Co-operatives and Alternative Businesses: Local Authority Support

Christina Rees Excerpts

Tuesday 20th June 2023 Westminster Hall

[Christina Rees (Neath) (Ind)]

It is always a pleasure to serve with you in the Chair, Mr Dowd. I congratulate the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate. I have been a co-operator for many years, because I believe that the only way to improve the quality of life of people living in the UK, Wales and my constituency of Neath is by working together.

I would like to pay tribute to some of my fellow co-operators who have encouraged and supported me in my co-operative endeavours over the years. Alun Michael, former MP and now police and crime commissioner in south Wales, introduced me to the co-operative ethos many years ago. Three of the four police and crime commissioners in Wales are Labour and Co-operative, which is a wonderful achievement. I thank all the current and past members of the Wales co-operative council, on which I have had the honour to serve for many years. A special mention goes to K. C. Gordon, secretary of the Wales co-operative council for nearly 20 years, my campaign manager when I stood for Arfon in the Senedd election in 2011, and a formidable mountain rescuer on Snowdon. Chair of the Wales co-operative council and former MEP Jackie Jones is an ambassador for co-operative ideals throughout Europe. The legend that is David Smith has campaigned for many years for the father of the co-operative movement, Robert Owen, a Welshman who was born in Newtown in Powys in 1771, to be part of the school curriculum in Wales. That will mean that children can learn that Robert Owen, who made his future and his fortune in the cotton trade, was unique among employers of that era because he believed in putting his workers in a good working environment with access to education for them and their children.

Karen Wilkie, former regional secretary of the Wales Co-operative party, gave 20 years’ service to promoting and growing the co-operative sector all over Wales. The former MP and now Senedd member Huw Irranca-Davies has worked with me to have Marcora law adopted in the UK and Welsh Parliaments. I firmly believe that support for co-operatives and alternative businesses would be greatly enhanced if the UK Government created a Marcora law.

Those who missed my 20-minute speech in my Westminster Hall debate on Marcora law in September 2021 will be relieved that I am going to give the edited version today. I believe that a Marcora law is the answer to small businesses closing or where there is a lack of succession planning. Marcora law was created by the Industry Minister Giovanni Marcora in the Italian Government more than 30 years ago. Marcora law gives workers the right and, more importantly, the financial support to buy out all or parts of an at-risk business and establish it as a worker-owned co-operative. Italian workers are given the opportunity to rescue profitable parts of a business or an entire profitable business, and are each given a lump sum in advance of three years’ social security payments and redundancy payments, which they pool together to use for the buy-out.

Marcora law is run by the Cooperazione Finanza Impresa—I will call it the CFI—which was set up in 1986 by the Italian Government, who hold a 98.6% share of the capital investment and oversee the CFI board. The CFI assesses, supports and provides the finances for the buy-out, and it has invested over €300 million in 560 companies, saving more than 25,000 jobs and retaining the skills and experience of the Italian workforce.

The return to CFI is more than six times the capital it has invested in worker buy-outs, and the workers also benefit from co-operative values, safeguarding employment and guaranteeing fair workplace conditions. In my Westminster Hall debate, which seems like years ago now—it was September 2021—I asked the Minister whether the UK Government had

“conducted an assessment of…the existing co-operative sector”.

I asked whether his UK Government would

“increase the size of the co-operative sector”.—[Official Report, 8 September 2021; Vol. 700, c. 113-114WH.]

Had he considered the benefits of worker buy-outs for at-risk businesses? Would his UK Government provide financial support to workers looking to buy out their at-risk business? Unfortunately, the Minister was not too impressed, so I will ask the Minister today whether she will meet me to discuss the benefits of Marcora law.

I followed up my debate by introducing ten-minute rule Bill on a Marcora law, the Co-operatives (Employee Company Ownership) Bill. To my absolute astonishment, the CFI got in touch, having watched my Westminster Hall debate and my ten-minute rule Bill debate. I had the absolute honour of speaking at the CFI conference in Rome in November 2021. Unfortunately it happened virtually, so I have still never been to Italy, but it is on my to-do list.

