Business_Insight_130528

Business Insight Tuesday May 28 2013

The growth of fan power page two

Comeback of the old school page ten

Who shares wins

The case for a co-operative culture Forum focus pages eight and nine FC United: setting new goals – page two

Tuesday May 28 2013 | the times

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Business Insight

Welcome

Why it’s back to the future The co-operative movement was born in Rochdale in 1844 and has grown to become a global phenomenon, with no fewer than 900 million co-operators worldwide. In this issue we examine how a movement which at one time seemed in decline has found new momentum against a background of economic hardship.

Its influence peaked between the two world wars, when it had 60 per cent of the grocery market in the UK. From those heady days, interest in “co-operation” fell during the second half of the 20th century.

It took the financial crisis for the British to rediscover the appeal of an approach to business that emphasised the values of sustainability, accountability and transparency. Establishing trust, it appeared, was not just a matter of ethics, it was good practice as well.

Since the banking crash, the number of co-operative businesses in the UK has grown to around 6,000, an increase of close to 25 per cent – and the sector has outperformed the rest of economy four years on the run.

The momentum is being sustained by the Co-operative Enterprise Hub, the organisation charged with creating the next generation of co-ops and which has helped over a thousand to get off the ground since 2008.

Today’s Times Business Insight supplement explores the way in which old-fashioned values are being recognised, from the board-room to the shop-counter, as the hallmark of a successful company.

Inside Togetherness pays dividends Low co-operation costs £34 billion Page 4

United we stand Growing fan power shows way ahead in club ownership

By Mike Cowley

F

C United of Manchester, the football club set up by irate former Manchester United supporters who viewed Malcolm Glazer’s takeover of the Theatre of Dreams as being their worst nightmare, finds itself in a somewhat select “league”.

FC United is in the company of Barcelona, Real Madrid and all but two of the increasingly powerful German Bundesliga clubs – and although there is no likelihood of FC United facing any of them in the Champions League in the foreseeable future, all these clubs do share one common denominator. They are owned and democratically run by their fanbases on the co-operative model, on a one member, one vote basis.

Although fan ownership of football clubs has been established in Europe for many years – with significantly lower ticket prices as a result, with Borussia Dortmund for instance charging the equivalent of just £10 to stand – the model has only relatively recently started to gain true traction in the UK. There are now over 35 football and rugby league clubs owned co-operatively by fans in England and Scotland. These include AFC Wimbledon and Dundee, along with arguably the biggest scalp thus far won for fan power: Portsmouth.

The co-operative team with the highest profile in the movement, however, is undoubtedly FC United. While they have still to reach league status in football terms – and have caused heartbreak to their supporters by losing the Northern Premier League playoff final in each of the past

three seasons – they have enjoyed significant success off the field.

This has come about through showing the way in which groups of fans can get their hands on the money needed to establish a successful community club. Working with Co-operatives UK and a number of fan “professionals” willing to lend their expertise, FC United used a new financial instrument – community shares.

To date, this has raised almost £1.8 million and the cash continues to roll in. Just as important, the club has been instrumental in establishing a way of generating money that is now used widely by other community co-operative-backed projects. Groups formed to save local shops and pubs facing closure – and even a project to rescue the pier at Hastings – have all adopted the scheme.

In the sphere of football, the ability to raise huge sums of money for a club without having to turn to billionaires from the Middle East or Russia is a historic change for fans. Pooling resources to secure the future of their own clubs in a one member, one vote, equal ownership structure – known as a Community Benefit Society – will produce a legacy far outliving that of Sir Alex Ferguson.

It has already had an immediate and lasting impact on FC United’s ambitious plans to build their own 5,000-capacity traditional-style stadium – with only 700 seats, the rest standing – in the Moston district of Manchester.

With an average gate of 2,000, and 1,000 season ticket holders – unrivalled at their league level but still tiny beer in terms of the mother club – the cost of their new ground will be a cool £5.5m. And a very large slice of this will come from the Community Share scheme. Not that such trailblazing is a surprise for the team at FC United. After all, Manchester United was an original hotbed of fan power, with a clutch of powerful fanzines always willing to lead the charge.

FC United’s general manager is Andy Walsh, an old-school Manc and lifelong Manchester United fan until the takeover – he went to his first away game at the age of five. He has the distinction of having run the successful campaign to stop Rupert Murdoch from taking over United, long before the shadow of the Glazers fell across the club.

After the lobbying of politicians, businesses, trade unions and the Professional Footballers’ Association, the takeover threat ended when the Monopolies and Mergers Commission ruled against Murdoch because of a conflict of interest – thus achieving the first real illustration of fan power in the Premier League era.

Then came Glazer and an even bigger challenge – but this time Andy Walsh and the Independent Manchester United Supporters Association pressure group lost.

“After Murdoch, we were always wary of predators,” Mr Walsh says. “We actually approached then MUFC chief executive Peter Kenyon and advised him there should be a management buyout, as we could see people starting to build positions in the club.

“We bought shares, but not enough – and when the Glazers came calling, with the help of various wealthy fans, we put

Co-ops — the alternative to the plc model Pages 6/7

Community ownership:

The real Big Society: The Times Forum Pages 8/9

Arresting decline: the challenges of rural life are best met by those most affected by them, says Peter Couchman First Person

To advertise in the next edition of Business Insight: Freephone 0800 027 0403 or contact: stuart@timesnorth.co.uk

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he Plunkett Foundation has been involved in developing and supporting co-operative and community-owned approaches to rural “regeneration” since

we were founded in 1919. Today, we are seeing rural communities facing pressures which include declining services, high house prices, low local wages, poor broadband and mobile connectivity and a lack of access to jobs and services. Rural communities are being forced to rethink how things are done.

At the Plunkett Foundation, we have a fundamental belief that the people affected by issues or challenges are best placed to resolve them. We also believe that in most circumstances the best way of addressing a range of issues which are resilient in the long term is by enterprise approaches owned and run by communities.

Community ownership has proved itself to be a successful and viable model in rural areas, whether this is through saving the local shop or pub, addressing the decline of public services, or putting in place the infrastructure needed for the 21st century, such as renewable energy and high-speed broadband. It is also highly resilient. For example, no community-owned shop or co-operative pub closed anywhere in the UK during 2012. This means that community-owned enterprises are well placed to adapt to the needs of rural communities, through good times and bad.

Government on various levels has always been the main player in regeneration, having been the funder of infrastructure,

the times | Tuesday May 28 2013

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Business Insight

Raising off-field standards: FC United fans march out behind their ‘anti-millionaire’ slogan

ourselves as a co-op, every member having one share, one vote.”

Mr Walsh has a message for other discontented football fans out there. “Take control of your club,” he says. “It can be done. If we can raise £2m from such a small fanbase [the FC United membership stands at 3,500, but it is growing], just think what a club much bigger than us can do. Do the calculations.

“Our shares scheme qualifies for tax relief. For every £100 that people put in, they could get £30 back. So people could do worse than looking at our scheme, which is still open for anyone who wants to get involved. Clubs right up to the Premiership could be wholly owned by their supporters if they become co-operatives. This would put an end to the casino approach most investors look for in football.”

Dave Boyle – fanning the flames for co-operative football clubs

D together a supporters’ counter-bid. But it didn’t happen because the Glazers moved very quickly to secure their position and launch a full-scale takeover. But it was close.”

Such was the level of discontent that spewed out from the Glazer takeover that a meeting was held in the Dahbar restaurant on Manchester’s Curry Mile – a regular port of call for the Red Issue fanzine. The meeting was attended by more than 20 influential fans – including Andy Walsh – who almost all pledged to boycott Manchester United by not renewing their season tickets.

And so the seeds of forming their own club were planted in fertile ground.

One person who decided not to turn in his season ticket – for which he had already applied – was Andy Walsh. He maintained that stance until his father Paul and son Patrick – who was 12 at the time – told him they would no longer be going to the matches with him as they had joined the boycott. This led to one of the most traumatic moments in Andy Walsh’s life, with him sitting outside Old Trafford holding a letter which effectively revoked his season ticket application. Eventually, filled with emotion, he took the faltering steps into his beloved club for the last time.

