Without a new model of growth, we'll be just another government of empty promises
Jim McMahon MP, chair of the Co-operative Party, in October 2024 (Credit: Alan Keith Beastall / Alamy)
4 min read
Every post-war government has, in some way, promised the country economic growth. And yet today we have some of the worst and most persistent regional inequalities in the developed world.
For many parts of the country, growth has been a distant concept, not something that has come to their town centre or high street. Wages have been stubbornly stagnant; living costs have risen; jobs and opportunities have been concentrated unequally. Meanwhile, austerity has stripped away social infrastructure.
The government is right that without economic growth we cannot unlock the improved public services and increased living standards people desperately need to see. But the Prime Minister is also right to argue that how we grow the economy – not just how much, but who and where benefits – is crucial.
Without a new model of growth, we risk being just another government in a long line of empty promises
For this Labour government to deliver growth that counts, we must be different from every other predecessor making these promises. We need to try new things and pursue options for growth that have never before been tried. This mission requires creativity and energy, and a willingness to look beyond traditional economy orthodoxy.
I believe an unprecedented focus on the role of alternative business models could and should be part of the answer. Worldwide there are three million co-operatives made up of over a billion members, the largest 300 of which report a total turnover of $2,409.41bn. France’s co-operative sector is six times the size of ours; Germany’s four times the size. Despite the glaring lack of support, the UK co-operative economy still manages to employ a quarter of a million people, made up of 16 million members, with a total income of £42.7bn.
Co-operatives are some of the most stable businesses in our economy – proven to be more productive, more equitable and more resilient than comparable models. Owned by members or employees and rooted in communities, they are powerful vehicles for grassroots economic growth, keeping wealth and power local.
There is huge potential for co-operatives to drive genuinely inclusive growth, but they currently operate in a business context that is indifferent at best and hostile at worst. Here in the UK, we spend many billions of pounds on business support but nothing on co-operative support. Financial regulators, key in ensuring a fair playing field for business, were not asked to consider the role of co-operatives until last year. Unlike other business models, co-operatives have laboured under legislation designed in the 1960s.
The co-operative movement is full of excitement and energy for the role we can play in building the type of growth our communities want to see. In my debate in Parliament today, we heard about the potential for co-operatives to deliver better social care, create fairer financial services and play their part in a clean energy transition. There is an entire movement standing ready to play its role in a fairer, more inclusive economy. But it needs support to do it.
Labour pledged to double the size of the co-operative and mutual sector. This was a significant step: for the first time in many decades, we have institutional recognition of the model’s importance. But to reach that goal, and to unleash co-operative power to help drive growth from the grassroots, the state must be much more active in setting the conditions for co-operative growth.
The government should, at a minimum, be looking to create an encouraging legislative and regulatory environment for co-operatives, along with proper investment in co-operative business support. But our ambition must be much greater. The government has announced a new Co-operative Development Unit, a positive step. It should also be looking to support the growth sectors set out in the industrial strategy with co-operatives across supply chains, to ensure wider sections of the population are able to share in the success of high-growth industries.
This isn’t just about meeting a manifesto commitment. It’s recognising that, without a new model of growth, we risk being just another government in a long line of empty promises.
We have the opportunity to be bolder and braver than ever before, to accept the failures of the past and look ahead to creative new solutions. Growth is not just an economic goal – it is a moral duty to every community left waiting for change. It is our responsibility to deliver it.
Jim McMahon is Labour (Co-op) MP for Oldham West, Chadderton and Royton, chair of the Co-operative Party and former minister for local government and English devolution
