Breconomics – the new agenda?

The Brexit campaign was won on the campaign slogan ‘Take back control’. And in her comments on the agenda ahead, the new Prime Minister Theresa May has vowed that her government would give people ‘more control over their lives.’

The reason why control has become such a potent rallying cry is not hard to see. Our economy has become more complex, decisions more distant and politics less able to shape what happens in society. The make-up of local high streets is determined by global market forces, not just the choices of local people. Work, for millions of people, has become more precarious as technology develops and labour markets change. Home life is more risky for many, as more people are in private rented accommodation.

A rising lack of control is something we have identified in our data on the economy and business over the last two years. On the one hand, the evidence is clear and strong that if you give people a voice and a stake in economic life, they are more motivated, more productive and more open to innovation. On the other hand, long-term trends are working against that sense of control.

As I have written before, in Unfinished Business published by ResPublica, the number of individual shareholders on the London Stock Exchange has halved over the last thirty years (from 20% to 11% as a proportion of overall ownership). The number of people in secure, social rented homes has close to halved over the same period (from 20% to 11%), while those in private rental has doubled (from 9% to 22%). The percentage of people who are self-employed – the so-called ‘precariat’ – has increased by around a third (30%), again over the same period.

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This is matched by our customer data, looking at how they view business and the economy. 59% of people simply think the economy is out of control. 62% think they lack influence over the businesses they use. Not surprisingly, 68% of all workers and 75% of part time workers want more influence at work.

Ironically, transnational institutions – like the European Union – exist in part to exert some control over these forces. But the referendum result showed that they themselves appear beyond influence and so simply compound the sense of disconnection people feel.

As such, Theresa May’s aspiration to give people control over their lives and create an economy that works for everyone, is welcome. We have Brexit. Can we therefore have Breconomics – an agenda to give people more of a stake and a say in the world around them?

I have written on this ‘control agenda’ in the Huffington Post, and elsewhere on voting for economic democracy, suggesting five key themes for such a Breconomics.

  1. We need to harness the enthusiasm for local ownership.
  2. We need to make it easy for employees to have a voice at work.
  3. We need to recognise the needs of self-employed workers.
  4. We need to make it easier for small businesses to compete collaboratively.
  5. We need to give more people a say over the businesses they use.

Co-operative and mutual ownership – where those closest to a business own and control it – offers a way to achieving these aspirations of course. But this, social economy is just part of a bigger picture of the control agenda.

It is a time for new thinking. Whether you voted for Brexit or not, what Breconomics can now look like is vital to all those of who want to see an economy that works for everyone.

In praise of Europe – Mondragon arrives in the UK

We are mandated to leave the European Union, but we remain a European set of nations. There is enough inspiration in the European cooperative sector to embrace and improve all the connections we can.

So, enough of nationalism now, after the referendum. How do you make change at a local level? The great Basque worker co-op, Mondragon, is investing in a model in the UK that aims to answer that question. 

Of course, everyone tends to have their defaults when it comes to making things happen, or putting up with things when they don’t. The model being worked up by the Young Foundation is interesting as it is a blend of the community development approaches of old (I have written about the inspirational work of Tony Gibson for example) and contemporary interests such as for social innovation.

What is the same is a focus on understanding shared experiences, developing shared narratives and taking action together. What is distinctive is a more intensive initial research phase, using participatory and ethnographic research to hold up a mirror to people at a local level, coupled then with a matching phase of linking local people to local and national social innovations that could catch light. 

Mondragon Co-operative is investing in a trial of the model in Northern Ireland. Gorka Espiau, Director of Places at the Young Foundation, explains that Mondragon has been an inspiration for the work, making it natural to bring them in, alongside other partners, and other pilots in areas such as Leeds. “The Basque Country has managed to transform its economy following a sustainable human development approach and currently enjoys some of the best outcomes across the EU in healthcare, education and income per capita, combined with low poverty rates and a more balanced distribution of wealth.”

In Belfast and in Derry / Londonderry the approach, called Amplify, has started to link up local innovators and decision makers in what is hoped can become a social movement, coming together around a shared vision but building this into a network of shared ownership and innovation.

It is early days, and there have been enough stop start attempts in neighbourhood regeneration and community organising to hold our breath before suggesting that this can change the world. It is an intensive approach, which may be a strength or a weakness. But it has ambition and is rooted in culture. That, rather wonderfully, is exactly the magic that Mondragon and the best of European co-operation can teach us.

