Wednesday, March 17, 2010

Collective Ownership, Labour and the Co-operative Movement

Our last discussion meeting under the above title went exceptionally well. Steve Thompson the speaker has a full involvement with the Co-operative Movement and with the Co-operative Party. His fine speech is presented below. It stimulated a intense debate, which was added to by the fact that both Ken Curran (the Chair of the Sheffield Co-operative Party) and Mark Grayling (the Secretary of the Chesterfield Co-operative Party) were present and fully participated.

Our group will certainly pay close attention to developments in the Co-operative Party in the future, especially as a number of us are now likely to be recruits.


"I have been a Labour supporter since I was eleven. My father was an electrician at the pit, Handsworth Nunnery in Sheffield. It was around the time of the General Election of 1964. I got the picture instantly, at home. What I could not understand, then, nor can I understand now is why everyone is not a Labour supporter. After all, the purpose of the Conservatives is to protect private wealth, (the owners of commerce and industry who exploit working people like my father and their families for their own private profit). It seems to me that it is wonderful that there is a political party whose purpose is to support working people and all who depend on them, which is most of us. I would have thought that the rich could look after themselves.

Furthermore, if people were being used by the individuals who owned industry and commerce, what could be better than the people owning it themselves. This is a point that people ‘get’ or do not ‘get’. I ‘get’ it.

Labour brought in our health service, which exists outside the Tories remit as it does not bring in a private profit (not directly anyway). The Tories voted against it when the N.H.S. bill was brought to Parliament in 1948. (The photo shows Nye Bevan, Labour's Minister of Health on 5 January 1948 on the day the NHS commenced)

Labour strengthened collective bargaining rights for working people, which was inside Labours remit.

But most importantly of all, Labour gave ownership to the people through extending municipal services, and bringing national services like the railways, and industries like coal and steel into public ownership.

Labour gave access to those who would not have been able to afford it, to the arts though free access to museums and galleries, and supported the development of free educational opportunities.

The Tories and their millionaire supporters were becoming anxious that ownership was being shared out, and they were losing sole control. I would have thought that to be a good thing. But working people often vote against their own interests by voting Conservative. During the dreadful period of the Thatcher and Major governments the people of this country lost most of their common property, it was simply taken away from the Public and given to private entrepreneurs. Such is the political culture that not many people really noticed it, or seemed to care. But they felt it, as the gap between wealth and deprivation increased. Somehow it became ‘cool’ not to be interested in politics.

We live in an apolitical age, where deprivation and ignorance are increasing in our society, but amongst the few, wealth is increasing. It seems that the political left is no longer seen as worth engaging with by most people. People are led not by ideals, but by the commercial interests of advertisers, reduced to the mere status of ‘customers’. When they haven’t got the money to keep up with the latest ‘fashions’ they become ‘victims’.

We have lived through a period of ‘neo-liberalism’ or ‘market fundamentalism’. This is a doctrine which says that everything must be brought into the private sector, if it does not make a profit for somebody, it has no purpose. It is a doctrine which dehumanises us all.

Municipal Socialism, with many services being contracted out to private firms and elected councillors losing much of their influence to unelected quangos, seems to be a thing of the past. Nationalisation has also had its day, it seems, even a Labour government did not see fit to re-nationalise the Railways. Perhaps there was a lot lacking, in terms of public engagement, with these bodies. I do not think that people felt a sense of ownership of the public sector. By nature, these bodies were paternalistic, imposed from above, perhaps for the best of reasons, but without the involvement of the people who, after all, owned them.

I believe that certain industries and services, like The Railways, Postal Services, and the Utilities should be in public ownership. This would facilitate planning and coordination for the benefit of all. Undoubtedly though, small privately run businesses also have a role to play in an ideal society. But I believe in the value of keeping alive the ideal of the Co-operative Commonwealth.

