INDUSTRIAL AND PROVIDENT SOCIETIES BILL

HC Deb 09 December 1960 vol 631 cc1579-621

Order for Second Reading read.

11.5 a.m.

Mr. John Rankin (Glasgow, Govan)

I beg to move, That the Bill be now read a Second time.

The Bill has two main purposes. The first is to raise the maximum value of the shares which an individual member may hold in a society registered under the Industrial and Provident Societies Act, 1893. The second is to enable agricultural and horticultural co-operative societies to make advances of money to their members without security. I must make it clear that the consumers' co-operative movement does not seek power for its own societies to lend money without security; although it welcomes an increase in the maximum shareholding.

Clause 2 is intended to facilitate the work of agricultural and horticultural co-operative societies. I shall deal with it later.

Clause 1 is permissive. No co-operative society will be required to change its present practice, unless it wishes to do so; nor will any agricultural society. Clause 1 (3) gives power to the committee of a registered society to pass a resolution recorded in writing that members be permitted to hold such greater amount of share capital up to £1,000 as may be specified in the resolution. Upon the passing of such a resolution, the rules of the society will have effect accordingly. Such a resolution, however, will not hold good for all time, because Clause 1 (5) lays down that if any amendment to the rules of a society is made after the Bill has come into force the power of the committee passing a resolution such as the one to which I have just referred under subsection (3) will come to an end.

In other words, a simple resolution of a committee of management can give effect to the provision of the Bill relating to share capital, but when the rules of the society are next amended in any respect whatsoever the new share limit must at that time be the subject of an appropriate amendment to the rules. This, as hon. Members on both sides will realise, would be a great convenience to societies which may, for good and sufficient reasons, not wish to take the trouble of amending their rules to cover this point alone.

Clause 2 (1) does not enable the committee of an agricultural society to make advances of money to members without security, unless the rules of the society are appropriately amended. The reason for the difference in treatment of the two amendments is not difficult to understand. In the first case, a decision to raise the shareholding limit is not one which can be open to abuse. No one can be obliged to subscribe more to the share capital than he wishes. In the second case, decisions about lending the funds of the society to members without security are of direct concern to all members. They have a right to be consulted before such power is given to the committee.

Clause 1 (1) raises the limit of the amount of shares which any one member may hold in a society from £500 to £1,000 by amending the principal Act. It has already been pointed out that societies do not need to adopt the higher figure unless they choose. The figure of £500 was laid down in the Act of 1952. Before that, the maximum figure was £200 which had existed since 1862. In the original Industrial and Provident Societies Act which was passed in 1852, the limit was £100. In this respect as in so many others, co-operative societies differ from the joint stock companies in that the maximum share holding of any individual member is laid down by Statute. Although the rules of a society may fix a lesser amount than that permitted by law, they may not provide for a greater amount.

It is extremely important, therefore, in the interests of societies and their members, that the maximum shareholding should keep pace with changes not only in the value of money, but in economic and social conditions. If we take the value of money in 1914 as 100, it has now, in 1960, fallen to about 20. On this basis, it may be claimed that the present shareholding limit should be at least £1,000 to maintain the same relative position as we had before the First World War. In 1952, that aspect of our case was admitted by the Government of the day.

Looking at the matter, however, from another point of view, there has been a vast development of co-operative trade during this century. In 1914, the total retail trade of the consumers' co-operative movement was £88 million. Last year, it had risen to £1,022 million. It is true that some of this increase can be accounted for by the rise in prices, but it must be noted that during this period membership has risen from over 3 million to nearly 13 million. Such large increases of trade require the employment of corresponding increases in capital. In fact, in recent years, the growth of share capital has slowed down. Indeed, between 1952 and 1959, co-operative retail trade increased by 42 per cent., but share capital increased by only 11 per cent.

It would be misleading to claim that the reason for the slowing down in the rate of capital accumulation in the co-operative movement can be attributed to the present limitation upon the individual shareholding. Many other factors are involved. Some of these are the direct responsibility of the Government, but naturally, as this is Friday, that is an aspect which I shall not pursue. I simply mention the fact. I do not, however, propose to develop it; nor shall I dilate upon the discriminations practised against co-operative investments in the matter of Income Tax concessions, for I hope that some of my hon. Friends, who have greater freedom than I, may say a word on this aspect of our case for speeding up capital accumulation.

It would, however, be agreed on both sides that co-operative societies have fared badly in comparison with the treatment offered to National Savings Certificates, Defence Bond holdings and Post Office savings. I submit, therefore, that the upper limit of £1,000 for share- holders in co-operative societies is a reasonable claim in all the circumstances of today.

I turn now to Clause 2. The agricultural co-operative societies have a particular interest in this part of the Bill, although their case must receive a different emphasis from that of the consumers' co-operative movement. Like the retail side, however, their need of more capital is just as pressing. The necessary increase in my view must come from additions to share capital and reserves.

I want briefly, and, I hope, without intruding too far on the patience of the House, to direct attention to some of the recent statistics which illustrate the work of the agricultural societies better than mere words. To deal, first, with increase in England. The turnover of agricultural societies for the year ended 31st March, 1959, was more than £135 million. In 1953, it was just over £92 million. In 1946, it was £46 million. I relate this to the gross agricultural output which in 1953–54 was £1,253 million and in 1958–59 it was £1,450 million. A simple calculation shows that in 1953 the agricultural co-operative societies enjoyed 7.4 per cent. of the gross agricultural output. Last year, they had 9.4 per cent. This is a notable and welcome increase.

It is worth while observing the detailed figures. Of the total turnover of agricultural societies of £135 million for the year ended 31st March, 1959, the requirement societies absorbed £85 million. The marketing societies £43 million and those societies which provide for services and a number of miscellaneous matters absorbed £7 million. Every one of these separate aspects of the general work of the agricultural societies is showing expansion. It is only fair to them to say that the Government have given quite good support in practical ways to this movement, and I hope that this morning they will indicate their desire to continue that work by supporting the Bill.

When we look at the total share capital in England, and find that it is only £10 million, we see that it is obviously too small a capital accumulation in relation to this turnover. A recent survey has shown that if societies maintain their present rate of growth they will need new capital at the rate of £2½ million per year. In Northern Ireland, the traditional home of the movement, last year the output was almost £7 million, which represented an increase over 1958 of £540,000. In Wales, where the movement is very extensive and is called the Agricultural Organisation Society, for the titular aspect varies a little from country to country, they had a total trade in 1958 of nearly £15 million, which represented an increase of £750,000 over 1957, and, there again, success marks the progress of the Co-operatives.

I come to my own country, Scotland, and there the story is not quite so happy, I am sorry to say. Development has been largely confined to the west Highlands, and there the trouble is chiefly lack of capital—which is our song and plea this morning—and transport costs. Nevertheless, the system is practised, admittedly on a smaller scale than it was before the First World War, but possibly greater help with loans would assist to strengthen it and enable it to expand.

Ideally of course share capital should be proportionate to the amount of trade put by the member through his society. A rough method of ascertaining this is to relate existing capital employed to turnover, in which case it will be found that the average requirement society stands in need of £250 of capital for each £1,000 of annual output. That is quite a remarkable figure, and, in fact, a society extensively occupied in manufacturing may use even more than that. On this basis, therefore, a farmer putting £2,000 per annum through his society should subscribe the maximum shares.

Recently, estimates were made of the expenditure of an average dairy farm of 1,000 acres on feedingstuffs, seeds, fertilisers, fuel and machinery. The amount was £1,750 per annum. I think that this illustration shows that the present limit—

Mr. Brian Harrison (Maldon)

The hon. Gentleman mentioned the figure of £1,750 for a farm of 1,000 acres. Would it not be more like 100 acres?

Mr. Rankin

I apologise, Mr. Speaker, and I thank the hon. Gentleman for his interruption. I thought I said 100, but if I did not, I correct the figure and say that the dairy farm was 100 acres.

I think that the illustration which I have given shows that the present limit of £500 is far from being over generous, even if the £ retains its present value. If there should be any further inflation this situation could become much more serious. It is broadly true, I think, that the present limit is mainly a handicap to the societies having the larger farmers in membership.