While he was not one of the original members of the FC United steering committee, it wasn’t long before Mr Walsh was approached. He accepted his present position on a temporary basis for six months – and the rest, as they say, is history.

The passion that has kept FC United afloat started on day one when donations – eventually totalling £180,000 – started to roll in. The smallest came in the form of a 50p coin sellotaped to a letter from a youngster, and there were a number of £5,000 cheques from the better-heeled former Manchester United supporters.

And the goodwill was always there from the football community. The club’s first game, in July 2005, was a nil-nil draw against Leigh Railway Mechanics Institute.

Sadly Leigh RMI, who offered support to FC United, no longer exist as a club – which shows how precarious life can be in the lower leagues.

Not so for FC United, who opted for the co-operative route to avoid the pitfalls of a start-up. “The problem we saw with football in general was that the fans were being marginalised, ignored even,” Andy Walsh says. “So it was important that the legal entity of the club put supporters at the centre of everything. That’s why we established

ave Boyle, the consultant who helped to steer FC United of Manchester into a co-operative structure, was not only instrumental in advising the former Manchester United supporters but also had a hand in establishing a growing number of other clubs opting to become co-operatives – starting with the club he supports, AFC Wimbledon.

A former chief executive of Supporters Direct – the prime mover in fan-owned clubs – Mr Boyle now spends time as a consultant for the Co-operative Enterprise Hub, bringing to bear a background in membership issues, co-operative development, fan culture and the politics and economics of sport.

He cites AFC Wimbledon as being “John the Baptist to FC United’s Jesus”, with his advice to FC United having helped them to avoid the mistakes made by Wimbledon. But he was not even a football fan until he started to work with Wimbledon in his role at Supporters Direct.

“When I started to work with the AFC Wimbledon people,” he recalls, “they became friends and I started to go matches with them. So when I’d got the shirt and the season ticket, I realised I had become a fan.”

Having gained experience in football politics with his role at Supporters Direct, Mr Boyle became aware of the growing level of discontent among football fans. “It started with a simmering disquiet in the late 1990s,” he says, “when ancient football clubs began to be sold for hundreds of millions of pounds. They were offering fans up to new owners as a captive market to be bled dry.

“There was a need for a mechanism to deal with the problems when the fans hate the club and the club hates the fans, and to try to move beyond conflict and attrition. Supporters Direct saw the answer in the co-operative model, and we were blown away by the demand. When we set up, the phones never stopped ringing and we spent the first two years on trains eating unspeakable sandwiches going round the country talking to fans at every level of football.”

everyone gets a say assets and anything else that others would not or could not do. So what is the role of government in community-owned regeneration? To support, not to do. To enable, not to instruct. To build, not to own.

We are proud to be a part of the Co-operative Enterprise Hub, a fantastic source of support for co-operative enterprises.

Community ownership, for us, is built on co-operative principles: widespread ownership by those who could benefit from community-owned enterprise, democratic control on the basis of one member one vote, and voluntary and open membership.

These values are built into viable enterprises which ensure long-term resilience.

Contrast this with top-down regeneration via budgets and targets set by people with no local knowledge or connection. I know which approach I would bet on still being there in 20 years’ time.

For more information, go to www.plunkett.co.uk, www.communityshops.coop and www.pubs.coop – and on Twitter: @PlunkettFoundat

Peter Couchman, chief executive of the Plunkett Foundation

These values are built into viable enterprises and ensure long-term resilience

Dave Boyle sees the catalyst for the fan-owned clubs as having been the time when ITV Digital collapsed in 2002, leaving “an enormous hole in the balance sheet of every non-Premier League club”.

Insolvency became the order of the day, and people who would normally have put money into clubs saw balance sheets riddled with debt. Suddenly there was an opening for supporter-owned football clubs set up as trusts with the comfortable backing of the Co-op – seen then, as today, as a safe pair of hands.

The reason clubs became privately owned in the first place was to raise the capital for football grounds – and this started the process of moving away from the community that we now see in full fruition. In developing their new ground, FC United will have overcome the biggest hurdle and become closer to the community as a result.

Helping to fan the flames of fan ownership, Supporters Direct was formed in 2000 following a recommendation from the Government’s Football Task Force, with its initial purpose being to encourage the formation and development of groups of fans to take ownership stakes in their clubs.

Supporters Direct now operates in over 20 countries across Europe – and, with backing from the Co-operative Enterprise Hub, the body responsible for the upsurge in co-operatives in this country – it works with over 170 supporters’ trusts. These, collectively, have more than 400,000 members and have raised more than £30m in finance since 2000.

Dave Boyle cites the example of FC United offering a pay-what-you-want season ticket to help fans who are struggling in the current economic climate in which many are losing their jobs. “The end result,” he says, “was that whereas the previous season ticket had been £140, the average paid under the new scheme went up to £160.

“That’s the amount of goodwill for fan-owned co-operative clubs out there – and co-operative principles are very good at leveraging goodwill.”

To take the first steps to becoming a communityowned club, visit www.clubdevelopment.coop and follow FC United at www.fc-utd.co.uk

Tuesday May 28 2013 | the times

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Business Insight

Togetherness

Patience is a vital virtue says leading co-operator The secretary general of Co-operatives UK believes the movement’s model must become increasingly part of Britain’s business mix to help combat ‘low co-operation’, which is costing companies £34 billion a year

By Mike Cowley

E

d Mayo’s stellar career, with his single-minded focus on ethical business and co-operation, saw him make one decision which still causes him to cringe whenever he recalls it – and it is a decision of which he is constantly reminded wherever he travels in the UK or abroad.

It wasn’t the time when the secretary general of Co-operatives UK became involved in mud-wrestling while he was studying philosophy at Cambridge University. That, after all, was during Rag Week – which he was organising – and it was to raise money for charity.

No – what still makes him cringe is that, as part of the World Trade Movement team behind the introduction of the Fairtrade mark, he was the one who suggested deleting the space between Fair and Trade, “at great damage to the English language”. Nevertheless, even this worked out for good, as it made it easier to trademark a global consumer label which now links 10 million farmers and their families worldwide.

His involvement with the Fairtrade project also gave Ed Mayo a clear direction for his subsequent career path. “Not only did it give me huge satisfaction,” he says. “What I went on to do was to mimic the concept of Fairtrade in other parts of the economy.”

His success in achieving this objective can be judged by his having been named as one of the top 100 most influential figures in British social policy by a quality broadsheet, and nominated as a “Young Global Leader” by the World Economic Forum.

Some newspaper reports also placed Mr Mayo as being close to Gordon Brown during his time at 10 Downing Street, and likewise now being close to David Cameron, but he dismisses both these claims as being over the top. They came about, he suggests, because of his personal contacts with prime ministerial advisers, rather than with the Prime Ministers themselves.

There is little doubt, however, that Ed Mayo is a man of considerable influence

in his chosen sector, particularly in his latest incarnation. After a lifetime spent holding down positions with organisations and think-tanks steeped in the ethical business ethos, he has found his “dream job” as the person responsible for helping to nurture co-operative businesses in the UK. During his stewardship of Co-operatives UK, the trade body for co-operatives and mutuals, the co-operative economy has outperformed the mainstream UK economy for four consecutive years.

With a turnover of £35.6 billion, income for co-operatives has grown by 19.6 per cent since the banking collapse of 2008, while the overall UK economy shrank by 1.7 per cent over the same period.

Between 2008 and 2011, the number of co-operatives in the UK grew from 4,820 to 5,933, and the momentum increased by almost 10 per cent in both 2010 and 2011. The failure rate for co-operatives is also much lower than for other business models, with 98 per cent still in operation after three years, compared with 65 per cent of all businesses.

A recent report has also shown that for every £100 of sales by co-operatives, £40 goes to the local community in the form of payments to local suppliers, dividends to customers and staff wages. Ed Mayo describes money spent in co-operatives as “sticky”.