In the Welsh Parliament, Huw Irranca-Davies introduced a legislative proposal for an employee ownership Bill to give workers support to buy out their workplace if it is at risk of failure. Huw’s motion, which received cross-party support, proposed

“that the Senedd:

1. Notes a proposal for an employee ownership Bill on promoting worker buy-outs and employee ownership;

2. Notes that the purpose of this Bill would be to:

a) legislate for a Welsh Marcora law to provide the legal framework, financial support and advice for worker buy-outs;

b) put in place a statutory duty to double the size of the co-operative economy by 2026 and to actively promote employee-ownership and worker buy-outs;

c) provide financial support and advice for workers to buy out all or part of a business facing closure or down-sizing and to establish a workers co-operative;

d) ensure that all companies in Wales in receipt of public funding or part of the social partnership and ethical procurement chains agree to the principles of worker buy-outs and employee ownership.”

Huw’s Bill is still awaiting legislative time, but although it would pave the way for a Marcora-type law in Wales, only this place has the financial power to truly provide what will be needed to make worker buy-outs a success. Welfare and benefits are not devolved. Even with a Welsh Marcora law, the Welsh Government would struggle to provide the funding needed. That is why we need the UK Government to commit to such a law for the UK.

Co-operatives and alternative businesses represent a departure from the traditional business model, emphasising principles of shared ownership, democratic decision making and the pursuit of sustainable development. By prioritising social and environmental wellbeing alongside economic growth, these enterprises encapsulate the values that we hold dear: equality, co-operation and resilience. These forward-thinking initiatives are reshaping our economic landscape, fostering inclusivity and empowering communities across Wales.

Many local authorities in Wales, including my own in Neath Port Talbot, have recognised the potential of co-operatives and alternative businesses to drive positive change in their communities. They understand that these ventures not only provide valuable products and services, but generate meaningful employment opportunities and promote community engagement. By lending their support, local authorities are fostering an environment conducive to collaboration, innovation and empowerment.

A key way in which local authorities assist co-operatives and alternative businesses is through the provision of financial resources. They offer grants, loans and other forms of financial assistance to help those enterprises get off the ground, expand their operations or invest in sustainable practices. By leveraging access to funding, local authorities are reducing the barriers to entry and are levelling the playing field for aspiring entrepreneurs who wish to pursue a co-operative or alternative business model. In Neath Port Talbot, support is provided through a range of schemes targeted at the third sector, including the community regeneration fund, the Building Safe and Resilient Communities programme and community benefit funds linked to renewable energy products.

Moreover, local authorities play a pivotal role in facilitating networking and knowledge sharing among co-operatives and alternative businesses. They organise events, workshops and conferences at which entrepreneurs can connect with like-minded individuals, share best practice and learn from successful case studies. By fostering a sense of community and collaboration, local authorities are empowering these businesses to thrive and grow.

There are also examples of capacity-building initiatives to ensure the long-term viability of co-operatives and alternative businesses. They provide training programmes, mentorship opportunities and business-development support to enhance the skills and knowledge of entrepreneurs. By equipping them with the tools that they need to navigate the challenges of running a co-operative enterprise, local authorities are creating a sustainable ecosystem that fosters success.

I will finish by mentioning Cwmpas, a development agency working with local authorities, organisations and businesses for positive change in Wales, which has recently expanded to cover the UK—so look out! Cwmpas is a co-operative that was established in 1982 as the Wales Co-operative Centre. It focuses on building a fairer, greener economy and a more equal society in which people and the planet come first.

How we do things is just as important as what we do. Cwmpas works collaboratively, for mutual benefit, by providing support and encouragement, addressing inequality, valuing diversity and democracy, striving to be open and honest, investing in achieving positive outcomes and inspiring and empowering people, communities, and businesses to take control and reach their potential.

My good friend, Derek Walker, led Cwmpas for many years, and I was proud and honoured to speak at many of its events. Recently, Derek was made the Future Generations Commissioner for Wales, and I am sure he will do just as good a job there.