Europe and the case for international co-operation

We are told that we have a choice between national sovereignty or EU membership, but I personally don’t buy that. 

If sovereignty is control over our own affairs, then we will potentially have less of it if we go it alone, because so many of the economic challenges that we face are ones that can’t be determined at a national level alone. They require international co-operation.

I was sent recently the words below from the architect of the twin towers in New York. The vision he had was of trade that not only draws on international co-operation but nourishes it. 


Arguably, this was the same vision that inspired original European Coal and Steel Community… And the same vision of the  Corn Laws campaigns out of Manchester in the nineteenth century.

For the people involved, like Jean Monnet and Richard Cobden, exchange across borders was about open co-operation to widen prosperity and peace. If the answer that emerges from the UK referendum is not the European Union, then we will have to come up with something that is. 

We can’t duck the challenge of international co-operation. Else, our sovereignty will be the freedom to lose.

Dorothy and Dawn: two extraordinary women and what they teach us about entrepreneurship

Two women of extraordinary commitment and ability have been named recently for their work over decades in the cause of entrepreneurship. Dorothy Francis, chief executive of the co-operative development agency CASE in Leicester is the one and only person this year to be given a lifetime achievement Queens Award for Enterprise. And Dawn Whiteley, chief executive of the National Enterprise Network has been honoured with an MBE, again for services to enterprise. 

Their work has been at the front end of business support and advice. They are not the business leaders at the public helm of FTSE companies. They are business leaders in another sense, of having supported, nurtured and inspired hundreds of small and medium sized businesses, private business, social enterprise and co-ops, whatever works, whatever creates jobs, uses skills and expresses hope and opportunity.

The origins of both institutions is also interesting as it is entwined. Many of the early enterprise agencies, as Adrian Ashton reminded me this week, were formed by the co-operative development agencies that already operated locally, from the 1970s. Just as, in later years, it was London co-operative development bodies that were the key force in the arrival of social enterprise agencies.

Also linked are a few other progressive institutions. The story is told to me by one of the prime movers of the early enterprise agencies, John Davis. John, author of Greening Business, keeps in touch with me from our time together at the New Economics Foundation, when he was Chair of Trustees. His letter is below.

Fritz Schumacher, author of Small is Beautiful and once named by Keynes as a preferred successor, asked John Davis, on leaving a global role at Shell in the late 1970s, to lead a programme on intermediate technology in Britain (the work of the charity Schumacher founded out of an Observer article, ITDG now Practical Action, had been focused overseas). John started work to support enterprise agencies – to catalyse and support local small business. One of the first was in St Helens, but there were soon many more: by 1981, 30 agencies.

The model appealed to the Chair of Pilikington Glass, Sir Alistair Pilkington, who visited them and inspired him to found Business in the Community, explicitly to spread the practice across the country. Oh, it would be wonderful to see that noble charity return to those roots of practical community economic development, away from the back slapping world of social responsibility reports and awards.

By 1986, there were 250 local enterprise agencies, but that was perhaps close to the tide turning. Rather than embedded micro-economics, government turned to a national advice agency, business link, and then when that failed to demonstrate the same track record (and yes, enterprise development is notoriously hard to evaluate, as this report from the state-endowed NESTA concludes), ditched it in favour of austerity-friendly websites, unpaid mentors and hopeful social investment. 

It is true, there is a different story in Scotland, where enterprise and community enterprise trusts have their own proud history – and to an extent also Wales, with the leadership of the Wales Co-operative Centre. People-powered prosperity is a recent book by David Boyle that tells more of the story of community economic development across the UK.

John was writing to me to welcome the new Community Economic Development programme we had launched with NEF, Locality and Responsible Finance (in liaison with many others, such as CLES and the Reconomy network), backed by the Department for Communities and Local Government. Through this we have supported fifty neighbourhoods across England with their community economic development plans, rooted in a holistic and participative approach to livelihoods and enterprise development. We are now in our second year, inspired by the communities we are working with.

At national level, over three decades we have an extraordinarily patchy record of support for enterprise. But look at the story of Dorothy and Dawn. Look at the grassroots as the most innovative and persistent of enterprise, social enterprise and co-operative agencies still show us the way, if ever we wanted to move from an economy of dependence to one of true, mass entrepreneurship.