With the plc model constantly under pressure both from the banks and shareholders, it is little wonder that some pundits are forecasting that the time has come for the co-operative movement

– even though it currently makes up a mere 2 per cent of the UK economy.

Mr Mayo believes that the underlying reason for the recent success is because the movement is on a different growth trajectory to investor-led business models, which are held hostage by shareholders rather than being owned and run by members.

“It is a more patient model,” he says.

“You are relying on finance from your own members for business success, so growth is more evolutionary. When times are tough, it is even more important for your customers to be onside and loyal, for your workforce is productive and motivated – and your suppliers are brought into a long-term framework. In many ways, co-ops have got what is increasingly recognised as a key formula for business.”

The man who joined the Co-operative as a teenager points out that co-operatives were expanding as far back as a decade ago, but this went almost unnoticed because of the high-flying businesses in what was then an overheating economy.

“With the economy turning down, the co-op success story has become more prominent,” Mr Mayo says. “But it reflects a long-term strategy and mandate, rather than an ability to run a countercyclical business. It is tough times for all business at the moment.”

However, this hasn’t deterred Ed Mayo and Co-operatives UK from continuing to put in place the building blocks which will enable the co-operative movement to gain further traction in the UK economy.

Ed Mayo has found his dream job as the man helping to nurture business cooperation in the UK

You rely on finance from your own members for business success, so growth is more evolutionary

The trade body is behind the high-profile Co-operatives Fortnight, which acts as a platform for the sector to engage with the wider public.

It has also launched a “Co-operate” app for the iPhone – which lets you know where your local co-operatives are, not just the food stores but schools, housing and any organisation owned and run by its members.

Even more significant has been the successful campaign to get the Coalition to back a consolidation bill, which will make it easier to start and run co-operatives.

David Cameron has agreed to back this initiative, which will bring together and simplify 17 pieces of legislation – many of which contradict each other – and slash the legal costs currently involved.

“We’ve had a consolidation bill for companies and charities over the last 10 years,” Mr Mayo says, “so this is the third leg of the stool for which there is a commitment for 2015. In recent years, one of our great achievements is to get recognition that co-ops are not a party political model. I’m not a member of any political party – and that is key to being able to win support from across the political spectrum.”

On a day-to-day basis, the remit of Co-operatives UK is to focus on steering fledgling co-ops along the path towards integrity and good governance – prerequisites of the movement. It is being kept busy as new co-operatives are sprouting everywhere – in schools, in community energy schemes, in housing, even owning and running football clubs. There is also a boom in interest in the co-operative movement in rural locations, where communities have come together to save their local pubs and shops – the very heart of village life – from closure.

“In a rural setting, you need all the community to come together,” Mr Mayo says. “You need wealthy commuters, you need the landowners, you need the rural poor – all coming together to save community assets, to safeguard them.

It’s a partnership model – it can include putting in money, so it is about taking responsibility. It is one member, one vote – not £1, one vote – so it is not that Lady Bountiful puts all the money in and gets 80 per cent of the say.”

Yet much as Ed Mayo is an advocate of co-operatives, he sees them as simply being part of the business mix, not all of it – even though the movement has a 10year blueprint for significant expansion.

“I don’t think every business should be a co-op,” he says. “It’s not for everybody – you won’t get everyone on board.

“However, every business would be better if they were more co-operative, rather than necessarily going all the way to being a co-operative. Our research has shown that the cost of low co-operation for business – where staff aren’t fully engaged – is in excess of £34bn. So if we could all be more co-operative, UK business as a whole could be more productive.”

the times | Tuesday May 28 2013

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Business Insight

New ways

It’s nice work if you can share it Secure job, good pay, pension and no boss to order you around – that’s what you find at the Suma Wholefoods workers’ co-operative, reports Rick Wilson

A

former academic turned occasional forklift truck driver, Bob Cannell has a secure job in a major food wholesale distribution outlet based in Elland, West Yorkshire – and takes home 66 per cent more in his pay packet than is offered by similar businesses nearby.

Neither he, however, nor any of his 150 workmates – each of whom receives exactly the same hourly rate which amounts to £29,000 annually for a 40hour week – have a boss to order them around. The bottom line is that they are all owners of Suma Wholefoods, a workers’ co-operative.

Workers’ co-operative? For many people, this is likely to conjure up visions of Chairman Mao or Stalin. Aren’t they the sort of people who walk round in sandals, eat lentils and live in a world where profit is a dirty word? But while the Suma workers are unlikely to be found wearing sandals, they will probably eat lentils, as the co-operative distributes vegetarian food and around 70 per cent of the workforce follow the healthy regime.

Should someone turn up with a bacon sandwich, as has been known to happen, they are asked – asked, note, not told – to eat it outside. So you don’t have to be a vegetarian to work there – and in fact you don’t have to be anything except prepared to work hard and blend into a business that is both ethical and co-operative.

Profit is certainly not a dirty word at Suma – which currently has a turnover of £35 million – as the annual profit dictates what members are paid for the next 12 months. High wages are part – but certainly not the main part – of the reason why most people want to work there.

They tend to be “co-operators”, people who share the co-operative dream. With a workers’ co-operative, this means thatmanagement is effectively a collective decision.

To outsiders, this suggests a free-forall, a scenario that is almost alien to

the clearly defined worker management society inhabited by most of us. It is far removed from a free-for-all, however.

Instead, it is an example of people working together for the common good. Certainly some of them could be described as tree-huggers, but you will find your fair share of the conservative-minded in there – and they all have their say. Here, then, is true democracy in action in the workplace.

Suma’s policy and direction is decided by a general meeting of the members.

Once that has been agreed – on a one member, one vote basis – the business is achieved by “co-ordinators”. These are members trained for specific roles and who form part of a flat management structure working to an agreed business plan overseen by an elected management committee. Members are actively encouraged to learn new skills and to take on responsibilities – a situation which has been described as “pragmatically idealistic”.

Just how it works can be seen in the role of Bob Cannell, who has been with Suma for more than 30 years. “When I discovered Suma,” he says, “I was a postgraduate looking at food economics – how it was produced and distributed – and I came across this amazing organisation and thought ‘Wow, that’s the way to do it’.”

Today, Mr Cannell’s duties involve human resources (HR) issues – his specialist area – combined with the occasional shift spent working on machinery in the shop floor. This mirrors Suma’s approach to breaking down the traditional office/ shop floor division, by getting people to work in both environments.

Suma also has a flexible policy which enables people to pursue other activities – such as, in Mr Cannell’s case, being a Bradford city councillor for 12 years and also representing UK workers’ co-operatives on various national and international co-operative bodies.

So Bob Cannell can find himself attending a European Parliament meeting one day, with the next day spent in manual work on the shop floor. And while this might seem somewhat mindboggling, it does work – as witnessed by the fact that Suma is “the UK’s largest independent wholefood wholesaler/distributor, specialising in vegetarian, fairly traded, organic, ethical and natural products”.

Throughout the downturn, Suma has been growing at 10 per cent each year by expanding into new markets. One member is currently learning Mandarin and

The fruits of their labours... frequently goes repping in China. “Every country has its veggies,” says Mr Cannell, “and we aim to supply them from West Yorkshire”.

Naturally, there is a high demand for jobs at Suma, but the screening process is both sophisticated and exhaustive. Once a new employee has passed the interview stage, they undergo a nine-month period of intense training. They are not chosen initially for specific skills – the preference is for someone who shows the type of behaviour which would make “a good co-op member”, and they are then trained to meet the technical requirements.

“We look for someone who can put up with knocks and setbacks and disappointments,” Mr Cannell says. “It is not a bed of roses, it is very challenging – there is no one else to blame when it goes wrong.

Once newcomers have reached the ninemonth milestone, the entire membership votes on whether they should stay or go – and they need a sizeable majority to secure a job.

While members are owners, they can still be disciplined or sacked by democratically agreed procedures. This underpins the need for “co-operation” and instils appreciation of the benefits that a workers’ cooperative bestows.

