Opinion: Good co-ops, bad co-ops and the funding of the Labour Party

imageWe Lib Dems do not need persuading of the merits of the Co-operative Movement. Founded in Rochdale in the 1840s, it continues to this day to provide an alternative model for business.

However, it cannot be said that there are many takers for this business approach. Apart from a good number of small co-operatives, there are two dominant players. The John Lewis Partnership, which is owned by its employees, and the Co-operative Group, owned by its members.

John Lewis is a success. It is often cited as an example for others. Not so the Co-operative Group which seems to go from one crisis to the next. The public scandal surrounding Flowers, the loss of control of the Co-operative Bank to hedge funds, and now the resignation of Euan Sutherland, citing that the Co-operative Group is ungovernable.

At this time of crisis, the Co-operative Group needs friends. For example, it could do with the support of influential Liberal Democrats who believe in co-operatives. However, any Liberal Democrat who rides to the rescue should only do so while tearing up their party membership card and, perhaps, joining Labour.

The Co-operative Group is party political. It funds the Labour Party. It funds a good number of Labour candidates, and if this continues into the 2015 election, we can reasonably infer that Lib Dem MPs and candidates will be defeated as a result.

I know that many Lib Dems have stayed loyal to the Co-operative Movement. The Movement will retain our loyalty. We are natural supporters of the co-operative ideal. But there is no reason to connect our support of the Movement with supporting the Labour Party – or more exactly the Co-operative Party which is exclusively affiliated to Labour.

The Co-operative Group has a clear choice: to continue to fund the Labour Party into the 2015 election, or to scrap its political affiliation.

I hope that as Lib Dems we will fight for the latter, and deliver in the last months of this Parliament a change that could re-energise the whole Co-operative Movement.

* William Hobhouse lives in Bath and is co-founder of the Lib Dem Campaign for Manufacturing.

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  • A Social Liberal 13th Mar '14 - 3:17pm

    I believe wholeheartedly in co-operatives. However, it is between those co-operative members and the party they affiliate to (if indeed they do) to decide the relationship between them.

    WE HAVE NO RIGHT to interefere or even comment on that relationship – fiscal, political or whatever. IT IS NONE OF OUR BUSINESS!!

  • paul barker 13th Mar '14 - 3:22pm

    The thing that Libdems find hardest to “get” about Labour is that its not just a Party but a movement. Labour was founded as an alliance between Socialists of every hue, Trade unions & The Co-operatives, that has always been its strenth.
    The Milliband “Reform” process has started to weaken the links with The Unions & now The Co-op movement has started to pull away as well.
    The Labour Movement is starting to break up, opening up Political space which we best suited to fill.

  • @Joe: I think you rather missed Paul’s point. Labour was founded as a movement. It was the party of the trade unions, the co-operatives and “the working man”. It stood for something, and it stood with the other members of the movement when it did so.

    Labour is no longer that party.

  • Stuart Mitchell 13th Mar '14 - 4:29pm

    “John Lewis is a success. It is often cited as an example for others.”

    Not by me it isn’t. I think the way they exclude their cleaners from the annual bonus bonanza is a disgrace. See :-


    “Not so the Co-operative Group which seems to go from one crisis to the next.”

    Though of course, you are basing that on the last couple of years and ignoring the previous 168, most of which were successful. Despite recent fiascos, the co-op still has an awful lot to be proud of when it comes to the ethical aspects of its business.

    @Joe Otten
    Liberals have just as much right to found co-ops or organise trade unions as anyone else. So why don’t you do that instead of moaning about the fact that the existing co-ops and unions are linked to Labour?

  • Joe Otten, come to London and you will find the idle rich who are growing in number. They have moved here from Russia and other countries where they have ripped off their own people to be able to buy themselves a chunk of London.
    Check out the ownership of Chelsea FC or The London Evening Standard.
    They are attracted to London by our home grown idle rich — the wonderful Windsors. Prince Charles with his tax free. £19 Million a year and his ten state visits to the Saudi Royal Family. If you want sword dancing to celebrate an arms deal or if you want human rights violations completely ignored Charles is your man, or Andrew, or William.

  • A Social Liberal 13th Mar '14 - 6:32pm

    Joe Otten

    Yes, individuals (and political parties) have the right to free speech, what they don’t have is the moral right to pass judgement or to gainsay. It is up to the co-op involved and it’s members to choose how to go about their business. And that is the crux of the matter – it isn’t our business. By all means, those who are members can and should voice their concerns but unless crimes have been committed or those who cannot speak out are therefore kept silent then it is not the place of the Liberal Democrats to say who should or shouldn’t benefit from co-operative funds.

