Removing the Upper Limits
Ed Mayo, Co-operatives UK
The mission of Co-operatives UK is to grow the co-operative economy, through
action to promote, develop and unite co-operative enterprise.
When we talk of growth, we mean in the sense of co-operative values and principles,
including expanding member participation, co-operation among co-operatives – not
just turnover growth.
At a time when growth at any cost is the concern, balance matters. We are in an age
not just of austerity, but of blame. Outsiders, incomers, scroungers - cuts we had to
make become cuts we are told we want to make. It is not just here. One Japanese
cabinet minister attributed his country’s uncertain economy to the elderly suggesting
that they should “just hurry up and die”.
We blame but show no signs that we are ready to take responsibility. So yes, we
blame bankers too … though for a financial system that we were part and parcel of.
We turn a moral blind eye to species loss and climate risk… unwilling to give a
mandate for collective action.
One reading of the International Panel on Climate Change report just out is that if we
want to level off at no more than two degrees temperature rise worldwide, then we
have a choice. We can grow the economy, or we can cut emissions and try and do
so rapidly. It is increasingly clear that we can’t do both.
So, the big economic choices of our day are for an economy of prevention, a great
transition to low carbon living within limits, or one of adaptation, a great disruption of
coping, survival and loss.
Co-operatives will play a vital role in either case. We are enterprises that, as the
International Co-operative Alliance puts it, aims to be exemplars of participation and
sustainability. We don't just want to do business. We want to change markets.
As you may know, from our annual Co-operative Economy report, we know that there
are 6,169 co-operative enterprises in the UK and these are owned by 15.4 million
members.
The number of co-operatives is increasing at a rate of 6% per annum, averaged over
the last four years, which is represents around 250 new co-operatives a year –
around one new co-operative every working day of the week.
There is a diversity of co-operative forms, in the UK and overseas. There is
continuous experimentation around key issues, such as the nature of membership,
1
interest in community benefit and new models of financing.
At the same time, they operate with a strong, local connection. The study we did to
track what happened to money spent in a Co-op food store in Lincolnshire showed
that every pound spent is recycled five times before the last penny leaves the local
economy.
Spend it elsewhere or online with other national brands, it is hoovered out, not just
nationally but to tax dodging havens overseas.
Yes, things are tough with the Co-operative Bank. But if you want to see how good
co-operatives are, in any sector. Just have a look at our competitors.
Even so, there is no guarantee that a co-operative form carries commercial benefits.
It is what you do with it in order to create competitive advantage.
So how are we doing on this?
The co-operative economy has grown overall every year since 2008. But the caveats
on this are:

The success of the Co-operative Group reflects the role of acquisitions.
These have played a significant role in growing turnover but have not
necessarily sustained their full potential in terms of market share

John Lewis Partnership has been an outstanding performer as an employeeowned co-operative and on current trajectories could overtake the Cooperative Group in terms of turnover over the next decade

The growth of the number of co-operative enterprises is at the smaller-scale
end, which is necessarily more fragile

There is a ‘missing middle’ in terms of high growth ‘mid cap’ co-operative
enterprises

The most significant and dramatic new sector within the co-operative
economy is co-operative schools. But this field is vulnerable to policy change,
the use of assets is constrained and there are some limits to which this sector
can operate in a commercial way.
Looking forward, the International Co-operative Alliance (ICA) agreed in Manchester
in November 2012 a Blueprint for a Co-operative Decade. This sets out an aim that
by 2020, the co-operative form of business will become the:

model preferred by people.

acknowledged leader in economic, social and environmental sustainability.

fastest growing form of enterprise.
2
However you measure this, and the metrics and baselines are not straightforward,
this is an ambitious set of goals.
As a stepping stone towards this, the ICA Blueprint for a Co-operative Decade sets
out two challenges for co-operative enterprises to live up to in terms of being best in
class across the business sector: participation and sustainability.
On participation, there is a world of new participation methods and opportunities that
come with new technologies and new expectations. We don’t have a good
understanding as yet of how membership models fit into this new world of armchair
and mouse click affiliation. We are not lead innovators on participation, even if we do
have areas of practice such as community ownership and workplace democracy that
are still points of real difference.
On sustainability, we have outstanding practice in the sector in a new generation of
sustainability-inspired co-operatives but it is not generalised, nor is sustainability yet
a central, commercial point of differentiation for our retail and wider co-operatives.
There is a close alignment between the mission of Co-operatives UK and the
objectives for the Co-operative Decade. We are working with our members on all of
the key themes of the Blueprint.
These include:

