Co-operative Development Agency

HC Deb 22 July 1981 vol 9 cc439-53 12.27 am

The Under-Secretary of State for Industry (Mr. John MacGregor)

I beg to move, That the draft Co-operative Development Agency (Grants) Order 1981, which was laid before this House on 24 June, be approved. The purpose of the order, which is being made under section 4(1) of the Co-operative Development Agency Act 1978, is to increase from £900,000 to £1,500,000 the aggregate of grants that may be made by the Secretary of State to the Co-operative Development Agency.

The House may find it helpful if I begin by explaining a little of the background to the agency and its work. Following the report of a working group drawn from the co-operative movement, the CDA was set up with all-party support by means of the Co-operative Development Agency Act 1978 and came formally into being on 1 September of that year. The Act was drafted on the basis of the majority recommendations of the working group whose report concluded that a statutory body should be established to promote the co-operative sector, that the agency's members should be appointed by the Secretary of State for Industry and that the cost of establishing and running the agency for three years—estimated at £300,000 a year—should be borne by the Government.

The act empowers the Secretary of State to make grants to the agency up to a ceiling of £900,000. However, it was envisaged that there might be a need for further Government support after the initial three-year period, and there is a provision under section 4(1) of the Act for the limit of grants to the agency to be raised from £900,000 to £1,500,000 subject to the approval of this House. The agency's initial three-year term ends on 31 August, when the current funds will almost have been exhausted and the appointments of the present board expire.

The fact that the 1978 Act makes provision only for launching finance reflects the clearly expressed intention of the working group that the CDA should be dependent on Government grant only for the first years of its existence. The working group took the view that the agency should use every opportunity to raise revenue by charging for its services and should set itself the aim of eventual self-sufficiency.

That was also the view expressed by the then Government, the then Opposition and the Liberal Party when the Bill was before the House in 1978. However, the working group recognised that it would be unrealistic to suppose that any material amount would be earned in the very early years. That has certainly been borne out in the event.

I recognise that that will be disappointing to some of those hon. Members who spoke in the original debate, especially to the right hon. Member for Orkney and Shetland (Mr. Grimond), who said that he did not see why the agency should not finance itself from fees or contributions after the first three years.

In the last financial year, however, the agency's fee income was only £13,000. In fairness to the agency, I acknowledge that the general economic situation has made it difficult to build up income, whether from other organisations with which the agency collaborates or from the new smaller producer co-operatives which typically look to the agency for advice.

Another non-Government source of funding—the co-operative movement—was seriously considered by the working group. Since the CDA was set up at the instigation of the co-operative movement and for its benefit, it was argued—why should the movement not pay for it? That argument was rejected at the time because the cost would have fallen almost entirely on the consumer retail section. For that reason, the agency's credibility as the representative body of the movement as a whole could have been jeopardised, particularly since such emphasis was and still is being put on producer or industrial manufacturing co-operatives. However, the working group considered that when the agency had established its position, financing by the movement would no longer be such a sensitive issue. There is no immediate possibility of the movement taking over financial responsibility for the CDA, but this possibility remains for the future and I hope and expect the agency to take advantage of the breathing space that a further tranche of Government funding will allow it to pursue this possibility urgently together with any other possibilities that there may be of becoming financially independent of Government at an early date. I hope that the movement will be in a position to consider in due course a more positive contribution in that respect. The number of years which can now be involved—the three that have passed and the others that could be ahead—is quite long enough for a pump priming exercise to run.

The House will wish to know why the Government should have decided to seek authority to continue the financial provision for the CDA, even at the reduced annual rate that we now propose. The decision was taken after a critical review of the agency's performance to date and a careful assessment of its potential national contribution in generating businesses and jobs. We took into account also an independent evaluation of the agency by ICFC Consultants Limited and the CDA's own report on the progress that it had made.

The agency's role is to promote the principles and practice of co-operation generally and to be the representative body for the whole co-operative movement. With no fewer than 10 separate functions allotted to it under the Act, the agency has a considerable number of broadly defined and broad objectives. This wide remit has inevitably meant that in practice the agency has had to be to some extent selective and has had to learn from experience—and is still learning—where best to concentrate its efforts.

Admittedly, three years is a relatively short time for the agency to get over its teething troubles, establish its reputation and secure its financial future, although, frankly, I have heard criticisms, and I have some sympathy with them, to the effect that the CDA could have been quicker off the mark. The fact is that the first year was mainly spent in getting started—finding premises, recruiting staff and so forth—and it is only over the last year or so that the agency has been fully established and operational.

