From creative industries to community pubs, football supporter trusts to locally-owned energy schemes, housing co-ops to community care: across Britain, a new generation of small and medium-sized co-operatives are blossoming.
Owned democratically by the people who work and use them and reinvesting their profits in the local community, these co-operatives are leading the way to a fairer, more innovative and resilient economy – and we, along with our partners in the Labour Party, want to see more of them.
Earlier this year Shadow Chancellor John McDonnell pledged that a future Labour government will double the size of the UK’s co-operative sector. Such a move would take it from 40 billion to 80 billion, making it larger than the whole of the UK’s car making industry.
But before that can happen, we need to get to grips with the red tape and roadblocks that are holding small community co-ops back.
Despite the obvious advantages of the co-operative model, the truth is that current regulation and legislation force co-operatives to jump through extra hoops. In a whole range of areas, small co-operatives are burdened with rules and requirements that do not apply to traditional companies of an equal size.
Under current rules, small co-operatives are required to divert unnecessary time and expense appointing ‘lay auditors’ and meeting other complex reporting and auditing standards that usually only apply to large companies. Differences in how co-operatives raise and distribute capital – in some cases spread among tens of thousands of members – also mean that regulatory requirements based on measures such as turnover aren’t always appropriate, or the best way of measuring a co-operative business’s size or level of risk.
Regulation and auditing requirements exist for good reason: to ensure that businesses are run in a legal and transparent way, and that they take appropriate steps to reduce the risk of going bust. And because, as businesses grow larger, the stakes increase, it’s right that the level of scrutiny and auditing requirements should increase too.
Co-operatives shouldn’t be put at a disadvantage compared to other types of companies of similar size. The evidence suggests that if anything, co-operatives are more, not less resilient. Eight out of ten co-operatives created in the last five years are still going strong. Characteristics of the co-operative model, such as shared risk, stakeholder involvement and a broad ownership base, mean that co-operatives are far less likely to fold than traditional types of companies.
So, tomorrow, the Co-operative Party will act to stand up for the co-operative economy. Labour & Co-operative MP Adrian Bailey will be introducing the “The Small and Medium size Co-operative Development Bill”, a 10 minute rule bill motion, which is backed by fellow co-operative MPs Louise Ellman, Stephen Doughty, Luciana Berger, Gavin Shuker, Gareth Thomas, Stephen Doughty, Anna Turley, Christina Rees.
The Bill aims to make small but important changes to the Co-operative and Community Benefit Societies Act 2014, starting to tackle some of the problems we’ve outlined. By cutting back unfair red tape, we can bring the treatment of co-operatives in line with other types of businesses.
The competitive advantages of co-operatives are clear already, and we’re not looking for special treatment. But if the government is serious about delivering a more competitive economy and in unleashing the co-operative sector’s full potential, then it’s time for it to work with us to clear the roadblocks that stand in the way.