Anna Birley Policy Officer 2nd March 2021 Blog Westminster Co-operative development Economy Share Tweet Photo by Markus Spiske on Unsplash This week, the chancellor will be delivering a budget unlike no other. Not only does it take place in extraordinary times, and in the face of extraordinary challenge, but it also poses extraordinary opportunities – to create decent, sustainable jobs; to rebuild an economy which is more productive resilient; and to hardwire fairness into the way our country works and shares its rewards. Covid-19 has shone an unforgiving spotlight on the structural problems in our economy. The fact that the UK has suffered the worst annual economic slump among major economies globally is not bad luck. It is a product of an economy obsessed with short-term profits at the expense of wages and workplace rights, the environment, and our communities. In the world’s sixth richest economy, too many still struggle to just put food on the table. Covid deaths in the most deprived areas have far outpaced those in the least deprived. The workers we have relied on to take the greatest risks during this pandemic – from nursing our sick to keeping buses moving – also take home some of the lowest wages. After every crisis, there is a window of opportunity to just to recover but to do so in a way which fixes the structural causes of the crisis too. The economy was so vulnerable to shock in a large part because of its widening inequality. Wages have decoupled from growth and living standards are falling. For the first time in many generations, young people will grow up to be worse off than their parents. History shows us that inequality is often a precursor to financial crashes, and that it impedes recovery too. So, this week’s budget will show us whether the Conservative Government are going to continue to put our economic recovery at risk by peddling the same broken model, or whether they choose to enable a fairer and more resilient economy to emerge from this crisis. The evidence to date doesn’t inspire much hope. While other countries announced long term packages of wage support to last throughout the crisis, the Chancellor repeatedly refused to extend wage support past the autumn. Last-minute decisions resulted in huge rises in unemployment, pay “pauses” have meant public sector workers receive an effective pay cut, and cuts to Universal Credit will leave around six million families up to £1000 a year worse off. But meanwhile big contracts going to contacts of the Prime Minister and his cabinet makes it clear that despite the hardship in many households, there are some people benefitting from this crisis. The antidote to this? By widening ownership, we can narrow inequality. And by reducing inequality we create something that doesn’t just benefit those individuals at the sharp end of the economy, but which benefits the economy’s resilience and sustainability. Rather than an economy based on shareholder primacy, where decisions are made only by a small group of executives and investors at the top for short term gain, we need an economy that puts employees, communities and consumers in the saddle. We know from other countries with larger co-operative sectors that ours that when wealth, and crucially power, are shared, decision-making is longer term, jobs are rooted in communities, and profits are reinvested. Companies and organisations in which employees have a real influence, and especially when this comes with a genuine ownership stake, are more productive than organisations where this is not the case. This budget presents the opportunity to significantly grow the co-operative sector. The Labour & Co-operative Shadow Chancellor, Anneliese Dodds, has put forward proposals to boost start up loans and support for new businesses – and highlights in particular the importance of targeting this at alternative models of business ownership such as co-operatives and employee-owned enterprises. We’ve long called for support to double the size of the co-operative sector, and this crisis has made that an all the more urgent mission. As well as new provisions for the sector, we must also take care not to pull the plug on existing policy which supports co-operative growth. Since its introduction, SITR has become an important tax relief which has helped raise millions of pounds for social enterprises and co-operatives looking for the investment they need to grow. But, it is at risk of being scrapped by the Government in the midst of a crisis. It is crucial that the Chancellor uses this week’s budget to extend this scheme and safeguard the vital investment that many in our movement rely on. We also see the need to support and enable community ownership, and this is especially the case on our high streets. Having once been the beating heart of our communities, in too many towns, the high street is in decline – a trend that has been accelerated by the Covid lockdown. While it’s welcome that this budget includes some community ownership funding, and a credit to everyone who campaigned for this, it also needs to include a fundamental review of business rates, new powers for communities and local councils to intervene when shops lie empty, strengthening of the Localism Act and mechanisms to help the community have a stake through owning and running high street shops themselves. This approach already sees communities in places like Dumfries, Plymouth, Bethesda, and Sheffield breathing new life and vibrancy into their town centres. In a similar vein, communities up and down the country have successfully taken over their local pubs and post offices in order to protect the assets they love and rely on, and to ensure important community hubs remain open. This budget needs to also acknowledge the important role that cash still plays in our society. We were promised action to protect access to cash in the last budget, but 12 months on, while thousands of ATMs have gone and hundreds more bank branches have closed, little has been done. More than 8 million adults rely on notes and coins every day, and the lack of action leaves them at risk of financial and social exclusion. A budget which prioritised fairness would do all this and more. This crisis has shown us the best of humanity – from mutual aid groups and co-operatives stepping up, to everyone doing their to save the NHS – but it has also exposed its worst excesses. This budget must call time on inequality, and rebuild a fairer economy which is based on our co-operative values of sharing power and wealth, giving every community a stake and a say, and ensuring no-one is excluded.