The extent of this disadvantage is rather difficult to ascertain, though it has been calculated by the Agricultural Central Co-operative Association, in a survey of English societies, in 1957, that approximately £70,000 of additional capital was lost to them because the present investment limit of £500 would have been exceeded. This loss may be compared with a total addition to share (capital in the same year of £755,000. To take an example, one society which obtained £61,000 of share capital in that year had to turn away an additional £9,500. It is generally accepted, I think, that if the 1960 figures were available they would show a still larger loss of capital. As the percentage of the farmers' trade put through the societies becomes greater the limitation will become increasingly more important, with the result that societies will have to ask the smaller farmers to invest more than their fair share to make good this deficiency.

There are, of course, ways of getting round the £500. Shares might be taken out in the names of wives or other non-trading members of the society, but I am sure it will be agreed that that is not a desirable practice.

In pressing, therefore, for a relaxation of the limit at the upper end of the scale, societies are not oblivious of the need to bring about a generally higher level of investment on the part of their other members. Such a policy has, indeed, been actively pursued for many years. A number of devices, such as, for example, retention of bonus for conversion into share capital, are in general use. It will be appreciated on both sides, I am sure, that this must be a slow process, and that it would not be practical policy for a society to insist that every new member bringing in much-needed trade should immediately contribute an appropriate investment of capital. Such a result, we hope, would be eventually obtained, but not as a rule till he had traded for some years with the society and had got some confidence in it.

I think, therefore, that there is no doubt that the £500 limit is a definite handicap to marketing societies in particular, because they must spend a lot on grading and on cold storage equipment, and particularly where their outlay in capital is large and membership rather small.

Clause 2 of the Bill could remove an out-dated restriction in the original Act of 1893, which was designed to protect the early leaders of co-operative societies, who were assumed to lack experience in financial matters. I know that on this question of lending without security doubts exist about that part of the Clause, and I want to assure the Joint Parliamentary Secretary and his right hon. Friend the Minister that we shall co-operate with them in securing such amendment, if necessary, as will be fair to all legitimate interests.

Apart from the consideration that I have just mentioned, I think that the Bill is simple and non-controversial. It certainly covers an astonishingly wide field of human endeavour which is worthy of the utmost help. Its principles, I believe, are acceptable to the Government, and to the co-operative movement its proposals are necessary for future expansion.

11.31 p.m.

Mr. J. M. Coulson (Kingston upon Hull, North)

I should like to confine myself to dealing wholly with agricultural co-operatives. I very much welcome the Bill. It attempts to deal with the most important movement in British agriculture today, the co-operative movement. We heard a great deal earlier this year, during the debate on the Agricultural Price Review, about the blows that were suffered by agriculture when agricultural subsidies went down, as they seem to do year by year. We have heard a great deal recently about the effect, if we join it, that the Common Market would have on our agriculture. But I think that the most detrimental effect that anything could have on agriculture in this country is that of the failure of our farmers to agree to plan and co-operate together.

It is this lack of co-operation and reluctance on the part of many farmers to band together to solve their problems which will prove a great hindrance to their security in future. In agricultural co-operation we are years behind the United States, the Scandinavian countries and, indeed, many European countries, and we must do something to make up that lack. Although this is a private Member's day, I must say that I should like to see the Government give more assistance towards helping farmers to set up co-operatives and particularly to give them more help in the form of guidance on how to form these co-operatives and organise their financial affairs.

We spend £250 million a year on agricultural support. It is surprising that a percentage of that does not go towards encouraging marketing for farmers. I know that we do a great deal for horticulture and have done something recently, but more should be done for the farmers. There should be more co-operation in the purchase of fertilisers and seeds and the supply of services like grain-drying and storage. Most important of all, there should be assistance in marketing. These forms of co-operation are absolutely vital. Any Bill that helps this movement deserves our support.

The Bill serves two basic purposes. Clause 1 gives agricultural co-operatives the chance to raise more money to finance their operations. There is no lower limit to the amount brought in. This is largely a matter for the co-operatives concerned, but the Bill raises the maximum from £500 to £1,000, which is a step in the right direction. I do not think that it is realised by many people how much money is required by the average farmer for his annual purposes. The hon. Member for Glasgow, Govan (Mr. Rankin) quoted £1,750 for the average farm per year. Perhaps he was thinking of a dairy farm. It may be true of many farms of that sort, but if it is a high production farm of the kind that existed until recently at the Royal Agricultural College the figure is considerably more than that each year. In many cases it is twice as much.

This applies not only to dairy farms but to cash root farms where there is a great deal of investment, and also to sizeable pig or poultry enterprises. There is a considerable difference between these enterprises in speed of turnover, but basically many of them require a great deal of money every year. If the farmer does the bulk of his trading through an agricultural co-operative association he should be in a position to contribute something like a quarter of his annual expenditure in the form of share capital. I think that that is one of the reasons behind the Bill. This is particularly true of the farmer who farms a large number of acres.

At the moment a sum of £500 is clearly inadequate and it certainly restricts co-operatives that have in mind very ambitious plans. The Bill would enable co-operatives to expand and be of much more use to their members. The increase is needed not only at the top of the scale for farmers who are doing most business, but also at the bottom of the scale. As the activities of the co-operatives expand, I am sure that this will give confidence to small investors and to farmers to expand their businesses. Clause 1 is to be welcomed because it allows this expansion of activities.

Clause 2 helps to deal with the great necessity in farming today for the expansion of credit to the credit-worthy. I am thinking particularly of the younger farmer farming for the first time and also of the many cases of the older farmer who has worked himself up from being a farm worker and wishes to buy a farm. The price of land at the moment is at a very high level, and I think that it will go further. Ten years ago the £100 an acre farm was an expensive farm, but it is now largely a thing of the past, and it will be for many years.

Therefore, unless he is very rich, the new farmer has to raise a considerable amount of money on mortgage to buy the farm and he is faced after that with buying implements, running costs, and the cost of stocking. He has to raise as much as possible on mortgage to buy the farm in the first instance and then finds it difficult to raise the extra money. I should like to pay tribute to the help given by the banks and the credit organisations, but any further help is welcome.

Clause 2, therefore, enables agricultural co-operatives to lend money unsecured. The great merit of this is that money will be lent by organisations better fitted than any others to lend it, because they are able to judge better whether the applicant is credit-worthy, whether he is the sort of man who, by background, training and ability, is likely to succeed as a farmer. This is very important. I know myself how careful a farmer has to be for many years when he is building up his farm and how long it takes to get an adequate return on the money.

If the right sort of person wishes to obtain credit from an agricultural association, he deserves all the help he can get. Agricultural co-operatives are not only enabled by Clause 2 to lend money unsecured but they are bodies that can help the farmer in many other ways to start up, particularly with equipment and advice, and I think that they are more likely to do this to the man who is a debtor. The position of the tenant-farmer in his need for help and advice is just as important as that of the man who buys his own farm, even though he is not likely to want a mortgage.

I congratulate the hon. Member for Govan on his choice for a Private Member's Bill of this unstartling subject and such an unnewsworthy subject. The Bill is probably all the more worthy for that. It seeks to secure co-operation between existing farmers and to help the man who is just starting, to enable him to climb that most difficult and most satisfying of all things—the farming ladder.

11.40 a.m.

Mr. Laurence Pavitt (Willesden, West)

I join with the hon. Member for Kingston upon Hull, North (Mr. Coulson) in congratulating my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) not only on having the good fortune to have his name come out of the hat, but on his usual good sense in introducing such a Measure as this. It is a rather unique characteristic of unity, and it draws together not only Members on both sides of the House but also, I hope, town and country. What is put forward in Clause 1 is of considerable interest to some 12 million members of the consumer co-operative movement—most of them industrial workers—and Clause 2 turns to the countryside and gives a very considerable encouragement to the growing movement of co-operation in the farming community.

I listened with interest to the hon. Member for Kingston upon Hull, North. One of the most important points he raised was that in a development of this kind in agriculture the Government should be available to give advice on "know-how." In no sector of the economy are we anxious that the Government should have a lot of bureaucrats or forms, or should interfere with the ordinary working of industry or of agriculture, but increasingly, as technology advances, there is need far "know-how" to be available in easy terms for people in their own sector. I hope that one of the by-products of this Bill will be that such a department might emerge from the Ministry, perhaps to increase facilities already available.

I also welcome the hon. Member's criticism—which was drawn lightly—of the position of this country compared with Scandinavia and the United States. We do well to watch advances in these countries to see whether there is anything we can gain by following their example. By banding together for any purpose, and so encouraging some of the greatest individualists of all, the farmers—they are not as individualist as the doctors, but very nearly—to join together in their mutual interest.

