John McDonnell wants to double the UK’s co-operative sector

Shadow chancellor John McDonnell has pledged to double the size of the co-operative sector in the UK, currently valued at £37bn. Speaking at an event in Preston on...

Shadow chancellor John McDonnell has pledged to double the size of the co-operative sector in the UK, currently valued at £37bn.

Speaking at an event in Preston on 20 April, Mr McDonnell announced that an incoming Labour government would launch a consultation for new legislation to unlock capital funding for small business by enabling mutual guarantee societies to be formed.

The opportunity here is huge […] Our co-operative sector is just 20% of the size of Germany’s. But it’s grown by 15% since 2010

He explained that Labour’s emerging economic policy rested on three pillars: managing the nation’s finances in a responsible manner; creating an entrepreneurial state; and finding ways in which the wealth of society is better managed.

John McDonnell at the Ways Forward conference in Manchester, November 2015
John McDonnell at the Ways Forward conference in Manchester, November 2015

He said: “With two-thirds of Britain’s family businesses at risk of closure when their owners retire, employee ownership can help solve our brewing succession crisis. I know the council here in Preston has already started working on this, providing help and support to those business owners retiring and making sure viable businesses stay locally owned.

“The opportunity here is huge. The UK’s co-operative sector is currently worth £37bn. This is far smaller than Germany or certainly the US. Our co-operative sector is just 20% of the size of Germany’s. But it’s grown by 15% since 2010 – faster than the rest of the economy.

“And 15 million people now own a share in a co-operative. That’s up 16% since 2010. The evidence suggests that co-operatives are more resilient than conventional businesses. Twice as many co-operatives survive the crucial first five years as other businesses. And worker-owned companies have a clear productivity advantage over conventional businesses. So we should be more ambitious about what can be achieved here. We want to see resilient, high-productivity businesses in an economy that is fairer for everyone. The next Labour government will work with the co-operative movement to at least double the size of the co-operative economy. That’s a £40bn boost to the economy.”

Labour pledges to expand co-ops and give workers a ‘right to own’

Mr McDonnell has also called for a real increase in civil service resources for co-operatives and mutuals, putting them “at the heart of policy making”. Community energy was also a priority for Labour, he added.

“Turnover has risen by 1,400%, as local communities realise the value of community ownership in both providing a revenue stream, and helping us move towards a low-carbon future,” said the shadow chancellor.

“In government we must repair the damage done to the sector through the withdrawals of incentives to investment such as the Seed Enterprise Investment Scheme for genuine community-owned energy schemes.”

He also referred to a paper published recently by Co-operatives UK, which made the case for the gig economy.

Ed Mayo
Ed Mayo

Secretary general of Co-operatives UK, Ed Mayo, welcomed John McDonnell’s announcement.

“The aspiration to double the size of the co-operative sector resonates deeply with Co-operatives UK’s strategy. The actions the shadow chancellor suggests, including new legislation and allocating more resources in government to support co-operatives, are among proposals that can help deliver this step-change.

“Our report released earlier this month, Not Alone, set out the case for co-operative solutions to some of the insecurity faced by freelancers, and we are delighted to see the shadow chancellor highlighting this potential and endorsing our recommendation for legislation that will help small businesses club together as co-ops,” he said.

“Co-operatives are owned and supported by people of all political parties and of none, whether as customers, employees or local residents. We have and continue to work across the political spectrum to support the development of a more co-operative economy. Labour’s political leadership on this issue and announcement today that co-operatives are an essential part of Labour’s vision for a ‘better, fairer economy’ is welcome indeed. We look forward to working with the Labour Party, as we do with other parties in Westminster and the devolved nations, to put this into effect,” added Mr Mayo.

Claire McCarthy
Claire McCarthy

Claire McCarthy, general secretary of the Co-operative Party, said: “This announcement demonstrates the real ambition that the Co-operative Party’s sister party, the Labour Party has for our movement.

“As ever we hope to use our unique position and relationships to ensure that we are able to inject strong co-operative movement proposals and values and principles into British politics.

“The party will continue to work in all tiers of politics, whether it be Holyrood, Cardiff Bay, City Hall, Local Councils or Westminster to ensure a strong and constructive co-operative voice is heard.”

  • John McDonnell’s full speech is available here.
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