To ensure that individual rights are protected, Suma is highly unionised, with 75 per cent of its members being in the Bakers, Food and Allied Workers Union. Mostly, the union works with the co-operative by helping them to resolve disagreements, and Suma union meetings ensure that the co-operative does not fall prey to self-exploitation – a traditional criticism of workers’ co-operatives by the trade union movement.

Workers’ co-operatives are not new, as there are around 400 in the UK. They can, however, be found in far greater numbers in Europe – particularly in Spain, Italy and France, where they are involved in making everything from aircraft engines to buses. Suma, though, is arguably the most successful example in the UK. “It is all about culture,” says Bob Cannell. “The Suma way is very powerful – it is about self-discipline and members are very aware of what their peers think about them. There is no boss authority to say you will do this – the ‘I’m telling you’ situation. Instead, people say ‘I’d like you to do this job’.

“Then, in most cases, people say ‘Oh yes please, that will make a change’. And we try to share out the less desirable work to make it easier.”

The lack of a boss figure is arguably the most difficult aspect for outsiders to get their heads around. When asked if

...not just customer satisfaction but a highly motivated workforce, says Bob Cannell

they have a chief executive, Bob Cannell’s standard reply is: “Well, we do. She just happens to have 150 multi-personalities.

Our challenge is to work out what she wants.”

Questioned as to whether he would ever consider working in a mainstream business, Mr Cannell’s answer is direct and to the point. “Only as the boss,” he says.

Suma lines up its ethical credentials

Product sourcing: All products are sourced with diligence, all are vegetarian and – where eggs are used an ingredient – they are free-range. Organic versions are used whenever possible. All bodycare, cosmetic and household products are cruelty-free.

Vegetarian: Suma is one of the few businesses in the UK that sells only 100 per cent vegetarian produce, from sweets to toothbrushes. That means no meat, no fish and no animal-derived nasties such as gelatin or rennet.

Environmental impact: Suma uses 100 per cent

renewable electricity, and motion sensors switch off the lights when workers leave a room. Suma reps share a hybrid car. The organisation retrieves plastic and cardboard packaging from customers and recycles what cannot be used. Food waste is composted, and there is an appointed Suma carbon champion to monitor its carbon footprint.

Fair trade: Suma has always acknowledged its responsibility to the people who grow the food, and follows the guidelines required of a licensee of the Fairtrade Foundation.

Tuesday May 28 2013 | the times

6

Business Insight

Regeneration

Giving enterprise a good name... the hand-holding champion leading a new revolution Faced with losing the pub or the village shop, the heart of your community?

Concerned that cuts to local services are harming you and your neighbours?

There is a solution

By Mike Cowley

M

ichael Fairclough’s formative years were rooted deep in the co-operative movement – although he was unaware of it at the time. It wasn’t until 2007, when he was appointed head of community and co-operative investment at The Co-operative Group and charged with stimulating the second wave of the radical co-operative revolution, that Mr Fairclough learned he had arguably been unwittingly predestined for the job.

That was when his father, Vincent – now 85 and proud of his son’s new role – began to recount anecdotes about his own early life. He revealed for the first time that he had started out as a Co-op delivery boy on a sit-up-and-beg bike, with milk and bread in the basket on the handlebars. Mr Fairclough also learned that the house in which he and his eight siblings had been brought up was a Co-op house, his father having become entitled to this after promotion to local manager.

It also unfolded that the Fairclough family had at first to make do with a tin bath in front of the fire, as the one house available with a bathroom went to a butcher, the Co-op being short of butchers at the time. “I knew [my father] had worked at the local Co-op,” Michael Fairclough says, “but never knew about the house or his time there.”

Although he has only heard these stories in recent years, Mr Fairclough’s

working life has always been bound up in one form or another with the co-operative ethos of supporting hard-pressed communities. His early career was spent working as a Roman Catholic priest in communities across the North West.

Then, after 14 years, he decided to leave the ministry and to study at the University of Central Lancashire – where he gained a first-class combined honours degree in journalism with history.

With the words from his lecturers still ringing in his ears – that there was little future for journalists – he first eyed teacher training, then accepted a role with Christian Aid, the international development agency. He thus again found himself working directly to help struggling communities both at home and abroad.

In 2003, Mr Fairclough applied successfully for a community development managerial post at United Co-operatives – and four years later United merged with The Co-operative Group in Manchester, at which point he applied for and secured his present position. This period coincided with a major upsurge in interest in co-operatives, due to the banking crisis of 2008.

What followed was a flight to trust, with The Co-operative Group seen by many as the pinnacle of integrity in an increasingly seedy commercial world.

Whereas the plc community had previously made pointed jokes about The Co-operative Bank being run by plasterers, nurses and ministers – due to its board being made up of democratically elected members – smiles soon left smug faces when the irresponsible behaviour of dodgy bankers came to light.

Suddenly, there was a realisation that ethics in business did matter, and that The Co-operative seemed to offer a set of values largely absent from a plc-dominated economy. People began to understand that co-operatives were not accountable to shareholders interested only in profit, but to their members – owners who did not allow the organisation to take irresponsible risks with other people’s money.

Hardly had the banking crisis started to slip from the headlines when The Co-

operative Group received another fillip in the form of austerity, when the need for co-operation became even more relevant as community services began to fall, one after another, by the wayside.

By this time, the co-operative movement had found itself very much back in fashion – and people such as Michael Fairclough saw that the time was ripe for the second radical revolution, akin to when the movement’s 28 founding fathers sought, in 1844, to address “the fundamental flaw in capitalism”. After all, the primary objective behind the first co-operative shop in Rochdale was not simply about making a profit – although that was necessary for survival – but to help liberate the local community from widespread deprivation and exploitation When Mr Fairclough took up his present position, the co-operative movement had been effectively flatlining in a world which had institutionalised the pursuit of wealth, with research showing that “the knowledge of the co-operative business model was dying”. Until that moment, the co-operative movement – which had always put aside money to stimulate new co-operative ventures – had relied on grants to achieve this objective. But these non-returnable grants had resulted in a failing dependency culture.

One of Mr Fairclough’s first actions was to persuade the values and principles committee, to whom he reported, to discontinue grants in favour of a more direct approach: plain and simple business advice, delivered through an initiative now known as The Co-operative Enterprise Hub. This evolved from a successful pilot run at United Co-operatives, which had replaced grant funding with “handholding” – providing the advice, training and guidance needed to support the creation and growth of sustainable memberowned businesses.

Now available for free nationwide, the services of the Enterprise Hub have, to date, helped more than 1,000 fledgling co-operatives operating across all sectors – from pubs to post offices, from retail to renewables – to get off the ground or grow, and so increasing the UK-wide total to around 6,000.

A chord has been struck, particularly in rural areas, with the Enterprise Hub’s services increasingly accessed by groups determined not to see the heart torn out of their communities as local assets and services face closure. The Enterprise Hub is also witnessing an ever-increasing demand from urban communities ravaged by the ongoing loss of funding for public services, where co-operation offers one of the few options for regeneration.

The Co-operative Group, then, is enjoying a new lease of life as the realisation dawns that the culture of profit for profit’s sake is unsustainable in a world of finite resources. Yet the question remains: how to get influential people to listen and to take the message on board?

“I’m not saying that co-ops are the complete answer,” Mr Fairclough says, “but they need to play a greater role in the economy going forward. Unfortunately, it remains too much a secret little world. It takes something like a financial crisis to make people discover how much co-operation and co-operatives contribute to the world globally.

“There are currently three times as many members of co-ops as there are shareholders in businesses – yet the news narrative is all about investor-owned companies, the plc model.”

And Mr Fairclough remains constantly surprised when he discovers that the public claims to have limited knowledge of co-operatives. “After all,” he says, “many people are involved in co-operatives without even realising that they are. Look at sports clubs and the like, where people naturally co-operate, contributing time, skills and finance to help the club – a community asset – thrive, even when it makes no profit.”