This is a very narrow Bill, but I want to approach it from a wide angle. Clause 1 deals with the raising of the limit on share capital. It has been very well explained, and most of the points have been put forward by my hon. Friend the Member for Govan. The principle behind it is that of encouragement to a number of people to get together, performing things mutually for themselves. It is also an encourgement to the spread of democracy at a time when there is a tendency for things to become increasingly centralised. It gives greater opportunity to them to contribute some measure of their own resources to do a job mutually which perhaps could not be done individually, and it enables the amount which they contribute to be enlarged.

We have seen elsewhere this increasing tendency towards having one expert at the centre. In commerce, we have seen take-over bids, with huge sectors of the economy passing into one man's hands. Bat the tendency to get together, encouraged in this Bill, which arises throughout the co-operative movement, Whether applied to consumers, agriculturists or housing, is one which the Government and all people of good will can only support. The inherent thing in a co-operative society is that the members participate, and that participation will be heightened if they have a little larger stake than they are allowed to have by existing law.

I do not expect that people will dash to increase the amount of money they put into co-operative societies in order to get a return of 3 per cent. fixed interest, with no possibility at any time of capital appreciation. Nevertheless, from the point of view of small savings this Clause of the Bill is very important. The tendency in a co-operative society is that an amount of capital accumulates because not only are the profits of the society turned back into the society, but the bulk go to members in the form of dividend on what they purchase—and in many cases they do not draw the dividend but allow it to accumulate until such time as they need something which costs a considerable amount. Thus, it is an encouragement towards thrift amongst small savers.

I do not want to go into that aspect, however, because we do debate it from time to time, but pending the passing of this Bill, a shareholder, when his accumulation reaches over £500, knows that he must draw some out. Often, however, he will also lake the opportunity to spend more. Thus he draws out not only the few pounds in excess of £500 but tends to draw out more. That may lead to an inflationary trend in the country's economy.

The proposals in Clause 2 bring in a principle that is not new. This has existed in the past. The British Government took great pains more than fifty years ago, when they were responsible for the Government of India, to pass two special Acts in 1908 and 1911 precisely in order to give agriculturists in India the opportunity of borrowing money without security. The background, of course, is different. There is a different situation in this country from what it was in India fifty years ago. We were then dealing with peasants who were not creditworthy. They were in the hands of moneylenders and the British Government had to pass legislation in order to get them out of those hands.

These Acts brought results that began in India but spread throughout the whole of Asia, until now there are hundreds of thousands of co-operative societies for credit and thrift. The emergent countries foster this movement as part of their economic planning.

Many safeguards were inserted in these Acts in order to ensure that credit was safeguarded. One safeguard was mentioned by the hon. Member for Kingston upon Hull, North—that the people who were agreeing and giving authority for a loan were themselves members of the society. As far as I can see, the same provision would apply in this Bill. It will be the agricultural co-operative societies which will have the final say about whether or not a loan is to be granted when there is no backing of collateral security. That is what happened in Asia, but they were dealing with less credit-worthy people and the safeguards were more stringent. They all had collective liability and, if a member defaulted, they had to pay his debts. In order that the entire society need not be caught, the borrower had to find two sureties to guarantee the money. In this country co-operative societies have limited liability.

What provisions will be made to safeguard money lent without collateral security under this Bill? We would welcome any suggestions in Committee which would help clarify this problem. The basic principle is that we are dealing with adult people who know agriculture and who should have a measure of freedom to decide whether or not it is possible, under the prevailing circumstances, to provide credit for their members in order to do a specific job. After all, what is being judged is not the amount of resources and land behind the man so much as his ability as a farmer. He has land and property, but what is being judged is the extent to which his ability is capable of making the land yield more to enable him to pay back any unsecured loan obtained through this Bill.

I welcome very much the fact that in the Schedule the Bill takes notice of what is probably one of the most important developments in the 'sixties—the very belated but very necessary growth of co-operative societies to deal with the housing needs in this very tight little island. The House will know from housing debates that the Minister of Housing and Local Government has welcomed this approach where people are unable to own their own house and, in the terms of hon. Gentlemen opposite, individually become part of a property-owning democracy. There is much to be said for such people joining together in a housing association to own a block of flats or their own houses collectively. The Minister of Housing and Local Government has given his blessing to the efforts that many of us have been making in this direction, particularly in my constituency where we have two such societies and people who would have been evicted as a result of the Rent Act have been saved by joining together in a co-operative fashion.

So in a period when there is a tendency for people to get apart, in a period of intense personal ambition and competition, when it seems as though the motto "I'm all right, Jack. Haul up the ladder." has been part of the philosophy running through the country in recent years, it is very nice that my hon. Friend has had the opportunity of bringing forward this Bill which goes in the opposite direction and enables people to contribute of their own resources and ability and join together for common purposes. To help others, I hope the whole House will join with my hon. Friend and ensure that the Bill obtains a Second Reading and is eventually placed on the Statute Book.

11.52 a.m.

Mr. Brian Harrison (Maldon)

First, I congratulate the hon. Member for Glasgow, Govan (Mr. Rankin) upon his luck in the Ballot and also upon his judgment in selecting this piece of legislation. It is a logical piece of legislation to come before the House in view of certain Measures which have preceded it over the last decade or so. We have had a good deal of legislation which has dealt directly or indirectly with agricultural co-operative societies, such as the 1952 Act, which was introduced by my right hon. Friend the present Minister of Pensions and National Insurance, and the recent Measure concerned with horticultural improvements, which bears directly on the present Bill.

At present, we are experiencing a revolution in agriculture and horticulture and particularly in marketing. I welcome the Bill because it helps the co-operatives to contribute a little more fully to the revolution. An indication of the Government's support for the revolution is the specific mention in the Horticultural Improvements Act of the fact that grants can be made to horticultural co-operatives. These grants will be more and more important in connection with the purchasing and marketing of produce when we get smaller units working together on certain matters without losing their own direct independence in controlling their own holding and what they are producing on it.

When one has regard to the amount of capital on which co-operative societies operate, it is remarkable that they operate as efficiently as they do. The hon. Member made a very good point when he drew attention to the fact that for every £1,000 worth of purchases that a member may make from a co-operative, the co-operative needs some £250 of capital to finance what is done. The hon. Member drew from that a conclusion which, I think, is very important, that the person who has a limit to the amount of capital which he can hold in a co-operative society and who has a big purchasing programme from the society is benefiting out of proportion to the amount which he has invested in the society.

In other words, that person is having the benefit of what he is getting from the society being financed by the other shareholders, who, in turn, may be on a smaller scale. Whether the limit which is being introduced in the Bill will be sufficiently high, I do not know, but I think it is wise that a figure of £1,000 has been chosen as a logical step following the previous limit of £500.

The hon. Member for Govan pointed out the way in which the figure had been held remarkably low until the 1952 Act. The hon. Member knows the history much better than I do. My researches have gone back only to the 1893 Act, when the limit of £200 was set. As the hon. Member correctly pointed out, the value of money between 1893 and 1952 had altered more than in the proportion of the two limits concerned. I hope that people will not think that because we approve of the Bill now we believe that the purchasing power of money has halved since 1952. However, I think that, on balance, the limit proposed in the Bill of £1,000 is probably about right.

It will, of course, be possible to raise the limit at a later date if it is found to be too low. Meanwhile, it gives the societies an opportunity to show that they can exploit that limit to the full. It will need some hard work on the part of the societies to obtain capital up to this limit. However, it is something which accumulates, because very often people leave in their account not only the capital but also the interest, so one gets a compound interest factor operating and the capital of the society building up in that way.

I have been assured of support for the Bill from a number of other Essex Members who, unfortunately, are unable to be present today. These include my hon. Friends the Members for Chelmsford (Sir H. Ashton) and Harwich (Mr. Ridsdale). The manner in which the societies can obtain their capital has been very fully explained by the hon. Member for Govan. All right hon. and hon. Members will agree that it is much better that the societies should to a large extent be self-financing rather than that they should have to depend on bank loans, and so on. Therefore, I most wholeheartedly support the first part of the Bill, raising the limit to the number of shares that can be held.

While, in general, I support Clause 2, I am glad that the hon. Gentleman said that he would be open to receive suggestions for modifying the rather wide drafting of the Clause about unsecured loans. It is extremely important that we should realise that co-operatives are in a very responsible position, in the same way as are building societies. In both cases, there are many small members in the society, and, therefore, it is necessary for the House to make doubly sure that the interests of those members are fully protected.

