Budget 2024: Co-operative growth opportunities and reaction

The long-awaited budget first Labour budget in 14 years has been delivered. It includes potentially significant developments for the co-operative sector. Read our analysis of the budget:

Co-operative growth  

Co-operative growth will be in scope for the Small Business Strategy in 2025 which is brilliant news. Ahead of this, we will publish a Co-operative Growth Strategy - planned for a January release - setting out how a thriving sector will address major societal challenges.    

For high-impact co-operative growth to be unlocked, access to specialist advice and better finance options will be critical. Our view is that a proportionate amount of the new funding for the British Business Bank and business support schemes will need to cater to ambitious co-operatives.  

Further funding for devolved and local government can be used to build on the good work already underway in places like Greater London, West Midlands, West Yorkshire and Greater Manchester. The one-year extension to the UK Shared Prosperity Fund should largely be used to extend existing programmes.  

Net zero 

To get the most out of £100 million announced for renewable projects next year, we need to mobilise community investment at scale. Communities will need specialist support to set up co-operatives and raise funds effectively. The government committed £3.4 billion to its Warm Homes Plan in the budget. We recommend government utilises the innovative retrofit co-operative model, to ensure value for money and impact. Read a case study on our member Loco Home Retrofit >>

Community co-operation 

We welcome the move to provide business rates support for retail, hospitality and leisure businesses, including lower business rates multipliers, freezing the small business multiplier and the 40% relief. 

Infrastructure 

The Budget includes £500 million of investment in new digital infrastructure and £200 million for electric vehicle charging. Innovative co-operative models, pioneered by the likes of Co-operative Network Infrastructure and Charge My Street, offer solutions for rolling out of this infrastructure. They are great at crowding in private investment and avoiding wasteful overbuild.  

Making work pay 

The increase in the employment allowance to £10,500 is a real positive. This move will help protect smaller co-operatives from the cost pressures the rise in Employer National Insurance (NI) could cause.  However, it is important to note the significant cost pressures this and the living wage increase will place on many businesses. 

There are positives. The Living Wage increase makes it more difficult for co-operatives to be undercut by other businesses on pay. We know co-operatives already lead the way as good employers. Moves to level the playing field will make it easier for co-operatives to deliver fairer workplaces.   

Fair tax 

We welcome the changes to the Employee Ownership Trust rules, to prevent misuse of this vital enabler of mutual growth. We thank government for acknowledging of our proposals on extending relief to worker co-operatives, which it says were outside the scope of its specific consultation. We very much welcome the signal that government will keep our proposals under review and commit to developing our case further.  

We also welcome moves to tackle tax avoidance, including the increase in resources to Companies House to tackle instances of non-compliance. It is important to note that resources dedicated to tax compliance/non-compliance should not preclude other registrars. We need proportionate resources directed towards the mutuals team within the Financial Conduct Authority (FCA). 

The increase in Higher Rate Stamp Duty will further increase the already unfair tax burden on housing co-operatives, undermining the ability of this model to offer affordable rents. It's time to stop charging Higher Rate Stamp Duty on the purchase of homes by housing co-operatives.

Retail crime 

It is great to see moves by the government to tackle retail crime after many years of campaigning by Co-op Group. We are pleased to see scrapping of the effective immunity from prosecution for low value shoplifting, as well as additional funding to tackle the criminal gangs organising shop lifting and more training for police officers and retailers. Read The Co-op’s 10-point plan focused on curbing retail crime and violence >>