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Co-op Policy Blog #11: The elusive economy that works for everyone

The May premiership is ending without ever making real progress on that ‘inclusive economy that works for everyone’, writes Co-operatives UK Policy Officer James Wright. This priority must be taken up with greater ambition by governments to come, whatever their political makeup.

Someone needs to get the Westminster machine moving again; to start making important decisions about things like the future of local economics and social care. And they need to be more innovative and ambitious in policy areas that are still active, like Social Investment Tax Relief and procurement.

Government’s ambitions have largely been dominated by a desire to see investment flow from high net worths into charities and social enterprises delivering public services, via the City.

Spending Review

One big casualty of the current breakdown in government might be the promised Spending Review, which should allocate departmental funding for three years, starting before the summer recess (July) and concluding with the Budget (end of the year). While this might still go ahead, there is every chance that it will be postponed until a new Prime Minister is in Downing Street, leading a stable government with some clarity on Brexit. Hmmm.

The first Spending Review for the UK after Brexit would be the perfect moment to embrace worker ownership as a proven option for sharing power, wealth and wellbeing through business. We’ve joined forces with the Employee Ownership Association to develop a common proposition: fund local pilots that improve awareness, practical understanding and advice on worker ownership among communities, workers, founders, business owners and those who advise them. Evidence suggests that if we’re successful in giving these people the right information and advice, in the right contexts, we’ll see a rapid, voluntary expansion in worker ownership through both start-ups and conversions. Find out more by joining us at Congress 2019 on 22 June.

Shared Prosperity Fund

Another casualty is the long-expected consultation on the Shared Prosperity Fund (what replaces EU development funds). As trailed, the fund will be used to reduce inequalities and deliver sustainable, inclusive growth everywhere in the UK.

Evidence suggests that with the right support, communities have the potential to be incubators and platforms for inclusive wealth creation in otherwise challenging circumstances. And community can also be a means through which people gain much needed agency, ownership and control in the economy. That’s what we mean by Community Economic Development.

We have a proposal doing the rounds for 20 percent of the Shared Prosperity Fund to be allocated for Community Economic Development, prioritizing the participation of people in the most deprived parts of the UK. This would create very fertile conditions for co-op formation within the communities who could benefit from it the most. 

We’ve helped to build some strong alliances on this issue and a campaign is ready to go.  Find out more by joining us at Congress 2019 on 22 June. Now we just need government to actually bring forward its plans for consultation. But it’s kind of tied up with the Spending Review, so…

A better deal for societies

Last summer we were twice promised an exploration of possible improvements for co-operative and community benefit societies, through a ‘social sector forum’. In preparation we consulted our members on both legislative and non-legislative priorities. On the latter, issues with Making Tax Digital are becoming ever more frustrating and urgent. We had hoped to raise these issues through the social sector forum, but apparently the officials tasked with it have been redeployed to ‘no deal’ preparations. So we wrote to the relevant Treasury minister instead, who, helpfully, was then moved on to replace Andrea Leadsom as Leader of the House after she resigned. 

Beyond the Big Society

Right now government is deciding the future of Social Investment Tax Relief and social value in Whitehall procurement. But however May’s government might have liked to rebadge them, these are currently more continuations of Cameron’s Big Society agenda than bold measures to change the way business is done, or opportunity, wealth and power are shared.

Take Social Investment Tax Relief for example. It’s the damp squib of the Cameron era social investment agenda (and that’s saying something!). Why, government is asking? One reason is that the pool of social enterprises able to take advantage of the relief was always small. And then it was made even smaller by excluding all co-operative societies and big chunks of Community Shares, such as renewable energy, property development and leasing of community-owned assets. Another related reason is that financial sector wizardry does not in itself grow this pool of businesses, things like Community Economic Development do.

Government’s ambitions have largely been dominated by a desire to see investment flow from high net worths into charities and social enterprises delivering public services, via the City. With bolder ambitions this agenda could support a more democratized model of social investment, one that enables communities to generate their own social impact, in their housing, their livelihoods and the evolution of their towns and neighborhoods. Click here to take part in our response to government’s Social Investment Tax Relief consultation.

Government is also consulting on a new framework to help central government buyers maximize social value in procurement. There are some good intentions in this framework, not least in measures to make public contract supply chains more accessible to a diversity of business types. But this could easily exclude too many co-ops in practice. Click here to take part in our response to government’s social value consultation.

Government’s wider leadership on social value is ultimately underwhelming. The tools to turn social value procurement into a catalyst for inclusive wealth creation are not really there. This came up at the last meeting of the Greater Manchester Co-operative Commission (you can still feed into the Commission here). For example, the Social Value Act only covers services, whereas the success of the local wealth building model being pioneered in places like Preston rests on localizing anchor spend on goods and works as well. And social value must be about more than helping charities and social enterprise to deliver public services. It also needs to be used to reduce inequalities in opportunity, power, wealth and wellbeing, not just through public sector supply chains, but also through investments made under Local Industrial Strategies and in the Spending Revi… oh, yeah, right. 

Thank you for supporting our policy work through your membership of Co-operatives UK.

James Wright, Policy Officer

Written by James Wright
Updated: 30/05/2019