Time to think

In a time of austerity, as we wait for a rebalanced economy, stable jobs and sustainable growth, it can be hard to think big. To ask: what if…?

Yet the question has never been more important. We may be through the worst of the financial crash, but the issue now is, surely, how can we create a new economy, one directed by all of us, one that works for everyone?

Many of us involved in responsible business have been asking the question for some time. What if people had more of a say over the things that matter to them – where they work, where they shop, where they live? What if more people had a stake?

Co-operatives – from community sports clubs to retail giants – are giving people more control over just these things. This report analyses the sector’s contribution to the economy as well as the ways that co-ops are helping people in some of our most vital sectors, from agriculture to social care.

But just as importantly it asks the question, what if more people could benefit from taking control of things together? Family farmers, agency workers, house buyers, care users, energy customers, local residents… By working together they and countless others can create greater financial security for themselves and gain influence over what matters to them.

By working together people are creating a more co-operative economy. What if more people joined this movement? What if more people had a stake? Now is the time to think big. Now is the time to ask, what if…?

Ed Mayo

What if … we all had a say?

Source: You Gov polling, February 2016.

The big picture

The UK co-operative sector in 2016

The UK co-operative sector, 2012 to 2016

Paying a fair share

Last year the five largest co-ops paid over 50% more tax to the government than some of the largest and most high profile businesses operating in the UK.

With nearly 7,000 independent co-operative businesses, the performance of the UK’s co-operative sector over the last five years has been determined by a number of factors, including the success and challenges of individual businesses and wider economic trends.

We have seen gradual overall growth in the co-operative sector despite a significant reduction in turnover of the UK’s largest co-operative, the Co-op, since 2012 following a period of recapitalisation and the onset of its rebuild phase. Indeed, beyond the Co-op, the wider sector has grown by £3.5 billion over the last five years – growth accounted for by a combination of success among retailers like John Lewis, Midcounties Co-operative and Central England Co-operative, and steady growth in agriculture, the second largest part of the co-operative sector after retail. This success comes despite retail and agriculture being two of the markets most affected by increased competition and reduced margins.

Alongside this solid commercial performance, the number of people who own and control the UK’s co-operatives has grown by more than 10%, to nearly a quarter of the UK's population. From customer owned retailers giving more people a voice over their businesses to the a surge in the number of people starting and joining grassroots community owned organisations – from credit unions to community farms – the rise in co-operative ownership is a significant development for the UK’s business sector, meaning that the number of co-op members continues to outstrip the number of shareholders in the UK.

Source: Unfinished business: the ownership agenda 30 years on. 2015. “Co-operative business groups have long been a part of Britain’s rich commercial history, encouraging diversity and promoting responsible capitalism. From credit unions to community cafes, they create jobs, provide important services and add £34 billion to the British economy.

“I was born in Rochdale, where the ideals of co-operative governance were first crafted, so the role of business in the community has always been an issue close to my heart. When people take a stake in businesses that matter to them, we see greater engagement, increased productivity and more innovation. Co-operatives should be incredibly proud of the work they do across the country.”

Sajid Javid, Secretary of State for Business

Working across the country

What is a co-op?

A snapshot of the size of different sectors based on turnover and number of co-ops

What is a co-operative?

From the outside a co-operative might look like any other business. It is what happens inside that makes them different. They are businesses that are owned and run by the people closest them. Whether they are customers, employees, suppliers or local residents, the members of a co-operative have an equal say in what it does and decide how its profits are shared.

Co-operatives are not just supermarkets and funeral services – although these are among the most successful co-operatives found on the high street today.

From FC Barcelona to parmesan cheese, co-ops are behind some of our most iconic brands. A diverse and vibrant sector, co-operatives work in all parts of the economy, from healthcare to housing, farms to football clubs.

What if … people could influence the businesses they use?

The UK’s customer owned businesses

Customer owned retail businesses constitute the single largest part of the UK’s co-operative sector. With 16 million member owners, a turnover last year of nearly £14 billion and a presence on high streets across the UK, they they are the most prominent part of the co-operative sector.

Retailers have experienced a challenging couple of years with the rise of discounters like Aldi and Lidl, the shift toward convenience stores and growth of online shopping. Yet the co-operative sector has held up well. Distinctive market positioning, the expanding ranges of local food and focus on high street convenience stores have enabled co-op retailers to maintain market share amid significant changes. The Co-op, in particular, has seen a change in its fortunes this year as an improved product range and in-store experience has led to a boost in sales. "The model of customer owned businesses, which is the cooperative and mutual way, is a wonderfully powerful force for consumers – and for fairer competition in markets."

