Sceptical response from co-op movement to Jeremy Hunt’s spring budget

A welcome for the £100m support fund for community business came alongside a call for more action to ease worker buyouts

Chancellor Jeremy Hunt unveiled his budget last week, with a focus on childcare, pensions and benefits alongside some measures relevant to the community business sector.

Co-operatives UK noted in its response that the budget includes over £100m to help charities and community organisations meet increased demand for their services as people struggle with the cost of living – while also being hit by unsustainable energy bills themselves.

This money can be used to address financial pressures and to increase energy efficiency, said Co-operatives UK, which is “seeking more details urgently”.

“We hope this funding will help some community co-operatives we know are struggling,” it added. “This funding is testament to the great work of organisations like Locality who have lobbied hard on behalf of community organisations over the winter.”

Locality CEO Tony Armstrong said: “We are delighted by the chancellor’s announcement of £100m of support for community organisations and charities. The community sector’s call for targeted support to deal with the cost-of-living crisis has been listened to in Westminster and we are grateful for the commitment of the civil society minister in making this happen.

“This support will help alleviate the growing pressure on many frontline community organisations – the very organisations who are providing food banks, warm hubs, mental health and welfare support to those worst hit by the cost-of-living crisis. Many of these organisations have been struggling to survive, creaking under the weight of growing demand and soaring bills.

“We look forward to working with the government to ensure this vital funding reaches the people and places who need it most.  It is crucial that arrangements are put in place as quickly as possible with a straightforward and simple process for organisations to access support.”

But in other respects, Co-operatives UK found the budget lacking, voicing its concern over the co-op sector’s potential exposure to historically high energy bills from April.

“We didn’t expect the chancellor to extend current support for firms to pay their bills,” it said. “But we hoped to hear more about how businesses will be supported to invest in energy saving and decarbonisation. This is a glaring omission in our view.”

It also criticised the lack of action to ease the path to worker ownership as a business succession option, accusing Hunt of “passing up an opportunity to save thousands more jobs every year through worker buyouts, by amending an existing employee buyout tax relief so that it also applied to conversions using the worker co-operative model”. 

Co-operatives UK warned that hundreds of thousands of potentially viable jobs are at risk because of business closure, adding: “Transitions to worker ownership offer a proven way to sustain jobs through resilient, productive and socially just enterprises. Our proposals for improving the employee buyout tax relief would give workers and businesses more good options for doing just this.”

It also condemned the loss of the Social Investment Tax Relief in April. “Over the years HM Treasury has drastically undermined the utility and impact of the relief, by excluding co-operative societies, agriculture, renewable energy and buyouts,” it said.

“We are concerned that government appears to have no new plans for incentivising the investment of private wealth in socially and environmentally beneficial enterprise. Unless this happens, we’ll remain trapped in our low-wellbeing and environmentally disastrous economy.“

Daniel Monaghan, policy officer at the Co-op Party, said in in an online post that the budget was “a missed opportunity to adequately fund our public services, provide support for families and boost prosperity in our communities” and failed to meet the government’s promises on levelling up.

Echoing Co-operatives UK’s call for more support for the co-op movement, he said: “Diversifying business ownership and boosting the conversion to employee ownership, which has been growing despite the economic difficulties, was absent from the government’s agenda. Despite the clear benefits of co-operative and employee ownership, the government has offered nothing to support this development – a clear missed opportunity to deliver growth at a time of declining living standards.”

With regard to chilcare, the Monaghan said the Party welcomed Hunt’s commitment to uplifting the hourly funding rate paid to providers and expanding 30 hours of free childcare to one and two year olds, but warned: “the devil is in the detail. The new arrangements are not due to come into place until September 2025 – far too long to wait for those struggling to afford childcare presently.”

He also noted that the new 30 hours free childcare is only available to working families, “depriving children of unemployed and low-income families from valuable hours of childcare which can help a child’s development“.

Monaghan said a support for co-operative childcare provision in early years would help to “deliver a childcare system which values workers, reduces costs and delivers for children”.

He also called for business rates reform to protect bricks-and-mortar businesses which “continue to be disadvantaged against online competitors – harming our high streets and communities.”

And he accused the government of dragging its feet on net zero. “By focusing on nuclear energy,” said Monaghan, “the chancellor has missed the opportunity to support the emergent community energy sector which could revolutionise the energy market and make millions of people community energy owners.”

He said the budget should have included a national fund for the sector, “with the ambition to deliver millions of new community energy owners and gigawatts of power” and also condemned the lack of new funds for energy efficiency retrofits in the UK’s housing stock. “A commitment to delivering the pledges of the Great Homes Upgrade – which seeks to retrofit 19 million homes by 2030 – would have helped to reduce energy bills, improve energy efficiency and work towards net zero,” he said.

“By growing the co-operative sector, harnessing community energy and delivering affordable childcare – we can start to build an economy which achieves real levelling up,” added Monaghan. “It is a shame the government has missed the opportunity to do this with their budget.”

The Employee Ownership Association (EOA) said EO businesses would benefit from the simplification of Enterprise Management Incentive (EMI) schemes. And it said extra support for levelling up and devolution, particularly through investment zones, would benefit the sector.

But it wants more action to stimulate economic activity and said support for the EO model would help make work more rewarding. “The absence in the Budget of any policy decisions that strengthen employee ownership … is a missed opportunity,” it said. It is also concerned that tax changes could negatively impact low-wage employee owners.