At the tail end on 2013 the Co-op Movement had some very good news and no it was not about yet another inquiry into the Co-op bank. Or perhaps that should be the Bank formerly known as the Co-operative as last week it finally passed all of the regulatory and business hurdles required to complete its demutualisation.
The process has been agreed by all necessary classes of creditor and shareholder and approved by the Courts. So effective majority control of the Bank has now passed to investors with the issuing of the new ordinary shares and the termination of the Co-operative Groups existing shares.
Personally I am not rushing to leave the bank I suppose in my heart I hope to win it back for co-operation but in my head I am fully aware of what happened to all the other Building Societies that became small banks on demutualization and what subsequently happened to them. So the omens are not good.
No the good news was astonishingly in the Houses of Parliament. The first reading of the Co-operative and Community Benefit Societies Act due to become law on 1st August. It took a while of patient and careful lobbying of government and civil service but this is the most tangible benefit from the UN International Year of Co-operatives in 2012. One of the objectives of the Year was to get governments around the world to update their legislation when it comes to Co-ops. And on a wave of Big Society rhetoric David Cameron found it hard to resist.
This new Act is however a consolidation act and can therefore only ‘consolidate’ existing legislation and that means that, the 1965, 1967, 1975, 1978 and 2002 Industrial and Provident Societies Acts; the Friendly and Industrial and Provident Societies Act 1968; the Co-operatives and Community Benefit Societies Act 2003; and the Co‑operative and Community Benefit Societies and Credit Unions Act 2010, will be repealed and replaced with the new Act.
Having all this Co-op law in one place will be a great boon when it comes to starting and running co-operative enterprises making life simpler for everyone who works for and with co-ops.
Co-ops UK has however got a long list of new things it would like to include as new Co-op law and has been encouraging the Law Commission to take some of these ideas into account in the process of consolidation. There has been some success including increasing the limits on withdrawable share capital from £20,000 to £100,000, modernising the processes on insolvency – something that will particularly help with fan owned football clubs, improving the investigatory powers of the regulators, and allowing the electronic submission of registration documents.
Co-ops UK will be pushing for more amendments as the legislation progresses but despite all the movements set backs this is the most significant change in the legal basis of co-operation for a generation.If you read the mainstream press you would think the whole co-op movement had gone bust but for all the troubles that have hit the Co-operative Bank after all it is not as if all the other Bank’s have be free of trouble. This new law is good news for the over six thousand co-operative businesses across the UK, and in turn for their 15.4 million owners.
Despite what you may have read elsewhere 2013 was a good year for Co-ops with a new one starting everyday! What is more their survival rate is far higher than for business at large. One in three conventional businesses goes out of business within three years of starting. For co-ops, that is only one in twenty.
For five successive years the co-operative sector has outperformed the UK economy, growing by 20% since 2008. Across the nations of the UK, turnover is now £36.7 billion. Worldwide, the co-operative sector has a turnover 54 times the global turnover of Coca-Cola.
Meanwhile in the UK the sector is strong and growing Examples of this commercial success story are:
- In farming, 65% of all farmers in Scotland, an expanding sector, are now members of an agricultural co-operative.
- Co-operative schools have doubled their number every sixteen months, with now over 500 co-operative schools in England.
- There are now one million members of credit unions in Britain. These are financial co-operatives, lauded most recently by the Archbishop of Canterbury, who asks all churches to work with their local credit union.
- Co-operative Energy is challenging the big six retail energy giants. The percentage of UK consumers who would recommend their energy supplier is 30% overall but an amazing 97% for Co-operative Energy.
So in a nutshell the problems with the Co-op Bank are just that a problem with the bank all that is wrong with the rest of the sector is that it is still too small. There is also a very important thing you learn when things go wrong - the corporate media are no friends of co-ops. But why should they be, the sector maybe small but the co-op model is a clear threat!