INDUSTRIAL COMMON OWNERSHIP BILL

HC Deb 12 March 1976 vol 907 cc808-82

Order for Second Reading read.

11.4 a.m.

Mr. David Watkins (Consett)

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

I want first to describe in broad terms what constitutes a common ownership enterprise. It is a self-governing association of people who are productively engaged and where the association exists to enhance the quality of life of its working members and to serve the wider community.

After taxes have been paid and provision made for re-investment, the remaining profits of such a concern are used to provide a bonus for the working members or for social purposes as may be defined by the members. These could include charitable purposes—local, national or international. If the members concerned so decide, they may also make provision from their surplus to help the financing of other common ownership enterprises.

In recent years, there has been a remarkable growth of such enterprises in this country and elsewhere. There has been a growing movement both to establish common ownership enterprises and to convert conventional small companies— where there is a mutual desire between owners and workers—into common ownership.

When any bandwagon gets rolling, it attracts undesirable passengers, and for that reason, among others, it is necessary that this House should produce a proper legal definition of a common ownership enterprise, and this is one of the fundamental purposes of the Bill.

Against the background of this growth in common ownership and demands for its increase, it is not surprising that this House has already devoted some attention to the matter. In July last year, my hon. Friend the Member for Chorley (Mr. Rodgers), who is one of the sponsors of my Bill, introduced a Ten-Minute Bill to make provision for changing companies into self-governing democratic enterprises. In March last year, the Standing Committee on the Industry Bill debated the issue of democratic control at some length on an amendment moved by my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray). It is against the background of the growth of common ownership and the parliamentary debate it has inspired that I introduced my Bill.

The Bill has three main purposes. It defines a common ownership enterprise, proposes certain changes to facilitate conversions and makes certain financial proposals.

Clause 1 of a Bill is often its heart and soul, and this measure is no exception. Clause 1 gives the legal definition of a bona fide industrial common ownership enterprise. It is defined as an enterprise owned and controlled solely by the people working in it on the basis of one person, one vote, with membership open and equal between all those involved, in whatever capacity, in the concern.

The definition ensures that ownership and control shall be by a substantial number of those involved and avoids the possibility of control by any small clique. There could also be no control by outside shareholders.

Clause 1(4) ensures that the enterprise cannot be disposed of for the personal advantage of the members. One of the objects behind that is to ensure the continuance of a common ownership enterprise, and, where a productive manufacturing concern might be wound up, that the capital assets cannot be sold for that purpose or for asset-stripping purposes for the enrichment of certain individuals but are retained for the general well-being of the local and national economy.

The idea behind the subsection is well precedented. The clause has been taken directly from the memorandum of association of Trylon Community Limited, which is a well-established industrial common ownership enterprise manufacturing glass-fibre products. It was started in 1968 at Wollaston in Northamptonshire. Other similar enterprises, including Scott Bader Commonwealth and Sunderlandia Limited, also have similar clauses in their articles of association.

I am spending some time on describing the clause because it is heart and soul of the Bill, and for the first time ever it provides a legal definition—as watertight as possible—of what constitutes a common ownership enterprise. Clause 1 gives an overall protection by providing that the Chief Registrar of Friendly Societies must be satisfied as to the bona fide nature of each enterprise. My hon. Friends who are sponsors of the Bill and I have devoted considerable attention to trying to make the definition as watertight as possible.

Clauses 2 and 3 deal with conversions. Clause 2 provides a simple and inexpensive procedure for changing from a shareholder company to a common ownership enterprise. The decision having been, duly, properly and constitutionally taken that conversion is desirable, the voting shareholders become non-voting loan stock holders. In so doing they forgo the chance of a capital gain, but they receive a marketable asset in the form of loan stock on which interest is paid.

The object of the clause is to simplify the existing procedure whereby it is necessary to set up a two-tier company. For very good reasons a company is not allowed to buy its own shares. We have seen the scandal of insider trading in recent years, and it is obvious that stringent safeguards must be laid down if a company is to be allowed to buy its own shares. The present procedure does not preclude common ownerships being set up or converted from conventional companies, but it is a clumsy and expensive procedure. Clause 2 makes it considerably simpler and less expensive.

Clause 3 provides that if a shareholder decides to forgo his right to receive loan stock his holding shall be treated as if it were a gift to a registered charity and receive appropriate tax relief.

Clauses 4, 5 and 6 embody the financial provisions of the Bill. Clause 4 provides that if the Secretary of State is satisfied that body exists genuinely to assist the development of common ownership enterprise he may, with Treasury consent, provide that body with grants and loans, and the clause lays down strict conditions as to disbursements. It makes them subject to parliamentary control, as is set out in Clause 4(3), through the procedure of a Statutory Instrument subject to annulment in the House. We have provided strict control over financial disbursements.

Clause 5 sets strict limits on the amount of finance authorised by the Bill. Where grants are made, they may not exceed £30,000 in one year, and the total of all grants which may be made under the Bill may not exceed £60,000. Loans are restricted to £250,000 in one year and to an absolute total of £1 million. Therefore, the total financial provision for both grants and loans is £1,060,000 spread over four years, which is an extremely modest financial provision.

It is also entirely in accord with the positive proposals of the somewhat hotly disputed White Paper on Public Expenditure which has exercised the minds of hon. Members during this week. It is designed to further industrial expansion and job creation in manufacturing industry. As the financial proposals are so modest and are in accordance with the Government's policy, I trust that the Bill will receive the Government's full support.

In view of the disputed nature of the White Paper, my right hon. and hon. Friends in the Government are likely to be under pressure to modify certain aspects of it. I hope that the Government will be more positive on the introduction of a co-operative development agency, which would be an important contribution to common ownership. The proposal to establish such an agency was contained in the Labour Party's manifesto for the last election, but there has been deafening silence about it since then. The Bill seeks not to introduce a co-operative development agency but to show the way towards one, and I hope that that point will not be lost upon the Government.

Clause 6—the last of the financial provisions—empowers the Secretary of State to appoint advisers, and the remaining Clauses, 7 and 8, are self-explanatory and well precedented.

I spoke earlier in general terms about the growth of common ownership. I wish now to say something more specific about it. It is the background against which the Bill is produced and presented to the House. I wish to refer to a remarkable enterprise which is situated in my constituency. It was born in circumstances of conflict which I witnessed. I have also witnessed the growth of what has come out of that and I have been greatly in- fluenced by what I have seen. My experience in this matter has played no small part in shaping my thinking and leading me to introduce a Bill along these lines, having had good fortune in the Ballot for Private Members' Bills.

In July 1972 a firm called Leadgate Engineering Company, situated in Lead-gate, County Durham, in my constituency, closed suddenly. It was a wholly owned subsidiary of another company based in Leicester. There was no consultation with the work force, or even with the management of Leadgate Engineering Company, and 290 jobs vanished on one month's notice. Much of the plant had been paid for, and the concern had been set up with substantial subventions of public money in the form of regional development grants.

There was a great sense of anger in the area amongst those whose means of livelihood had suddenly vanished, the people in general and, especially, the local business community. In their determination that there should be no asset stripping, and that the plant and machinery, largely paid for out of public funds, should not be taken away for use elsewhere for someone else's profits, the workers organised a picket line and a sit-in in the factory. I visited and supported them on that picket line on a number of occasions to show my support for the public-spirited action they were taking.

I will not weary the House with the details of the protracted struggle which took place, but, in the event, 35 of the workers set up a company which they named the Nightbridge Engineering Company on the basis of one person one vote. They faced many problems—of getting orders and then of buying plant and finding the money to pay for it in order to fulfil the orders. In one rough period, 12 of the original 35 became redundant, and with democratic agreement all round they left. But that firm has expanded considerably. It has long-term contracts with famous engineering firms. It is expanding and expects further expansion.

This proves that when working people are involved directly and democratically in decision making, even when most difficult decisions have to be made, they can surmount those difficulties without the traditional industrial conflict that we have known for centuries in this country. It also shows that where there is no such involvement, conflict is inevitable.

There is a popular misconception that workers' co-operatives grow only out of conflict. I have just described one which did. But I want to disprove that popular misconception by referring to three well-established common ownership enterprises which did not come into existence in circumstances of conflict. There is in this House an all-party group on common ownership. I see members of it present on both sides of the House. It meets under the chairmanship of my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards), who is also here and is a co-sponsor of the Bill.

This all-party group maintains close contact with the Industrial Common Ownership Movement, a federation of small firms which operate common ownership. Quite recently, ICOM has had its model rules for common ownership enterprises approved by the Chief Registrar of Friendly Societies, which of itself indicates the growth of the idea in practice and the need for legislation such as this.

I want to refer to three of the affiliated firms. The first is the Scott Bader Commonwealth, set up at Wollaston, near Wellingborough in Northamptonshire, and engaged in the manufacture of chemicals and plastics. It was founded in 1920 as a conventional company and was converted to a common ownership commonwealth in 1951. In 1975, it won the Queen's Award for Industry for the technological development of polymer emulsion. It has had a quarter of a century of existence as a common ownership company and has a remarkable record of democratic control, progress and expansion. In 1975, its turnover was £13½ million and its profit £959,000.

At the decision of the members at the annual meeting, which is the constitution and normal practice of the company, £851,000 of the profit was ploughed back; £54,000 was distributed as a bonus to the approximately 430 members of the commonwealth; £27,000 was given to charity; and the remaining £27,000 was invested in the ICOM development fund for the encouragement of common ownership.

This is a remarkable record, the more so in that two years ago an independent group of economists made a study of the achievements of Scott Bader and compared it with its competitors, including the largest chemical firms in the country, multinational companies among them. On every count—the level of wages and salaries, productivity, the application of health and safety measures and return on capital—the Scott Bader Commonwealth was superior to any of its competing capitalist enterprises.

Secondly, a firm called Sunderlandia Limited, a construction company situated in Sunderland, was started as a common ownership enterprise in 1973. This, too, is operating in an extremely difficult market and, starting from scratch, faced very great difficulties during its first two years. It, too, had to face at one stage the problems of redundancy, but they, again, were resolved democratically and accepted by all those concerned.

In January, I took the opportunity to visit Sunderlandia and I found it an inspiring experience. I visited not only its modest offices in Sunderland but the members working on a number of construction sites. It was inspiring to see working people who had faced and resolved, democratically and without dispute, problems of contraction and redundancy and were every day engaged in tackling successfully difficult problems of management. Sunderlandia has also withstood serious crises. It has survived them and now looks confidently to expansion in the future.

In 1965, a group of disabled and unemployed miners in South Wales decided that they were not going to have their ability and their productive capacity wasted because they were disabled and had been made unemployed. They started an enterprise called the Rowen Community, taking the name of Robert Owen, the famous pioneer of Socialism in the last century.

The Rowen Community makes garden furniture and has more recently diversified into other products. Again it had immense difficulties in early years, but it has become so successful that last year it was able to employ two of those who had been made redundant at Sunderlandia for periods of three months, which was a remarkable demonstration of cooperation between common ownership enterprises, the one situated in South Wales and the other in the North-East of England.

Before I stop mentioning individual concerns, I want to refer to the famous John Lewis Partnership. This is a large concern engaged mainly in retailing, and very successfully. It is not an industrial common ownership as strictly defined in the Bill, but, with 25,000 members doing over £200 million of business per annum, it is the largest and best-known firm, with a constitution which recognises—and I quote from one of its publications— … that democracy lies in the accountability of the management to the managed, not just as a theory, but as a hard fact of everyday commercial life.

I believe that the lessons of the John Lewis Partnership, of the experiments it has made and of its constitution, which is constantly under review, are important pointers to the application of those principles to large concerns.

Above all, what we are talking about in the Bill is democracy. We are not talking about democracy as an abstraction. We are not just talking about political democracy. We are not just talking about industrial or economic democracy. It is the sum total of all these which make up the true definition of democracy. The democratic control of industry is as fundamental to individual liberty as is political democracy, because without industrial and economic democracy there can be no real democracy. What democracy was there for my 290 constituents at Leadgate whose livelihood was dictatorily taken from them by a decision taken 200 miles away? We are at the fag-end of the age of British capitalism, which has produced these conditions—a system which has been in a state of steady decline since the beginning of the century.

I notice that the hon. Member for Woolwich, West (Mr. P. Bottomley) is smiling. One of the first people to recognise these facts a long time ago was an eminent predecessor of the hon. Member in the Conservative Party, Joseph Chamberlain. He split the Tory Party from top to bottom at the beginning of the century on the great protection versus free trade issue, because he recognised that the symptoms of the collapse of the capitalist system were already apparent in this country. It is a system wherein capital employs labour and people serve money, instead of money serving people. Above all, it is a system which has manifestly failed to create wealth to meet the country's needs.

Mr. Peter Bottomley (Woolwich, West)

One of the predecessors to whom I pay more attention in my own constituency is Kingsley Wood, the first Chancellor of the Exchequer to commit this country to full employment. I was smiling just now because I was considering not the point the hon. Gentleman was mentioning just then but an earlier one. I should like to ask the hon. Gentleman what opportunities there are for independent trade unions to represent the interests of those who may democratically decide to leave in a situation where the company is controlled not by independent managers but by democratic control within the organisation.

Mr. Watkins

There is every opportunity. Sunderlandia has a closed shop, and it was the construction trade unions which played a large part in bringing it into being. The normal situation is that there is a very high level of trade union membership in these concerns, as at Scott Bader and in others. One does not need to do more than recall the great tradition of trade unionism among the South Wales miners working in the Rowen Community in order to make the point.

The answer to the hon. Gentleman's question is that in the existing ones there is every opportunity, and it is certainly envisaged in the continuance of these enterprises. It is not specifically written into the Bill because it does not need to be, but it is envisaged by my co-sponsors of the Bill and myself.

I was saying that there is no evidence that this failing system, through which we have lived for three-quarters of a century, can create the wealth to meet the country's needs. There is no evidence that it can do so in the future. On the other hand, nationalisation has not proved to be any more successful than capitalism.

Ms. Maureen Colquhoun (Northampton, North)

It is State capitalism.

Mr. Watkins

Indeed, as my hon. Friend says, it is State capitalism. That is a view held by many people, and I shall go on briefly to enlarge upon it.

In the great coal disputes of 1973 and 1974, for example, the National Coal Board was manipulated exactly like a capitalist monopoly. I represent a constituency with many people employed in nationalised industries. If we talk today to railway workers in the nationalised industry currently in the news, to steel workers in another nationalised industry which is regularly in the news, and to other workers employed in nationalised industries, we find that there is not among them any greater sense that they are working for the common good than if they were working for a multinational corporation. There is no identity of interest generally speaking, in these huge corporations with the common interest.

This is the background against which my co-sponsors and I introduce the Bill. I have outlined its provisions to the House in some detail. I have described some of the exciting developments in industrial common ownership which have taken place. I emphasise "some". because these are no more than representative of many other examples which could be quoted of a system in which capital does not employ labour, but labour employs capital for the common good.

