the problem with Tory mutualism

Policy Network are running a series of essays on the topic of mutualism, specifically about how the Left can reclaim this territory from the Conservatives. I've contributed this essay, making the argument (again) that mutual ownership is not simply a means of decentralising power and accountability in the public sector, but an alternative business model in the private sector. Here is a chunk:

What’s interesting about the swift reframing of the crisis, from a problem of bad private investment to one of bad public spending, is that it has been perfectly mirrored in policy debates about ownership and governance. References to ‘John Lewis public services’ give some hint of how warped the Coalition’s stance on mutualism has become: they want more ‘John Lewises’ in the public sector, but make no discussion of ‘John Lewises’ (or for that matter, building societies, employee-owned firms, consumer co-operatives and so on) in the private sector. Only two years ago, the state was rescuing society from the greatest failure of financial markets in 80 years, whereas now it is taking advice from business leaders about how to reform itself. Two years.

...

Politically, it would not be unreasonable for Labour to depict the Coalition’s public sector mutualism as two-step privatisation, unless the government can give extremely strong assurances about the asset lock. The public may just remember that Tories have a record in this area, giving building societies the right to de-mutualise in the 1986 Building Society Act. Bradford & Bingley and Northern Rock both seized on this opportunity, and the rest is history.

It would be wrong for Labour to let the Conservatives dominate this agenda for public services, not least because of the important precedent of the Foundation Trusts. But equally, the Left cannot be dragged into a debate that is limited to public service reform. If mutualism blurs the distinction between public and private sector, there must be progress made in both directions.  

 

Comments

[Dick Pountain]

Absolutely spot-on. "Private-sector mutualism" should be the long-sought Third Way between unregulated capitalism and state socialism. It won't be simply conceded by shareholders giving their companies to the workers for Christmas though - getting there will require a political campaign *at least* as long and hard as that for the Welfare State. It would require fundamental amendments to the structure of the limited company and the Companies Act to make it more or less compulsory (eg.as director's various responsibilities are now). That would be a tough campaign...

[Oranjd]

Labour could borrow from the rhetoric of Thatcher and make "a right to own" part of its offer to the electorate: http://www.labourlist.org/ideas-for-electability-the-right-to-own.

[Dick Pountain]

Absolutely. It's one of the few winning offers Labour can make since Thatcher demolished their base. Most middle-class people are now instinctively wary of anything that sounds like socialism, but not so of owning part of their own firm. (And it puts current proprietors on the spot)

[Graham Mitchell]

A positive piece (the essay for Policy Network), and certainly Labour would do well to do some serious work in partnership with the cooperative and mutual sector to develop a policy framework that would facilitate the wider adoption of cooperative and mutual business models. Labour does need to do its homework on this and does need to work with the lead organisation for the sector in the UK, that being Co-operatives UK, which is the trade body for the movement (not Mutuo, as stated in your piece, which is in fact more of a think tank and policy forum than anything else, although it does bring together a broader constituency).

Note that cooperatives and mutuals are very similar, but are not the same thing.

A key issue, which your piece misses, is that other than Industrial and Provident Society legislation there is no legal definition in the UK as to what a cooperative is. This is a double edged sword. On the positive side it enables a great range of flexibility in terms of the legal structures employed by cooperative enterprises. As well as the Industrial and Provident Society (IPS) model commonly used by traditional consumer cooperatives and now widely used to support community share issues, cooperatives can also be companies (both share and guarantee), LLPs, CICs, etc. On the downside it makes it difficult to define- for example - tax breaks that would be beneficial to cooperatives and mutuals without excluding one or more important sub-sectors or types within the broad cooperative/mutual sector.

There is a real interest in cooperative and mutual solutions right now, and this should be supported. A key issue is the capacity to support large numbers of new cooperatives and employee owned firms being created. The number of business development professionals in the UK today who really know what they are talking about in this field probably numbers less than 200 currently. This needs to be scaled up by at least one order of magnitude, and as you correctly point out the financing needs to be made available to support those new enterprises. Without quality expertise, early stage failure rates will soar and the model will quickly gain a reputation as being weak.

[Will Davies]

Graham - thanks for this helpful addition. Definitional issues are problematic here, as people quite quickly become very confused once you start trying to nail down the different models. Some venn diagram is required. I think I've taken the broadest definition of 'mutual', as including 'co-operatives' within it. Surely 'mutual' is a woolier category than 'co-operative', and can therefore be used loosely to describe organisations without external shareholders, but which are nevertheless owned by their 'members' (whoever they may be). Co-operatives would therefore be a form of mutual...