Co-operation: a tool for the next government?

Cliff Mills, a co-operative consultant with Anthony Collins Solicitors LLP, on how can co-operation contribute to change

There is much in Labour’s manifesto – and some in others – to encourage those coming from a co-operative and mutual tradition, not least Labour’s promise to double the size of the UK’s co-operative and mutual sector. But rather more remains unsaid about how this is to be achieved, and what part co-operation and mutuality might play in implementing this change.

To be fair, this is not surprising when the movement itself generally struggles to articulate what it offers that is so fundamentally different to traditional businesses. Why is this?

We have lost sight in the UK of how member-owned businesses turn traditional enterprise on its head, by first establishing relationships that aren’t simply transactional. Those relationships are based on a shared vision, however superficial that may seem to some, of people collectively creating access to something essential, available to everyone, on a fair basis. There is a moral framing for the transactions that follow. That’s the distinction. In other businesses, it’s simply about the transactions, because that’s how profits are generated.

In the UK we have sidelined that moral-based relationship and fallen back on buying and selling things using the very market mechanisms (consumer contracts) that the Rochdale Pioneers tore up because they did not get people access to the things they needed to survive.

The Rochdale method, established 180 years ago, replaced sales contracts with provisions set out in the rules of the co-operative founded on values. This was to eliminate the exploitation facilitated by traditional market mechanisms: competitive arrangements which perpetuate inequality.

To describe co-operation as an alternative to contracts may sound strange. But through co-operatives, you can create communities of customers or workers or traders who set up their own arrangements about how they do business together. That includes their basic aims and objectives (purpose), the scope covered by their agreement (objects) and how they make decisions together (governance). Co-operation is a way of opting out of the market and setting up your own ground rules for enterprise.

Today, as in the time of the Rochdale Pioneers, mechanisms are needed by which people can get access to essentials, such as housing, food, social care, childcare, banking, energy, transport and the internet – the foundational economy that we all rely on – without unfair advantage being taken by providers exploiting their position to private advantage. Co-operation and mutuality are available to be used now without any changes to the law; it simply requires an intention to adopt the approach.

So how can co-operation contribute to change?

One of the themes running through Labour’s plans is the idea of government collaborating with communities and other interests. An example of this can be found in Middleton, a town close to Rochdale, where a group of people have come together and designed an organisation that promotes and facilitates co-operation and mutuality across all aspects of the foundational economy and beyond. Middleton Co-operating brings together local tenants, residents, small businesses, and local public sector organisations to design and build alternatives to the extractive contract-based economy, following a clear set of principles and values founded on a commitment to mutuality and the common good for all the community. 

The manifesto highlights that ”Government is at its best when working in partnership with business, trade unions, civil society, faith groups, and communities”. Co-operation between all these interests needs to play a significant part in meeting the challenges caused by the financial plight of local government. Middleton Co-operating is the kind of transformative, innovative ambition that government at all levels needs to get behind with policy and resources, now more than ever.

Another recurring theme of the manifesto is innovation, which can often be seen to be just about new technology and scientific advances. But innovation is also about radically new ways of solving old problems. A highly innovative development in extending fibre connectivity involves a co-operative of land-owners granting rights for fibre to be laid in ducting in their land, and a range of commercial users buying access to a unified fibre network. 

This so-called thin-layer model, pioneered by Cooperative Network Infrastructure CNI brings together local authorities with well-known private sector organisations in a co-operative venture which satisfies both public and private interests. Such mechanisms for cross-sector collaboration, alongside other mechanisms for public-common and public-community partnerships will be important in driving the collaborative agenda emphasised in the manifesto.

Perhaps one of the most intractable challenges facing an incoming government is social care. Market-based provision has dominated change over recent decades, but in truth the profit motive is out of place in all parts of the care sector and undermines the very nature of the service being provided. Aside from some pioneering exceptions, we don’t have a co-operative care sector in the UK. Other jurisdictions illustrate the role co-operation could play. Italy for example, which has much more supportive co-operative law, has nearly 11,000 co-operatives in the social sector, mainly providing social and personal care. It would be good to know that the next government would commit to implementing the current Law Commission review of co-operative law.

What about public ownership, utilities … and sewage? Plans for Great British Energy, bringing railways back into public ownership, and water sector reform are all welcome signs of a gear-change, from smaller government and reliance on markets to solve problems. But it is important that reforms take account of past learning. There has been some experimentation with new forms of public ownership such as member-based NHS Foundation Trusts (public benefit corporations) but otherwise limited exploration of ways to involved workers, users and citizens.

Welsh Water demonstrates that shareholder capital isn’t the only viable method for funding and owning utilities. The Liberal Democrats also call for public benefit companies to own the water sector. A co-operative approach to owning and operating utility services for the good of all, and replacing broken consumer contracts with a rules-based approach to payment for services, should both be explored.

It is also clear that stopping river pollution requires collaboration involving landowners and managers, planning authorities, environmental bodies and communities to reduce runoff into rivers and sewage systems. Such collaboration could also regenerate ecosystems to reduce flood risk, increase water resource resilience and biodiversity, and sequester carbon, all improbable under contractual systems

A strategic review of probation should explore the innovative role co-operation and mutuality can play in rehabilitation and criminal justice generally.

In terms of finance, the reform of banking is fundamental to decarbonisation, innovation and growth, small businesses and the high street. The Green Party has stated a commitment to setting up regional mutual banks and a Co-operative Development Fund, and it would be interesting to see how a Labour government would address this. Co-operative banking is another area where the UK lags a long way behind other countries, but where current initiatives like Avon Mutual and Banc Cambria deserve government support. 

Bringing all types of business – including co-operatives – under one business department and ministerial team would encourage a more diverse and resilient economy, and establish a coherent basis for orienting regulation more toward co-operation.

It could be an exciting time for co-operation, with the prospect of a change in government raising hope of the possibility of real change in lives, communities, and society. 

The market-driven, profit-seeking, target-chasing mentality which has dominated the recent past isn’t working. A better future is possible.

Visit the ICA’s Law Committee website to view briefing papers on the UK Law Commission Review, including on the Nature of a Co-operative