Co-operatives Unleashed Building a growth infrastructure

1. Co-operatives UnleashedBuilding a growth infrastructure Alex Bird www.alex-bird.com

4. 1. A CO‐OPERATIVE ECONOMY ACT SHOULD ESTABLISH THE FOLLOWING: • Create a statutory underpinning for the creation of co-operative indivisible reserves and an asset lock. • Introduce a right to own to support employee buyoutsand the co-operatisation of existing businesses. • A duty to develop the diversity of corporate form. • A Co-operative Development Agency in statute. • Recognition of co‐operatives as inclusive business models, and a new statutory duty to foster diversity of corporate forms to help enable a new culture of co‐operative entrepreneurship in the economy as a whole.

5. 2. BUILDING FINANCE THAT SERVES THE CO‐OPERATIVE ENDEAVOUR • A National Investment Bank that includes a mandate to supply patient risk capital specifically to the co-operative, mutual and social enterprise sector. • A new model for co‐operative financing to allow the provision of non-member investment, which provides capital in return for a limited return but no participation rights. • Legislate for the creation of mutual guarantee societies, ending the UK’s anomalous position • Tax relief on profits reinvested in asset-locked indivisible reserves and on profits paid into a co-op development fund to incentivise common wealth creation. • Offer people facing unemployment or receiving in-work benefits the opportunity to start a business using a ‘co-operative enterprise grant’

6. 3. A CO‐OPERATIVE DEVELOPMENT AGENCY • Facilitating knowledge exchange among co-operatives by helping co‐operatives share best practice and costs. • Supporting co-operative business development: • Enhancing the image of co-operatives. • Fund the development of a core co-op API that could provide the building blocks of a common digital infrastructure. • Replicate, shelter and expand successful co-op models by providing an accessible co-op replication service. • Provide the technical support to assist in worker buy-outs.

7. 4. ACCELERATING THE ‘CO‐OPERATISATION’ OF EXISTING BUSINESS • Prioritise promotion of co-operatives or more democratic options at point of business transition. • Introduce a right to own, to support employee buyouts and the co-operatisation of existing businesses. • This should be underpinned by the legal framework, financial instruments and institutional mechanisms needed to allow for a negotiated employee buyout between workers, exiting owners and the co‐operative sector.

8. 5. ANCHORING CO‐OPERATIVES WITHIN PLACE‐BASED INDUSTRIAL AND COMMUNITY WEALTH BUILDING STRATEGIES • Local authorities should be required to produce place-based industrial strategies that seek to retain and build wealth at the district or borough level. • A new approach for genuine and powerful place-based localism with an economic focus. • Encourage local procurement and commissioning strategies to support, where appropriate, co-operatives and social enterprises. • Local authorities, in combination with the community, social oriented enterprises and unions, should work together to increase the capacity of co-ops and other local businesses to bid for anchor institution contracts.

9. CREATING AN UNDERLYING CULTURE OF DEMOCRATIC OWNERSHIP: THE INCLUSIVE OWNERSHIP FUND • In addition to the five steps described above, further policy is needed to create a deep economic heartbeat that consistently and over time transfers the ownership and control of businesses to workers and other key stakeholders. • We call this an Inclusive Ownership Fund. Under this proposal, all shareholder‐ or larger privately‐owned businesses would transfer a small amount of profit each year in the form of equity into a worker or wider stakeholder‐owned trust. Once there, these shares would not be available for further sale.

10. So, how do we double the size of the Co-op Economy? • Double the Consumer Movement? • The Group and the regional societies are already trying hard, but retail is very competitive • Double the credit union/CDFI sector? • Growth has been relentless but steady over the last 40 years, and the High Street Banks are still very strong • Double the community shares/community co-op sector? • There’s only so many shops and pubs, and saving them takes time • Double the worker co-op sector? • It’s been done before, it can happen fast, and this sector is underdeveloped in the UK

11. Worker Co-ops in the UK & EU • Spain - 18,000 worker co-ops, over 300,000 employees, turnover €60 billion • Italy - 12,000 worker co-ops, 400,000 employees • France - 2,000 SCOPs, 50,000 employees • UK - 400 worker co-ops, 2,500 employees, turnover £500 million

12. Worker Co-ops in the UK & EU • Largest UK worker co-op – 170 employees, turnover £48 million • Largest Spanish worker Co-op – 70,000 employees, turnover €15 billion

13. Rise, then decline in UK worker co-ops…….. • 1925 – 42 worker co-ops, 5,578 employees • 1930 – 43 worker co-ops, 6,970 employees • 1935 – 42 worker co-ops, 7,908 employees • 1940 – 40 worker co-ops, 7,366 employees • 1945 – 44 worker co-ops, 5,055 employees • 1950 – 37 worker co-ops, 5,971 employees • 1955 – 32 worker co-ops, 4,313 employees • 1970 – 8 worker co-ops, 706 employees

14. 1976 and all that……………… • 1976 - Industrial Common Ownership Act + £250,000 Loan Fund • 1977 – First CDA formed in Scotland • 1978 – National Co-operative Development Agency (CDA) formed with budget of £200,000 p.a. • 1979 to 1983 – Rapid growth in CDAs • 1984 – Over 100 local CDAs • 1989 – Margaret Thatcher closes the national CDA • 1990 to 2018 – Slow decline in CDA (CDB) numbers

15. The result - lots more worker co-ops, then another slow decline

16. Lessons learned…………….. • We can grow the co-operative sector very fast with the right infrastructure • We need investment - not just loans • The lack of a comprehensive legal and fiscal structure holds us back • Support needs to be maintained to ensure replacement and continued growth • The national CDA could have been more effective • The co-operative sector is very diverse, and growth is possible in many sectors, especially worker co-ops, which are under developed in UK

17. National Co-op Development Strategy • Launched in 2018 by Co-ops UK • Identifies 3 key areas:- • Supporting freelancers to come together in today’s ‘gig’ economy • Meeting needs for social care through new models of co-operation • New digital ventures, or ‘platform co-operatives’, using new technology for shared ownership services

18. So what infrastructure do we need now? • A CDB within easy reach of everyone – over 100 at least across the UK • A national Co-operative Development Agency to develop policy, research and analysis – part of Government but run by experienced co-operators • A specialist Banking and finance system to provide the necessary investment • Revised legislation to allow for the creation of truly indivisible capital reserves • Tax incentives to incentivise its creation • Education about the co-operative model – in schools, in Business Schools and across the Professions

19. Questions………………….. Alex Bird alex@alex-bird.com