Over the past year, however, the agency can point to a sharp increase in its activities, both those that are responsive and those where it has taken the initiative. On average, more than two new industrial co-operatives are now being registered each week. Most of these seek the agency's advice either directly or from other agencies which in turn have received guidance from it. The rate of inquiries received has doubled over the last year and three quarters of these have been from existing or proposed new businesses. In collaboration with the agency, an increasing number of local authorities are showing interest in promoting co-operatives. The agency has taken the initiative in developing new kinds of co-operative to cater for particular situations. The neighbourhood co-operative is designed to fill gaps in the provision of small-scale local services and so provide jobs mainly for young people. Ten businesses of this kind are being set up and 250 inquiries have so far been received.

A co-operative training and enterprise workshop is being considered which would be designed to train young people in a trade and as members of an industrial co-operative. The marketing co-operative enables small businesses to pool resources to market their products. The agency has also made some headway in promoting a greater awareness and understanding of the co-operative form of enterprise and its possibilities among lending institutions arid public authorities. It has also devised a new set of model rules as an alternative to those of the Industrial Common Ownership Movement.

Though not a comprehensive evaluation, since time and cost were limited, the report on the agency by ICFC Consultants Limited was generally favourable. The sample was too small for conclusive results, but the main findings were that the agency had been generally successful in supporting and encouraging co-operatives and in representing co-operative interests nationally, but less successful, at least until recently, in publicising co-operative possibilities. Despite some reservations about its performance, nearly 90 per cent. of those interviewed in the study sample—excluding members of co-operatives—felt there was a need for the agency.

While the recent evidence of an improving performance is encouraging, the Government have reached the conclusion that changes within the agency are necessary to improve its effectiveness and substantially to reduce its current level of expenditure.

I have already mentioned that the agency has to some extent had to be selective. It does not in practice attempt to give equal weight and attention to each of its numerous functions. Much of the agency's effort has been devoted to advising those who are concerned with setting up co-operatives, and particular emphasis has been placed on the encouragement of producer co-operatives in view of the weakness of this sector in the United Kingdom compared with several other European countries. We do not disagree with this selective approach. On the contrary, we would like the agency to go much further and with more speed in the same direction.

In particular, we want the agency to give top priority in future to those functions that are likely to make a direct contribution to the creation of new enterprises and jobs. In the economic situation that we face, it must be right to put the emphasis firmly on job creation and practical activity. We wish the agency also to concentrate on giving advice on matters that are peculiar to co-operatives, such as model rules. I suspect that much of the advice on straightforward business matters can be supplemented and in many cases provided by the Department of Industry's small firms service and the counsellors, who are practical business men, or, where appropriate, other business advisory agencies, a point to which I wish to return later.

The Government also see considerable scope for reshaping the agency into a more streamlined and effective organisation, with a smaller board and fewer staff. A businesslike and hard-headed approach will be needed to succeed in the difficult task that I have described and at the same time to achieve the economies that the reduced rate of funding will impose. I do not wish in any way to decry co-operative ideals and principles, but commercial attitudes must be given due weight if there is to be a significant and lasting increase in co-operative businesses. In considering appointments to the new board, we shall place a premium on business experience.

This is the challenge and the opportunity that we are offering to a reconstituted CDA. I realise that it is not an easy prospectus, but I do not consider it unrealistic either. I have discussed it with the chairman of the CDA, Lord Oram, who accepts that it provides a feasible way forward that will enable the agency to continue with and concentrate on its key tasks. In fact, Lord Oram has made a considerable personal contribution to working out: a future strategy on the lines that I have described, and at his instigation the present board has already taken steps to pave the way for its introduction. I thank him and his board for all the work that they have done.

I suspect that some hon. Members will express their personal views about co-operatives. Therefore, as a Conservative, perhaps I may express why I wish the agency well in the task that we are asking it to carry out with, I hope, renewed vigour and a strong practical emphasis. I do not expect all hon. Members who have experience of and views on co-operatives to agree with everything that I say, but it is worth putting my view on record.

I have long been in favour of increased employee participation, including financial participation and wider capital ownership. In fact, I had the privilege of leading for the then Conservative Opposition on the 1978 Finance Bill when we were dealing with proposals for increased share ownership, which was a modest start on which the Government have been able to build.

I have also long been a supporter of small businesses and the private enterprise spirit which motivates them—often, and much observed now, by people who started life with little and who, by their efforts, skills and independence, have made a success of the businesses that they created. I am delighted when they do so and when they obtain the rewards that I believe are their due because, by their efforts, they have brought jobs and economic activity to their communities.

