Role of local authorities in supporting co-operatives and alternative businesses

What are co-operatives?

According to the International Cooperative Alliance (a body that “unites, represents and serves cooperatives worldwide”) a co-operative is “an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”

Cooperatives are a type of “Mutual” society. Mutuals is an umbrella term for organisations that are owned by, and run for, the benefit of their members. Other types of mutuals include credit unions and building societies.

Separate from its function as a regulatory authority for financial services firms, the Financial Conduct Authority (FCA) is the registering authority for more than 9000 mutual societies in the UK.

The key feature of cooperatives is that, unlike traditional companies, they are not owned by shareholders and profits are reinvested in the enterprise or returned to members, which could be their customers, employees, suppliers, or residents.

Alternative business models

Social Enterprise UK, a membership body for social enterprises, describes cooperatives as part of a range of “alternative business models” that also include employee-owned firms or social enterprises. In a recent report published with the Co-operative Party, it said that such businesses “demonstrate that profit can be pursued and distributed or reinvested equitably without marginalising workers, harming the environment, or diminishing social conditions”.

The report identified a lack of access to affordable finance, a lack of understanding of alternative business needs, and the difficulty of navigating diverse governance structures as three distinct challenges facing alternative businesses.

Social Enterprise UK says there are “more than 100,000 social enterprises in the UK, contributing £60 billion to the economy and employing around two million people”.

The UK co-operative sector

Co-operatives UK (a cooperative that describes itself as “the voice of the UK’s co-operative movement”) publishes regular reports on the sector. It noted in 2021 that co-operatives are present in many areas of the UK economy and society, with the largest concentration being social clubs and trade unions (over 2,500), retail (721) and housing (720). These include organisations such as the John Lewis Partnership and the Co-operative Group, as well as regional groups such as East of England, Scottish Midland, and Central England.

In its 2021 report, Co-operatives UK said that there were over 7,200 UK co-operatives, with 14 million members and employing 250,000 people. UK cooperatives had a combined annual turnover of £39.7 billion, with turnover rising every year from 2017 (when it was £36.4 billion). The report said that co-ops were resilient to the Covid-19 pandemic compared to other businesses, stating their numbers grew by 1.2% from 2020 to 2021.

Co-operatives UK estimated that cooperatives represented under 2% of UK GDP in 2015 – less than 0.3% of all businesses.This compared (according to a 2014 United Nations Department of Economic and Social Affairs report) to over 10% in four countries: 20% in New Zealand, 18% in the Netherlands and France, 14% in Finland.

The International Cooperative and Mutual Insurance Federation (a global trade association) estimated in 2019 that mutuals held 10.6% of the UK’s insurance market, compared to 20.6% in Italy, 47.3% in Germany and 51.8% in France.

Support for co-operatives and alternative businesses

In January 2023, Economic Secretary to the Treasury Andrew Griffith noted, in his response to a parliamentary question, the steps the Government was taking to support the UK co-operative sector. He said that:at the 2021 Budget, the Government announced a £150m Community Ownership Fund, which allows community groups to bid for up to £250,000 matched-funding to help them buy or take over local community assets at risk of being lost and run them as community-owned businesses, supporting co-operative entrepreneurship. He said that 71 projects across the UK had benefitted from the fund to date; and the Government is supporting a Private Members' Bill on Co-operatives, Mutual Insurers, and Friendly Societies, which would grant the Treasury the power to bring forward regulations to give those mutuals further flexibility in determining for themselves the best strategies for their business regarding their surplus capital.

As at 15 June 2023 this Bill had cleared all Commons stages and was awaiting its final stage in the House of Lords. More information on the Bill can be found in the Commons Library briefing on the Co-operatives, Mutuals and Friendly Societies Bill 2022-23.

Mr Griffith also said the “Government is currently exploring options for reviewing key pieces of legislation underpinning the co-operatives and mutuals sectors”.

Local initiatives

Local authorities provide some funding to support businesses in their area more generally. According to the most recent data published by the Department for Levelling Up, Housing and Communities (DLUHC), in 2022/23 local authorities in England budgeted a net total of £78.5 million in business support. Many of the authorities spending the most on this tend to be combined authorities, although some county councils, London boroughs and metropolitan districts also spend large amounts. Many authorities also record income from business support schemes, and some make a net profit. DLUHC’s data does not include any details on how much is spent specifically on support for co-operatives and alternative businesses.

Initiatives also exist at a more local level to support the co-operative and alternative businesses sector. For example, Hackney Co-operative Developments (HCD) describes itself as a “local community economic development agency” that supports “the creation and growth of co-operatives and social enterprises”. It does this through a range of ways, such as providing “affordable workspace” to social and ethical organisations and providing training and resources to businesses in the sector. An “acknowledgements” page in its latest annual report on its website listed Hackney Council and the Mayor of London.

Further information

i)News

Andrew Griffith MP announces government review of Co-operative and Community Benefit Societies Act 2014 at Congress, Co-operatives UK, 16 June 2023

ii)Websites

Cooperatives UK - see information on Co-op Congress 2023 [June 2023]

Co-operative Councils' Innovation Network - see case studies pack 2023 in particular

International Cooperative Alliance