I submit to the House that the Bill is urgently relevant to our national situation, and I commend it to the House.

11.35 a.m.

Mr. Esmond Bulmer (Kidderminster)

I congratulate the hon. Member for Consett (Mr. Watkins) on introducing this subject today, and on the clear way in which he has set out his own thinking. I do not pretend to agree with everything the hon. Member says, but I find myself in agreement with some of his points.

The Explanatory Memorandum states that the Bill's function is to enhance the quality of life … and to serve the wider community. I do not believe that anyone could take exception to those sentiments. This statement stands in stark contrast to the way in which current company law defines the company and the objectives of the company, although I do not believe that the distinction is as stark as the words might suggest.

I am sure there is a lot of common ground in the House that scars the excesses of the Industrial Revolution have written across our landscape and across our industrial relations cannot be cured simply by the passage of time, but have to be met by new thinking. The ideas advanced by the hon. Member for Consett take us on to different ground.

The sponsors of the Bill draw on both Christian and Marxist theory. Looking back over time, one has to say that much of what is expressed in the Bill would have commanded wide support from the Conservative Party in the nineteenth century. The Conservative Party spent most of the nineteenth century in passing legislation against Whig and Liberal factory owners.

The hon. Member referred to Joseph Chamberlain and the effect that his change of allegiance wrought on the Conservative Party. We have to look at all sorts of suggestions. I do not believe that there is any one way forward. I do not believe that capitalism has failed. I do not believe that nationalisation has been successful. I believe that there is room for a lot of meeting of minds between these two extremes.

But I think we can agree that it is absolutely vital that we look to the higher objectives of man. We are a society rich enough to look beyond the meeting of immediate material needs. We can meet those, and we have to organise our society so that the creation of wealth goes hand in hand with satisfying people's aspirations. I am quite certain that there is a wide measure of agreement in the House on the need to reform company law, and that the judgment in Parke v. Daily News is something we would all wish to temper.

I give a welcome to the sponsors of the Bill in their attempt to bring people together to do something socially useful and to facilitate it. Naturally, we on the Conservative side always have reservations concerning public expenditure and unfair competition, but I do not believe that these points are really material to our discussion this morning.

The hon. Member touched on several large themes, and one that particularly strikes a chord in my mind—coming from the background of a family business which is now in the third generation—is that, necessary as it is to have entrepreneurial drive in the first and earlier generations, of necessity, as companies prosper, the contribution made by the founding family is taken over by the people who work in the company, and the law insufficiently recognises this at the present time.

I personally prefer co-ownership to common ownership. I think that the sort of example set by Sears Roebuck is a better one than common ownership. Some hon. Members may know the exact proportion of the shares owned by the members of the company, but it is between 20 and 30 per cent. I do not think that in large companies people should be misled into thinking that in order to control the company a 51 per cent. shareholding is necessary. Very often it is a much smaller percentage.

I should welcome any sensible measures that facilitated the passing of shares from the founding families, when the company comes of age, to those who work in the company. But this requires root and branch reform of the tax system—something much wider than our debate.

I believe that common ownership presents problems. The early Owenite experience was one where financial and managerial weakness and indiscipline were real problems.

When it comes to converting a successful company of the size of John Lewis or Scott Bader into a different animal, I believe that co-ownership serves better than common ownership. If loan stock is issued in a period of inflation, substantial hardship is bound to be inflicted on those who lose their shares. I do not think that loan stock of itself is the right solution. There may be others. But if someone is told, in a period of inflation, that he must have loan stock instead of equity, he is likely to have something taken from him.

Another theme on which the hon. Member for Consett touched and which is fundamental to finding the right way forward in our industrial relations is the search for common objectives. There are many ways in which this can be done, from the extremes of managerial inspiration to the toughest of collective bargaining. But there must be a greater movement towards the joint formulation of objectives of enterprises and a greater degree of participative procedures in companies to ratify those common objectives.

I believe that a great deal of the present misunderstanding stems from a total ignorance of profit. The Louis Heren organisation published some research in The Times 12 months ago which indicated that only one in 10 of the people working in a company thought that profit benefited them. They could not see the correlation between a profitable company and one which had secure employment, one which could invest in the future, one which paid proper pensions and one which paid taxes which in turn paid for the schools, hospitals and roads which everyone wanted.

The other day, I was talking to someone who had spent six hours discussing with a group of shop stewards whether their company would be more efficient if the shareholders were bought out. They discussed different ways in which the shareholders' funds might be borrowed. They had a very constructive discussion. But at the end of the morning the person to whom I was talking put up the value of the shareholders' funds on the blackboard, put up what everyone agreed was the cheapest cost of interest, and then said "Very well, £500,000 is a great deal of money and this is the loan stock equivalent which the company will have to pay. Shall we look to see what we pay to the shareholders?" The answer was £100,000.

This is the case throughout most of British industry at present. That is what the shareholders receive. After tax, it is a tiny proportion of the likely sum involved in the proposals behind this Bill for a conversion to loan stock.

It is my view that co-ownership offers more of a way forward than common ownership, that individual drive initially to set up profitable enterprises is one which must be retained and harnessed, and that this morning's debate will, I hope, discuss a variety of ways to achieve a greater unity of objectives.

11.44 a.m.

Mr. Robert Edwards (Wolverhampton, South-East)

I join the hon. Member for Kidderminster (Mr. Bulmer) in congratulating my hon. Friend the Member for Consett (Mr. Watkins) on taking the initiative in promoting a Bill which, although modest, is of fundamental importance.

At the outset of my remarks, I have three interests to declare. I am a Labour Co-operative Member of Parliament and, of course, that movement is involved in mutual aid and self-help in developing co-operative techniques. Secondly, I am President of the Industrial Common Ownership Movement. I am also chairman of the all-party group in this House. They are not vested interests. I am not paid. But they are interests. I am also a trustee-director of Scott Bader Commonwealth. So I have been involved in the campaign for developing voluntary common ownership for half a century.

My father-in-law who was a Member of this House—in fact the first Labour Member for Kirkdale—converted his factory to common ownership many years ago. However, he made the mistake of thinking that a good Labour agent would make a good manager. I am afraid that it went broke and had to be rescued and converted back to conventional private enterprise.

Almost 170 years ago, in a small village in Lancashire an ancestor of mine founded the first co-operative bakery in Britain. Even before I was born, I was involved in the struggle for social ownership.

In Britain today there are 600,000 firms. Unfortunately, however, only 100 of them are responsible for half of our total production and for almost 50 per cent. of our total exports. So we have a real problem in our society today. We live in a kind of two-tier system which is characteristic of the economies of the world.

We have declining industries which are socially necessary. They are labour intensive and they have to be maintained by massive Government subsidies. The people have to bear this burden. We also have the enormous growth and power of the huge multinational or international companies which are technically based and which are building up massive asset formations.

In between are the small companies, which are the very lifeblood of an economy based on democracy. Those small companies, many with know-how and great skill cultured and nurtured by families with immense knowledge and humanity, are in real trouble. Many of them will disappear as if they never existed, with great loss to our society, simply because they lack liquid capital. The capital that they need represents only a few hundred thousand pounds in many cases.

It is nonsense and suicidal for the country to allow these companies to be taken over by multinationals only to have their assets and know-how stripped and to be closed down. It is great folly to allow it to happen if we can create machinery to help them to develop their know-how, to guarantee employment and to make further contributions to our society. This modest Bill creates the machinery to make that possible. It is modest, but it is vital.

I said that I was President of the Industrial Common Ownership Movement. Twelve industrial common ownership firms are members of the movement, and there are also 55 associate members. The majority of those 55 associate members will transform themselves into industrial common ownership if this Bill reaches the statute book. Surely that is important to everyone.

I listened with close attention to the hon. Member for Kidderminster. The firm which bears his name is very progressive. I appreciate very much the pioneering work that it has done in the training of lower management. That is very important. We in the trade union movement engage in massive training programmes for our shop stewards. It is time that management learned a few lessons from the trade union movement.

But I disagree fundamentally with the hon. Member for Kidderminster. How can he think that partnership is superior to common ownership? After 25 years the Scott Bader project has proved that in favourable circumstances, not in industries that are declining but in industries that have a growth potential, it can compete with three of the biggest multinationals in the world. It can compete with them on equal terms and beat them at every count.

The hon. Member for Kidderminster was quite wrong about shares. Under the present capital formation, equity shares are only 6 per cent. of the total. Business is developing now out of undistributed profit. Last year, for example, equity shares amounted to £124 million and undistributed profits pushed back into business amounted to well over £3,000 million. Loans from the bank also amounted to almost £3,000 million. These days equity shares are becoming meaningless. That is why it is so important that we develop the idea of industrial democracy.

I was in at the very beginning of the development of the Scott Bader project. The workers in that project were in my trade union. At the time I was the General Secretary of the Chemical Workers' Union. The union never insisted on a closed-shop, because the owner of the firm—a saint of a man—Ernest Bader, was a Christian Socialist and so we did not press the closed-shop idea. One of my co-trustees was Dr. Schumacher, who wrote a marvellous book entitled, "Small is Beautiful", which phrase is now written large in the dictionaries of the world. I believe that small is beautiful. We must have variety in the structure of our industries.

One of the great mistakes of the British Labour movement was that it always discussed the politics of social ownership and the economics but never talked about structure. The importance of structure is now being realised on all sides and in this modest Bill we are talking about it because our nationalised industries are highly centralised. There is no proper accountability. Unless we do something about it they will become part of the cartel system of the multinationals.

My colleagues and I were extremely distressed that the British Steel Corporation, for example, could invest £3 million of our money in a chrome smelting plant in South Africa. I was distressed that the National Coal Board could force up the prices of fertilisers on a price-fixing cartel which is normal for the multinational companies. We did not envisage this type of development and it is time the halt was called.

My hon. Friend the Member for Consett has made out a marvellous and constructive case for the Bill. When speaking to the Bill my hon. Friends and I are inclined to say "Ditto", because my hon. Friend the Member for Consett has said all there is to say. However, it is my duty to comment on it. One of the founders of the common ownership movement in Britain, in my opinion, was Ernest Bader. The year before last at his own expense he placed an adverisement in The Times. In that advertisement he said: In 1951 I converted my family business to common ownership (£600,000 a year turnover then, over £5 million now. £150,000 has been distributed in staff bonuses and £150,000 has been donated to charity). I am 82. I still enjoy a very active and interesting life. I have a comfortable pension, and the security of my family is stronger than it could possibly be under traditional ownership because it stands or falls alongside that of 400 colleagues all dedicated to maintaining it. Some of these colleagues are members of the Transport and General Workers' Union. I have in my possession a summary of the replies to that advertisement. In all, there were 103 all showing an interest in industrial common ownership and asking how firms could be converted to industrial common ownership. Indeed, 58 replies came from business concerns, seven from business consultants, 10 from managers and colleagues in executive positions, three from lawyers and there was one donation of £500 towards the cost of the advertisement. The list is long and includes building contractors saying that it is a marvellous idea and asking for further information, a limited company in Northants, an owner of a business, a managing director, managing agents and so on.

I am trying to prove that the will for transforming to considerable voluntary common ownership exists today. It is widespread. This is the one growth industry in Britain. In the Bill we have an opportunity to establish the machinery that will express that will. I hope that the Bill will go on the statute book.

11.57 a.m.

Mr. Peter Bottomley (Woolwich, West)

It is a great pleasure to take part in this debate because it is clear from the speeches we have heard already that there is room within our industrial structures for industrial common ownership. However, enthusiasm to provide that opportunity for those who want it should not blind us to one or two facts which concern all enterprises. We must get away from the idea that we must have State monopolies, large multinational corporations, or single traders.

It is clear that the increase in the standard of living in this country, as in any other has come about only since the change from the feudal system. If one talks about a static economy, one talks only of a feudal system. To get away from that there must be provision for change.

The hon. Member of Wolverhampton. South-East (Mr. Edwards) referred to the National Coal Board and its proposals in connection with fertilisers, and the British Steel Corporation's investments in Africa. We cannot get the type of self-correcting mechanism that most of us would like to have unless we provide opportunities for competition, for choice and the spread of information.

We all share a hatred of secrecy or unnecessary husbanding of information. One of the joys about Dr. Schumacher is that when he was working for the National Coal Board, which was involved in fertilisers and spending millions of pounds on back boilers that blew out the wrong way and all the other problems, such as Bronowski's bricks, he was still able to go on with his work on small industries and on intermediate technology which, incidentally, does more for the under-developed countries than sending them large steel mills. The drive of Dr. Schumacher and some of the people who have set up the existing co-ownership schemes shows how important it is to have a capitalist system.

The people with drive—and I am referring not just to the Schumachers of this world, but to many humble people as well—have little choice in a State-controlled economy. I do not pretend that we have a totally State-controlled economy at present. They have to persuade a committee at the lowest level of the value of an idea. That committee would pass it up to the committee with overall responsibility for doling out the right amount of money.

The person with inventiveness or drive would probably not have the skills necessary to put across his ideas within the 1960 committee of the London Co-op and to the Department of Industry. Such people are probably good only at making toothbrushes or at producing chemicals in competition with ICI possibly because they have been trained in one of the other larger companies and they know how to exploit a market which is closed to the larger companies because of their size.

These people of inventiveness and of ideas—not always good ideas—I admit —exist in large numbers. Their efforts, especially since the Industrial Revolution, have helped the world to develop higher standards of health. We live longer now, we enjoy a higher standard of living and we make our products differently. We now produce two blades of grass where one grew before. This is due to the efforts of individuals, not just of groups getting together and saying "We are a collective and we will transform the world". Even collective organisations depend on the drive of individuals.

The individual is not likely, especially nowadays, to have a large number of pound notes in his back pocket. He has to try to persuade others, whether in a co-operative, where everyone puts in a pound to set up a trading enterprise, or at a bank, where he argues that if he mortgages his house, sells his car, or sends his wife out to work, he should get the money to finance the idea. Alternatively, he can go to the Government or a development agency and argue the case for finance. Whether this is done through co-ownership, common ownership, individual ownership, or a limited company, it is capitalism married to enterprise.

I believe that the promoters of the Bill are arguing that within this spectrum of enterprise of borrowing and using money one is not eliminating the need for working capital or risk capital. The hon. Member for Consett (Mr. Watkins) gave one or two examples of firms where things had not gone right to begin with. Where firms set off from the disasters of previous managements or market conditions, the enterprise has a lower chance of success and the dedication required and the risks taken are that much greater.

There is the serious point about unions and common ownership where redundancies take place. There may be 100 per cent. agreement that a proportion of the work force must go, and it may be decided that the redundancies will fall on the basis of last in, first out, or on the basis of retraining those with the necessary skills for the enterprise. This, however, provides the opportunity where everyone may be in a union for the district officer of that union to argue the toss on behalf of the minority who are to go, but it can create greater difficulties in common ownership industry than in industry with the traditional, independent type of management.