I realise full well the difference between a peasant co-operative and one in a semi-sophisticated society like our own. [Laughter.] There seems to be some doubt about that, but I still think, particularly in view of the experience we have had quite recently with building societies which have fallen into the wrong hands and have been used for objections completely different from those for which they were designed—in financing take-over bids on a very unsound basis—that it is very necessary for there to be some precautions in the operations of co-operative societies. That is why I am a little doubtful about Clause 2 being quite as sweeping as it is.

Generally, I welcome the Bill, and I am very glad to have been able to be one of its sponsors, because I think that it will help to establish co-operatives still wider in the horticultural and agricultural field, and to make them more effective in the very important work which they must undertake if we are to have a thriving horticultural and agricultural industry in the future.

12.3 p.m.

Mrs. Joyce Butler (Wood Green)

I intervene very briefly in the debate in support of the Bill which my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) has introduced, and I should like to add my congratulations to him on having used his place in the Ballot to bring in such a much-needed reform. I hope that the Bill will proceed from its Second Reading to reach the Statute Book, and be very useful not only to co-operative societies, but to their members.

I take part in this debate primarily as a co-operative housewife. I do not think that figures are available, but, if they were, I think that they would show that a large part of the share capital of retail societies is supplied by housewives who do their shopping in co-operative stores. It is a common practice for housewives to leave their dividends to accumulate in the form of share capital, and they add to it from time to time in various ways, very often by the purchase of savings stamps, which again add to the accumulation of share capital. In passing, it is interesting to note that in my own society the denomination of savings stamps for some time past has been increased from 6d. to 1s., which indicates the change in the value of money—one of the main reasons for the introduction of this Bill.

The savings of co-operative housewives in these societies are simply made because they can use their shop as their bank, and, therefore, it is a great advantage to be able to save in this way. When, as so many housewives do today, they go out to work, I do not think that it is sufficiently appreciated how many of the families which are now becoming owner-occupiers, either from choice or necessity because of the housing shortage, depend on the housewife working outside the home to supply the money which will help to put down the deposit on the house. While she is working and saving in this way, she very frequently uses the co-operative society to invest the savings until she has accumulated enough to produce the necessary deposit and the other fees necessary for house purchase.

These are very common arrangements among many families. Many women go out to work solely for the purpose of enabling the family to become the owner-occupiers of a house. It is quite obvious that for many families the limit of £500 at present is inadequate, because if they are saving for house purchase or something else of that kind, that limit must be raised for their convenience, quite apart from the benefits to the co-operative society.

Therefore, I think that there is no argument at all, quite apart from the fact that we all know how the value of money has changed, against raising the amount of the holding which co-operative society members may have in a society from £500 to £1,000. While the savings are being made, they are of great benefit to the societies themselves, enabling them to expand and develop. When there are so many thousands of people who use co-operative societies because they believe them to be socially desirable, and who save through co-operative societies for the same reason—in spite of disadvantages which have been imposed in some ways—it is quite wrong to limit them, as at present. If they want to save through co-operative societies, they should be able to save to a maximum of at least £1,000, which is the purpose of the Bill.

That is from the paint of view of the consumers' societies. So far as agricultural societies are concerned, in my own constituency at Wood Green, this is not a burning issue, because we have long since lost all the farms that we ever had there. Again, from the housewife's point of view as well as that of agriculture, this is a service which the community very much needs and which ought to be developed and increased considerably. Looking through the British Farmer, which I occasionally read. I saw one paragraph, referring to farming co-operatives, which used these words: In any event, co-operation as such needs a lot more publicity, alike on what societies are doing and what they could do when members and managers are alive to their opportunities. It is because I agree with that and with the fact that sufficient publicity is not given to the benefits of co-operation both inside the House and outside that I hope that the Bill will receive a Second Reading and, ultimately, reach the Statute Book. I warmly welcome its introduction.

12.10 p.m.

Mr. Marcus Worsley (Keighley)

I hope that the hon. Lady the Member for Wood Green (Mrs. Butler) will forgive me if I do not follow her observations about the Bill from the housewives' point of view. I agree with her and all hon. Members who have spoken in warmly welcoming the Bill and in congratulating the hon. Member for Glasgow, Govan (Mr. Rankin) on bringing it forward.

I should like to support what the hon. Lady said about agricultural co-operatives as a service to the community. I wish that their importance were more widely appreciated by housewives and the public generally. If the debate has done nothing else, it has drawn attention to the agricultural side of the co-operative movement, and that will be valuable.

It is important that we should not give the impression, in the House or in the country, that businesses which operate under the Industrial and Provident Societies Act are in some way second-class types of business. There is possibly the feeling that when a company is registered under the Companies Act there is something more respectable or more professional about it. That is completely untrue. Not only does the co-operative movement now have great resources of skill and experience, but it does many things which cannot be and are not done by ordinary companies. If the Bill does nothing else, it should emphasise that the House regards the movement as a worthy part of our business effort.

The hon. Member for Govan spoke of the increasing rôle of consumer co-operation except in his own country. I will not follow him by giving illustrations, but the more one is involved with agriculture—

Mr. Rankin

When I regretted slow development in Scotland I was referring to the agricultural side of co-operation.

Mr. Worsley

I am grateful to the hon. Member. That was a slip of the tongue. I intended to refer to producer co-operatives. I believe that the producer co-operatives will make most use of these facilities if the Bill is passed.

I have some doubt about the wisdom of periodic Bills to increase the limit of permissible investment. I wonder whether it would not be wiser to take a more radical view of the matter. Presumably, the purpose of a limit is to prevent any one person, or a few people, from dominating any society. One could legislate to prevent that by providing that no person should own more than a certain proportion of the society's shares, one-seventh or one-tenth, say. That might have great advantages and it is a matter which we might consider in Committee. Is it better to make a rule which would stand for ever, even with changing values, or a rule which needs the luck of an hon. Member like the hon. Member for Govan to be amended?

This is a period of remarkable and even revolutionary development in agricultural production and techniques. Those of us who went to Smithfield, at the beginning of the week, probably saw, as I did, a piggery in which the whole process, including feeding, watering, and even mucking out, was automatic. That sort of agriculture is being carried on on holdings which are the result of long historical processes, but where the type of agriculture is often out of date.

In my constituency, which is primarily industrial, the agricultural holdings are extremely small. Because of their smallness, they find the difficulties of competing in modern conditions becoming ever greater. I am convinced that that size of holdings is the greatest bar to agriculture taking advantage of the tremendous opportunities and the new techniques and the thrilling ideas which are now being developed.

I believe that there must be amalgamation of holdings if agriculture is to be efficient, but amalgamation of holdings is, and clearly should be, a slow process. It is easy to be sweeping and ruthless about these things, but the people on these holdings are earning their livings in the only way which they know, and amalgamation must be a slow process. But I would like to see the Government concentrate more on bringing that process about.

However, short of amalgamation of holdings, the best way to get over the disadvantages of smallness is co-operation. On the Continent, co-operation is very much more advanced in countries where the holdings are in every case smaller than they are in this country. Our holdings are small enough, but in a country like Denmark, which is held up as a model of agricultural production, holdings are very much smaller still.

In The Times Agricultural Supplement, published on the occasion of the Smithfield Show this year, there was an illuminating table, which I shall not trouble the House by quoting, but which showed the extent to which Continental farming is undertaken in units smaller than British units. With intelligent use of co-operation in agriculture the results can be remarkable.

In passing, I must say that the debate has illustrated that producer co-operation is a non-party matter. I listened with great interest to the hon. Member for Willesden, West (Mr. Pavitt), who speaks with great authority on matters of co-operation, and I very much agreed with him when he said that this was a narrow Bill, but that its implications were very wide.

During the autumn, several hon. Members on this side of the House had the good fortune to be the guests of the Agricultural Central Co-operative Association on a trip round my own county, Yorkshire. I think that my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) was on that trip and that he will confirm my view that the trip was an eye-opener even to those of us who had been closely involved in this movement for many years. I understand that similar trips have been arranged for hon. Members opposite.

Mr. R. Gresham Cooke (Twickenham)

As someone who is not an agriculturist, but an industrialist, my opinion of the agricultural executives in Yorkshire was that they were most efficient, managed in a very businesslike way, were providing an excellent service to the public and that they should be encouraged in every way.

Mr. Worsley

As a Yorkshireman, I very much appreciate that.

One of the main impressions, I am sure, was the astonishing variety of things which could be done with the co-operative method. We saw large and small co-operatives in a fairly limited area to the south and east of the City of York. We saw the Yorkshire Egg Producers' Association, which is a large concern, we saw the Yorkshire and Northern Wool Growers' Co-operative, which is a medium-sized association, and we saw the Yorkshire Farmers' Bacon Factory, which is not a large concern.

