In the run-up to the 2015 general election, Ed Miliband has become the first political party leader to pledge support for co-operatives.
In an article for Co-operative News, Mr Miliband said that if Labour comes into power it will mark the “beginning of a new culture of co-operative entrepreneurship” that will “help to stem growing inequality and ensure that more working people are able to reap the rewards of economic success”.
He said more needs to be done to ensure mutuals are on a level playing field with PLCs, and that to strengthen access to capital, Labour’s British Investment Bank will support co-operatives and social enterprises.
The party is also consulting on proposals to give workers a statutory right to request an employee buy-out when businesses are being sold. “These buyouts can be an attractive route for business succession because they transfer ownership to people with a genuine interest in an enterprise’s long-term success,” said Mr Miliband.
According to the Labour party, the new right would give employees the time to organise the finance they need to match any other offers and ensure that employers are able to consider that request with the seriousness it deserves.
Ed Mayo, secretary general of Co-operatives UK, welcomed the Labour Party’s announcement. “Sharing ownership through co-operative enterprises is good for British business – it increases productivity, unleashes innovation and gives people a stake in the wider economy. Over 6,000 UK co-operative enterprises have grown ahead of the economy at large and this commitment makes good business sense,” he said.
“There are thousands of owner-managed businesses in the UK that would welcome the option to transfer ownership to their staff, if it were easier to achieve. At present, too many good jobs disappear because of a failure in business succession. A right to request employee ownership, with buyouts backed by a British Investment Bank, would save jobs and constitute a proactive approach to growing jobs and enterprise.
“The right to request chimes with a lot of work around worker-owned co-operatives in Scotland, Wales and across Europe more widely. As one of the co-operative sector’s asks of political parties in the run-up to the election, published in our Call to Action, it is excellent to see that the Labour Party leader has now given this commitment to take it forward if elected.”
Ed Miliband also acknowledged the work of the Co-operative Party too, and its influence on the Labour manifesto. He highlighted the Co-operative Party’s work in promoting credit unions and community energy, as well campaigns on mutualising the railway and empowering sports fans through the establishment of Supporters Direct.
What is Labour pledging?
1. A statutory right to request employee ownership
Labour will consider introducing a statutory right for workers to put in an offer when a company is being sold, dissolved or floated on the stock market. Under these proposals, employees could be notified in advance of a business takeover or disposal and be given the opportunity to prepare an employee buyout. This would give employees the time to organise the finance they need to match any other offers, and ensure that employers are able to seriously consider that request.
2. Support for co-operative and mutual organisations through the Business Investment Bank
Labour will create a British Investment Bank, providing long-term funding for small and medium-sized businesses. This, along with a network of regional banks, will boost lending for small businesses so that they can grow. Labour will also make this support available to co-operatives and social enterprises to ensure that they too have access to the finance they need to innovate and grow.