Labour has put ownership on the inclusive economy map. The party still backs co-ops, which is very encouraging. We're helping to ensure it's policies reflect the needs of the co-op sector.
This conference season Labour has certainly catapulted inclusive economics into the headlines like never before. And while it’s promise of mandatory employee ownership in large companies is not without its controversy, it is at least prompting the likes of the CBI, the Economist and politicians from other parties to say positive things about worker ownership.
So, what to make of Labour's inclusive ownership agenda, from a co-op perspective?
The first thing to say is that Labour retains significant aspirations for growing the co-op sector in power. After the last election it called on the co-op sector to come forward with ideas, so in December 2017 we did just that (see our briefing for John McDonnell's team). We are currently representing our members on the Labour and Co-operative Party 'implementation group', which the Shadow Chancellor has so far attended.
The best overview of what the implementation group is working on is the independent report by the New Economics Foundation - Co-operatives Unleashed. This includes five headline recommendations:
- 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
We support these, as they broadly align with what we have already submitted. But the three concrete elements within these that we introduced and would point to as TOP of our priority list are:
- a Co-operatives Act and its key reforms: indivisible reserve, asset lock and disinterested distribution (‘common wealth’ reforms), co-produced with the sector
- tax relief on surplus reinvested in locked indivisible reserve or into a common wealth development fund (‘common wealth’ measures)
- national policy and funding to support grassroots community economic development everywhere, with co-op options, and the spreading of knowledge and knowhow about these options, featuring prominently
A number of recommendations are ones we think need more work.
Statutory co-op development agency
The recommendation for a statutory national co-operative development agency is one we can support but with caution on its governance, focus and delivery method. We are concerned that the examples the NEF report gives of the things a statutory national agency would do, to build an ecosystem supporting co-op development, are things such agencies often end up doing poorly.
Subsidiarity would be an important principle here.
There are activities that need public funding and central coordination, at least in the medium term, like buyout support and perhaps replication/proliferation programmes. The success of Co-operative Development Scotland (a government agency) in establishing worker buyouts as a mainstream succession option among Scottish business, and the Wales Co-op Centre's great government-funded work on co-op care, backs this up.
But our Economy Data shows there has been little organic growth of co-ops in Scotland or Wales. NEF's report failed to articulate this. To get co-op options into broader new enterprise support pathways, we do need national funding and co-ordination, but in support of local delivery hubs. And this all has to plugged into properly funded and supported grassroots community economic development.
Ultimately, what we believe is needed is a properly funded national policy agenda for helping the co-op sector to build developmental capacities for itself. Lets develop a proposal for a statutory national agency that helps us do this.
It's not all about finance
As a wider concern, we caution against policy for co-ops being led by a focus on finance. Yes, there are structural challenges for many co-ops that could be overcome with a combination of sector-led action and better public policy. But usually finance is less of a barrier than the knowledge and know-how gap among people for whom a co-op option might be worth exploring, or than the ingrained economic behaviors that make such actors culturally disinclined to explore and choose a co-op option.
And on finance, rather than starting with what a National Investment Bank would do, we would encourage a focus on the ways in which co-ops can self-finance, through member investment and mission-aligned non-member investment, or financial co-operation between co-ops. A National Investment Bank could play an important supportive role in these endeavors, but it should be that way round.
Inclusive Ownership Fund
Finally, it is worth clarifying that the Inclusive Ownership Fund - mandatory employee ownership in large companies - announced by the Shadow Chancellor last week is aimed at investor owned companies and is not about co-operative models. It is probably helpful to keep this separate from our agenda, not least because history warns us that mandatory forms of co-operation can be problematic and there is a need for cultural change alongside structural changes to achieve a genuine shift in ownership, not just in name but in practice too.
We are always eager to hear from our members on this issue and any other aspect of our advocacy work. Please contact our policy officer if you want to contribute: [email protected]