Going for ever: ‘industrial and provident societies’

Tomorrow we say farewell to the Industrial and Provident Societies Act, the legislation which has provided a legal framework for the vast majority of Britain’s coops for over 110 years.  We welcome instead the new Co-operative and Community Benefit Societies Act.

It was two early cooperative pioneers (both members of the group known as the Christian Socialists) J M F Ludlow and Edward Vansittart Neale who shepherded the first IPSA through Parliament in 1852, giving cooperative societies at least some of the legal protection which they needed to develop.  In hindsight it might have been even better if Neale and Ludlow could have arranged for the legislation to be called the Co-operatives Act but, never mind, we’ve learned to live with ‘industrial and provident societies’ over the years and in fact I will almost mourn their disappearance into history.

Don’t get too excited,  however: the new law is simply an act consolidating existing legislation, and won’t introduce any new powers for cooperatives.  I wrote about the change earlier in the year for the Guardian: it’s here, if you’re interested.

What future(s) for Britain’s credit unions?

I’ve been looking at the HM Treasury document published last month as part of its public consultation on the future of credit unions in Britain.

The government is asking, among other things, about credit union legislation and the future of the common bond concept.  Or, in short, it’s asking what needs to be done to make credit unions more secure and more effective.

I do admit to the occasional worry about our credit unions.  I worry on the one hand that, as the trend grows for them to become bigger and more professional, they are heading off in exactly the same trajectory as our building societies, where member ownership became little more than a legalistic formality.  I worry about my credit union no longer feeling as though it is ‘mine’, or rather ‘ours’.  But then conversely I worry that strategic oversight by elected volunteer boards isn’t really up to the job of looking after its members’ money in a properly efficient way. A friend complained the other day that she’d been waiting a month for her (and my) credit union to sort out a problem with her account.  The letter she’d sent had brought no reply.

I suppose I have another worry, too, and that is ironically caused by the very enthusiasm with which the government recently has been embracing the credit union idea, as the answer to everything from loan sharks to small business finance needs. As coops around the world know very well, too much top-down influence (and funding) doesn’t always produce the most appropriate answers.

It’s interesting is to see what we can learn from countries where the credit union movement is more developed, so it’s fortuitous that the latest issue of the Journal from the Society for Co-operative Studies which has just arrived through the post has a useful piece by Paul Thompson on credit unions in the US.  What’s particularly interesting – and perhaps slightly depressing – is to see how closely the three challenges Paul identifies for the US movement mirror what I see as the issues here too.

The first, according to Paul, is the challenge of fostering credit union philosophy (he calls for credit unions to have a ‘philosophical compass’ to keep them on the right path of providing honest reliable service to members, and avoiding staff convenience and self-aggrandisement).

Secondly, he identifies a challenge of maintaining credit union democracy  as they grow in size and lose direct contact with members.  And thirdly he detects a governance challenge for management boards (“During the past 40 years, boards of directors have been playing catch-up in terms of understanding their credit union’s business”).

Back to the UK:  the government’s consultation period lasts until September 1st.

Another cooperative bank demutualisation

Vivian Woodell of the Phone Co-op has drawn my attention to a news report of the proposed stock market flotation and demutualisation of a small cooperative bank in Melrose, Massachusetts (here). You’ll see that Vivian has also added his own comment on the webpage, making the point that “the fundamental purpose of a shareholder-driven business is to make money for shareholders, whereas the purpose of a co-operative is to serve its members”.

Capital has been identified by the International Co-operative Alliance as a key issue for the global cooperative movement to debate, and the ICA’s absolutely right.  We have lost too many cooperatives (especially financial and agricultural cooperatives) over the years to the private sector because traditional equity capital seemed to be the only new source of capital on offer.  We need some innovative solutions for capital for coops, including taking a new look at the opportunities for member-provided investment capital.

Cooperative data should be free to search

As the business press reported earlier this week, the government intends to make company data from Companies House free to access from next year. This is a welcome development, and will make it easier to get information on companies, their activities and who owns and runs them.

What about cooperatives? As I mentioned some time back, data on coops and mutuals are held separately, at the Mutuals Register run by the Financial Conduct Authority, and the fees (£12 for an electronic document, for example) are very significantly more than Companies House’s current equivalent fees.

We should be pressing for cooperative records to be free to search, too. Ed Mayo at Co-operatives UK tells me that his organisation has long called for equal and easier access to cooperative data and that they’re monitoring the current development. Time to get lobbying again, I think.

The state of the British coop economy

This year’s version of the facts and figures booklet from Co-operatives UK The UK Co-operative Economy is now out. It’s a useful reminder that there are more coops out there than just the troubled Co-operative Group, even if the Group remains very much at the top of the table in terms of size.

You do have to interpret the data. Britain’s worker-owned coops are shown as, together, turning over £10.7 billion, but read more carefully and you’ll find that almost £10.2 bn of this is the trade of one business, the John Lewis Partnership, which is arguably only a sort-of-cooperative-and-not-a-coop-at-all-if-we’re-being-very-strict.

It is of course famously difficult to define the cooperative economy. Nevertheless if John Lewis and some very conventional farming businesses  get admitted, then shouldn’t the UK’s remaining mutual insurers also get a look in? And what about the building society sector whilst we’re at it?

Suma is ‘coop of the year’

I’m not necessarily a great fan of prizes and competitions but I have to say that the workers’ cooperative Suma, based just a few miles away from here close to the M62 motorway, fully deserves their award from Co-operatives UK as Cooperative of the Year. I reported on their recent successes in a blog earlier this year (you’ll find it if you look back to my entries for mid-March).

As well as Ed Mayo from Co-ops UK the current TUC President Mohammed Taj visited Suma last week to present the award. The press release I’ve been sent includes a quote from Suma’s Bob Cannell, which is interesting if like me you’re interested in the relation between coops and trade unions.

“Suma has had a BFAWU [bakers’ and food workers union] branch for 30 years now and around 80% of our worker members are union members,” Bob is quoted as saying. “Union advice and support has proved invaluable over the years, for individual workers and for our co-operative, demonstrating that worker co-operatives and trade unions can work together for mutual benefit; it has certainly worked for us.”