What’s in store for co-ops in the post-Covid settlement?

Insights from CASE and Co-operatives UK into the prospects for a co-operative economy as the UK rebuilds from the coronavirus pandemic

Lockdown has left the UK economy facing a rocky road to recovery. Does this mean a chance to reshape things or a return to business as usual? Q&A with East Midlands co-op development agency CASE, with a joint response from team members Ian Wilson, Jane Avery, Natasha Jolob and Dorothy Francis; and James Wright, policy officer at Co-operatives UK.

What do co-ops and community businesses need in support and policy terms for their recovery?

CASE: The main focus should be fairness in that co-ops should get the same treatment as other types of organisation. 

CASE supports the current campaign for fair treatment of the social economy. The detail of the changes that will be necessary post Covid-19 are not clear as yet. There will be opportunities and it is envisaged that the community and social economy will possibly look very different from February 2020. We will find ourselves as a sector stepping in to fill gaps and needs where there is not the interest from big business or big state.

A challenge will be working out what the new business models will look like and having the capacity to offer timely and appropriate finance and support skills. The need is likely to be greater than capacity. The non-strategic rush to emergency funding may leave a funding gap into 2021. 

CO-OPS UK: With 70% of co-ops telling us they have concerns about their financial health, it’s clear that co-ops need help. So things like the furlough scheme, cash grants and the low interest loan schemes continue to be invaluable.   

In many cases, a blend of grants and loans will probably be best. Government’s current efforts to get patient and affordable credit to small businesses will probably need to continue for the foreseeable future. Equity investment could start to play more of a role, too. Here, the institutional investment model pioneered by the Community Shares Booster Programme could be one way to increase the flow. This is a model that can use public money to generate social and economic returns for communities and the Exchequer. 

Many co-ops could benefit from quality business advice and support. There is a role for the government in helping co-ops access support, including by covering some or all of the costs. 

Support that combines finance (grants) and expert advice is often really effective. The more policymakers and sector support bodies can put combined packages together, the better.

The behaviour of some commercial landlords will contribute to the failure of small and micro businesses if left unchecked. Government interventions may be required. But the approaches found in community economic development, including mutual ownership of commercial property, could be part of the answer.

Has the crisis brought a shift in mentality towards community-oriented business?

CASE: People are more involved in local communities through volunteering and mutual aid. They are starting to see the need to change and are perhaps more open to exploring co-op and community business models. 

In terms of business development, the crisis has accelerated underlying trends while not doing anything to change the fundamental structures. We envisage there will be an initial space to take advantage of openings brought about by the crisis.

There are other possible shifts from the old narrative, which might include a bigger role for private companies in public services, charities being involved as a response to failures within public services, relaxing rules and regulations on safety, the need to accelerate economic growth – and perhaps an increase in ‘country first’ and the myth of exceptionalism. 

We must be careful not to hear what we want to hear which could result in the assumption that our bubble is the wider community. As co-operators we feel the learning from this crisis is to develop more co-ops and to keep the focus on ethics and sustainability; however, we doubt that many people outside the co-operative conversation would see that as a priority or the natural solution.

CO-OPS UK: Government has had to rely on the power of community to achieve policy objectives. But one could argue that the benefits of a strong central state have also been demonstrated. 

Members of the public who participated in and benefited from mutual aid groups during the pandemic may now have more confidence in the power of community and co-operation. But we shouldn’t assume that everyone will automatically make significant changes to their behaviours as consumers, workers, and so on. Some will. And the more people are given good options to shift their behaviour, the more they will do so. 

Does this crisis offer co-ops a proactive role in any social/economic reconstruction?

CASE: The focus could be to reach out to a greater number of people that already share our values. There is also scope for co-op education. Sadly, the fact of being a co-op won’t be enough, especially if the values are not promoted and practised. 

The co-op movement has neither a clear alternative proposal to pitch, nor the voice or capacity to influence a social/economic reconstruction. This means its response is likely to be operational and tactical rather than strategic or transformational … the movement is unlikely to play a key role in reconstruction unless we influence at government levels, and affect attitudes and behaviour to influence people to become involved in co-ops. 

More needs to be done to ensure the co-operative voice is heard. This requires facilitation at a local and national level. 

Perhaps the focus will be more on localism. However, current co-op strategies are not well placed to respond to this. A place-based approach with quick access to capital, knowledge and skills is probably a better opening; but the focus on this will be more about laying the foundations. 

The greater likelihood in a reconstruction is towards a narrower nationalism which fixates on protection and acceleration of existing wealth and power, especially if Brexit is factored in.

CO-OPS UK: This goes back to giving people good options to shift the way they consume, earn a living, etc. If co-ops can do this, we may see some larger-scale changes. A lot of this will be down to individual co-ops having a positive impact. 

There are things co-ops can do together to maximise their impact and enhance their visibility. Co-operatives UK and other groupings of co-ops can play a role here. Collectively, co-ops may be able to make one or two big interjections into the public discourse. We need to be ready for this.

Is it more likely to be a case of the movement clinging on to what it has got – or having to respond to austerity measures?

CASE: A replay of austerity is unlikely; however, what is also unlikely is any fundamental change in wealth and power. We believe the focus will be high growth and freeing up big business … The targets will be red tape and dealing with the legacy of the EU – and, of course, the country will still have Brexit to work through. 

Government tactics are likely to lead to growth for big business and a strong state and we would not be surprised to see massive de-regulation and championing of business heroes. There may be big changes in business rates; however, the government may also look to self-employed people and SMEs to pay more in return for less regulation. Corporate welfare will be secure and even accelerated (even if some sectors lose out) and, of course, tax havens will be safe.

This will make it harder for the co-op sector as the minimum floor standards won over decades will disappear and we will see a massive push on costs and overheads and diminishing of controls around minimum wages, terms and conditions.

A return to Big Society-type rhetoric will focus on for-profit private companies with good CSR and probably a few “social entrepreneurs” that the co-operative sector would not recognise as such. There will also be more emphasis on being good neighbours, volunteering, and so on. The government will use the crisis to quietly privatise further sectors of the NHS. 

We suspect there will be an ideological battle in the Conservative Party with some wanting a return to one-nation conservatism and another faction going all out for free markets to address the damage to the economy. If the one-nation faction prevails, co-ops may be attractive to them. But if the free market faction become the most influential, the environment for co-ops will be very hostile. 

CO-OPS UK: It’s hard to talk about a single movement here. The issues are too complex and varied. Some co-ops may struggle, while many that remain will be stronger than they were before. And there could be a wave of new co-op formation, though we should expect a lag time on this, with the replacement rate being negative for a time.

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