§ Mr. Alan Williams (Swansea, West)
I beg to move amendment No. 1, in page 3, line 1, after 'may', insert`after consultation with the persons as defined by section 1(3) of the 1978 Act,'.
§ Mr. Speaker
With this it will be convenient to take amendment No. 2, in page 3, line 16, after 'Fund', insert`provided that some part of those sums be used, in accordance with the wishes of those consulted as defined by section 1(3) of the 1978 Act, for one or a combination of the following purposes: the establishment of a co-operative development fund, a loan guarantee scheme, a national training scheme or to facilitate access by worker co-operatives to general measures of support for small businesses;'.
§ Mr. Williams
The Minister will recollect that we had considerable discussion in Committee when there was a fair degree of unanimity about the value of the work that the Co-operative Development Agency has been able to do. But he will recollect that there were considerable misgivings amongst Labour Members about the adequacy of resources to enable it to fulfil the welcome wider role that is envisaged as a result of the legislation. The possible consequence of lack of resources, plus wider responsibility, is that the agency could find itself in a non-viable position. That led the Government to build into the legislation a provision that was not in the original legislation enabling them to wind up the CDA. I made it clear that when the Labour Government introduced the original legislation for the CDA we considered whether to include that provision and decided against it because we could not envisage a circumstance in which we would want to disband the CDA.
I know that I must not repeat the lengthy arguments that we had over the first few days in Committee on the pros and cons of the Government's position. The amendments seek to limit the Minister's discretionary power, or at least to ensure that he exercises it after taking into account views that may be contrary to his own. Therefore, the aim of amendment No. 1 is modest but sensible and possibly something the Minister may feel has to be done in any case — to undertake consultation with the co-operative movement more generally, for example, possibly with other people who might be able to provide financial resources, and so on. Certainly he might wish to have wider consultation before making an irrevocable decision to wind up the agency.
Therefore, in the first amendment we are simply asking that the Minister accepts the obligation to carry out such consultation. In the event of the Minister ignoring the advice that I am sure he would get from the co-operative movement and deciding to wind up the agency, we want him to take into account the wishes of the movement in 24 deciding how to use whatever resources may at that stage remain available to the CDA, which otherwise would have gone into the Consolidated Fund.
The second amendment would make it possible for the Minister to consult the co-operative movement about the possible use of any residual finance, for example in a co-operative development fund. He will recollect our detailed arguments in Committee when we pointed out that while the loan guarantee scheme has been of some relevance to the small, start-up co-operatives, most of the schemes that the Government have brought forward to help small businesses are equity-based. They involve share participation. Since the equity base required in the start-up schemes does not exist in the co-operative form of organisation, it means that co-operatives are precluded from many of the schemes of assistance that Ministers have recognised as being sensible for firms to have available to them in the early days of their existence. We maintain that the abolition of the CDA would not merely put the new co-operatives back on the same basis as would apply to any other small firm, but would leave them substantially worse off in that they would have a more limited range of resources available from the range of measures that the Government have brought in for small businesses.
The need for the development fund is particularly important when one bears in mind that only a short while ago the Minister had to announce a modification of the loan guarantee scheme, which was generally recognised as being one of the successful schemes introduced by Government. Its effectiveness had to be reduced because, while the Government have been willing to boast about the businesses that the scheme has created, they have resented the fact that it has cost them money to operate the scheme. The new loan guarantee scheme that has been introduced is substantially more costly for borrowers. The Minister indicated in comments to the press when he made his announcement that he thought that the number of small businesses using the loan guarantee scheme might fall by as much as 25 per cent. as a result of the change that he announced.
In this situation, the Government could conceivably, against the advice of the co-operative movement, dissolve the CDA. They would thus deprive the movement of support that up to now has been thought to be essential for the new start-up co-operatives, leaving them to a range of small business incentives, most of which are irrelevant to the co-operatives, while the one that is relevant—the loan guarantee scheme — will be substantially more costly than in the past. For all those reasons, we have tabled amendment No. 2.
I realise that the Minister is instinctively opposed to the sort of financial package that is implicit in the amendment. I would accept his rejection of the package, but I ask him at least to consider the genuine case that we have revealed of the inadequate help that is provided for co-operatives by the normal range of small firm schemes introduced by the Government.
We ask the Minister to accept our proposal, which we think is a modest and reasonable one, for consultation before any dissolution. If he is unable to accept the amendment, which I realise may be the case, we ask him at least to recognise the validity of the arguments that we put forward in some detail in Committee, and to give an undertaking that, in the event of any dissolution, the 25 Government would introduce some scheme tailored more to the needs of co-operatives than are many of the existing small business schemes.