The thinking is changing. In a recent survey of students who were asked if they planned to become entrepreneurs, the respondents said they would be frightened

Greater Manchester TreeStation – one of the first of its kind in the UK

Unfortunately it takes a financial crisis to make people discover how much co-operatives contribute

the times | Tuesday May 28 2013

7

Business Insight

The ‘what’s in it for you?’ mentality is still an issue for co-operatives

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Michael Fairclough moved to end grants in favour of a more direct approach: plain and simple business advice to start a new business on their own – whereas to do it in a group, where they shared the risks, the capital, the support and the skills, would be much more attractive. The same research, however, revealed that more than three-quarters of the 18-to-24-year-olds asked had never been taught about co-operatives as a business model.

In response to this, and to make sure that the next generation is better equipped for the challenges that lie ahead, free teaching aids which bring co-operatives into the classroom have been added to The Co-operative’s Green Schools Revolution – a free education programme joined by more than 5,000 schools.

The Co-operative also works closely with, and is the lead sponsor of, academies in Manchester, Stoke-on-Trent and Leeds – fertile ground for the cooperative movement of the future. And

Michael Fairclough believes it is a perfect time to present “an old solution to a present-day problem”, with the move away from the financial crisis to an age of austerity meaning that conditions for establishing co-operatives have never been more opportune.

“Local communities are losing their assets and services, and neither national nor local government can come to their rescue any more,” he says. “So we have reached the stage where there is not just an interest in setting up a business that makes a profit; you have a whole new world out there, where communities want to set up businesses to save an asset or a local service. That is why, with the Enterprise Hub, we have moved away from regarding its service as simply business advice to it being a key tool in community-led regeneration.”

Closer to home, the upsurge in interest in the co-operative movement can be seen in no less a person than Mr Fairclough’s father, Vincent. “I think my dad worked for the Co-op at a time when co-operation as a force for good in society had lost its meaning and value,” Michael Fairclough says. “He was proud to work for the Co-op as a business traditionally on the side of people, but he didn’t see himself as a member-owner, therefore loyal to it.

“Now he has retired, he’s become the person he wasn’t before – ferociously loyal to the Co-op because he sees they had his long-term interests at heart. The only reason my mum and dad haven’t struggled in their old age is because of his Co-op pension and the dividends he receives.

“He drives us all mad in that when we help him do his shop – he’s given up his car now – he insists that we pass an Asda, a Morrisons and a Tesco to make sure we shop at the Co-operative – and that’s five miles further on.”

he Co-operative Enterprise Hub has been nominated for several business awards since launching in 2007, but it consistently receives the same criticism from awarding judges – that the application is weak when it comes to the question “What’s in it for The Co-operative?” The answers given – about community cohesion or the promotion of co-operation – tend to be “too woolly” for people unable think outside of the pure profit box.

“Few out there in the business world can understand this,” says Michael Fairclough. “Quite often there’s nowt in it for us, other than being faithful to our founding principles “The reason we invest in initiatives like the Enterprise Hub is because our members expect us to do it. ‘Concern for the community’ and ‘Co-operation among co-operatives’ are both principles enshrined in our business model. We’re not like other businesses, which if they donate £50,000 will have shareholders demanding to know why they are giving away their profits.”

Historically, Mr Fairclough says, the UK business community has had difficulty in understanding that The Co-operative has always “had a purpose beyond profit, recognising that some things are plainly unjust and need to be tackled”. To this end, community investment at The Co-operative usually comes with no strings or expectations attached.

When applicants to the Enterprise Hub have filled in a simple online form, the least they are offered is a minimum of one day’s advice – for free. And if and when the assessor concludes that their idea is viable, a further four days of advice and training is on the table, again at no cost, from experts drawn from all sectors and tailored to the needs of the specific group of applicants. The Enterprise Hub even provides a free PR service to fan the flames of commercial interest once the venture is up and running.

Naturally, the Enterprise Hub does screen any misguided applicants – if, for example, someone insists that they want to set up a co-operative on their own, then they obviously haven’t quite got the hang of what’s on offer. But for those who are successful, more than just advice is available.

There is currently a £500,000 Community Shares Fund

Green Valley Grocer, a community-owned co-operative in Slaithwaite which Enterprise Hub clients can access – and which, after appropriate due diligence, can be used to underwrite community share offers (so removing the worry of losing up-front costs) as community groups seek to raise money to save local assets and services. A £1.5 million revolving Co-operative Loan Fund is also available.

“Banks are nervous about lending to co-ops because they don’t always understand them,” Mr Fairclough says, “so we’ve set up this fund to make it easy for new co-ops to access start-up finance. Each year we top-up this fund to cover any defaults, but this rarely happens.”

The Enterprise Hub has also launched a new facility enabling small co-operatives such as football supporters’ clubs and village shops to access low-cost green electricity on the back of The Co-operative’s bulk purchase arrangements.

The question Mr Fairclough is most asked is whether co-operatives are good investments. “This depends on what you mean by a ‘good investment’,” he says. “Yes, many will make a profit and members will receive a dividend – this is particularly true of renewable energy projects at the moment, where some people are making a very good return on their investment, thank you very much.

“But the definition of a good investment can be very different.

To people in a rural community, investing in a co-operative to save a local asset or service would also be regarded as a ‘good investment’ – perhaps more so than purely financial gain.”

There are now around 6,000 co-operatives in the UK, operating across every business sector – with particular growth in new areas such as schools, community energy, sports clubs and rural services. The number of co-operative members in the UK has grown to 13.5 million, with the enterprises contributing more than £35 billion to the economy.

“Our vision for this country,” Michael Fairclough says, “is for third sector organisations – especially co-operatives – to play a greater role in the economy as we seek to rebuild trust in business. They put people first, and they have social and environmental aims at the heart of their business objectives. They need to be back in the business mainstream.”

Community groups interested in co-operative solutions to the running of businesses and services can contact The Cooperative Enterprise Hub at www.co-operative.coop/ enterprisehub.

Tuesday May 28 2013 | the times

8

Business Insight

Forum on mutual benefits

The case for co-op culture

Times are less hard for believers in this new business model, hears Michael Cape

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he breathtaking One Angel Square, which now dominates the view of North Manchester, is a fitting new home for the flagship of a movement once written off as old-fashioned and left in the shadow of the shareholder-driven plc camp. The co-operative model is now riding what many see as the second wave of a revolution that started 170 years ago in Rochdale.

The new headquarters for The Co-operative Group stands as living testimony that the co-operative movement is not only alive and well but on a roll, outperforming the mainstream UK economy for the past four years.

The spectacular £100 million, 14-floor building has also been designed to deliver some key green messages, making it not only Europe’s most sustainable large office building but also demonstrating The Co-op’s concern for its staff and for the community as a whole.

So its selection as the venue for The Times Forum on the co-operative movement came as little surprise. Nor did the names of the key “co-operators” who were chosen as delegates to put their movement’s case, illustrating that there is much more to the co-operative movement than just The Co-operative itself.

In a boardroom on the top floor, with its memorabilia showcases including a commemorative cup for the co-operative community fire brigade dating from 1886, Forum attendees were reminded of the

role The Co-op has played in Manchester over the years.

Under the constantly probing direction of The Times columnist Magnus Linklater, who chaired the Forum, a representative cross-section of the ever-expanding movement proved time and again that they were up to the challenge.

The chairman opened the debate by questioning why, in this time of economic hardship, the co-operative approach to business should be the one that succeeds.

The responses were not slow in coming.

“The co-operative gives ownership to those that are closest to the business,” said Ed Mayo, secretary general of Co-operatives UK. “That could be the workforce, the customers or the suppliers. When times are tough, those are the people you want onside. For when the economy turns down, it is tough for all businesses, co-operatives included. The advantage of the co-operative model is that it comes out strongest.

“We know that 74 per cent of the adult British public sees co-operative businesses as likely to act fairly. That is quite remarkable, because the comparative figure for stakeholder companies is only 18 per cent. So trust in British business has fallen off the cliff, but we do seem to have retained that trust in our sector.”

Bob Cannell, of the Suma workers’ cooperative and a representative of workers’ co-ops in Europe, took up the verbal baton. “All around Europe,” he said, “co-ops are withstanding the economic crisis better than the other models, and I think it is because it is in their interests to work harder and be more creative to keep the business going.”

