Now, more than ever since the Second World War, the very foundations of our economy and society are being challenged. The EU referendum campaign left a country divided about who we are as a nation and our place in the world. But the one area of growing consensus is that we need to change the way our economy works and how it delivers its rewards.

We urgently need a more inclusive economy that distributes rewards more fairly, successfully seizes new opportunities, and effectively supports communities through the inevitable changes ahead. We are clear that the only way to build this is to put cooperation at its heart. This means a larger co‑operative sector, but it also demands the ‘hard-wiring’ of co‑operative values into the DNA of the wider economy.

The world and our approach to it have moved on since the last economy consultation in 2013…

From purpose-driven, responsible business where consumers and workers have their say, to equitable growth across every corner of the UK, the Co-operative Party has a wide range of existing economic policy. However, members haven’t had an opportunity to formally shape our thinking on the economy since 2013. The world has changed over the last five years, and it is important that our thinking remains up-to-date and relevant.

One of the biggest trends over the last few years is that the nature of work and the workplace are changing. Instead of secure jobs with predictable hours and wages, and all the benefits of being an employee from union representation to sick pay and maternity leave, many jobs have become precarious and uncertain. Self-employment is on the rise – in many cases out of choice but also because often it’s the only option available to drivers, couriers or care workers. At the other end of the spectrum, the creators of apps and platforms are becoming a new financial elite who profit from the fruits of others’ labour.

And the workplace is likely to continue to change, as technology evolves and consumer expectations shift. Whether it is robots and artificial intelligence, or the unknown long-term impacts of Brexit, the Co-operative Party needs policies that prepare workers, co-operative businesses and communities for the future.

Another significant trend is the Tory Government’s austerity agenda and its impact on public services, incomes, growth and the economy. Our public services are underfunded and have to find new ways to work. Too often, this means the safety net that many rely on at points in their lives is being eroded. The impact of this on the wider economy, and our response to it, must be an important part of our policy going forward. It is also important to reflect on the important role that the public sector plays in shaping local and national economies.

Much of our policy work has looked beyond the macro national picture to local economies and individual experiences. We are concerned about the rise in personal debt; about those people and communities that are left behind; about the households seeing a drop in living standards as wages remain stagnant; and about the regions where the old trickle-down school of thought isn’t creating wealth or jobs. From regional banking and community wealth, to profit sharing and employee ownership, we want to hear ideas on how to tackle the challenges faced by too many households today.

Levelling the regulatory playing field

Co‑operative and mutual enterprises continue to operate under a regulatory framework that can disadvantage them in contrast to company law. There should be a review of laws applying to co‑operative and mutual enterprises to ensure they benefit from a level playing field.

Diversity of corporate forms

The government must provide official recognition of co‑operatives as inclusive business models, and introduce a new statutory ‘duty to foster diversity of corporate reforms’ to enable a new culture of co‑operative entrepreneurship. This would include amending the government’s Impact Assessment on new legislation and regulation, to ensure that all legal forms are properly considered, and to identify and remove burdensome unintended consequences of new government policy.

Minister for mutuals

The Inclusive Economy Unit, currently within the Office for Civil Society at the Department for Culture, Media and Sport, should be strengthened and moved to the Department for Business, Energy and Industrial Strategy (BEIS), and benefit from the appointment of a new Minister for Mutuals. The Minister should be tasked with developing a roadmap for policy development in Whitehall aimed at making co‑operative options more user friendly, removing the unnecessary red tape faced by many co‑operatives and allowing them to adopt a statutory asset lock if they choose. There is a strong case that current Treasury support for Co‑operatives and Mutuals should be moved to the new unit within BEIS to ensure the new unit is as well placed as possible to drive the promotion of the co‑operative economy

Mutual reform

The law applying to mutuals should be reformed so that they have the opportunity to choose a legally binding corporate form that enshrines the principle of ‘disinterested distribution’ common in other EU states, ensuring that there can never be a benefit from ‘cashing out’ because the assets must be transferred to another mutual.

Tax exemption

Community benefit societies are non-profit distributing businesses that exist for a specific social purpose. While several of these are also registered as charities, this can be a difficult bureaucratic hurdle to navigate for some smaller organisations. As businesses solely concerned with social outcomes, the government should exempt community benefit societies from paying corporation tax and business and non-domestic rates.

