We are delighted that Sir Mark Hendrick’s Co-operatives, Mutuals and Friendly Societies Bill received its Second Reading in the House of Commons on 28th October 2022.
With all-party and Government support, the Bill will now proceed to the Committee Stage in the Commons, where it will receive detailed scrutiny and be subject to technical amendment. We anticipate that this will take place before Christmas.
The Bill will act to preserve mutual ownership by ensuring that assets may only be used for the purpose they were intended. This would ensure they cannot be distributed to members or third parties, and thus disincentivizes demutualisation. The full debate can be read here.
We would also like to thank Richard Fuller MP, Peter Gibson MP, Chris Clarkson MP, Anna McMorrin MP, Sally-Ann Hart, Danny Kruger MP, Andy Carter MP, Dr Luke Evans, and Anna Firth MP for their contributions, as well as Tulip Siddiq MP’s welcome support from HM Opposition.
We warmly welcome the Economic Secretary, Andrew Griffith’s response: “confirm(ing) that we will support it because we believe in, understand and recognise the contribution that the mutual model makes to society and financial inclusion, which is important to hon. Members on both sides of the House, and the diversity that it provides for the financial services sector.”
The Bill received strong cross-party support with Richard Fuller MP stating that it is “an important responsibility of Government to maintain a structure of legislation that enables each of those organisational structures to thrive and prosper. Such organisations are the essential “little platoons” of the Burkean view of Conservative ideals and of the co-operative ideals of the Labour Party.”
Sir Mark Hendrick MP stated that: his “Bill will introduce new provisions to maintain the destination of the capital surplus to ensure that where a mutual’s rules make the capital surplus non-distributable, any resolution to convert it into, amalgamate with or transfer engagements to a company shall also include a provision to transfer the capital surplus, as provided by the rules in the event of a solvent winding up.”
Danny Kruger MP said: “I welcome the Bill…not all capital is fungible. It is not appropriate to allow all capital to be blown to the four winds at the whim of speculators and investors. It is important sometimes to lock capital in the places where it belongs, for the benefit of the people it was invested for.”
Peter Gibson MP also spoke in support of the Bill stating that: “Australia’s Treasury Laws Amendment (Mutual Reforms) Act 2019 introduced new mutual capital instruments (MCI). Under the 2019 Act, share owners in Australia are limited to one vote per member regardless of how many MCIs the owner holds. The Act also introduced a clarification that the issuing of MCIs does not amount to demutualisation by the organisation for tax purposes, I would be interested to hear the Minister’s thoughts on that Act and its relevance to any legislation that might be appropriate for the UK’s mutuals sector.”
Anna Firth MP said: “Co-operatives, mutuals and friendly societies are a wonderful resource embedded at the heart of our communities. They expand opportunity, wealth and aspiration throughout our great nation. They are democratically owned and controlled by their members, with profits reinvested in the organisations or among their memberships.”
Mutuo Managing Partner Peter Hunt said: “We welcome the level of support from across the House and look forward to working with Members of Parliament as the Bill progresses.”