Richard Lloyd, Policy Director, Which? In focus: Lincolnshire Co-operative

From a standing point of just 74 in 1861, Lincolnshire Co-op signed up its 250,000th member towards the end of 2015. That figure is equal to a quarter of the population of Greater Lincolnshire, the main area in which it trades.

With sales growth to £293m and a rise in profits to £20.9m, those members benefitted from a strong dividend of £3.4m. The key? Providing the services members want, near to where they live and work, whether that's a food store, post office, pharmacy, travel agency, funeral home, filling station or even a florist.

But Lincolnshire Co-op, which employs 2,800 people, has a wider focus than just its 215 trading outlets. Examples include moving under-threat libraries into its own stores and providing support for volunteers, to the £12m Cornhill Quarter project to revitalise part of Lincoln city centre.

Chief Executive Ursula Lidbetter said: "Our members love that whatever service they use, any profit goes back to them or to improving their area. It's shown in major projects like the Cornhill Quarter and the Lincoln Science and Innovation Park. But that's just one end of the scale. We also demonstrate it every day on a smaller scale by investing in our services, sharing our profits with good causes through our innovative Community Champions scheme and by supporting key community services like post offices and public libraries."

What if … the employees had a say in how their business was run?

The UK’s worker owned businesses

Worker owned co-operatives offer a distinctive and powerful way of doing business – one that gives employees a stake in the organisation, boosts productivity and helps create a more diverse economy. Much of the financial growth of the sector is accounted for by the success of the John Lewis Partnership. With its committed employees and effective commercial operations, the business has grown consistently over the last five years.

With more people wanting to have a say at work, the number of worker co-ops continues to grow. Organisations like Paper Rhino represent an emerging trend of creative industry professionals – designers, artists, web developers – who are eschewing the traditional choice of joining a large company or freelancing, and instead opting to start worker co-ops. "Employee owned businesses make an important contribution to UK plc. Evidence shows that they are more resilient, have higher productivity and greater levels of transparency than conventionally owned businesses. As I know from first-hand experience, this is underpinned by very high levels of engagement, with co-owners typically having more autonomy and responsibility over their working lives."

Jane Burgess, Partners' Counsellor, John Lewis Partnership In focus: Paper Rhino

For Paper Rhino, turning the business into a co-operative was a creative solution for a business all about being creative. The Peterborough-based workers co-operative specialises in graphic design, illustration, video and typography.

Paper Rhino operates on a flat structure, with shared profits and an equal say in all decisions. Offering “affordable design to ethically-conscious organisations” the organisation’s six-strong team boast an annual turnover in excess of six figures with further growth projected.

Co-founder Jay Gearing said: “Democratic decision making gives all the employees a real invested interest with the business, instead of just being a passive worker that is told what to do by the bosses. It brings creativity with different personalities.

“Everybody contributes new ideas for the business that one or two CEOs may never have thought of. We share our profit-making rather than paying people at the top more and more money. If the business makes more money, we all make more money – and that is the best incentive you can think of.” “Worker owned businesses often out-perform conventional firms. The reason: people who work in them control the business and want it to continue to provide good and meaningful employment. The boost to productivity stems from the workers having a say in decisions and owning the business, so they work harder and make better informed decisions.”

Professor Virginie Pérotin, Leeds University Business School

What if … your money stayed in your community?

Taking ownership of our communities

Over the last five years community ownership has rocketed. A combination of government support for community rights and a growing body of financial assistance and business support means that more and more communities are taking charge, whether it’s assets like community buildings to services like libraries.

Community shares is a way for people to invest and co-own vital assets and services. One of the success stories of co-operative sector, community shares have enabled people to raise significant sums of finance together and run community enterprises democratically. The community shares approach has worked across sectors, with village shops and green energy generation proving the major clusters. In recent years, though, community shares has been used to bring harbours, piers and even whisky distilleries into community ownership. In focus: GlenWyvis Distillery

Community ownership of local assets is hitting new heights. What traditionally had been the domain of local pubs and shops now encompasses piers, lidos, harbours and more. Over £30m was raised in community share offers in 2015 – and the thirst for local ownership is now set to break new ground as it enters the world of Scotch whisky.

