HL Deb 30 July 1984 vol 455 cc534-44

3.2 p.m.

Lord Lucas of Chilworth

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [Increase in limit on grants to Agency]:

Lord Graham of Edmontonmoved Amendment No. 1: Page 1,line 13,leave out ("£3,000,000") and insert (£3,600,000 of which£600,000 shall be used to carry out the functions specified in section 2(2)(b)").

The noble Lord said: This is one of the main amendments, which has a number of facets. What we are seeking in Amendments Nos. 1 and 2—and I should like to speak also to Amendment No. 2—is to find out whether the Government can write into the Bill a specific provision for one of the major elements in the extended role of the CDA in the future; that is, the question of training. Amendment No. 2: Page 1,line 13, at end insert (", of which £600,000 shall be used to carry out the functions specified in section 2(h).").

I thought that the Minister was quite fair on Second Reading in acknowledging the importance of training, particularly in the early days of the establishment of what one might call the new co-operative movement—the worker co-operatives. We have experience over 100 years of the crucial importance of starting off a venture in the right way. The history of the co-operative movement, whether it be in this country or elsewhere, whether it be in consumer cooperatives, producer co-operatives or agricultural cooperatives, is studded with examples of good men and women with a first-class idea, with a great deal of enthusiasm and with not a little capital, foundering because, in spite of their enthusiasm, they have not been given even the rudiments of knowledge about the way in which to manage a business.

The Minister will recall that on Second Reading I spent a little time pointing out that we were gravely concerned on two points. One was what appeared to those who share my view to be a restriction on the amount of capital. The Minister will also recall—and I think the Committee could benefit from being reminded—that what we now have is a funding of the development agency for six years at the same kind of level as that on which it has been in the recent past: that is, £200,000 a year for six years, with a small cushion of £300,000 to be called upon in circumstances that we can envisage but which are not specified. So what we have is the possibility in six years' time of £200,000 a year, which will clearly be worth less than it is now.

In addition to what we consider is a reduction in funding, we also have the cry from the development agency itself that it needs more money. On top of that, we have the remit from the Government to ensure that those who have responsibility for successfully launching new co-operatives are trained effectively. We want to use this debate on this amendment to test the Government's intentions, not only in respect of training, which could certainly be improved, but also as regards two other premises upon which this Bill rests. One of them is that the CDA will be enabled to launch out into commercial activities and that it will not need to rely just upon central funding. We have been puzzled, and so have a great many people outside, as to what the Government have in mind as the range of activities. But I appreciate that under Amendment No. 5 we can deal in a little more depth with what the Government have in mind and with what we consider to be commercial activities.

We start off with an amount of money which, in our view, is inadequate, especially in the light of the enlarged remit, but the Government say, "Even if it is inadequate, the CDA can find other sources of income: first, from commercial activities; and, secondly, from grants and assistance". The grants which the Government have in mind, and which have been alluded to in another place and by the Minister on Second Reading, are from the European Community. We believe that the Government are making a major mistake in resting on the premise that the CDA will be able to augment the basic sums of money to any large extent. We believe that it was never the intention of the working party which was established in 1977, and whose outcome was the creation of the CDA, that it would need to rely to any large extent on central funding in order to do its major work. The Government have to answer a number of questions, one of which is: what precisely do the Government see as measuring the success of the CDA? Is it simply a question that it should manage its activities out of the funds allocated to it, or, if we are looking for success, do we want successful cooperatives—not merely a handful but many successful co-operatives —to be established?

The Minister knows, as do all those who follow these matters know, that there has been a phenomenal increase in the establishment of new co-operatives, inspired very often by the CDA, but also inspired very often by local, county and borough-created CDAs. It would be a tragedy if there were to be a succession of failures in the next few years. We need not merely the establishment of new co-operatives, but the maintenance, success and continuation of those new co-operatives. Therefore we want the Minister to tell us whether he believes that a duty should be laid upon the CDA to encourage training.