Mr. David Watkins

The hon. Member is developing a difficult and important theme. My whole case in pointing out how the scheme works was that it involved a collective decision rather than the sort of situation which arose at the Leadgate Engineering Company where the workers were confronted with the sudden news that they were to be made redundant. It is that that we are seeking to avoid.

Mr. Bottomley

I take that point with pleasure, because I have been involved in working both for the British Steel Corporation and for a very small business, which investigated the opportunities of going into co-ownership or common ownership and where the problems of redundancy occurred on different occasions. No one would argue that we have these things right in our community at the moment when it takes three months to get permission to erect a 5 ft. fence around one's home but when workers can be declared redundant overnight and given eight weeks' pay in lieu of notice.

My point is that the opportunities provided for representing the interests of the minority who are to be made redundant are reduced under a system of majority rule. Trade unions have fewer opportunities in those circumstances to argue the case. I am conscious of the difficulties of majority decisions.

In common with many other hon. Members—not quite as many as I should like to see on my side of the House, but very many on the Labour side—I am a member of a trade union. It is recognised that probably one-third of the members of my union are Conservatives and yet there is no Conservative representative at the union's conferences and deliberations or at the Trades Union Congress. There is an opportunity for representation of minority views within all democratic organisations, and that depends not only on the efforts of the individuals, but on the structure of the organisation.

It is important to spell out that enterprise, coupled with the opportunity of borrowing money and the risk of losing it, is behind common ownership in the same way that it is behind co-ownership, co-operation and the more conventional forms of free enterprise. It is no good trying to say that just because the opportunities of capitalism are associated with risk, capitalism is to blame for all our problems.

The problems were far greater when we had a feudal and agricultural society. The people would not have flocked to the towns when the iron foundries and the steel mills were established and when we developed into an industrial nation if living on the farms and working as an agricultural labourer had been so much better than living in the towns with all their faults.

Co-ownership does not eliminate the risk of redundancies, the need for unions, or the need for capital. We are talking therefore about capitalist enterprises in terms of ideas associating with sources of money. The advantage of a common ownership scheme is that it ties together the dedication of people in such a way that unnecessary conflict is avoided.

I support the Bill, but I would not recommend anyone thinking of setting up an organisation of this kind simply to have in mind the idea of full equal shares. Co-ownership is just as appropriate in many circumstances. The most successful co-ownership scheme at the moment is probably Scott Bader. That was converted into common ownership by someone who had built up a business which had the benefits of capital expansion in a successful business which he was able to share equally among all the workers. If he had not had that opportunity, there would not be common ownership there now.

Although charity can follow from the common ownership scheme outlined by the hon. Member for Consett, many people running successful businesses are making great contributions to the general good and common wealth through taxation on their profits and capital gains, and in other ways. It could be argued that the benefits to charity from common ownership are no greater and not necessarily any less than in terms of the capital gains tax paid by people who have built up share stakes when those shares are transferred. It is pleasant to have the opportunity of explaining the virtues of capitalism to the promoters of a common ownership scheme.

Mr. Speaker

I intend to call the hon. Member for Northampton, North (Ms. Colquhoun), who has made a request to me not to be called either Mrs. or Miss, but Ms. I had better give my ruling that that is pronounced Miz.

12.12 p.m.

Ms. Maureen Colquhoun (Northampton, North)

I am delighted that you are in the Chair, Mr. Speaker, to give your individual Welsh pronunciation of Ms. I find it quite delicious and I thank you very much.

The hon. Member for Woolwich, West (Mr. Bottomley) has developed an interesting, if somewhat chauvinistic, theory about sending the wife out to work and mortgaging the car. It shows that in some men's eyes women are still regarded as their personal property. I suggest that it might be better to mortgage the wife and send the car out to work.

I intervene briefly in this debate because I did not know very much about common ownership until I became the prospective parliamentary Labour candidate for Northampton and found it in my constituency—it was not mine, but it is now. It just shows how capitalist I have become that I can now call it my constituency.

Mr. Peter Bottomley

Chauvinist.

Ms. Colquhoun

That is not being a chauvinist. At that time I knew nothing about industrial common ownership.

I am glad that my hon. Friends have introduced this Bill, because it is of fundamental importance. One of the things that I find disappointing as a Labour Member of Parliament is the sometimes our attitude adopted by many of my hon. Friends towards the small business. I am an avid supporter of small businesses and am greatly concerned about the way in which they are harassed by things like value added tax. Small business people in my constituency spend many hours of their time filling in forms for the bureaucracy instead of being allowed to develop in a creative way within the community. Small businesses contribute greatly to the life of the community.

I feel that I have a responsibility, as the Member for Northampton, North, to draw the attention of the House to a firm in my constituency called Michael Jones Community Limited. It is a most interesting firm. For example, it is a great pleasure to shop there. All the assistants are interested in their work and their customers. That stems largely from the common ownership attitude which pervades that firm.

I do not want to bore the House by telling it too much about one firm, but it is interesting to see how it has developed and contributed to the life of Northampton. The firm was set up in 1970 to hold all the shares of a group called Michael Jones Jeweller Limited. Fundamentally, it is composed of all persons who had worked for Michael Jones for at least 12 months and were over 18 years of age. The members held a monthly meeting at which any aspects of the workings of "Jewellers Ltd.", which is what it was eventually turned into, can be questioned and, by majority vote, altered.

There are no secrets: that is most important. Everything, including salaries, must be open to inspection by any member. The Government might well take note of that when they refuse to publish in the Official Report the salaries paid to official advisers to the Government. It seems to be fundamental in working life that people should know about each other and what they are getting. Such matters, particularly in the structures of nationalised industries and even of the Government, are kept secret.

Any profit which is not ploughed back into the company is divided in half. One part is for distribution to the staff, who decide at a community meeting what the division shall be. The other part is given to charitable work. For example, in 1974 the Michael Jones Community gave £2,000 to a hostel for handicapped people. That money was used to improve the furnishings. Through that connection, people in the firm began to visit the hostel and made friends with the residents.

Jeweller Ltd., although it springs from an earlier company, had sales last year of £523,000 and employs 61 people. This is an important part of the work force in Northampton. The firm is successful and creative. It is rapidly beginning to build up an international reputation in modern jewellery design. Indeed, it has. just opened a new unit in the Grosvenor Centre in Northampton and is hoping to expand still further.

I hope that this Bill will go on and achieve parliamentary support. It is interesting that on a Friday, when Private Members' Bills are brought forward, we should be debating and looking at at creative ideas. This is important and satisfying to us as Members of Parliament. I suppose that this Bill can be said to be concerned fundamentally with job satisfaction and the quality of life. That is another important aspect.

We know that common ownership has worked successfully wherever it has begun to be operated. We seek an extension of that principle. I am glad that my hon. Friends have introduced this Bill. I wish it every success. I hope that it will quickly go through the machinery of the House and become law.

12.19 p.m.

Mr. W. E. Garrett (Wallsend)

I, too, congratulate my hon. Friend the Member for Consett (Mr. Watkins) on his foresight in introducing the Bill. I should like to think that in some ways this debate is a continuation of the discussion which the hon. Member for Chingford (Mr. Tebbit) and I have in the Committee which is considering the Aircraft and Shipbuilding Industries Bill where for many weeks we have argued the principles of public representation on the Boards of the British Aerospace and British Shipbuilders Corporations.

My enthusiasm for the Bill is not as strong as that of some of my hon. Friends, although there is some lukewarm support for it from the Opposition. One of the main defects in the motivation of common ownership is the reluctance of the trade unions to show more enthusiasm for it. Although in Parliament we have some grand ideals and much inspiration, the inspiration is not coming from the bottom. It tends to come from the bottom in spasmodic, isolated cases in the United Kingdom. We can all give examples of them. My hon. Friend the Member for Northampton, North (Ms Colquhoun) mentioned an excellent example in her constituency, and so did my hon. Friend the Member for Consett.

Unfortunately, such examples seem to be born not out of enthusiasm but out of adversity and, in virtually every case, out of the failure of a company or lack of drive in a company or, indeed, out of a takeover by the workers. In such desperate circumstances, there are often failures of common ownership. The proposal in the Bill that the Government should give assistance in the form of special advisers to help the concept in the early, crucial stages of common ownership is of immense importance.

I do not wish the House to get the impression that I am completely against the principle of common ownership. Hon. Members will be aware that I was responsible for introducing a basic example of common ownership to the Palace of Westminster. The Federation Brewery—and we all consume its products from time to time—[Hon. Members: "No."] Some of us consume them and enjoy them more than do others. The wide variety of products available is the result of common ownership. The story is very interesting.

The brewery was formed in 1918, after the end of the First World War, when the private brewers would not supply with beer some of the working men's clubs in the North-East. Six of the clubs met in the village where I was born and they bought a brewery to brew their own beer. The brewery gathered strength in the 1920s, 1930s, 1940s and 1950s. It has a turnover of £22 million. The shareholders are the clubs. There are now over 700 shareholder clubs of all political shades. Some of them are apolitical, some of them are Army units. Under the original articles of association, one is not allowed to give away the dividends to a private company or private person.

Every year the clubs elect a Board of nine members on a democratic basis. The House of Commons, if it wishes, can vote in the election for a member to represent it on the Board. The members of the Board receive a modest honorarium. The brewery produces beers with a declared gravity which is known by the public analyst—something which the private brewers are reluctant to allow. It declares a dividend twice a year, in addition to the profits made over the bar, which is about 20 per cent, for draught beers. For every barrel of beer which is drunk in the House of Commons—and there are 36 gallons in a barrel—a dividend of £4.50 is paid which goes to the House of Commons catering fund. Whether a Member is a teetotaller or not, he gets the benefits of the dividend.

Because of the brewery's fame throughout the United Kingdom, and in some foreign countries, more than £10 million has been set aside to commence another brewery in the North-East. In fact, the project has already started.

Mr. Russell Kerr (Feltham and Heston)

I yield to no one in my admiration for the product which my hon. Friend has been describing, but he should in fairness perhaps warn the House that when he, with the able encouragement of a number of others, launched the North-East product, we had to rescue from hospital, where he had to be taken in a hurry, a distinguished Lobby correspondent who became over-enthusiastic about the product. Hon. Members should bear that in mind before they go over the top for the product which my hon. Friend has rightly praised.

Mr. Deputy Speaker (Sir Myer Galpern)

I do not know whether that was strictly an intervention, but there has been so much reference to the brewery and the strength and quality of its product that I, as a teetotaller, am beginning to feel intoxicated.

Mr. Garrett

I appreciate your view, Mr. Deputy Speaker, and I respect your judgment about being a teetotaller. I know that members of the Press enjoy the product and that wisdom has taught them how much of it to consume without losing their ability to use the pen.

Mr. Norman Tebbit (Chingford)

It seems to me that the hon. Gentleman is describing a customer-owned firm as opposed to an employee-owned firm. Will he enlarge on the distinction?

Mr. Garrett

The employees, of whom there are about 600——

Mr. David Watkins

There are between 600 and 700.

Mr. Garrett

—are members of a club and they elect the Executive Committee or the Board of Management. One of the employees, who is elected on the same basis as the others, has been a mem- ber of the Board for many years. I am pleased to say that he is a greatly respected member. I think that it is a 100 per cent. trade union set-up.

The unions should consider the question of common ownership and perhaps spend much more of their resources on educating people about it. The Government also should give the matter closer scrutiny. I cannot anticipate what the Minister will say, but I sincerely hope that he will indicate that the Government are interested in this subject, that thy are prepared to consider it, and that they will say that, in certain instances, it can play a useful part in the advancement of the industrial and commercial viability of the country.

12.29 p.m.

Mr. George Rodgers (Chorley)

I am grateful for the opportunity to speak in the debate, particularly as I am not usually present on Fridays. I never realised what tranquillity reigned on Fridays compared with the shouting and tumult that we have had in the last couple of days.

I have found all the speeches in the debate intensely interesting. The hon. Member for Woolwich, West (Mr. Bottomley) made a very constructive contribution. I must, however, disagree with his definition of the capitalist system as it operates today. It has tended to become rather cannibalistic. It gobbles up its own young. Although, at one time, it may have had its swashbuckling side, nowadays it is dominated by the asset strippers and multinational companies, which are hardly competitive even in the old sense of the word "capitalism". If in those days there was a spin-off benefit to the consumer, I doubt whether it exists today. That approach to capitalism has become obsolete.

I congratulate my hon. Friend the Member for Consett (Mr. Watkins) on his good fortune in the Ballot and on his enterprise in presenting such a useful piece of legislation, as well as on his thoroughness and ability in researching his subject. The opening sentence of the Explanatory Memorandum says: A common ownership enterprise is a self-governing association existing to enhance the quality of the life of its working members and to serve the wider community. That is a noble purpose. It is worth our while to linger on this Friday to support, and I hope advance, those sentiments.

The common ownership movement is not a collection of well-meaning idealists with woolly notions about creating a strike-free and co-operative area of industry. Far from it. The people who serve the movement are hard-headed, their accomplishments are many and substantial and they have been enormously successful despite the present obstacles in the way of common ownership. They have acquired a wide knowledge of industrial management, they understand market analysis and cash flow forecasts, and they have developed immense know-how and an expertise which deserves extended application.

There are several firms already in common ownership which are operated with great efficiency despite the fact that they have frequently been established in the most adverse conditions. The existing enterprises range across a wide spectrum of industry, varying in size from a handful of worker-cum-managers to the vast Scott Bader organisation. That organisation was converted in 1951 and now has over 400 worker co-owners. The firm has had 20-fold growth since entering into common ownership and it is highly profitable in a very competitive area. In 1973, a bonus of £73,000 was shared equally among the work force. A further £36,000 was devoted to charities and another £36,000 to the promotion of new common ownership enterprises.

At a modest level we see the Sunderlandia enterprise. Out of a total of 45 workers it has 17 skilled tradesmen and 23 apprentices. That is an encouraging proportion, particularly to those who are anxious about the job opportunities for young people.

Following a study by Miss Manuela Sykes, the Secretary of the Industrial Common Ownership Movement, Cumbria County Council has appointed the country's first official with the specific job of helping to develop worker co-ownership organisations. So there is a bright future for industrial common ownership and the time is ripe to provide support to those who are determined to develop this reforming and successful section of industry.

There is already massive evidence that workers' co-operatives generate an attitude to work which various companies have been trying to encourage in industry generally. Already, many other nations have moved ahead of us in creating the right climate to enable common ownership to flourish.

The purpose of the Bill is to provide a straightforward formula which defines common ownership but lists the modest assistance which would be necessary to enable the creation of new common ownership enterprises and to remove obstacles at present confronting firms which wish to change to common ownership.

