Why co-operatives are cool again

Why co-operatives are cool again
Lisa Bachelor, The Guardian
01.05.10

With less than a week before election day, the three main parties are preparing for one last push to try to distinguish themselves from one another on key issues. But there is one major policy area where you will find surprisingly little disagreement: Labour, the Conservatives and the Liberal Democrats all support a new wave of workers’ co-operatives.

Regardless of who wins on Thursday, it seems certain that Britain faces a revolutionary change in the way local services are run and delivered. The Conservative party has made mutualisation a central pillar of its election strategy, promising to "unleash a new culture of public-sector enterprise". Its manifesto, entitled An invitation to join the government of Britain, contains proposals for millions of public-sector workers to set up co-operatives and sell their services back to the state. Employee-owned co-operatives would be able to decide on management structures, innovate to cut costs and share out any financial surpluses among staff.

Labour is similarly enthusiastic about co-operatives. Its "mutual manifesto" puts the emphasis on people running many of their own services, from health and social care to council estates and Sure Start centres. The Liberal Democrats would go even further, introducing a new mutuals, co-operatives and social enterprises bill to bring the law up to date and give responsibility for mutuals to a specific minister.

But why the sudden enthusiasm for a mutual model – and will the plans work?

Critics have accused all three parties of using the plans as a way to cut public-sector costs, but supporters of the movement argue that now, more than ever, the mutual model is needed to bring about a real change in the way organisations and services are run. The credit crunch, in particular the behaviour of the big banks, has provoked this renewed enthusiasm for social enterprises.

"In a nutshell, co-operatives are cool again," says Ed Mayo, secretary general of representative body Co-operatives UK. "It’s a really good time to be in the co-operative movement. The people who have got involved have always been passionate about what they do but now their organisations are being seen as a real alternative."

The co-operative movement – by which workers jointly own and run their own businesses – is by no means a new one, having existed in one form or another for hundreds of years.

It was the 19th century when the movement really took off, however, with the blueprint for the modern co-operative laid down in 1844 by the Rochdale Society of Equitable Pioneers.

From there the movement burgeoned up until the 1980s when co-ops found themselves out of favour, after the Conservative government withdrew its support of the co‑operative ideal. Now, while co-operatives from John Lewis to local bakeries are flourishing again, it is the emphasis on public-sector services that has caught politicians’ eyes.

Mayo says it is ironic that the focus is on the public sector, when it is private industry that has failed so disastrously in recent times. Still, he recognises that change is needed in the sector because, he says, successive governments have failed to "take people with them" when implementing changes.

He says: "If they can now find ways to combine a sense of service but also to create space for staff to own their own solutions then that has to be a good thing. If it’s done as an excuse for cost cutting, however, it won’t work."

Some councils have already started to run some of their activities and services using the co-operative model. Lambeth council, in south London, is one such example, running various activities and services along these lines. In housing, for example, tenant management organisations take control of their own estates using Lambeth council money.

Erica Ballmann, head of the leader’s office at Lambeth council says: "We are interested in how we engage with the community more when it comes to delivering services. We’ve got really strong mutually run organisations in the borough and we want to make much more of these. That’s in contrast to the easyJet approach that Barnet council employs, for example."

Last year, Barnet adopted the so called "easyCouncil" model, when it announced that residents would have to pay extra to be able to jump the queue for some local services, such as planning.

At the time it said the move, known officially as the Future Shape proposals, was part of its "relentless drive for efficiency", and was designed to bring private-sector flexibility and choice to the provision of public services.

Ballmann says there are areas where Lambeth council won’t be able to employ the co-operative model, such as benefit payments and planning, but that the council is now setting up a commission to oversee the further expansion of the mutual model where possible.

"Irrespective of who is in government there will be a reduction in public spending and we have been planning for this for some time," she says. "We want to build on the borough’s mutual models and develop them."

It is not just councils but also individuals who are successfully adopting the co-operative model.

A year ago, Guy Turnbull and Walter Young became pioneers in their field, having set up the UK’s only social work co-operative. The pair have backgrounds in social care, and having founded various co-operatives before, they realised there was a huge demand for locum social workers – and no mutual agency supplying them. So they set about founding the Social Work Co-operative, which supplies specialist staff to childrens’ services agencies.

"When we spoke to locum workers as part of our research, they told us one of their main problems was being able to continue their professional development, as they are not part of a local authority that gives them that training," says Turnbull. "They also said they often felt isolated because they were not members of a bigger organisation."

Turnbull and Young host monthly meetings for members and provide regular training programmes and other support. Their mutual model has already proved popular. They have 30 social workers fully signed up (having passed Criminal Records Bureau and other checks); 15 in the pipeline and a further 55 who are interested in signing up.

They also have a lot of interest from around the country – they only operate in the north-east – and are considering franchising the model.

"At the moment we have around seven or eight job vacancies a day coming our way and don’t have enough members to fill them," says Turnbull.

Another appeal of the enterprise is the opportunity for members to earn a "divvy", or dividend, every time they take a job through the Social Work Co-operative.

Turnbull says: "The more work members take on through us the better off they are. But the main appeal is the fact that we are able to meet the demand for social work services in an ethical manner. Social workers are, in general, very caring individuals and the co-op ethos fits with that way of thinking."

The highs and the lows

While there is much to like about the idea of co-operative social enterprises that gets to the heart of community problems, they are not without their problems when it comes to getting them started and running them smoothly.

Turnbull says access to equity finance for setting up a co-op can be difficult. He cites the case of Casa, an employee-owned homecare social enterprise he is involved with, which is looking to buy private providers and convert them to employee ownership to speed the organisation’s growth. "But we are struggling to secure strategic growth finance," he says.

Ed Mayo agrees there can be start-up issues. "Co-operatives can tend to be harder to start than getting an off-the-peg company," he says.

"Spending time early on thinking about issues like membership and using your identity as a co-operative in business planning takes time upfront, although it can pay dividends down the line."

Finding managers with the right balance of entrepreneurial skill, ethical value base, and technical skills can also be a challenge, says Turnbull. Mayo adds that other employee issues later down the line can be trickier to tackle than under a conventional business model.

"If there is one thing that co-operatives learn, it is that people’s behaviour matters," he says. "When staff relations are a matter of contract, then you can resort to employment law when things go wrong. When staff relations are about membership, then you have to ensure that the spirit and not just the letter of co-operative behaviour is affirmed."

The first ever Co-operatives Fortnight will run from 19 June to 3 July.