§ Mr. Dick Douglas (Dunfermline, West)
I support the amendments, because I want the Minister to use this opportunity to allay the fears of hon. Members, particularly those who are involved in the co-operative movement, about the Government's intentions for the future of the Co-operative Development Agency.
The effect of amendment No. 1, as my right hon. Friend the Member for Swansea, West (Mr. Williams) explained, would be to make it obligatory on the Secretary of State to consult people in the co-operative movement comprehensively about any winding-up of the agency. The Minister gave an undertaking in Committee that there was no likelihood of the agency being wound up within a period of, say, six years, but that, of course, is subject to any indication by the Treasury of cuts in public expenditure.
A fear exists about what will happen to the agency's assets should it be wound up. The Government are increasing the agency's powers and obligations, without saying that they are willing to subvent the agency further. Additional impositions are being put upon the agency. I refer to national training schemes, to new types of support for small businesses and to the co-operative movements ability to qualify for such support.
I hope that the Minister recognises the concern, both within and outside the co-operative movement. We hope that he will take this opportunity to give assurances about how training overheads will be borne by the CDA. Perhaps the agency will be able to raise sufficient extra funds from outside sources and be in a quasi-commercial position, but there is no guarantee of that. The co-operative movement is still in its embryonic stage. It needs assistance in training and in gathering know-how.
The object of the amendments is to probe the Government's intentions further. The Committee on the Bill probed a great deal, but we have once again to ventilate our fears on the Floor of the House. I hope that the Minister can give an adequate reply and assurances about the future of the CDA.
§ Mr. David Alton (Liverpool, Mossley Hill)
I am reluctant to support the amendments, not because of the principles to which the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Dunfermline, West (Mr. Douglas) aspired, but because I do not believe that they add much to the Bill. We said in Committee that we were worried that the limited life which the Co-operative Development Agency enjoyed since 1978 was being extended for only another relatively short time. We want the agency to be given a permanent place, without a damoclean sword hanging over its head, and without the possibility of its being wound up. We have for a long time been seeking to ensure its permanency.
We were glad when the Government announced a further six years of life for the CDA and said that £200,000 was to be provided. If the amendments were passed, the future of the CDA would be called into question yet again and more uncertainty would be cast over its future.
I understand that the amendments are perhaps a device to have yet another debate on this part of the Bill. We welcome the debate, but I do not think that the amendments add much to the Bill. They will not allay fear 26 that the CDA might be wound up. If that were to be proposed, we and the official Opposition would oppose the move vigorously. The safeguards for which we look in terms of parliamentary scrutiny and control already exist.
I am unhappy about the possibility of funding currently available to the CDA being redeployed, almost as soft money, without the type of scrutiny which the CDA can bring to bear. I am also worried about the possibility of more Meridens, which would loom large if the amendments were passed. If anything, I do not think that the amendments are ambitious enough or that the Bill sets a sufficiently large target for developing the co-operative sector.
I have long argued that we should develop the co-operative sector to about 10 times what it is at present. I have made the point before that the CDA receives only one tenth of the funding received by agricultural co-operatives, yet farmers constitute only 2.5 per cent. of the work force and are a relatively well-protected sector.
Clearly, there is room for the expansion of co-operatives. One need only look at what co-operatives have achieved in other European countries. In Italy co-operatives constitute about 7 per cent. of economic activity, and 5 per cent. in France, yet in the United Kingdom it is not a measurable statistic. We should set a target of employing at least 1,000 people in co-operatives.
I should also like to see a more ambitious role for the CDA, especially in the further establishment of industrial democracy, rather than just co-operatives. The CDA would have a useful role to play. We debated that in Committee. Clearly, Liberals and Social Democrats, because of our traditional commitment to the sharing of the power of wealth and work, would like to see the CDA used as a tool to achieve that.
The amendments would add little to the Bill. I suspect that they will cause unease among those in the CDA. At this stage, together with hon. Members on both sides of the House, I pay tribute to George Jones and his team in the CDA for their work.
The measure opens the old arguments about the possibility of the CDA being wound up and what would happen to its funds. Let us talk no more about the possibility of winding up the CDA. The Bill gives it a life expectancy of six years. We should agree to give the CDA funding of £200,000. I wish it could be more, but at least the Bill will provide £200,000. We should ensure that the CDA becomes an institution in this country, with more ambitious objectives and, ultimately, a greater role and wider parameters for dealing with other important issues such as industrial democracy. For all those reasons, I am reluctant to support the amendments.
