To ask the Chancellor of the Exchequer, what assessment he has made of the potential contribution of cooperatives and mutuals in his industrial plan for the country.
Co-operatives and mutuals contribute to the UK economy by offering a different form of running a business, with a focus on delivering the services their members and communities need.
The Government has improved the business environment for co-operatives and mutuals through the Co-operative and Community Benefit Societies Act 2014 which cut through the legal complexity involved in running a co-operative, improving their competitiveness. The ability of co-operatives to raise £100,000 of withdrawable share capital per member, increased from £20,000 in 2014, has ensured that co-operatives have the flexibility to raise funding and compete more effectively with companies.
Furthermore, following the interest rate cap rise from two per cent to three per cent in 2014, credit unions have expanded into higher-risk markets and provide an important alternative to high-cost lenders. The prize-linked savings scheme, which was offered through credit unions, increased individuals’ financial resilience and raise awareness of credit unions. Credit unions have also benefited from the distribution of dormant asset funding by Fair4All Finance, including their £5m COVID-19 resilience fund.
At Budget 2021, the Government also announced the £150m Community Ownership Fund. This will allow community groups to bid for up to £250,000 matched-funding to help them buy or take over local community assets at risk of being lost and run them as community-owned businesses, supporting co-operative entrepreneurship. In the first round of the fund, the Government funded 38 bids, totaling £10.07 million. Twenty-six of these projects were in England totaling £7.6 million; six in Scotland totaling £1.2 million; three in Wales totaling £460,000; and three in Northern Ireland totaling £780,000. Second round bids are currently being assessed and funding decisions will be announced in due course.
The Government will continue to support the growth of the mutuals sector. Through the Financial Services and Markets Bill, the Government will enable credit unions in Great Britain to offer a wider range of products and services, thereby supporting the growth, diversification, and development of the sector.