Early impact of Covid-19 on the co-operative sector

Impact on co-ops

Like all businesses, co-ops are being hit hard by COVID-19:

• one in two co-ops (48 per cent) report experiencing cash flow issues,
• almost 40 percent are having to furlough workers in order to survive
• looking to the medium-long term 70 percent of co-ops express concerns about the health of their business

What is at stake?

The more co-operatives are lost in the pandemic, the greater the destruction of shared economic and social value. Communities could lose co-ops that are currently critical to the mutual response to COVID-19, as well as many they rely on to provide decent livelihoods and essential services in response to market failures. But we could also lose thousands more co-ops that demonstrate how free enterprise can be more sustainable, democratic and distributive.

If we want to ‘level up’ the UK and reduce environmental harms in the years ahead, we need more co-ops, mutuals and social enterprises, not less.   

Gaps in government support

We concerned for the 17 per cent of co-ops that list ineligibility for any government grant as a major challenge to their survival. We are also concerned for more than half of UK’s 7,215 co-ops, which may be surviving now but will need better-tailored support in the months to come. We particularly share the concerns of the wider social enterprise and business communities that the Coronavirus Business Interruption Loan Scheme (CBILS) is not meeting needs.

Policy asks

If government wants to ‘level-up’ the UK and reduce environmental harms in the years ahead – or in the words or the United Nations to ‘build back better’ - it needs to do more to limit the loss co-ops, mutuals and social enterprises during this pandemic.

Alongside the wider social enterprise and business communities, we urge government to:

Survival 

• Extend eligibility for the Small Business Grant Fund to all micro enterprises (annual turnover up to £632,000) that have a clear social purpose and reinvest the majority of their profits in that purpose 
• Ensure the Coronavirus Business Interruption Loan Scheme and Bound Back Loan scheme provide fast, simple and low cost loans to small businesses
• Provide additional capital to social impact financiers, so that these can provide fast, patient, low and zero interest loans to co-operatives, mutuals and other social enterprises 
• Ensure community benefit societies will be eligible for the £370 million of grants being made available for charities and social enterprises via the National Lottery Community Fund
• Include co-operative and community benefit societies in the fast-tracked and emergency insolvency reforms being legislated for companies

Build back better

• Increase paid-for and subsidised specialist advice for co-ops and other social enterprises, to help them adapt business models, develop new products and increase productivity/efficacy 
• Support the #1MillionOwners agenda, which aims for a fivefold expansion in employee and worker ownership by 2030, by allocating funding for business support that helps the creation of new worker co-ops and the conversion of existing businesses to employee ownership, as part of planned succession and post-pandemic renewal
• Deploy the £100 million Community Ownership Fund in a way that utilises  co-operative approaches to community ownership, as part of a wider agenda for community development and empowerment
• Refocus the UK Shared Prosperity Fund on inclusive and sustainable growth and earmark 25 per cent for community-led economic development, prioritising the participation of people in more deprived places