Lib Dems: The Co-operatives Party

Theresa May’s plan to introduce worker directors onto company boards is a start, but she still has a long way to go to catch up with liberal thinking:  Jo Grimond advocated worker-owned firms more than 50 years ago, and she hasn’t reached that point yet.

But the Lib Dems need to be more consistent and outspoken in support for worker-owned firms and other types of co-operatives, too. Over the decades, we’ve had the occasional burst of enthusiasm, such as when Nick Clegg called for the creation of a “John Lewis economy” in 2012, but it doesn’t appear to be integrated into our policy-making as it is over at the Co-operative Party. It ought to be for the following three reasons:

First, by supporting co-operatives we can create a coherent, credible, principled centre-left alternative to Corbynite state socialism that might help us find common ground with some Labour and Co-operative Party supporters. Significantly, the Co-operative Party is increasingly keen to distinguish itself from Labour now, and shares some of our views on key issues. As Labour MP and chairman of the Co-operative Party, Gareth Thomas, says, the co-operative movement is pro-business and pro-EU; so are we. 

And, of course, by supporting co-operatives we reinforce our claim that we are now the party of business, not the Tories.

Second, mutuals work. Twice as many cooperatives survive their first five years than other types of businesses. What’s more, co-operatives are efficient providers of low rent homes and successfully develop human-scale regeneration projects.

Third, if the rise of the SNP and the Brexit referendum have told us one thing, it’s that people want more control over their lives. Looking to break-up the United Kingdom or have Britain reject collaborative working with our European neighbours are, of course, wholly destructive.  Much better and more meaningful to give people a greater say over their affairs by looking for ways to extend mutualisation in more areas of our daily life: more housing co-operatives to help ease the housing shortage by providing low rent homes, and more businesses owned by their workers and even their customers to sell honestly-made goods and services at honest prices in an honest way. And, of course, to pay a decent salary.

Indeed, support for co-operatives could form part of a policy package aimed at giving people more power over their lives. Other components could include our continued support for proportional representation.

Co-operative ownership comes in many guises. Which is best, if any, is something to discuss. Companies don’t necessarily need to be wholly owned by their workers and customers: The Co-operative Party is arguing for carers, care recipients and their families to be represented on the boards of private companies providing social care, for example.

Co-operatives themselves are looking for their voices to be heard more loudly, and some feel both the Labour and Co-operative Parties have let them down in recent years. We would be doing them, ourselves and the country a service if we gave them a home in our party.

* Richard Warren is a journalist who is a member of Richmond Park Liberal Democrats.

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24 Comments

  • Kim Spence-Jones 9th Oct '16 - 11:14am

    So what are the practical policies we need to embrace to support cooperatives?

  • John Peters 9th Oct '16 - 1:02pm

    I’d suggest the Lib Dems make an attempt at due diligence before accepting that the John Lewis Partnership is a good model for a co-operative. Perhaps ask some of the shop floor workers rather than the management?

  • Richard Warren 9th Oct '16 - 2:05pm

    Hi Kim

    More new social housing could be run by co-operatives. Many existing housing co-ops are oversubscribed (at least in London), so they might welcome additional housing units to help them accommodate people on their (and the council’s) waiting lists. Co-ops could be brought in as consultants in new housing developments, to share their knowledge of what work. In cases where co-ops have experience of construction and renovation they could help bring new schemes to fruition.

    There’s a limited amount of public funding available for new co-ops to construct homes. That ought to be increased. As the Royal Institution of Chartered Surveyors says, co-ops are the most economic providers of low cost homes.

    The government is encouraging banks to lend more to businesses. We ought to make sure the government includes co-operatives in that message,

    Also, we could look at the feasibility of having workers and passengers involved in the running of the railways.

    It’s really about being mindful of the co-operative option and seeing where it could be applied when finding solutions to problems. At the moment it’s not considered as much as it could be.

  • Peter Arnold 9th Oct '16 - 2:41pm

    An excellent article Richard. In my opinion, the LibDems believe in co-operative principles and practices, as set out in the Preamble to the Party’s federal constitution, so there is no theoretical problem with LibDems coming out more forcefully in support of co-operatives at every level of society. In practice, however, people seem to forget what some of our fundamental principles are. This was demonstrated a few years ago in the policy paper on workplace democracy, where participation and democracy were discussed, but not the third pillar of our beliefs – co-operation. This was a massive missed opportunity to link our policies to our beliefs. For me, the current difficulty of The Co-op is that it does not regard itself as a movement, but as part of the Labour Party. A genuine movement does not tie itself to one partisan sector of society. As a member of the Co-op, I have always voted at AGMs to break the link with Labour, but so far, the majority of members do not agree. Some people argue that co-operatives are only relevant in some sectors of society, and whilst there may be some element of truth in this view, it misses the point. There are three sectors in the current make-up of the UK’s economic structure – the private sector, the public sector, and the community or third sector. None of these sectors, on their own, are relevant in all circumstances. Each operates best in a limited number of ways, and success comes from allowing and encouraging each sector to succeed. Teamwork and co-operation always wins! The co-operative movement is part of the third, community-based sector of the economy, the sector containing co-operatives, mutuals, credit unions, charities, and community groups. What is required is recognition by government that each sector has a role to play; none of them is a panacea; and that encouraging each sector to get on with doing what it’s best at, is the way forward. This is policy territory that Liberals and Democrats should be occupying. Until our leaders come out strongly in favour, we will always struggle to be relevant. The good news is that the third sector of the economy, including co-operatives, is firmly supported by our endorsement of community politics and economics. All we have to do now is to persuade Tim Farron and his leadership team to get on and do it, because it was one of the policy attitudes that got Tim elected in the first place!