Do raise a glass to Dorothy and Dawn.

91 million and rising means that we’re a nation of members

A country of shopkeepers? The suggestion, often attributed to Napoleon Bonaparte, was certainly made, in derogatory tones, two hundred and twenty years ago (on Saturday) in the National Convention in Paris.  Bertrand Barère de Vieuzac declared Britain to be “une nation de boutiques”. The contrast I guess that he wanted to make was between a democratic republic and a market state.

Although shopkeeping is probably a tougher livelihood now than then, there is one way in which the description holds. The UK is a nation of members – and many of these are member owners of co-operative and employee-owned retail shops across the UK.

We have just released the UK co-operative economy 2016, annual data on the sector, which point to a significant increase over the five years in the number of members of co-ops.

The co-operative and then we can add in also the mutual sector – powered by the likes of mass member owned high street businesses like the Co-op Group and Nationwide – form the largest part of the UK’s wider membership figures.  This is going to get larger too. The Co-op recently relaunched its membership scheme, so that 5% of own brand purchases are returned to members, and 1% to their communities – and aims to recruit one million new members over the next period.

The rise and rise of co-operative members

Being a member of a club, a community or a cause is part of who we are. It is rare to find someone who does not belong to any group. It is also rare to find someone for whom being a member doesn’t also change, in subtle ways, how they interact with others and how they view themselves. There is such a thing as society, and membership is one of the building blocks.

Membership, in fact, is part of a wider field of civic participation. You can sign a petition, click to like an online campaign or donate money. All these actions are part of a healthy democracy and are acts of citizenship, but they are not necessarily rooted in membership. Because the term ‘membership’ is used in so many varied, and sometimes shallow ways, we have also done some research on what the public thinks count as proper membership.

Good membership, it emerges, can be seen most clearly as a two-way relationship between an individual and an institution. We find that people think the best membership organisations do five things:

  1. keep them informed,
  2. give them a say,
  3. treat them with respect,
  4. allow them a vote and
  5. offer them opportunities to get involved.

What underpins this, in terms of social psychology, appears to be that great forms of membership are ones that offer identity and control.

We can this as a way to select across that mix of membership schemes to weed out membership schemes that are really only one-way models. Having a loyalty card for a coffee chain gives you no voice. Being a friend of a museum gives you no vote. For the most part, anyway. From this, I have had a go at identifying the top 15 membership networks in the UK. These are:

  1. Building Societies – 25 million
  2. Co-operatives – 17.5 million
  3. Neighbourhood Watch – 10 million
  4. Sports clubs – 9.1 million
  5. Mutual insurers – 8 million
  6. Trade unions – 6.4 million
  7. Christian churches – 5.5 million
  8. National Trust 3.7 million
  9. NHS Trusts – 2 million
  10. Wildlife Trusts – 1.1 million
  11. RSPB – 1 million
  12. Political parties – 812,000
  13. Freemasons – 600,000
  14. Girl guides – 538,000
  15. Scouts – 450,000

There has never been a Doomsday Book for members in the UK, so this is far from the final word. What are the next fifteen? Or fifteen hundred? Our intention has been to open up the conversation on membership, rather than close it down, and we would be delighted to find others.

In England and Wales, for example, the Charity Commission estimates that there are around 80,000 charities that have a membership structure. These come in different forms.

A number of the disability charities have members, often with a democratic model where members are able to vote on who gets on the governing board (even if that the board remain in formal terms trustees of the charity rather than directors acting as representatives of member interests). In the disability field, over many years, this shift has been key to the move away from a tradition of paternalism, acting ‘for’ people with disabilities to a model in which action is led by people with disabilities. The great participatory slogan has been ‘nothing about us, without us’.

The New Citizenship Project, led by Jon Alexander, is working with six associations on the theme of the future of membership organisations: Amnesty International, Soil Association, NASUWT, Tate, National Union of Students and House of St Barnabas. This looks a fresh and contemporary version of an exploratory venture with fourteen membership charities coordinated by Katherine Hudson for NCVO with the RSA a few years back.