THE CO-OPERATIVE COMMONWEALTH (ICA for the International Co-operative Alliance)

Why should people be reduced to being no more than employees and customers, there for the benefit of the privileged few who own the private wealth of the Country? Why should people not be co-owners and beneficiaries of the businesses and services which they work in and own? That way they would not be so vulnerable to exploitation. The Co-operative Movement offers an agreed model for collective ownership which incorporates a set of values and principals, ensuring the observation of the following:

* Voluntary and Open Membership
* Democratic Member Control
* Member Economic Participation
* Autonomy and Independence
* Education, Training and Information
* Co-operation among Co-operatives
* Concern for Community

This vision, of wealth being held in common, and control of the commercial and social economy being held democratically (rather than in the hands of those with private wealth) is not new. It was tried in the days of the Commonwealth in the 1650’s by groups known as the Levellers and the Diggers, inspired by a man called Gerrard Winstanley.

In the days of the early industrial revolution, before decent employment rights and
conditions were won by the collective effort of the Labour Movement, the vision of The Co-operative Commonwealth took root.


What are the benefits to members and the wider society of co-operative businesses?
Firstly, a co-operative society is not answerable to private shareholders who invest in order to make a profit. P.L.C s on the other hand exist in order to make private investors wealthy, their shares are bought and sold on the stock exchange, the profits go into private pockets. The goods and services supplied are merely a means to that end.

A co-operative is an entirely different thing. It operates according to the values and principles laid down by The Co-operative Movement. Any surplus made in its trading activities is called a ‘contribution’. This money can then be used for purposes consistent with the principles of the co-operative and agreed democratically by its membership. Examples of allocation of surplus might be:

* Re-investing in the business.
* Sharing the surplus amongst the members pro rata to their purchases.
* Educational services for members, customers and staff.
* Supporting community projects which help to make the world a better place.
* Funding co-operative organisations.
* Supporting environmental and charitable causes.
* Producing information about co-operation to the general public.
* Supporting the members, in their aspirations to build a happier and healthier world.
* Providing all that is necessary to ensure that the democratic structures of the co-operative are complied with.
* Any other purpose which is consistent with the co-operative values and principles and which is agreed with by the members in accordance with the constitution.

In a large co-operative society like The Co-operative Group the contribution represents a large amount of money which is being used for the benefit of members, communities and the wider society. In a private company that money would go into rich men’s pockets.

Of course, the monetary surplus is not the only benefit of a co-operative business. Right from the days of the Rochdale Co-operative in 1844 a central principle was to trade with integrity. Private shopkeepers and company stores were selling inferior commodities to boost their profits. Co-operatives only sell pure and unadulterated goods at a fair price. A co-operative exists to fulfil a community need, not to make a profit. You can expect to get good value and quality at the Co-op.

Anyone working at a co-operative will be valued and provided with good working conditions and educational opportunities. Employees are always encouraged to be members of their appropriate trade union and co-operative societies have good relationships with the trade unions.

If these co-operative standards are not kept, members are able to take up such issues through the democratic structure, and the management must listen and respond.

Fair dealing with customers extends to fair dealing with suppliers. Co-operative own brand goods comply with the ‘Ethical Sourcing Initiative’ which ensures that employment rights have not been violated in the production of the goods. Also a large proportion of Co-operative products are ‘Fairtrade’. This is, of course, entirely consistent with the values and principles of the Co-operative Movement from its inception.


The story of the Rochdale Pioneers is well documented. Indeed there were many examples of people setting up co-operatives before the Rochdale co-operative in 1844.
The Rochdale Pioneers were truly successful and it was from their little shop on Toad Lane that The Co-operative Movement developed. The principle is simple, a group of people united in order to fulfil a community need. The same thing is happening to-day in 2010. In The Co-operative News of 2nd – 16th Feb. 2010 on page two is an article with the headline “Co-operative pub opens doors in Salford” it contains “Britain’s first urban co-operative pub has opened in Salford, Greater Manchester“, as a report shows pub closures have accelerated to one every three hours. The Star Inn in Salford was given three weeks’ notice of closure but, after locals clubbed together, the pub is back in business as a community owned co-op.

The pub’s reopening coincides with the publication of a report, ‘Calling Time on Pub Closures – The Co-operative Answer’ by Co-operatives U.K. which documents the rising trends in pub closures and sets out advise on creating co-operative pubs”.