If one looks at the annual reports of the CDA over the past few years. one is left in no doubt that the CDA recognises its responsibilities. However, we fear that the CDA does not have adequate funding in order to carry out its training responsibilities. We believe that at least £100,000 a year over six years—that is £600,000—ought to be the basis of the CDA's training responsibilities. We believe that if at least £100,000 a year were to be specifically earmarked for training, additional sums of money would need to be provided for the CDA.

What are the additional functions of the CDA? One of its functions is to promote co-operative ownership. Secondly, it provides help for the development of projects. Thirdly, it has to answer inquiries. Another function of the CDA is to respond to the cries of small groups of workers who feel that a co-operative might be the way out in regard to either a bankrupt private organisation or an organisation that is failing to find the answers in the market place. The CDA has to answer a great number of inquiries which take up a great deal of time. Another function of the CDA is to give advice to local CDAs, to local authorities, and to Government departments. Another function of the CDA is to keep under review the legal and financial matters which relate to co-operatives. Yet another function, which has now been emphasised, is to pay attention to generating commercial schemes which will raise cash. The current budget of the CDA is approximately £200,000 a year. We believe that it will prove to be—I shall not say impossible, because nothing is impossible—quite inadequate to finance those activities.

From the sums of money which are available we want to earmark at least £100,000 a year for training. We believe that there is a massive need for training, not just in terms of co-operatives, but in a great many other areas as well. Education in the philosophy of co-operation, as well as education in the practical skills of running a small business is absolutely crucial. Some very big organisations which were called co-operatives have come crashing to the ground because of the lack of management skills. We are not envisaging that kind of situation. We are envisaging the steady need to train eager, untutored men and women who like the idea of running their own business, given the opportunity, sensibly and systematically to learn the skills of the trade. One of the skills of that trade, besides manufacturing, will be how successfully to stay alive as a business. Accountancy and managerial skills, marketing, problems relating to exports, and how to survive in a business environment may be completely new to many of these men and women. The Government believe that home ownership should be more widely spread. We believe that job ownership should be successfully spread.

We are talking about £200,000 a year in order to create a successful CDA and the expansion of the cooperative idea. This is a tiny sum of money. We hope that the Government appreciate that this amendment, which seeks to earmark almost half of the annual sum of money allocated to it for training, presents other problems: that if more money is provided for training, less money will be available for other activities. The Minister may say that I shall have to put forward some good ideas about how to attract additional money. We want the Government to tell us, in relation to this amendment (which, although it is a separate amendment, is not wholly unrelated to Amendment No. 5) how we should look for the other sums of money that he believes will be made available.

Reference was made during the Second Reading debate to the co-operative college which is run by the retail co-operative movement and to Beechwood College, a specialist college which is associated with the industrial common ownership movement. Efforts are being made and the need for training is recognised by those who are successfully promoting those efforts. I pay full tribute to George Jones, who is the chief executive of the CDA and to his small, specialised committee. They have been handpicked by the Minister because of their knowledge of practical cooperative management. We believe that this work is already being done, but we want it to be stimulated.

A team consisting of two people, with support staff, could easily cost £50,000. That is not exorbitant in terms of salaries and the cost of support staff. If one is talking in terms of a national project, with two or three people to do the job properly, one immediately recognises that the sums of money which are to be made available are inadequate.

We believe that there is a good reason why the Government should respond helpfully to the main imperative of this amendment: that if we are to do the job properly, we have to do it well. If we are to do the job properly, adequate sums of money ought to be allocated to it. Therefore I should like the Minister to address himself to some of the other aspects.

I hope the Minister will not say that since the Government have provided the money, how it is spent—within the remit of the kind of projects which it is anticipated will be carried out and which I have itemised—is for the CDA to decide, and that if the CDA is short of money, it will have to try to obtain grants from other bodies and at the same time be successful in its commercial activities. In my view, that would virtually cripple the CDA at the very beginning of what could be an exciting and expanding era.

