The Case for Co-operative Development Bodies

The ‘fourth right of citizenship’, alongside rights such as participation, is advice and information. So declared the great social innovator and co-operative champion Michael Young in the late 1970s.

It was around this time that a generation of co-operative business advice agencies came into being, supported by local authorities and designed to spur the growth of co-operatives. That they did, but the resource squeeze that faces those working in the field has got sharper and sharper over time.

In the report for the National Co-operative Development Strategy, we pointed to the accelerating loss of capacity and knowledge in these typically local bodies: “the co-operative development bodies that have survived [since the 1970s] have done so by operating entrepreneurially. Their emphasis is typically on face-to-face and generic advice and hands-on business development, and there are some outstanding examples of impact – often unsung if subject to commercial confidentiality.”

As a result, “the provision of and access to co-operative business advice is therefore patchy. Wales is well supported with co-operative advice, while Scotland receives government assistance that does not exist in the same way in England and Northern Ireland.”

There are other bodies that provide advice and support – in particular federal bodies that support co-operative models in specific sectors, whether credit unions or community shops. As the late Robin Murray suggested in his work for us, these have eight potential roles as a catalyst and community for co-operative ventures in their sector. But they too have faced a resource squeeze in recent years. Infrastructure is stretched and one way or another, there is an underinvestment in resources and no easy solution, beyond co-operation across co-operatives, to remedy that.

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So, it is welcome that there is a substantive new research report published in the run up to Co-operatives Fortnight by Alex Lawrie. With long experience as an innovator and entrepreneur, plus skills of research and philosophy that shine in the report, Alex explores options for co-operative development bodies, with opportunities rooted in new ways of working – being an embedded participant and partner in new ventures, rather than being purely responsive to existing clients.

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This has to include moving outside of the ‘values ghetto’, as the report puts it, by finding new ways in which people can work together with trust. “Trust is not a matter purely of goodwill and altruism, but to a considerable degree is the security that emerges from protocols fixing interdependence.”

Some of this can be rooted in physical spaces. Somerset Co-operative Services, where Alex works, for example manages a hot desking hub for co-operators at 10 East Reach in Taunton, where the new social enterprises taking shape include an urban farming collective, the UK’s first co-operative train operating company and a community business developing tram systems.

As part of these systems for ‘community and calculative trust’, and alongside more consistent ‘systems of practice’, giving people a voice in enterprises as they emerge is particularly powerful – “the findings of this study are that… accountability repays the investment made in it.” And he points to the scope for an ambitious agenda for co-operative education and training – pointing to the example of the recently opened Dyson Institute in the UK.

He makes the case in the report for co-operative development bodies, but cautions that, without change in practice and steps like these, “the winnowing of the co-operative development movement is far from over.”

The recommendations for practitioners are carefully thought through and include the following steps:

  • lock clients into long term obligations to repay all of the costs of co-op development when they are able to do so
  • develop co-operative incubators
  • invest in knowledge and skills
  • adequately capitalise new co-ops, incubators and co-op development bodies themselves by involving investors in mutual relationships, including the use of multi-stakeholder co-operatives.

This is an important contribution in a debate that is important for all concerned with and supportive of co-operative development.

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What comes after nationalism… could it be global co-operation?

OK, so what comes after today’s upsurge of pumped up nationalism around the world? There are one or two signals of a new era of experiment and innovation in global co-operation.

I signed up last year as a member of the first ‘online space nation’, Asgardia, which ran an open process to develop its constitution. There is an inaugural leader, the founder, but not surprisingly, the system of governance that has emerged is close to that of a global co-operative. When you need to bind people voluntarily into a common cause, equality of voice and control knits people together, just as inequalities of power can tend to unravel it.

There are now close to 200,000 members signed up, across two hundred countries.

Of course, the United Nations itself could be characterised as a co-op of Nations, were it not for the Security Council, which usurps power of nations more widely by giving a veto to a handful of nations, some of whom like Britain would find it hard to justify their place if launched today.

There are all too many many global challenges stacking up, for which global governance ultimately is needed. It can feel like nation states drag their feet when it comes to species loss or climate change, because each is responding to their own electorate rather than the shared interests for action across all.