Access to funding

Regulation and law should be changed to ensure co‑operatives are better able to access investment. Given their unique structure, they are often excluded from traditional investment methods. A new funding model for co‑operatives must be developed, based on a similar model to the permanent interest-bearing shares (PIBs) pioneered by the Building Societies.

Community share offers

Many co‑operative projects rely on community share offers. Currently, individual investment limits mean there is a ceiling on the amount that can be invested in a co‑operative project. As well as addressing this issue, there are suggestions within the co‑operative movement to develop a co‑operative investment fund, which could invest in the debt and/or minority holdings and nonvoting equity of co‑operative businesses and projects. This would enable investors to fund not only single projects, but to acquire a diversified co‑operative portfolio without undermining the co‑operative principles and operation of each individual project.

Patient capital

Long-term institutional investors have enormous potential to act as providers of ‘patient capital’ and as responsible owners of businesses at home and abroad, but Britain’s investment markets are dysfunctional. We urgently need a more accountable investment system that would give more opportunities for greater scrutiny and participation by savers.

Mutual Guarantee Societies

Mutual Guarantee Societies (MGS) enable SMEs to work together to bridge the gap between the SME sector and financial institutions, improving access to finance. The appropriate regulatory guidance is needed to allow MGS to form.

British Investment Bank

A new investment bank should be created along mutual lines, to support the expansion of the co-operative, mutual and social enterprise sector through the provision of patient capital.

Enterprise Investment Scheme

Changes to the Enterprise and Seed Enterprise Investment Schemes should be made to ensure that asset locked mutuals have access to funding. Currently, small asset-locked mutuals are unable to benefit from the EIS due to the limited role that external capital plays in member-owned organisations. Where mutuals decide to opt for an asset lock, their retained profits should qualify them for tax relief under EIS.

Employee ownership tax relief

Tax relief should only be offered to all-employee share ownership schemes that, require employees to purchase and hold shares for a number of years in order to benefit. This would save the Government £285m per year, which should be invested in giving permanent employee benefits trusts the same tax treatment as temporary schemes, developing new schemes that give employees a collective democratic choice, and a new Co-operative Entrepreneurs’ Programme to augment existing start-up support.

Employee buyouts

Employee buyouts show how self-help and co-operation can build resilience into our economy, saving productive businesses and providing an attractive option for businesses. Because they transfer ownership to employees, there is a guarantee of the new owners taking a genuine interest in an enterprise’s long-term success.

New legislation should give employees a statutory ‘right to request’ employee ownership during business succession, alongside an ‘early warning’ resource capable of informing workforces in advance of insolvency or disposal of a viable business. This would enable employees to assess the scope for acquisition and prepare a bid.

The Co-operative Party calls on the next government to also be more proactive in supporting the process of employee buyouts, in particular giving the employees the financial freedom to do so when needed. For example, Italy’s ‘Marcora Law’ provides funds and business support for employee buy outs, and has returned an economic return of 6.8 times the capital invested by the funding mechanisms. The government needs to build on the lessons from innovative policies like this to adapt and adopt them in the UK – the existing British Business Bank could be strengthened to become an important lending and guaranteeing institution within the delivery of a UK version of this law.

Profit sharing

Urgent action is needed to re-establish the link between profits and wages. There should be legislation to ensure that all British businesses with more than 50 employees are obliged to set up a profit sharing scheme with their staff, with a minimum profit share pot set aside based on a calculation of its annual profits and its financial position.

Workers on boards

In the European ‘stakeholder’ approach to business, employees are given a formal role in making decisions about how a company is run. All publicly listed companies should have a ‘duty to involve’ their employees at a workplace level, and have representatives of employees on their board. These new rights would operate in addition to, not instead of, the vitally important role that trade unions play in Britain’s workplaces, and the Co-operative Party would like to see a higher penetration of trade union membership and recognition in the private sector.

Duty of stewardship

Business should be required to make a statement of purpose in their annual report, measuring and reporting on shared value rather than simply profit – including their impact on the environment, their employees and their community.

The fiduciary duties of board members should be expanded to include a duty of stewardship to the company’s stakeholders and the long-term future of the business. This should attract new ‘safe harbour protections’ insulating their judgements from legal challenge.