The Minister may also say that there is a range of functions which are already provided for. I am thinking of consultancies and advice of one kind or another. However, the Minister is not unaware that during the last three or four years there has been a plethora of successfully established CDAs at local level. Many of them were established through the efforts of the central CDA. They now have their own expertise and do not require the consultancy services of the central CDA. In other words, the market for the central CDA in terms of successfully engaging in that kind of commercial activity is not so great as the Minister may very well say that it is. Therefore we want the Minister to support the maximum need for training in the context of successful co-operatives that is provided for by this amendment. If he agrees with that, he must agree with the premise of our amendment that there needs to be a clear, very heavy marking of the monies available for training. It is in that context that I move this amendment.

3.20 p.m.

Lord Oram

I should like briefly to support my noble friend, Lord Graham, in his moving of the amendment and in drawing your Lordships' attention to the vital necessity for good training facilities for small co-operatives. In a sense, we are passing through a decade which parallels the early growth of the consumer co-operative movement more than a century ago. Those pioneers of the consumer cooperative movement wrote into their famous principles, the Rochdale principles, the need for education. What they had in mind in those days was education in the three Rs. When I say that we are in a parallel situation, I am not suggesting that that kind of education and training is necessary in these later days. What I am suggesting is a parallel, that there are, as my noble friend has illustrated, growing up many small co-operatives of a different kind, workers' cooperatives, which have grown very considerably over the past few years. It is for them that a special kind of training and, as my noble friend has pointed out, special funds are needed in order that that training should be properly provided.

In making my contribution to this debate, I seek to draw briefly on my experience as the first chairman of the Co-operative Development Agency, just a few years ago. I recall that this question of the provision of training was often a subject for our discussions in the board room. From that experience I should acknowledge that the Government have done well to include a stronger clause concerning training in the Bill now before us.

When we come to Clause 2, we shall see what the Government propose in that respect.

The Government are to be commended on including in the Bill a stronger acknowledgement of the need for training. But as my noble friend has suggested, it is no use putting a new obligation or a new duty upon an agency unless the agency can see where the funds are to come from in order to carry out that new function or that new duty. It is to that end that my noble friend has moved the specific Amendment No. 2 on the Order Paper.

I would just point out that two special aspects are to be taken into account when considering training courses for the small co-operatives that we have in mind. Possibly a dozen building workers or a small group of printers are struggling, with small resources to set up their own collective business, perhaps because they have become unemployed. It is not easy for them to enter into the normal education and training system that we have in this country. They cannot afford the fees; perhaps they cannot afford even the fares to go to the Co-operative College in Loughborough, for example, or to Beechwood College near Leeds. More important, if they are a small group of artisans they cannot afford to spare the time of their leading people to be away from the business for a period of study.

I think the solution to this dilemma is that there should be a proliferation of local provision of training facilities, perhaps only over a weekend, or at most a week's duration for a course, so that the leading people in the small co-operatives can get together and gain the skills in a short course. This I believe to be a main part of the work of the local co-operative development agencies which have been increasing splendidly in recent years. It is also I think part of the responsibility of local authorities if they can engage in expenditure without the danger of rate capping. I think that kind of provision is so necessary and could be provided if the funds were made available.

There is just one other aspect that I should like to point to on why the kind of training we need for these co-operative societies is rather special, rather distinctive. What we need to do is to bring together two kinds of people and two kinds of skills. We have on the one hand those who are motivated by the co-operative philosophy, who believe that it is a good thing that they should get together with their workmates and be their own bosses and own their own business in a collective way. But that sort of person does not necessarily have the management skills, in accountancy or in legal understanding.

On the other hand, there may be a local solicitor or a local businessman with other skills. What is needed is a course of training which brings together those two kinds of people and two kinds of skills.

It is with those considerations in mind that I think that the Government should not only have in the Bill the need for training but should pay attention to what my noble friend has said about the need for resources to enable that training to be undertaken.