Mr Cannell also pointed out that the co-operative approach offered significant benefits for the future over the plc sector.

“Whereas co-op businesses go to great

Bob Cannell: significant benefits lengths to retain people,” he said, “the problem with the rest of the UK is that we are wrecking the skills in the British economy. Trained people are going on the scrapheap and they will never come back again when things improve.”

Britta Werner, representing Unicorn Grocery, another workers’ co-operative, pointed to customer trust as being a key reason for co-ops being able to withstand the downturn better than plcs. “Even though things are difficult,” she said, “customers still want to see ethical and fair trade and know that’s what we stand for.

We are busier than we have ever been.”

A key indicator of the success of the co-operative economy came from Ian Rothwell of Co-operative and Community Finance, the body involved in funding co-ops through loans. “Back in 2008,” he said, “we were quite scared about a number of our loans – but though trade fell, they all made adjustments very quickly to ride out the situation. So our failure rate has remained around 3 per cent, which

for a loan operator lending to small businesses is very good.”

Kevin Marquis of Sustainable Enterprise Strategies insisted that people were turning to co-operatives because they had begun to appreciate that, in a world where profit has been king, the co-op wasn’t “just about profit”.

“Because of the crisis in capitalism in the private sector,” he said, “people are looking for new ways of doing business – and that’s why we are growing more quickly than they are.”

Magnus Linklater questioned whether or not the co-operatives saw themselves as part of the private sector, and Ed Mayo answered: “Yes, of course we are in the private sector. But we are a member-owned businesses, so we respond to our members’ needs, and so we are different in many ways from the investor-leading company model which will focus purely on financial return.

“One of the things that we are very keen to spread is awareness that there is a co-operative option here. Often when people approach business advisers, or they turn to accountants or banks or others, there is not a good knowledge that there are different business models. We believe that Britain should be open for all forms of business – not just co-ops, but family-owned businesses, sole traders as well. Business comes in many forms.”

Asked why there has been such a resurgence of interest in co-operatives of late, several delegates pointed to the internet as providing one of the answers.

Dave Boyle, of Principle Six, a consultancy which advises on setting up cooperatives, believes that the internet has boosted the co-operative movement not only in the UK but also internationally.

We do seem to have retained trust in our sector Dave Boyle: word’s getting out

New thinking, new address: One Angel Square

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escribed as an example of The Co-operative’s commitment to values, the new headquarters has been named as Europe’s most sustainable large office building. It has carried off several accolades even before most of the staff are in place – including sustainable building of the year at the Builder and Engineer awards, and project of the year at the 2013 Royal Institution of Chartered Surveyors North West awards.

With some 14 storeys above ground and two below, it stands 220 feet high, with 320,000 square feet of office space to eventually accommodate 3,500 staff. One Angel

Square has attained the construction industry’s top environmental ratings: BREEAM Outstanding and A-rated EPC (Energy Performance Certificate), the first building of its scale in the UK to do so.

It is designed to use half the energy of the current Co-operative Manchester estate and 80 per cent less carbon, leading to a reduction in operating costs of up to a third.

Built at a cost of £100 million, it is the first phase of NOMA, an £800m project that will transform 20 acres of Manchester city centre into a mixed-use development, providing 4 million square feet of office, retail, residential and leisure space over the next 10 years.

A pioneering combined heat and power and cooling system is fuelled by rapeseed oil grown on The Co-operative Group’s own farms, with excess energy exported back to the National Grid. There is a double-skinned building facade to minimise heating and cooling throughout the year, and to control glare.

Air is tempered through the use of geothermal Earth Tubes linked to the air-handling plant. Naturally, The Cooperative didn’t overlook its ethical stance during the building period. Local homelessness organisation Lifeshare was identified as an ideal charity for The Cooperative and sustainable construction company BAM to partner with throughout the One Angel Square project.

the times | Tuesday May 28 2013

9

Business Insight

Speakers put plus points for the model

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Forum line-up, from left to right: Dave Boyle, Bob Cannell, Kevin Marquis, Ed Mayo, Britta Werner, Dave Boston, Magnus Linklater CBE, Ian Rothwell, Angela Davies, and Peter Couchman “The original co-op movement was built on social networking, non-conformist churches, the Chartist movement,” he said. “Much as we have problems with Google, it has made the co-operative virus of today more virulent, and the word is getting out there.

Our new communication channels allow us to get the message out to social activists who are eager for something different. We don’t need to live in the next town now to give them the good news.”

The internet has also helped to carry the co-operative message into rural areas, where communities are increasingly faced with the loss of vital amenities such as the village pub or shop. This was a point picked up by Peter Couchman of the Plunkett Foundation, an organisation committed to helping local groups take over failing amenities.

“You’ve got a whole bunch of people discovering co-ops because they have a problem to solve and find that others, like them, have solved it by becoming co-ops,” he said. “Most of the people intent on saving village stores didn’t start off wanting to be a co-op, they just saw it as an answer after hearing on the internet about others in a similar position.”

The boom in co-operative schools – from one seven years ago to 450 today – was also given as an example of how the co-operative message was spreading out into the community. Dave Boston, a former headmaster and now chief executive of the Schools Co-operative Society, revealed how thinking about co-operatives had changed since the year 2000.

“At that time,” he said, “there was almost a complete absence of anything co-operative happening in school education, and many schools would ignore the co-operative alternative because they didn’t see it as a relevant.

“There has been a danger in looking at league tables rather than at the development of the child. What we are saying with co-operative schools is we are a value-driven organisation, with international values, and we want to develop the child as well as being successful academically.”

Angela Davies, business development manager of the Co-operative Enterprise Hub, was keen to point out that most people behind the new ventures – unlike in the plc model – didn’t qualify as what was normally thought of as the typical entrepreneur. She cited one example out of the 1,000 ventures which the Enterprise Hub has helped to launch since being formed in 2008.

A group of women from Belfast were on benefits before they got together and formed their own successful cleaning co-operative. They came from both sides of the religious/political divide and had been meeting together as a crosscommunity group.

Having talked about forming a cooperative, the opportunity arose to clean up after the MTV music festival. In a few hours, they assembled a workforce, agreed a contract and started work. After that, they contacted the Enterprise Hub and were given help and advice on how to start up a sustainable business.

So the Belfast Cleaning Society joined the growing ranks of the co-operative movement.

“I think a lot of lay people who come together to run a co-op are not what you would normally think of as entrepreneurs,” Angela Davies said. “But by coming together and co-operating, they can get a business off the ground. Our job at the Hub is to help develop the skills and talents of people in the local communities, latent talents that they may not have known existed.”

Yet despite the fact that all the delegates agreed that the co-operative movement now had real traction in the UK, there was concern that, after originally exporting the model, they currently lagged behind other areas, including the BRIC nations (Brazil, Russia, India and China).

“I do think we have a lot to learn from co-operatives around the world,” said Ed Mayo. “Some in the United States are booming in the high-technology and broadband sectors. Agriculture is one area we need to look at more closely, with farmers coming together to capture more of the food pound as they are famously in the armlock of the big supermarkets.

“Three out of four farmers in Scotland are members of an agricultural cooperative. In England and Wales those figures are much lower. We are also now seeing the entry into the UK market of large continental co-ops like Arla, and they are being successful” It was left to Magnus Linklater to sum up the Forum. “Absolutely fascinating – and, dare I say it, inspiring,” he said.

“People doing it for themselves rather than having people do it for them. I think I’ve heard something like that before from this chap called David Cameron talking about the Big Society.

“Well, we don’t actually hear about the Big Society any more – that’s been binned. However, it seems to be alive and well in the co-operative movement.

We may not hear more about the Big Society from the Government, but I suspect we’ll hear a lot more about the cooperative approach to business.”