  • Matt (Bristol) 9th Oct '16 - 3:37pm

    Yes, yes, yes.

    For me, legislating to definitively end the process of demutualisation that turned most of the building societies into banks (banks which then often died horribly in the banking crisis due to their own errors) and make mutualisation of existing non-mutual bodies easier would be significant step.

  • Richard Warren 9th Oct '16 - 9:34pm

    Peter Arnold

    Thanks very much!

    I wonder if there’s a Lib Dem cooperatives group made up of Lib Dems who are either part of a cooperative or support the concept. If not, maybe we need one to lobby the party from within to push this up the agenda.

  • Richard Warren 9th Oct '16 - 9:46pm

    Matt

    Good point. Not sure how we’ve benefitted from having building societies turned into banks. The credit crunch ought to have told us that we’re better off with mutuals, but there’s been no government or Bank of England efforts to move in that direction. D

  • Michael Main 10th Oct '16 - 8:33am

    For a number of years I served on area committees as well as a Regional Board, as well as being on the main board of Co-operatives uk. I never made any secret of the fact that I was a dedicated LibDem To clarify the situation, the Co-operative Group pays each year money to both the Labour and Co-operative parties. The movement as a whole is apolitical and Co-operatives uk acts as the CBI for all the members. I too have always voted against the political donation but to no avail.
    I did join some years ago a LibDem Co-operative group but little happened and it seemed to have just disappeared. I would be more than happy to support a new grouping

  • Richard Warren 10th Oct '16 - 10:04am

    Maybe we could re-start a Lib Dem Co-operatives Group. Could organising a group on Facebook be a start? Anyone interested in joining that? And/or are there other, better ways to get things off the ground?

  • Peter Arnold 10th Oct '16 - 10:23am

    There used to be a LibDem co-operative group started several years ago. Along with others, I joined it, but the original founders were unable to develop it and resigned. I took over as Chair, but like the original founders, we were unable to make a go of it. The organisation folded last year and merged with an on-line co-operative group, which is fine if you’re into social media, which I’m not. Good to see Michael Main and Roger Roberts still interested, and I would be happy to see it resurrected as a LibDem interest group. The need is there, as this discussion shows. What we really need is leadership support from within the Party hierarchy instead of warm words but no action.

  • Robin Grayson 10th Oct '16 - 10:49am

    Great article, thanks!
    Harking from Manchester, the modern heart of the retail, wholesale and banking cooperatives, my view is that there is strong merit in Lib Dems building a bridge with the Cooperative movement, as it shares many Lib Dem values. The retail co-ops in Manchester have survived the ruthlessness of capitalism and connect well with local communities. In Manchester the retail coops, wholesale coops, banking coops, insurance coops are a highly visible part of the city’s booming economy. It is important to stress that the Cooperative Party is nominally independent but is officially in a permanent alliance with the Labour Party. It is also important to stress that the fundamentally the consumer coops are huge parts of the Manchester economy and are owned by the consumers, whereas worker coops in the region are owned by the workers and are tiny by comparison. While the worker coops are, almost by definition, starved of capital as there is no mandate for capital to take shares, the consumer/retail coops are flush with cashflow from shoppers who are a mix of members and shoppers. The shopper-members get dividends not the capitalists.

    In Manchester then, there is a lot of public loyalty to retail coops as, almost by definition the retail coops get the best ethical deals for the shoppers who own the movement.

    In my opinion Lib Dems should consider building a bridge with the retail/consumer coops, and for a start you can join at the counter of your local coop store. It costs next-to-nowt and the financial payback via dividends is cool, as well as part of the dividends going to local community projects.

    But the Cooperative Party? No, as it utterly locked into the Labour Party.

  • Richard Warren 10th Oct '16 - 11:11am

    Peter Arnold

    Do you know of any Lib Dem MP’s, peers or other party figures who have an interest in co-ops? Maybe they could be co-opted into this.

    From what you’ve said it doesn’t sound like we ought to expect too much, but if we could re-create some sort of co-op presence within the party that would help to push the case.

