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Lesser-Known Co-op Party Could Shape A “Key Pillar” Of Labour’s Economic Plans

In 2022, Rachel Reeves pledged to double the size of the co-operative sector if Labour get into government (Alamy)

6 min read

Co-operatives should be seen as a “key pillar” of Labour’s economic plans, Chair of the Co-operative Party and Labour shadow minister Jim McMahon has said.

With a general election due to be called by December 2024, Labour is still way ahead of the Conservatives in the polls, and the leadership is preparing for the increasingly real prospect of entering government for the first time in 14 years. This means the Co-operative Party is having to do the same. 

The Co-op Party is one of the least well-known political parties in the UK, but they have 25 MPs in Parliament, 6 of whom are in the Labour’s shadow cabinet and 11 of whom are shadow ministers. Shadow cabinet ministers Anneliese Dodds, Steve Reed, and Jonathan Reynolds are just a few of the top names. 

Recent analysis by the Co-op Party found that its percentage membership growth since the last general election has exceeded that of all the other major parties, including Labour. 

In an unusual arrangement, the Co-operative Party is an independent political party which has been signed up to an electoral pact with the Labour Party since 1927, where the parties agree not to stand candidates against each other and candidates selected by members of both parties contest elections using the description of Labour and Co-operative Party.

McMahon, the Co-op Party's chair, told PoliticsHome that the party has a “visibility issue”, but that it was now increasingly important for the party to make more of a name for itself. He described the co-operative movement as “ideology in action” where ordinary people can have a “bridge” into politics, at a time when there are high levels of dissatisfaction with the government and political system as a whole. 

Rather than having an all-encompassing manifesto, the Co-op Party focuses on a few specific policy areas, particularly on community ownership and tackling increasingly high rates of retail crime. It advocates for socially responsible business through the practice of retail and industrial 'co-operatives', which are democratically controlled by their member-owners with each member having a say in how the business is run. The Co-operative Group is one example of this practice in the UK, which has more than 65,000 employees working across a range of services.

“The co-operative movement really does come into its own if you think about the way that the economy has been hollowed out and think about the brands that used to be on the high street that aren't there anymore… Wilkinsons or Debenhams, and in industry how many family firms have gone to the wall,” McMahon said.

“Quite a lot of decisions have been taken by multinational organisations that don't have that community grounding. When they're making decisions, they may well be correct globally, but they may be disastrous for local communities when that’s the foundation of the local community's economy.”

On Thursday, Labour hosted a business conference with around 400 corporate figures, charging attendees £1,000 a head. Shadow Chancellor Rachel Reeves announced a surprise pledge to cap corporation tax at its current rate of 25 per cent if Labour wins power this year.

As Labour woos big business, does McMahon see this as a compromise on the co-operative values that he says will shape the direction of the party?

“It's not co-operative businesses versus other businesses, what the co-operatives want is to be able to operate on a level playing field,” he said.

“The Co-operative Party is very much part and parcel of the mainstream business offer, it's just that we want to see more of the co-operative sector represented in that.”

McMahon said that co-operatives should be considered as a “key pillar” of any economic offer.

Jim McMahon
Jim McMahon has been chair of the Co-op Party since 2020 and has held numerous shadow ministerial roles (Alamy)

“If you want a resilient economy, the fact is that co-operative businesses are more resilient and more productive than their standard counterparts,” he explained.

“They're twice as likely to survive after five years of trading than a non co-operative business. They also have small pay gaps, whether that's a gender pay gap or ethnicity pay gaps, because they are owned by their members.”

In 2022, Reeves pledged to double the size of the UK’s co-operative economy at the Co-op Party conference, and set out plans for a national wealth fund to give the public a stake in investment. McMahon said that incorporating co-operative values continued to be a core part of conversations around Labour’s policy development. 

The next step is figuring out how, which McMahon said the Labour and Co-operative parties were still in “negotiation” on, with Labour considering how expanding the co-operative sector will fit into the overall policy programme. 

“It needs a wholesale review of barriers to existing co-operatives: You can create 1,000 new ones but you've also got to help the existing ones grow, to train more and to generate that turnover in the economy,” McMahon said.

“The second bit is how do you educate the wider business community and entrepreneurs and local communities that this is a model that should be considered.

“You've got to go through efforts to bring people with you, but there are regulatory barriers that we need to review so there's a level playing field, things like borrowing requirements and capital requirements. You wouldn’t see it on a pledge card. But actually it's quite important because it is a barrier to growth in the creation of new co-operatives.”

McMahon, who is also Labour Shadow Minister for English Devolution and Local Government, said that it was vital that the expansion of the co-operative sector was led on a local level, with co-operative development agencies in each region.

Plans are being considered by the Department for Levelling Up, Housing and Communities to encourage councils to sell publicly owned buildings and other assets without government approval to plug budget shortfalls, according to the Guardian.

The Co-op Party chair said that this ignored how important such assets were to local communities. He added that Labour was currently looking into how to change the funding model for local government in order to solve the deeply-rooted issue of local authority finances.

Community ownership is becoming a more prominent feature of Co-op Party campaigning, a practice that McMahon believed was being “lost” across the UK.

“There needs to be a mechanism where first of all there can be protection if there is something that has importance to a community, like something with heritage… it could be a pub or shop that has character and a sense of place, there should be a protection for that,” he continued.

“Secondly, if what happens inside a place is the glue that holds the community together – a community centre, a library, a Sure Start centre – there should be protection for that in law. Following the protection there needs to be a right to buy.”

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