A co-op guide to a Conservative government

Conservatives have won an outright majority and will form the next government. So, based on their manifesto what opportunities and obstacles will there be in public policy terms for growing the co-operative economy?

We see real opportunities for co-ops in their policies for community ownership and social enterprise. With a bit of effort we could also unlock opportunities in their agendas for agriculture, housing, business investment and public sector mutualisation.

What do they offer co-ops?

The Conservatives make a couple of manifesto promises to back co-ops in specific sectors.

The party backs co-op pubs in a big way. Firstly they promise a new Pub Loans Fund that will enable community groups to obtain small loans to pay for feasibility work, lawyers’ fees, or materials for refurbishment. Crucially this very welcome measure would need to compliment the community shares market and co-op models generally.

They pledge to continue supporting credit unions, to the end of further expanding access to financial services. We think this probably refers to a continuation of measures like the Credit Union Expansion Project, being rolled out by the Association of British Credit Unions (ABCUL). While this has been warmly welcomed by ABCUL, we know there is a critical need for government to back credit unions as more than just a tool for financial inclusion and poverty prevention.

Community ownership

Still extremely salient to the co-op economy are commitments to strengthen Community Rights. The Conservatives will extend the length of time communities have to put a bid together when trying to buy an asset. We know from experience of working with community co-ops and speaking to the likes of Plunkett that this extension, which featured in our Call to Action, will make a real difference to the number of successful community buyouts. 

The proposed requirement for owners of community assets to set a clear ‘reserve price’ will also be great, as communities will always know how much they need to raise without the goalposts being moved late in the game.

Community Rights often only make sense when combined with other tools, such as community shares and the co-op ownership model. Any progress made in planning and community support is therefore contingent on equally good policymaking for co-ops and community shares. Over the past few years we have enjoyed just such an alignment, with government supporting models of democratic finance and ownership that allow communities to exercise their rights. The new Conservative government will need to provide leadership to sort out recent regulatory challenges for co-ops and community shares.

Promised support for locally-led Garden Cities can be cautiously welcomed, so long as our recommendation that these maximise community co-operation is heeded.

Social enterprise

The Conservatives make a broad commitment to give more people the “power and support” to start their own social enterprise. This could mean something very good indeed, depending on the degree of substance behind it. Elsewhere their manifesto mentions successes in social investment policy, so we read the commitment as primarily a continuation of the direction of travel begun under the Coalition. This means working with more established channels like Big Society Capital and the potentially promising new body Access, varied initiatives across Whitehall to work with social enterprise, and hopefully a renewal of Social Investment Tax Relief after April 2019.

Our overriding priority is to ensure co-ops are fully in the frame. For the party’s support for social enterprise to be effective it will need to extend to models of mutual self-help, not least because co-ops pooling people’s own resources tend to need less cash from government and grant makers.

Conservative policy must recognise that a significant number of co-ops are social enterprises. It’s time to dispel the false dichotomy being propagated between community benefit and member benefit, when in reality the two are intrinsically linked. Co-ops allow people to pool resources to meet their own needs, and in the long run this mutual self-help has a game changing impact for communities.

One way we can reinforce co-ops’ social purpose is to gain official recognition of the asset locks used in bona fide co-operative societies, through legislation if necessary. This should be top of the Conservatives' ‘to do’ list for co-ops and social enterprise.

Right to Mutualise

Co-operatives UK has viewed the Public Service Mutuals programme with mixed feelings. Some great social enterprises and a few genuine mutuals have been created, but it all fell a bit short of 2010 commitments to support public sector workers to create co-ops and mutuals. So we greet the Conservative pledge to give public sector workers a Right to Mutualise with measured expectations.

For this Right to Mutualise to work properly Conservatives will need to ensure spin outs are staff-led and result in real empowerment and accountability, as we and the TUC have already recommended.

Furthermore our public services need a fuller mutuality, one that empowers workers as members but also brings in service users and communities as partners as well. Only this will bring about the radical transformation in people’s relationship with public services we increasingly need. Conservatives need to refine the legal and procedural frameworks through which public sector workers ‘spin out’ to enable and encourage the creation of multi-stakeholder social co-ops. 

Agricultural co-ops

We think the proposed British Food Unit, promoting local foods around the world and backing British food at home, presents an opportunity for our agricultural co-ops. Conservatives should learn lessons from Scotland, where agricultural policy is devolved and farmer co-ops play a strategic role in the very successful Scottish Food and Drink. 

Housing

Conservatives will introduce a Right to Build, requiring councils to allocate land for self-builders. This will augment the Self-Build and Custom Housing Act (2015), passed as the last Parliament was dissolved, which places a duty in councils to keep a register of individuals and community groups interested in self-build, and allows volume builders to include self-build plots as part of their affordable housing obligations. This will open up real opportunities for community-led and co-op housing. The task will be to ensure mutual approaches to self-build are mainstreamed; something we recommended in our Call to Action. 

Investment

Conservatives offer two schemes to drive investment in business. It is hoped a Help to Grow fund will plug a £1 billion finance gap for firms that are looking to expand, invest and take on new employees. Meanwhile they promise to treble the Start Up Loans programme during the next Parliament so that 75,000 entrepreneurs get the chance to borrow money to set up their own business.

We have already made it a strategic policy priority to try and maximise the benefit to co-ops such schemes deliver, but it’s obvious that benefits will be limited by sheer competition alone. We must also contend with the fact that by design such schemes tend to contain built in presumptions more attuned to traditional profit driven and investor owned business models. Co-operatives UK will of course continue campaigning for a level playingfield for our members. 

Business Tax

In keeping with announcements in Budget 2015 Conservatives promise a major review of Business Rates by the end of 2015, which we expect to benefit smaller businesses in particular, although the party makes no clear commitment. It will be important for our member’s views to be heard in the review.

Another more solid offer to small businesses is a promise to retain the current Employment Allowance, which frees businesses from the first £2,000 NI contributions. While not substantially new policy, smaller co-op employers will continue to benefit.

Community energy

We’re concerned that the Conservatives have made no accommodation for community-owned wind power in their planned scrapping of onshore wind subsidies, and no mention of supporting community energy at all. When communities want to develop their own clean power sources we believe they should be supported to do so.