So, how many members are there in the UK? Just drawing on our top fifteen membership networks, I conclude that there are over ninety one million in total. Not surprisingly, there are more members than people in the UK, because we are members many times over. But still, this is a dramatic number – for comparison, it is ten times the number of individual shareholders in the UK. Can we imagine the television news, where member ups and downs were treated with the same profile and respect as stocks and shares?

With technology platforms making it easier and more cost-effective to operate membership systems, members are likely to be part of national life for years to come. With ninety one million memberships and rising, we are a nation of members.

Note: An expanded version of this blog was first published by Democratic Audit – I would welcome additions you may have to this list of top membership organisations and will credit you. What is missing?

Mutuals are ageing well

The UK is an ageing society and with that comes a growing recognition of the needs and aspirations of older people.

There are more people over the age of forty five than under, more people over sixty five than under sixteen. That means changes to the way that business operates, says Mark Beasely, from the Mature Marketing Association, who presented to cooperative retailers in the UK last month. 

The concept of age, he reports, is almost entirely associated with negative attributes in marketing and yet that is not a good reflection of how it feels to be older. Ninety five percent of marketing, he reports, is focused on people under fifty. 

But that doesn’t mean it makes sense to talk to older people as older people. Age is not how people want to be defined.

The social economy sector has some outstanding examples of people working to redefine age – such as Change Agents – including in sectors such as health and social care, where services based on co-operation and mutuality rather than financial return make all the difference. One of the best exemplars I have seen of action is what building societies are quietly doing to meet the financial service needs of older people.

“Already one in four people borrowing beyond the age of 65 is a first time buyer” says Dick Jenkins, Chair of the Building Societies Association. “The assertion that the over 40s can’t get a mortgage following the changes to mortgage regulation is overstated, but there are challenges.”

Building societies are therefore stepping back from simple age policies, beyond which you can’t borrow. They are working with insurers to help older people get cover for the mortgage risks they face. They are making sure that older customers have good information and advice in terms of their consumer rights.

The Vernon Building Society for example has lent to a married couple, both aged 70, who were renting in Poole, having moved back to the country from Spain. They had some capital and the Vernon lent them £80,000 on an interest-only basis, paid from their pensions (at a lower costs than their rental outgoings) and repayable from the sale of the property on death or if they move into alternative accommodation. They pay a discounted rate for registering a Lasting Power of Attorney to mitigate against the risk of not being able to deal with their affairs. It meant an end to our sleepless nights, the couple remarked.

Another approach is ‘right sizing’ where people move to a smaller house. Although 32% of older people have considered this in recent years, only 7% have done it, according to Legal and General. Having a trusted product designed for their need from a building society could help make a difference – even if we also as a society need to build more homes designed to be suitable for older people.

The origins of the term ‘mortgage’ is of course the grip of death (the words death and debt being similarly intertwined). Because it is a long-term product, building societies like the Vernon are taking on the stigmas of old age – while keeping an astute commercial eye for a growing market. Death may come to all, but as a society and economy, we should do better for all the years of life before it. 

Think of ageing? Think of life and not death.

 

John McDonnell, David Cameron and the growth of the UK co-operative economy

It is great news today that the Shadow Chancellor, John McDonnell, commits that the Labour Party will aim to double to the size of the UK co-operative sector if in power, as a way to boost the economy.

Drawing on figures from our co-operative economy report, he compares the size of the UK co-operative sector to counterparts in Europe, saying “We should be more ambitious about what can be achieved here. We want to see resilient, high-productivity businesses in an economy that is fairer for everyone. The next Labour government will look to at least double the size of the co-operative economy. That’s a £40 billion boost to the economy.”

His suggests mechanisms for supporting the growth of the co-operative sector chime with a number of our policy proposals, including legislation for ‘mutual guarantee societies’ which will enable small businesses to pool resources in order to access much-needed finance and support for self-employed workers to form co-operatives, both of which are recommendations from our latest report on freelancer co-ops that picked up significant media coverage.

I will blog soon on mutual guarantee societies to say more of our work on this innovation for enterprise finance.
The Shadow Chancellor also cites the limited resources allocated to co-operatives in central government, which points to our case for consolidating responsibility for co-ops in the department for business. And he commits to reversing the cuts in support for community energy ventures.

This is the most far-sighted speech from a front rank UK politician since January 2012, the start of the United Nations International Year of Co-operatives – and the speaker in question then was… David Cameron.