‘Co-operation in the UK badly needs right now a distinctive way of identifying itself against investor-owned enterprises,’ says Cliff Mills
How difficult it is to explain in simple terms the difference between a company and a co-op?
For those of us who believe passionately in a co-operative economy, it is constantly frustrating not to be able to explain succinctly to a cynic precisely why we believe what we believe. We can’t pass what I call the street-corner test – being able to explain something to somebody in a hurry, in a couple of phrases or sentences, before they lose interest.
This is a conundrum I have been wrestling with for more than two decades, the first time being in the 1990s. As a new co-op enthusiast, I was puzzled that a large retail society I was advising did not say in their rules why and how they were different. Surely their key story should be up there in lights?
But then I realised it’s not just co-ops that fail to say what they are trying to achieve: companies are exactly the same. Nowhere in the articles of a company or in company legislation is it expressly stated what a company is aiming to achieve. Of course, we all know the answer – maximising shareholder value; but that’s not a great marketing strategy, and so companies ignore or hide that when selling and focus on other rather more aspirational things. But for co-ops, surely they have a great story to tell; and there it all is, carefully set down in the ICA’s statement of Co-operative Identity. So why can’t we summarise it in a few words? Just try.
There was a big development for companies in 2006. A new Companies Act came into force, which for the first time set out in legislation the duties of directors. Defining the legal duties of company directors requires you to specify what a company is trying to achieve, and which directors, therefore, have a duty to deliver. So for the first time, legislation referred to promoting “the interests of the company for the benefit of its members …”
Here it was at last – a clear statement of what the statute calls the “purpose” of a company: namely the private benefit of the members. This was no surprise of course because this was already clear from decisions of the courts; the legislation simply put into statutory form what the judges had developed over many decades. So if companies are for the private benefit of members, what is a co-op for?
In 2017, with a number of colleagues from my firm [Anthony Collins Solicitors], with Co-op Energy, the Phone Co-op, Co-operatives UK and a number of others, we ran a venue at an arts, faith and justice festival called Greenbelt. That year’s festival theme was the Common Good, and our venue (the Exchange) put on a series of talks, panel discussions, and workshops across the August bank holiday weekend. Our focus was on explaining how business could be for the common good, rather than for private benefit and that co-ops are for the common good.
We returned to Greenbelt again in 2018 with Midcounties and others, and in 2019 with Central England, and although the programmes varied significantly, essentially it was the same message, about how enterprise – and especially co-operative enterprise – was for the common good, and not private gain.
With my colleague David Alcock, at the Co-op Party’s Centenary Conference we published Co-operation for the Common Good, a paper which argued that based on the historical origins of co-operation, on an analysis of the law of co-operatives in the UK, and of how societies were starting to self-identify at the time, there was a clear argument that the purpose of a co-operative is the common good.
More recently, David and I have been working with the Mutual Banks Association to design a company structure for the establishment of a community bank in the UK, having come to the clear conclusion ourselves (confirmed by the FCA) that this could not be done under the Co-operative and Community Benefit Societies Act 2014.
The aim, in short, is to establish a co-operative bank using a company structure.
Working with a team with experience of banking regulation, corporate finance, accountancy, policy, and financial innovation we have designed a member-owned, democratically controlled bank, with indivisible reserves that cannot be demutualised and full commitment to the ICA principles.
The articles will clearly state that its legal purpose is to trade for the common good.
That, I believe, is what co-ops are for, and always have been: providing goods and services in a way that is fair and equitable to everyone, with no preference or reward to anyone, and open to all including future generations. Co-ops are enterprises for the common good.
Over the last couple of years, I used this short-hand a lot; companies are for private benefit, but co-ops aren’t, they’re for the common good. I have found generally that this resonates with people; it makes sense; and it passes the street-corner test.
Those in the movement who hear it for the first time are somewhat unsure. It isn’t language they are used to. It is a bold claim. There is an obvious reluctance to adopt something so new. And there are lots of questions (Isn’t our purpose to serve our members? What about some worker co-ops? Aren’t you talking about community benefit societies?) to all of which there are good answers.
Co-operation in the UK badly needs right now a distinctive way of identifying itself against investor-owned enterprises. It needs to be able to state its case, its distinctiveness in easy language which everyone can understand – and more to the point – is accurate.
Where companies are for private benefit, co-operatives are for the common good.