I beg to move,
That leave be given to bring in a Bill to make provision about groups of employees at risk of redundancy buying their employing company as a co-operative; and for connected purposes.
As a Labour and Co-operative MP, I am very proud that Robert Owen, who was born on 14 May 1771 and is regarded as the founder of our co-operative movement, and whose vision included villages of co-operation and a “new world order” of mutual help and social equality, was born in Newtown, Powys, in beautiful Wales.
In the 1840s, cotton and woollen workers in Rochdale fought against falling wages and poor working conditions and adopted Robert Owen’s values to form the first UK co-operative. By 1900 there were 1,439 different UK co-operative societies with over 2 million members, and in 1917 the Co-operative party was formed, with an electoral agreement with the Labour Party. UK co-operators believe that too much power rests with a small number of investors, shareholders and executives, and that decisions are often made for the benefit of the powerful and wealthy, not for the benefit of communities, workers, and the environment.
The “Ownership Effect” inquiry, chaired by Baroness Bowles, found that there was an economic dividend to employee ownership that benefits workers, businesses and the wider economy. The Nuttall review of employee ownership found a lack of awareness and a misconception of employee ownership among businesses, and that banks, traditional funders, education, academia and advisers lack employee ownership expertise.
The Employee Ownership Association found that without incentivised support for entrepreneurs and their employees to pursue employee ownership, few would take the perceived risk of changing their company structures and practices. Firms that want to transition to employee ownership, or those that have transitioned but want to expand, have problems accessing loans from banks. In times of crisis, co-operatives resist destabilisation because they fight for the long-term economic and social sustainability of their workers, and sacrifice remuneration to reinvest and to maintain employment levels. Any restructuring takes place locally.
UK Co-operative party public polling in our “Owning the Future” report of June 2020 found that only 10% of people believe that the economy prioritised wealth sharing before the pandemic, but nearly 70% believe there will be an opportunity post-pandemic to widen ownership and give communities more say in how businesses and the economy operate and shape our lives. Unfortunately, nearly two years after the onset of the pandemic, the virus is mutating, not fading away.
One way to widen ownership is to provide employees with the advice, support and funds to buy out their at-risk employer company. In Italy, the former Industry Minister, Giovanni Marcora, established the worker buy-out system over 30 years ago, during the economic crisis of the 1980s. Marcora law gives workers the pre-emptive right to save their jobs by taking their redundancy entitlements, plus three years’ projected social security payments, as a lump sum to invest in a new worker-owned co-operative company, supported by Italian Government loans and advice. Since 1986, the Cooperazione Finanza Impresa, known as the CFI, an institutional investor, has operated Marcora law on behalf of Italy’s Ministry of Economic Development.