2012 has been recognised as the
International Year of Co-operatives by the United Nations and ResPublica is
pleased to have launched a series of events that will address co-operative
models in relation to various social issues and sectors of society.
March Budget and the ensuing debate on economic growth, ResPublica and
Circle Partnership co-hosted the first session in the 2012 International Year
of Co-operatives series on the theme: 'Driving the UK Economy through Co-operation
and Innovation'. The panel event explored how co-operation and shared
ownership can offer an alternative to traditional business models and create a
more sustainable and responsible economy with resilient social and civic
As part of our work on growth through co-operation and shared ownership, panellists explored how these forms of enterprise and association can be realistic models to drive social change and to promote long-term sustainability of the UK economy.
The event began with the agreed recognition that the
current economic system does not ensure long term social and economic
prosperity. It was noted by Lord Newby that keeping the ‘health service the way
it is will lead it to running out of money’.
Simon Randall and Ali Parsa drew attention to the great concentration of
ownership within the UK’s economic structure where ‘93% of all assets are
controlled by two square miles’.
There was a consensus among the panel members that the
UK’s antiquated economic structure must catch-up with the rest of the world.
The UN announced this year that there are 1.4 million cooperatives across the
world supporting half the people in the world. This however is not reflected by
the UK economy. The concentration of wealth in the UK is much greater than in Germany.
Randall suggested a key factor responsible for this was that 40% of German economy
is owned by cooperatives and family businesses, leaving a fairer distribution
opportunities from co-operation are great but so is the challenge
The challenge for the economy is not about
restarting growth; it is about restarting a new economy. Ed Mayo proposed that
there has to be diversity in business models. Ownership should not be
centralised to a few. Support has to be given to Small and Medium Enterprises
(SMEs) and family firms. These models are proving successful - where the
general economy has seen near to zero per cent growth, these cooperatives have
seen a 21% increase in growth over the past year.
There has to be a greater understanding and support
for these initiatives across legislation and the banking system. This said, changes
are being made to the current system which may help overcome these challenges.
Social enterprises are receiving great support from the government. The
establishment of the ‘Big Society Capital Fund’ will see more investment in the
direction of SMEs. And banks, over the past five years, have increased their
investment into social enterprises.
One of the strongest examples of a successful
cooperative in the UK is the establishment of Circle’s co-owned hospitals. The
cooperative works through an employee co-owned partnership structure which
offers incentives across the organisation, enabling everyone to put the
patients first. Circle offers an improved patient experience whilst keeping
their costs down. This system has seen
very positive results, as Circle offers five-star hospitality to NHS patients.
Ali Parsa explained their system works for the long
term gains of the patient and for the economy through three key areas. Firstly,
Circle is able to deliver better services through partnerships with businesses
and different sectors. Secondly, the structure of ownership, whereby employees
have more of a voice and representation means the organisation can benefit from
‘the intelligence of the many [which] is better than the few’. Finally, with
this pride of ownership, the employees are more committed and passionate about
The People’s Supermarket, funded three and a half
years ago, has also shown the success of working through cooperatives. Kate Bull
brought to light the fact that there is an over dominance of bad cheap food
with centralised ownership in Britain’s high-streets. Thus, the People’s
Supermarket was set up in reaction to this. As Bull emphasised, they faced many
challenges, most notably, they found themselves having to follow laws created
in 1884. Moreover, applying for loans was extremely problematic as the category
of ‘cooperatives’ is not officially recognised on bank forms.
Through overcoming these challenges they now have a
cooperative business system in place. Many of the shop workers at the People’s
Supermarket own company shares. Unlike many supermarkets in the UK, this store
works hard to protect the environment and prevent food wastage. Bull gave
example to the fact that when dealing with fresh fruit, a lot of it can get
bruised and therefore wasted. However, at the People’s Supermarket this food is
given to a chief, who at a customer’s wishes, turns it into a meal. They also
work with the local community; investing and advising new businesses.
Although there are some examples of success, the legislation
and the business system must modernise to help new co-operatives. For instance,
Circle and the People’s Supermarket are finding it very difficult under the
current system to procure enough investment in order to expand and help others.
Bull argued it is a ‘travesty’ that without the banking systems acknowledgement
of co-operatives being unique from businesses and charities, they still have to
‘pay full business rates’, which is extremely detrimental to their growth.
However, 2012 is an exciting year for co-operatives
as legislation is beginning to change, and more government support is beginning
to be delivered. The Localism Act supports key partnerships between innovative
thinkers, businesses, local government and private organisations; furthermore, the
‘Big Society Capital’ promises more accessible investment, which could be used
to create more examples of success stories for co-operatives.
ResPublica welcomed this opportunity to host such a topical discussion amidst the continuing debate surrounding co-operation and shared ownership. For further information, please do not hesitate to contact Annalisa Plachesi, Events and Partnerships Co-Ordinator, at annalisa.plachesi@