For this reason, the Swedish Global Challenges Foundation has launched a $5m competition for radical proposals to improve global governance. From clubs of cities to new global networks, it is interesting to see how many are rooted in and perhaps informed by co-operative models of democracy plus participation. The competition received 2,702 entries from 122 countries. The finalists will appear before the jury at the New Shape Forum in Stockholm, 27-29th May.

One finalist, for example, submitted by Stephan Bettzieche and Katharine Peter is for a global web of co-operative communities.

There is a new edge too to international campaigns like Global Citizen, non-governmental organisations that are gaining the support and participation of a new generation of citizens across different countries, to tackle issues that national governments are failing on. In the UK, the campaign has been working with The Co-op on its outstanding campaigns on modern slavery.

It reminds me of the words of Hazel Henderson, the visionary new economist, writing of Jubilee 2000, the campaign I was associated with, that “it marked the emergence of global citizens, in advance of the structures of true global governance”.

Cat Tully runs the School of International Futures. She commented to me in an exchange recently on what a good fit co-ops are for the challenges of sustainable development, suggesting that “co-operative governance is a human operating system that is much better able to be innovative and resilient under conditions of dramatic change and uncertainty.

So what follows populism, nationalism and trade wars? If it is not outright conflict, then there are signs of hope for a new and hopeful push for global co-operation.

The Guernsey Literary and Potato Peel Pie Society – a film version of millions of true societies around the world

A new film out is The Guernsey Literary and Potato Peel Pie Society, a historical drama based on a book by Mary Ann Shaffer, with the support of her niece Annie Barrows.

The_Guernsey_Literary_and_Potato_Peel_Pie_Society.pngThe wartime years of the Channel Islands have been both content and controversy for years, but this acclaimed story, formerly No 1 on the New York Best Sellers list, is on safe ground. The society of the film title is a spur-of-the-moment invention, to explain to German troops why a group of friends had broken curfew.

As those in the co-operative and mutual sector will know, a society is the name given to their most common corporate form. Think Building Societies or Friendly Societies for example.

The Channel Islands Co-operative Society was founded in 1919 in New Street, Jersey. In the war years, it was run by two young men. Today, it is a vibrant co-operative retailer with 120,000 members, with an active programme of engagement with members and communities on all the islands.

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The term society has a long history in and around the UK. The early references appear to focus on associations designed both to serve the wider commonwealth and also to encourage virtuous and civil behaviour through the participation of those involved. In his 1576 book The Safeguard of Society, John Barston of Tewkesbury set out five kinds of society. These were ‘society of one country’, ‘society of one town’, ‘private society’ (referring to the mutual trade guilds), ‘society of kindred’ and ‘society of friends’. Together, these made up a civil society.

Phil Withington, author of the 2010 book Society in Early Modern England writes that “by 1700, if you wanted to do something – anything – then the best course of action was to form a group and call it a society.”

But, as with the camouflage in the film, societies also did more than serve their members. In my Short History of Co-operation and Mutuality, I retell the story of how they acted as prototypical trade unions allowing workers to come together. In France, for example, informal societies of journeymen were known as cabales. The term ‘cabal’ has since had the connotation of sedition and conspiracy, but after all, what is seditious to those in power may be freedom to those without.

In London, journeymen printers would meet up at the Hole in the Wall pub on Fleet Street, organising a strike for higher wages. Five – Edward Atkinson, Luke Ball, John Turk, John Warwick, Nathaniel Lynham – were prosecuted at the Old Bailey on 4th July 1798. The Judge concluded that the charge of worker co-operation represented “a very heinous crime, and is properly so considered, because the consequences of it must be very fatal to society”

In Scotland, weavers in the town of Fenwick turned their friendly society into a trading co-operative, buying oatmeal in bulk and selling it to members at cost. This was a model codified and made famous by twenty eight weavers and workers in Rochdale in 1844 – the Rochdale Pioneers.

