Workers on boards could just be the start for expanding Britain’s co-operative and mutual sector, explains Gareth Thomas
Navy Federal Credit Union and Redwood Housing Co-operative are two organisations that prove that co-operatives can change the world. For 40 years the economy has often looked like a one-way street. The interests of those who own Britain’s businesses too often look like they are different to those of staff, customers and local communities.
Navy Federal Credit Union is the world’s largest credit union with billions of dollars in assets, offering some of the best financial services at the cheapest rate to United States military personnel, from Navy Seals to army cooks and veterans’ families. They have helped to stop payday lenders exploiting soldiers and sailors by offering cheaper loans and a better all-round service. American military personal also get to have a say in how the credit union operates, so instead of a faceless uncaring bank they can join a co‑operative and help to decide how the financial services they need or depend on should be offered and at what cost. Imagine if banking in Britain was democratised in the same way.
Navy Federal are the model for more and more credit unions in the United Kingdom who are looking to expand to offer faster and better low-cost services to more and more people. The Bristol Credit Union is already at 11,000 members and looking to almost treble their membership over the next five years. In the US, Canada, Australia and Ireland, more than a quarter of the population are credit union members.
A different kind of economy is possible and credit unions and other co-operatives will be an essential part of correcting the malaise in the British economy that has led to a culture of long hours, low productivity, low pay and insecurity. Why should more staff not have more of a say in the big strategic decisions affecting the businesses they work for? In Germany and Scandinavia it is routine for companies to put one, two or three employees on their boards and other key committees of the business.
Shadow chancellor John McDonnell’s announcement at Labour party conference to give employees a say in how companies are run – by requiring boards of large companies to reserve at least one-third of their seats for workers, and to introduce employee ownership schemes to companies with over 250 employees – is hardly radical, despite the inevitable protests. Many of the biggest business names in the UK, such as Ikea, Deutsche Bank and John Lewis, already have workers on their boards. Employee ownership is increasingly seen as a sensible next step for increasing productivity. Whisper it quietly, but Theresa May also once supported the idea of workers on boards.
We want a Labour government to deliver on its commitment to support measures to double the size of Britain’s co-operative and mutual sector to bring us into line with the Organisation for Economic Co-operation and Development average. As the New Economics Foundation highlighted, if only five per cent of business who are set up over the next three years, to undergo a transfer of ownership were supported to make the transition to employee ownership or one of the other mutual or cooperative models available in the UK, then the number of staff‑owned businesses would double.
Why not also convert more of our utilities to mutuals or co-operatives? Despite the promised energy cap, energy bills keep rising and the big five energy companies are still making excess profits. Giving control over the energy we need to ordinary people and helping them get a direct financial benefit from investing in renewable energy are some of the benefits of energy co-operatives, which despite government cuts in support are growing fast.
And what about water? Water bills have risen 40 per cent in real terms since privatisation and £18bn has been paid out in profits, often to foreign owners. Labour has announced plans to bring the water companies back into public ownership. Converting them into mutuals would be in line with Labour’s commitment but would also allow these new ‘people’s water’ businesses to access the money they need to invest in tackling leaks regardless of which party was in power.
If there were any doubts about the power of co-operatives to change the world, Redwood Housing Co-operative located in London’s Oxo Tower; the iconic remnant of London’s docklands on the South Bank of the River Thames, is proof. Their flats house one of the most diverse groups of local people you are likely to find were built by locally owned Coin Street Community Builders and they charge some of the lowest rents in London, in one of the most desirable locations in the capital.
Coin Street Community Builders, that supports Redwood, transformed the lives of local people by using co-operation first to fight off a big corporation who wanted their land for a giant hotel, and then by building social housing and other local services creating jobs, a nursery and so much more for local residents.
Co-operatives exist to share risk, power and reward. They are more democratic and accountable forms of business that, again by nature, cannot sell equity on capital markets and so are beyond the influence of big corporate shareholders. Recent studies have shown them to be more enduring and resilient in the face of market disruption, more profitable, more productive, and happier and longer lasting than non-cooperative forms of enterprise. Their ownership structure aims to ensure people – whether producers or consumers – have a genuine, democratic stake in their enterprise, and share in the wealth they create. In short, they encourage enterprise and working together. They are radical, but business friendly and they are what our country needs.
Gareth Thomas is member of parliament for Harrow West and chair of the Co‑operative party
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