I welcome the recent growth in management buy-outs and the new strength that they can bring to what may in some cases—not all—have been a failing business or failing part of a much bigger business. Management buy-outs help to bring about the closer participation of employees in the success of a firm and a more vivid awareness of what is involved in achieving it by identifying customer needs and working hard and effectively to meet them.

I see co-operative enterprises as another strand, albeit with a different organisational structure, in that kind of thinking. It can bring economic benefits and real permanent jobs also by aligning the interests of those working in the enterprise with what is necessary to make it succeed.

For me, the justification is not the satisfying of some ideological ideal as such. It is that it is a business structure which in certain circumstances, like any other, can work and work well. But, like any other business, at the end of the day it is customer satisfaction—and I make no apology for coming back to it—that enables the business to be viable, let alone to prosper. This means attention to proper business practices and to the wide range of skills that are required. That is why I placed some emphasis earlier on the importance of getting advice in a new co-operative setup to make sure that all the range of skills which may not be available to the members of the co-operative are brought to bear to make the business succeed. Sometimes the counsellors of my own Department's small firms service can play a helpful part, as well as others, with that business experience.

We do no prospective co-operative a service by letting its members believe that somehow this is a system which absolves them from proper industrial and business disciplines. They are as essential to success in co-operatives as to any other type of enterprise. It is because I believe that it can work, especially with the right advice and guidance from the beginning, that I am pleased to recommend this further lease of life to the agency tonight.

I must make clear the position on the future funding of the agency. In the light of the case I have outlined, the Government consider that the steps we are taking are justified. However, funding will be on a considerably reduced scale, in line with the agency's modified role and size. Although the approval of the House is being sought to raise the limit of grants for the agency by £600,000, funds will be made available to the agency at the rate of no more than £200,000 a year, and will be subject to review.

The decision that I am putting to the House for agreement tonight will, I believe, give the agency more time to prove its value—despite the fact that many hon. Members speaking in the debate in 1978 hoped that this would have been achieved by the end of the first three years—and to explore again the possibilities of becoming financially independent of Government. But the Government have not assumed any commitment to support the agency with public funds indefinitely.

It is now up to the agency, with this renewed but modified mandate, to prove that it can play a fully constructive job-creating role. If it can, no doubt others will recognise its worth and provide the means to enable it to continue. Government pump priming will then have fulfilled its objective, and I wish it well.

12.38 am

Mr. Les Huckfield (Nuneaton)

The Opposition welcome the Government's introduction of the order. We welcome also the chance perhaps to have the first debate or the first real discussion on co-operatives that we have had for a long time in the House, although we shall not presume on your generosity, Mr. Deputy Speaker, and will do our best to stay within the bounds of order.

I welcome the personal contribution made by the Minister. I hope that it fits in somewhere within the realms of his party doctrines. Nevertheless, we welcome the sincerity with which he gave his benediction. That sincerity will be echoed from the Opposition Benches.

The Minister was right in saying that the proposal to set up the Co-operative Development Agency emanated from the Labour Party's manifesto at the 1974 general election. The legislation was inaugurated in 1978. That is how the agency was set up. I make no secret of the fact that many Labour Members at that time wished to see a stronger agency, with perhaps stronger powers, and even loan-granting powers. There was a considerable amount of cross-party support for the introduction of some type of promotional agency.

I hope that all hon. Members will agree that we have watched the development with interest. Since the inauguration of the agency we have witnessed the onset of a considerable number of local authority co-operative development agencies. During that time we have watched with interest the progress of co-operatives such as Meriden, KMES and others under the Industrial Common Ownership Act, which was introduced by my hon. Friend the Member for Consett (Mr. Watkins). Therefore, the Minister was right to say that there had recently been a spate of co-operative activity. It is even referred to as a "growth sector" in the latest draft annual report of the Co-operative Development Agency, which is in the Library.

Under the careful and watchful eye of the chairman, Lord Oram, and his board, the agency has helped to propagate the gospel and the concept of co-operatives. Some in the co-operative movement might have wished the agency to do a little more field work and to concentrate a little less on central promotions. Nevertheless, thanks to the CDA, its promotional activity and the advisory services that it has generously given, the co-operative concept and option are firmly established among the range of options open to a number of organisations and groups of workers in different circumstances. There may still be a feeling in some quarters that the structure and pattern of the CDA are not quite right. However, I pay tribute to it for the promotional and advisory work that it has done. The co-operative option is now firmly established.