The Channel Islands Co-operative Society today is not simply a very successful and diversified enterprise, good for the local economy. It is also a voice in favour of openness and inclusion. The same issues around immigration that have put the Windrush generation into the headlines exist as risks on the islands. Colin MacLeod, CEO of the co-operative, has commented to say:

“I don’t want to see a two-tier society where Jersey residents are valued according to the tax revenue they generate, and where they are branded as either high skilled or low skilled. The foundation of a community isn’t separation, it’s inclusion. It isn’t temporariness, it’s permanence. At The Channel Islands Co-operative, we believe in potential and that all people should have the equality of opportunity to succeed. Some of our best people in both Jersey and Guernsey are first generation migrants who are justifiably proud of their heritage but fiercely loyal to their birthplace. We will continue to commit to our people for the long-run, not the short-term. If our people want to build a future in Jersey for themselves and their families, we will be behind them every step of the way.” 

This is what a society is. And what makes it different from a company. It is the claim that what makes people more than individuals are the values and purpose that can bring them together.

Today, in the UK, there are at least eight and half thousand formal societies – co-operative and community benefit societies, friendly societies, building societies and countless more that are local or voluntary associations also using the name. In the co-operative form, the society can now be found in every island, every town, every country. There are 2.9 million co-operatives worldwide, owned mutually by their members, operated on a democratic basis.

The Government is currently consulting on a strategy for Civil Society in England, with an opportunity to respond before May 22nd. It might learn from a new film that whether it is literary or agricultural, strong societies build a strong society.

A model of how to be authentic as a non-profit: values, purpose and the work of the Foster Care Co-operative

I had the pleasure recently to visit the Foster Care Co-operative, whose head office is based in Malvern, and which is a vibrant and successful non-profit brimming with purpose and values.

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The co-op was set up in 1999 by Laurie Gregory after 30 years working with local authorities as a senior social worker and finishing as a Deputy Director of Children’s Services. Over that time, he also had personal experience of fostering, looking after a child with disabilities for 13 years. He saw the need to offer an alternative to private and venture capital funded agencies as foster care was increasingly outsourced to the market.

“I instinctively did not wish to start a ‘for profit’ company and, after meetings with my Chamber of Commerce and invaluable advice from Co-operatives UK, I chose the model of a multi-stakeholder co-op” he explained. “We have grown slowly by bringing new people to fostering.”

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The staff are unionised with the GMB, and it is a stable and happy team; it was a pleasure to meet. There is a sense of dignity across the work, in the central team, across the foster carers and in their contact with the children who are looked after.

More widely, foster care is in difficult times. The contracting model of the outsourced market focuses less on the issue – the development of young people – and more on the management of the issue. With pressures on budgets, one of the challenges that commissioners face is matching cost and quality. The shift to look for the lowest cost, scoring less for quality can then generate other costs and unintended consequences, including worse outcomes for looked after children (an added challenge is the tendency of local authority commissioners to take an annualised view of budgets rather than look further out, planning more effectively over the years that a child might be with a foster carer).

“I have been to meetings where commissioners talk of unit costs, or annual unit costs. Call them children please, I say” comments the co-op’s Director, Ian Brazier.

In the current market, with a cut down model, national agencies are dominant – structured and financed through loans via Luxembourg to cut taxes, with taxable profits lost in the repayment of loans to the same owners. It was to understand the costs of a quality service that has been at the heart of a recent government stocktake of fostering (in England) – the Foster Care Co-operative was one of a handful of agencies to share data on an open book basis, to help them do that.

The co-op has contracts with 54 local authorities, but it refuses to bid for contracts that are set up to deliver a quality that is lower than the values of the co-op would countenance.

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An example is the dedicated resource the coop employs to support foster carers with education and schooling for the children. One young person said: “The support my brother received from our carers has resulted in him going to university. After visiting him there, I think going to university is something I would like to experience too.”

The two outstanding indicators of the co-op’s success are the length of time spent with a carer and the outcomes in terms of what children go on to do when they reach adulthood. The average for a placement nationally is just four to six months. With the Foster Care Co-operative, the average is three and a half years. And every child that has left the co-op in recent years has gone on into work or education.

While foster care has to be seen as a later stage of support for children, stepping in where families can’t cope, the power of co-operation still makes a difference. The co-op is collaborating with other non-profits in the sector, working on the basis of shared values, and has launched a successful training programme in a joint venture with increasing take-up, to spread good practice. It is also piloting, with the local university, a programme to bring in foster carers with disabilities into the sector – a great potential example of asset-based social care.

The Foster Care Co-operative is an authentic non-profit, led by values and shaped by the participation of those involved across what is a vital service for young people in need.