One of the most interesting—and I do not know whether I should declare an interest, but this was the only one of which I am not a member—was a small machinery co-operative at Holmeupon-Spalding-Moor, which serves about 3,000 acres and where farmers co-operate to dry their grain, which many of them also store on the same premises. It was impressive because, as has been said during the debate, the agriculturist is not noted, or has not been noted in the past, for being a particularly co-operative person. It is largely due to the activities of the Agricultural Central Co-operative Association Ltd. that this long tradition is being broken down.

I am sure that the Bill will greatly encourage the development of co-operation. I hope that it will bring the idea of co-operation into the minds of the Government so that it will be studied from the point of view of availability of grants, rating, and the rest of it to make sure that if a group of farmers get together to carry out some enterprise co-operatively, which, because of the size of their holdings, they cannot do individually, they do not suffer in treatment from the Government in such matters. Although this is not within the Bill, there is a great deal of room for consideration of these important matters.

In producer co-operatives there is great variety not only in size, but in capital needs. Some of the societies to which I belong, and which we visited on this trip, had taken from their members a nominal share of 5s. and raised capital in other ways. Others borrow the money from the bank and attempt to recoup over a short period. In yet others the question of the shortage of capital is the dominant consideration at almost every meeting of these societies, and the Bill will be a great help to them.

For one thing, it will allow greater investment, but, perhaps as important, it will, as the hon. Lady the Member for Wood Green said, bring publicity on this subject. This question is a little like the attitude of too many people to the church collection. Before the war people used to give 3d. to the church collection. The number of threepenny bits in church collections is still very large.

Not everybody appreciates that if one is to have something, as times change one must increase the payments towards it, and I think that this is very true of producer co-operatives. I hope that the publicity of today's debate will encourage people to ask themselves, "Am I really fairly supporting my local co-operative? Do I perhaps realise that because I am not putting in as many shares as I could readily afford the co-operative has to go to the bank and get money on worse terms?".

I would like to say a word about one aspect of producer co-operatives which has not so far been mentioned. It is the forestry co-operative. Every word that has been said about agricultural co-operatives applies probably more strongly to forestry co-operatives. If it is difficult with the size of the modern farm to take full advantage of modern conditions and techniques, in the ordinary size of woodland unit it is immensely more so, because in this country woodland is owned in extremely small units, and to bring to bear the skill of management and the marketing knowledge in these small plots is an immense problem.

If we are to use our resources as we should in this country, it is vital that these small packets of woodlands should be cultivated with skill and knowledge. If that were done it would increase the amenities of the country and would bring a little extra income to many people. It is important to mention that forestry co-operatives will also benefit from workings of the Bill if, as I hope, it is passed into law

I had the privilege of sitting on the board of, I think, one of the largest forestry co-operatives in this country. Northern Forestry Products Ltd. I know the difficulties we repeatedly had over the question of the amount of capital available when this and other co-operatives were expanding. There have been a certain number of new co-operatives set up during the last year or two, and there is a general feeling of "going ahead" and of expansion, and I have no doubt that this provision will be of great help to these forestry co-operatives.

Horticulture and agriculture are specifically mentioned in Clause 2 of the Bill and I wonder why forestry has not been mentioned. Perhaps this is something which might be considered in Committee. Forestry is never quite sure of what it comes under. People concerned in forestry sometimes wish there was another "F" in the title of the Ministry of Agriculture, Fisheries and Food. It would be good to know that the Bill covered and dealt with forestry co-operatives in the same way as other producer co-operatives.

Mr Rankin

indicated assent.

Mr. Worsley

I am glad to see that the hon. Member agrees with me.

The Bill is not only a useful step forward in producer co-operation. It is a great achievement by the hon. Member for Govan, who brought it forward, and I hope that this debate, which has been very useful and enlightening, will cause a great deal of interest in the country and will stimulate this important movement.

12.27 p.m.

Dr. J. Dickson Mabon (Greenock)

I rise to speak briefly because of the comments made by the hon. Member for Keighley (Mr. Worsley). I am delighted with what I regard as a most warmhearted speech from an hon. Gentleman about the principle of co-operation. I hope this example will be followed by many other Conservatives.

I have no wish to disturb the harmony of the House by bringing in partisan matters. I recognise that the Bill embraces not only consumer co-operatives but producer co-operatives. Perhaps for that reason it has been taker out of the party arena by hon. Gentlemen opposite and we are therefore able to get agreement on a matter which, in another context, we would not.

I have been in the House for five years, and I have witnessed a number of occasions on which the co-operative movement as a whole has been rebuffed, always I thought unfairly, at the hands of Treasury and other Ministers. I hope that this will not be the case today and that the excellent example of the producer and consumer societies to which reference has been made will be acknowledged and that their rightful place in the community accepted.

The hon. Gentleman made a point which I thought was in a sense rather strange when he more or less, I will not say chided, but suggested that perhaps my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) in promoting this excellent Bill had not gone far enough; he perhaps had not been radical enough. It was a peculiar charge to make against my hon. Friend. The charge, if it is a charge, is that perhaps £1,000 as the shareholding limit is somewhat modest, and that this idea of leap-frogging after a score of years from one position to another was hardly the most satisfactory way of going about this matter. This is a rather strange note of criticism considering that we on this side of the House have struggled for a long time and, indeed, are rather surprised that we managed apparently to get this accepted by the Government as the present limit. It only places us in the same position, if the Bill is passed, as the co-operative movement was in 1914, but I do not regard it as a reasonable argument that where we were in 1914 is where we ought to be in 1960, or where we should be in 1980. That seems to me a bad argument. I therefore welcome the hon. Gentleman's comments in this regard. I think he feels the same as I do, and as I know my hon. Friend the Member for Govan does, that we ought to have gone further than this. In the circumstances, however, this modest advance is probably as much as we can get while maintaining the present harmony in the House.

If we are in this excellent frame of mind on both sides of the House, however, in which we recognise the virtues of co-operative societies, whether producer or consumer—and I hope that we do—then, if the Bill becomes law, as I hope it will, perhaps the Government will examine the whole of the legislation governing industrial and provident societies. If the Bill is placed on the Statute Book it will be the sixth Act on the subject. The legislation is becoming a little more complex as the years go on. This might, therefore, be the time for the Government, in welcoming the Bill, as I hope they will, to say that they are considering a review of existing legislation on industrial and provident societies in order to bring it more into tune with our times.

Irrespective of any argument about capitalism, Socialism or any other "ism," I firmly believe that in our modern democracy in Britain today the co-operative societies ought to have a proper place in the development of the country. They deserve it. They are a form of social ownership which is very close to many proposals which we hear from all political parties. We have spent Friday afternoons discussing proposals for co-ownership from the Liberal Party, co-partnership from the Conservative Party and many other similar proposals from this side of the House on how we can spread ownership in this country. Surely the co-operative societies are a good example of social ownership.

I think that often, in their desire not to concede anything to the radical party in this country, hon. Members opposite blind themselves to the great usefulness and social purpose which the co-operative movement represents. I hope that hon. Members will divest themselves of their prejudices about the co-operatives, which the hon. Member for Keighley mentioned, which lead them to regard the co-operatives by their very nature as a second-class business. It is quite true that the co-operative movement as a whole does not pay its executives as highly as other organisations. Perhaps that is a mistake in this modern economy, but it has been a tradition of the movement that this should not be the case and that men should be willing to serve rather than to be paid as fulsomely as in other posts.

It is also the tradition of certain right-wing newspapers in this country constantly to attack the movement and to put it in the second class which they think it deserves. This attitude is shameful and wrong, and I am sure that the hon. Member for Keighley meant to convey that view too This is a kind of organisation in industry and agriculture which ought to have its deserved front rank place.

I congratulate my hon. Friend the Member for Govan on his good fortune in being first in the Ballot and also on choosing this much-needed Bill, and I am delighted that we have had such harmony on both sides of the House today.

12.33 p.m.

Mr. Charles Doughty (Surrey, East)

I congratulate the hon. Member for Glasgow, Govan (Mr. Rankin), as other hon. Members have done, on introducing the Bill, and, if necessary, I shall be prepared to support it if there is a Division. This does not necessarily mean, however, that I agree with everything which has been said by every previous speaker. There are two or three points which I want to raise before I sit down, as I shall in a few minutes.

