This Q&A was first published in STIR Spring 2022, along with an excerpt from Les Huckfield's new book How Blair killed the co-ops: Reclaiming social enterprise from its neoliberal turn, published in 2021 by Manchester University Press.
The Q&A has since inspired a 'Right of Reply' between Les Huckfield and Co-operatives UK, whose response we have published below.
JGF Your new book How Blair Killed the Co-ops explores a politically formative period from 1998-2002, which you claim accounts for a significant shift from democratic control and local accountability, towards opening up the third sector to social investment and marginalising an existing democratic enterprise sector. Can you briefly recap this period and its legacy?
LH The critical period between 1998 and 2002 has either been missed or misinterpreted by most academic and other commentators. Social Enterprise London (SEL) was first registered on 2nd February 1998 from the merger of London Cooperative Training and London ICOM (Industrial Common Ownership Movement). Yet by the time of its first Annual Meeting in October 1998 any mention of co-operatives had almost disappeared. Its first Chief Executive, Jonathan Bland, quickly moved SEL from co-operative and mutual structures towards more loosely accountable social enterprises. After the General Election of June 2021 significant policy input from Bland and others to Patricia Hewitt, who became Secretary of State at the Department of Trade and Industry (DTI), led to the formation of a Social Enterprise Unit in October 2001 and ultimately to the DTI’s “Strategy for Success” in July 2002 as the Department’s first public policy statement on social enterprise. A last minute intervention from Gordon Brown meant that social enterprise surpluses would be only “principally reinvested” in the organisation, thus paving the way for external private investment. In September 2002, the Cabinet Office ‘Private Action Public Benefit’ sought to change third sector governance structures and the Treasury’s ‘Cross Cutting Review of the Role of the Voluntary and Community Sector in Service Delivery’ essentially formed a technical assistance manual for third sector procurement funding. Alongside this, Peter Lloyd’s further consultancy work for the Social Enterprise Coalition on funding and procurement meant that in the four years between 1998-2002, beginning with the merger of London co-operative organisations committed to democratic control and ownership, the basic elements of a third sector prepared for procurement and tendering in a competitive market were in place.
JGF While the book covers the commercialisation of the third sector and democratic enterprise, and the declining political capital of this approach within national and local government, you argue that this is largely limited to the ‘anglosphere’. Can you explain what is happening in places like mainland Europe and Quebec during this period?
LH Surprisingly, this UK third sector journey to a procurement market was directly contemporaneous with a totally different direction in Quebec and France. In 1995 in Montreal the Women’s March Against Poverty and in 1996 the Women’s March for Bread and Roses led to the formation of the government-funded Chantier de l’Economie Sociale as a new social economy framework. In France in 2000, a significant report from Alain Lipietz MEP to Martine Aubry as Minister for Employment and Solidarity recommended a new Social Economy for France, based on Work Integration Social Enterprises and the French Revenu Minimum d’Insertion work placement subsidy. Since Aubry is the daughter of Jacques Delors, who as President of the European Commission promoted the European Social Chapter, this was an important report.
These directly contemporaneous developments are rarely mentioned in any UK contribution. In contrast, the UK witnessed:
These ‘Third Way’ developments were influenced by Present Bill Clinton’s ‘workfare’ proposals in his 1996 Personal Responsibility and Work Opportunity Reconciliation Act, which sought to transform the welfare state. The Act was hailed as “the biggest shift in social policy since the Depression”, designed to save $55BN in federal expenditures.
For the UK, there was thus considerable “Anglosphere” influence, which is still evident in current policy for Social Enterprise UK, Cooperatives UK, and latterly for the Scottish Government’s decision to decide its own third sector delivery infrastructure through a procurement competition.
JGF Given the ‘neoliberal turn’ and the recent history of imposing market-based approaches within the third sector and democratic enterprise, where do you see opportunities for a return or reimagining of this sector over the next five years?
LH Too many current third sector promotions and policies are in the context of the market or driven by a market approach. The author foresees considerable political difficulty for any promotion of co-operative, associationist, mutual or common approaches at national level and instead recommends various projects from more progressive local authorities, especially through devolution of more powers to regional mayors in England and through Scottish and Welsh Governments. However, the Scottish Government’s latest iteration of its Ten Year Social Enterprise Strategy and 2021-2024 Action Plan is problematic, since this emphasises loan finance and equity stakes, both of which were introduced without consultation. The Scottish Government is now conducting a procurement competition to decide for itself which third sector infrastructure organisation it will continue to fund. This notion of “representation by contract” poses difficult questions.
National third sector organisations also pose difficulties. Social Enterprise UK with the British Council promotes social and private impact investment globally. Co-operatives UK, in its alliance with the Employee Ownership Association, is forming ‘Ownership Hubs’ to encourage employees to buy shares. This is not industrial democracy. This continuing prioritisation of the market domestically and globally by national third sector infrastructure organisations no longer represents growing co-operative and community aspirations in housing, energy, and smaller local community-based organisations. Recent ethnographic research shows that these have enabled many communities in the poorest areas to survive during COVID restrictions. Above all, there is no promotion, advocacy or discussion of Elinor Ostrom’s “Commons”, with its potential for new non-market structures.
Preston, North Ayrshire, Plymouth, Islington and others are experimenting with co-operative development and community wealth building. But many of these approaches are based on procurement in competition with the private sector and are hampered by current procurement legislation. Despite advocacy of a new UK version of the EU’s Article 77 Light Touch Framework, which permitted a shortlist of third sector organisations for specified activities, this has effectively paved the way for privatisation. A further difficulty for more democratically controlled social enterprise and co-operatives is their lack of access to finance. Though Community Benefit Societies through community shares represent a possible way forward, a framework for public utility banking, based on German sparkassen or the Spanish caja laboral (Workers’ Credit Union) model, shows that further investigation is needed to expand credit unions and community development finance. However, external loans and equity represent an ongoing discussion for third sector structures, including companies limited by guarantee, community benefit societies, and IPS (industrial and provident society) and FCA (Financial Conduct Authority) co-operatives. ∞
Leslie Huckfield has a range of UK, European and international policy development and implementation experience, including as a Member of the House of Commons and the European Parliament, as a Government Minister in the Department of Industry and as a Member of the Labour Party National Executive Committee. Les lectures at Glasgow Caledonian and the Open University.
This online Q&A was updated on 17.08.22 with the following response:
In the interview with Les Huckfield (published in Issue 37, Spring 2022), the interviewee describes our Ownership Hub programme in a way that is wholly inaccurate. Les incorrectly states that the Ownership Hub "encourages employees to buy shares". The Ownership Hub is explicitly focused on worker co-operatives and collective employee ownership via trusts. Individual share ownership is not a focus or a priority.
Les also claims that co-operative participation in market-based public procurement was a policy priority for Co-operatives UK. Again, this is untrue. Our policy priorities are aimed at creating a better environment for co-operatives to form and thrive, with a focus on increasing awareness and understanding of co-operatives, strengthening co-operative business development and addressing problems with the operating environment. Competitive public service procurement and markets are not a priority.
We'd like to openly invite Les to speak with us about the activities and aims of the Ownership Hub programme and Co-operatives UK's policy priorities, as covered in our current three-year strategy (available online at: www.uk.coop/resources/co-operatives-uk-strategy-2022-24), so we can better inform and spread the word about the positive impact we can have through working together.
James Wright, Policy and Development Lead, Co-operatives UK