Shadow Chancellor: Co-operative Ways Forward conference

“Co-operatives should, I believe, play an essential part in the economy of the future” 

Edited extracts, added information and links (full text here).

John McDonnell pointed out that wealth is more concentrated now than it has been for a century or more, social mobility has dwindled, financial legislation is being unwound and serious attempts at scrutiny scrapped, just a few years after the catastrophic crash that was the bankers’ responsibility.

A succession of governments promised that by unleashing markets, governments would unleash opportunity and creativity. This approach promised new freedom for individuals, free from the dead hand of the state – a “shareholding democracy” would arrive through privatisation. But the promises turned out to be illusory.: today, share ownership by individuals is at the close to the lowest level ever recorded. Just 12% of shares are owned by individuals in the UK, down from 28% in 1982, and pension funds own only 3%. 

The co-operative tradition 

We must look elsewhere. There is a long labour movement tradition of decentralisation and grass-roots organisation, stretching from RH Tawney, GDH Cole and the guild socialists, back to the Rochdale Pioneers, the Society of Weavers in Fenwick, Ayrshire, and even further back to the radicals of the English Civil War.

The expansion of co-operatives in Britain since the crisis, matching developments across the rest of the world, shows the potential. There are now more than 7,000 independent co-operatives throughout the UK, contributing £35bn to the economy. Co-operative businesses are more stable. Whilst only one in three new businesses makes it through the difficult first five years, four out of five co-ops do.

Preston, inspired by cooperatively run communities in Cleveland, Ohio and the world’s largest co-operative group, Mondragón, in the Basque region of Spain, has developed an extensive programme, working with the Centre for Local Economic Strategies thinktank and an EU network of cities that face similar challenges. Major local employers and buyers – so-called anchor institutions, like the University of Central Lancashire, are driving through a local programme of economic transformation. By changing their procurement policies, these anchor institutions were able to drive up spending locally. They’re looking to shift a proportion of the joint council’s £5.5bn pension fund to focus on local businesses, keeping the money circulating in Preston. And the council is actively seeking opportunities to create local co-operatives as a part of local business succession, working with the local Chamber of Commerce. The aim of the Preston Co-operative Network (includes video) is to sustain high quality local employment, by giving the chance for workers to keep a business in local hands. Read more here. There has been interest in this programme from other councils, including Birmingham, Rochdale and Sheffield.

The great majority of people pay their taxes because they know taxes sustain the services we all need. It’s part of what makes a good, functioning, fair society. Yet we have large corporations and the super-rich apparently viewing tax payments as an optional extra. That can’t go on. Ultimately, it undermines the public services we all need – and forces the burden of taxation onto people less able to carry it. State spending is not the answer to everything: there are clear limits on what can be achieved here. But we can make the system work far better, and distribute the burden more fairly.

A fairer economy requires a fairer tax system. The tax system will be re-examined and simplified so it is fairer to everyone and encourages the growth a fair and prosperous economy, taxing assets in an economically efficient way. 

Co-operatives, like other small businesses face real difficulties in getting the funding they need from high-street banks

We’d work to bring about the conditions for a flourishing of co-operative entrepreneurship. No other major developed economy has just five banks providing 80% of loans. We’d look to break up these monopolies, introducing real competition and choice. Regional and local banks, prudently run and with a public service mandate, have to be part of the solution here. With consortium co-operatives providing an effective means for new businesses to share and reduce costs, we’d look to support these at a local level, working with local authorities, businesses and trade unions. Italy’s Marcora Law, supporting employee buyouts and providing matched funding for those seeking to establish co-ops, is a model worth considering. 

The Tories have offered a “Right to Buy”. Labour would seek to better this. We’d be creating a new “Right to Own”.

McDonnell concludes:

“We will look into the recommendation in Graeme Nuttall’s report on employee ownership, creating a statutory right to request employee ownership and have proposals considered by their employers. We should look to extend this approach, offering employees first rights on buying out a company or plant that is being dissolved, sold, or floated on the stock exchange.