With support from Community Shares Scotland more than £500,000 was raised in just weeks as the local population backed GlenWyvis’ bid to become the very first community-owned craft whisky distillery not just in Scotland – but in the world. Using green energy produced onsite and barley from Highland Grain Farmers' Co-operative, the ethos of community and co-operative is ingrained in the Dingwall project.

GlenWyvis Distillery is the brainchild of John Mckenzie. He said: “From the outset we have envisaged the project as more than a distillery. It is an opportunity for all social investors to help reinvigorate the historic town of Dingwall. GlenWyvis will be built on its whisky heritage, its community-ownership and its environmental credentials.

“We have amazing local resources and will be using only local barley from a farmers’ cooperative – hence our strapline ‘built on history – powered by nature’.”

The Big issues

What if … farmers and customers got a fair deal?

A growing sector

Business in the UK agriculture sector is difficult right now. Commodity prices, regulation, reducing EU payments, increasing costs of employment and political uncertainties are all making life challenging for those who make their living from agriculture. In certain sectors, the most prominent of which is the dairy industry, this is having a devastating effect on farmers.

Farmer owned co-operatives play a vital role in protecting their members from the worst effects. With the bottom having dropped out of the dairy market, many – though not all – dairy co-operatives have taken a hit to the bottom line. But others, particularly in arable farming, have seen an upturn. GrainCo, East of Scotland Growers and United Oil Seeds have all enjoyed standout years, with the latter growing by a third and now turning over £165m million a year.

As businesses set up by and for farmers, agricultural co-operatives are offering farmers a way to reduce costs, to share risks and ultimately find a business model that helps them generate sufficient profit while giving customers a fair deal. In focus: Arla Foods

A challenging climate, such as low milk prices, is creating difficult conditions for dairy farmers nationwide. As a co-operative owned by 12,700 farmers, 3,000 of whom are British, Arla has a unique understanding not only of the challenges this brings, but has the strength of its membership to provide innovative solutions.

To boost returns for its farmer owners, Arla is focusing on innovation through new products from the milk they supply, such as Arla Best of Both, a fat free milk that tastes as good as semi-skimmed. It is also highlighting the health benefits of milk and working hard to ensure that consumers are aware that Arla is owned and run by its farmers through the introduction of a new ‘farmer owned’ marque.

For Arla’s farmer owners being a member of a co-operative also brings long-term stability. “Being an Arla farmer owner is a great source of strength to me, especially during tough times,” said Arthur Fearnell, an 8th generation farmer based near Chester. ”It gives me the confidence to continue investing in my dairy farm and helps me plan for long term. I have a clear say in how much I’m paid for my milk and help elect the Board of Representatives, Arla’s decision making body. What’s more, Arla guarantees to take every drop of milk I produce so I can continue to grow.” “As the agricultural market becomes increasingly global, we need to identify new opportunities to boost profitability for the UK’s farmers. Whether it’s increasing productivity, finding new ways to add value or to reduce costs, farmer-owned co-operatives offer a tried and tested model for farm businesses. Co-operation, it turns out, might just be the foundation of increased competiveness.”

Lord Curry of Kirkharle

What if … people were as important as the bottom line?

Putting users and carers in control

It is well known that there are big challenges for those involved in providing care. Demand is high and constantly growing. There are calls to improve how care is organised so that it can be available to more people, more efficiently and to a higher quality. And social care often falls between local authority and NHS responsibility, adding to the complexity of looking after younger, older and vulnerable people.

As part of public service reform, new care models are being developed. The co-operative model is part of this change, but has an established history running successful social care services. What sets co-operative approaches to social care apart is that they put the people closest to the service – the employees, the users, or both – in charge, meaning that a more responsive service can be provided.

Co-operative approaches to care might be growing, but they are in their infancy in the UK. Imagine, though, a care service led by the people who use it… Where the people who run the service have a voice… Where people matter more than profit… In focus: Leading Lives

An employee-owned business, Leading Lives provides high quality social care support across Suffolk. That care support encompasses a wide range, from older people to those with learning disabilities. It is a business with people – its staff and customers – truly at its heart.

Leading Lives’ Milly Gaskin said: “We don’t have masses of buildings, we don’t have masses of minibuses, and we don’t have hundreds of computers. We have a workforce. We have a workforce who are an asset. They are our marketers, they are the people that get us more business, they are the face of what we do. So who else would you trust to run your business apart from your greatest asset?