The money that the Minister referred to is the maximum that he can give under the existing legislation. We recognise that he has gone to the maximum. He could have gone to less than that. However, he will recognise that the maximum in the 1978 legislation was one of a number of maxima fixed by the Labour Government. The borrowing powers and overall limits in the Iron and Steel Act and the Industry Act of the Labour Government have been increased, but the powers and limits in this legislation have not been. Therefore, I am sure that the Minister will accept that, although he is right to say that he has gone to the maximum, £200,000 per annum is not a generous sum. However, it will enable the agency to remain in being, and Lord Oram has said that the new money will at least enable the essential job of the CDA to continue unimpaired.

I understand that Lord Oram's chairmanship will shortly come to an end. Apparently, the assistant directors will no longer be with the CDA. I turn to John Evans and his work on conversions in the private sector. The report states that conversions in the private sector have not been very numerous and that the agency will have to be more selective. I hope that that does not mean that the agency will do fewer conversions. We still regard conversions—particularly on a voluntary basis—as an essential way of setting up co-operatives.

We should also pay tribute to the work of the other assistant director, Martyn Sloman. He did excellent work in promoting the concept of co-operatives with local authorities and in creating an assessment unit. He has done a valuable service to the co-operative movement.

In setting up a co-operative, one of the most difficult factors with which many financial institutions have to grapple is the lack of a yardstick by which to judge the potential viability of a particular co-operative. The assessment unit created by Martyn Sloman's team has achieved a great deal in that direction.

On the promotion, education and information side, we understand that there is to be a merging of some functions. Concern exists in the labour movement and the trade union movement over the fact that there has not been more publicity for the many co-operative successes that have taken place. Opposition Members would have welcomed more publicity. We hope that the merging of some of these functions will not mean less publicity.

The Minister paid generous tribute to the co-operative concept. Is it possible that some of his right hon. and hon. Friends on the Government Benches would not like too much publicity given to these successes? I hope that he endorses the fact that he wants the promotional side of the agency to continue to publicise co-operative successes when and where they occur.

While the promotional organisation and the assessment unit will continue, I should like to know from the Minister how much of the ideological commitment will continue. Some of us have noted with interest the staff who now remain and the staff who have departed. I do not wish to impugn their sincerity. However, those serving on the original CDA came from a number of backgrounds, many of them co-operative backgrounds. Not all now remain. I hope that the ideological commitment, in its slightly modified version, to the wider co-operative movement will continue to exist in the new agency.

The annual report, to be fully published on Friday, extols the virtues of employees' co-operatives holding shares in their firms. That is a new variation on co-operatives for the CDA to promulgate. There has also been talk recently of the concept of job ownership. I am sure that the right hon. Member for Orkney and Shetland (Mr. Grimond) will wish to refer to that matter. I have to tell the Minister that there is some suspicion in certain parts of the trade union and labour movement about the kind of co-operatives that the CDA might promote in the future. I have to be candid with the Minister. When his right hon. Friend the Secretary of State talks about workers' co-operatives, I feel that they may not be the same kind of workers' co-operatives as might be espoused by some of my right hon. and hon. Friends.

The Secretary of State has talked about workers using their redundancy money to start co-operatives. I hope that the right hon. Gentleman is not espousing the cause of workers co-operatives simply because he wants workers to get a taste of how it feels to be involved in business. That is not the Opposition's motivation for endorsing the co-operative concept.

The report also refers to the innovations of the CDA, particularly in the concept of neighbourhood service co-operatives involving two or three or perhaps a few more unemployed young people, together with full-time workers and the National Council for Voluntary Organisations. I am glad also that the report refers to the other innovation of the CDA, namely, the enterprise and training workshops. Opposition Members have been critical of some of the YOP schemes that have been operated by the Secretary of State for Employment. Many of my hon. Friends feel that more permanent results would be achieved if a greater share of YOP money were channelled into co-operatives modelled along the lines of the community enterprise programme and the enterprise and training workshops, where youngsters who receive training in management and development skills can then obtain business experience in using those skills and making products within co-operatives. I welcome the appearance of that step forward in the innovations mentioned in the annual report.

The annual report also mentions that the CDA has had contact with about 95 local authorities. I do want to remind the Minister gently that most of those authorities are Labour-controlled, but he will have to take into account the fact that many will have far more adventurous programmes for co-operatives and will make available more money than the Government have so far provided. They will certainly be watching the actions of the CDA and the Department of Industry.

