It is a year since Labour returned to power, with Keir Starmer’s government featuring a large Co-op Party representation – and pledging to double the UK’s co-op and mutual economy.
But that year has not been easy: Labour’s win, a landslide in terms of parliamentary seats, was skewed by the rise of multi-party politics under first past the post. Its lead in terms of vote share was more slight, with the populist Reform Party running it second in many constituencies.
The government was also dealt a bad hand, with foreign policy crises, an economy struggling from the effects of austerity, Brexit and Covid-19, and regions struggling to revive themselves. To make matters worse, Labour ran straight into controversy with ministers – including Starmer himself – drawing flak for accepting gifts, along with a series of unpopular policy decisions such as the retention of the two-child benefit cap, cuts to the winter fuel allowance, inheritance tax changes for farmers, a hike in businesses’ National Insurance contributions, and disabled benefit cuts.
Still, ministers can point to a string of post-Brexit trade deals, ambitious devolution plans and reduced hospital waiting lists – and won plaudits from the co-op and mutuals sector when Labour backed its pledge to double the co-op economy with measures including a beefed-up community right to buy, calls for evidence on co-ops and credit unions, and a Law Commission review. It’s also hoped that the shake-up in local government might ease the way for more community wealth building experiments. This has left the co-op movement in buoyant mood.
Related: Co-op and mutual leaders attend Downing Street reception
“Labour entered government with a bold and welcome pledge in its manifesto: to double the size of the co-operative and mutual economy,” says James Wright, policy and development lead at Co-operatives UK. “That commitment was a clear recognition of the role co-operatives can play in spreading wealth and power more fairly.”
One year on, he adds, “we’ve yet to see the details of how this brilliant ambition will become reality” – but there are encouraging signs.
“The creation of the Mutuals and Co-operative Sector Business Council, announced by chancellor Rachel Reeves in her Mansion House address, gives our sector a formal seat at the table.
“The English Devolution White Paper included commitments on local co-operative business support and a community right to buy. The Clean Power Action Plan, backed up by the Great British Energy Act, confirmed finance will be made available for community energy.”
Welcoming the planned call for evidence on co-ops and mutuals, Wright adds: “While we would have preferred this to happen earlier, we recognise ministers have had a lot on their plate. Our Co-operative Growth Strategy identifies the growth opportunities and key enablers, like business support and finance. And we are assembling a strong body of evidence on co-operative potential and how it can he unleashed.
“We have a government that is serious about inclusive economic growth. Now is the time to focus on the detail and act with informed urgency to give co-operatives the tools to thrive.”
‘Worker co-ops are key’
Co-op development worker Alex Bird – who sat on the Labour/Co-op Party working group in 2018, which helped to develop the original policy to double the sector, also welcomed the pledges, but sounded a note of caution.
The 2018 group, he says, “was wide-ranging, with representatives from across the co-op sector; academics to activists, apex bodies to co-operators at the coal face. It kicked off with a research report from the New Economics Foundation which was honed by the group into workable policies.”
But, he says, Starmer’s government has set up a high-level group with representatives of apex bodies and larger co-ops. “Every one of these representatives needs to be there,” he adds, “but there’s a whole range of expertise they do not have. The group needs the addition of activists, co-op business developers, collective entrepreneurs, and those with worker co-op experience.”
Related: What does ‘doubling’ the co-op economy mean – and how do we do it?
Worker co-ops are key, thinks Bird. “The UK co-op sector is deficient in worker co-ops compared to elsewhere in Europe, where the co-op sector is almost four times larger on average, and worker co-ops are the largest part of that, and the one mostly likely to produce serious growth.”
He points to the co-op development boom of the 1970s and 1980s, which was “built on worker co-ops”. Worker co-ops increased in number from eight in 1970 to 1,476 in 1986, he says, enabled by a network of over 100 local co-op development agencies. “This localist approach is needed again,” he adds, “because co-ops are person-based, formed from the bottom up, and so face-to-face advice and support is essential.
“If the government seriously wants to double the co-op sector to 3.2% of GDP, they need to ring-fence 3.2% of total business development funding to co-ops, and if they are more ambitious and want reach the European average of 5.5% they need to raise that to 5.5% too.
“This must include all government business support including British Business Bank, export credit guarantees, R&D funding. If the co-op sector doesn’t receive its fair share of funds, the government is not being serious in its ambition.”
Energy
Community Energy England also highlights the need for more state cash, as it welcomes government plans. Policy and advocacy officer Josh Barnes says: “Labour came into government with far-sighted and courageous plans to involve communities in their climate agenda.”
Welcoming the commitment to the Local Power Plan, “a transformative agenda” to deliver up to 8GW of clean power in partnership with local authorities and community energy, Barnes adds: “Labour’s first year in government has delivered plenty of encouragement to the community energy sector. Acting swiftly to remove the counterproductive and anti-growth onshore wind ban was a strong signal of intent.
“Establishing GB Energy, particularly with its mandate to eradicate slavery and human tracking in its supply chains and to facilitate projects involving or benefiting local communities, shows a willingness to engage with critical questions about net zero, such as who should feel the benefits of the transition. If realised, the energy secretary’s stated ambition for the biggest expansion of community owned energy in British history would be transformative for the UK’s energy system; enabling communities to drive and benefit from the transition.”
