Co-operative and Mutual Businesses

Patricia Gibson Excerpts

Thursday 27th June 2019 Commons Chamber

[Brendan O’Hara (Argyll and Bute) (SNP)]

I add my thanks to the hon. Members for Harrow West (Gareth Thomas) and for Wycombe (Mr Baker) for securing this debate.

We have heard many times already from Members right across the House that co-operatives and employee owner companies demonstrate a radically different way of how a company does business and how it organises its resources. As the hon. Member for Harrow West said in his opening remarks, these companies and enterprises come in all shapes and sizes and cover almost every—indeed, perhaps every—sector of the economy. Of course, one of the most welcome aspects of co-operatives and employee owner companies is that they allow people to democratically own and have greater control over the things that really make a difference to their business. In addition, by sharing and fairly distributing wealth, they promote employee wellbeing far more than perhaps traditional company models do.

We on the SNP Benches will always support measures that give workers a genuine and more meaningful stake in their organisations. Any measures that enable everyone who has a stake in a company to have a say in how that business is run will find support here. The benefits to business are obvious—from increased productivity and innovation to being able to attract and, perhaps just as importantly, retain high-quality talent, which in turn can help safeguard the long-term future of businesses and bring benefit to the communities where they are based.

There is an awful lot to like about co-operatives and worker or employee-owned businesses, and I believe Governments should do whatever they can to support their voluntary expansion through both start-ups and conversions. In this, I think the UK Government should look at and perhaps learn from the success of the Scottish Government, who have been promoting employee ownership conversion as a mainstream option for ownership succession of small and medium-sized enterprises.

I am really pleased to see that, in the last five years, the number of such employee-owned companies operating in Scotland has more than trebled. That trend shows no sign of slowing down, with Scottish Enterprise reporting recently that it has been working on a deal a month over the past year. Currently, there are about 100 worker and employee-owned businesses operating in Scotland, which together create about 7,000 jobs and contribute around £1 billion to the Scottish economy. I am delighted that the Scottish Government have shown their commitment to helping more companies become employee-owned or worker-owned enterprises by announcing a programme that will seek to achieve a fivefold increase in the number of employee-owned businesses in Scotland by 2030.

At the end of last year, when the Scottish Cabinet visited the Isle of Arran, the First Minister launched Scotland for EO. It is a collaboration between the Scottish Government, Scottish Enterprise and business, and its ambition is to make Scotland a world leader in employee ownership and other co-operative models. Under the banner “Employees can do ownership” and backed with £75,000 of Scottish Government funding, this new leadership group has been charged with increasing the number of employee-owned and worker-owned businesses in Scotland from the current 100 to 500. Sarah Deas, a director of Scottish Enterprise and the head of Co-operative Development Scotland, who is a member of this leadership group, said:

“Promoting employee ownership helps drive growth in the economy and create greater wealth-equality in society.”

Thanks to Co-operative Development Scotland, a dedicated team working within Scottish Enterprise, any company wishing to explore employee ownership, or indeed any other co-operative-based model, will now have expert advice on tap. Any business or firm that submits an inquiry about moving to an employee ownership model is able to access up to three days of free support from the team at Scottish Enterprise. Thereafter, Scottish Enterprise will provide the company with a report, which will examine potential ownership structures, governance, management, funding and how a possible transition to employee ownership could occur. As Nicola Sturgeon said when she launched Scotland for EO, the Scottish Government

“want to make it easier for companies and workers to find out more about this model and to move towards it if it’s right for them.”

It is generally accepted that one of the biggest barriers to the development of co-operatives and employee-owned enterprises is the absence of readily available, impartial advice and support. Yet there is evidence to show that when entrepreneurs and businesses are given the right information—in the proper context, with access to expert help—they are more likely to choose the model of employee or worker ownership for a business. I urge the UK Government to look at what the Scottish Government are doing and, I hope, match the ambition being shown by the Government in Holyrood.

Despite the recent growth in the UK’s co-op economy, by international standards the UK still lags far behind most OECD countries in both the scale and the economic impact of our co-operative sector. Germany, for example, has a co-op economy four times that of the UK, while in France it is six times larger. As I have said, I believe one of the main causes of that is the lack of awareness and a paucity of good, impartial advice. All the evidence tells us that employee ownership delivers real benefits to businesses, to the people who work in them and to the communities in which they are located.

As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) knows only too well, one of the great success stories of a company transitioning to become an employee-owned business is the Auchrannie Resort in her constituency.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

My hon. Friend is making a wonderful speech showing the potential for success in this area. I am the proud MP for the beautiful island of Arran. Does he agree with me that Auchrannie is a wonderful enterprise and that everybody would benefit from it if they had the good fortune to have an opportunity to visit it?

[Brendan O’Hara]

Probably the best reply to my hon. Friend comes not from me but from Linda Johnston, co-founder and managing director of the Auchrannie Resort on the Isle of Arran. She successfully transferred over to the employee ownership model a couple of years ago, and said:

“The staff were involved in the process from an early stage and were given the opportunity to input throughout. They are delighted that Auchrannie’s legacy will be protected and that they have the chance to play an active part in, and benefit from, Auchrannie’s future success. They also realise that what each of them does will affect the future success of the business and that this is directly linked to their own success. There is no, ‘them and us’ now, we’re all in this together.”

I commend the words of Linda Johnston and support this motion.