On the eve of the Forum, the Cooperative Enterprise Hub won the community impact category in the Third Sector Business Charity Awards – a reminder of how co-operation is changing the world for the better.

he Forum debate heard case after case for the co-operative model as an alternative to the existing shareholder-led plc one, often at length and in considerable detail. So the chairman Magnus Linklater gave each delegate a final opportunity to sum up their positions. Here is what they had to say:

“I think there’s never been a better time to start a co-operative or to grow a co-operative.” – Ed Mayo, secretary general of Co-operatives UK.

“In a previous life, I was national president of another member organisation where, when you tried to encourage people to join in, the response was ‘What’s in it for me?’ I’m very excited about the thought of co-operative schools and having co-operation on the curriculum. It makes me excited about our future and what kind of a society we might live in when children learn about co-operation.” – Angela Davies, business development manager, the Co-operative Enterprise Hub.

“My elder son left university – no work, no employment, and he doesn’t particularly want to be a selfish entrepreneur. So he set up a co-op and he lives in a housing co-op. It seems to be the natural thing to him, because he knows about it. It’s not because he’s super-special or clever, it’s just because he knows how to do it because he has access to the information. I think that’s what people need.” – Bob Cannell, Suma Workers’ Co-operative.

“I’m resolutely optimistic about the ability of people to provide for their needs, because we’ve got everything we need already and now we’ve got an ability to source capital and information from each other – something that can take us to another level.” – Dave Boyle, consultant, Principle Six.

“I think the challenge for all of us is that we should be making sure that people see co-operatives as an alternative to another way of doing things, and spread that message because I think the rest of the world actually gets it better than we do.” – Dave Boston, Schools Co-operative Society.

“I think it’s really important that people don’t see the co-operative as just a little shop at the end of the road, but recognise it is actually a massive international movement.” – Britta Werner, Unicorn Grocery Workers’ Co-operative.

“You have to have communities come together and decide what they want to be as a community, and realise that they need to do it themselves rather than waiting for someone else to do it for them. This is an idea whose time has come and the co-operative option is to the best option they have got.” – Peter Couchman, the Plunkett Foundation.

“I have been involved in co-ops since the early 1980s, and back then people would set up a co-op and expect people to come to them and buy from them because they were a co-op. Nowadays, it is all about the financial viability, vital for any sort of co-op to survive and prosper. I think we’re seeing many more good businesses coming through than we did in the past.” – Ian Rothwell, Co-operative and Community Finance.

“My thought is simply that a co-operative is a better way to do business for the customer, for the member and for the community it sits within.” – Kevin Marquis, Sustainable Enterprise Strategies.

I’m excited for the future of society, when children learn about co-operation

Tuesday May 28 2013 | the times

10

Business Insight

Education

Top marks for idea whose moment has come – again The co-operative movement has been involved in education throughout its 170-year history – but schools are now opting for the model at an unprecedented level

By Stuart Rowa-Dewar

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hen Reddish Vale School in Stockport opted to go co-operative seven years ago, few people were aware that a revolution in education was under way. Since then, however, 450 schools have signed up for the ethical and mutual ownership approach, and the UK is likely to overtake Spain at the top of the international league table for co-operative schools – the Spaniards have 500 – before the end of this year.

Spurred on by two successive Governments having created a debate on the way forward for schools – with the question of choice being high on the agenda – the co-operative model is increasingly becoming a strong option.

This means that, as a co-operative school, all the members – teachers, parents, community representatives and students – have a say in its future, with co-operative values setting the ethos for the school, from the curriculum through to teamwork.

Former headteacher Dave Boston has become one of the driving forces behind the switch to the movement’s values, in his role as chief executive of the Schools Co-operative Society. With a family background steeped in sharing and caring – his great-great-grandfather was one of the founders of the Brightside and Carbrook Co-operative Society in Sheffield – Mr Boston chose to live his life by co-operative values.

“The importance of supporting each other to lead a good life was important to me,” he says. “And it was something that was natural for me to carry into my career in education. Co-op values are ideal for bringing up good citizens, and that’s what schools should be all about.”

While Mr Boston had used these personal convictions to improve the schools where he had worked, it was not until he became head teacher at Sir Thomas Boughey High School in Stoke-on-Trent that a major transformational opportunity presented itself.

This was at a time when the winds of change were blowing through education, as schools debated which direction they would take. Dave Boston saw the

potential to turn his school into a centre of business excellence, with the cooperative model – then almost invisible in schools – on the agenda.

“I didn’t want anything too narrow,” he recalls. “So we decided to go for business because we thought that would affect every area of the curriculum. I was also passionate that we should have a co-op dimension as an alternative to the plc model, so children would have a balanced input.”

As part of the required research, Mr Boston visited a school which had an impressive record in business – and asked one of the teachers what they did about the co-operative business model. The reply took him aback: “Nothing. It’s a Victorian idea long past its sell-by date.”

Dave Boston was quick to point out that nearly a third of the world’s insurance policies were co-operatives or were mutually owned, and the teacher responded by questioning how this could compare with the “fantastic advantage” which demutualised banks were giving to the country. “As they were the ones that led to the crash,” Mr Boston says, “I felt stronger than ever that schools should learn what co-operatives and cooperation can offer” – and he started to lay plans to take his school in that direction.

Coincidentally, around the same time, The Co-operative Group decided to sponsor six business and enterprise colleges – and so the Sir Thomas Boughey High School, seeing this as a short-cut to meet its objective, entered a bid. After an exhaustive process which involved a visit from the regional Co-operative Group board, the school got the nod.

The initiatives introduced with the help of the Co-operative College proved transformational. “When I went there,” Mr Boston says, “results were around 28 per cent A to C – and that was the old measure, without English or Maths.

When I left two years ago, we were at 70 per cent including English and Maths.

And just as importantly, I’m convinced that is sustainable because of the co-operative structure.”

The question of sustainability has been driving schools to take up the cooperative model. “Many heads want to leave a legacy of their achievements,” Mr Boston says. “More often than not, when a new head appears they take a different approach and that legacy disappears.

With the co-operative model, you have laid down a framework for your work to continue.”

To help schools make both the decision and the transition, The Co-operative Group helped to establish the Schools Co-operative Society. And Dave Boston, who by then had taken early retirement, became the first chairman of the board.

“By the time I left my school,” he says, “there were around 50 co-op schools and we started a debate between ourselves to see what should happen next. To be quite honest, at that time I thought it would be

Dave Boston, chief executive of the Schools Co-operative Society — the co-ordinating body for the hundreds of co-operative schools across the country — and formerly headteacher of the Sir Thomas Boughey High School, one of the UK’s first co-operative schools are co-operative converter academies; there are multi-academy trusts; there are sponsor academies, with four academies sponsored by the largest consumer cooperative in the UK, The Co-operative Group itself.

The Schools Co-operative Society has been able to achieve all this within the existing legislation. And it is still on a roll. “I fiercely believe,” says Dave Boston, “that schools shouldn’t do things just to get themselves up league tables. They should do things to make children better, and if that moves you up a league table then great – but we need good citizens.”

There is a scarcity of statistics to show how well co-operative schools are doing in terms of education – or even in behaviour. They simply haven’t been around long enough. But results from the first handful of co-operative schools indicate “a significant improvement” in results, with parents clamouring to send their children there. And Ofsted appears to be more than happy with what it has seen.

Dave Boston knows the jury is still out, but feels that the co-operative solution has already proved itself to be “one of the tricks in the bag”, as he puts it. just a few people like me who thought it was brilliant, but not many more.”

He was wrong. The fact that going down the co-operative route involved ownership had struck a nerve. Even the local education authorities were happy to come on board. People liked the idea and voted with their feet.

“If you involve people,” Mr Boston says, “then there is a much better chance of them wanting to do well for it, as it belongs to them. It has a particular appeal to teachers because they are used to cooperation, with the added bonus this time that they have a real say.”

Involving people evidently works, as the Schools Co-operative Society has evolved to a point when regional structures are being formed. Clusters of cooperative schools are appearing almost everywhere. The entire special school sector in Devon has gone co-operative, and the situation is on the verge of replicating itself in other areas.