Apart from the local authorities that have already set up co-operative development agencies, many groups of workers and communities are so desperate that they see the co-operative option as their only salvation, and they will be watching the Department's relationship with the CDA. We shall watch the new CDA with caution, but with sympathy. We wish it well.

Many Labour Members have concluded that even the continuation of the CDA, which we welcome, and more tax and fiscal innovations will probably not be enough to foster the expansion of the co-operative sector that we wish to see.

The Labour Party national executive committee yesterday endorsed a statement that will be put before the party's conference in September. I am letting no secrets out of the bag, because all the details have been published in a discussion document which was the product of a working group of which I was chairman.

We welcome the excellent promotional work of the CDA, favour the creation of a new co-operative investment bank, jointly funded, controlled and operated by the Government and the co-operative movement, want to see an expansion of the role of local authorities and obviously want an expansion of education and training facilities, but we feel that all the expansions and institutional changes will still not be enough.

The discussion document and the statement to be placed before the Labour Party conference proposes that groups of workers in a variety of circumstances should be enabled to go to a new advisory board, which would assess proposals to set up workers' co-operatives and in certain circumstances, after careful consideration, give financial assistance to allow a proposal to proceed. It may also give workers the legal right to turn their enterprise into a workers' co-operative.

That is a new scheme which still has to be approved by the annual conference. At this stage, it is still only a proposal from the NEC and it may invite the response from certain sections of the co-operative movement that the existing institutional framework can cope. I do not entirely disagree with that. A future Labour Government would have to build on, and employ, the facilities, services and organisation of the existing movement as much as possible.

Indeed, I pay tribute to the existing institutions, the work of the Co-operative Bank and the way that the movement has taken the Co-operative Productive Federation to its bosom. I also welcome the work of the new and emerging co-operative sub-committee and the way that the movement has moved apace on the formulation of policies to foster new workers' co-operatives.

What we are saying in the proposal that the National Executive Committee of the Labour Party will put to the conference is that we believe that we must build as much as possible on existing institutions but that something further than the existing institutions may be necessary to bring about the expansion that we wish to see of the co-operative sector. I am sure that the hon. Gentleman will agree with me that we must bear in mind that the size of the co-operative sector in this country is considerably smaller than the size of the co-operative sector in Spain, France and Italy.

I do not wish to dwell on the proposal. It is brand new and needs much discussion. It has been carefully worked out. I do not believe that it will lead to revolutionary transformations overnight. It is a carefully-thought out and carefully-worded mechanism, but, in welcoming what the Minister said, I want to reinforce my conclusion and mention Jenny Thornley's new book "Workers' Co-operative, Jobs and Dreams". In the section on the Co-operative Development Agency she examines the achievements of the voluntary movement and welcomes the work that has been done by the CDA but comes to the conclusion that if we want a more generous expansion of the co-operative sector we must have more involvement from local authorities. We shall probably need more involvement from the Government and from the wider labour and trade union movement.

In that spirit, I welcome the Minister's introduction of the order. We pay tribute to the work that the CDA has done so far. We shall watch it with interest and sympathy. I hope that in a year's time, or less, in the next debate on the co-operative movement, we can watch it with approval too.

1.2 am

Mr. J. Grimond (Orkney and Shetland)

I am glad that the Government have introduced the order and I welcome the speech that the Minister made in commending it to the House.

The Co-operative Development Agency has undoubtedly done a good job. We must look forward to the time when it is able to provide more and more of its finances from the fees that it charges.

The lesson of a successful co-operative development, as in Mondragon in Spain, is that the more workers feel that they have built up co-operatives from their own resources the more they feel they are in control of them and the more likely they will succeed.

I also believe that it is greatly in the interests of our country to develop as wide a spectrum of different forms of industrial control as possible. Co-operatives should be one form of control. I do not think that anyone believes that they are a total answer to all our industrial problems, but they should be encouraged to spread in the interests of us all.

I want to ask two questions about the order. I am not clear for what period it will apply. I know that it extends the amount available, but from the point of view of keeping the CDA going, it is necessary to know how long the Government envisage its future will be.

Lord Oram is resigning, I believe.

Mr. MacGregor

That is correct.

Mr. Grimond

It is important to know fairly soon who Lord Oram's successor will be. The Government may not be able to announce that tonight, but the House will be interested to know when they hope to do so. The CDA is engaged in advising and promoting many new co-operatives, even now, and continuity is important. I hope that the Minister will be able to tell us when he can announce the successor to Lord Oram, and how he sees the futue of the CDA. I welcome the order. I believe it to be right. The amount announced is about right. The CDA deserves well of the House. Everyone will wish it good fortune in the future.

