2010 Mutuals Manifesto: Progress update

21 February 2013 | Advocacy, News

Two and a half years ago Mutuo was commissioned to produce a Mutuals Manifesto on behalf of the mutual sector.  This summary provides an overview on the Government’s progress to date on implementing these policy objectives.

We continue to work closely with the Government and Opposition Parties on policies and later this year we will be producing a Mid-Term manifesto in preparation for the next General Election in 2015.


Government should ensure that mutuals are understood and receive equal treatment across all Government departments

In the Government’s Coalition Agreement in 2010, it stated its desire to foster diversity in financial services, promote mutuals and create a more competitive banking industry.

‘We will bring forward detailed proposals to foster diversity in financial services, to promote mutuals and create a more competitive banking industry.’


Create a Government Office for Mutuals with a designated Minister for Mutuals

While there is a Minister in the Treasury who is responsible for legislations affecting co-operatives and financial mutuals, a specific multi disciplinary Minister for Mutuals has not yet been created.


Government should commit to alter the terms and approach of Regulatory Authorities to match Government policy (and promote mutuals)

Government has legislated to change the regulatory framework for Financial Services. During the passage of this legislation, the opposition pushed for the new Regulator’s responsibilities to include the promotion of mutuals but the Government rejected this proposal.


Government should support the Ownership Commission

The Government engaged positively with the work of the Commission on Ownership. This was demonstrated by the fact that The Rt Hon Vince Cable MP, Secretary of State for Business attended and spoke at the launch of the Commission’s Report in 2012.


Government should evaluate returning Northern Rock to the mutual sector

Government did not do this and sold it at a discount to Virgin Money.  However, although the Government decided to sell Northern Rock to Virgin Money, it did demonstrate its commitment to diversity in the financial sector and the important presence of mutuals in that mix by supporting The Co-operative Group to become the preferred bidder for 632 Lloyds branches which must be disposed off to comply with competition rules.


Public services should be supported to convert to mutuals 

Public Service Mutuals: The Cabinet Office established the Mutuals information Service, Mutuals Taskforce and the Mutuals Support Programme as a sign of their commitment to establishing new mutuals in public services.
The Mutuals Information Services is run by the Cabinet Office and gives advice and support to help public servants take over and run their organisations as mutual organisations. The Mutuals Taskforce is a group of mutual practitioners who advise the Cabinet Office and the Mutuals Support Programme refers to the £10 million which has been provided by Government in the form of grants to aspiring spin outs.  In the Government’s Mid-Term Review in January 2013, they stated that, “We will continue to support public sector workers who want to establish mutuals, and provide service commissioners with the information they need to support the creation of mutuals and co-operatives. We will continue to develop ‘Right to Provide’ policies that will enable mutual and co-operative organisations to deliver a wider range of public services.”
Although, the Government’s focus has almost exclusively been on mostly employee-led mutuals being spun out to run public services, this is nonetheless a step in the right direction.

Post Office Mutual: The Department for Business agreed to support turning the Post Office into a mutual and engaged Mutuo to advise the Post Office on how this might be achieved. This was then conducted through a feasibility paper.
Following this, the Government introduced enabling legislation and while this was passing through Parliament, they published a Consultation Document entitled, ‘Building a Mutual Post Office’. This Consultation was then completed after the legislation had been passed into law.  The Post Office are now taking this work forward in their business plan.


A regulator should be established to drive quality corporate competence

There has been no action on this point to date, but the formation of the Mutuals Information Service, Mutuals Task Force and the Mutuals Support Programme are a step in the right direction.


Ensure that mutual sector legislation keeps pace with company law reform

Credit Unions and Co-operatives Legislation: The main law governing credit unions is the Credit Unions Act 1979. A Legislative Reform Order (LRO) was made by Parliament and changes to the Credit Unions Act came into force on 8th January 2012. The changes remove restrictions in the current law and allow credit unions to serve many more people and use the increased flexibility to provide the services that people need.  The LRO changes also affected co-operatives by making changes in three key areas:

Young People: Allowing people 16 and under to become members of co-operatives and those 16 and over to stand for committees or boards; Share Capital: The £20,000 limit on share capital will now apply only to withdrawable shares; there will no longer be a limit on non-withdrawable, i.e. transferable, shares; Interim Accounts: The LRO allows societies to publish un-audited interim accounts provided they are clearly identified and published alongside the most recent audited accounts. This is a change that will save co-operative businesses thousands of pounds in expense.

Electronic communications in the mutual sector: In December 2010, the Government launched a consultation proposing to amend legislation to facilitate the use of electronic communications (such as email and internet) by the mutual sector. The consultation covered building societies, friendly societies, industrial and provident societies, credit unions and mutual societies. The consultation closed in January 2011 and Statutory Instruments have now been made in Parliament.

Consolidation of Co-operatives Legislation: In January 2012 Prime Minister David Cameron announced that the government would refer the legislation governing co-operatives to the Law Commission.  The announcement means that the 17 separate pieces of legislation governing the sector, much of which dates back to 1965 and has been developed piecemeal, may now be consolidated into one Act.