It appears that co-operative schools are just as likely to spring up in inner cities as in rural locations. There are serious numbers appearing not just in Devon and Cornwall, but also in Yorkshire, Humberside and the Midlands. And there are options as to the way they do it.

There are schools which opt for cooperative trust status on their own; there are clusters of schools in trusts; there

The Co-operative Trust model – what it means to a school

The school remains part of the local education authority family of schools.

A school adopts co-operative values, making the values work for them and their communities.

The school joins a strong national network led by values and by the schools themselves.

The land and assets of the school are transferred into the co-operative trust and are safeguarded for the community, as with any conventional trust.

A co-operative trust school is similar to a church school in terms of status.

It means that, as members of a co-operative, teachers, parents and the wider community become stakeholders in the school – so in effect they own it.

As stakeholders, parents have a voice – they are involved in discussions, rather than simply being told (or not told) about what is happening when their children come home.

There are the unquantifiable – for the moment, at least – benefits of embracing the co-operative values of transparency, equal shared ownership, ethics and mutual respect. A return, then, to what many see as the old values.

All schools opting to become co-operatives must sign up to work on co-operative values.

“The co-operative option is not a soft one,” says Dave Boston. “But it works because it is all down to co-operation.”

the times | Tuesday May 28 2013

11

Business Insight

Housing

The feeling is mutual...

Local authorities are seeking better ways to improve services while keeping them in some form of public ownership

By Michael Cape

R

ochdale is best known – although fans of Gracie Fields might dispute this – for being the birthplace of the co-operative movement, and the town is now witnessing the start of another social revolution. The local authority has handed over the vast majority of its remaining social housing stock – almost 14,000 properties – to an external body which has brought tenants and employees together for the first time.

Known as Rochdale Boroughwide Housing (RBH), its strategic direction will be influenced directly by the people

at the housing coal-face – those who live and work there. They will do this through a 23-strong elected committee, known as the representative body, in association with a management board drawn from the ranks of housing and business experts.

Just how much influence the representative body will have can be judged by the fact that, ultimately, they could sack either a board member or the entire board. Not that this means Mrs Jones at number 17 – if she happens to be on the committee – will be able to have immediate access to the new roof she wants.

Nor will it mean that the foreman joiner working on the housing support team is going to be able to vote himself a pay rise.

The key to understanding what will happen can be found in the meaning of public mutual itself. Clare Oakley is The Co-operative’s general manager for public service mutuals, whose role is to work with local authorities to help transfer public services into mutual bodies, and she has supported the Rochdale initiative.

“Mutual principles have particular resonance in the public sector where there is

an underlying sense of public purpose,” she says. “Members of public service mutuals – who can be employees, users or multi-stakeholders – are democratically involved in the governance of the organisation. Successfully run, they unlock energy and ideas and provide everyone with a sense of purpose and ownership.

“All co-operatives are mutuals, but not all mutuals are co-operatives. RBH is close to being a co-op – it is part of the co-operative movement and shares its one person, one vote [approach] and its ethical values – but in one key way it is different.

“Whereas a co-operative trades as a business and return profits to its ownermembers in the form of dividends, RBH is established as a community benefit society, where all the benefits accrued by it as a mutual go back to the community as a whole. This type of mutual is not about individual members receiving individual benefits.”

It would appear that with this type of public service mutual, self-interest goes out of the window – then comes back in again through the door in the form of a benefit as a member of the community.

After having delivered the reason-to-bea-member message to both tenants and employees – mailshots, people knocking on doors to explain, etc – early results have been encouraging.

Some 76 per cent of employees have signed up to the mutual, while around 2,000 tenants have already joined – and recruitment is ongoing. This is a clear indication that people see being a member of a mutual which looks after where they live and work as having the potential to make their lives better.

Clare Oakley, public service mutuals manager at The Cooperative — working to offer a one-stop shop for expert advice and practical assistance to those looking to establish alternative ways of delivering public sector services

Although the council delivered its housing stock into the care of the RBH mutual in March 2012, it will not become a true mutual until next month. Until now, under transitional arrangements, the representative body has operated in shadow mode.

But even at this early stage of development, the model is already generating excitement in Rochdale, along with increasing interest from other local authorities around the UK. “People know Rochdale for its heritage as the home of the co-operative movement,” says Colin Lambert, leader of Rochdale Borough Council.

“I am proud that this generation of Rochdale people has such an opportunity to lead the development of new peoplebased public services. I believe the pioneers would have approved.”

For further information, visit www. co-operative.coop/corporate/PublicService-Mutuals-/

What’s yours?

The whole pub They’re the heart of the community, but with 16 pubs closing each week, Britain’s way of life is in need of co-operative rescue

By Jason Reid

T

he 17th-century stone-built George and Dragon, in the tranquil Yorkshire Dales village of Hudswell, population under 300, was not just another rural pub to its regulars.

It was a beacon of light of a winter’s evening on what is a poorly lit main street, the place where locals gathered to play dominoes, to take part in quiz nights and to relax over a pint or a gin and tonic.

Wealthy residents were happy to rub shoulders with the less well-off in an environment that is quintessentially British – as anyone who has been to a replica pub in Spain will testify.

One of the many reasons for the George and Dragon’s popularity was simple: it was the only pub in the village. So when the bank foreclosed on the couple who were running the free house at the time of the

credit crunch, and the shutters went up, it ripped the heart out of the community.

Not that this was unusual at the time, as pubs were closing at the rate of 52 per week – a figure that has now slowed to a still unacceptable 16 – but when it happens in your own back yard, being simply another statistic offers no balm.

While there was an attempt to breathe some life back into the stricken community by holding quiz nights in the village hall, the patient literally found itself in a nil by mouth situation. So a group of regulars decided to buy the George and Dragon and run it as a community pub – and, after exploring all the options, only the co-operative model offered the desired solution.

Increasingly becoming the preferred option for communities wishing to save their assets in these turbulent economic times, a co-operative not only opened a channel for the raising of funds but also guaranteed the hand-holding required to ensure that the project was a success.

The George and Dragon was to become only the second co-operative pub in the UK, but many more have now opened or are in the pipeline. The saviours of the Hudswell local registered themselves as an industrial and provident society, prepared a business plan, issued a prospectus and raised almost £250,000.

The group’s enthusiasm permeated out into the village and the surrounding area,

Launch of the community share offer: villagers, residents and wellwishers dreamt of the pub offering a warm welcome again after having stood empty for 18 months

When the keys were dropped back in my hand the soul returned to the village

attracting hundreds of new members to share the co-operative dream by becoming co-owners with a vested interest in the pub’s success.

Adherence to the co-operative model – one member, one vote – was the leveller that prevented those choosing to invest more than the minimum of £500 (up to a maximum of £20,000) from taking control. Sufficient funds were raised to enable the co-operative to buy the pub – and then to refurbish it – without debt.

No debt ticked one of the criteria boxes laid down by the founding group – and the other requirements were also stringent.

The pub was not to be run by committee, but by professionals who would lease it as their own business. People who bought shares were to be made aware that there would be no significant financial reward from being co-owners of a building that was likely to double in value.

Guidelines were also laid down for the mother-and-daughter team who were

eventually appointed by the co-operative to host the pub. No jukebox, no television and no pool table were key to ensuring the objective of the George and Dragon being a traditional Yorkshire Dales pub.

It reopened in 2010 amid a blaze of publicity, with William Hague, the local MP who had just been appointed Foreign Secretary, officiating. Ade Edmondson also featured the pub on The Dales TV programme.

Today, after three years of trading, the George and Dragon is even more welcoming. The co-operative influence has seen one room become a village shop run by volunteers, there is also a library, and the land behind the pub has been given over to ten community allotments.

“When the keys were dropped back in my hand, it was like the soul had returned to the village,” recalls founder member Paul Hetherington. “But it wouldn’t have happened without co-operation.”

TAKE YOUR CO-OPERATIVE FURTHER Get free advice and training from The Co-operative Enterprise Hub to help you set up and grow your co-operative. www.co-operative.coop/enterprisehub

Photo: The Green Valley Grocer, a communityowned co-operative in Slaithwaite