Co-operative Congress debate 1: How should co-ops finance growth?

Each year, at Co-operative Congress, the co-operative movement comes together to look at how to move the sector forward. In 2015 CEOs and directors, members and employees gathered...

Each year, at Co-operative Congress, the co-operative movement comes together to look at how to move the sector forward. In 2015 CEOs and directors, members and employees gathered in Birmingham on 26-27 June for CoopNow, organised by Co-operatives UK, to debate two key issues: how co-operatives should finance growth; and how co-ops can keep leading the way.

The first debate on financing growth saw co-operators pitch a series of ideas in response – including a suggestion of a radical change to the nature of worker co-ops.

Jim Brown, strategic adviser at Community Shares Unit, said co-ops could unlock new sources of funding by letting everyone invest in them.

“I want to be a member of Suma,” he said. “I can’t be a member because it’s a worker co-op. Let’s end this separation – we’re all co-ops, let everyone invest, let everyone be a member.”

More than £60m is raised from the public through share offers, but three quarters of these are community benefit societies, not co-ops, he said, urging delegates to lobby the FCA to allow supporters of a co-op to become members and investors.

In another pitch, Vivian Woodell, chief executive of the Phone Co-op, suggested co-ops should depend on members much more than they currently do for capital, adding that the Phone Co-op had done this since its early days.

Linda Edwards from the Co-operative Credit Union called for more co-operation between co-ops and credit unions.

“Many credit unions are cash-rich,” she said. “We need to get borrowers to grow – we could have a role to play in the wider approach to investment in the movement.”

Commenting on this, Richard Bickle, board member of the Central England Co-operative, suggested co-ops offer all staff payroll deductions for credit unions.

Phil Frampton, member of FC United of Manchester and consultant at Co-operative Business Consultants, called for a replacement for the Co-operative Enterprise Hub, which had helped set up his own organisation.

“The Enterprise Hub is gone and we need a movement-wide co-op fund to replace it,” he said. “The number of community share applications has declined with the Hub closing because people need that support and expertise.”

He proposed that co-ops donate a percentage of their profit to a co-op fund. “In Italy they give 3%, in Argentina 5% and at Mondragon 10% for a co-op fund,” he said.

Co-op Group council member Dave Smith suggested proceeds from the plastic bag charge go towards this co-op development work as well as environmental projects.

Cliff Mills, of Anthony Collins Solicitors, looked at share capital. He argued that withdrawable share capital was designed for a different age and failed to work for large-scale societies, which had to borrow from banks and pay a regular interest.

He said: “Members are unable to support societies through member share capital. It stops us from developing an economy we prefer. Simple legislation could facilitate the creation of shares repayable.”

Asked to vote for three ideas, delegates opted for: Co-operative Business Consultants’ suggestion of exploring a Co-operative Development Fund, to be funded from across the movement; Vivian Woodell’s idea to grow member capital and Richard Bickle’s payroll link between co-ops and credit unions.

Click here for debate 2: How co-ops can keep leading the way

This article was amended on 16 July. A previous version stated that delegates voted for the carrier bag levy, which was rather seen as a way to fund the development fund.

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