§ Mr. Ian Wrigglesworth (Stockton, South)
I shall make a few brief remarks in support of my hon. Friend the Member for Liverpool, Mossley Hill (Mr. Alton) and others who have spoken. I understand that the Government are taking into account the Labour Front Bench amendment and that it may not be necessary to press it to a vote. No doubt the House will welcome that.
I emphasise what my hon. Friend the Member for Mossley Hill says about our commitment to the CDA. We all realise that the development of producer co-operatives in this country has been very slow and small by comparison with consumer co-operatives. When one 27 draws comparisons with the co-ownership producer sector against that of other countries, one realises how small it is.
There are historical reasons for that, which we all understand. All Opposition Members want to see that imbalance rectified, with the development of more producer co-operatives. There are a variety of ways in which that can take place. The Minister has referred to some of the local co-operative development agencies and their excellent work. I strongly support the excellent job that they are doing in different parts of the country.
I was much involved in putting forward the original proposals that led to the establishment of the Development Agency. When we were doing that in the early 1970s our idea was that it should have a much bigger budget and much greater resources than was the case when it was first introduced. Indeed, the resources were to be greater than those envisaged in the Bill. We welcome increased provision for the agency, but why the Government should have raised the spectre of the agency being wound up is beyond me. It is also beyond most Opposition Members.
We all know that if the Government want to do away with such a quango, they can easily do so, as they have so ably demonstrated, often amidst criticism from Opposition Members. They can easily abolish such agencies, and need come to the House only to put through the necessary legislation if they wish to do so. In our view, there was no need to introduce such provisions or such uncertainty into the future of the organisation.
The Government must accept that that very uncertainty impedes the agency's progress and undermines its work. In five years' time, questions will be raised. It will be asked whether the agency is to continue, whether its budget is to be replenished and what its role will be. Organsiations that have come to rely on the agency and that have become used to looking to it for advice and assistance will wonder whether it will still exist. That was never necessary, and we very much regret that such a provision has been included in the Bill. On the face of it, the Bill was introduced to help the agency to do its work.
I hope that the Minister will say that the consultations that the amendment seeks to ensure will be undertaken, and thus that the amendment is unnecessary. We believe, however, that all the provisions for winding up the agency are unnecessary and that is why we do not look favourably upon the amendment.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. David Trippier)
I am anxious to allay the fears expressed by Opposition Members. As I said in Committee, we are proposing to run the agency for six years and it is unlikely that a decision to wind it up will be taken during that period. At the end of the six years the position will be reviewed.
It was always the Government's intention that persons connected with the co-operative movement would be consulted on the agency's future before any decision was reached. The Government are, therefore, sympathetic to the intention behind amendment No. 1. However, in our view the amendment, as drafted, goes too far, since it would require the Secretary of State to undertake statutory 28 consultations on purely administrative matters such as the transfer of the agency's property, rights or liabilities and the formalities of dissolution.
However, in the spirit of good will that existed in Committee, I am delighted to say that we are certainly prepared, with your permission, Mr. Deputy-Speaker, to move a manuscript amendment provided that the Opposition are prepared to withdraw their amendment. The manuscript amendment requires the Secretary of State to consult persons representing the interests of the co-operative movement before he makes an order terminating the agency's functions. I believe that that meets the Opposition's concern, and I therefore hope that the right hon. Member for Swansea, West (Mr. Williams) will withdraw his amendment at the appropriate stage.
I turn to amendment No. 2. I remind the House that it was our intention that the CDA should move towards self-sufficiency. Having spent a considerable amount of time looking at the CDA, visiting co-operatives and having long discussions with those excellent people, Mr. Ralph Woolf, the chairman of the CDA, and Mr. George Jones, the director—and we are all very anxious to compliment them—I was satisfied that we should continue to fund the agency. That was the whole purpose of putting the legislation in its present form.
The right hon. Member for Swansea, West mentioned the loan guarantee scheme. I listened to him carefully, and he said that the scheme, as currently revised, was substantially more costly. In the spirit of good will that I have tried to generate, I would not wish to argue forcefully with him on that point. However, the net cost of the premium for the loan guarantee scheme has risen from 2.4 per cent. to 3.5 per cent., which is an increase of 1.1 per cent. That is not a substantial rise. The purpose of amending the loan guarantee scheme is to increase the exposure of the banks in the hope that they will improve their appraisal and monitoring procedures.
§ Mr. Williams
In the spirit of good will that we are both sustaining, I should point out that that increase of 1 per cent. can also be seen as an increase of nearly 50 per cent.