Just because a private enterprise service is unable to continue because of the interests of the proprietors, why should the public be denied the service when there is a need for it?

There is a tendency for people to say that nothing can be done, as if people, united, have no power. Nothing could be further from the truth. This is demonstrated by the many community shops and other services which have been rescued by Co-operative action.

Furthermore, the Co-operative Movement is there to give help and support. Co-operation among Co-operatives is one of the Movements principles. Co-operatives U.K. can offer resources as can local co-operative development bodies.

The Phone Co-op is one of the really successful co-operatives. It was established in 1998 and offers conventional telephone, mobile and broadband services to both individual customers and organisations. It currently turns over about £7m a year and employs about forty staff. It is a consumer co-operative, legally owned by its 7,000 or so member/customers. It fulfils the sixth co-op principle (Co-operation among Co-operatives) admirably, establishing a loan fund for other co-operatives. It has a sustainability policy and the business is carbon neutral. The Phone Co-op reaches new customers through over three hundred affinity schemes, signed with a wide range of environmental, campaigning, political and charitable organisations, each of which is rewarded with 6% of the business generated. Vivian Woodell, the Chief Executive says “we’d far rather support organisations in the Third Sector than spend money paying big media organisations for advertising” The total paid out in affinity payments to date is over half a million pounds.

Phone Co-op members can choose to invest in the business by buying fixed shares in the co-operative in accordance with co-operative principles, attracting interest. In recent years this has been set at over 5%. The phone Co-op has taken in 1.6m in members capital helping to boost its balance sheet. It has positive cash flows, healthy cash balances and no borrowings says Vivian Woodell. Being owned by their members (who are also their customers) and having no outside investor/profiteers, co-operatives like this one are very robust business models and better equipped to ride out the recession.

There are so many examples of democratic collective ownership in the wider Co-operative Movement which serve the purpose of enriching the quality of the lives of the people who co-own and use the services, for example, football and rugby supporters trusts and financial inclusion co-operatives such as credit unions. There are also housing co-operatives like West Whitlawburn in Glasgow. There is a co-operative being set up to take over a rail franchise, ‘Go! Co-operative’. There are many wholefood shops and cafe’s which are co-operatives and Suma, an ethical wholefood wholesaler is the largest and one of the most successful workers co-operatives in the country.

As a response to the contempt paid to Manchester United fans when Glazer took over the club in 2005, many of the fans got together and formed a co-operative football club, FC United of Manchester. Why shouldn’t the fans own their club? There is now a way forward for fans to form supporters trusts through Supporters Direct, the path has been laid, there are approximately 110 supporters trusts with shareholdings in their club. There are some clubs which are controlled and in some cases owned by their supporters trust. The concept is well established in Spain - Barcelona, Real Madrid, Osasuna and Athletic Bilbao are all owned by their fans.

It cannot be said that the setting up and successfully running a co-operative is easy or problem free, co-operatives are still not in the mainstream thinking of our economy. But think of the early co-operatives of the 19th century, they had no back up or support from a well organised Co-operative Movement. Co-operatives U.K. and the local co-operative development groups and other co-operatives are often able to give support. The Co-operative Movement also has political support from the Co-operative Party who work closely with Labour in Parliament to provide legislation and other initiatives which at least make sure that the co-operative sector is operating on a level playing field with other forms of business.

Co-operation is not part of the mainstream consciousness and it is therefore very unusual to see articles about it in the press (other than Co-operative News).


At its inception, the Co-operative Movement in the U.K. was home for those of all political persuasions. It was in the early 20th century that both Liberal and Conservative businessmen in Parliament used legislation to try to curb the growth of the popular co-operative model, and it was the emergent Labour Party that championed it. This is not surprising as Labour exists to give political support to the ‘people’, those who rely on collective solidarity rather than private capital. Conservatives and Liberals showed their true colours, then, and have continued to ever since.

One of the early acts of the Thatcher Government was to stop funding for the Co-operative Development Agency, a move indicative of things to come. There was a raft of de-mutualisations of building societies, the privatisation of public services and all that goes with doctrinaire ‘neo-liberalism’; the wealthy gaining at the expense of the wider society. Mrs Thatcher boasted that ‘there is no such thing as Society’. Had the Conservatives remained in office any longer I doubt that there would be anything left of the co-operative movement by now. A government can transform the political culture of a country.

