Co-operative and Community Benefit Societies and Credit Unions Bill

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A bid to modernise the law relating to co-ops and credit unions, allowing them to expand and compete better during the economic downturn, was launched in the Commons.

Former Labour minister, Malcolm Wicks said in AD203 the Romans had mutual insurance societies to provide for death and retirement.

After a long period of "slumber and decline" co-operatives and mutuals were now experiencing a "renaissance".

He told MPs: "It could hardly be more timely - with the mainstream banking sector in some disrepute customers seek a reliable and honest home for their money.

"With many people looking for ethical alternatives, goods that are fairly traded and produced sustainably make co-ops, large and small, very attractive."

The Croydon North MP said his Co-operative and Community Benefit Societies and Credit Unions Bill would allow the movement to expand and meet the commercial realities of the 21st century.

Co-ops, mutual and credit unions were already "significant players in the British economy", with total assets of more than £400 billion and combined membership of over over 30 million.

"But now is the opportunity for a substantial expansion and, in the finance sector, an alternative, perhaps, to both market structures and nationalisation."

Opening the Bill's second reading debate, he said credit unions offered an affordable alternative to "unscrupulous doorstep lenders" for low income groups - because they belonged to their members and weren't answerable to shareholders.

By updating the laws and modernising the legislative framework, they would be able to expand and instil a greater savings culture.

Wicks said the Bill offered an opportunity to make "much-needed reform" to co-ops and credit union legislation.

He told MPs: "Renaming and rebranding them will make the legislation easier to relate to and provide greater appeal to a new and younger generation of members.

"This Bill comes at a time when the work of credit unions has never been more important and also when more and more consumers are attracted to the ethos and ethics of co-operation and the quality of products and services from such societies."

Former equality minister Meg Munn (Lab, Sheffield Heeley) welcomed the Bill.

She said: "We need our co-operative and mutual sectors to be able to compete even more effectively in the future than they have up to now."

The Bill would end all "artificial legislative obstacles" by "levelling the playing field".

Munn said: "It has tremendous significance for the mutual sector and the wider economy."

Linda Gilroy (Lab, Plymouth Sutton) described the Bill as "almost the last piece of the jigsaw" needed to ensure co-ops could develop fully.

Co-ops were based on the values of "self-help, democracy, equity and solidarity" and the Bill would give them a "new lease of life", she said.

Member of the Treasury committee, Andy Love (Lab, Edmonton) said the Bill would update existing legislation to create a "level playing field" for co-operatives and credit unions and also strengthen protections for their members.

"This legislation, I believe, will help to modernise, it will help to make more relevant, it will help organisations to innovate," he said.

For the Liberal Democrats, John Pugh said he supported the Bill and was sure the government also did.

Pugh said: "Credit unions address the issue of financial exclusion and deal with people who can't use banks or who aren't comfortable with using banks - I dare say there are more people uncomfortable with using banks than ever these days."

He said Wicks was right to suggest the "time had come" for the Bill.

For the Conservatives, Mark Hoban said his party would also support the Bill.

"It is a very important Bill," he said.

"It does modernise the legal framework for co-operatives. I think it actually does protect the interests of members of co-operatives and industrial providence societies."

Hoban backed the Bill, stating there had been a "renaissance of interest" in mutuals.

Hoban said despite their "arcane legal framework" the sector was thriving.

The latest move to modernise would help them develop in the 21st century, rather than being seen as "relics from the industrial past".

Adrian Bailey (Lab, W Bromwich) said the "excesses" of the current banking crisis had demonstrated the need for the co-operative movement and there was an emerging consensus that these sort of businesses were the way forward.

"The co-operative movement has come of age and reinvented itself as an ethical provider going back to its roots," he said.

Junior business minister, Ian Pearson, said the government "fully supported" the Bill.

He told MPs: "The Bill contains measures that the co-operatives and credit union sector have specifically asked for.

"It will help modernise the legislative framework for co-operatives and credit unions and put in place appropriate mechanisms to enhance their corporate governance, which I'm sure will help the sector continue to flourish."



Progress

House of Commons

First reading: January 21 2009 [HC Bill 14]

Second reading: April 24 2009

Committee stage: no date