It has always puzzled me that our parliamentary doctrines are couched in such quaint "olde worlde" English and I have dark suspicions about the reasons for that. But this Bill has the splendid merit of simplicity. It shows how the humble Back Bencher can occasionally influence events, and I wish it success.

The Manpower Services Commission should look closely at the Bill with a view to using its resources to assist common ownership development by establishing training programmes and work schemes which will incorporate the principles of common ownership and indicate priorities for such training projects.

Clauses 2 and 3 will effectively facilitate changes to common ownership and will encourage industrial democracy. Clauses 4 and 5 list the extent of financial support which may be provided by the Government. The financial commitment is small—perhaps too small—and the sums involved are revolving and self-generating loans. This is different from the generous and miscellaneous grants too often made to private industry, where money is directed far too generally, with no specific purpose. Far too much cash has been doled out to private industry with too little public accountability. Finally, we must surely welcome the prospect of genuine job creation, particularly in manufacturing industry, which is under extreme stress.

This is one of the prime purposes of industrial common ownership, the custodian of which, the Industrial Common Ownership Movement, is where aid should be directed. I have long resented the internal brain drain. We tolerate enormous waste of ability and talent. We see evidence of great ability in the trade union movement and in various clubs and organisations and it is astounding that it is simply not in harness. We casually waste talent which is of enormous value to the country.

The Bill goes some way towards remedying that situation. Again I congratulate my hon. Friend and all those associated with it. It displays not only vision but much common sense. I am confident that it will have a fair passage today.

12.37 p.m.

Mr. Ioan Evans (Aberdare)

I am pleased to follow my hon. Friend the Member for Chorley (Mr. Rodgers) and to join him in congratulating my hon. Friend the Member for Consett (Mr. Watkins) not only on his luck in the Ballot but on his choice of Bill. I am pleased to be one of the sponsors. Like my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards), I should declare an interest. I am a member of the Common Ownership Parliamentary Group and Chairman of the Cooperative movement. I am pleased on behalf of the co-operative group in the House to say that we wholeheartedly support the Bill.

From its beginning, the co-operative movement has been interested in developing other forms of common and cooperative ownership. The Industrial Common Ownership Movement is now making contact with various forms of common ownership in this country, and I pay tribute to its work.

I am very pleased to see Conservative Members supporting this idea. We Socialists believe in common ownership. In 1918, when the constitution of the Labour Party was redrawn, Sidney Webb wrote into it our belief in the common ownership of the means of production, distribution and exchange. There are varying forms of common ownership. Some of my hon. Friends have criticised nationalised industries, but the workers in those industries would not want them to return to private enterprise. Many of them are industries in which private enterprise has failed and which have been taken over by the nation. Despite changes of Government, no party has attempted to denationalise those industries, except for road haulage early on. Those industries have been kept under national ownership. We should try to bring the ideas of the common ownership movement into them and to transform nationalised industries into socialised industries.

I hope that the Government will address themselves to that, especially as we are now as a party committed to bringing about industrial democracy. I agree that railway workers, miners, electricity and gas workers, those working for the Post Office, British Airways and even the Bank of England, do not feel involved in the running of those industries. If we are to aim at a form of common ownership where the people own the industries, we are responsible for ensuring that those industries become more democratic.

There is a form of common ownership where a local authority decides to take over enterprises. The tragedy in the development of Socialism in this country is that we have accepted the conventional wisdom of the economists and taken over only those enterprises that are not profit-making. Our attitude is that local authorities can provide housing if that has proved to be unprofitable, that they can collect the refuse if that also is unprofitable and when education ceases to be profitable, they can provide facilities for that. We must ensure that even at local authority level there are forms of common ownership which can be extended in future.

The Bill is concerned with a form of co-operative ownership. In this country the common ownership movement has developed mainly on the consumer side. However, there is great scope in years to come to develop the type of workers' co-operative to which my hon. Friend the Member for Consett referred.

There are other forms of co-operatives —co-operative housing and co-operative credit societies. My hon. Friend the Member for Consett referred to the Rowen industry in South Wales, so called because it was wanted to associate it with Robert Owen. Robert Owen was a Welshman but also an internationalist —he even went to Scotland to create the co-operative in New Lanark and to America to create one in New Harmony. He was a dedicated Socialist who, instead of waiting until we had power here to pass an Act of Parliament, wanted people to come together and form themselves into a co-operative community. He wanted workers' co-operatives in order to prevent the type of economic exploitation that has been prevalent in our society. It is that type of activity that we should seek to develop. We have in mind, of course, the results of the by-elections in the Wirral and Carshalton—

Mr. Ted Graham (Edmonton)

And the Coventry by-election.

Mr. Evans

Yes, and the Coventry by-election. We have a majority and we are firmly established so we can carry on.

The world is faced with the choice whether to have a type of common ownership without democracy, or a type with democracy. The tides of history are with us. People in the East do not have the type of political liberty that we consider essential. My hon. Friends have referred to a "modest" Bill. They might well have used the same word when that little shop was opened in Toad Lane, Rochdale, which only sold flour and candles. Yet from that small shop has grown an international co-operative movement.

My one regret about the Bill is that it is a Private Member's Bill. I wish that it had been a Government Bill. If the powers in the Bill are found to be insufficient, I hope that the Government will introduce amending legislation. We are concerned with workers' co-operatives. This is a Bill to promote common ownership by allowing A company limited by guarantee … or a co-operative society registered under the Industrial and Provident Societies Acts 1967–75 to be so regarded, if the appropriate registrar is satisfied that it is a bona fide organisation.

As my hon. Friend the Member for Consett said, the Bill highlights the need for the establishment of a co-operative development agency. The Co-operative Group in this House and the Co-operative movement have called upon the Labour Party to create a co-operative development agency. It is mentioned in the manifesto on which we fought the last General Election.

If a co-operative development agency is created, it could deal with the growing demand in Britain today for workers' co-operatives. Unfortunately, no organisation in Britain has the resources either in men or in money to undertake that important work on a continuing basis.

Mr. Donald Stewart (Western Isles)

I am following the hon. Gentleman's thesis with great interest. He says that there is a great need today for workers' co-operatives. What is there to prevent such a development? Surely that is the mistake which the Labour movement made. Socialism could have started in various areas and industries without coming to this place. The mistake was that the Labour movement involved the politicians. All such things could go on and be financed by the limited funds at the disposal of the trade unions. If there is a need for workers' co-operatives, they need not be directed from this place.

Mr. Evans

The hon. Member for Western Isles (Mr. Stewart) has agreed with a point I made earlier. The cooperative movement and those who form common ownership organisations outside this House have not waited for legislation.

Mr. John Cartwright (Woolwich, East)

Will not my hon. Friend agree that in the early days of the co-operative movement there was discrimination and persecution? It was because of that that a political force had to be established so that the co-operative movement could be treated fairly.

Mr. Evans

I agree with my hon. Friend. Although small groups of cooperative members came together and formed retail organisations, they found that manufacturers denied them supplies. That is why they moved into manufacturing and why we have one of the largest manufacturing concerns in the country, namely, the Co-operative Wholesale Society Ltd.

There is a potential growth area here. At this time of unemployment we should consider not simply picking up the failures of private enterprise, but positively moving into new areas and creating forms of common ownership. The absence of a co-operative development agency with funds at its disposal means that the only existing source of assistance is the Industry Act 1972, which was passed by the previous Conservative Government. The Secretary of State for Industry receives guidance from the Industrial Development Advisory Board.

The consumers co-operative movement in Britain has wide-ranging expertise, not merely in retailing but in manufacturing, banking, insurance, property and accountancy. That experience could be called upon and used by the Government in developing co-operative activities.

I turn to a recent personal experience which illustrates the need for this measure to be speeded through this House as early as possible. After Christmas, I visited a factory called Sageways in my constituency. At present we are in a period of world recession and we all know the difficulties that face industries. I came away from that factory very pleased. I spoke to the management and the men and they said "There is nothing to worry about here; the order books are full, there are good industrial relations and no problems. We are even thinking of increasing our labour force."

When I visited the firm I did not realise that it was part of the Charles Spreckley Industries group. Here were 180 workers, working with management and producing products so that we did not need to import them. Then there was a little statement in the Financial Times of 4th February this year, as follows: Today appears certain to bring clarification of the future for Charles Spreckley Industries, the property development and contracting concern whose share quotation was suspended on Monday, pending the outcome of discussions with its bankers. Further urgent meetings continued throughout yesterday between the company and its bankers. These are the National Westminster Bank, which has some 4½ million in loans outstanding to Spreckley's specialist contracting side. I shall not continue because the article refers to Slater Walker and other names familiar to those of us on the Government side of the House.

However, there were management and men producing products and working effectively, but they were part of one of the new financial institutions that have developed. We can talk of Spreckleys, Slater Walkers and Bentleys, and the other so-called financial whiz-kids, but they have been concerned not with manufacturing products for use by people, but with making hugh fortunes for themselves, and it has been at the expense of skilled workers.

In this case I had a telephone call from the workers. A notice had been put up outside the factory. The management did not know anything about it and the 180 workers, who had invested their skills in the enterprise, were not consulted at all. They asked me what they could do about it. They wanted to organise a sit-in. I asked them what they would try to do. They said "We want to organise ourselves. The management are with us. We are producing a product. We have full order books. Why can we not run this industry in the form of common ownership?"

I got in touch with the Department of Employment. I should like to express my appreciation for what my right hon. Friend the Secretary of State for Employment did in helping with this problem. I also took a deputation to the Welsh Office. In the end we were successful in one sense, in bringing in a board to take over the firm and pick up the pieces. The firm is now continuing with half of the work force.

However, the important point to record is that although the co-operative movement is discussing what it can do, although we have the Bill before us today, and although the Industrial Common Ownership Movement is helping workers when something of this nature can develop into a form of common ownership, we should have a Government Department able to step in to give the workers a choice if they are investing their skills in an industry and proving that they can turn out a product for which there is a demand. The workers should not be at the behest of the financial manipulators in this country who, instead of investing in manufacturing industry, have invested in property development and other things.

Mr. Laurie Pavitt (Brent, South)

That point is absolutely confirmed by what has happened in my constituency, where Sir Arnold Weinstock has closed factory after factory. We lost 2.000 jobs in AEI. Such a Department as my hon. Friend has mentioned could have saved those jobs, because both management and workers were in accord.

Mr. Evans

I agree. There are numerous instances of this sort of thing that one can see if one goes back over the pages of the Financial Times. In talking of the benefits of private ownership, I think that even Opposition Members must deplore some of the activities that have occurred in the private sector.

I hope that the Government will support this modest measure. It is not a measure that will completely meet the demand. Today, under the conventional wisdom we believe that labour should work for capital. However, there is a growing belief, understanding and demand that capital should work for labour.

Therefore, I wholeheartedly support the Bill. I hope that it will gain a Second Reading well before 4 o'clock today and that in Committee we shall have Government support. I hope that this measure will become the law of the land and will take us one more step forward towards a more just society.

12.56 p.m.

Mr. John Cartwright (Woolwich, East)

I join all hon. Members who have paid tribute to my hon. Friend the Member for Consett (Mr. Watkins) for using his good fortune in the Ballot to produce a Bill that is relevant to many of the needs that we face in Britain, and a Bill which is refreshingly short and simple.

In view of the somewhat less than complimentary comments which my hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards) made about the management expertise of Labour Party agents, I ought to declare that after 12 years as a Labour Party agent I graduated to be a full-time director of a retail co-operative society. That society, I hasten to tell the House, survived without any noticeable impact on its balance sheet.

It is not surprising that the co-operative movement is as well represented in this debate as so clearly is the case, because, as my hon. Friend the Member for Aberdare (Mr. Evans) pointed out, the co-operative movement was founded about 140 years ago on very much the same sort of principle as we are debating today. That is the principle that ordinary people ought to have some control over their own destiny and that they should not be merely pawns on a gigantic chess board on which the moves are dictated either by the needs of private profit or by some remote State bureaucracy.

The success of the consumer co-operative movement in Britain makes it absolutely clear that when ordinary people come together to pool and to use their knowledge, experience, skill and expertise, they can run the most effective and, in some cases, the most gigantic cooperative enterprises without the need for the motivation of private profit. It is quite clear that the consumer co-operative movement really is big business. It is the nation's largest farmer, butcher, greengrocer and off-licence operator. One could continue with the list. The Cooperative Insurance Society is the third largest insurance undertaking in Britain, and the Co-operative Bank is the fastest-growing bank.

In talking about retail societies and the way in which large co-operative societies can come from humble beginnings—we have had Toad Lane mentioned—I should like to mention the society with which I have been proud to be associated, the Royal Arsenal Co-operative Society. In 1868 just over two dozen workers from the Royal Arsenal got together, with a share capital of about £4. Last year that society had a turnover of £100 million. That demonstrates what ordinary people can do when they put their minds to it.

However, against the background of the sort of enterprise that we are debating, I suggest that the consumer cooperative movement is in some senses the victim of its own success. It has become very big business indeed. Because of the need to compete with the multiples and other examples of private enterprise, the co-operative movement has been forced into forming larger and larger units covering wider and wider areas. As a result, the democratic participation which is the life blood of the movement must inevitably become more and more strained. As the economic pressures of big business and competition force the closure of smaller units, the rationalisation of services goes on, and there is a risk of the consumer cooperative movement withdrawing from many areas in which it was formerly so very strong. As a result, many people are denied the opportunity of taking advantage of the services of that movement. Economies of scale and other economic jargon affect the co-operative movement like any other enterprise.

We are talking about workers' cooperatives rather than consumer cooperatives. The consumer co-operatives are owned by and responsible to their members. Many employees are members, and therefore shareholders in their own right, but there is little rank and file employee involvement in management. The position of many employees is no different from that of workers in private firms. Certainly in the large co-operative units such as the Co-operative Wholesale Society and the Co-operative Insurance Society, the experience of trade unions does not indicate that attitudes are very much different from those in private trade.

The movement is to be commended for the time and effort it spends trying to involve ordinary members—shoppers and consumers—in the affairs of co-operative societies. But it has lagged in its efforts to involve its own employees and in finding new ways of developing forms of industrial democracy.

There is an honourable tradition of worker-producer co-operatives. The Cooperative Productive Federation has declined in recent years, more because it was involved in fields of endeavour which were declining than because of any failure of the principle of workers' co-operatives.

We have seen a considerable rebirth of interest in the idea of workers' co-operatives in recent years. Unfortunately, this has often been for the wrong reasons and has occurred when there have been rationalisations by big business forcing the closure of what would otherwise be quite efficient units. The very large overheads incurred by big business have forced the closure of a number of small units which, in themselves, were perfectly viable. We have seen, from examples given in the debate, that these units can operate as co-operatives without the massive overheads and without the restrictive practices which workers sometimes feel to be necessary when they are confronting a large multinational company or commercial corporation.