Strengthen board governance

The ability of non-executive directors to challenge should be improved to cut down on an overdependence on managers. For this to take place, they should have confidence that they are receiving independent information but currently in the majority of the FTSE100 companies they are appointed, remunerated and line-managed by the Chief Executive Officer.

The government should modify the Combined Code to ensure that the Company Secretaries are appointed by the non-executive directors, reporting to the chair. Non-executive directors should have their own independent resources and staff.

Protecting private pensions

The takeover code should be reformed so that workers and their pensions don’t suffer when a company is sold or shut down. Irresponsible company owners who put their employees’ private pensions schemes at risk should be held to account. Workers and consumers on boards

Consumers on boards

Britain’s businesses lack the scrutiny needed to prevent bad corporate behaviour and to ensure consumers get a fair deal. Corporate governance requires urgent reform so that, where appropriate, consumers have a voice on company boards.

Access to impartial advice

Legislation should go further and ensure that consumers are given access to accurate and portable information. Too many companies are opaque in their dealings, obscuring charges and costs to hold on to customers or to overcharge them.

Access to advice and advocacy services are also important. Having access to independent advice can help consumers understand their rights and resolve problems more quickly. A new duty should be placed on statutory regulators to report annually on the provision of free independent advice available to consumers purchasing services in their sector.

Collective action

Consumers deserve the right to access their data in a meaningful format and to be allowed to share it. The government should bring forward legislation to create a framework for Next Generation Intermediaries (NGIs) – these ‘consumer clubs’ need the ability to use data shared by consumers to negotiate services on their behalf. NGIs would enable consumers not only to individually compare prices but to collectively negotiate them for a wide range of services from energy to banking, and provide a new weapon in their fight for a fairer deal.

A single Consumer Ombudsman

There are at least 17 different Ombudsman services and fourteen different recognised complaint handling services. Navigating this confusing system makes it harder for consumers to get justice. There should be a single Consumer Ombudsman with US-style powers and the ability to take up class actions on behalf of consumers against companies.

Competition health check

It is vital that the Competition and Markets Authority (CMA) remains responsive to consumer concerns, acts on the priorities of consumers and works closely with other consumer champions. The government needs to put CMA reform at the top of the agenda and introduce an annual ‘Competition Health Check’. Led jointly by consumers and the competition authorities, the annual health check would ensure regulators and politicians act where markets do not work in the public interest.

Tax transparency

The Co-operative Party wants to see a more equitable system of taxation for businesses in the UK which enables small, regional and co-operative businesses to grow while ensuring big businesses play by the rules and contribute their fair share.

Tax transparency is key to ensuring that UK businesses are paying their fair share of tax. Measures such as the Fair Tax Mark will make it easier to reward firms doing the right thing and identify those who are not.

Country-by-country tax reporting

Companies who shift profits to tax havens should play by the same rules as every other business. The Treasury should use its powers under the Finance Act 2016 to properly enforce country-by-country reporting for global corporations, so that public scrutiny of corporate behaviour can put pressure on businesses to be more responsible.

Land value tax, stamp duty and business rates

The Co-operative Party wants to see a new approach to land and planning which rewards productive economic activity rather than simply owning the deeds to a plot, where the big developers are discouraged from sitting on empty land waiting for land values to increase while thousands sit on council waiting lists for an affordable home. We believe this requires a rethink about the UK’s tax policy, replacing regressive property taxes with a fair land value tax to encourage developers to “use it or lose it” instead of land banking.

Currently, business rates tax economic activity, creating a perverse disincentive to doing business, while stamp duty can have a dampening effect on the housing market. These less efficient, regressive taxes should be scrapped in favour of this new Land Value Tax, and council tax should be reformed so that it is fair and based on income not property values. The Co-operative Party proposes that a new Land Value Tax is levied on all land, based on its unimproved optimum current permitted use.

Public procurement

New procurement rules should acknowledge the benefits of co‑operative and social enterprise procurement.

Furthermore, there needs to be strong and clear guidance on the types of co-operative, mutual and social enterprise models covered by Regulation 77 (public Contracts Regulations 2015) to ensure that they deliver the social value intended and do not allow for privatisations via the back door.