Lord Lucas of Chilworth

I am most grateful to the noble Lord, Lord Graham of Edmonton, for explaining so fully, as he did, the purpose of his Amendments Nos. 1 and 2. I do not want either the noble Lord, Lord Graham, or the noble Lord, Lord Oram, to think that I am being frivolous about this matter when I say that there does not appear in either of the two arguments that I have heard to be any suggestion as to how that which both noble Lords opposite want to achieve should be achieved other than by giving more money.

I thought I made it quite clear when we had our Second Reading discussion that the Government cannot accept any further increase in funding than that which is provided for in the Bill. It is the Government's view that the agency should eventually become independent of Government funding, and with this in mind we have set the funding at a level which we believe will encourage the agency to maximise its own earning powers and to seek support from the private sector. To raise the amount even further, for whatever purpose, as suggested by this amendment, would run counter to the Government's policy.

Having said that, of course both noble Lords who have spoken are quite right in their underlining of the need for training. But I think they have also confused, to a small extent, the need for training as such and the need for making other people aware of certain requirements that a co-operative may have if and when it gets off the ground. I think we shall probably come back to this when we discuss Amendment No. 4.

The noble Lord, Lord Graham, is tremendously persuasive. He quite rightly summarised the funding figures of the agency; but again in his earlier remarks and also in his concluding remarks there was the cry from himself and from the agency for more. Let us not forget that the agency are not restricted only to the monies we have been talking about. They have received some £44,500 in the past year from the European Social Fund for a training programme they undertook in 1983–84. I believe that the last tranche of this is due in a number of weeks. Furthermore, they expect to receive additional funds from the social fund for another programme.

Amendment No. 2, which really forms the basis of the noble Lord's argument, underlines the fact that under the 1978 Act the agency are given 10 specific functions. The noble Lord referred to some of these, and we are adding two other specific functions. No where in that legislation, nor in the Bill before us, is it specified what proportion of funds the agency should devote to any of the activities, nor indeed the priority they should give to those activities.

The amendment seeks to specify the proportion of funding the agency should spend on training. Although we regard training as important, we believe it would be quite wrong in legislation to impose, as it were, our two hands on the agency's management, in saying, "Thou shalt spend this amount of money on this item, and another amount of money on something else". We believe it is more important that the agency should be given greater freedom of action. That comes by virtue of the Bill providing for six years' funding; a security and continuity which the agency have not had before.

We believe it best that the agency should themselves determine their priorities and allocate their resources accordingly. During the period of his distinguished chairmanship the noble Lord, Lord Oram, directed the agency's affairs so successfully, and he will know better than I that the agency are fully aware of the importance of training. I do not believe it is necessary to emphasise this aspect in the Bill as the amendment seeks to do. I had hoped that in my exchange of letters with the noble Lord, Lord Graham of Edmonton, I had made that clear. The agency have undertaken training programmes in Great Britain and Northern Ireland with the financial support of the social fund; and, incidentally, the total cost was in the order of £88,000. The agency themselves are fully active in that sphere.

The noble Lord, Lord Graham, said that it would be difficult for the CDA to raise the additional funds he thought they needed; and nobody denies that. But giving the agency additional funds would not help them to achieve the self-sufficiency which the Government seek to encourage over the next six years. The noble Lord asked also what the Government see as being the success of the CDA; he asked whether the Government's perception of success was restricted to money. Of course it is not restricted to money. The CDA's success will be in the growth and long-lasting nature of those co-operatives which the agency seek to promote. Many people approach agencies such as the CDA and say, "I have a very good idea. I want to establish a co-operative. This is my product". The CDA have to say no, because there is not the lasting commitment. In no way, I think, is this amendment seeking to ensure that the CDA sustain a co-operative for time immemorial.

