Co-operation and Mutuality in the International Year of Co-operatives

We live in a world that takes co-operation and mutuality for granted. In one way that’s good news because it means it’s so common we regard it as a given – which suggests that there’s a lot of it about. (Imagine what driving would be like if you couldn’t rely on the vast majority of your fellow motorists to cooperate and abide by the same rules!) But this is also a problem because so much of the time we don’t really register how much co-operation is involved in our everyday living. And this can make co-operation and mutuality become invisible.

Whether we’re at work, or socialising, our ability to get pretty much anything done is dependent upon our ability to engage with others in such a way that we can get our needs met and they theirs. We swim in an ocean of mutual aid but barely notice it. Every so often though we’re brought up sharp by its absence. That’s when you’ll hear people say things like ‘I’m afraid they’re not being very co-operative’. But what’s so striking is that most of the time this is the exception not the rule.

Figuring how we can best co-operate to achieve mutually desired outcomes in economic life is not always easy – the Nobel Prize for Economics was awarded in 2009 to a team, including co-operative theorist, Elinor Ostrom, for discovering just how complex, and productive, that can be. But fortunately perhaps for the UK, there are branches of business life that has been experimenting with co-operation and mutuality for over a hundred years and more. It’s time perhaps to compare notes and learn what has worked.

Co-operatives like building societies are member-owned businesses

Co-operative enterprises, like building societies, are member owned, mutual businesses.  Although the culture differs across many co-ops and financial mutuals, you could say, paraphrasing Churchill, that we are two business nations divided by a common model of ownership. Certainly, under international definitions, most UK building societies, with their open membership and democratic voting, would probably be classed as part of the co-operative family.

Whether or not, a business has co-operative in its name (as Nationwide did, for example, in its early years), there is a wide variety of co-operative and mutual forms both here and overseas. The co-operative movement worldwide is itself huge. There are eight hundred million people worldwide who are members of co-operative enterprises. In turn, they employ over 100 million people. That is more than all multinational companies put together. They range from helping with everyday needs, such as food and shelter, through to people banding together for savings and loans. There is also continuous experimentation around key issues, such as the nature of membership, interest in community benefit and new models of financing.

So what is a co-operative? Apart from the investors of capital, there are three main economic stakeholders in any business: its consumers, the producers who supply inputs to or take the outputs from the business, and its employees. In a co-operative, usually one of these other stakeholders is put at the centre of the business as member owners.

The advantages to stakeholders of co-operating are obvious; together they can channel the value added from the business to themselves rather than to investor-owners or to ‘middlemen’:

• Consumer owned businesses provide people with consumption goods at the lowest possible price and with a guarantee of good value, and so make their income go further.
• Producer owned businesses enable individual self-employed people and other businesses entities to come together to achieve economies of scale and improvements in their business offer enabling them to compete, whether in local or global markets.
• Worker owned businesses provide people with an income, but also are a way of gaining control over the conditions under which they labour, providing what the International Labour Organisation calls ‘decent work’.

A number of co-operatives businesses are hybrid – or multi-stakeholder - enterprises. These deliberately offer different categories of membership to more than one stakeholder. The Eroski retail co-operative in Spain, for example, has employee and customer members.

Where enterprises are member-owned, they are generally not subject to stock market listing. Unlike the situation for PLCs, teams of analysts are not employed to study their performance and the financial press often omits to report their results. As a consequence, there has been a tendency to marginalise the role of both co-operatives and mutuals in the wider economy.

But we know that co-operatives operate in all parts of the economy including retail, banking, food and farming, design and renewable energy. They are emerging in new sectors, such as the creative industries, allowing freelancers and creative professionals to come together into collaborative enterprises where it helps to work together. Co-operatives and mutuals also deliver a range of public services including housing, social care, sport and leisure, recycling and healthcare.

Consumer-owned co-operatives

There has, as in the building society sector, been significant consolidation among consumer-owned co-operatives in recent years, through merger. The number of consumer owned retail societies has shrunk from 39 to 26 over the past five years – although turnover has increased. The Co-operative Group is the fifth biggest food retailer, the leading convenience store operator, the number one funeral service provider, Britain’s largest farmer and of course a major financial service provider, with Britannia and the Co-operative Bank. There are then a further ten independent consumer owned retail co-operatives with a turnover, for each, of over £50 million: Midlands, Midcounties, East of England, Scottish Midland, Anglia, Southern, Lincolnshire, Channel Islands, Heart of England and Chelmsford Star.