§ Mr. Trippier
I do not want to be sidetracked on to the loan guarantee scheme, because I could go on at length about it. However, when it was first introduced, the rate of interest—I hesitate to say that it was very high and was, I believe, inherited from the previous Labour Government—still meant that the scheme was extremely attractive. Nevertheless, I do not want to press a party point. The right hon. Gentleman referred to a possible cut of 25 per cent. in the number of applications made, and he correctly quoted from something that I said in a press statement. The percentage was purely a guestimate on my part. But I have also publicly said that the funds made available through the loan guarantee scheme are very much needed.
The hon. Member for Dunfermline, West (Mr. Douglas) was, of course, right to point out that the decision whether to continue funding the agency after six years is subject to Treasury approval, as so many things are. I cannot allay his fears about the future of the CDA any more than I did in Committee. He said that maybe the CDA would attract funds. I think that he was being rather pessimistic and I would certainly be more optimistic than that. I have had two meetings with the CDA since the 29 Committee last met, and I am encouraged by what Mr. Jones has told me. The CDA not only regards what we have set down for it as something of a challenge, but is also achieving a good deal at present. It may interest the hon. Gentleman to know that I am trying to persuade a rather large co-operative to help the CDA by funding a video or film that will explain what co-operatives do throughout the country. It was also said that the CDA was in its embryonic stage. I would not disagree with that in any way. However, it is precisely because it is at that stage that I decided that we should continue to fund it.
I am afraid that the Government cannot accept amendment No. 2. In the first place, provision has already been made in clause 3(4) to permit any sums received from the winding-up of the agency to be applied by the Secretary of State for purposes corresponding with the functions of the agency. Therefore, there is no need to specify that a part of those sums should be used for training or facilitating access by worker co-operatives to general measures of support for small businesses. When the Bill is enacted those activities will, of course, be consistent with the functions assigned to the agency.
I remember the hon. Members for Liverpool, Mossley Hill (Mr. Alton) and for Stockton, South (Mr. Wrigglesworth) referring to local co-operative agencies, and I am grateful to them both for doing so. In Committee, I also referred to those agencies in favourable terms. I applaud their work. However, I cannot resist saying once again that the assistance being given to the existing co-operatives by the staff of the local CDAs is extremely intensive—although I recognise that very few of those whom they have helped to get off the ground have gone down, which is to their credit. The hon. Member for Mossley Hill may remember that I said, I think at the Committee's first sitting, that I had worked out that one full-time worker in a CDA would be looking after only 32 co-operatives. If the number of small firms counsellors who are contracted to the Department were added to the number of directors of local enterprise agencies, one adviser would be looking after 2,450 small firms, since the total small firms sector numbers 1.3 million. As the Minister with special responsibility for small firms, I am anxious wherever possible to encourage giving what is known as hands-on advice. The co-operatives are doing this, and I welcome it; they are doing extremely well at present.
Amendment No. 2 would also permit some of the proceeds from winding-up to be used for a co-operative development fund or a loan guarantee scheme. That is unacceptable, as providing money for those purposes would go beyond the agency's functions. While we welcome the growth of co-operatives, as I said, we do not believe that they should be in any way subsidised.
§ Mr. Williams
The Minister is making the very point that perhaps I did not make adequately. He says that it is beyond the agency's functions. When he withdraws the agency's functions by closing it down, then will be the time for it to receive alternative support of the kind that we specify in the amendment.
§ Mr. Trippier
I thought that I had made it clear in Committee that co-operatives have access to the many schemes that are targeted at the small firms sector, in the way that other small firms do, and that they would not lapse. To provide further schemes using public funds 30 would, in our opinion, unduly favour co-operatives compared with other types of small businesses. In addition, in the case of the loan guarantee proposal, co-operatives already have, and would continue to have, access to the Government's existing loan guarantee scheme.
The Government do not believe that a decision on the use of moneys arising from the winding up of the agency should be statutorily constrained by the wishes of the co-operative movement. However, we should have regard to any wishes made known to us. I hope that Opposition Members will accept that position and withdraw amendment No. 2 also.
§ Mr. Deputy Speaker (Mr. Paul Dean)
It might be helpful if I tell the House that Mr. Speaker has selected the manuscript amendment to which the Minister referred.. I shall give the Minister an opportunity to move it' when the debate on this amendment is concluded.
§ Mr. Geoffrey Robinson (Coventry, North-West)
We listened with interest to the Minister's remarks. Much has been achieved by the co-operatives, by worker participation and by progress in industrial democracy. My hon. Friends and I take such issues most seriously. The Conservative Back Benches have been entirely vacant for the best part of the discussion. That is more eloquent testimony than anything I could say to the total lack of interest on the part of Government supporters.
