Transforming Business

We welcome the Labour Party’s commitment to doubling the size of the co-operative economy. We wholeheartedly support the ambition to grow this vitally important part of the economy.

But we want to do it in a way that doesn’t just develop an alternative co-operative economy, but helps to transform business more broadly; which helps people to understand how business can be good for everyone and contribute to the common good. Business needs to benefit the many people who are affected by its activities – as workers, customers, suppliers and neighbours; not just the few who are its owners.

In the modern world, to an increasing extent businesses have become more significant than national governments in terms of impact on the lives of citizens. It is not just the size of turn-over of the world’s biggest businesses which increasingly dwarfs national budgets;

• it is their ability to influence, change and potentially control the context in which individuals buy goods and services (markets);
• their power over the creative and working capacity of individuals (workers);
• through digital technology and social media, their reach into and hold over people’s private lives (community).

This ever-growing power of businesses would not be of particular concern to us if it was held and used for the benefit of human beings as a whole.  But it isn’t.  Most of the power of businesses is held by and accountable to private interests which have no absolute moral or legal responsibility beyond themselves. Consequently, the optimisation of profitability and economic growth for their own benefit outweighs any broader concerns about human well-being and happiness, climate change, and future generations.

One of humanity’s highest priorities today is for business to be transformed from operating for the private benefit of investors to operating for the common good of all. 

Cooperatives can play an important part in that transformation.

For this to happen, three fundamental things are needed.

1. The role that cooperatives can play in contributing to the common good needs to be publicly and formally recognised. This essential recognition, which has never existed in the UK in spite of the historical origins of the movement, is needed to provide a platform to address the prevailing assumption that investor-owned enterprise is the only viable legal and economic model for business.
2. Cooperatives need to be regarded and treated as part of mainstream business in the UK. This means bringing cooperatives, and other social businesses, under the formal responsibility of the Department for Business, Enterprise and Industrial Strategy.  BEIS should be responsible for ALL types of UK business, not just privately owned enterprise.  This will help to provide a platform to develop a coherent strategy for enterprise to serve the interests of all, and to create the appropriate basis for government to support and promote the most appropriate form of business for individual sectors.  It will also help to avoid the risk of sub-optimal policy-making just because the very structure of government is in tension with the pursuit of the common good.
3. There needs to be a review of the laws of registration for cooperatives and all other social businesses. Such a review happens every generation in relation to companies because such laws are seen as crucial to the economic success of the country. There has never been such a review in relation to cooperatives; nor has there ever been a strategic review of all business forms (including PLCs, private and community interest companies, mutual societies, social enterprises, and charitable businesses. It is, therefore, no surprise that our laws fail to provide the supportive legal framework necessary to provide the best possible environment for those striving to carry on business for the common good.

As a first step to reinforce its long-term commitment to the cooperative movement, we ask Labour to make a manifesto commitment on taking power to carry out a review of the law and policy framework for all enterprise for the common good with a view to transferring departmental responsibility for cooperatives and community benefit societies (all societies registered under the Co-operative and Community Benefit Societies Act 2014) from HM Treasury to the Business Department, and for BEIS to assume responsibility for other third sector businesses currently under the responsibility of the Office for Civil Society within DCMS.

We recognise that securing formal and public recognition of the contribution which cooperatives make is a longer process. Some insight into a mechanism for this, through collaborative working between government, trade unions and employers’ organisations, can be gained from ILO recommendation 193 which supports the promotion of cooperatives based on the ICA principles, and creating a supportive environment for cooperatives to secure the many social and economic advantages which they bring.

Establishing a review of the laws of registration for cooperatives needs to follow on from the relocation of departmental responsibilities, so that such a review can be launched on a proper basis where cooperatives are formally located within the mainstream of UK business, and recognised for their contribution to the common good.

For more information

Please contact David Alcock or Cliff Mills.