Some of the most publicised experiments have been in situations where they were in a difficult position from the start There was nothing wrong with the principle of workers running the enterprise, but they had a sad and heavy legacy from the previous ownership. This was the case with the Scottish Daily News and the motor cycle co-operative at Meriden. It is not the principle which is at fault but the circumstances of some experiments. I hope that the Bill will give a new shot in the arm to this sort of approach by workers and allow us to restate cooperative principles and reapply them in a modern relevant way to meet the needs of people in the second half of the twentieth century.

On occasions, some of my hon. Friends and I have been worried by the extent to which some other hon. Friends seem to believe that public ownership, common ownership or social ownership equal nationalisation and a great State bureaucracy. Nationalisation is not always the only or the best way of taking enterprises into public ownership.

I was very glad that the Labour Party recognised this in its "Labour's Programme for Britain" produced before the February 1974 election. That document said: Labour's commitment to public ownership does not mean a rigid adherence to the 1940s form of nationalisation. The best example of our wider view is the Co-operative movement, where 11 million people join together to operate a huge sector in the British economy, which has a vast potential for further development". The document continued: We believe that the time has come to encourage positively and to sponsor the development of strong grass roots organisations which will decide their own affairs without passing on the profit to some absentee owner". The vehicle for that sort of encouragement was to be the co-operative development agency, which would not only concern itself with the immedate, pressing problems of the existing consumer cooperative movement but would also help new co-operative ventures of all sorts. The commitment to establish that agency was repeated in the Labour Party manifesto for the last General Election, and it is significant that the commitment was contained not in the section of the manifesto dealing with industry or trade but in the part related to individual rights and the community. The Labour Party is at last realising the social rôle of cooperative ownership and the contribution the co-operative principle can make in encouraging people to work together instead of competing with each other.

It is not enough simply to wait for adversity to hit an enterprise in order to get some enthusiasm for the application of co-operative principles. We need a central agency to encourage this development all the year round.

We have already agreed that big is not necessarily beautiful, and there are other areas where the creation of large units has meant a diminution of service to the ordinary consumer with some large gaps left as a result. We have all had experience of areas where shops are not available—perhaps on new large council estates or in remote housing developments —because it is not economically possible for large organisations to provide the shops. Why should we not encourage council tenants to set up a co-operative to provide their own basic shopping needs? Where transport is difficult, why not encourage people to provide collectively their own transport system? Why not encourage council tenants to set up a co-operative system to manage and maintain their own estates? The cooperative principle is infinitly varied and can be applied in many circumstances to meet many needs.

I welcome the Bill and hope that it will be a shot in the arm for the application of co-operative principles which so many of us want to see developed. I hope that the central co-ordinating body mentioned in Clause 4 will be the forerunner of a co-operative development agency or that, better still, we shall have a fully fledged development agency to undertake these responsibilities.

1.9 p.m.

Mr. Ted Graham (Edmonton)

I begin, as have most of my hon. Friends, by warmly welcoming the initiative and good fortune of my hon. Friend the Member for Consett (Mr. Watkins), not only on his luck in the Ballot, but on the great service he has done to the House and the workers of this country. He has demonstrated what the ordinary people are capable of doing on their own, with perhaps a little help from their friends on occasions, to enlarge their opportunities.

I declare a warm and cordial attachment to the co-operative idea. I have worked with the movement all my life and am at present a director of the Enfield Highway Co-operative Society.

We are not discussing the beginning of an idea, because the idea of co-operation is as old as man himself. We are considering the development and expansion of the idea of co-operation in a particular way. To me, co-operation is do-it-yourself Socialism. Co-operation has been embraced by hon. Members on both sides of the House and by people of all political views. The co-operative idea is an aid and support to my basic political belief in Socialism.

Although ordinary people may want assistance from an outside source, there is much that they can do for themselves. The main sponsors of the Bill I am sure do not expect the situation to be immediately transformed. The Bill is an initiative. It shows a measure of impatience. After so many years of Socialism in practice, we are anxious to extend the idea of co-operation.

I am sorry that the hon. Member for Western Isles (Mr. Stewart) is no longer here. He asked why we needed a Bill of this kind to encourage people to do things for themselves. The reason is that the environment has completely changed. There is a need for cash, guidance and expertise.

Mr. David Watkins

If the hon. Member for Western Isles (Mr. Stewart) had heard my opening speech he would have heard me say that the Bill was needed because of developments outside the House and that it was not an attempt to force developments.

Mr. Graham

I take that as a fair intervention that requires an answer. The answer lies in the developments which have occurred in land management, manufacturing and in society generally. It is no longer easy for a person to get to the top. My hon. Friend the Member for Aberdare (Mr. Evans) spoke of ordinary people who, through no fault of their own, needed assistance of one form or another, not because they were work-shy, but because they were victims of the situation.

The Preamble states that the purpose of the Bill is to: Further the development of enterprises owned and controlled by people working in them, to enable existing enterprises to change to such common ownership". The Bill is not a steamroller and it not designed to transform the present position. It recognises that opportunities are being missed and its purpose is gently to point out those opportunities. There appears to be too little provision of finance, and Government intervention seems to be thin, but at least the Bill is a beginning.

I am in favour of a strong worker influence, which the common ownership movement wishes to extend. The ownership of the enterprise by those who work in it is a laudable objective. I welcome management accountability to the workers who exercise control through democratic machinery, outside capital being provided on a fixed basis, surplus earnings being distributed among the worker-owners and allocation of part of the profit for the welfare of the community. Those are all aspects of the management of business to which no hon. Member can take exception.

Hon. Members on both sides of the House have experience of industry and they know that there is no optimum size for a common ownership enterprise. I like the idea of common ownership in the sense that ordinary people put at risk some of their capital and their future work.

In broad terms this is a non-party issue. There is a passage in the Conservative Party manifesto of 1974 which reads: We want to promote partnership between Government and industry, and partnership between those who work together in industry. That is a broad endorsement of the ideas contained in the Bill.

The Liberal Party manifesto of 1974——

Mr. Peter Bottomley

The hon. Gentleman does not need to worry about the Liberals.

Mr. Graham

I am not being paid to say this, but the Liberal Party manifesto contained the following passage: The introduction of approved profit-sharing schemes (or, in the case of the nationalised industries, a dividend for each industry based on productivity) is also essential if the necessary co-operation is to be achieved at plant level. During the passage of the Industry Bill last year, the hon. Member for Bridgwater (Mr. King), speaking from the Opposition Front Bench, introduced an amendment which provided that workers should be encouraged to form themselves into a co-operative. He said: The principle of workers' co-operatives clearly merits serious consideration. Examples have been established in the past and have been very successful, but it is vital, if they are to succeed, that their introduction is transparent and obvious and has had some warning so that people can understand and so that there can be some informed public discussion." — [Official Report, Standing Committee E, 18th March 1975; c. 257.] It is important not to stumble into cooperatives. We must also make sure that they do not fail so that "co-operative" becomes a dirty word. The Bill sets out clearly the means of control and discipline and also the opportunities available for individuals to get guidance and advice.

The Scottish National Party had something to say about the value of co-operatives. On 4th March it issued the outline of a new deal setting up a Scottish Industrial Ministry of Development and Industry whose purpose was to encourage new ventures on a co-operative basis.

Much has been said about the enormous impact of co-operatives on the consumer sphere. Those of us who enjoy, welcome and are grateful for the opportunities it gives are conscious that there have been gaps in the extension and use of the co-operative idea. I am glad to see that the need for filling those gaps is seen on both sides of the House.

Many of us on this side of the House feel impatience at the slow progress being made towards the establishment of a cooperative development agency. The idea had been coming to fruition for a number of years and finally arrived in 1973 when, as my hon. Friend the Member for Woolwich East (Mr. Cartwright) said, it appeared in the Labour Party's programme. The purpose is simple—to encourage the rationalisation and modernisation of co-operative societies and to help provide capital for new and existing developments. But today we are not debating the existing co-operative movement, proud as we are of it. We are concerned with extending the frontiers of the co-operative idea.

At the Labour Party conference at Blackpool last year, I was delighted to hear my right hon. Friend the Prime Minister, when retailing what the Government had achieved, say: Work is also going on on legislation to phase out pay beds, to bring the ports into public ownership, to create the Co-operative Development Agency". With some impatience, hon. Members on this side are watching closely the progress towards the establishment of such an agency, and progress of a kind is being made.

One of the aspects we have to bear in mind is the way in which many of the new co-operatives have been formed. Sadly, they have often been formed in a rush and have provided some people with opportunity to doubt whether the co-operative idea is a good one. But one thing they have all had in common is that they have all been capitalist enterprises about to be closed but which happened to have within them a group of workers with imagination and determination. We can do nothing about the former, but we can do a great deal about the latter. Where there are workers who are not demoralised and are prepared to look for new opportunity, we should seize the chance.

I see a great rôle for the idea of common ownership in the way that the National Enterprise Board will work. Its rôle is on occasions to bring into the public weal massive organisations as well as smaller ones. One can envisage a situation where a conglomerate finds itself bought or substantially capitalised by the NEB. There will be a main business, which will be massive and may well have to be organised on one basis or another, but which will bring into the NEB many other disparate organisations and businesses with it. Here I can see a useful rôle for the co-operative idea in industry and in other ways in transforming such businesses from a kind of private joint stock company venture into a co-operative venture by this Bill.

The challenge is before the broad Labour movement. That challenge is enormous to those who work for the co-operative idea. The challenge is before the existing co-operative movement—the challenge to help not only orthodox cooperatives, but worker co-operatives as well. My hon. Friend the Member for Woolwich, East said a great deal of truth and substance when he said that, sadly, the co-operative movement has allowed to limp and some to die a number of worker co-partnership co-operatives over the last 80 or 90 years. Indeed, 20 or 30 years ago there were more than 50 such co-operatives—today there are only 23. Too many worker co-operatives, in which the workers participate and help to run the organisation, have been allowed over the years to go down.

Mr. Robert Edwards

Whilst it may be true that productive societies have declined somewhat in Great Britain, it is not true internationally. There are 45,000 worker co-operatives affiliated to the International Co-operative Alliance. There is something wrong with our legislation which has interfered with the development of workers' productive co-operative societies.

Mr. Graham

I bow with great respect to my hon. Friend's knowledge. He is right. It is puzzling that in Great Britain the workers' co-operative movement has not become as strong as it has on the Continent. But that in itself is one of the challenges facing those who believe in the co-operative idea. We have to recognise that the opportunities are there.

The challenge is also to the trade union movement. I believe that it has neglected —I use that word rather than "ignored" —the responsibility to respond vigorously and fully to the pleas and cries to it as a collective organisation from groups of its own workers, who are often beaten down by the sad way in which they are affected by closures.

The challenge is also to the Labour Party. I believe that it has to be much more positive in proclaiming that not only does it believe in nationalisation, but believes in and will positively encourage and discriminate in favour of this other manifestation of Socialism as well as State nationalisation.

Finally, the challenge is also to the Government. Not only should they welcome the Bill. They should say that they will do something positive to encourage it—and that means money, not a lot, because we are not asking for handouts, but money to get off the ground. We believe that when the idea gets off the ground, a great many people will embrace it.

We should congratulate the promoter of the Bill on giving us the opportunity to restate what many of us on this side of the House believe to be a basic tenet of a better life—co-operation. I believe that the mood of life and society in Great Britain is now more receptive to changes in man-management relations than it has been for a very long time. These can be exciting times provided that various bodies can accept the challenges.

We do not see this as a swift translation job but as an opportunity to cultivate and educate and, above all, not to lose opportunities. The co-operative development agency, which we need as the follow-on of this idea, will undoubtedly face many challenges, but at least when it exists it will have a wonderful opportunity to take forward a great idea. I warmly welcome the Bill.

2.28 p.m.

Mr. Stanley Newens (Harlow)

Like others who have spoken, I congratulate my hon. Friend the Member for Consett (Mr. Watkins) on the Bill and I express my support for it. Much of what I wanted to say has already been said, but there are a few points I should like to make.

Many of us who advocate the extension of social ownership are represented as advocates of 100 per cent. nationalisation of every single enterprise, from the subsidiaries of multinational companies to the sweet shop on the corner. We are represented as advocating nationalisation in the image of the nationalised corporation. That is a great distortion of the position which most of us who are Socialists take. As Socialists, we do not wish to create soulless leviathans in which the workers are trampled underfoot or in which they are treated as individuals without any real significance.

I believe that there must be very radical changes in our society to create a Socialist commonwealth, and I advocate very drastic changes in the form of ownership. But I state quite clearly that I believe that in any society—and particularly in the sort of Socialist society for which we are working—there would still be room for a number of different forms of social ownership and ownership in general which would be appropriate. This would include ownership in the form of nationalised industries. It would include municipal enterprises. It would include co-operative enterprises. I also believe that in a Socialist society there is still a place for individually-owned enterprises.

In the society in which we live at the present time, despite the protestations made very frequently from the other side of the House, I believe that the small business men and the small enterprises are crushed underfoot by many of the organ- isations which are supported, and held up as models of efficiency and enterprise, by Conservative Members. We on the Government side should make it very clear that we exist to defend the rights and the purposes of small enterprises, not only every bit as much as hon. Members opposite but even more so.

The Bill provides scope for promoting a form of co-ownership. As such, as other hon. Members have remarked, it is a modest measure, but it is extremely desirable. There are many reasons for promoting the particular form of enterprise with which it is concerned—not least the fact that it provides workers with a stake in and a responsibility for operations which are carried on during the course of their working life and gives more meaning to that life.

Today it is generally recognised that job satisfaction is an extremely important element in the success of any industrial enterprise. Today there is a demand on the part of employees, which is much more powerful than ever existed in the past, to be treated as something better and more important than mere adjuncts of the factory machinery. The Bill provides some scope for a recognition of this demand. Many of us on the Government side have for this reason been advocates of industrial democracy for many years. Many of us accept that unfortunately, it has been sadly lacking in many enterprises—not least the nationalised corporations and the nationalised industries.

We believe that the Bill provides that, in the limited number of enterprises to which it will be applied, a democratic structure will be possible, and this may well act as an example which may be copied elsewhere. My hon. Friends have already pointed out the great possibilities of success which exist, and which have been demonstrated by existing companies, such as Scott Bader and many others quoted this morning. However, it is important to point out, as some of my hon. Friends have pointed out, that the attempts of people engaged in manufacturing and commerce to participate in and to initiate their own enterprises have a very long history indeed.

I sit as a Labour and Co-operative Member. I am also a director of the London Co-operative Society and a mem- ber of the Central Executive of the Cooperative Union. I am conscious of the vast number of enterprises which were launched 100 years ago, and during the course of the last century, which in many ways had objectives similar to those about which we have been talking today.