Social Value Act

The Social Value Act must be strengthened and enhanced to give local authorities and public-sector institutions greater scope to procure for social and long-term value rather than simply on a short-term assessment of cost. This should include:

• ­Giving public commissioners a duty to ‘account for’ rather than just ‘consider’ social value, with measurable targets and clear steps outlined if these are missed;
• Public bodies should be required to publish social value priorities and how they weight contracts;
• Extending the scope of the Act to include contracts of a lower value.

Devolution of economic power

In order to unlock the growth potential of every community, more support should be given to Combined Authorities, Economic Prosperity Boards and Local Enterprise Partnerships (LEPs), to facilitate the devolution of further significant powers over the Work Programme, adult skills and infrastructure.

Anchor institutions

Organisations like hospitals, universities and local authorities have strong ties to their local region. By leveraging their supply chain, it is possible to make significant contributions to the local economy, generating community wealth that remains in the area rather than being extracted by big businesses and their shareholders.

Local and regional authorities should be encouraged and supported to partner with anchor institutions to spend their money with local supply chains. Where an anchor institution is an arm of government, there should be targets setting out expectations on local spend.

Anchor institutions should be encouraged to use their expertise and capital to invest in the development of local employee-owned, co‑operative and social enterprises so that the money spent through their local procurement is reinvested in local jobs creation and the local community.

A network of regional banks

The government should work with city and local authorities to establish a network of regional mutual banks tasked with lending to co-operatives, social enterprises and small and medium sized businesses in their regions.

Regional banks should be encouraged to take a co‑operative form of ownership, ensuring that they are inclusive and helping them return benefits to their locality to reinforce local economic growth. In order for these banks to benefit from shared knowledge and economies of scale, inter-cooperation should be encouraged and supported. This should include delivering the back-office technologies required for each individual bank collectively, embedding economies of scale from day one, and establishing a system of checks, balances and shared risk that ensures financial sustainability.

Credit unions

The government should support the growth of the credit union movement, aiming to treble the number of members so that it hits 3 million by 2020. This can be started by ensuring that all public-sector employers establish payroll deduction facilities for credit unions. A credit union payroll deduction system should be a requirement for private organisations tendering for public contracts.

The government should also consider targeted investment in the credit union movement – not ongoing revenue support which, while valuable for the duration, doesn’t create sustainable growth, but capital investment in projects such as online and mobile banking platforms, improving the digital capacity of the sector, and technology to enable backroom efficiencies.

Building societies

The banking levy disproportionally hits the ability of building societies to lend and punishes them for the misdeeds of the PLC banking sector. As such, Building Societies should be excluded from this levy.

Much of the legislation governing building societies and other financial mutuals is antiquated and in urgent need of reform. The government should modernise the Friendly Societies Act, which hasn’t been reviewed since 1992. A better regulatory environment needs to be developed – one that facilitates the expansion of existing building societies as well as urgently reviewing the hurdles currently put down by government and regulators that have effectively meant no new building societies can be created.

Mutualise failing banks

Failed banks like RBS should be turned into mutuals, like a building society, to conserve the strength and credibility of one of Britain’s major global financial players while injecting competition and diversity into the banking sector.

Banking regulatory proportionality

Banking operates within a blunt regulatory framework that puts credit unions, building societies and other innovative banking models on the back foot.

In an effort to increase competition in the financial sector, fintech start-ups have been given a degree of regulatory flexibility to enable them to innovate and grow. The same flexibility and support should be extended to proven models of banking, like credit unions, and the wider co-operative banking sector to enable them to continue to grow and provide the competition desperately needed in Britain’s broken financial market.

Duty to serve

Every adult, household and business should have access to at least a basic package of fair and affordable finance tools, including a basic transactional bank account; a savings scheme; access to credit; physical access to branch banking facilities; insurance; and independent money management advice. The government should legislate to introduce a new ‘duty to serve’ that would force UK banks to demonstrate that they are serving individuals and SMEs from all backgrounds.

Financial institutions could also look to form a partnership with Community Development Finance Institutions operating in their region and commit to supporting and promoting their activities whenever possible.

Improving competition

A genuinely competitive banking system will require widening fair access to the UK payments system, which is how financial transactions are processed.

The market review conducted by the UK’s Payment Systems Regulator in 2016 found a lack of effective competition in Britain’s payment infrastructure. In order to enable genuine competition in the current accounts market, the government should commit to working with this regulator to make appropriate reforms.

