Sticky Money

Local produce is cheaper than local police, at least if you believe that a good way to keep communities safe and flourishing is to have a local economy that sustains local jobs and livelihoods.

A new study we have published today shows that every £10 you spend in a co-operative food store generates an additional £4 for local suppliers, customers and employees, providing a real boost to the local economy.

The research by independent economic analysts K2A follows money that is spent by customers of the local co-operative in the county of Lincolnshire. It draws on a method that we refined when I was at the New Economics Foundation. After all, if you want to regenerate a local economy, one way is to attract new money in, but a second, no less effective, is to plug the leaks and keep money local.

Money stays local, because co-operatives like Lincolnshire employ local people, are owned by local people and try to source from local firms that do the same. Every pound spent in a co-operative shop is a real boost to the local economy.

Overall, this means that Lincolnshire Co-operative, rather than generating profits for outside investors or national or even global suppliers, generates nearly £100 million annually for the local economy. This comes from 75 stores across the county, with the dividends shared with 219,000 member owners living in Lincolnshire. Every pound spent in a co-operative store changes hands five times, at diminishing levels, until the final penny leaves the local economy.

The co-operative uses more than 600 local suppliers, who in turn are deeply embedded in the local economy, sourcing 75% of what they need from the local area. One example is Jenny’s Jams. This started as a kitchen table business, but when the co-operative offered to list the produce, wonderfully tasty jams and chutneys from local fruit, in 2011 then Jenny Smith moved to a workplace to grow the business. A second is Chapman’s Fishcakes which combine Lincolnshire potatoes and Grimsby fish – a wonderful video on this as a case study of local suppliers is here.

Of course, there is also national sourcing, through joint purchasing by co-operatives and international buying groups that include co-operatives from different countries. But, in terms of public perceptions, 81% of people see co-operatives as being local in their orientation, so it is a strength to build on.

Ursula Lidbetter, Chief Executive of Lincolnshire Co-operative, spoke today on the research findings: “Everything we do as a co-operative society is for the benefit of our members who own the business, and their local communities. We support these communities in a numbers of ways – by providing the rural services important to people like food stores and post offices, by giving local producers an outlet for their goods, by giving grants and donations to local groups and by making our members better off by sharing profits through the dividend.”

The co-operative is the first significant food retailer to publish this kind of analysis on its local impact. Rather than sucking wealth and life out of the community, fuelling crime and unemployment, this is sticky money, which helps to sustain a local economy.

According to the charity CPRE, local food sales in England now sustain 61,000 jobs. In work completed as part of the Making Local Food Work partnership, with agencies such as Plunkett Foundation, Country Markets, FARMA, Soil Association and Co-operatives UK, CPRE conclude that spending in smaller, independent food stores supports three times the number of jobs than at national grocery chains, while, with re-circulation of money locally, this contributes to £6.75 billion to local economies.

In tough economic times, buying local if you have the choice and chance is not just good for you, but good for those around you.

What is a co-operative council?

The idea that local authorities might become ‘co-operative councils’ has emerged over recent years. From Oldham to Edinburgh, Newcastle to Rochdale, it is great to see the interest in and commitment to co-operative working.

There is an overlap between public ethos and co-operative values, not least around open and democratic models of organisation.

But the challenge is that it is not an entirely easy fit. Co-operatives are an established form, underpinned of course by an international definition and agreement. We are enterprises. Co-operatives can be many things, but not, without very significant stretch, can they be a local authority.

What matters then perhaps is not form but action. If a council is genuinely pro- co-operative, then the results ought over time to be clear. So it is welcome that a community of co-operative councils has started, slowly, to coalesce, kickstarted by the Co-operative Party, and last month, published a collection of policy contributions on the potential of the idea. The sections on education and housing, in particular, are strong because they talk to practical action, already happening.

It has taken time, not unreasonably, for this agenda to take shape. In 2010, under the aegis of the Local Government Association Labour Group, around one hundred councils expressed interest in the idea of becoming a co‑operative council. A document, titled Co-operative Communities – Creating a shared stake in our society for everyone was published that same year. There is more focus now in terms of numbers, with twenty one councils signed up – still with the same political affiliation – but also more visible ambition.

Co-operatives UK is the recognised voice of the movement, so we have a natural concern to protect the integrity of co-operative action. So what would we say made for a co-operative council? I think it has to have more bite, to ensure genuine action rather than just rhetorical political positioning, with the following steps as a draft, outline set of criteria:

  • the authority endorses the internationally recognised co-operative and ethical values as a basis for work that it takes forward as a co-operative council
  • there is a Cabinet Member for co-operatives
  • plans for local economic development, such as for jobs, investment and housing, include an explicit component focused on the development of co-operative enterprise, including credit unions
  • there is an explicit recognition in commissioning of the added value that can come from co-operative and mutual enterprises
  • commissioning staff have received training in co-operative models
  • they are open to the potential of services that are being spun out services where appropriate being run on high quality co-operative models
  • services that are spun out of direct provision encourage a co-operative or mutual form and protect assets through common ownership or a wider asset lock where they have been developed with taxpayer money
  • it operates as a Fairtrade Town, recognising the value of this as a form of support for producer co-operatives overseas
  • they encourage schools, where the national context allows this, to convert to co-operative schools, following the options now available for this
  • they encourage agencies that act as partners locally, such as further education colleges and social housing, to consider co-operative and mutual models of governance
  • they have given consideration / had a debate on sourcing utility services, including banking, energy and telephony from co-operative providers
  • the authority operates as an employer with an appropriate partnership and form of consultation with trades unions.

There is no roadmap for this and these are suggestions only. But there does need to be a dialogue with the co-operative movement on this, to encourage action and to ensure that the co-operative identity as set out by the International Co-operative Alliance – of which Co-operatives UK is the domestic guardian – maintains its historic, hard-won integrity.

Come in, be co-operative – and act co-operative.

Terry Leahy versus the world

Why did the UK fall out of love with Tesco? It is good to be reminded.

On desert island disks today, Terry Leahy, ex Tesco Chief, argued that the closure of local shops across the UK represents progress.

In 1984, Tesco announced that it could not see itself opening a shop in the high street “ever again”. It got it wrong on convenience stores, even if right on other things, so I wouldn’t bet against the colour, life and resilience of independent, local stores on Terry Leahy’s say-so.

We have anyway been doing some work on the re-spending from locally-owned stores in the local economy, based on a case study of the Lincolnshire Co-operative Society. For release later this month. One finding I take out of it? For all their retail success, the quickest way to kill a local economy, high street and all, can be to bring in a chain like…. Tesco.