A co-operator’s guide to the Conservative cabinet

David Cameron announced his new cabinet earlier this week, with many ministers keeping their old positions. But what is their record on co-operatives, mutuals or credit unions? George...

David Cameron announced his new cabinet earlier this week, with many ministers keeping their old positions. But what is their record on co-operatives, mutuals or credit unions?

George Osborne, Chancellor of the Exchequer

In September 2013, George Osborne launched the coalition government’s “Shares for Rights” scheme, which enables employees to waive employment law rights in return for tax breaks on shares in their employer. These rights include the right to a statutory redundancy payment and the right not to be unfairly dismissed.

With this policy the government aimed to reduce red tape for employers while giving employees the incentive of tax-efficient equity. Although start-up companies have used it, the policy has been criticised for also enabling tax-breaks for senior management teams, by offering equity.

Iain Hasdell, chief executive of the Employee Ownership Association, told the Guardian there was no need to dilute the rights of workers in order to grow employee ownership, adding there was no evidence that the policy would help such growth.

The chancellor made another pledge to offer a “power shift to public sector workers” in the run-up to the general election. He talked about plans to allow public sector workers to create employee-led co-operatives and state services paid for by the taxpayer.

Mr Osborne argued this could help move away from top-down bureaucracies. Last year his party promised to introduce employee partnership models within the NHS to give health workers more say in how services are run.

Community energy is another area where the coalition made changes which could impact on co-operatives. In his 2015 budget, the chancellor announced the government was extending Enterprise Investment Scheme (EIS) tax relief to community energy co-operatives for another six months. This tax relief for investors was due to be removed for bona fide co-operatives on 6 April 2015. Under EIS, investors can receive 30% tax relief of the cost of the shares.

Relief can be claimed up to a maximum of £1m invested in such shares. The Treasury expanded social investment tax relief (SITR) as an alternative to EIS. The withdrawal of EIS will not occur until six months after state aid approval has been granted for SITR.

The extension was welcomed by a coalition of community energy co-operatives and support bodies that have been campaigning for a transitional arrangement.

However, the sector expressed concerns over the constant “start and stop” in support for community energy.

Iain Duncan Smith, Work and Pensions Secretary

Iain Duncan Smith is a member of the London Mutual Credit Union, which he joined in December 2013. He believes credit unions are a means to provide financial services to lower-paid families.

In an interview with the Telegraph in 2014 he urged borrowers and savers to consider credit unions, which, he said, offered some of the best rates on the market. The work and pensions secretary argued that saving with a credit union provided more than a financial return, as members invest in their local community.

Chris Grayling, Leader of the House of Commons 

Under the coalition, then-Justice Secretary Chris Grayling announced plans to privatise probation services. The reform will replace the public-run Probation Trust with community rehabilitation companies. The plan drew bids from more than 50 organisations, including eight mutuals formed by probation trust staff. The government’s list of 21 preferred bidders includes four probation staff mutuals.

Sajid Javid, Business Secretary

Last year parliament passed the Co-operatives and Community Benefit Societies Consolidation Act, which consolidated all existing IPS (industrial and provident societies) legislation in one place. The Bill was sponsored by Mr Javid, then economic secretary to the Treasury, with Lord Newby.

The act was welcomed by Co-operatives UK as an opportunity to “simplify the language, modernise archaic requirements, and do away with references to obsolete legislation”.

Mr Javid said co-operatives provided an important alternative business model that needed an appropriate framework to enable them to grow and succeed. The Bill received Royal Assent on 14 May 2014.

Amber Rudd, Secretary of State for Energy and Climate Change

Amber Rudd previously served as minister for consumer energy under the coalition. As MP for Sussex, she backed an initiative led by community energy groups associated under OVO Energy and Energy Community South to help residents reduce energy bills and take control of the energy they use. The Sussex Energy Tariff aims to offer residents across Sussex competitive local energy bills. Ms Rudd said community energy partnerships empowered people and had her full support.

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