“And as our policy development process rolls out over the next few years we will ask ourselves time and time again how the practical, everyday-socialist principles of the co-operative movement can be applied. In an uncertain world where a laissez faire market approach continues to fail, co-operation is an idea whose time has come again. This is the start of developing a new, positive economic alternative for Labour – the new economics”.

 

 

 

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Locally based, small-scale social care co-operatives

Last year the subject of social care and the way forward offered by the co-operative model was considered in this column:

“The care system is in urgent need of reform. Private companies profiteer, whilst older people, (and all) who rely on social care and the staff that deliver it, pay the price. The market in social care services is broken – incentivising a race to the bottom on quality and workforce conditions, a lack of accountability, and de-personalisation of services”.

Could the active membership and co-operative ownership of workers, service users, volunteers and family members rebuild public trust in services through a socially inclusive solution where the system of care is owned by the recipients?

It was surprising to find no mention of this sector in the Social Economy Alliance  post-election outreach (below) – but there were four passing references in its manifesto (above, left).

As Pat Conaty has frequently pointed out, in a growing number of countries co-operative models of social care are expanding; many will agree with him that these approaches can be further developed in the UK. More in this video.

Personal experience leads the writer to advocate that such co-operatives will provide optimum care if locally based and not large. Conaty finds that social co-operatives “celebrate and prove that small is beautiful, and do so through dynamic forms of democracy” He adds that most Italian social co-operatives have fewer than 30 worker-owners and less than 100 other stakeholder members.

A further search led to the website of Wales’ Social Co-ops Forum which has, as one of its aims, the encouragement and support for the sustainable development of local co- operatives. It was no surprise to find that David Smith was one of the founding members.

The writer has seen at first hand the advantages of co-operatives employing local people to give care in the home, rather than in a communal setting. They will have the same background as the person being helped and see him or her as a neighbour in need of help, to be treated with respect instead of indifference, neglect or – at worst – active cruelty.

The performance of larger, profit-driven companies can fall short, giving only a fraction of the care stipulated in contracts. If the individual scheduled to receive help is deteriorating mentally and unable to complain effectively it has been known for notes to be pushed through doors saying that carers were unable to gain admittance.

A local care provider would be far less able to ‘get away’ with such neglect; the neighbourhood, as well as ’the active membership and co-operative ownership of workers, service users, volunteers and family members’, would informally oversee the care, adding another dimension to that formally exercised by the co-operative.

 

 

 

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News received about East of England and Midcounties co-operatives

In a recent post we quoted MEP Molly Scott Cato: “The Co-operative shops have not been as successful in(sourcing locally) as I would like because of their centralised distribution system, but my own Midcounties Co-op has been building up its Local Harvest offer (below) in recent years and I’m surely not the only customer who looks to see whether the vegetables on the shelves have been grown on the Co-operative Farms”.

Ed Mayo of Co-operatives UK, commented If you want to see an inspiring example of a co-operative retailer sourcing locally, and many of the independent co-operatives do, have a look at the work of East of England Co-op with one hundred local suppliers on https://www.eastofengland.coop/sourcedlocally.

This website (header below) is really inspiring and members and would-be customers in the food desert of many co-operative retail areas can only look on with envy.

Today we received quite a detailed account from a Midcounties member who had just attended the AGM with around 500 other members. He wrote: “In the shops they’ve started a locally sourced brand “The Best of our Counties” and lots of local producers were there with stands”.

The Midcounties Co-operative website expresses the belief that one of their main strengths is the fact that they support local farmers and suppliers where possible and are therefore able to offer their customers the best quality local food and drink: “Products from our Best of Our Counties range is only sourced from the home or neighbouring county of each store. This not only reduces food miles, it also means that our customers know exactly where their food comes from and how it has been produced providing peace of mind that it is of the highest quality as well as sustainably sourced”.