The Bill has been described as a message going from the House, and the hon. Lady the Member for Wood Green (Mrs. Butler) talked about the socially desirable nature of the co-operative societies. I do not agree with her. This is a free country, and if people want to shop in one place rather than in another, they are fully entitled to do so. If people like to subscribe to a particular party, they are fully entitled to do so. All political parties depend on their support.

We know where the support of the co-operative societies goes. Even though it goes there, I should never think of opposing anything of this kind for political reasons, but there is nothing socially desirable in shopping at a co-operative society. People do it from choice. I think that it is an unwise choice, because I am certain—and I want this message to go clearly from the House, and no one has yet said it clearly—that they will get better service, better attention, better credit and better goods from private traders.

That is why I do not care two straws whether the co-operative societies have this Bill; they are welcome to it, and good luck to them in that sense. It will do no good in increasing their trade, because they cannot give the service which private enterprise can give. That is the message which I want to go clearly from the House. But I shall not allow political prejudices to interfere with my support of the Bill. If they want extra money subscribed, why not? Private industry can get it, and probably much easier.

The hon. Member for Govan gave us figures about capital expenditure, but no one has told us whether there is any demand by the co-operative societies for this advance. Probably there is, but it has not been mentioned. No doubt the hon. Member who winds up the debate will tell us.

Mr. Rankin

I can assure the hon. and gallant Member—

Mr. Doughty

Hon. and learned.

Mr. Rankin

I am sorry that gallantry should be divorced from learning. I can assure the hon. and learned Member that there is a demand in the retail societies.

Mr. Doughty

I am obliged to the hon. Member.

I am glad that this a permissive Bill. If it had been compulsory, obliging societies to do this, I should have objected to it on the ground that they should be allowed to run their own affairs in their own way.

While I cannot wish the societies especial good luck, I wish the hon. Member luck in getting his Bill through. The Bill is well drafted, which is more than one can say for many Bills, both Government and private; it is clear, and it says exactly what it means.

I have spoken about consumer co-operatives, and I come to the second aspect—the agricultural co-operatives. They are desirable, but when we talk about credit for farmers, and particularly small farmers, what better body is there for deciding credit than the banks? They have more experience of rating credit values and the local managers have more knowledge of the local farmer and whether he is likely to farm well or badly.

I am not suggesting for a moment that anybody should have a monopoly in granting credit, and I do not suppose for a moment that the banks will worry about the credit which the agricultural co-operatives can give, but it is wrong for hon. Members to compare the position of agricultural co-operatives here with that in other countries. Their position is entirely different. We have a much more specialised agriculture in this country than they have; for example, in New Zealand farmers may produce butter and lambs exclusively, with one market for those commodities. In an agricultural industry of that kind it is wise to co-operate in order to market in the best way.

Here, with their huge export trade in cattle, for example, our farmers are faced with a different problem. While we want them to discuss their mutual interests together, it does not necessarily mean that the co-operative is ipso facto a good thing. We know of the very powerful influences which are wielded by the National Farmers' Union, and it is wrong to say that farmers, both large and small, do not have a voice in the governing of their affairs.

The hon. Member for Govan said that he would be accommodating on the question of advancing money without security. To be frank, I should have objected to such an advance, because they are dealing with other people's money and it would be wrong to advance such money without security merely because they like a particular member. When dealing with other people's money, there ought to be some form of restraint.

Mr. Rankin

It is their own money.

Mr. B. Harrison

Surely the banks are also dealing with other people's money.

Mr. Doughty

All joint stock banks are limited liability companies.

As the hon. Member for Govan said that he was prepared to assist in setting up some form of security, I will not press the matter any further. I should have done so had he not been as accommodating on this occasion as I am sure he always is on others. I hope that the Bill will receive a Second Reading and will eventually pass through all its stages.

12.40 p.m.

Mr. A. E. Oram (East Ham, South)

I am glad that in his opening remarks the hon. and learned Member for Surrey, East (Mr. Doughty) indicated that if there were a Division he would support the Bill, because I felt that the nature of his speech indicated rather lukewarm support and one might have had some doubt. I did not really follow the hon. and learned Gentleman's opening point when he queried whether my hon. Friend the Member for Wood Green (Mrs. Butler), was right in saying that co-operative societies are socially desirable institutions, because, as he said, everyone has a choice as to where he will shop. That does not seem to me to counter the claim that a co-operative shop is a socially desirable institution.

Many congratulations have been offered to my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) both on his good fortune in the Ballot and on his choice of subject. If I may, I should like to offer him my congratulations on the clarity and cogency of his speech when he introduced the Bill to the House. My hon. Friend is doing a service by the Bill to the retail co-operative movement and to the agricultural co-operative movement.

We on this side of the House, of course, are more closely associated with the retail co-operative movement, but we are more than friendly towards the development of agricultural co-operation. We know that many hon. Members opposite are closely associated with the agricultural co-operative movement, and we sometimes feel, as my hon. Friend the Member for Greenock (Dr. Dickson Mabon) indicated, that some of them might be more friendly towards the development of the retail co-operative movement.

I would stress that although there are differences of emphasis, differences in the nature of the support which the two sister movements have in this country, fundamentally they are based on the same principles. They are set up, of course, on the basis of the same law. The essential principles which that law ensures are that the members of a co-operative should exercise democratic control over its management, that distributions of interest on capital should normally be fixed and deliberately kept at a modest level, and that the major distribution of surplus should be in relation and in proportion to the amount of loyalty, support and use which the members makes of the services of the co-operative.

I wish to deal with one detail in Clause 1 (3), which I particularly welcome. It is the fact that a resolution of a committee is all that is necessary, in the first instance, to raise the capital holding of members from £500 to £1,000. I think I am right in saying that the same procedure was adopted in the Bill which Mr. W. T. Williams, at that time the Member for Barons Court, introduced in 1952. As a member of a management committee, as I was then and am now, I know that that procedure is of considerable administrative convenience to co-operative societies, and I welcome the fact that it is included in this Bill.

The retail consumers' movement, of course, welcomes the uplift to £1,000. Although we are not directly concerned with the second part of the Bill, we certainly have no objection to the possibility of agricultural co-operative societies lending to their members without security. Several hon. Members have pointed out that the raising of the limit on shareholding to £1,000 is really only catching up with the passage of time and with the diminution in the value of money.

In this connection, when I was browsing through the century-old HANSARD of the time when the £200 limit was fixed, I came across a quotation which rather startlingly illustrated the great change that had taken place both in the value of money and in the scale of co-operative enterprise. The hon. Gentleman who introduced the Bill nearly 100 years ago said, in referring to the membership, capital and trade of the then young movement, that it was doing £1½ million worth of trade and that he regarded that as an extraordinary and almost incredible amount of trade.

If it was considered suitable to make the limit of £200 at a time when £1½ million was considered to be extraordinary and almost incredible, surely it is perfectly reasonable to raise the limit to £1,000 when, in terms of retail trade, the amount is not £1½ million but more than £1,000 million. The £500 limit which was introduced in 1952 was, in my view, over-cautious at that time. I think it would have been better to raise the limit to £1,000 at that point. However, it was not done, and my hon. Friend the Member for Govan is now seeking to do that.

I think it has been obvious from the debate that the Bill is, perhaps, rather more in the interests of the agricultural co-operatives than of the consumer movement, although we in the consumer movement will find it very useful. We have a lot to do in the way of development—shops, vehicles, factories—and we have our problems from time to time of shortage of capital. In order to accomplish what we wish to do, therefore, the raising of the limit to £1,000 will be useful to us in our work.

There are not very many statistics which show us the number of members of co-operatives who have capital holdings approaching the present figure of £500. What is certain, however, is that there is a vast number of members who have nowhere near that amount. Indeed, we know that the average amount held is only something like £20. The fact that the average holding is only £20 might prompt the question, What is the significance of allowing some people, at any rate, to have up to £1,000? The significance, I think, lies in the fact that a relatively small number of members is responsible for a considerable proportion of the share capital of the movement. Though it is not a big proportion of the 12 million members, the capital which that small proportion introduces into the societies is important, and it may well be that the raising of the limit to £1,000 would produce an influx of capital which would be very welcome. If that is true of the consumer movement with a small number of members who are particular providers of capital, I think it must be all the more true in the case of agricultural co-operatives; I do not know, but I fancy that must be so. Therefore, this lifting of the figure to £1,000 must be particularly useful to the agricultural co-operatives.