But he warns: “The disappointment of the first 12 months has been an inadequate short-term financial settlement for community energy, which risks causing a slump when the sector should be growing exponentially.
“We are hopeful that new funding, improved access to existing funds for community energy organisations and policy initiatives to accelerate grid access and enable shared ownership and local energy markets will empower the sector.
“Much of this work is already under way. This is a government with serious ambitions on climate, for which it deserves credit. We are hopeful that it will move fast in its second year.”
Right to Buy
Power to Change’s policy manager, Josh Westerling, says: “In a number of areas the government is moving in the right direction, whether that’s new powers like the Community Right to Buy, funding directed towards the most deprived communities, or funding to drive local growth.
“The task now is to get these policies right and go further. A Community Right to Buy should be accompanied by funding to support community ownership. Newly announced funding pots should be put in community hands so they have the tools they need to drive local growth.”
Also looking at community business, David Lydiat, head of external affairs at Plunkett UK, welcomes plans to strengthen Right to Buy, but adds: “We are yet to find out when this will happen and what details it will contain that will benefit rural areas.
“Plunkett has also called for a replacement, or reintroduction, of the Community Ownership Fund which the government closed – this grant funding was key for so many community groups attempting to take local, under-threat, assets such as pubs, shops, cafés and woodlands, into community ownership.
“The government has promised to double the size of the co-operative movement; that is a positive ambition, however, for this to become a reality, an essential funding support package for the sector is a necessity.”
Related: Social economy is crucial to local growth, says Power to Change
Right to Buy is a vital tool for the community pub sector, says John Mark Dodds, a publican who has been looking to set up a national network of pub co-ops. “It would be a big thing because so many pubcos turn down communities looking to buy a site,” he says.
But he warns that an enabling framework is also needed for the ailing UK pub sector, suggesting a moratorium on the sale of freehold for all purpose-built pubs, as these are designed to serve a range of functions.
Support is also needed in terms of funds needed to maintain buildings which can have expensive legacy issues, he adds. And communities may need training in the expertise needed to manage a pub – and to run a co-op.
Challenges
These issues of community empowerment and local amenity are crucial for Labour as it looks to regain voters’ trust. Underlying its shaky performance, and offering fertile territory for its populist rivals, are sluggish growth, income inequality and a decades-long decline in local services and amenities.
Co-ops can help here: their values and member-led structures enable them to deliver, and studies have repeatedly confirmed they are also more resilient than conventional businesses. The question is, whether Labour’s boost to the sector will be enough to allow it to bring the sort of transformative change that wins over voters in four years’ time.
There has been some cause for concern, with Labour watering down its net zero commitments before the election and devolution plans clashing with tough talk by ministers on overruling local planning authorities. A blog for Power to Change expressed concern in May over rumours that natural assets might not be covered under Right to Buy. “Denying communities the chance to own natural assets delivering environmental benefits would also undermine other government policies and priorities,” warned campaigner Guy Shrubsole.
Just as important is the question of how these measures fit into wider policy. Co-ops offer a more equitable model in social care but the sector is still dominated by corporate players. And while co-ops like Switzerland’s Midata are showing how a mutual model can help patients benefit from the ownership and control of their medical data, the UK continues to work on NHS data with Palantir, the US software company owned by Trump ally Peter Thiel, who has said the NHS “makes people sick”.
Right to Buy and mutualisation have themselves long been subject to debate, with trade unionists and critics on the Labour left warning they could mean privatisation by the back door, and preferring for privatised services to be mutualised rather than in-house ones.
One such debate, at the Ways Forward conference in 2019, saw former Labour MP turned co-op researcher Les Huckfield warn against “driving co-ops into the market … I don’t want co-ops in the market – I want them to form something separate from the market”.
Building societies
Still, the government’s agenda offers much for the movement and continues to win plaudits. Robin Fieth, CEO of the Building Societies Association, says: “This public recognition of our distinct business model creates a great opportunity for us to be at the heart of a growing, inclusive and resilient UK economy.”
Again, the devil is in the detail. “A level playing field with our plc competitors is essential,” adds Fieth. “That means ensuring there is representation of mutuals and co-ops on mission boards, advisory councils and at events. We would like to also see a new categorisation for mutuals and co-ops in official data and reporting, with regulators required to track how effective they are in fostering business diversity.
“For our building society members, we are concerned that the chancellor may reduce Cash ISA limits to encourage more investment in stocks and shares. Building societies contribution to an effective mortgage market is investment in the UK economy, and substantially reducing cash ISA savings risks increasing costs and reducing access to mortgages.
“Now is the time for the government to back mutuals and co-ops and unlock our full potential to build a stronger, fairer, economy for all.”
Housing
And more positive news is emerging. Blase Lambert, CEO of the Confederation of Co-operative Housing, welcomed last month’s spending review, which is “putting real money on the table … to enable the building and scale of new homes that we need in this country. And, of course, we are hopeful that some of that money will come in the direction of co-operatives, community land trusts and other forms of community-led housing.”
He adds: “We have been working closely with government since last year’s election and we are pleased to see the progress that is being made in delivering on the agenda that we set out in our manifesto. We are also looking forward to the forthcoming Social Housing Bill later in this year, that hopefully will put in place some of the supporting frameworks that we need to grow this sector.
“We were delighted when Angela Rayner announced the extension of the Four Million Homes programme for another 12 months. This was a key plank within the broader social housing element of our manifesto.”