It is not just food and funerals though. Credit unions are consumer owned financial co-operatives whose membership has tripled over the last ten years. There are 716 credit unions in the UK, owned by 1.1 million members. There are also 671 housing co-operatives, with 63,000 members. Tenant satisfaction in models of co-operative and mutual housing, using standardised measures, stands at 88%, compared to 77% for tenants in housing associations and social housing more widely [1].   And, in terms of a green future, there are 27 energy co-operatives trading across the UK, with a further 21 at pre-start or development stage.

Employee-owned co-operatives

There are over 400 enterprises classed as worker or employee owned, in line with co-operative models. There is an overlap here with wider employee owned (or ‘co-owned’) enterprises, some of which with majority ownership of staff, would again be classified as co-operatives, following international definitions. These include, notably, employee trust co-operatives: John Lewis Partnership, Scott Bader Company and Tullis Russell Group. Worker co-operatives adhere to an additional set of characteristics around democratic governance and organisation, beyond the core classification of wider co-operatives [2].   Dulas, for example, is a worker co-operative in Wales with sixty staff providing some of the most innovative renewable energy products in the UK, including hydro, solar, biomass and wind power.

Producer-owned co-operatives

Producer co-operatives including agricultural co-operatives, have grown in recent years. Sole traders and other small businesses sometimes work together co-operatively to enhance their trade through joint activities such as purchasing and marketing. Co-operative consortia can save money, spread risk and enables the participating business to pool their resources, provide mutual support and learning and strengthen their business sector, while maintaining their business independence [3].

Examples of co-operative consortia include creative co-operatives, which bring together artists, designers and creative sector freelancers; crafts co-operatives; bed and breakfast co-operatives; fishing co-operatives and taxi co-operatives. The National Merchant Buying Society, for example, allows its members, who are builders’ merchants, to benefit from the purchasing power of collective buying. The benefits to members include not just price, but also preferential payment terms, enhanced delivery and rebates.

Multi-stakeholder co-operatives

In terms of mixed stakeholder models, there is a diverse set in the UK of community, sport and public service co-operatives. The co-operative model, where members have a stake in the success and survival of a venture, has proved to be one way to save lifeline services such as pubs and shops. So, there are now 257 community-owned shops in the UK [4].  There is a high survival rate for consumer and community ownership of this form, with only ten closures over the last twenty years. Meanwhile, the emergence of supporters’ trusts has helped to build fan ownership in British sport, with 15 fan owned or controlled clubs in football, rugby union and rugby league and 160 trusts.

In public services, co-operative schools have emerged in England, typically using trust or academy status allied to co-operative models of governance that help to enfranchise key groups, including parents, learners and the community, through multi-stakeholder ownership. There are 136 co-operative schools, promoted by the Co-operative College and backed in many cases by co-operative enterprises, notably the Co-operative Group [5].

At UK level, the most high profile state-owned candidate for converting to a mutual model is Post Office Limited. Co-operatives UK, in collaboration with key partners, delivered a report in May 2011 at the request of the UK Government, which recommended a multi-stakeholder form for a Post Office Mutual [6].

 
The International Year of Co-operatives

The co-operative business model has a strong presence across a range of international markets. Three quarters of all fairtrade goods are produced by co-operatives in developing countries [7].   In a few countries, co-operatives may 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% [8].  In New Zealand the largest domestic business, Fonterra, is a co-operative. Co-operatives from every region of the world come together to provide mutual support through the International Co-operative Alliance – including sectoral bodies such as the International Co-operative and Mutual Insurance Federation.

Looking forward, the UN General Assembly declared 2012 as the International Year of Co-operatives (IYC), “highlighting the contribution of co-operatives to socio-economic development”.

In the UK plans for the year include:

• A possible programme of action to find and affirm co-operative towns, where self help and mutual aid of different forms are strong and growing
• A ‘find my coop’ easy to use directory or app to identify opportunities to become a member and get engaged with co-operative action
• A high profile week of events, including an international EXPO, designed to attract around 10,000 people in Manchester in late October / early November
• A touring photographic exhibition of co-operation.

Like many building societies, a significant number of co-operatives are engaged in giving practical support for community action through co-operation and mutual aid. The International Year is a chance to showcase this model of community reinvestment [9]. 

There may not be many new building societies likely to emerge in the coming years given the regulatory hurdles, but it is inspiring to consider how the same values and ideas around mutual action can serve to rebuild society in new and vital ways – and it helps to give a cachet and resonance to the wider brand of co-operation and mutuality.  

Co-operative Societies and Building Societies

Co-operatives UK is pleased to work closely with the Building Societies Association as a sister organisation. We would welcome any interest or engagement by building societies or wider financial mutuals in the programme of work for the International Year of Co-operatives in 2012.

The values of co-operation and mutuality are more relevant than ever and there is a new confidence and spring in the step of all those involved.

Together, we are stronger.


Ed Mayo
Secretary General
Co-operatives UK

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