In 1997 Labour inherited a very non co-operative country, but there were enough people who were ready for a co-operative culture shift. In the ensuing years, given a sympathetic government and strong focused Co-operative representation in Parliament the Co-operative Movement was energised, particularly in the wake of the Co-operative Commission of 2001, chaired by John Monks.

Government cannot do the work of co-operatives, neither are they asked to. They can nationalise and run a corporation from the top, but that is not how a co-operative works.

Co-operatives are established and run by the people who benefit from them. However, a legal framework which does not disadvantage the co-operatives is really important. Until this Labour Government came to power co-operative organisations were at a disadvantage.

Legislation governing the co-operative sector has remained untouched since 1968, apart from worker co-op legislation in the 1970’s. Since 1997 substantial legislative progress has been made with a sympathetic government working with the Co-operative Party in Parliament. As a result of changes to the law in 1997 the de-mutualisation of a building society can only take place if passed by a minimum percentage of the total members, rather than a minimum percentage of those attending meetings. De-mutualisation can now only take place on a 50% turnout and on 75% vote in favour. Since the Industrial and Provident Societies Act of 2002, Industrial and Provident Societies (the legal name for co-operatives) have been brought into line with the same voting requirements as building societies. This Act permits the use of statutory instruments when company law is changed in future to assimilate I&P Society law with company law.

There were some issues left outstanding. These were dealt with in the Co-operatives and Community Benefit Societies Act of 2003. This Act provided an asset lock for community benefit societies, including housing associations, community childcare facilities, football supporters trusts and social clubs. This will completely prevent de-mutualisation to strip assets, making societies much more secure and making co-operative structures better suited to the running of public services. This will be the first time an asset lock of this kind has been provided for any type of organisation. This crucial provision entrenches the important role of community benefit societies in local economies, ensuring that assets built up over many generations can only be transferred to other organisations with a similar commitment to serving the community. Other provisions in the Act clarify the legal position of third parties entering into substantial transactions with societies, including trading and financial transactions. Also, corporate governance anomalies are dealt with. These provisions will place co-operative societies on a level playing field with companies, and greatly facilitate efficient governance.

The Employee Share Scheme Act also came into law in 2002, its purpose to promote greater employee ownership of U.K. companies. This will benefit in particular small and medium sized businesses that seek to become partly or fully employee owned. The Act promotes employee shareholding by ensuring that employee representatives have a right to sit as trustees on the boards of trusts set up to manage employee share schemes.

Further legislation, The Co-operative and Community Benefit Societies & Credit Unions Bill is progressing through Parliament at the present time.

So how would we sum up the purpose of the Co-operative Party in 2010. I would say that it works to replace, by political means, the culture of de-mutualisation and privatisation with co-operative and mutual ownership. This cannot be done in a top down way but by providing a political forum by which awareness of the Movement can be raised. The Party works closely with Labour to clear away legal obstacles which have hitherto hindered the progress of the Co-operative Movement. In short, The Co-operative Party is there to support those who want to build ‘The Co-operative Commonwealth’.


I believe that wealth and political power belong to a few individuals to the disadvantage of all of us. Lack of awareness amongst the general public perpetuates this situation.

Capital succeeds at the expense of labour.

At general elections people have a choice, Labour or Conservative. It is clear who’s interests the respective parties represent.

This morning I saw words written in the frost on a car window - ‘fight capitalism’. But I would rather speak more positively: ‘BUILD THE CO-OPERATIVE COMMONWEALTH’ ".

Steve Thompson,
March 2010


  1. Well, I am converted. I have completed a form for membership of the Co-operative Party. For other converts, see here -

  2. Thanks for directing me this way, Harry.

    In the US, the steelworkers union is looking to work with the Mondragon Corporation to promote worker co-ops. Perhaps something our unions should consider exploring?

  3. Great info.. Keep on sharing nice things Smile This blog is interesting about its information, this is defined in uniqely behaviour. I will really appreciate it.