A ten-minute bill asking for various legislative changes to ensure a level playing field for smaller co-operatives has passed the first reading in the House of Commons.

Introducing the bill, Labour/Co-op MP Adrian Bailey said that although the proposed changes were “small”, they could have an impact on thousands of co-operatives across the country. The ten-minute rule allows a backbench MP to make the case for a new bill in a speech lasting up to 10 minutes.

The bill is asking for the removal of the requirement for small co-operative societies with a turnover under £5,000 to appoint “lay auditors” to scrutinise their accounts. No such requirement exists for the smallest companies. Co-operative societies with a turnover over £90,000 also have to pay for fully audited accounts, while the smallest companies do not have to meet any such requirements.

In addition, the document suggests updating the turnover at which societies can “disapply” the full audit requirement from £5.6m to at least the company level of £6.5m.

The MP noted that these thresholds have not been updated since 2006 .

The proposed bill also suggests making the requirement for an auditor’s report contingent on a threshold of share capital instead of turnover or on a special resolution at a general meeting.

Mr Bailey said: “It is clear that co-operatives offer a solution. They give people control of the businesses they are closest to, whether they shop at them, work at them or supply them. They also give people control over things that matter to them, in the process boosting productivity, harnessing innovation and giving them a real stake in their business. That is the co-operative advantage.”

Mr Bailey argued that “too often” co-operatives had to comply with regulations or legislation designed for other types of businesses. He added that the bill would remove red tape, which prevented some co-ops from achieving their full potential.

“This Bill aims to ensure that smaller co-operatives enjoy the benefit of a level playing field and to help unleash the potential boost from co-operation to the UK economy through higher employee engagement, which, according to Co-operatives UK could be well over £50bn,” he said.

“Furthermore, through levelling the ​playing field for smaller co-ops, the economy as a whole benefits from increased business innovation. Innovation accounts for 70% of long-term economic growth in the UK, and the most common sources of innovation are employees and customers.”

Mr Bailey called for having a dedicated team of civil servants for co-operatives within the Department of Business, Energy and Industrial Strategy which could “act as a champion for co-operatives” and “examine ways of developing a more inclusive society that works for working people”.

“These legislative changes are designed to give further impetus to a business model and movement that are flourishing but are yet to achieve their full potential,” he added.

Commenting on the bill, shadow chancellor John McDonnell, said: “It is clear that co-operatives offer a resilient and fair alternative to the traditional PLC model and I believe that regulations should ensure that this model is not disadvantaged and that Government Departments are ready to provide the assistance to enable the doubling of this sector which we believe necessary and desirable.”

A second reading of the bill is scheduled for 3 February 2017.