an overhaul of co-operative codes of governance,

promoting our identity, for example through Co-operatives Fortnight as the
sector’s campaign,

the advice we give to 300 co-operatives on governance, legal models and
registration,

work on co-operative capital, including community shares,

and on legal frameworks, our campaign for a consolidated act for societies,
which looks to be on track to become law next year.
A significant number of co-operatives are also engaged in growing the co-operative
economy, not just through their business, but in supporting others. The Co-operative
Group funds the UK-wide business advice service, Co-operative Enterprise Hub.
Societies such as Midcounties and Lincolnshire Co-operative Society support a
dedicated co-operative development agency in their region.
For me, what we have learned from all this is seven lessons on how to grow the cooperative economy:
3
1. Go with the flow
The growth of the sector is organic and is shaped most significantly by the
commercial success of the largest co-operative enterprises.
2. Start next to success
It is clear that co-operatives in the UK are not, and never have been, spread
evenly across the economy. They tend to cluster in various ways, and
successful co-operatives are even more clustered. This isn’t just by economic
sector, but by geography and demographics too.
3. Focus on excellence
There is a confusion of brands, in terms of social enterprise, mutuals,
employee ownership and co-operatives and more to do to work in an
inclusive way across these communities of interest and action and to project
co-operatives as a model of excellence for delivering what these set out to
achieve rather than only protect our turf as an alternative to them.
4. Join up the delivery
There are also institutions that play a key role in co-operative development
across sectors, including the Co-operative Enterprise Hub, Co-operative and
Community Finance (and other financiers), national agencies in Wales
(Wales Co-operative Centre) and Scotland (Co-operative Development
Scotland - CDS) and local co-operative business development bodies
(CDBs). But there are weaknesses too in terms of delivery:
a. There is more demand for advice, including paid for and peer advice,
particularly on co-operative matters than is felt to be available
b. Our knowledge base and capacity is stretched thin.
c. It is not easy to respond to national or large-scale conversions.
d. There is an over-focus in resources on start-ups and new enterprise
development, which, while welcome, operates at the end of the sector
with the highest failure rate and least economic impact.
5. Think sectors
The greatest success has been seen in sectors where there is a need and a
model that is developed and championed by a sector development body,
notably our federal members, that is able to build momentum and is rooted in
the experience of co-operatives and mutual enterprises that emerge. Cooperatives UK itself has a track record of working on sector development, but
our federal members are the experts in their own sectors – at least where
federal members exist.
4
6. Make it easier to do the right thing
The sector approach is a vertical approach. There are also horizontal
changes, such as understanding of the co-operative option, which have to be
tackled, to reduce the barriers to co-operative business development across
sectors. These take time to change, although arguably the new Co-operatives
and Societies legislation represents an outstanding opportunity in the coming
years to promote the model. Other ‘horizontal’ interventions include: cooperative education and building a community of practice and knowledge;
legal and institutional solutions; access to finance; policy support and
recognition; secondary co-operative services; policy advocacy etc. Again, all
these require patient and persistent co-operation among co-operatives to
achieve.
7. Harness innovation
Tough times are ones in which innovation is more important than before, as a
source of new commercial value. The co-operative sector has spread its
activities in a horizontal form of innovation, through co-operation among cooperatives, that is unique in the UK economy. But the sector is not benefiting
in a systematic and commercial way from innovation. The area of greatest
business reinvention – using online channels – is one in which the sector is
relatively poorly represented. Innovation happens at the margins, as always,
but we lose out on co-operative potential, if it simply remains there.
There are risks, particularly at the moment with the capital action plan in train for the
Co-operative Bank.
But there is also a world of opportunity out there for growing co-operatives:

The Evergreen Initiative in Cleveland, USA, launched in 2007 shows how to
renew a local economy in a bootstrap way.

The Wales Co-operatives and Mutuals Commission can set out a new
agenda to set the pace for the UK as a whole.

In Italy, co-operatives get tax relief and pay the money instead, of around 3%
of surplus, into funds for co-operative development fund.

In a few countries, co-operatives have a dominant role in the economy. In
Finland, the co-operative sector is said to account for 21% of GDP, in
Switzerland 16% and in Sweden 13%.

In countries, such as Portugal and Denmark, there are national programmes
for the creation of young people’s co-operatives. Here, over one million young
people are out of work. In 2014, we will be asking for your help to search for
self-help, co-operative solutions for young people.
We have high hopes and ambitions for our model of business. If we do things right
and do them together, there is no upper limit to what can be achieved through cooperation.
5
6