October 2022 digital edition

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the campaign says is “desperately out
of date in a number of areas”, imposing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