  • paul barker 13th Mar '14 - 8:34pm

    I was trying to explain the glue which, up to now has held Labour together, across massive Ideological gaps. Clearly that glue is dissoving. I think thats a Good Thing, in general. The links between Labour, Unions & The Co-ops have damaged all 3 & wider society.

  • Chris Pilkington 13th Mar '14 - 8:55pm

    As I’ve said before in previous discussions the links between the co-operative movement and the Labour Party need to be put into context. There are over 6,000 co-operatives in the UK and only around 10 donate money to the Co-op Party (and as such to the Labour Party) . The vast majority of co-operatives and other mutuals have no connection to any political party and seek to work with people of good will across the political spectrum.

    I should also point out that most consumer co-operatives in the UK (e.g. the Midcounties Co-operative, the Phone Co-op etc) are doing well and far from people not wanting to form new co-ops the sector has seen robust growth for some years now (see http://www.uk.coop/economy2013).

  • Alisdair McGregor 13th Mar '14 - 9:33pm

    Ahhh, an opportunity to post this again:

    Arthur Seldon on Liberal, Labour and Co-operative from 1949
    From “Liberal Magazine” Nov 1949

    “A Liberal looks at the Co-operative Movement, declares
    Alliance with Labour is dangerous”

    The co-operative movement is a liberal institution. It was born in a liberal economy. It grew in an era of political and economic liberalism. It will survive and prosper only in a liberal State.

    Its alliance with the Labour Party is a profound and tragic blunder. Its principles, its purpose and prospects as a trading organisation, and its political policies make its most natural and congenial political home the Liberal Party.

    First, its principles are liberal. The co-operative movement is a voluntary association of individuals who join and leave at will. It is based on the voluntary principle, without which is loses its soul. It lives by serving the consumer in a free economy independent of the State. It could not breathe in a regime of compulsion, direction and State control.

    Secondly, its business structure and development makes its Labour alliance incongruous, out-moded, and dangerous. Changing distribution of income and social groupings are leading it to expand and extend its services and activities. The bulk of its members are drawn from skilled workers whose incomes and requirements are approaching those of the old middle classes. The new members of recent years have come mainly from the middle classes, and the expansion has been mainly in the South. It is a far cry from the groceries, the coal, and other staple commodities of the Northern working classes to the fashion goods, the television and the department stores of the 1950’s.

    The co-operative veteran must rub his eyes when he reads the current advertising campaign of the C.W.S with its “co-op. customers” – the dentist, the teacher, the colonel and other middle class figures. How is the movement to continue to expand along these lines – the only lines along which it can expand – if it is tied to a political party which potential members, for reasons good or bad, fear or distrust?

    Thirdly, a free consumers’ co-operative movement has no business to be allied to a party largely financed by a producer interest, the trade unions, and inspired by Socialist ideology based on belief in the efficacy of State control. The National Council of Labour is not a triumvirate of like-minded equals; it is an unconvincing facade for irreconcilable opposites.

    The co-operative movement’s differences with the trade union element in the Labour movement are typified by its attitude to the licensing of shops. Can any co-oiperative official or member endorse U.S.D.A.W.’s demand for this reactionary and illiberal device for the control of retail outlets?

    And the inevitable conflict with the philosophy and practice of Socialist planning has been laid bare in the compromises and the concessions which preceded the final draft of “Labour Believes in Britain”. No doubt face saving formulae will be found by the Labour Party negotiators in the effort to keep the goodwill of the movement at least until the coming general election is over. But is the movement faithfully served by buying a few more years of immunity? The clash must come sooner or later.

    The co-operative official or member who convinces himself that the nationalisation of wholesaling and other co-operative activities can be put in cold storage for ever, or who gives credence to seductive talk of the movement being “allowed” to run a part of a Socialist economy, is indulging in wishful thinking that does no credit to his judgment and no service to the movement.

    He has forgotten that there is a co-operative movement in Russia that is “allowed” to run a sector of the economy – now expanding, now contracting at the will of a commissar. But is this poor thing, this convenient instrument of a total State, unfree, dependent, a mockery and a travesty of the hopes of the Rochdale Pioneers, held up as a desirable fate for the British co-operative movement?

