Co-ops enter the Scottish devolution debate

Scotland has voted to stay in the UK, but pledges in Westminster to transfer more powers to the country have opened up a new debate. As Britain considers the detail of further devolution to Scotland, co-operators are weighing up the risks and opportunities and preparing to make their representations.

James Proctor, strategic relations officer at Co-operatives UK, says further devolution could invigorate Scotland’s co-operative sector.

“If this includes the scope for increased economic powers, and a strongly devolved approach to business policy and regulation, there will be opportunities and risks for Scotland’s growing co-operative sector, already around 4% of GDP,” he says.

“Co-operatives UK will examine these proposals for their impact on co-operatives and, as ever, will champion the case across the UK for improvements that will encourage the growth of the co-operative economy, with the shared benefits it brings as a model of enterprise.”

For others, Scotland already has all the powers it needs. Lawrence Demarco, director of the Scottish social enterprise network Senscot, thinks further devolution will not help co-ops. “I can’t think of any further powers to Scotland that would benefit community enterprises or co-ops,” he says. “Scotland has all the powers we need to develop these sectors. Our challenge is to convince politicians to invest in our work.”

According to Martin Meteyard of Co-operative Business Consultants (CBC), there are new opportunities, but the co-operative movement’s first task is to make sense of what is on the table.  The Vow, published by the Daily Record before the referendum, saw David Cameron, Nick Clegg and Ed Miliband promise to work together to transfer “extensive” new powers to the Scottish Parliament and protect public services, including the NHS, from cuts engineered outside Scotland. “It’s suitably vague on what the actual new powers would be, but the implication was that they would be based on Gordon Brown’s previously published 12-point plan,” Mr Meteyard explains.

Mr Brown’s plan covers everything from income tax to health and safety and includes new powers relevant to the co-operative movement, Mr Meteyard says. The new powers proposed for job creation “could be far-reaching”, while existing job-creation powers could be used to better effect.

“One thing the co-operative movement could be lobbying for would be to make it far easier for unemployed people to form co-operatives while not losing any benefit entitlement in the process,” says Mr Meteyard. “Housing benefit appears to be the only devolution of Department for Work and Pensions powers currently proposed, largely in response to the protests over the bedroom tax.”

Mr Brown’s proposals for new powers in transport suggest devolution of railway powers to facilitate a non-profit ScotRail franchise. “This is very interesting, and could potentially allow for the implementation of ‘A People’s Railway for Scotland’ as outlined by the Co-operative Party,” Mr Meteyard says.

He said he was also inspired by Mr Brown’s proposals on land use. “The proposal to devolve the Crown Estate’s responsibility for the seabed and foreshore to local authorities could potentially open up the possibility for greater community ownership and development when taken in conjunction with the Community Empowerment Bill,” he added.

“Other than that, I think the implications and potential for new powers to strengthen the position of co-operatives are very limited,” Mr Meteyard concluded. “CBC will keep a watching brief on devolution, although it would most likely feed in primarily to any consultation or policy development co-ordinated by Co-operatives UK.”

David Cameron, director of Community Land Scotland, also believes devolution could support community ownership of land in Scotland.

“Scotland already has full powers over land laws and the challenge is to use those powers to full effect,” he says. “The Scottish Parliament has before it a Community Empowerment Bill which will amend the existing Land Reform Act to increase community land rights. The problem is the approach it takes is too timid.

“In the post-referendum environment, with renewed emphasis on an ever fairer Scotland, we need to see bold action to deliver workable new community rights. If further devolution brought the full range of tax powers, then some of those powers could be used at the Scottish level to tackle the many tax perks that private owners get and which do so much to keep land in the hands of a privileged few.

“Even if all those tax powers are not devolved, we’d still want to see the UK government address tax and how it can help bring about more equitable ownership of land. Scotland already has powers over local taxation and could do a lot more with those powers to positively affect land issues.”

James Graham, chief executive of the Scottish Agricultural Organisation Society, added that farming co-ops could benefit from changes to tax provisions. “Farming and food industry development are already devolved to Scotland, so there’s limited scope there, although we’d much prefer if Scotland represented itself in CAP negotiations in Europe,” he said.

“Scotland probably enjoys the most favourable environment and support of anywhere in the UK for farmer co-op development, and we have nothing but praise for the Scottish government’s approach to this. We’d really like ways to tackle the capitalisation issues that farmers’ co-ops have, whether that is via the tax provisions or other mechanisms.

“We’ll be raising issues that are of interest to farmers’ co-ops as opportunities arise in the devolution negotiations. A lot depends on what’s on the table for negotiation.”

According to Co-operatives UK policy officer James Wright, economic forces are localised in nature. “The parts of the economy that can provide jobs, services and opportunities tend to be anchored in our core cities and rural county life,” he says. “Yet, too often, businesses, communities and policymakers lament that levers pulled from Whitehall lack impact on the ground.

“Devolving key powers to people in real economic locales makes sense. We must keep in mind, though, that these locales, in the sense of real socio-economic places, often don’t align with current administrative boundaries for councils, local enterprise partnerships or regions.

“Economic strategies need to support the growth of businesses that are owned and networked locally, galvanising not just economic but also vitally important social capital within communities.”

He added: “This must include helping small businesses to form co-operative consortia to pool resources, share costs and offer mutual guarantees to lenders. Local approaches to banking and SME finance need to be pursued.

“Local political economy must also include support for collaborative entrepreneurship including new co-ops. Crucially, this devolution must also provide a greater role for mutual and democratic community enterprise in key sectors such as finance, energy, food and public services.

“As businesses that tend to be very much rooted in their local economies, co-ops stand to gain from political economic policies that are tailored to local needs. We may also find that there’s greater understanding of, and support for, co-operative ways of doing businesses and delivering services at a local level.”