street-by-street organisations competing for tiny amounts of money. It is now possible, with support and proper governance and advice, for social enterprise companies to compete with the biggest and the best in the private sector to offer their services for public-service delivery in the future, and the Government should promote that more actively. Indeed, I would go further. Given that we are introducing programmes and pilot schemes such as those for the Flexible New Deal, we should encourage people who have been unemployed for long periods to consider setting up mutual organisations and becoming involved in that sort of activity, as well as considering important advice and suggestions about moving towards self-employment. There is a lot that the Government could do, and I hope that the government Front Benchers will think about that very carefully. Finally, with all the work that is being done on the legislative reform order and the process that I know is ongoing, I hope that the momentum is being kept up. We have obviously lost a little time with the Bill, for the reasons that the noble Lord, Lord Tomlinson, has perfectly well explained, but I hope that the Minister can give us some assurance that, in addition to this Bill, there is activity downstream on the LRO, so that the other changes that can be made and that will fit behind the primary legislation that we are considering this morning are actively and urgently pursued. I am very pleased to support this Bill. I hope that the Government understand the need to generate more interest around the whole subject, in addition to the valuable work that they have done in the past, and that the government Front Benchers will not only support the Bill but will champion the cause in future.