It is interesting that, in the days when trade unionism was growing up in this country, frequently when strikes occurred the workers proceeded, even while on strike, to establish their own co-operative or co-ownership enterprises. In the East End of London 100 years ago enterprises were founded in many of these fields. It was demonstrated that there was great scope for success. Unfortunately, because of the scales of economy which were necessary, many of these enterprises failed to survive until the present time. But once again the opportunity is with us to go forward.

The Bill has a limited scope, and it demonstrates the need for a more far-reaching measure, such as that promised in the Labour Party's Election manifesto, to establish a co-operative development agency. The need for this agency is demonstrated by the groundswell of opinion and the many attempts over recent years to establish co-operative enterprises. It is unfortunate that many of those, as a number of my hon. Friends have remarked, have been born recently only as a result of the failure of existing enterprises established on the basis of conventional capitalism.

The particular advantage of the Bill is that it provides an opportunity for the conversion of existing companies into co-ownership enterprises before failure hits them in any respect. I consider that there is, however, a need to make it possible to establish co-operative and co-ownership enterprises on a much larger scale than that provided by the Bill. It is a need which can be met only by establishing a co-operative development agency I hope therefore, that the Government will give very serious consideration at an early stage to introducing a measure which will make that possible.

There is, of course, the Industry Act 1972, already in existence, which provides in certain circumstances for aid to be given to industry. Guidance is, however, provided for the Secretary of State for Industry by the Industrial Development Advisory Board, and that Board includes at the present time no members with practical experience of co-operative enterprises. It is therefore not surprising that it has given very little sympathetic consideration to the opportunities which this sphere of activity might offer. When the separate Industrial Development Advisory Board was set up for Scotland, the same thing occurred. I am sorry to say that no co-operative members, as far as I am aware, serve on that Board.

The Scottish nationalists are not in their place at the present moment to raise this issue, which is perhaps surprising as they were particularly vociferous in opposition when the Scottish CWS was merged with the CWS several years ago. It is important that people in Scotland as well as England should advance the need for co-operative enterprises to be established.

I am very surprised that no Liberal Member has been in the Chamber for the whole of this debate, because I understood that co-ownership was one of the Liberal Party's basic objectives. Those Liberals who read this debate in due course should consider very seriously indeed the fact that when what we understand to be a fundamental objective of the Liberal Party is the main issue for debate, not one of the Liberal Members has entered the Chamber. It makes it very difficult to take their efforts on this matter seriously.

I believe that this debate has emphasised the need for the extension of many different forms of social ownership. The Bill is a most desirable measure. I wish that it went further, but I hope that in due course it will be supplemented by many other measures.

I notice that the hon. Member for Chingford (Mr. Tebbit) is leading for the Opposition this morning. I hope that he will express support for this measure. He and I have been political opponents in West Essex for some years. It is not often that measures are brought before this House—or any other Assembly, for that matter—on which he and I are likely to find ourselves in agreement. But, as he remarked on a previous occasion when we met, a Bill which has his support and mine as well must be a singular measure which has great merit. In those circumstances, I hope very much that he will support this Bill today.

Mr. Tebbit

I ought to point out that what I said on that occasion was that such a Bill must be absolutely right or colossally wrong. In a few moments, the hon. Gentleman will hear me tell the House which I think this one is.

Mr. Newens

I live in anticipation that in the hon. Gentleman's view it is absolutely right.

The Bill is designed to advance the cause of industrial democracy, for which hon. Members on both sides of the House have expressed their support. That being so, I hope that it will become law very soon. I look forward to hearing my hon. Friend the Under-Secretary of State express Government support for it, and I hope that during the course of this Session we shall see this very useful measure put on the statute book.

1.42 p.m.

Mr. Laurie Pavitt (Brent, South)

It is always a pleasure to be called immediately after my hon. Friend the Member for Harlow (Mr. Newens), because his sincerity shines across this Chamber like the beacon on the top of the clock tower of the Houses of Parliament.

I add a special word of congratulation to my hon. Friend the Member for Consett (Mr. Watkins) which is rather different from those which we have heard so far. It gives me great pleasure, for a personal reason, to see his name heading the list of sponsors of this Bill. Shakespeare wrote something to the effect that a rose by any other name smells just as sweet. My hon. Friend will know that one of the giants involved in co-operative development during the past century and the previous director of the International Co-operative Alliance was a Mr. W. P. Watkins. For that reason, the name of the leading sponsor of this Bill is a great pleasure to see for anyone such as my hon. Friend the Member for Edmonton (Mr. Graham), my hon. Friend the Member for Harlow and my hon. Friend the Member for Woolwich, East (Mr. Cartwright) all of whom, like me, have spent a lifetime in the co-operative movement.

There has been considerable discussion about the importance of the Bill. I commend its passage on a number of specific grounds, the most important of which probably is its relevance to the starting point to future industrial development. Before becoming a Member of this House, I had experience with the United Nations of seeking the promotion of co-operatives in Asia. I spent three years in Pakistan, Indonesia and Burma. I learned that basic to all co-operative industrial, consumer or housing developments is the need to start from a framework of law. This Bill provides the correct starting point. Without the necessary framework on which to build, many difficulties will arise later.

It is interesting to note that the framework of law in India originated in a British Empire headed by what could hardly be described as a Socialist Government, and India's first Co-operative Act in 1906 has since been copied throughout what is now the British Commonwealth in Asia, Africa and the Caribbean.

A number of hon. Members have described how the application of the cooperative idea in this country has in the main been applied to the interests of consumers and to the stores set up in the last century where ordinary working people were able to combine in order to cut the cost of living. Because of the gigantic success in that direction, it may be that there has not been so much development in other areas where we might have wished to see the same philosophy applied. About 100 years ago, two conflicting interests fought together in the co-operative movement. The outcome was to the benefit of consumers and it was in 1881 that the chairman of the CWS, J. W. T. Mitchell, succeeded in establishing the concept of the "sovereignty of the consumer" which has lasted until this last decade.

There is this history, and my hon. Friends the Members for Edmonton and Woolwich, East were right to point out that past successes in one direction should not preclude an objective and visionary approach elsewhere to what has been successful in one quarter of the economy, because by means of this Bill we can make a start towards the wholesale application of the systems of people working together for economic and social ends where they themselves participate in all the decisions which need to be made.

Before we can establish industrial common ownership on a satisfactory basis, there has to be a prelude, and that prelude is education and training. Some of my hon. Friends have pointed out the problems which have arisen recently when, in order to rescue an industry or some other concern at the last minute, it has been found that without previous training there is not sufficient groundwork from which to start. I have in mind examples such as the Scottish Daily News. Therefore, it seems that to balance this Bill, which provides the legal framework, it is necessary for action to be taken to give the backing of education, understanding and knowledge which will enable legislation of this kind to be put into practical operation successfully. In other words, the skeleton of the law must be given the flesh of the organisations which need to operate it.

In this connection, a number of my hon. Friends referred to the Government's commitment to the development of a cooperative development agency. It is imperative that we see some reference to this project in the Queen's Speech next Session. It is imperative that, without delay, the Legislative Committee of the Cabinet puts this high on its list of priorities. If we do not have legislation in the next Session of Parliament, I warn the Government that a number of us will seek to take all possible action to bring pressure to bear where it can hurt most.

The setting up of a CDA is dealt with to some extent by Clause 4. But already in other spheres of activity this education and training has begun. I have in mind, for example, co-operative housing and the acceptance by Her Majesty's Government of the final Report of the Working Party on Housing Co-operatives under the chairmanship of Mr. Harold Campbell which gives responsibility and financial backing to the Housing Corporation for laying down ways in which tenants who seek to manage their own housing cooperatives can be taught the necessary skills, judgment and information to enable them to do so. I should like to see the necessary money similiarly provided for industrial co-operatives as a result of the passing of this Bill, especially the provisions contained in Clause 4.

There should be some development on the basis of the existing two giant organisations interested in furthering industrial common ownership, by which I mean the co-operative movement and the TUC. Already both of those organisations have educational apex bodies—Ruskin College, from which many hon. Members have graduated, and the Co-operative College at Loughborough. If we look through the list of African senior statesmen we see that even a Prime Minister graduated from the Co-operative College. By learning about agricultural co-operatives and social studies they have become great men in their own countries.

I should like to see a common ownership and combined operations for basic training and education on management skills and democratic procedures in industry between the TUC and the co-operative movement, using the instruments which are available. We must pursue the fresh opportunities that are now available. Just as the TUC is able to be associated in the public mind with great names and great trade union leaders such as Jack Jones, I hope that we shall have similar personalities in the co-operative movement who, in extending co-operation to other economic forms, become household names.

A good deal of what has been said during the debate leaves the responsibility in the hands of the Co-operative Union and the co-operative movement. I hope that opportunities will be seized when the Bill gets on to the statute book. The framework will be there and the good will of hon. Members will be backing it. I hope that it will get the support of people who have different activities outside this House in connection with social, industrial and economic affairs. The Bill is a springboard. Those of us who have responsibility in the House have a duty to ensure that our colleagues outside pursue the principles contained in this Bill to the utmost.

I emphasise the points made by my hon. Friends the Members for Woolwich, East and Edmonton. Perhaps if I emphasise them for the third time it will have the authority of a three-line Whip, with which I have been recently associated in a rather different capacity.

Just as the Labour movement has been saying for the past decades that nationalisation should not be brought in solely to rescue derelict industries, so cooperative organisations and industrial common-ownership should not be seen as merely the means by which something which is in a mess is put right. It should be the constructive way in which we provide a far better community and a more integrated society, because citizens will participate not only in social bodies and good causes such as those for the disabled and the elderly but also in the day-to-day work they pursue in order to earn their living.

1.55 p.m.

The Under-Secretary of State for Industry (Mr. Neil Carmichael)

May I first say, Mr Speaker, that in your short and distinguished period in the Chair you have dealt with many innovations but none as rare as that raised in the speech of my hon. Friend the Member for Northampton, North (Ms. Colquhoun) I accept that of the Celts, the Welsh, with perhaps the exception of one or two of my countrymen from the Western Isles, have probably the most euphonious accent. Nevertheless, I found it difficult even with your elocution to accept the pronunciation of Ms. It may well be that we are not used to this innovation yet.

My hon. Friend the Member for Northampton, North said that many of her colleagues were rather soured towards small business and also a bit soured towards the whole subject of the rights of women. I do not believe I am—at least not in my head, although I might be in my heart—fundamentally prejudiced, but I have difficulty in pronouncing Ms. which, incidentally, I saw for the first time on the annunciator today.

Mr. Speaker

It seemed to me that the alternative pronunciation was "Mooz", and I did not like that.

Mr. Carmichael

Yes, that is one of the difficulties.

This has been a most interesting debate. I have learned a great deal from what has been said. I know that the hon. Member for Chingford (Mr. Tebbit), who will be winding up for the Opposition, has been closely associated with the Committee of the House which has dealt with this matter. The hon. Member for Bridgwater (Mr. King) has also been closely associated with it. The hon. Member for Kidderminster (Mr. Bulmer) and many other hon. Members disagreed with some of the details, but gave the Bill general support.

My hon. Friend the Member for Wolverhampton, South-East (Mr. Edwards), whom I imagine I have known at least as long as any other hon. Member—I used to write to him when he was at the Aragon front and I was a young boy— has been the chairman of the all-party committee and spoke very warmly of Dr. Schumacher. I have never had the honour of meeting Dr. Schumacher, but it is interesting to note that probably the most influential books I have read over the past few years have been a combination of Dr. Schumacher's "Small is Beautiful" and books by the American author, Mr. Alvin Toffler.

The hon. Member for Woolwich, West (Mr. Bottomley) spoke about the small industries in the under-developed countries. In my constituency there is a large cross-section of world population, because among other reasons there is a university. From talking to especially the African students and the post-graduate students at their parties and family celebrations I have discovered that they are most impressed with technology and that it has nothing to do with ideological attitudes. There is no ideological bias.

They frequently say that the one country which gives them the aid and advice they want is China, because that country does not think of helping them by building an enormous factory that manages to reduce 1,000 workers to about 150. They are still looking for the technology that will keep jobs and high labour-intensive industries, but no doubt they will move on to the other technologies. That is a good example of the way in which we sometimes ignore small industries.

My hon. Friend the Member for Walls-end (Mr. Garrett) spoke glowingly of the Federation Breweries. He was given a great deal of support, visible and verbal, from my hon. Friend the Member for Feltham and Heston (Mr. Kerr), who has spoken warmly, and perhaps too warmly, of the importance and qualities of Foster's Ales. I hope that they are federated ales. I hope that Foster's from his own country do not feel too aggrieved at his statements.

My hon. Friend the Member for Chorley (Mr. Rodgers) spoke of the tranquil atmosphere on a Friday. We should all be grateful for this atmosphere, particularly after the last rather hectic week. It is an appropriate atmosphere because from what I have gathered from speeches on both sides of the House everyone is anxious to be extremely helpful and to do what he can to foster a favourable attitude towards a common and community ownership. He also spoke about the brain drain and the possibility that the smaller firms in common ownership could perhaps help to alleviate the problems here.

Robert Owen was mentioned a number of times. One fact which is not widely appreciated is that Robert Owen married the daughter of a Glasgow man named David Dale who was one of the pioneers of what in the late eighteenth and early nineteenth century was called common ownership. He was closely associated with the New Lanark project. He strides through the history of Glasgow, and although Robert Owen may be famous in a wider world, he takes second place in Glasgow to David Dale.

My hon. Friend the Member for Woolwich, East (Mr. Cartwright) made his position known as a Labour agent and quite rightly felt indignant that my hon. Friend the Member for Wolverhampton, South-East had made comments on that subject. My hon. Friend the Member for Wolverhampton, South-East was pointing out that sometimes we assume that because someone can do one job, he can do the other jobs as well, but not everyone is as efficient or as adaptable as my hon. Friend the Member for Woolwich, East. My hon. Friend mentioned Dr. Schumacher and suggested that perhaps in some industries we were the victims of our own success.

Nationalisation is not the only way in which some of the ideals we hold can be put into action, and it is certainly not by any means always the best way. I was interested in my hon. Friend's point about council tenants organising their own maintenance and repairs and so on. This is a development from which we should all benefit greatly.

The hon. Member for Woolwich, West made a most important point when he said that it took three months to get permission for a garden gate yet 1,000 people could lose their jobs overnight. There is a lesson for us in that. My hon. Friend the Member for Edmonton (Mr. Graham) made the point that this was not a party issue. He also made clear that this was a modest Bill which did not try to steamroller its way through. He said that it was a tentative Bill with good ideas well tested in many spheres, but a Bill, to use the words of my hon. Friend the Member for Brent, South (Mr. Pavitt), which provides a legal framework to set up co-operatives. He spoke of the interest and assistance he had received from the hon. Member for Bridgwater.