Fake Non-Profits (2)

A fake non-profit is a corporate body whose purpose beyond being non-profit is to enable other businesses to make profits.

The underlying practice is not new. It uses models of transfer pricing questioned by critics of multinational companies since the 1970s (setting exchanges between different bodies in an artificial way in order to move money where it is needed) and it is close to the tax shelters exposed in more recent years by campaigners and transparency rules which aim to show who controls the entity. But the practice is on the rise, thanks to the combination of public sector outsourcing and the extraordinary pressures on budgets that today’s public sector faces.

In the wake of the collapse of Carillion, I pointed in a blog in February 2018 to that company’s use of fake non-profits – for example around the provision of library services.

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Carillion’s Values: a beautiful diagram but also an illustration of a company that did the very opposite of what it said it stood for.

That triggered exchanges with practitioners in many a field, from academy schools to utility providers.

Professor David Hall, Director of the Public Services International Research Unit  at the University of Greenwich pointed me to non-profit partnerships developed by water multinationals, in Grenoble in France and Bogota in Colombia, which are run on a 50:50 basis with local authorities.

The running of the service is outsourced to a subsidiary of the utility, and the partnership slips into making regular losses, which are shared 50:50 with the council, so that public money is poured in year on year to cover half of the ‘losses’. Meanwhile, following the money, a substantial profit is made by the subsidiary, all of which goes back to the parent company, more than offsetting their share of losses on the joint venture. “I think both of them show that there are systematic strategies adopted by these companies, not just one-offs” he commented to me.

In the UK, one service where the use of non-profits is most in question appears to be leisure services.

Close to where we are based, at Manchester City Council for example, there is a decision out on leisure services – with two finalists named, one a longstanding co-operative social enterprise, GLL – also known as Better – (and a member of Co-operatives UK, for disclosure), and the second a company called SLM, which has taken up the non-profit model as part of a wider private sector bid.

Practice in the sports and leisure service sector is coming under scrutiny. Sport is a major sector in economic terms, employing close to half a million people and with something like 180,000 non-profit clubs across the UK. In leisure services, there has been a strong tradition over the last two decades of social enterprises, leisure trusts, looking at the social value that can be created in partnership through sport.

This is what the new private sector contracting model looks as if it might aim to subvert. I understand that SLM is one of the private sector leisure operators that SPORTA, the network of leisure trusts, is asking for more transparency on – in the context of the inquiry into Carillion and the outsourcing market by the Public Administration and Constitutional Affairs Committee.

There is a vital principle at stake here, which is the integrity and value of genuine social enterprises, that put social purpose first.

To tackle the rise of fake non-profits in any sector, we need two system changes.

The first is greater transparency around tax, for example through the use of the Fair Tax Mark. This was pioneered first by co-operatives, and it has been taken up by a number of investor-owned companies such as Scottish and Southern (SSE), who have seen it as a way of demonstrating that they put back into society through taxes, rather than take from society by avoiding them.

The second is a more effective system of registration around exempt charities. The official policy aim, set out in legislation over a decade ago, has been for the Charity Commission to monitor these, but the integration needed to achieve this has been slow.

Why these two? Transparency on tax ought to be a sine qua non of public sector or socially responsible procurement, alongside the wider story on social value through commissioning. The foster care sector, reviewed recently by Sir Martin Narey and Mark Owers, is one in which genuine non-profits such as the Foster Care Co-operative, with a proud record of support for their looked after children, are competing with national chains, venture capital financed and structured to minimise tax, through registration in tax centres overseas.

And when it comes to fake non-profits, there need to be stronger safeguards and if there are complaints or concerns, there ought then to be a single point of authority for the public to be able to turn to.

This is about the integrity of a proud and important sector of non-profits, one that plays a key role in people’s lives across the country.

When British house building briefly went co-operative

Malcolm Sparkes was a builder, but he wouldn’t be a soldier. Exactly one hundred years ago, as many others of his faith as a Quaker had been, he was locked up as a conscientious objector.

When peace came, he saw the opportunity to develop an idea that he had been working up while in prison, co-operative house building.