Cwmpas research found that small and medium-sized enterprises make up 90% of public sector and 62% of private sector companies in Wales, and that 20% face closure or succession in the next five years. A Marcora law has a place in improving the chances of succession, rescuing jobs and securing the future of many at-risk businesses across Wales and the UK. A Marcora law would allow organisations such as Cwmpas and local authorities to provide the financial support and expertise to deliver this.

Importantly, the support provided by local authorities and organisations such as Cwmpas is not limited to the start-up phase of co-operatives and alternative businesses. They recognise the need for ongoing support and aim to create an enabling environment for those enterprises to flourish. Local authorities work hand in hand with those businesses to identify opportunities, address challenges, and advocate for policies that promote their growth. By nurturing a long-term partnership, local authorities ensure the resilience and sustainability of co-operatives and alternative businesses.

Support for co-operatives and alternative businesses in Wales is an essential pillar of economic development and community empowerment. By championing those enterprises, local authorities are not only fostering inclusive growth and job creation but promoting the co-operative values that define us as a society—co-operative values that have stood the test of time. As we move forward, let us continue to embrace and support the co-operative spirit and its values, for it holds the key to a more equitable and prosperous Wales.

I invite the Minister to visit Neath and to see those wonderful co-operatives and alternative businesses in operation in every community of the Neath Port Talbot local authority.

--- Later in debate ---

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see you in the Chair, Mr Dowd. I commend the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) for leading this debate with an excellent speech. I commend the speeches of my good friends, the hon. Members for Neath (Christina Rees) and for Cynon Valley (Beth Winter).

I completely agree with the hon. Member for Cynon Valley: the ongoing cost of living crisis has clearly demonstrated the inherent dangers of communities being reliant on companies motivated by profit for essentials like food and housing. It is vital that co-operatives and social enterprise organisations, which prioritise supporting communities, receive adequate funding, not just from local authorities and devolved Administrations, but central Government, too.

I listened intently to the colleagues who provided a bit of history on co-operatives, which have existed for centuries. The co-operative movement predates the British Labour party. In Govan in Glasgow South West, in 1777, the Govan Victualling Society became Scotland’s second co-operative—it was pipped to first place by the village of Fenwick. The book on co-operatives describes Govan in 1777 as a pretty village on the banks of the Clyde just outside Glasgow. Of course, some of the people of Govan still deprecate the decision of 1912 to bring Govan into the city of Glasgow for local authority purposes. I am not here to describe that part of Govan’s history, but to demonstrate that we can learn lessons from the past. The memory of that society founded in 1777 lives on today in my constituency.

I am privileged to be the chair of Good Food Scotland. That organisation, along with a number of others, assisted the great organisation Govan Home and Education Link Project—Govan HELP—which transitioned during the covid pandemic away from emergency food parcels to become a co-operative pantry. The work of Good Food Scotland is thriving, with the help of both the Scottish Government and Glasgow City Council. We now have six, and rising, larders run by Good Food Scotland, with a membership so far of 1,500, which is also rising.

How vital is that service? The saving for a weekly shop using one of these Good Food larders is on average £20 a week, but we had an example just this week from the Linthouse Larder. A couple who go to a regular supermarket calculated their weekly shop at £80; using the larder, their weekly shopping is now £30. We not only need to promote the great work of co-operatives, we also need to look at supermarkets’ excess profits, and we should be debating whether companies that are making excess profits should perhaps be contributing a bit more in the taxation system.

The work we are doing on eliminating food poverty backs the principles of my private Member’s Bill, the Food Poverty Strategy Bill, in which I ask the Government to produce a food poverty strategy to eliminate the need for food banks by the year 2030. If Joe Biden’s America can look at producing a food poverty strategy to eliminate food banks in America by 2030, we can learn lessons in this nation state and do that as well.

Co-operatives are business organisations that are owned and controlled by members to meet their shared needs. Members can be customers, employees, residents or suppliers, and they have a say in how the co-operative is run. In 2020, just 1% of UK businesses were co-ops, but more co-ops are opening in response to the ongoing cost of living crisis, and a vital job they are doing, too. In January 2022, Cooperation Town had six co-ops in its network, and that has now more than tripled to 21.