He referred to a measure of impatience behind the Bill, and I noted that impatience today, reasonable and modest though it may be. There is evidence that we have gained from co-operation in all spheres and in all countries, and there is naturally impatience that we are not willing to do a great deal more.

My hon. Friend the Member for Harlow (Mr. Newens) quite correctly said that we have no intention of nationalising every sweetshop. We do not want social leviathans, no matter how they are owned, because if they are nationally owned but control is lost at the lower level, we are straying from the correct path. I remember one prominent public figure who was very worried about the concept of public ownership and who thought that it was going too far. He said on one occasion that some people would want to nationalise all the public houses. Now, about 15 or 20 years later, there are very few public houses outside the control of the big powerful breweries.

It is a pity that on this issue of all issues we did not have the presence of a Liberal spokesman. The Liberals have done a lot of work on this subject and I am sorry that none of them was here this morning to recount the evidence that the Liberals have collected and the results they have achieved from the many conferences they have held about small businesses and common ownership.

Perhaps I may turn now in more detail to what was said by my hon. Friend the Member for Consett (Mr. Watkins) about the Bill. He is to be congratulated on his success in the Ballot and on choosing a Bill such as this, which arouses so much interest, as I know from the correspondence that hon. Members have been receiving. My hon. Friend is of course an experienced campaigner. Hon. Members will recall that in 1969 he introduced and piloted through the House the Employers Liability (Compulsory Insurance) Act. He therefore knows the drill very well, and he knows that where possible the Government give every help to get suitable Bills on the statute book.

I am grateful to him also for providing this opportunity for us to discuss the development of industrial common ownership enterprises. It is a subject which I know is of great interest to hon. Members. Let me say at the outset that, subject to some qualification, the Government are in broad sympathy with the principles of the Bill. I regret all the more, therefore, having to say that, in view of the heavy legislative programme which remains to be dealt with during the current Session, it may not be possible to provide Government time for the Bill —in fact, it is extremely doubtful.

Mr. David Watkins

My hon. Friend has made the point which I appreciate, about the realities of legislative pressure. He was kind to mention my previous successful effort in 1969 when I faced and surmounted the same problems. I appreciate the situation absolutely as it was outlined by my hon. Friend.

I must advi se him, however, that I shall be using every means available to me with the support of a number of hon. Members to circumvent that situation. My hon. Friend may recall that in a previous ministerial existence he had to contend with my questions about the absurdity of British membership of the Central Commission for the Navigation of the Rhine. He may remember from that that I can be very persistent if I wish.

Mr. Carmichael

The subject of the Rhine Commission is straying a little from the Bill. However, I remember my hon. Friend's persistence. We have always intended to undertake a visit— preferably at some pleasant time of the year—to see precisely how the Rhine Commission works. I entirely agree with my hon. Friend's attitude about the Commission and I can commend the thoroughness with which he proved its value. I am familiar with his tactics and I know that he will use every method possible to get the Bill discussed more fully. That will be a matter for him- self and my right hon. Friend the Leader of the House. Nevertheless, having perhaps dampened his ardour mildly, I express the hope that the House will accord the Bill a Second Reading today.

The Labour Party's involvement with the co-operative movement covers much wider areas than this Bill. In our October 1974 manifesto, we said that we would seek to work with the co-operative movement to develop its role through the creation of a Cooperative Development Agency and in other ways. That commitment remains.

Hon. Members have asked from time to time when the Government intend to proceed with their manifesto commitment. One of my hon. Friends said that he was anxious that this should be included in the next Queen's Speech. I shall certainly draw the attention of my right hon. Friend the Prime Minister to the debate and to the fact that this sentiment has been expressed, because I think that he has a fair amount of influence over what is put into the Gracious Speech.

Hon Members will be aware that a number of interested parties have been consulted about the way in which we might best carry out this commitment. In particular, my right hon. Friend the Secretary of State for Trade has recently had the benefit of useful informal discussions with the Co-operative Union. But this must be a matter of priorities.

I should like to remind the House that in his speech last Saturday the Prime Minister said: More than half of our election manifesto commitments of 1974 have been introduced or passed into law. By this autumn it should be around three-quarters—and even then we will still not be halfway through this Parliament. I assure the House that we are giving careful consideration to our commitment to help develop the rôle of the co-operative movement.

I have long been of the opinion that co-operative production was one area where we could benefit from the experience of our European neighbours. We have had many examples today in our own country. My hon. Friends who are experts will know of the examples. For instance, France has 500 producer co-operatives with about 35,000 workers. Loan facilities are available to producer co-operatives through the French cooperative banking system. There is a central agency, financed by the producer co-operatives, which provides specialist financial and business advice and has its own development fund. The Mondragon co-operatives in Northern Spain have 10,000 worker-owners in about 50 enterprises, largely in the capital-intensive metallurgical industry.

In contrast with the situation elsewhere in Europe, producer co-operatives in this country remain relatively small scale. The co-operative producer societies registered under the Industrial and Provident Societies Acts have declined in number during this century until there are now only about 20 firms employing around 2,000 workers, mostly in the printing, footwear and clothing trades. There is also, of course, a small but growing number of firms, most of which are members of the Industrial Common Ownership Movement, which are owned and controlled by their workers. These enterprises operate in a diverse range of manufacturing and service industries and, although they are for the most part small, they demonstrate that common ownership firms can be run efficiently and successfully. My latest information is that there are 12 United Kingdom member firms in ICOM.

I think it right in this connection to acknowledge the vigorous efforts of my hon. Friend the Member for Wolverhampton, South-East, who is also the President of ICOM, in his work in fostering the principle of common ownership. I am sure that all hon. Members will wish to join me in acknowledging my hon. Friend's efforts not only in that respect, but in so many others in our movement.

Sponsorship responsibility within Government for co-operative enterprises is of necessity fairly widely spread. My right hon. Friend the Secretary of State for Trade has overall responsibility for the distributive trades side of the co-operative movement. My right hon. Friend the Secretary of State for Industry has ministerial responsibility for producer co-operatives, including common ownership firms. Under him, Lord Melchett, has special responsibility for small firms and has visited some half-dozen producer co-operatives and been most impressed by the efficiency of their organisation and by the advances that they have made in industrial democracy.

Several hon. Members have mentioned some of the co-operatives which Lord Melchett has visited. It is clear that cooperatives can start in many ways. Although it has not so far been mentioned, I consider that the manner in which Airflow Developments in High Wycombe started is of considerable interest.

Airflow Developments progressed to a fully common ownership structure three years ago. It was started in 1951 by Mr. Connor Wilson who had developed an improved portable manometer test set. A wider range of instruments was eventually developed and branch factories were opened in Germany and Canada during the 1960s.

At the beginning, the whole of the equity was held by Mr. Wilson and his wife, but, in the light of his earlier industrial experience, Mr. Wilson cherished the idea of wider participation in ownership so that the business would always be owned and controlled by those working in it. To this end two of the directors were given shareholdings amounting to 14 per cent. of the total. However, it was obvious to Mr. Wilson that widening the share ownership without constraints would eventually lead to a dilution of the controlling interest among those remaining in the company.

In the mid-1960s, inspired by the Scott Bader experiment, which has been mentioned by hon. Members, 40 per cent. of the equity was transferred to a holding company controlled by the employees, 25 per cent. of the remaining shareholding was transferred to the Airflow pension scheme in 1973, and the remainder was put into the holding company, which was limited by guarantee with charitable status. That is a relevant and interesting example of the way in which common ownership can be developed.

It is of course the case that, as the Government made clear in the note on "Criteria for Assistance to Industry" which was made available in the Library of the House on 12th January, co-operative ventures can at present benefit on the same basis as conventional firms from loans and grants under the Industry Act 1972. They may also be eligible for the regional employment premium, and can make use of benefits generally available to small industrial firms.

Several hon. Members have spoken in terms of common ownership and the need to improve industrial democracy. The Government share that view. We are awaiting the recommendations of the Committee of Inquiry into Industrial Democracy, which is being chaired by Lord Bullock. That Committee was established last December. I am sure that Lord Bullock recognises that the co-operative movement has a special viewpoint on industrial democracy, and I have no doubt that it will be making its views known to the Committee.

Firms involved in common ownership are eligible for the regional employment premium and can make use of benefits generally available to small firms, such as the lower rate of corporation tax chargeable on companies with annual profits of £25,000 or less. Similarly, producer co-operative societies registered under the Industrial and Provident Societies Acts gain from the flat rate of 40 per cent. corporation tax.

The Government thus already provide a fairly wide range of measures from which producer co-operatives and small firms can benefit. However, I am mindful of the strong arguments put forward in the debate on the self-employed and small businesses last January. We must take account of them when we consider the whole subject of common ownership.

I do not wish today to deal in detail with the issues which the Bill raises. I hope that there will be an opportunity on another occasion to go through it in detail, but there are certain provisions central to the broad purpose of the Bill which I should like to mention.

As drafted, the Bill limits benefits to common ownership companies limited by guarantee or to co-operative societies which are, in the opinion of the Registrar of Friendly Societies, bona fide enterprises, owned and controlled by the people working in them". My understanding is that, given the present drafting of Clause 1, not all the existing producer co-operatives would be able to benefit from the Bill, although my hon. Friend the Member for Consett suggested that a slight change in their rules of association might obviate this difficulty. We think that the House should give careful consideration in Committee to expanding the definition so that a wider spread of producer co-operative organisations would be brought within the scope of the legislation. That might be a better way of dealing with the matter than by changing their rules.

Separate from this, Clause 3 provides for certain taxation concessions in relation to capital transfer tax and capital gains tax. Such provision could not appropriately be made within a Private Member's Bill and such issues are more appropriately matters for a Finance Bill. However, I give my hon. Friend the Member for Consett the assurance that my right hon. Friend the Chancellor of the Exchequer is fully aware of the matters that have been raised as a result of Clause 3.

Another point of significance relates to the financial limits set by the Bill. Clauses 4 and 5 deal with the setting up of a revolving loan fund and provide for loans and grants totalling £1,060,000 to be made available to assist co-operative ventures. Whilst I appreciate the importance my hon. Friend attaches to this part of the Bill, I must make clear—this is the unpleasant part—that in the present economic situation finance of this magnitude cannot be made available. The Government wish to consider this matter further in the light of the Bill's scope and objectives, and I fear that the amount we shall be able to provide will be more modest than that which my hon. Friend has proposed. If the Bill is given a Second Reading, the Government will be prepared to put down a Money Resolution before the Bill is taken in Committee. In this Money Resolution the Government will make their intentions clear on the sums they are prepared to make available.

On a more general aspect, we think that it would be desirable that the Bill should include provisions which would ensure that consultations take place with recognised trade unions and that there is trade union representation on any central machinery that may be established.

Let me, in conclusion, again express my thanks to my hon. Friend the Member for Consett for giving us the opportunity to debate this important subject today. I very much hope that the House will give the Bill a Second Reading. I look forward to its reaching the statute book in a suitably amended form.

2.24 p.m.

Mr. Norman Tebbit (Chingford)

I am able at once to assure the hon. Member for Consett (Mr. Watkins) that the attitude of the official Opposition to the concept of firms being owned in common by those who work in them is benign. My presence on the Opposition Front Bench should reassure—I might even go as far as to say "please"—hon. Members opposite, far-fetched as that may sound—and far-fetched indeed it does sound. The Industrial Common Ownership Movement will share the gratitude of the House to the hon. Member for Consett for introducing the Bill. I shall not repeat the praise which he has been given; it is fully his due.

This is a very useful Bill. We see some snags in it, as does the Under-Secretary of State, but I should not think that they were issues of principle over the concept of worker-owned firms or that they would cause me to suggest to my hon. Friends that they should do anything to block or oppose the Bill. I hope that I shall not alarm any of the Bill's sponsors or supporters by saying that to me worker-owned firms are entirely compatible with market economy, which is even more important than the capitalist economy, and that they are quite compatible with capitalism, although clearly they may not feel that they are capitalists themselves. I hope that that does not put off hon. Members opposite too much about the Bill. I do not want to sow doubts in their minds.

As the Under-Secretary of State said, if we want to find the homes of some of the major worker-owned firms in the we have to go further afield than Meriden or Glasgow. Curiously, and to the wry amusement of myself and many of my hon. Friends, for some of the largest we must go to no other place than Franco's Fascist Spain—no longer Franco's Fascist Spain—where the Mondragon co-operatives developed with the approval of the Government there. We can, however, take some encouragement from the fact that the firms have outlasted the régime, and long may they continue to do so.

Mr. Robert Edwards

Is the hon. Gentleman aware that the emergence of the worker co-operatives in Franco's Spain was the one and only means of bringing human freedom to that country and developing democracy?

Mr. Tebbit

I shall not stray so far off line as to become involved in a discussion on the merits of the former régime in Spain, but none of us can resist a wry smile at the fact that the co-operatives have prospered so well in that country.

I am anything but narrow-minded. I regard the small shop run by a family, or smallholding, or a partnership of a few men in running a window-cleaning business, or, in some circumstances, even a stockbroking firm, as potentially a worker-owned, common-owned firm. The Bill, for good reason, takes a narrower view, but I think that my hon. Friends would agree that nothing but good can come from working men running businesses and becoming familiar with the responsibilities and difficulties as well as the rewards of so doing.

It will be a good day if, as a result of the Bill, such expressions as cash flow, investment programme, the need to fight for business, the need sometimes for retrenchment, even for liquidation, were to be understood by more workers as "our problems" and not thought of as "their excuses for denying us our just wage increases or even proposing redundancies". Nor is it a bad thing if from time to time common-owned building firms come into contact with direct labour organisations as run by municipalities, and then perhaps the Opposition will have even more support for taking out a clause or two in the Greater London Council Bill, to the horror of the hon. Member for Edmonton (Mr. Graham), or even doing down the whole of the West Midlands Bill, to the horror of a great many hon. Members opposite.

We have heard much about Scott Bader and other successes. They emphasise how we can avoid the "us" and "them" syndrome. I do not believe that common ownership firms are likely to overcome the problem of scale, which is the most severe problem they have to face. It is hard to see how Scott Bader style could still be that style if it grew to the size of ICI. The existence of the John Lewis Partnership suggests that there is always dilution of the purity of the concept as the organisation gets bigger. Although small is certainly beautiful, some industries just have to be big to survive. Some of the successes, and perhaps some of the failures, of all these common-owned firms are no doubt due to their small size.

It will be no surprise to hon. Members opposite to hear that neither I nor my hon. Friends despair of the future of capitalism. It is still American capitalism, after all, that feeds Russian Communists and it is still an engine that can produce enormous wealth for the people of the world. There is room for the old style of capitalism in some ways. There is room for the new style of common-owned works. There is room for cooperative societies in the old style and I imagine that we shall have for many years yet room for some at least of the nationalised industries. There is no reason why they should not all co-exist and compete with one another to the general benefit.

