Cooperatives are enjoying a moment

Once charities were seen as the magic bullet for public service reform. But now their place seems to have been usurped by another part of the third sector: cooperatives.  

Last month, Shadow Chancellor George Osborne promised to free public sector staff to form employee-led “John Lewis” style co-operatives and sell their services back to the taxpayer. The Social Enterprise Coalition is right behind the idea.

But while all attention seems focused on the mutualisation of the public sector, some are asking whether it is the private sector that is most ripe to benefit from the adoption of the cooperative ethos and structure. Last month, to rather less fanfare, umbrella body Cooperatives UK called for legislation to give football supporters the right to convert  their clubs into cooperatives, provided 75 per cent of season ticket holders were in favour. The market failure which has seen clubs like Portsmouth brought to the brink by reckless owners could be replaced, the argument goes, by genuinely responsible ownership.

Another campaign, run by the Alliance for Finance, is calling for the re-mutualisation of Northern Rock, the building society-turned-bank that sparked off the financial crisis in 2008. Instead of being sold back to the private sector, argues secretary Russell Greig, “the new company could be turned into a community-owned organisation, serving the needs of the communities and able to re-invest in them.”

In their influential new book, The Spirit Level: Why Equality is Better for Everyone, epidemiologists Richard Wilkinson and Kate Pickett argue that “the concept of a company being owned by outside investors has implications that look increasingly anachronistic.”

Citing the success of cooperative experiments such as the huge Mondragon Cooperative group in Spain, they call for tax incentives and legal support to begin a gradual conversion of the economy to employee ownership and control. Much like John Lewis, in fact. Current record levels of inequality would be radically reduced, people would regain the sense of being part of a community, and other social blights such as mental ill health and crime would be alleviated.

The intellectual inspiration behind Osborne’s cooperative proposals is Red Tory Phillip Blond, whose pamphlet, The Ownership State pre-figured the Tory plans. But Blond’s lesser known opponent, Blue Labour’s Maurice Glasman, is also an advocate of mutualisation. He argues that all institutions, public and private, with more than 50 employees, should adopt a new form of governance, giving equal weight to workers, owners and the local community on their boards.

Mutualism could be the idea of the future. Just in more radical ways than George Osborne had in mind.