Our correspondent added: “Midcounties is doing well, and has solved last year’s energy website problems. When GB energy went bust, the regulator transferred their customers to Co-op as they knew we’d already put our house in order and had expanded capacity. We jumped from 300 to 400 (thousand) customers. It (from GB) now includes pre-payment meters, which are often used by the less well off”. Read more here: https://www.cooperativeenergy.coop/why-us/GB-Energy/

Returning to the subject of food we end with a quotation from a paper called ‘The co-operative path to food security‘. In it, co-author Molly Scott Cato pointed to the increasing volatility of global food prices as speculators moved their gambling activities from financial products to commodities markets, saying: “It never was enough for me that the food I bought in my local Co-op was ethical and fairly-traded; as a green economist I also wanted it to be as local as possible”.

And add that ideally this locally sourced food would also have a certified & verified pesticide regime or be organically produced.

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Co-operative Bank update

As Paul Gosling writes in the May 17 issue of Co-operative News (hard copy only), the Co-operative Bank’s customer numbers and deposits have held up ’amazingly well’ and interest is reported in several parts of the business.

One account holder speaks for many loyalists in a letter to the News (hard copy only, May 17): “I will stay loyal to the Coop Bank as long as it’s possible. I have been with the bank for over ten years after being disappointed by other high street banks and have nothing but praise. So sad that the Britannia debacle has ted to this. Thank you for the brilliant bank you have been”.

Shaun Fensom, in the March Save our Bank newsletter writes:

“We want to see this sale process lead to an outcome that protects the bank’s Ethical Policy and includes a commitment to customer ownership.

“As well as clearly setting out what we expect from any buyer, we’re building alliances and consulting with experts to look for the best ways to make this happen. We’ve met with Co-operatives UK to discuss the sale process and how we might work together, and have contacted the Bank of England to start a dialogue. We also expect to meet with senior representatives of the Co-op Bank soon to discuss the current situation and how it will affect our members and supporters.

“Some people have asked us: “why don’t you try to organise a customer buy-out?”. It’s an appealing idea – between the bank’s 1.4 million current account customers, the £750m that the bank needs is only around £550 each. However, split between our 10,000 supporters, it starts to looks a little less affordable.

“With our limited capacities, we think our efforts are best spent using the influence we have to try to secure the best deal possible, and to persuade the bank to look to its customers to raise capital. That said, we’re happy to work together with anyone with a good plan to make this happen”.

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Edgar Parnell of Co-op Pundit.org focusses on maintaining ‘the integrity of the word “co-operative” ‘ . . . we should not allow the word ‘co-operative’ to be misused. We want to get the UK regulator to exercise his power to stop the misuse of the term “Co-operative” ‘.  A petition on this subject will be delivered to Andrew Bailey, Chief Executive, Financial Conduct Authority. It may be read and signed here.

 

 

 

Could this MEP’s co-operative vision mitigate one of the Group’s most serious mistakes: the sale of its farms?

In 2014 the Co-operative Group sold its ‘strong and successful’16,000ha farms (£7m profit during the last year) for a mere £249m to the Wellcome Trust.

Danny Truell, chief investment officer of the trust said, “The trust’s philosophy is to provide long-term investment for the businesses and property we hold in good times and in bad. We will take this approach to running Farmcare Trading Ltd as a going concern, giving a business that is already strong and successful the support and resources it needs to grow, to the benefit of employees, tenants, partners and local communities”.

Could co-operative retailers sell good quality food produced on their former farms as MEP Molly Scott Cato advocated two years before the sale?

With foreboding in 2012, she saw the depressing comments from the Co-operative Group that the Co-operative Farms are a ‘non-core’ part of the business, and that attachment to them is sentimental, as indicating that the current generation of co-operative managers shared a short-sightedness about their role in providing customers with access to a reliable source of ‘good food’.