We did not hear much by name from Labour Members today about some of the recent unhappy examples of worker-owned firms. The shambles of the Scottish Daily News and the unhappy birth of the Meriden Co-operative have done a great deal to set back the idea of cooperatively-owned industries in the public mind. The public money and the workers' money which went into the Scottish Daily News went down the drain, and that was sad, because it seemed to be doomed from the beginning.

The Meriden experiment, of course, was, if I may be permitted the expression, conceived on the wrong side of the bed-sheets—but when one looks around society and sees how many of its pillars started that way, one sees that perhaps we need not worry unduly about that. Many of us believe that the co-operative has prospects of success, although we are sad that the way in which it arose should have done so much damage to the jobs of other workers and damage within the industry, which we believe could have been avoided.

The Opposition of course are totally opposed to what we would broadly call the theft of industrial assets, even if it is dignified by some such name as "sit-in", "walk-out", "workers' cooperative" or "industrial democracy". If it is theft of assets, that is what it should be called and we oppose it.

Mr. Newens

In fairness, would the hon. Gentleman also object to the theft of industrial assets by asset stripping and so on?

Mr. Tebbit

We have to define theft in terms of the law. If that which is done is against the law, it is clearly deplorable. If the structures of law are changed to prevent abuse and to make it possible to transfer assets in different ways, that is lawful and proper. That is one of the reasons——

Mr. Pavitt

The law is an ass.

Mr. Tebbit

But the hon. Gentleman is one of the legislators who makes the law. I do not know what one calls the father of an ass.

I am particularly pleased that the Bill sets out to define what I would call the reputable and respectable common-owned firms. That can do nothing but good.

I can find no quarrel with page 1 of the Bill—I do not mean the Explanatory Memorandum—but I fall out with the hon. Member for Consett over Clause 1(4) on page 2. I fully understand the reasoning behind this provision, which essentially prevents an asset-stripping operation under the guise of common ownership, but he must face the fact that as it is presently drafted it is a disincentive to the workers in such a firm to re-invest in it.

The thought is always bound to come into men's minds that it would be better to distribute more of the assets than to put them back into the firm if this clause exists. Also, there is a principle in my mind that if the men in the firm own the firm, it is right for them even to dissolve it, to take the assets in liquid form and to go out and do something else. There is perhaps a gulf between us on this. The differences may be resolved in Committee, but at present there is a difficulty.

Certainly, Clause 2 also requires rigorous examination to ensure that the genuine interests of all shareholders are fully protected. I am sure that we can reach an arrangement over that in the long run. I wonder whether the Under-Secretary of State and I might have a look at this clause in Committee upstairs on the Aircraft and Shipbuilding Industries Bill. Hawker Siddeley and other companies which are currently facing nationalisation might do better under this form of compensation, by selling the firm to the workers, than under the present method proposed.

Mr. Carmichael

If the hon. Member is serious about this, I would say that if he could help to rush the Aircraft and Shipbuilding Industries Bill through Committee we might find time to pursue his suggestion.

Mr. Tebbit

We shall have to consider that proposal carefully behind the Chair at some time. To be serious, there is some danger in Clause 2 to minority interests.

We should also want to examine Clause 3 closely. There is a danger of mixing up commercial business and charity. This is not so much a matter of principle; it relates to the possibility that it might be used as a means of tax avoidance, entirely illegitimately. I am not sure what the Under-Secretary's rather opaque words about the Chancellor "noticing" this provision meant. I am sure that he would not want to enlarge on them when we are only a few weeks away from the Budget, but I hope that the Chancellor will also cast a close eye over it to ensure that there is no opportunity for illegitimate tax avoidance.

As for Clauses 4 and 5, the Opposition could not feel that it was right at the moment generally to increase public expenditure. It would be possible to argue that expenditure in this form on this sort of enterprise would be far more productive than some of the make-work schemes recently in use. I am certain that it would do more good to assist a a firm through this sort of measure than to employ men to pick up stones from the beach merely to conceal unemployment, achieving nothing productive.

Clause 6 is also in italics as a token of its financial implications. I am not sure that we have a shortage of Government advisers—perhaps we have a shortage of Government ability to take good advice—but I note with some sympathy what is said about the present make-up of the Industrial Development Advisory Board. Perhaps the Government will consider that as well.

Some extra protection is needed for the rights of workers leaving a firm or wanting to opt out, voluntarily or involuntarily. If the workers have given up a good deal of their wages to reinvest so as to make the firm a success and then, perhaps for entirely personal reasons, have to leave, there should be some provision to safeguard their position.

It is noteworthy that both my hon. Friend the Member for Woolwich, West (Mr. Bottomley) and the Under-Secretary were concerned about the position of unions within these firms, though in slightly different ways. What the Under-Secretary said was mildly ominous. If those who are organising such a firm can agree among themselves on what they want, it seems odd that the Government should impose some extra requirements upon them, presumably in the name of democracy, when that is what the Bill itself is about.

If the hon. Member for Consett gets his Money Resolution and if the Bill goes into Committee, my hon. Friends and I will try to put the defects in the Bill right. However, at this stage I do not want any of my hon. Friends to block or oppose the Bill.

I congratulate the hon. Member for Consett, who now has two more milestones to his name. It was on his Bill that an hon. Member of this House was addressed as "Ms". To ensure that I also get into the Guinness Book of Records, I suppose I should say that I duly enjoyed and noted the speech of the hon. Person for Northampton, North (Ms Colquhoun).

2.40 p.m.

Mr. Ivor Clemitson (Luton, East)

I, too, congratulate my hon. Friend the Member for Consett (Mr. Watkins) on presenting the Bill to the House. I hope that eventually the Bill will be on the statute book in a not too amended form.

I welcome the general support for the Bill, to which the Under-Secretary referred. It sounds as though Government time cannot be found for the Bill, but I hope that that position will be reconsidered. Like my hon. Friend the Member for Consett and the other sponsors of the Bill, I will put my shoulder behind that wheel, persevere with the Bill and get it on the statute book.

We do not want to go into Committee before we have reached that stage, but it is important to have a definition which, although it does not exclude genuine and bona fide common ownership companies, at the same time is not so wide mat fly-by-night organisations, if I may so describe them, could creep in under the net and exploit the provisions of this Bill or any subsequent Bills. That is the reason for the tight definition in the Bill. We might discuss the degree of tightness in Committee, but it is important that the definition should be pretty tight and prevent non-bona fide organisations from taking advantage of the Bill.

Secondly, I hope that the Government will take sympathetic account of the financial provisions, whatever differences there may be between Labour Members, or between the two sides of the House. These provisions are in line with basic Government policy of providing help to manufacturing industries. It is a policy with which many if not all hon. Members would agree. I ask the Under-Secretary and his right hon. Friends to look sympathetically at the proposals.

Mr. Tebbit

I hope that the hon. Member for Luton, East (Mr. Clemitson) appreciates that we should want to be sure that any such provisions, regardless of public expenditure implications, did not leave one firm in an advantageous position in relation to access to capital, and another firm of similar size in a not so advantageous position. That is a serious problem.

Mr. Clemitson

Yes, mat is the sort of issue that we could follow up in Committee.

Bearing in mind the general principles of public expenditure and additions to public expenditure, this is a modest amount in terms of the billions of pounds of public expenditure that we are used to discussing these days. This amount is directly in line with Government policy. Nearly all the money is in terms of loans and not of absolute debits. I urge the Government to look at this matter sympathetically.

My hon. Friends and I welcome the speech of the hon. Member for Chingford (Mr. Tebbit). We appreciated his general welcome to the Bill and the constructive and frank way in which he went through the different provisions and indicated the matters that troubled him and his hon. Friends. I hope that if the Bill goes into Committee, these matters can be examined constructively and that the final shape of the Bill will benefit from our debates.

The hon. Member for Chingford referred to theft of assets. The Bill provides for the properly controlled voluntary transfer of assets from the present owners to the common owners. The hon. Gentleman was the first to acknowledge that there is no question of expropriation, force, coercion, or duress. We are talking about voluntary ownership.

It is noteworthy that the experience of those companies in common ownership of which I have knowledge is that they re-invest a large proportion of their profits in the business—I understand, often a larger proportion than is provided for in their constitutions.

The hon. Gentleman referred to trade unions. This important topic could be debated at great length. Trade unions grew up and developed in a certain kind of society with certain kinds of organisations and, therefore, they developed basically as defensive organisations. If they operate in a context of common ownership, their rôle will inevitably be rather different from their traditional functions. This new relationship in a new context will change and develop over time.

Mr. Peter Bottomley

If one compares the union activities of employees of the Amalgamated Union of Engineering Workers who are not members of the AUEW with the union activities of the employees of the Transport and General Workers' Union who have to be members of that union, one sees that the opportunities for putting forward a forceful case are greater when there is outside representation.

Mr. Clemitson

The hon. Member has raised an important point. There is always a danger within common ownership companies of their becoming inward-looking and, to a certain extent, immune to outside influences. That is why the business of giving away part of their profits is an important symbol of their responsibility to the wider community. However, certainly outside influences, of which trade unions are one, operating on such companies can only be for the health of the enterprises. I take that point.

We very much welcome the general support given to the Bill by both my hon. Friend the Under-Secretary and the hon. Member for Chingford. Those of us who are members of the Common Ownership Movement in the House and, indeed, outside it, have been very appreciative of the interest shown in the movement by Lord Melchett. He has shown considerable concern about this matter, particularly over the last month or so.

My hon. Friend the Under-Secretary mentioned the Bullock Committee. The members of the Common Ownership Movement all-party group have submitted evidence to that Committee. I understand that the Industrial Common Ownership Movement is also submitting evidence.

We in this House very often become involved in conflicts which are, at their worst, destructive, or are at least arid, and the best that we seem to achieve so often is some kind of compromise, which is often a rather shabby compromise. What I find so encouraging about this Bill and the ideas behind it is that we have here some concept which transcends so many of the differences which otherwise we have. Would that we could have more of these constructive, transcending ideas which bring together people who otherwise quite legitimately have very great differences of view!

The case for common ownership has been put very eloquently and very often in the debate by hon. Members on both sides of the House. I do not wish to bore the House with a reiteration of what has been said. However, I should like to refer to one or two points.

My hon. Friend the Member for Chorley (Mr. Rodgers) spoke of the internal brain drain in this country. That is an extremely important consideration. People at work are so often not enabled to use their tremendous talents and abilities. In so many areas outside of work we see people using these talents and abilities to tremendous effect. It is the greatest of pities that we cannot harness these abilities more to the whole productive process. Common ownership as a form of enterprise is one important way in which people's abilities can be harnessed to a common productive task.

My hon. Friend the Member for Northampton, North (Ms. Colquhoun) spoke of the importance of small businesses. Again, whatever our differences, that is a concern shared by all hon. Members who have taken part in the debate. Industrial common ownership can make a very important contribution to the whole health of the small business sector. I should like to return to that point shortly.

We have heard from my hon. Friend the Member for Aberdare (Mr. Evans), my hon. Friend the Member for Woolwich, East (Mr. Cartwright) and others of the great experience which has built up over many years in the co-operative movement, mainly in the retail field, and how there is a great need for this experience to be geared, used and harnessed to productive enterprise as well as retailing enterprise. We have heard about the movement towards industrial democracy. That was well put by my hon. Friend the Member for Consett.

Several times in the debate we have heard mention of the name of Dr. Schumacher and the title of his book, "Small is Beautiful". Perhaps I may read into the record—to use an Americanism—one or two quotations from his book which sum up very well the case for common ownership. On ownership itself he has this to say: A drastic change in the quantity of owners produces a profound change in the quality of the meaning of ownership, and this is so particularly when, as in the case of Scott Bader, ownership is vested in a collectivity … and no individual ownership rights of individual Commonwealth members are established…. In truth, ownership has been replaced by specific rights and responsibilities in the administration of assets. That is precisely what the Bill provides for. The purpose of the Bill is to enable and facilitate the setting up of common ownership enterprises, either from scratch or by a transfer from what one might call traditional businesses, and setting up an enterprise in which, by definition, the ownership is vested in the collectivity, in the commonwealth, or whatever term we wish to use.

My hon. Friend the Member for Northampton, North mentioned the firm of Jones, the jewellers common ownership firm in Northampton. I had the great privilege once of hearing Jones speak and saying how he had inherited his business from his father. He said: "I did not give it to my employees. I did not feel it was in my gift. I transferred the ownership." I found that to be very impressive. He felt that this was not some grand gesture of giving, but a question of a transfer from himself to the collectivity of the people who worked in his organisation.

On the aims of a business organisation, Professor Schumacher says that while: the transformation of ownership is essential … the transformation of ownership is merely, so to speak, an enabling act:"— which is precisely what this Bill is— it is a necessary, but not sufficient, condition for the attainment of higher aims… the tasks of a business organisation in society are not simply to make profits and to maximise profits and to grow and to become powerful. He quotes from the Scott Bader example the four main tasks and purposes of an organisation—the economic task, the technical task, the social task, which is to provide members with opportunities for satisfaction and development through their participation in the working community, and the political task of encouraging other men and women to change society by offering them an example by being economically healthy and socially responsible.

One of the basic principles behind common ownership is the development and encouragement of industrial democracy and, in a sense, common ownership is the ultimate in industrial democracy. The Bill does not attempt to lay down detailed rules and regulations for the conduct of particular common ownership enterprises. That would be quite wrong, because these rules must be developed by members of an enterprise themselves. That is the democratic process.

Professor Schumacher talks of this being a learning and involving process. It is important to realise that things do not change overnight. We must learn how to develop new forms of ownership and democracy. They must evolve gradually.

I have quoted at length from the book "Small is Beautiful" and I make no apology for that because it sets out well what I would have said badly. The title of the book has been quoted a number of times in the debate. Of course, the Bill is not confined to small firms. There is no limit on the size of firm which can become a common ownership enterprise.

The hon. Member for Chingford raised the very important question of scale and size and I know that the Scott Bader organisation has been concerned about the upper limit at which common ownership is a viable proposition. The Bill will be of particular importance to small firms. There are many such firms in this country and they are important to our economy in terms of what they produce and the jobs they provide. About 20 per cent. of our work force is employed in companies with 200 or fewer employees. The Bill will make an important and significant contribution to the health of the small business sector.

There is a growing realisation that people are becoming more remote from the centres of power and that organisations are becoming more centralised, whether Governments, large companies or supra-national companies. We must encourage people to become involved in their work and localities in meaningful ways so that they can truly exercise power over those processes which control and influence their lives. A number of companies are already expressing interest in becoming common ownership enterprises and an increasing number of groups of workers are setting up such enterprises from scratch.

I believe that this Bill will make a major contribution to the economic life of this country, to the growth of democracy and to the ennobling of human life by lending support and encouragement to a great, if small, movement whose day has come.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).