Co-op's and the Jobs Crisis

You would think that at a time when unemployment is once again inflicting untold damage on a new generation that any government would leave no stone unturned in getting people into work.

There is a sector that has continued to grow through the downturn, has outperformed UK economic growth every year since the 2008 banking collapse, is continuing to grow with the performance gap widening and is also expanding fastest in the new parts of the economy crucial for future economic development like renewable energy and environmental services.

It is a particularly resilient sector with new start ups out lasting their conventional competitors by a significant margin. A growing sector with a £33.2billion turnover employing over 236,000 people. Yet it is all but invisible when it comes to politicians and so called opinion formers.

That is of course the co-operative sector. Today there is so much interest in forming co-ops that the small number of co-op business advisors is overwhelmed by the demand. The movement has itself risen to the challenge the UK’s largest co-op, the Co-operative Group will by 2013 have ploughed £11 million into providing a specialist support and advice package to help new and existing co-op’s to become more sustainable businesses.

The service provided through the Co-operative Enterprise Hub puts those needing advice in contact with co-operative development specialists throughout the UK to enable them to access free advice, training and consultancy. The package can also include loans without security or personal guarantees.

Now this is a significant effort and clearly the Co-operative Group are fulfilling one of the key co-op principles that of co-operation amongst co-operatives. Many other co-ops help in similar ways like Lincoln and Midcounties. But we have to be honest and admit that this terrific effort on the part of the movement is scratching the surface of the potential for new co-op start-ups.

The fact is just one in every three thousand new business start-ups is a co-op! There are two main reasons for this. Firstly the chance of finding a business advisor who has any idea about co-op’s is decidedly slim.

There are some very good advisors out there in my own region we are blessed with the Coventry and Warwickshire Co-operative Development agency and the Gloucester based Co-operative Futures. But that is your lot so they have to cover a huge area with tiny staff numbers.

If that is not bad enough some mainstream business advisors are less than helpful and do their best to steer potential co-operators down the limited company route because that is all they understand and the registration process is simpler.

Which highlights the other reason - the sheer complexity of the regulatory environment new co-operative society’s face. New co-op start-ups have to be compliant with nineteen separate pieces of legislation! This is a tough ask when a group of people are taking a risk setting up of a new business. Co-operatives UK help with the process of registration ensuring that the cost is no more than establishing a limited company. This is very important as any error in registration can create huge problems further down the line.

Now after thirteen years of a Labour Government the fact that the co-operative movement has had to resort to winning piecemeal changes to legislation through very hard-won private members bills is a disgrace. Sadly this is what you get when the ruling party is in thrall to the monopolistic corporate sector. A sector which despite the rhetoric fears genuine competition.

The fact is that there is no chance of the corporate sector filling the huge gap in our economy being caused by the senseless attack on the public sector. Yet despite the governments myopia with a relatively modest level of public support we could double the number of co-ops in the UK in a short amount of time creating thousands of new businesses and many thousands of new jobs.

As well as start ups there is another untapped source of new co-operative businesses and that is the conversion of owner managed businesses. These types of businesses often face succession problems when the founder comes up to retirement. When there is no son or daughter with the skills or desire to take on the firm it can lead to closure or a painful acquisition by a competitor. Now the obvious successors are the workers but making this a genuine prospect requires education and support.

There is a considerable body of evidence that such transfers work well after all the John Lewis model that the government are always going on about (even if drawing the wrong lessons) was a successful transfer out of family ie private into workers ownership. Other examples of successful employee owned firms include the architects and consulting engineers, Arup Group, paper and board manufacturers, Tullis Russell and chemical makers, Scott Bader.

If the government was really committed to co-operative enterprise it would not be merely trying to pass off public sector privatisation as co-op development but would be just as enthusiastic about turning private firms into co-ops. Be in no doubt as Richard Wilkinson and Kate Pickett point out in their wonderful book the Spirit Level it is worth the effort. A country with a larger co-op sector would be a better place for all of us to live in.

Interested in starting a new co-op?

Go to www.co-operative.coop/enterprisehub