Co-operatives provide a vital service to those struggling through the crisis. The soaring food prices in supermarkets are a clear example of why we need organisations that prioritise fairness and support local communities. This cost of greed crisis is a stark reminder of the danger of companies that sell essential supplies prioritising profit margins above all else.

[Christina Rees]

The hon. Gentleman really is a friend of the workers. What I find so inspiring about this debate—I am sure he will agree—is that Wales, Scotland and England have come together to show the value of co-operation and the amazing impact that co-operatives have across the UK.

[Chris Stephens]

The hon. Lady, too, is a friend of the workers. In fact, I once said that to her when she was in your very spot, Mr Dowd, in a debate on workers’ rights. She is correct that the co-operative movement, which is doing a vital job, needs to grow in this country.

I would argue that credit unions are based on the co-operative model, and they too are playing a vital role in helping people with their finances. They help people to save and take out affordable loans. The credit union movement, which is doing great work, should be congratulated. The less I say about some of the bigger banks, the better, because I would probably veer into using unparliamentary language, and I am sure you would not allow me to do such a thing, Mr Dowd.

According to the House of Commons Library, in 2021-22 4.7 million people, or 7% of the UK population, were in food poverty, including 12% of children. In 2022-23, the Trussell Trust supplied the highest recorded number of three-day emergency food parcels. It is hardly surprising that the number of co-operatives in the UK is growing to meet the challenge of soaring levels of food poverty.

FareShare, the largest distributor of charitable and surplus food in Britain, supplies about 9,500 groups, including food banks, co-ops, community cafés and school clubs, but it currently has a waiting list of 1,500 organisations. That shows the challenge of dealing with the cost-of-living crisis. Its head of marketing noted:

“We believe this is just the tip of the iceberg for the number of charities and community groups needing more support… We do not have enough food to meet this soaring demand, so we’re asking the government to provide us with £25m to help us unlock an additional 42,500 tonnes of surplus food, the equivalent of 100m meals, to the people worst hit by the cost of living crisis.”

That shows the very real challenge facing citizens across these islands. The idea that the growing demand for affordable food is an indictment of the lack of action in providing adequate support through the cost of living crisis is echoed by other stakeholders.

Co-ops have the potential to offer a real, sustainable solution to the ongoing housing crisis. It is not just in the context of essentials like food that we are seeing companies take advantage of the ongoing crisis to disguise hiking their prices; increasingly, landlords are also taking advantage of the cost of living crisis to charge exorbitant prices for accommodation. Although the Scottish Government have taken decisive action to support people through the housing crisis by introducing a rent freeze and a moratorium on evictions, I am afraid that the UK Government have taken no action to protect people from the crisis. As with food prices, soaring housing costs do not impact everyone equally.

Chloe Field, the National Union of Students’ vice-president for higher education, has said that the “unprecedented” housing shortage is

“jeopardising students’ university experience and forcing them to make difficult decisions.”

She also noted:

“Without urgent action to increase the amount of affordable housing, it is inevitable that both dropouts and student homelessness will increase.”

Those on low incomes are paying a hefty price for the lack of action to tackle our housing crisis. One charity has warned that student housing is reaching a “crisis point” not seen since the 1970s. As a result, housing co-operatives are becoming increasingly popular, particularly among students, who have set up student co-operative homes. The Student Co-op Homes organisation notes that

“We know from elsewhere in the world this model works and is replicable at scale...There are now four such co-ops in the UK (housing over 130 students) in Birmingham, Edinburgh, Sheffield and Brighton, plus active groups looking to secure property in Belfast, Bristol, Glasgow, Manchester, and Nottingham. Further enquiries are coming in every month.”

Such co-op homes are a solution for people who have been priced out of buying a home in their local communities.

I hope that when the Minister responds to the debate, we will hear about what the Government are doing to help these housing co-operatives ensure that there is affordable housing, about how we are very much having to deal with food poverty, whether or not the Government will support my private Member’s Bill, what action the Government are taking to address food poverty, and about the support that they will give food co-operatives.