October 2022 digital edition
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POLITICS<br />
Co-op movement urged<br />
to back co-ops and<br />
mutuals bill ahead of<br />
second reading<br />
Co-operators are being urged to voice their<br />
support for the Co-operatives, Mutuals<br />
and Friendly Societies Bill, which is due<br />
for its second reading in the House of<br />
Commons on 28 <strong>October</strong>.<br />
The private members’ bill, which passed<br />
its first reading on 15 June, was developed<br />
by advocacy organisation Mutuo and<br />
Preston’s Labour and Co-operative MP,<br />
Mark Hendrick, and covers four key<br />
areas of reform long sought by the co-op<br />
movement.<br />
Firstly, it would make changes to share<br />
capital arrangements for co-ops, enabling<br />
p Mark Hendrick<br />
them to raise more money through<br />
perpetual, non withdrawable shares.<br />
The bill’s campaign website states that<br />
“co-operatives are at a disadvantage to<br />
their shareholder-owned competitors<br />
in relation to how they raise and retain<br />
capital”, and that “further legislative<br />
reform is now needed in the UK, so cooperatives<br />
have new options to access the<br />
finance capital that they need for growth.”<br />
The bill would also confirm that mutual<br />
insurers and friendly societies that issue<br />
mutuals deferred shares would not be<br />
disproportionately impacted when paying<br />
corporation tax. The Mutuals’ Deferred<br />
Shares Act was passed in 2015, allowing<br />
mutual insurers and friendly societies to<br />
issue share capital for the first time.<br />
An option for legacy reserves to be made<br />
indivisible for co-ops, mutual insurers<br />
and friendly societies is also proposed as<br />
a disincentive to demutualisers. The bill’s<br />
website references the recent attempt<br />
Image:iStock<br />
to demutualise LV= in its argument for<br />
the provision: “As witnessed with LV= in<br />
2021, mutuals remain a target for assetstripping<br />
demutualisers, attracted by the<br />
legacy assets built up over generations,”<br />
adding that legislative safeguards such<br />
as this would “disincentivise asset raids,<br />
and help to preserve mutual ownership<br />
and corporate diversity”. Most co-ops<br />
currently include non-distributable<br />
capital surplus provisions in their rules,<br />
but according to a statement made by<br />
Co-operatives UK, this often falls short of<br />
the permanent legal guarantee sought by<br />
co-op investors.<br />
Also included in the bill are changes<br />
to the Friendly Societies Act 1992, which<br />
the campaign says is “desperately out<br />
of date in a number of areas”, imposing<br />
“unnecessary restrictions on ambitious<br />
friendly societies and … problems that<br />
the Companies Act has overcome in the<br />
intervening period”.<br />
SAOS calls on Scottish government to include co-ops in farming reform<br />
In its autumn update to members, the<br />
Scottish Agricultural Organisation Society<br />
(SAOS) has given a mixed response to<br />
progress on the Scottish government’s<br />
agriculture bill.<br />
The bill is looking to create a post-Brexit<br />
framework for the agri sector, with farmers<br />
taken out of the Common Agricultural<br />
Policy (CAP) and its system of subsidies.<br />
The plan is to introduce payments and<br />
schemes that are developed in Scotland<br />
for Scottish farming, rather than being<br />
rooted in CAP legacy policies.<br />
SAOS, the umbrella organisation<br />
for Scotland’s agri co-op sector, sits<br />
on Scotland’s Agricultural Reform<br />
Implementation Oversight Board (ARIOB)<br />
and says it is pushing for “quicker, bolder<br />
reforms that will encourage more cooperation<br />
and support co-op business<br />
operations”, adding: “We are gaining<br />
traction but progress is slow.”<br />
It says that thanks to its input there are<br />
positive signs, with co-ops “specifically<br />
referenced as entities that could be<br />
eligible recipients of support”.<br />
The consultation also acknowledges<br />
that new specific funding mechanisms<br />
for the agri-food sector will be necessary<br />
including financial support for “Agri-food<br />
co-operation”.<br />
SAOS adds that the consultation refers<br />
to co-op working in terms of optimising<br />
collaboration and knowledge exchange,<br />
and there is also mention of collaboration<br />
within wider rural development.<br />
“These may appear only to be small<br />
wins,” it says, “but if these elements are<br />
enshrined in the enabling legislation then<br />
this becomes the skeleton upon which<br />
co-operation supportive schemes and<br />
funding can follow.<br />
“We urge all our members and<br />
stakeholders to participate in this<br />
consultation and provide proactive<br />
feedback on these and other areas that<br />
underpin a new, positive future for<br />
co-operation and co-op businesses.”<br />
10 | OCTOBER <strong>2022</strong>