    But if the Co-operative-Labour alliance is a mistake, on what does it rest? There is the sentiment of he working-class origin of both organisations, a sentiment which neglects the long distance both have travelled since their early days. Then there is that universal Aunt Sally, “the capitalist system”, which means all things to all men, a convenient thought-stifler when awkward questions arise. And a few words about “production without profit”, or about that wildly impossible “Socialist and Co-operative Commonwealth” could always be relied on to raise a cheer or quell the doubts of those who think for themselves.

    What are the facts of history? From the very first the alliance with Labour was never an easy one. Only ten years after it was born, doubts and fears were expressed by co-operative spokesmen about Labour policies, such as Dr. Addison’s producer-controlled agricultural marketing boards.

    More than once in the 1930’s Lord Rusholme (then Mr R. A. Palmer) and others spoke out against the monopoly legislation of the Labour Government of 1929-31, later adopted and enlarged by the “National” Governments of Macdonald, Baldwin, and Chamberlain, and supported in principle by Labour in Opposition. These co-operative spokesmen were supported not by the Labour Part, which was too concerned with trade union interests, but by the handful of Liberals who understood the economic and political dangers of monopoly in all its forms.

    It has taken four years of Labour in power to make the dangers too plain to be ignored. It is not merely a question of the nationalisation of a few co-operative activities in wholesaling and insurance. These are only the first steps. The ugly truth is that, however “liberal” some of its paper intentions, Labour’s philosophy is the antithesis of that on which the co-operative movement and other Liberal institutions rest. For underlying it is the impudent assumption that no voluntary association of free individuals can be superior to the State.

    The co-operative movement wants the freedom to develop in those fields in which, by trial and error and in rivalry with other forms of distribution, it proves itself in the interests of the community. It seeks no artificial respiration, but it rejects doctrinaire exclusion. This is precisely what a Liberal economy implies, and what the Liberal Party stands for.

    In a Liberal economy there is room for all forms of enterprise – companies and one man businesses working for “profit”, profit-sharing enterprises of all kind, and “mutual aid” organisations such as the co-operative movement. The only activity for which there is no room is monopoly.

    The Liberal Party does not stand for one kind of economic organisation against the others. It stands for the progressive elements in all forms of economic life against the backward-looking elements. It calls for room for all forms of activity provided hey benefit the community. And in its policies of freedom for enterprise and the prevention or destruction of monopoly, it truly serves the consumer. Here surely is the voice of sanity. It is the voice of the progressive in all forms of human activity, co-operative and all other; it is the voice of the Liberal.

    The hour is not too late for co-operators to see the truth and to warn their colleagues and their fellows. Many have paid uneasy lip-service to Socialist ideals in which they had no faith. Many have quelled doubts by representing themselves as “liberal-minded Socialists”. Misplaced loyalty to the established political strategy is treachery to the principles of the co-operative movement. To speak out now may be to incur the displeasure of the articulate minority who have vested interests in the Socialist alliance. But to remain silent is to earn the reproach of the multitude whose hopes will be crushed by the prostitution of the movement in a Socialist State.

  • Will Millinship 13th Mar '14 - 9:41pm

    Until such point where the CWS (or Co-Operative Group) end their exclusive arrangement with Labour, I won’t shop, insure or be buried with/by them. Still happy to go to ScotMid (Scottish local indy Co-Op) but.

  • Chris Pilkington 13th Mar '14 - 10:08pm

    Will – ScotMid also donate to the Co-operative Party.

  • I use the co-op heavily and although I don’t much like it funding Labour, I don’t like most other companies funding the Tories either. Why single the Co out for criticism for its political donations?

  • Stephen Donnelly 13th Mar '14 - 10:43pm

    Which is the better structure : mutuals who serve their members or share held business who serve their shareholders ? Actually, any business that does not serve customers will ultimately fail, and it is the structure of the business that determines whether that happens, not the form of ownership . The way Co-op is organised works against change, the organisation of John Lewis does not. Most businesses are not co-ops, because co-ops often serve their staff interest rather than customers. That is not inevitable, as John Lewis has shown, but it is more likely. Co-ops are a nice idea, but will always be peripheral to the main economic debate.

  • Something deeply unpleasant seeing tribal hatred reach such levels that supporters of one party want to inflict great harm on an organisation that benefits society and its members, rather than just shareholders, simply because it donates to a political party that isn’t theirs.

    I assume the co-op would be safe from lib dem attempts at destruction if it donated to them? What is the moral difference between this and politicians demanding donations from companies lest they find themselves legislated against?