We believe that the figure of £3 million plus the small 10 per cent. cushion represent the correct level of funding, bearing in mind all the other commitments of the CDA. Certainly we do not wish to interfere in the way the agency spend their money. The noble Lord, Lord Graham, said finally that he has great respect for the CDA and their directorate, as do we on this side of the Committee and as do the Government, as I am sure the noble Lord, Lord Oram, would confirm, but he felt that if we were going to do the job, we should do it properly. He really said, "And so I ask you for more money". I am sorry—there is no more money. It is for those reasons that I invite the noble Lord to withdraw his amendment.

Lord Graham of Edmonton

Without in any way attempting to curtail the debate so far as other noble Lords are concerned, I should like to comment on two points the Minister has raised. Amendment No. 1 proposes that the current intention to limit the total amount to £3 million should be increased. The second amendment asks the Minister to place the proper emphasis on education. If we set aside the first amendment—which really counters what the noble Lord the Minister said in respect of the total sum not being increased—then the second amendment is not asking for more money. In that amendment we ask the Government to join with us in establishing the importance of education to the extent that we believe it ought not to be left as one of 10 or 12 objectives.

We believe that it ought not to be left to the overburdened executive of the CDA to decide how much time and money they can afford to spend on training. Our amendment says that we believe training is so crucial that the executive should be asked, "How much can you afford to spend on a range of items?" The Minister spoke of a figure of £3 million. We are talking about £200,000. We are talking about the yearly sum of money that is available. We are asking that question of an executive who have about £200,000, plus the possibility of a little more; I acknowledge that.

The CDA's report for 1981–82 states: 44. Three major education areas have been identified: on-the-job training in business skills for members of co-operatives and workers in local CDAs; co-operation as part of the curricula of schools and colleges; provision of literature and teaching aids on co-operation. 45. The Agency has continued discussions with Regional Management Centres and polytechnics on courses for co-operators on basic skills. However, it is clear that there is little or no provision for training co-operators even by the Manpower Services Commission (MSC). Existing training provisions do not acknowledge the democratic nature of co-operatives, the dimension of collective decisions or the special need for developing management skills, through training schemes or consultants, in those accustomed to working with their hands. A serious obstacle here is that co-operatives, particularly in start-up situations, can rarely afford the fees involved. It is appropriate therefore that these special needs should be brought to the attention of the Manpower Services Commission. I want the Minister to envisage this kind of situation. Faced with all the imperatives, it could well be that the management of the CDA says, "We cannot afford to spend a great deal of money and we certainly cannot afford to spend a great deal of time because we are constantly having to provide the expertise of our executives not only to answer questions, but also to help to establish other co-operatives". One may think it is marvellous that in the past three years the number of co-operatives has doubled. We do not want to see in the next five years the number of co-operatives being halved. One way of avoiding that is to make sure that one trains as quickly as one can identify them the handful of people in each co-operative who are keen.

The Minister says that he wants to leave the priorities, hierarchy and the specification of those items to the mangement of the CDA. It has managed very well in the past three years and I am sure that it will be able to manage in the circumstances of the next three to four years. However, what we have been trying to establish, as it were, is some kind of policy imperative by Parliament. One must realise of course the shoestring nature of the executive of the CDA. For example, in an article in Your Business in October of last year the following figures are given: Of the Agency's 15 staff three, including George Jones, are on secondment; three are paid for by the EEC; and two pay for themselves. The highest salary is £14,700 a year and the lowest is about £4,000. By any standard that is extremely good housekeeping. I say that they are managing on a shoestring, and they are managing without complaint—certainly no complaint to me—that they want higher salaries or more staff. I am simply saying that if Parliament recognises that establishing co-operatives in the business environment of the 1980s is good business for the nation, we ought to recognise the good business of training.

I deal very quickly with just one other point. If I am asking for £100,000 out of £200,000 to be earmarked for training, that leaves only £100,000 for everything else. But that is not necessarily so, because the Government tell me that there are other sources of funds, and there are other ways in which money can be made. For example, there is the extension of commercial activity. Therefore, I am not, as it were, closing my eyes to the fact that if I want more money spent on training, there is less available to be spent on other things. I am hoping that the Minister will convince us, when we come to Amendment No. 5 and are talking about the commercial activities, that he has a plethora of ways in which this additional money ought to be raised.