It is the experience of the consumer movement that the capital of members, though still vital and important, has in recent years been a declining proportion of the total capital used by co-operative societies in the conduct of their business. This Bill may help to increase the amount of members' capital. But I stress that there is a need for capital to be raised by other means, by the building up of reserves and by the collective accumulation of capital in other ways. My hon. Friend the Member for Greenock referred to the fact that the co-operative movement has not received the greatest help at times from the Treasury when it has claimed—as it has claimed—that it is not getting fair treatment in respect of taxation, and so on. The collective provision of capital is handicapped in the co-operative society by the incidence of the Profits Tax as at present constructed.

Another piece of taxation which hampers the collection of co-operative capital is the differentiation between Post Office small savings and co-operative small savings. The fact that the first £15 of interest received on Post Office savings is tax free, whereas the first £15 of interest received on co-operative savings is not is a form of differentiation which we believe to be unfair. I put to hon. Members opposite, who have shown a commendable keenness over the development of co-operative societies in the agricultural sphere, and who welcome the possibility of members of co-operative societies depositing more funds with the society, that their agricultural societies also would receive considerable benefits if these unfair tax burdens were put right.

Mr. Speaker

Order. I think that the hon. Gentleman at that point is going beyond what is permitted to him in this debate. I am sure that it is all right to argue that an increase in the permitted holding in the co-operative society is needed because of the difficulty of accumulating capital, but he ought not to argue in this debate for a change in the taxation system as applied to the society.

Mr. Oram

I bow to your Ruling, Mr. Speaker, and I will not pursue that point. But the one form of capital is so closely related to the other, the need for individual members' share capital is so closely related to the collective provision of capital, that I wished to point out these other factors in the matter.

I urge hon. Members who have shown this keenness about agricultural co-operation to show in the future more keenness about our side of the movement, the retail co-operative movement. We shall look forward to receiving their support, not only in connection with this Bill but with the development of co-operation in all spheres of life. It is our firm belief that the co-operative principle is one of tremendous assistance to small people be they farmers, consumers or tenants. In all forms of life co-operation is an extremely important principle. We do our best to make sure that that principle is applied in every sphere of trade, housing and so on, and we should welcome the support of hon. Members opposite.

12.55 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. W. M. F. Vane)

I think it may help if at this point I intervene to tell the House that the Government are glad to welcome this Bill which the hon. Member for Glasgow, Govan (Mr. Rankin) has presented, and which is supported by a number of hon. Friends and by my hon. Friend the Member for Maldon (Mr. B. Harrison). Nearly every hon. Member who has spoken has mentioned that he speaks either from the producers' angle or the consumers' angle. I think I can claim properly that I speak for both, since our interests extend from agrciulture right across the water to food. Perhaps that is a form of co-operation which we should not overlook even though it has not been mentioned as yet.

It is true that this Bill has a particular reference to certain forms of agricultural co-operation, and here I do not think it out of place for me to express a word of credit to the Agricultural Central Co-operative Society which for a long time has done a great deal of work in this sphere, and has been working towards something of the kind envisaged in this Bill. My Department has many contacts with that society and our aims are in common.

The hon. Member for Govan has explained that the first purpose of his Bill is to raise the permissible share holding in co-operative societies. Here, following the tradition of the House, I think I ought to declare my interest. For a long time I have been a member of an agricultural co-operative society; in fact, I am a member of two. One of them I particularly wish to mention has expanded greatly and has gone so far as to carry out a successful invasion of south Scotland from the English side of the Border. But as the hon. Member for Govan has mentioned that he would like this Friday to be a special day of truce, I will not pursue that matter further.

The suggestion is that the figure of £500 which is now the law of the land should be raised to £1,000, and I think most hon. Members would agree that that is certainly in keeping. It may well be that without this provision the development of some of the societies might be impeded, for example, certain of the agricultural co-operatives, particularly those specialising in marketing. We think that it ought to be made possible for members' shareholdings to be made more commensurate with the business put through the societies. The House may have in mind particularly those where expenses are high, such as fruit packing, and where a high rate of investment per ton of throughput is needed, if they are to operate really effectively.

The second main purpose of the Bill provides for agricultural societies to lend money without security. Of course, the creation of credit is nothing new in the movement, either here or abroad. But, so far, agricultural co-operatives have not previously been allowed to lend without security, and societies wishing to do so have to register under the Companies Acts. There is no reason why the growth of such societies should be impeded in this way and, subject to certain safeguards which the hon. Member for Govan has mentioned—I think his words were that he would like to secure Amendments fair to all legitimate interests during the Committee stage, and I think that was very fairly put—we would agree that some such change might well he made.

Mr. Rankin

I am sure the hon. Gentleman will recollect that I inserted the two words, "if necessary." While I and I am sure everyone is anxious to co-operate, the hon. Gentleman will recognise that I must preserve my status at the moment with regard to the Bill.

Mr. Vane

I am not trying to put any pressure on the hon. Member. In order to be fair to him, I wrote down his words as accurately and quickly as I could. If I made an error by leaving out those two words, I certainly did not do so on purpose. I think he agrees that some such safeguard would be an advantage in this Bill. We should say that this change might well be confined to societies whose main function is the creation of credit; for example, we might say those which are providing finance for machinery syndicates. It might well lead to difficulties if societies whose main function were some other form of co-operation were too light-heartedly to take on the business of lending—which is no easy technique to master—as a sort of sideline.

Credit without security is not an unmixed blessing, either to the lender or the borrower. All the same, I hope the House will approve such changes as I think the hon. Member and other hon. Members who have spoken have in mind for debate in Committee. With these reservations, I hope the House will help this Bill on its way.

1.2 p.m.

Mr. George Darling (Sheffield, Hillsborough)

I think the House will agree that the assurance which has been given by the Joint Parliamentary Secretary that the Government will help this Bill along to the Statute Book will be very welcome. I do not think there will be any quarrel from this side of the House or in any part of the House about the need, if need is shown, to amend Clause 2 so that, if safeguards are necessary in giving of credit without security as now stated in the Bill, they may be written into it by amendments.

I join with other hon. Members on both sides of the House in congratulating my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) on using his good luck in the Ballot to bring forward this very useful Measure and also for the clear exposition of what in effect is a technical Bill. I am sure that his great forbearance in avoiding partisan political issues during his exposition is also to be commended. One hon. Member said that it was a non-startling Bill, but it has produced a remarkably good and interesting debate. The only comment I make is that, if I remember rightly, it was in the early years of this century when I believe Sir Henry Campbell Bannerman said, "We are all Socialists now."

An Hon. Member

Harcourt.

The Financial Secretary to the Treasury (Sir Edward Boyle)

It was Sir William George Grenville Venables Vernon Harcourt, to give him his full name.

Mr. Darling

At any rate it was a leader of the Liberal Party. Unfortunately, it was a sadly premature statement, but the support given this Bill today by both sides of the House indicates that we are all co-operaters now. That is a step in the right direction.

Apart from the hon. and learned Member for Surrey, East (Mr. Doughty), who apparently did not know what the Bill was about and does not seem to know what the co-operative movement is about, I think it true to say that this Bill has the unanimous support of the House. We are very glad indeed that the Government are supporting it, probably with a slight amendment, and I hope it will soon be on the Statute Book.

1.4 p.m

Mr. Walter H. Loveys (Chichester)

Now that this Bill obviously has the blessing of my hon. Friend the Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food and of the hon. Member for Sheffield, Hillsborough (Mr. Darling), winding up for the Opposition, it is unnecessary for me to pursue the subject at any great length. However, I should like to say a few words, as a practical farmer, about the importance of the Bill to agriculture. I also add my congratulations to the hon. Member for Glasgow, Govan (Mr. Rankin) on his luck in the Ballot and on choosing this most important Bill.

As many hon. Members have already said, this country does not compare with America or Scandinavian countries, or indeed other countries of Europe, in its agricultural co-operatives, but I understand that there are now 300 farm co-operatives in Britain. Most of them are registered under the Industrial and Provident Societies Act, which does not permit their members to hold more than £500 capital. There is no doubt a very real need to increase that amount to £1,000, not only because of the change in the value of money, but very much because farm co-operatives are expanding rapidly and there is great need for more expansion in future. Therefore, I unreservedly support Clause 1.

On Clause 2 I have some reservations, as obviously other hon. Members have, about advances being given without any security whatever. There is, however, certainly a need to make it much easier for co-operatives to lend money, thereby placing them on the same footing as organisations registered under the Companies Acts. In my view, this Bill is absolutely essential if we are to increase agricultural co-operation. Such an increase is absolutely necessary in the light of present conditions and trends for the future.

