The rise and rise of UK co-operatives

From breweries to newspapers, the co-operative movement is thriving today. Rin Hamburgh takes the temperature of the UK’s co-operative economy

The time of the co-operative is now. It’s a bold statement that has been made by pretty much every generation of economic revolutionaries since the Fenwick Weavers’ Society formed their association for collective purchasing in Scotland in 1769.

But, seeing as the UK’s co-operative economy has grown by a fifth since the financial crisis of 2008, perhaps today’s supporters have real cause for optimism.

After all, we’re not talking small numbers. There are currently 1.4 million co-ops in the world, employing 100 million people. The combined turnover of the three biggest is $1.1tn (£74bn) and the total turnover of the UK co-op economy in 2013 was £37bn. This business model exists on every continent and in every sector of industry, and is used by organisations as diverse as Visa, FC Barcelona and the Royal Philharmonic Orchestra.

So what is it about co-operatives that gives them their edge? Perhaps one reason, in these times of economic and political uncertainty, is their strictly democratic nature. Co-ops are run by and for their members on a “one member, one vote” system that eliminates hierarchy and allows profits to be shared by all.

“A lot of people wanted to make a change but the co-operatives had a theory of how to get there.”

“In a standard company, generally it’s organised solely around the economics,” explains Dave Boyle, a co-op consultant and director of The Community Shares Company. “We have as many votes as we’re able to buy. In a political society we’re all equal – we all get one vote, no matter who we are.”

This underlying principle of equality is what inspired the Rochdale Pioneers, a small group of working people who began their quiet revolution in 1844 by setting up a flour-buying project as the first step towards social reform. Although not strictly the first to form a co-op, they certainly set a foundational model which was then adopted by subsequent organisations.

“On one level it was about flour,” says Boyle. “But there was more to it than economics. The idea was to start with flour, then move on to housing, then factories, and then we rule the world. A lot of people wanted to make a change but the co-operatives had a theory of how to get there.”

Today the desire for fairness still remains a central tenet in the co-operative sector – fair prices for consumers, fair pay for workers, and no need to satisfy some remote group of owners or investors whose only concern is a profit at any cost.

But there are plenty of economically sound reasons for choosing a co-operative structure regardless of your politics, from the innovation benefits of collaboration to increased staff engagement.

A more resilient model

“We find that co-ops tend to be more productive businesses because the workers have a greater buy-in,” says John Atherton, of national trade body Co-operatives UK. “And therefore they tend to be more resilient. Around 90 percent of co-ops survive their first three years, whereas for normal businesses it’s nowhere near that.”

In community co-ops, whether taking the form of a local pub or a national supermarket, the business advantage is a motivated group of consumers whose ownership of the organisation gives them an incentive to use it in preference to the competition, guaranteeing a regular source of custom.

Co-ops also provide a fit when traditional business models simply don’t quite work. The government’s recent interest in free schools and academies, for example, has seen a massive rise in co-op schools as an alternative to religious or corporately-funded establishments, while the growing number of people choosing to work on a self-employed basis – an additional 500,000 each year – has led to an increase in freelancers pooling resources in co-operatively run collectives.

“You can be a freelance doing web design by yourself, or you can get together and set up a worker co-op, and you look and sound like a stronger business and you can bid for bigger projects,” says Atherton. “If you want that independence, but not the worries of working by yourself, then a co-op is a viable option.”

For the investor, co-ops are never going to deliver the returns that could be made on the stock market, for example, but they are a competitive alternative to the negligible interest rates available on most savings accounts and ISAs for the average consumer.

Of course, co-op investors aren’t generally in it for the money. But finance is essential for any business and the ability to use community share offers to raise capital is a helpful alternative for co-ops who might struggle to raise funds from traditional sources.

Although by no means a new phenomenon, community share offers have seen a boost in popularity over recent years, thanks in part to an awareness-raising project launched in 2012 by Co-operatives UK.

The continued growth of internet businesses and the advent of crowdfunding have also had a hugely positive impact.

“It means it’s not completely random in terms of the funding model,” says Matt Scrimgeour, co-founder of an Irish brewery co-op financed through crowdfunding. “There’s some familiarity for people in terms of buying into smaller enterprises and ideas.”

Digital fundraising

Based in Belfast, Boundary Brewery is a multi-stakeholder co-operative, with ordinary, supporter and worker members. The team launched their appeal for funds at the beginning of December 2014, hoping to raise £70,000 by the end of the month. Within a week they’d achieved their target, and by day eight they had reached their upper limit of £100,000.

“We were hitting ‘refresh’ in an addicted way over that period,” Scrimgeour admits. “And other people told us that they were doing that too, and they were putting more money in because they just wanted to see the total climbing. It was outrageous.”

Although personal connections accounted for around 25 percent of the investment, Scrimgeour says the team always intended theirs to be a digital campaign.

“We were religious about using Twitter, Facebook, LinkedIn and so on as a means of reaching people,” he says. “We went for total saturation. The digital tools we accessed enabled us to do way more than we could have done if we were trying to make those connections in person.”

Another fast-changing industry in which co-ops are having an impact is the media. Following in the path of established names like New Internationalist and Ethical Consumer magazine, a number of local and specialist publications are taking advantage of the co-op structure.

One example is The Bristol Cable, which launched in October 2014 with £3,300 in membership donations and grants of £1,500 each from Co-operatives UK and ethical cosmetics company Lush.

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Explaining the reasons behind the publication, co-founder Adam Cantwell-Corn says: “We thought, ‘It’s time.’ There’s a niche and a need. Local media has been declining in quality and quantity: it’s boring, it’s corporately owned and it’s not really doing what it’s supposed to be doing.”

To solve this problem, Cantwell-Corn and the other founders started their mission by consulting with the local community in order to see what the needs of the people were and how they could best address them. The co-operative structure seemed a logical way to continue their community focus.

“The main problem with the media as we see it is it’s not accountable to the public,” he explains. “With a co-op, by expanding the ownership base beyond a single proprietor, we invert the pyramid ownership structure – we make the editorial team accountable to, in our case, 165 people and growing. The base of power and accountability relies on the widest possible group rather than the narrowest.

“One of the things we want to be able to create is a sense of ownership and engagement,” he adds. “By being able to offer people a tangible stake for such a small amount of money, we can get them on board with the idea. They’re not just passive consumers, they’re owners too. Which is important, especially at the moment because we have to rely on volunteers. The idea of owning and creating this has really helped us maintain energy.”

For Cantwell-Corn and the rest of the paper’s volunteer staff, the goal is very much about serving the community rather than getting rich. And yet if a business is to survive then it must at least make enough money to serve the purposes for which it was founded, whether that be paying its workers fairly or providing a reasonably priced service to its users.

Perhaps that is where the challenge for tomorrow’s co-op lies – in valuing the bottom line just enough to create sustainable businesses without compromising the ethical values that underpin their existence.

“Co-ops can survive in areas where there isn’t a massive profit margin to be made because a massive profit margin isn’t the point,” says Atherton. “It depends on what you’re trying to achieve. If they don’t make money, they can’t survive, but what they do with their money is the most important thing.”

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