1.5 am

Mr. Ted Graham (Edmonton)

I speak on behalf of the 14-strong Co-operative Group in Parliament. I am grateful to the Minister for the sympathetic way in which he introduced the order. He rightly said that he is introducing it almost as an honour and as a continuation of the commitment which the former Government made three years ago. A number of hon. Members now in the Chamber were present when that commitment was made. I was present, but because I was a Government Whip I could not speak. I do not intend to make up for that, but that is why I am so pleased to be here tonight.

The Minister has explained that we are making a critical review of the past three years. The Minister gave a fair resume, not only of the problems, but of the achievements. I shall fill out those achievements, but I do not cavil at the manner in which the Minister introduced the order.

My warm welcome is not only for the renewal of the cash but for the renewal of the faith. The Minister has faith that there is a job of work to be done by the agency. I support the generous tribute by my hon. Friend the Member for Nuneaton (Mr. Huckfield) and the Minister to the members of the agency led by Lord Oram. My hon. Friend the Member for Nuneaton paid particular tribute to the staff, who have had difficulty in fashioning the tools with which they have attempted to carry out their remit.

There are many ways in which a Government can spend the taxpayers' money. They would have to go a long way to get better value for money. An average of £300,000 a year for three years has been spent on the agency. That is probably the best money spent by the present and previous Governments for a long time.

In effect, the Minister is giving a vote of confidence to the concept of the CDA, but, rightly, he made much of the need to refashion and redesign the CDA's emphasis. Co-operative Members and the Co-operative movement are committed to an expansion of the co-operative sector. My hon. Friend the Member for Nuneaton explained that we are probably more ambitious than Government Members about the expansion of the co-operative sector.

We are concerned to ensure not merely that theestablished co-operative movement survives but that new co-operatives are established. It is crucial that the impetus of the launch of the agency is maintained. We want to give confidence not only that there is continuity of policy but that it is widely believed that the CDA is worth continuing.

I was interested in what my hon. Friend the Member for Nuneaton said about conversions on a voluntary basis, with which he said that he agreed. He then said something, at which he would expect me to prick up my ears—that there is to be a statement by the national executive committee of the Labour Party concerning the expansion of the co-operative idea. Neither I nor my co-operative colleagues are privy to anything that will appear in that NEC statement, and we look forward to reading it, particularly as my hon. Friend mentioned a discussion document. He is aware of the strong reservations of what I shall call the established co-operative movement—the co-operative union and the co-operative party—about what is compulsory as opposed to voluntary conversion, or conversion with legal underwriting. I and the Co-operative Group of Members of Parliament look forward to the opportunity of seeing what the document says and to making a contribution, which may not be different from that of the established co-operative movement on the subject in the past.

I take this opportunity to put on record the considerable achievements of the CDA. In 1978 there were 100 industrial and service co-ops, and in 1981 there are 400. Not all of them, of course, are wholly inspired or serviced by the CDA. Many of them exist simply because the CDA was there to give advice and guidance. That is a tremendous achievement.

I echo the generous tribute of my hon. Friend the Member for Nuneaton not only to the CDA but to the work of the Co-operative Bank. To that I would add the Co-operative Union, the industrial common ownership movement, and in particular, the work of local authorities. Like my hon. Friend, I had the opportunity to glance at the draft report of the CDA, which will be published on Friday of this week. I noted paragraph 33, dealing with the range of work that has been done, particularly by local authorities.

I have here two documents which were produced by the CDA, one for the London borough of Haringey, and the other for the London borough of Lewisham. They are a credit to any organisation, in the way in which they give advice and guidance. Sadly, the opportunity to commission more such documents has not been taken up, because local authorities have had limited amounts of money available to them in the past to commission such work.

I want to echo what was said by my hon. Friend the Member for Nuneaton about the nature of the co-operatives that may emerge in the future, as opposed to those in the past. I take as my text paragraph 4 of the annual report, which says: There is still amongst those to whom people look for professional advice an almost total ignorance of the co-operative form and its possibilities. Whilst this remains so, the agency cannot feel satisfied that the promotional task confided to it has been sufficiently discharged". I accept that the Minister wants to have men on the new board who have managerial skills and experience, and I do not quibble with the importance that he attaches to the need to instil proper commercial criteria into all considerations in the future.