In this year's Annual Review and Determination of Guarantees it was stated that: The net income of the industry depends on many factors apart from the level of the guarantees, not least the industry's ability to adapt itself to changing circumstances. Changing conditions today call for reduced costs and increased efficiency. The small farmer with very limited capital will find it most difficult, and certainly uneconomic, even if possible, to invest large sums in small units in order to keep up with future trends in the industry. In my opinion, the only answer for him is more co-operation, for otherwise there is the certainty of being swallowed by a larger unit.

In my constituency there is a land settlement association, which, I understand, is not the same as a co-operative association, as these associations were set up under statute after the First World War, but the principle is exactly the same, that of co-operation in purchasing seeds, fertilisers, machinery and, even more important, co-operation in marketing. Advantages of such holdings over independent smallholdings is only too obvious. The main difficulty about agricultural co-operation is a social one. It goes against the grain of the independent farmer to co-operate. This I quite understand as a farmer myself, but these barriers must be broken down in the interests of the industry itself.

There is a feeling that compulsory co-operation is intended, but I am sure that no hon. Member would want that to happen and for the situation to be like that in Communist countries. This year I witnessed an interrogation in West Berlin of a farmer who was fleeing from East Germany simply because he was forced to join a co-operative farm. I saw the misery that that can cause. At the same time, there is need for more co-operation among small farmers in this country. By increasing the amount of share capital and making it easier for co-operatives to make advances to members, the Bill will be of real help to this most important of our industries.

1.10 p.m.

Mr. Robert Edwards (Bilston)

Far be it from me to delay the discussion of the following Bill, but I want to make a few general observations on the importance of the Measure that we are now discussing. My hon. Friend the Member for Glasgow, Govan (Mr. Rankin) is a man of many and varied interests. I am sure that he had to resist many temptations before deciding to submit a simple but important Bill of this nature. I am certain that he would have liked to put forward a Bill relating to Holy Loch, or other matters which engage his attention in this House from time to time. But he has chosen this simple Bill which deals with the improvement of one of our greatest social organisations, namely, the co-operative movement.

It is clear from the discussion that we have had so far that there will be no opposition to this simple but important Bill. It is well that from time to time the House should have an opportunity of discussing our great social movements. The co-operativemovement started in Britain and spread throughout the whole world. In the tropical zone of Africa there are many vital co-operatives, and in the frigid zone of the North Pole co-operative organisations exist among the Eskimos. It all started here in Britain. It is the greatest existing movement for training people in the practice of democracy in our universe. This movement will expand throughout Africa, Asia and the Antarctic. The movement in the Metropolis is strong and progressive, and anything that the House can do to remove obstacles preventing its expansion is a very healthy occupation.

Hon. Members on both sides of the House have discussed the relative merits of consumer co-operatives and agricultural co-operatives. What is not clearly understood is the fact that the co-operative retail societies, numbering about 1,000, are among the largest farmers in Britain. For example, the London Co-operative Society is one of the six largest farmers in the south of England. Even on the retail side, therefore, there is a very powerful agricultural organisation which makes a large contribution to the economy of the country. One of the largest and most thriving orchards in this country and, indeed, in Europe or the world is I he co-operative orchard at Bedford, which has over I million apple trees. It is efficiently run, and it makes a very important contribution to the co-operative retail trade and co-operative agriculture.

It is pleasing to note that the House accepts the necessity for expanding and assisting as much as possible the development of co-operation on the consumer side, the production side and the agricultural side. I therefore have great pleasure in supporting the Bill, and I hope that it will get a unanimous Second Reading.

1.14 p.m.

Mr. F. V. Corfield (Gloucestershire, South)

I want to give a word of welcome to this Measure from the agricultural point of view, and also to congratulate the hon. Member for Glasgow, Govan (Mr. Rankin) on introducing it. As with most other industries, one of the basic problems facing agriculture is that of reducing the costs of production. The Government are all to apt to preach to farmers by telling them that this can be done purely by producing the same quantity of produce at lower cost. That is obviously a very limited argument in farming.

In many cases it is possible to increase efficiency—that is, to lower costs—only by actually increasing production. On large farms, employing perhaps half a dozen men, it may be possible to hold the present rate of production while reducing the number of employees to five, but the vast majority of our farmers employ either members of their own families or one man at the most, and the Government have not yet made any very helpful suggestions as to how such a farm can be run profitably on a basis of employing less than one man. That must mean that increased efficiency can come only from increased production.

I have held for a long time that agricultural co-operatives can play a big part in helping in these matters. They can help to improve production directly by giving smaller farmers the advantage of bulk purchase facilities and, in certain circumstances, the advantages of producer processing. But they can also help enormously—and this is a sphere which we are only just beginning to exploit—in the whole problem of marketing. They can help to improve quantity and also to standardise, and they can help even more to increase demand by placing on the market a product which is really tuned in to what the housewife demands, and to produce a consistent quality. This is much more difficult for a series of small farmers working on their own.

It is doubtful whether, in areas consisting largely of small farms, many individuals will be likely to find even as much as £1,000. Nevertheless, as I think the hon. Member for East Ham, South (Mr. Oram) mentioned, one of the snags of the present limit is that many of these farmers, even if their initial contribution was a relatively small one, have been prepared to allow their bonuses, and so on, to accumulate for the benefit of the co-operatives in order to increase the available reserves.

The limit of £500, however, has meant in many cases that the funds which farmers were prepared to leave in the co-operatives had to be paid out to them because they exceeded this limit. I do not know whether there is any special merit in the figure of £1,000, as opposed to a figure of £2,000 or an even higher sum, but I certainly welcome this as an advance, and again congratulate the hon. Member for introducing a Measure which is not only valuable in itself but shows that the House is anxious to encourage farmers to use the mechanism of co-operation.

Hon. Members on this side have been chided for the somewhat different degree of enthusiasm they show towards the ordinary traditional retail co-operative as compared with the agricultural co-operative. In my opinion, the explanation of that different feeling lies to a large extent in the hands of the co-operators, as we generally understand them. I imagine that it was entirely of their own wish that they allied themselves to the political philosophy of public ownership.

Mr. Oram

Does the hon. Member realise that the co-operative movement was forced into politics only by the attacks of Governments supported by the hon. Member's party?

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)

We should be getting beyond the terms of the Bill if we were to proceed further with that argument.

Mr. Corfield

Agriculturists regard this as a system of individual ownership, albeit through the mechanism of co-operation. That seems to us to be quite different from the public ownership which the party opposite espouses. With that digression, I congratulate the hon. Member for Govan again, and hope that we shall be able to consider, in the reasonably near future, other aspects of co-operative marketing, especially in relation to agriculture.

1.20 p.m.

The Joint Under-Secretary of State for Scotland (Mr. R. Brooman-White)

As a Scottish Member has been fortunate in the Ballot and has chosen a United Kingdom Bill, he has saved us from the need of further deliberation in the Scottish Standing Committee, but it may be appropriate for me to say a few words about the Scottish reaction to this general Measure.

Clause 1, which has been generally welcomed, is thoroughly endorsed by the Scottish Agricultural Organisation Society. I believe that the Society is most enthusiastic about the provision which extends the sum which can be advanced from £500 to £1,000.

The caveats which have been generally voiced on Clause 2 are felt even more strongly in Scotland than they are south of the Border. This is because, as the hon. Member for Glasgow, Govan (Mr. Rankin) will recognise, there are a considerable number of extremely small societies in the Highlands and in the North and they lack the necessary expertise and resources to take in their stride these difficult and dangerous lending operations without security.

I understand that the Scottish Agricultural Organisation Society, which has the most expert view in these matters, feels strongly about those reservations. It also feels—this is a technical point which can best be dealt with in Committee—that organisations which are co-operative in character should be registered under the Industrial and Provident Societies Act, 1893. Those are the sort of matters which are proper for Committee deliberation.

The general point is that the Scottish view is that Clause 1 is as welcome, if not even more welcome, in Scotland than it is south of the Border. The possible difficulties inherent in Clause 2, which we hope can be satisfactorily cleared up in Committee, are even more apparent to small societies in the North than may be the case with larger societies in the prosperous agricultural areas of the South.

I thought it right to state those brief reflections on the Scottish point of view and also to join in welcoming the Bill and congratulating the hon. Member for Govan, who has so ably introduced it.

Question put and agreed to

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).