THE BLOG

Companies, Charities, Co-operatives - Three Legs of the Economic Stool

04/08/2014 15:18 BST | Updated 01/10/2014 10:59 BST

The new century has seen two great reforms of organizational life in the UK, in the form of new Acts of Parliament that review and consolidate all the relevant existing legislation. The first was the Companies Act 2006, which followed a lengthy Company Law Review. The second was the Charities Act 2011.

Now, following the private enterprise and philanthropic model of organisation, we have the third leg of the stool, the mutual model of member ownership. This is in the form of the Co-operative and Community Benefit Societies Act 2014, which came into force today, August 1st 2014.

Like the two previous consolidation acts, this brings together long dated and at time clearly out dated legislation into one simplified and unified statute. Over a dozen pieces of legislation, with all the contradictions and bureaucratic implications that is implied, have now been retired. It is the first new consolidated co-operatives act in the UK for nearly fifty years.

With technical input from the sector, support from across the political spectrum and preparatory work by the Law Commission, the Coalition Government has made UK a better place to start and grow co-operative enterprises.

The Act also wraps up a programme of legislative reform delivered by the Coalition:

  • cutting quite a bit of red tape
  • closing down some unhelpful loopholes where coops were overlooked in relation to business benefits
  • confirming some new gains, such as a three-fold increase in the investment limit in co-operatives

This shows what can be achieved when broad political support is backed up by firm government action. One new co-operative now starts every working day of the week.

Of course, there is focus and learning too, coming out of what went wrong at one of the 6,300 co-ops, The Co-operative Group. It lost sight of what members wanted, with governance structures and leadership that failed to advance their interests. Co-operatives are businesses that are owned by and run for its members and are at their best when that co-operative difference runs through it like a stick of rock.

But, overall, the turnover of the co-operative sector has outpaced the UK economy in recent years. The co-operative economy is worth some £37 billion, is owned by 15.1 million adult members in the UK, and has grown by 13.5 percent since 2009.

In the run-up to the new Act, hundreds of co-operatives from across the UK came together at a congress in Birmingham to develop an Action Plan for the co-operative sector that could see it continue to flourish and to meet needs across the UK, from social care to new digital enterprise, in innovative ways. One example is a new programme launched called AltGen, which supports young people from age 18 - 29 to set up worker co-ops as a collaborative and empowering solution to youth unemployment.

There is an old saying that if you want to make change - don't get angry, get organized. We need good organisations and the laws that underpin them to be in good shape to help make that possible.

As a cooperative legislator from a previous generation, WP Watkins, wrote: "true cooperation draws its inspiration from realms where the state's writ does not run. Cooperative movements are not created by legislation. Nevertheless, without an appropriate legislative framework, a cooperative movement in the form of a growing economic organism is not possible or even conceivable."