  • William Hobhouse, would you support movements by the Labour party to prevent businesses, groups or other collectives that currently donate to the Liberal Democrats from doing so?

  • Stuart Mitchell 14th Mar '14 - 9:05am

    @Joe Otten, just to be clear, the OP says that Lib Dems should “fight” to do away with the Co-op’s affiliation to Labour.

  • Stuart Mitchell 14th Mar '14 - 9:46am

    “John Lewis is a success. It is often cited as an example for others.”

    Given the way John Lewis treats its cleaners, I’d say anyone who cites it as an example to follow is not the sort of person I have much time for :-


    “Not so the Co-operative Group which seems to go from one crisis to the next.”

    You base that assessment on the troubles of the past two years and ignore the 168 years prior to that. Despite its current woes, the Co-op still has an awful lot to be proud of in terms of its ethical approach to business. All of which tends to get ignored because people would rather have a laugh at Paul Flowers, the “crystal Methodist”.

    @Joe Otten
    Of course there is absolutely nothing to stop liberals from setting up their own co-ops and trade unions, affiliated to either the Lib Dems or nobody. Why does nobody give it a try instead of constantly moaning about the links the existing co-op and unions have with Labour?

    A lot of Lib Dems these days seem to have an obsession with depriving Labour of funds which is almost Mugabe-esque. It’s very strange that there is no such interest in the Tories’ funding, though the Tories spent more than twice as much as Labour at the last election. Nor is there much scrutiny of the dodgy businessmen and nightclub owners who seem to provide the Lib Dems with a lot of its funds. The goal seems to be to drag Labour down to the level of the Lib Dems while letting the Tories continue to spend more money than everybody else put together. Nobody seems much interested in the broad issues around party funding; all we get is partisan sniping.

  • I have less of a problem with the Co-operative giving money to the Labour Party than I do with its failure to compete successfully. About 5 or 6 of the local stores it bought from Somerfield have now been closed and the premises are now empty or have been sold to Aldi or Waitrose. Only 3 of the ones acquired are still Co-op shops. Prices can be a bit on the high side which is a bit unfair where they are the only supermarket in the locality. The Co-op needs to be professionally managed. In the recent elections for board members hardly any of the candidates seemed to have any ideas for attracting customers and those that did were not elected. The rest seemed to put forward pious platitudes which they no doubt thought would get them the votes of members and they were right. I want to support them as my parents and grand parents did but I think even they would not recognise what it has become. It used to have 50% of the retail trade and now it has about 6%.

  • Joe Otton

    nobody is saying the Co-op shouldn’t be allowed to support Labour. We are saying that out of respect for co-operative principles, they should decide not to support Labour. It is an expression of tribal love for co-operatives.

    The article says:

    “The Co-operative Group has a clear choice: to continue to fund the Labour Party into the 2015 election, or to scrap its political affiliation.

    I hope that as Lib Dems we will fight for the latter, and deliver in the last months of this Parliament a change that could re-energise the whole Co-operative Movement.”

    It is explicitly calling for lib dems to persuade the co-op not to fund Labour, and it is by no means the first such article on this site to do so. In fact the previous one was an attempt to encourage political partisans to vote en masse in a survey to defund the co-operative party.

  • Joe, the co-op, or trade unions for that matter, aren’t big money. They are collectives of individuals who agree to fund a political party via their membership/subs. Not in way similar to a single loaded individual throwing a few million quid at a political party.

  • @Joe Otten. I do not understand — “…infiltrating an organisation to subvert the inclusive nature of its cause, whether it is the Co-op or Eton.”
    What are you talking about? There is nothing earlier in the thread that seems to relate to this. Who is infiltrating the Co-op or Eton?

  • Eddie Sammon 14th Mar '14 - 3:48pm

    Joe, why should we take the big money out of politics, but not the big money out of society? Do both or neither.


  • Stuart Mitchell 14th Mar '14 - 5:03pm

    @Joe Otten
    “Stuart, if arguing our corner is Mugabe-esque”

    Strangely, I said nothing remotely like that.

    Arguing one’s corner is somewhat essential in a democracy, which is why I describe those who seek to limit their opponents’ ability to put their case effectively (in this instance, by actively trying to deprive them of funding) as “Mugabe-esque”.

    “We should take the big money out of politics – and that goes for the Conservatives too.”

    And the Lib Dems? You forgot to mention them. Oddly, of all the sources of party funding in this country, the one that seems to upset Lib Dems the most is the only true mass-participation model we currently have.

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