I believe this has been a useful debate. It has put on record that the Government recognise the crucial nature of training. They are unable to provide more money at this particular time, and I always recognise that. This has been a probing amendment and I believe the probe has been reasonably successful. If it is the wish of your Lordships' Committee I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Clause I agreed to.

Clause 2 [Extension of functions and control of Agency]:

Lord Grimondmoved Amendment No. 3:

Page 2, line 9, at end insert— ("( ) at the end of paragraph (c) there shall be added the words "including social service co-operatives" ")

The noble Lord said: The purpose of this amendment is to ensure that the Co-operative Development Agency has the power to encourage and set up co-operatives of social workers. The cost of social services is causing very great concern to all those who believe—and I do very strongly—in their purposes. The cost of social services since 1979 has risen, I believe, by about £1 billion. It is essential that we try to find new and more efficient ways of achieving the ends of these services and it is also essential that we tap private funds as well as public money.

I have been greatly impressed by what has been happening in Italy in this respect. There are now some 300 co-operatives of social workers in Italy. They contract both with public authorities and with private plants for all the purposes for which personal services are needed. As I mentioned on Second Reading, this is not a sinister type of privatisation put through by people with fascist leanings. One of the main centres of this development has been Bologna. For many years Bologna has been run not by the Conservatives, not even by such admirable people as the Social Democrats and the Liberals, and not even by the Socialist parties literally, but by the Communists. The Communists have contracted a good deal of social work to an organisation whose name I will try to tell your Lordships but I must ask your forbearance of my Italian accent: it is the Co-operativa Assistenza Domiciliare Infanzia Anziani e Infermi. As your Lordships will see, it covers a wide spectrum of activity. It is composed of some 80 social workers, of whom about 90 per cent. are women. As I said, it undertakes all sorts of social work, not only for the public authorities in Bologna but also for private plants, voluntary societies and other people who are concerned with the welfare of the young, the old, the handicapped, and so forth.

It has been found that these co-operatives have generated a new enthusiasm. They have proved to be more efficient than direct labour which was previously employed in Italy; and so far as I have been able to find out they give very great satisfaction to clients. I emphasise that they bring into the social field private as well as public funds.

I may well be told that the CDA can do all this under the existing Act; but I have also been told that the CDA rightly regards itself as having to look strictly at its terms of reference. I want to make sure that it is in a position to encourage and set up such co-operatives. If the Minister can assure me on that point, I shall be only too happy in due course, with the leave of the Committee, to withdraw the amendment. I beg to move.

Lord Lucas of Chilworth

I am most grateful to the noble Lord, Lord Grimond, for so carefully and clearly describing the purpose of his amendment. I do not think that the amendment is necessary, and I will I hope be able briefly to suggest to him why it is not.

Although a co-operative is not defined in the 1978 Act, the words "co-operative basis" in Section 2(c) of that Act clearly embrace co-operatives of all kinds. There is therefore no need to specify a particular type of co-operative in relation to the agency's functions under Section 2(c). I am advised that making reference to social service co-operatives, or any others of a particular nature, might cast doubt on the extent of the term "co-operative" in other parts of the Act.

I can confirm to the noble Lord that under Section 2(c) of the 1978 Act the agency already considers projects that might be undertaken by community co-operatives, or neighbourhood cooperatives—the so-called social service co-operatives. In addition, the agency has prepared model rules for these kinds of co-operative to help them register less expensively as co-operative societies under the Industrial and Provident Societies Acts. I think that should reassure the noble Lord, and I hope therefore that he will not feel the need to press his amendment.

Lord Grimond

I am greatly obliged to the Minister. It will not have escaped his attention that this was partly a public relations exercise in which I hope the Govenment will take some notice of these new developments in the social services. In view of his reassurance, I beg leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas of Chilworth

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.