I hope that the Minister will bear in mind that there are such things as co-operative ethic and co-operative ethos. We want more businesses, but besides being successful they must be businesses with a difference. The whole raison d'etre of the co-operative, as distinct from the State or the private, is that it is different. The Minister should not simply create more small businesses. The co-operative is a small business and there is a desperate need for more of them. There is a need to ensure that a co-operative is a co-operative is a co-operative. We do that by ensuring that there are men on the board and people on the staff of the CDA who will ensure that that happens.

It is right that advice is given by the small firms service and by others. I am sure that the Minister will have noted the manner in which The Daily Telegraph, on 25 June, dealt with his two press releases nos. 127 and 128. No. 127 dealt with the small firms service and no. 128 with the co-operative development agency. It said: The Government have decided that the agency should abandon its role as a business adviser to co-operatives and feel that the functions can be handled better by experienced industrialists recruited by the Government's small firms service. I hope that the Minister is not saying that it is proper to divulge the commercial advice and guidance within the CDA. The Government need to use as many agencies as possible, one of which is the CDA. There are many others. It is crucial that the CDA has the opportunity not only to give business advice, but to keep in touch with the real world, namely, existing co-operatives and businesses.

We need sound business criteria. We must also have co-operatives whose employees are clear about what they have been converted to or what they are about to start. They need to recognise the significance of a common fund of capital. They need to understand what is meant by democratic control and employee participation. They need to accept the concept in a co-operative of a fixed rate of interest and the dispersal of the profit or dividend in accordance with loyalty or in some other way. The CDA must continue to give guidance and advice. It is essential that it is not isolated, but seen as one of a wide range of weapons in the armoury of Government.

I warmly welcome the activities which my hon. Friend the Member for Nuneaton and the Minister saw as highlights in the innovative nature of the CDA in its first period. I especially applaud its initiative in creating the neighbourhood co-operatives and the co-operative training and enterprise workshops. Sufficient has been done in the first three years to say that the CDA has justified the provision of money and the feeling of confidence that there is a role to be played by a central agency.

I hope that the Minister will become as excited as I and my colleagues in the co-operative movement are about the co-operative idea, which has yet to be fully extended and used in the British business scene.

I hope that the renewal of the mandate by the Minister and the Government will be seen by those who are involved—individuals, servants and civil servants as well as those who are involved in other ways—as evidence that the House believes that besides the State and private sectors the co-operative sector is one that should flourish. The co-operative group, the co-operative movement and the co-operative union are grateful for the fact that the next step in extending the co-operative sector has been brought before us.

1.20 am

Mr. MacGregor

As a former Whip myself, I am glad that the hon. Member for Edmonton (Mr. Graham) was able to speak about the co-operative movement. I know of his long experience in the movement. I am sure that the House listened to him with great interest.

I was not certain whether the hon. Member was agreeing with the hon. Member for Nuneaton (Mr. Huckfield) on the new Labour Party working document. I hesitate to introduce too much of a note of controversy, because I am sure that we all want to get to bed before too long. I have read quickly the discussion document, especially the paragraph which states: The key principle of our new approach is quite straightforward. I have indicated my support for forms of co-operatives as genuine additions to job creation and to new business structures—I agree that there can be a variety—but my right hon. and hon. Friends and I would be firmly opposed to some of the suggestions in the Labour Party's new document. I am sure that this is not too surprising to the hon. Member for Nuneaton. We are concerned about the provision that workers in a private firm … should have the legislative right…to acquire the assets of the firm. That is not what we regard as a co-operative movement and that would be strongly opposed by us. In addition, there is the suggestion that financial assistance should be provided by the taxpayer for these purposes.

Mr. Les Huckfield

It is a discussion document. If the hon. Gentleman on behalf of the Government cares to send the Labour Party his observations on it, it will welcome them. The process that he has described is not as easy, over-night or automatic as he has made it sound. Buxted Chickens in the hon. Gentleman's constituency is a potential co-operative with which we are both familiar. I think that he will agree that that is a potential event that the mechanism that is set out in the discussion document could possibly assist. I am sure that he will agree that there are many ways in which this could achieve an expansion of the co-operative sector. The lack of a yardstick to measure financial viability or lack of previous experience means that new co-operatives are difficult to get going. The hon. Gentleman may not agree with the Labour Party's mechanism, but I hope that he will agree that some new mechanisms are needed.