“Our staff own our company. Our business is owned by them. When you own something, you take more pride in it and take more responsibility for it. So things like abuse are less likely to happen.” “User led movements of disabled people and mental health service users have emerged to challenge the hierarchies that have come to typify modern organisations. They complement pioneering co-operative initiatives and are valuable sources of knowledge and expertise about how we can work in more equal and participatory ways, sharing power and responsibility.

“These organisations provide the basis for a new sustainable and participatory approach to a 21st century welfare state that will make it possible to transcend the limitations of top-down state and free for all market approaches to social policy.”

Peter Beresford OBE, Professor of Citizen Involvement

What if … freelancers didn’t have to work alone?

The growing army of freelancers

Source: Not Alone, Co-operatives UK. 2016.

Not alone? Freelancer co-ops in the UK

In focus: Swindon Music Co-operative

The co-operative business model and self-employment can work in harmony with one another. Swindon Music Co-operative was established in 1998 with around 20 teachers. Membership has steadily grown to over 50 teachers and the co-operative now provides instrumental and singing lessons to more than 1,400 pupils in over 70 local primary and secondary schools.

Janet Hodgson, Swindon Music Co-operative Director, said: “We work in partnership with local schools and deliver tuition during the school day, but most of our contracts are directly with parents. As our teachers are self-employed, we are able to run our business at minimal cost which enables us to maintain affordable prices.”

Woodwind and piano teacher Debbie Matthews said: “There’s training, development, mentoring, a network of like-minded teachers and a sense of working in a community who understand the situation of music teaching in schools in Swindon.”

Swindon Music Co-operative was one of the early trailblazers. Now there are music co-operatives operating across the UK, from Milton Keynes to Newcastle.

What if… you owned your local energy provider?

People powered energy Over the last five years community-owned green energy has become a thriving part of the co-operative sector. We have seen more and more communities coming together to raise finance to generate electricity, whether from wind, solar or hydro power. Community energy co-ops have managed to blend social or environmental purpose with a financial incentive, often offering members a significant return on their investment while producing green energy.

Interestingly, this growth has occurred despite an uncertain environment caused by regularly changing government policy, whether in terms of subsidies available to renewable energy schemes or incentives for investors in those schemes. Uncertainty around community energy was compounded at the end of 2015 with a government U-turn, removing tax incentives for investors after committing to them in the Budget earlier in the year. The full impact is yet to be seen, but from January to June 2016, 75% fewer energy co-ops were registered than in the same period in 2015. This is unlikely to be a permanent trend, but highlights the impact of regulation being in flux. Despite the reduction in new starts, existing energy co-ops are expected to continue challenging the established order with innovative approaches to delivering green energy. In focus: Bristol Energy Cooperative

Even the threat of World War II incendiary weapons will not be enough to prevent Bristol Energy Cooperative (BEC) becoming the largest generator of community energy in the UK.

Work is underway on a new solar farm in Lawrence Weston following the removal of 3,500 metal objects – including three incendiary munitions dating back to the Second World War.

The 4.2 Mwh solar farm in north west will generate enough electricity to power 1,000 homes each year and make BEC the country's top community energy organisation.

The Mayor of Bristol, Marvin Rees, said: "This is a proud moment for Bristol as BEC continues to help put our city on the map as a leader in the renewable energy revolution.

"We are lucky to have such active and successful community partners in the city that will play an invaluable role in our journey to becoming carbon neutral by 2050. I grew up here, so I’m really pleased to see a disused site like this get a new lease of life and create opportunities for local people in the community.”

BEC has raised £9 million since November 2015 for its solar projects. £2 million of this has come from local people who have invested in the co-operative and own it together, with additional funding from a range of partners including Bristol City Council.

What if …we stopped saying ‘what if’?

The co-operative sector is performing well and has done so consistently over a number of years. The 7,000 independent co-operative businesses together turnover £34bn, employ more than 220,000 people and, crucially, are owned by 17 million people, sharing ownership effectively across the UK.

Co-ops are good for the economy and just as importantly they are good for us as individuals. Farmers get a better deal because they cut costs and boost their strength by working together. Staff have a voice in the workplace because they own the business. Customers, as owner members, are able to influence the shops they use. And local communities are able to control what happens to vital services.

Co-operatives are giving people a say over things that matter to them.

Just imagine, though, if more people had a say? If more people had control? If more people worked together?

Just imagine. What if …?

The co-operative top 100

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