Financial inclusion

1.7 million people don’t have access to banking – our financial services must not be just for the rich. The government urgently needs to put financial education on the curriculum for primary schools, and take concrete steps to tackle the high cost of credit. The Co-operative Party believes that new strengthened duties on regulators to promote financial inclusions are also required. Outside of regulation and legislation the co-operative movement has some of the answers, for example organisations like ‘Fair For You’ should be the norm rather than Brighthouse.

Payday lenders

The government should impose a levy on payday lenders, which would be used to build the capacity of credit unions and other providers as a means of providing affordable alternatives. Part of this money should be used to offer £20 deposits into a credit union account for every child, opened in their first year at primary school.

Mutualise public utilities

In utility markets characterised by monopolistic structures, the government should pursue opportunities to enable the conversion of utility monopolies to mutual organisations owned and controlled by their stakeholders. Changing the way they are owned would ensure that their interests are aligned with those of their members rather than being in competition with them.

A voice for self-employed workers

The interests of self-employed workers are poorly represented in national policy making. The Department for Business, Energy and Industrial Strategy should identify how to create a voice for self-employed workers in business policy, regulation and commissioning, learning from the way in which the wider small business community has successfully become recognised.

Support self-employed workers to organise

The rights of workers to trade union representation in the workplace must be enforced in every business – including those that rely on a largely self-employed workforce.

Many self-employed workers are forced to rely on expensive, profit-making agencies. The government should play an active role in supporting self-employed workers who are organising themselves into co-operatives and starting service co-operatives, through improving access to start-up advice and investment, and ensuring that they have a level playing field to compete with big commercial enterprises.

For example, the Link Psychology Co-operative in Preston is a consortium of self-employed educational psychologists who offer services to schools. Their co-operative model enables them to join forces to gain mutual benefits such as access to administrative support, marketing services and training.

Employment co-operatives

The Department for Work and Pensions should explore the potential for employment co-operatives for people on benefits such as Job Seekers Allowance. This would mean that unemployed people would not lose out on the security of their benefits payments while they start out as self-employed workers, and enable them to access the collaboration, services and mutual support of the co-operative.

Support for the development of mutual aid and insurance would help self-employed workers who experience or are at risk of periods of unemployment. For example, ‘Bread funds’ in the Netherlands enable freelancers to pool the risk of periods of unemployment by creating funds into which freelancers can pay when they are working and then draw upon if they are not able to work.

The Co-operative Party is member-led, and so we derive our policy platform from the experiences, ideas and principles of our members, our subscribing societies, and the wider co-operative movement.

The economy is a wide and far-reaching topic, so it is important that the Party’s approach to developing our policies in this area engages and listens to our members and the wider movement.

The Co-operative Party will invite the views of its members through an open consultation with individual members, Party units, co-operative societies, and the wider co-operative movement, asking for their responses to the questions below. This will be launched in early 2018, and support will be given to local parties to convene their members for policy discussions.

The economy is an important issue across the whole of the UK, although the challenges, approaches and solutions may differ across the devolved nations. We will work closely with Parties in Northern Ireland, Scotland and Wales to ensure their members can contribute their thoughts and ideas. Alongside this, the voice of co-operative societies is very important in the debate about creating a fairer economy, and we will consult and engage them in greater detail on issues of particular relevance.

The consultation will begin in January 2018 and close in June 2018, and responses will be collated for review by the policy sub-committee. A report bringing together the concerns and ideas raised by individual members, and responses from the sub-committee to each submission from Party units and societies, will be issued. The points raised will be brought together into a policy platform on the economy which will be discussed at Conference in 2018 and agreed by delegates.

While this consultation is ongoing, the Party will continue to engage with topical economic issues and work closely with the Labour Party to explore how to meet their ambitious manifesto pledge from the General Election 2017 to double the size of the co-operative sector. This will complement the ongoing consultation and formal policy process.

The economy is a wide topic area, and inevitably the different topics that impact on how the wider economy works and how it distributes its rewards will be covered to greater or lesser degrees. This is a live document, and we will continue to explore these themes and develop our ideas on the economy. It also complements our other policy platforms, such as the comprehensive policy consultation and publications on housing and education agreed at Conference in 2017, and the parallel policy consultation on Brexit.