Mr. MacGregor

I have no doubt that we shall debate these matters more fully on another occasion. I wanted merely to put down a marker on the general issue that the Government, in supporting the extension of the CDA, did not have in mind anything along the lines of legislative right for workers to take over the assets of a firm and to receive taxpayers' money to do so. The hon. Gentleman knows that I am very familiar with developments at Buxted Chickens. I have been trying to help the co-operative in a number of practical ways. I say positively—this was made clear during the 1978 debate—that it would not be our intention or wish that the co-operatives that we are trying to encourage through the CDA should have subsidies or financial advantages given to them that are not made available to small businesses or other business organisations in the private sector. That is not part of our policy.

I think that it is better not to go into the full details of Buxted Chickens during this debate. I am not suggesting that anything that is recommended on the main lines set out in the working document would be appropriate for Buxted Chickens.

I shall respond quickly to the points which were put directly to me. The hon. Member for Nuneaton said that the borrowing powers and limits had not been increased, although that has been done in some other legislation during this Parliament. The simple reason for that is that we judge that the amounts which I have announced tonight and which the Government are considering as a maximum—£200,000 a year is the maximum for the CDA—are right for the tasks which it must now set about. As it is intended that it should be self-financing within a reasonable period, it did not seem to us to require new legislation to give higher borrowing powers or higher limits. I made it clear that it is our belief and intention that the CDA should be able to fulfil its functions within the terms of what, I hope, we will agree on tonight.

Secondly, the hon. Member made a point about there being insufficient publicity for co-operative successes. That struck a chord with me in a wider context because one of the things which I frequently wish would happen more often in current circumstances is that more publicity would be given to the large number of small businesses and business start ups which I know are succeeding. This is not a question of lack of effort, but it is often difficult in this country to get enough concentration on our successes. Too often, we tend to concentrate on the things that are going wrong—except perhaps in a successful Test Match. Normally, it is difficult, when firms are doing well, to get the same attention drawn to them—I include co-operatives in this—as to those which are running into difficulties. Therefore, I have some sympathy with the hon. Member's point, and I hope that he will join with me in recognising that many small businesses are doing extremely well at present, often also in export markets.

The hon. Member then asked whether the CDA should continue to have an ideological commitment to co-operatives. It is clear that we are not proposing any change in the Act in relation to co-operative principles or assisting co-operatives to set up. There is, of course, no single pattern for co-operatives. It will be a matter for the board to decide exactly which directions it wishes to move in in the next few years, just as, as the hon. Member says, if the structure and pattern of the CDA is not yet right, that, too, will be a matter for the board to direct and sort out. No doubt there are a variety of motivations. It is clear that my interest in co-operatives and the reason why I approach that are different from the hon. Member's. Therefore, there are a variety of motivations in looking at co-operatives and a variety of vehicles. I welcome the prospect of financial participation, which the hon. Member tended to push on one side. He will be aware from what I said earlier that I find that an attractive approach, in terms of getting the wider capital ownership in the community, which Conservative Members seek.

I do not apologise for my emphasis in my opening remarks on the business role and the creation of jobs and economic activity. After all, the co-operative movement and the Co-operative Bank, to which the hon. Member fairly paid tribute, would not have succeeded without it. However, that is not to say that the co-operative ethos which the hon. Member for Edmonton mentioned is not part of what the CDA is about.

I am grateful for the support of the right hon. Member for Orkney and Shetland (Mr. Grimond) for what I have announced. He made two specific points to me. With regard to the term, he will know that I have said that the maximum will be £200,000 a year and that the total figure is £600,000. That means that is likely to be up to three years, although I said that we would like to keep progress under review. One of the important points is the extent to which the CDA succeeds in becoming self-financing. I would not like to make a clear statement tonight on exactly what the fund will be over succeeding years. There is some indication at least that we would be looking at a period of up to three years.

As to the right hon. Gentleman's point about the new chairman, I fully understand the desirability of moving ahead now on that. I am obliged to consult widely on the appointment of the chairman and of the board—the appointment of the chairman is critical. I felt it right to obtain the approval of the House to the order before consultation. I do not wish to make an announcement. I genuinely wish to undertake consultations as this is an important appointment, which we must get right. I therefore accept the urgency of the task of going out to consultation on the question of a chairman.

I did not intend to suggest that it would be proper completely to divorce commercial advice and guidance from the CDA. A lot of the business advice and guidance to co-operatives, as to other small and growing businesses, can come from other sources, but I am not suggesting for a moment that that should not be part of the CDA's activity.

We have had a useful debate. I hope that hon. Members are in agreement with the order, and I commend it to the House.

Question put and agreed to.

Resolved, That the draft Co-operative Development Agency (Grants) Order 1981, which was laid before this House on 24 June, be approved.