July 9, 2018; Shareable
Earlier this month, the Co-operative Party in the UK released a report “outlining a strategy to double the size of the UK’s cooperative sector by 2030,” writes Aaron Fernando for Shareable. The Co-operative Party aligns with the British Labour Party. At present, 38 MPs (members of parliament) out of Labour’s 259 seats are also Co-operative Party members. Last year, the Labour Party’s manifesto (party platform) contained the express commitment “to double the size of the cooperative sector in the UK.”
In an attempt to make that commitment workable, the Co-operative Party commissioned a report authored by Mathew Lawrence, Andrew Pendleton, and Sara Mahmoud from the New Economics Foundation (NEF), a London-based think tank. Titled Co-operatives Unleashed, the study, notes Fernando, “reviews the current state of the co-op sector in the UK, features case studies from other European nations, provides a snapshot of existing hurdles for the co-op sector, and offers policy recommendations for advancing this sector.”
In 2017, the United Kingdom had about 6,000 co-ops with 13.6 million members. While impressive, in a nation of more than 65 million, this is less than many countries. “Germany has a co-operative sector four times the size of the UK’s as a proportion of GDP and France six times, while in the Netherlands, Finland, Sweden, and New Zealand co-operatives amount to between 5 and 10 percent of GDP compared to 2 percent in the UK,” note Lawrence and his colleagues. In short, the goal of a UK co-op sector that’s double the size is certainly achievable.
The report identifies five major strategies to expand co-ops. These are:
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- A new legal framework for co-operatives
- Finance that serves the co-operative agenda
- Deepening co-operative capabilities through a Co‐operative Development Agency
- Transforming business ownership
- Accelerating community wealth building initiatives
The proposed new legal framework would include a provision similar to the one in Italian co-op law that creates indivisible reserves, which, as the term suggests, cannot be divided and distributed to member-owners, but in exchange remain in the company, are exempt from corporate tax, and are available for reinvestment. As for finance, the report suggests the government should make it easier for co-ops to raise capital through nonvoting preferred shares and create a National Investment Bank that might lend to co-ops and other social enterprises. The report also promotes enabling recipients of unemployment insurance to apply for grants to help them create their own jobs through co-op businesses.
The Co-operative Development Agency proposed in the report would support a wide range of activities, including sharing information, promoting common digital infrastructure and back-end supports, and providing technical assistance for new co-op development. As in the United States, conversion of existing businesses to employee ownership is seen as a tool to preserve employment and share business ownership more broadly. The authors note that throughout the UK, “there are around 120,000 family‐run small and medium enterprises…expected to undergo a transfer of ownership in the next three years. If just five percent of these businesses were supported to make the transition to employee ownership or one of the other mutual or co‐operative models available in the UK, then the number of entities in the sector would double.”
Lastly, the report advocates for “innovative place-based community wealth building and local industrial strategies,” citing the effort in Preston, a city of about 140,000 people north of Liverpool that has increased local procurement from five percent to 18.2 percent in four years through a concerted effort to connect local businesses to meeting local government business needs.
As Fernando notes, “The strategy is multifaceted and ambitious, but the goal is for it to take place gradually over the next twelve years.”
Ben West, who works for the Co-operative Party, adds, “The mission now is as it was in the beginning: to stand up for the interests of the co-operatives that exist in the UK, where there are laws that are holding back their expansion. We want to create a favorable environment for cooperatives.”—Steve Dubb