I, too, pay tribute to the work of the CDA's chairman, Mr. Ralph Woolf, and director, Mr. George Jones. The Minister explained how impressed he had been during the visits to the agency. The Government have decided to continue to fund the CDA, albeit at a lower level than we should have liked. The Opposition are grateful for any clemency afforded by the Government to any form of quango that remotely purports to represent the interests of labour, and we are grateful, therefore, that the CDA should have a further six years of life envisaged for it, with the funds, at a moderate level, necessary for it to continue.
At the very time when we are seeing a growth—not an explosive growth; perhaps it is all the better for that — of interest in co-operatives, with workers being interested in playing a role in the survival of their companies, the Government are forcing the CDA not to undertake more work and create more co-operatives, not to invest more widely in the real assets of the co-operative movement, but instead to raise its own funds.
We are grateful for the concessions that have been made, and to which I shall come shortly, but putting much pressure on the agency at this early — as the Minister described it, embryonic—stage in its development will inevitably divert it from the role that it should be pursuing, which is the development of co-operatives. It should not be seeking money to ensure that it can continue to develop. The two things at this stage of the CDA's existence do not easily go together.
My right hon. Friend the Member for Swansea, West (Mr. Williams) pointed out, in relation to amendment No. 2, that in the event of the Government winding up the CDA the funds that would have been invested for co-operative purposes should continue to be used for those purposes. But perhaps now is not the time to look forward to what should be done in the event of the Government deciding to wind it up, and for that reason we shall not vote on amendment No. 2.
31 We have been struck by the Government's insistence that they must now provide statutorily for the winding up of an organisation which, they say, should continue to exist. My right hon. Friend pointed out that we were sufficiently committed to the CDA when in office to feel that any such statutory provisions were unnecessary. They are bound to give rise to the suspicion that the Government are not as fully committed to the agency as their words might imply.
It was, therefore, disappointing—he may be more forthcoming when he moves the manuscript amendment to which he referred—that the Under-Secretary could not give as clear-cut a commitment as he gave in Committee, when he said that it was unlikely that the agency would be wound up during the next six years. A statement to that effect would place on record as firm a commitment as we are likely to get from the Government. We shall, even so, have the strange position that, even with that degree of sincerity and firmness of intent, the Government feel it necessary to provide for the winding up of the very agency that they are now refunding.
For that reason, the speeches from the Liberal and SDP Benches were strange. It is not in our power to make the Government withdraw the provision; it is part of the Bill. The best that we can do is to secure an assurance that, should they decide to take that step, the interests of those in the CDA and those whom the agency has funded will to some extent be protected. That is why I cannot understand the decision of alliance Members not to support amendment No. 1.
§ Mr. Alton
We have made it clear that this provision should not have been in the Bill from the start. If it becomes the intention of the Government, in five or six years from now, to wind up the CDA, that, we believe, will be the time to deal with the issue, including the whole question of consultation. That is why we are not in favour of inserting contingency arrangements in the legislation at this stage.
§ Mr. Robinson
The hon. Gentleman will recall that we opposed the inclusion of the provision throughout our examination of the Bill in Committee and voted several times against various aspects of it. Unfortunately, but inevitably at this stage of the Parliament, we lost those votes. There would be no purpose in voting again on the same issues and losing conclusively again.
It is important to bear in mind that the Government have not entered into any commitment and that the agency is a quango. The Treasury may run short of money and we do not know what may come from that. We shall be grateful if we can have enshrined in legislation the best assurances and consultative procedures that we can obtain from the Minister. The Minister referred to the usual technical deficiencies of the amendment and added that he would be prepared to make arrangements for an amendment to be moved in another place that would meet our substantive argument on the need for consultation. It is against that background that I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Trippier
I beg to move, as a manuscript amendment, in page 3, line 21, after 'made' insert`without first consulting the persons required by section 1(3) of the 1978 Act to be consulted for the purposes of that section and'.32 The hon. Member for Coventry, North-West (Mr. Robinson) said that there was a lower level of funding than the agency would like. That is the fact, but the funding, which is substantial by any standards, is at a much higher level, at £200,000, than the £75,000 that is being paid to Business in the Community. That is the argument that I advanced in Committee. Both sides of the House should draw comfort from the fact that we have given six years of stability to the agency, which is a longer period than any it has enjoyed in the past, and I gather that it welcomes it.
Perhaps the hon. Member for Coventry, North-West did not hear me say that it is unlikely that a decision to wind up the agency will be taken during the six years. He now asks me to say that it is most unlikely that that will be done. The hon. Gentleman will have noted that I am in an amenable frame of mind, and accordingly I am anxious to acquiesce to his request.
§ Amendment agreed to.