AMENDMENT OF INDUSTRIAL AND PROVIDENT SOCIETIES ACT 1965 (Hansard, 3 August 1972)

§ Mr. Deakins
I beg to move, That the Clause be read a Second time.

§ Mr. Deputy Speaker
With this new Clause it will be convenient to discuss Amendment No. 52, in the Title, line 3, after '1950', insert: 'to amend the Industrial and Provident Societies Act 1965 in respect of agricultural co-operative societies'.

§ Mr. Deakins
As this is the first time I have spoken in the debate I should declare my general interest in agricultural matters. I hope that will suffice for the rest of the afternoon and evening.
I should like to make a few brief points on the new Clause, which deals with the maximum permitted individual shareholdings in agricultural co-operative societies.
Hon. Members on both sides of the House will be aware of the increasing importance of the work of agricultural co-operative societies. It is regrettable that over the last 10 years their total share of agricultural trade has tended to decline as more farmers have been banding together, not in the traditional form of agricultural co-operative societies but in group trading. While this is regrettable on a number of grounds, it has affected the competitive position of agricultural 1007 co-operative societies and in many cases has put them into a serious financial position.
With that background, I think the House should recognise that, with the increasing mechanisation of and productivity in agriculture and the increasing numbers of people still leaving the land to work in industry or to retire, we have a smaller number of farmers each year. A smaller number of farmers means there are fewer people available to become members and supporters of and traders with agricultural co-operative societies.
If the maximum permitted individual shareholding is £1,000, obviously if there are fewer people to invest in agricultural co-operative societies it is only right to try to redress the balance by increasing the maximum permitted individual shareholding in the way suggested in the Clause—namely, by doubling it to £2,000.
As farms tend to get bigger, farmers tend to become more prosperous. Therefore, I do not think that farmers generally would object to what is suggested in the Clause. I am sure that the more efficient farmers, like my hon. Friend the Member for Enfield, East (Mr. Mackie), would not be worried that in future, if the new Clause is accepted, they could contribute up to £2,000 for membership of an agricultural co-operative society. I am sure that the bigger, more progressive farmers appreciate the benefits which these societies can bring to the farming industry.
Agricultural co-operative societies, unlike other trading groups in agriculture or in business life generally, depend to a disproportionate extent upon their members when it comes to raising capital for trading purposes, both working capital and fixed capital. This has always been a feature of the co-operative movement, not only in agriculture but also in the consumer co-operative movement. It is therefore only right that the House should have some regard to the fact that they ought to be able to raise more money from their members, and that we should bear in mind the constant effects of inflation. Under this Government inflation has increased rapidly, and we constantly debate it in the House.
Inflation has an impact on agriculture, particularly on the activities of agricul- 1008 tural co-operative societies, and it is, therefore, only fair to say that what was worth £1,000 in 1965 is probably worth only £500 today. If, therefore, we want to restore the position—not improve it—of agricultural co-operative societies in respect of individual shareholdings to what it was when the Industrial and Provident Societies Act was passed in 1965, we should at least increase the maximum permitted shareholding from £1,000 to £2,000.

§ Mr. Peter Mills
I am grateful to the hon. Member for Walthamstow, West (Mr. Deakins) for bringing forward the new Clause, because I always welcome the chance of saying something about agricultural co-operatives. I do not wish to boast—I have had to give it up now—but I am the only Conservative Member who has been a director of a co-operative. I therefore feel strongly about these things and I am broadly in sympathy with what the hon. Gentleman said.
There are, however, one or two problems and one or two snags which are not too easy to overcome. The effect of the Clause would be to raise the limit for individual shareholdings in agricultural co-operative societies from £1,000 to £2,000, which is not an undesirable objective. In fact it is a good objective. Unfortunately, it would create discrimination between these societies and other industrial and provident societies, would complicate the administration of the rules governing all societies, and would almost certainly lead to misunderstanding and consequent injustices.
I have declared an interest. I want to see producers' agricultural co-operatives flourish, and, therefore, I am broadly in sympathy with any proposals which might help them. I am grateful to the hon. Gentleman for putting forward the Clause, but there is this real problem of co-operatives other than agricultural ones. There is the problem of defining what is an agricultural co-operative, which is not too easy, I understand, and past experience shows that it is not as simple as it might seem.
There is also the problem of wanting to preserve the distinction between a co-operative and a private company of a non-co-operative kind. There is also the important problem of the principle of co-operatives, which is "one man one 1009 vote", yet major shareholders will tend in practice to carry more weight. That is another point that one has to consider.
There is nothing to stop further amounts of loan capital being put in by a member. This can be done to help overcome a shortage of capital for expansion. Because of my connection with fairly large co-operatives, I understand the problems of finding capital. The need for expensive packhouses or storage makes it difficult to raise money, but loan capital is one way of doing it.

§ Mr. Torney
The hon. Gentleman gives as a reason for not accepting the Clause the difficulty of changing the law, and he cited other co-operatives. He referred to the difficulty of distinguishing between agricultural and other co-operatives. What is wrong with extending this provision to other co-operatives?

§ Mr. Mills
If the hon. Gentleman will allow me to complete what I have to say, I think he will find that I go a long way towards meeting him. If we do this in this Bill, it should be extended to other co-operatives. I ask the hon. Gentleman to allow me to complete my speech. If he does, he will find that I cover the point.
For the reasons which I have outlined briefly, the Government cannot accept the Clause, but we have been looking at the shareholding limits and I give the undertaking that legislation to increase them for all societies will be introduced as soon as time permits. The Government are entirely sympathetic to the aims of the Clause but, in view of the objections about other societies, and in the light of the undertaking that I have given, I hope and trust that the hon. Gentleman will feel able to withdraw it.

§ Mr. Deakins
The House is grateful to the Minister for the encouraging statement in the last paragraph of his speech. In view of that, I beg to ask leave to withdraw the Clause.