In 2010, Molly co-wrote a paper called ‘The co-operative path to food security‘. In it, she pointed to the increasing volatility of global food prices as speculators moved their gambling activities from financial products to commodities markets, saying, “It never was enough for me that the food I bought in my local Co-op was ethical and fairly-traded; as a green economist I also wanted it to be as local as possible”.  She continued: 

Supermarkets that sell the same corporate products as the rest have lost all but the merest token of a co-operative identity

“The Co-operative shops have not been as successful in this regard as I would like because of their centralised distribution system, but my own Midcounties Co-op has been building up its Local Harvest offer in recent years and I’m surely not the only customer who looks to see whether the vegetables on the shelves have been grown on the Co-operative Farms”.

Now that is no longer an option, the writer wonders if an agreement could be made with local Wellcome (former Co-op) farms to provide local food in Co-op stores – and offer some organic options for those who want to avoid food with pesticide residues?

 

 

 

 

Co-operative Web – a success story

The Co-operative Web, an IT company, now based in Longbridge Technology Park Birmingham, is a 28 person worker co-operative owned and run by the people who work there. It relocated from Walsall to the Innovation Centre because the location is ideal for the employees who all live fairly close by.

In 2006 four people from the IT department of Midcounties Co-operative decided to set up a company which would deliver great solutions while being fair to customers and workers.

Co-operative Web builds systems, web applications, mobile apps and content managed solutions in PHP, Java and NET technologies. Its focus is on development, working across all types of technology providing bespoke services by the hour, under retainers or for fixed price. It works from scratch, amending and supporting existing solutions (even those not designed by them) and offering a few products for sale.

It says its ‘passion’ is finding ways to apply technology to real world problems, how to manage the data on the future stars of a football club or combining details on all incidents of injury involving water in the UK, delivering mobile experiences to conference goers or booking transfers from an airport to the resort destination, it could be building the pixel perfect website from your design or supporting your internal legacy application.  We’ve done all of this and much more, and we just want to get involved and help as much as we can.

Its web programming solutions are provided for a wide range of clients including multi-national banks, small social enterprises, start-up businesses, local authorities, charities, and large blue chip companies.

 

 

 

A new Welsh wind co-operative – June investment deadline

You are invited to invest in Awel and own shares in a new Welsh wind Co-op. You can subscribe to this share offer for as little as £50.

Awel is a Community Benefit Society which will own and run two 2.35MW Enercon wind turbines on Mynydd y Gwrhyd, 20 miles north of Swansea. These turbines will produce clean, low carbon energy and are forecast to generate an estimated 12,558 MWh of clean energy a year, enough to supply over 2,500 homes. They started construction on March 14th 2016 with local company, Raymond Brown. The windfarm was completed ahead of schedule and the turbines were commissioned on January 25th 2017. They have now received our full FiT accreditation from Ofgem.

Carl Richards, Finance and Personnel Officer, writes: Any help you can give in publicising the Share Offer would be much appreciated.

Contact him at: Awel Aman Tawe, 76 – 78 Gwilym Road, Cwmllynfell, Swansea, SA9 2GN: Tel: 01639 830870

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The chairman of the West Midlands New Economics Group (WMNEG) recalls . . .

“It is 13 years since WMNEG hired a mini-coach to visit the co-op when it was struggling to get the idea of a community wind farm accepted”. This visit related to the ‘Sustainable Housing in Small Heath’ project: report published in 2004.

“Sustainable Housing in Small Heath” (2004) is the illustrated story of the year-long study into the application of renewable energy in an inner city neighbourhood.

After visiting projects in Leicester, South Wales and the Black Country and getting reports from a number of experts the group came to the conclusion that a ten-year programme was needed, starting with home insulation and energy efficiency and leading on to community wind turbines, photo-voltaic roofs, wood-burning stoves and combined heat and power plants. All of this could create many new jobs for local people provided the government offered new enterprises the right kind of support and created the general economic conditions for a renewable energy market to flourish in urban areas. The full version can be downloaded from www.sustainable-housing.org.uk“.