    Online is a great way for making connections easily and organising events. A Lib Dem Creatives group has been created online and has grown quickly to 300+ members. However, maybe an online group could be set up in tandem with a non-social media organisation, because, as you say, not everyone is into social media.

  • Richard Warren 10th Oct '16 - 11:14am

    Robin Grayson

    Thanks for your comments and useful suggestions. Yes, some co-ops feel the Co-op Party is letting them down, so there’s definitely space there for the Lib Dems to move in and provide a new voice for co-ops.

  • Sue Sutherland 10th Oct '16 - 12:46pm

    I seem to remember that the SDP was keen on co-ops too and I welcomed Nick Clegg’s John Lewis statement. I used to work for a small charity enabling people with learning difficulties to live independently which operated with them on the board and participating in staff selection. I think this should be the model for many organisations offering services to clients. It’s an alternative to competition and pricing which leads to wasted effort and diminution of quality of service. The concept of public service seems to have disappeared but perhaps co-operative working should be a plank of any policy the Lib Dems come up with for the kind of society we wish to create? It’s a completely different way or working which requires service user participation to be at the centre of an organisation’s philosophy not tacked on as an afterthought which much public consultation is at present.
    I can’t be active due to illness but would like to become a member of a future Co-operative Lib Dem group.

  • Richard Warren 10th Oct '16 - 5:06pm

    Sue Sutherland

    It’s good to hear you’d be interested to join a lib dem co-ops group.

    If there’s enough interest to go further with this, I’ll ask Caron if we can post a piece on LDV announcing the formation of a group. Watch this space!

    I’d also give the group a presence on Facebook.

  • Alex Macfie 10th Oct '16 - 5:40pm

    There is a closed Facebook group, Liberal Democrats for Co-operatives, at
    https://www.facebook.com/groups/808030385918578/?ref=br_rs

  • Matt (Bristol) 10th Oct '16 - 5:44pm

    Please make it about broader mutualism – not just cooperatives and the cooperative movement.

  • Richard Warren 10th Oct '16 - 5:51pm

    Thanks Alex!

    Matt
    Yes, I agree, mutuals ought to be part of the picture

  • Laurence Cox 10th Oct '16 - 10:02pm

    @Richard Warren

    Don’t assume that mutuals are exempt from making the same mistakes as plcs. Both the Chelsea Building Society (taken over by Yorkshire Building Society) and the Britannia Building Society (taken over by the Co-operative Banking Group) had made some very bad decisions in what they lent on. I can remember that back in the days before demutualisation, it was quite common for smaller building societies to get into financial trouble and be taken over by their larger bretheren. Even without demutualisation, the building society sector was rapidly becoming dominated by a few big players. The governance of the building societies was also pretty opaque in those days, I don’t remember there being elections for directors in the four or five different building societies where I was saving; it was normally a case of the Board putting up a list of names just sufficient to fill the places and usually comprised of ex-Board members.

  • I knew someone who was a big-wig in one of the smallish building societies who was very clear they should not become a bank, and hated the trend. He said it was short-term greed that persuaded people to change. The boards would tempt savers with a one-off windfall, which sounded like free-cash, so why not vote to change your BS into a bank? it seemed so easy, and the negative consequences were never mentioned. I suppose people used to work and save in one institution for all of their life, but around that time people were flitting from one to another, and weren’t thinking of long-term stability.

    I’m very much a fan of the co-operative ideology, and would welcome more attention being paid to it by the party. I think it is something that would resonate with a lot of voters too.

    I don’t have a particular issue with the Co-operative group supporting suitable Labour candidates, but I think we need to make the case that being Labour shouldn’t be the defining characteristic. This is a concept that also chimes with our core values, and those of the Greens, and Labour shouldn’t get exclusive rights to the association. However, it is up to us to make that case.

  • Richard Warren 11th Oct '16 - 1:26pm

    Laurence Cox

    Reading your comment reminded me of the Churchill quote, “democracy is the worst form of government except for all the others.” Yes, mutuals aren’t perfect, but at least they haven’t wrecked the financial system and “real economy” like the “too big to fail” banks.

    Your comment also reminds us that good regulation and the active involvement of members are key to having mutuals work well. Let’s learn from past mistakes.

  • John Littler 27th Jul '21 - 7:40pm

    Links with the Co-op movement would be good, but they have allowed themselves to get run down from peculiar practices.

    People who were prepared to sit on endless committees could find themselves propelled to the top even when they did have even the most rudimentary understanding of the business, as happened with Paul Flowers. It was proven in Select Committee that he did not understand the size of the bank’s capitalisation and was out by a factor of 10. It basically failed and was bought by a U.S Hedge fund, hardly in keeping with the bank’s principles. The Co-operative movement once dominated the UK’s grocery market, but it was outcompeted.

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