The Government had made a wartime promise of ‘homes fit for heroes’ and in 1920 started a scheme in which the Treasury would meet the residual costs of all houses built by local authorities. Because of the way it was designed, the scheme – we could dub it ‘Help to Build’ – led to a surge in the price of housing. Private builders and suppliers of building materials saw that local authorities had no incentive to keep prices low, because all the losses would be met by the national exchequer.

Sparkes offered to build houses on a non profit basis, proposing the formation of co-operative Building Guilds to do the work. With open book accounting, they would take up contracts, charging only costs, plus a percentage for overheads and a fixed allowance for the workers to have ‘continuous pay’. Finance could flow because banks had the security of payments from the local authority as the houses went up.

The idea captured the imagination of trade unionists and the idea, starting in Manchester and London, spread by the end of 1921 to 100 towns and cities. Local guilds were formed and soon amalgamated into one powerful umbrella body, the National Building Guild.

In the first eighteen months, everything went well, with the guilds outperforming both on cost and quality in terms of the houses they were building.

But of course, the competition of private house builders were vocal critics. Just as the Government had some years earlier changed the rules to disadvantage consumer retail co-operatives (prompting the formation of the Co-operative Party), so it changed the rules to pull the rug out from underneath the fledgling co-ops. The ‘cost plus’ contracts were outlawed and new requirements introduced which meant that far more working capital was needed while houses were going up.

“These changes could hardly have been better designed if they had been intended – which of course the Government protested they were not – to sabotage the Building Guild” comments Geoffrey Ostergaard in his 1990s essay on the tradition of worker control.

As night follows day, the enterprise went into reverse. The Co-operative Wholesale Society which had provided vital working capital to the early societies was forced to withdraw. By the end of 1922, the Guild was in the hands of the receivers.

Of course, there is a proud tradition of non-profit and mutual landlords and developers that flourished over the twentieth century and today in social housing, plus a vibrant renewal of community, co-op and mutual housing in recent years. The Confederation of Co-operative Housing is gathering in early May for an event, People and Power, on this.

But if the UK had been less hostile to co-operative house building early on, who knows, perhaps we might not have some of the housing challenges we do today.

As a builder, locked up in gaol, Malcolm Sparkes would perhaps have been having just that very same, hopeful dream… one hundred years ago.

‘Rather than complaining, we are getting on and doing things’ – stories of local economic renewal

One of the great contributions of community and worker co-operatives that I visit is often in acting as a flywheel for wider renewal of the local neighbourhood. As such, co-operatives can often be understood as part of a deeper process of empowerment or community development.

 

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I have pulled together and published a series of slides today on the role of co-operatives in community economic development – with input from and acknowledgement of many partners and allies around this work (thank you), including the Co-operative Bank, Locality, New Economics Foundation, Centre for Local Economic Strategies, Responsible Finance, Power to Change, Reconomy & Transition Towns Network, New Weather Institute, Co-operative Councils Innovation Network, Co-operative Development Scotland, Development Trusts Association Scotland, Co-operative Alternatives (Northern Ireland) and the Wales Co-operative Centre.

There are a number of genuine success stories across the UK of local economic renewal:

  1. In West Dorset, rural communities have created local food links and new food enterprises.
  2. In the Hebrides, three quarters of land is community owned, with more renewable energy generated in South Uist now in Summer months than the national grid can handle
  3. In Preston, the local authority, police and health services are seeing where they can place contracts with locally owned businesses – a ‘community wealth building’ approach
  4. In Bristol, growing numbers of people have joined the local credit union, for local savings and a currency that can be cashed with local enterprise.
  5. In the Black Country, a loan fund supports local businesses turned down by high street banks to survive and thrive.
  6. Children in the seaside town of Rhyl get to play music after teachers laid off by the county council formed their own co-operative to keep music education alive.

Researchers, by the way, call co-op effects like this ‘collective self-efficacy’ – in essence, the belief and ability of people to come together to make a difference. It reminds me of a report I read recently from the Democracy Collaborative on community development initiatives in the United States, which found that: “virtually all of the cases profiled in this report stressed the value of embarking on an achievable task that builds capacity and buy-in within the community”.

Self-help has a proud history and if you look around, it is a story that is just as compelling today.

As Carolyn Loftus, member of the Esk Energy Society in Yorkshire puts it…“rather than complaining about things, we’re getting on and doing something.”