Government support for the co-operative sector

Co-operatives are a type of mutual society, which includes credit unions, building societies, friendly societies and community benefit societies.

While mutuals serve different purposes they are all organisations owned and run by members who are actively involved in the mutual as opposed to external shareholders (PDF). These members may be customers, workers, producers or other stakeholders.

Mutuals tend to operate on the one-member-one-vote principle rather than voting rights being linked to a member’s total shareholding.

The government has said it intends to double the size of the mutuals sector. It says mutuals deliver social value but also strong business performance, noting mutuals have a lower failure rate than ordinary businesses.

Various legislative changes and proposals in recent years intend to liberalise and modernise the law for mutuals to make them more competitive, especially for financial services mutuals (credit unions and building societies).

However, proposals to change the law governing co-operatives and community benefit societies have received criticism from the sector. Co-operatives UK has said the planned changes do not go far enough in enabling the sector to raise finance. It also said the proposed new definitions for these types of mutuals would disrupt societies.

The body has also called on the government to provide more financial backing for the sector, specialist advice, training and support systems and tax breaks for mutuals and investors in mutuals.