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Swinging for the Fences

Illustration by
Rowena Sheehan
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Jay Standish

Obran’s Ambition to be the Largest Co-operative in the World

Baltimore is an American post-industrial city facing chronic troubles. For many, it's a tough place to live, and for those coming out of incarceration, it’s even tougher. In the US, employers are allowed to ask candidates if they have ever been incarcerated. To combat this significant obstacle, a staffing agency called Core Staffing was formed by three returning citizens in order to provide work for the formerly incarcerated. After that success, the team banded together a group of freelance tech workers led by people of colour and formed a digital creative agency of sorts, Tribeworks, which continues today as an artist-led worker-owned co-operative. Planted on both ends of the socio-economic spectrum, these two organisations decided to merge together as a co-operative holding company, the Staffing Co-operative, which eventually became the Obran Cooperative in 2018. Obran has now grown to six subsidiary companies under the co-operative umbrella, representing a range of industries, from home health care and HR software to third-party logistics and shipping. 

Make your membership vote count at Nationwide’s AGM in July

Mikael Armstrong

Building societies on the brink of becoming banks, rather than remaining as safe as houses?
Make your membership vote count at Nationwide’s AGM in July

Building societies have been an essential part of the UK mortgage market for almost 250 years. Building societies have no shareholders, and should act in the interests of their members, with key matters put to a member vote. But recently it appears that these once safe, conservative institutions – focused on offering mortgages financed by member deposits – are at risk of becoming more like banks. Make your vote count at your building society’s AGM this July – if you’re a customer, you’re a member – and have your say on these once-in-a-generation changes affecting the sector.

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Interview: The Rise of the Asset Manager Society

As global banks became the visible figure of recklessness and imprudence after the financial crisis, what you describe as a “new powerful financial actor” began to emerge in the form of the asset manager. But rather than the conventional focus on investing in financial assets – such as stocks and bonds – asset managers created investment funds that started to acquire essential infrastructure – or “real assets” – from housing to farmland, and roads to hospitals. 

Can you explain what has happened over the last 30 years in the financial sector and the real asset economy that supports your claim that we now live in an “asset manager society”?

I think the best place to start is with a very simple question – what is an asset manager? And what are its assets? An asset manager, or an asset management firm, is a very straightforward entity whose defining characteristic is that while they are essentially financial investment entities – in other words, they invest money – they predominantly invest other people’s capital. Sometimes they invest a little bit of their own capital alongside that of third parties, but that’s normally a very marginal part of their business. Essentially, they are investing other people’s or institutions’ money, and they charge their clients fees for carrying out that investment on their behalf.

The main kind of mechanism whereby they do that is to create fund vehicles in order to carry out an investment. This is like an envelope into which they can put the money that they raise from those third parties, and then pool it together and carry out that investment. Their clients come in all different shapes and sizes: they include regular individual investors like you or I who can easily open an account with an asset manager and say, look, I don’t want to invest this money myself – please do it for me and I’ll pay you a fee. They range from that all the way to pension schemes or sovereign wealth entities that have £1 trillion to invest – and everything in between.

Asset management has been around really as long as capitalism has existed. But it didn’t become a significant business until the 1980s and 1990s. Until then, there weren’t really any significant sovereign wealth funds or retirement savings available to be invested, but from that time there was a massive growth in surplus capital, principally held by pension schemes, but increasingly by other entities that needed to be invested. Prior to the 1980s and 1990s, the asset managers that did exist invested the money on behalf of their clients exclusively in financial assets, such as shares, or bonds, which are essentially loans issued by companies and governments. It wasn’t until the 1980s and 1990s that they began to buy ‘real’ assets, physical things like housing, and various forms of infrastructure.

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Money for good: the rise of ethical finance

Jonny Gordon-Farleigh & Grace Crabtree

Finance & the crisis

It has been nearly two decades since a financial crisis unleashed an economic crisis known as the Great Recession. The post-mortem of the period running up to this event uncovered reckless investments, irresponsible lending, and banks given licence to create too much money. 30 years of deregulation had made financial services an even more unac-countable and opaque part of the UK economy, with a strong reputation for bad practice and high levels of public distrust.

In its immediate response to the crisis, the UK government’s rescue package for the finance sec-tor took the form of quantitative easing, a fiscal policy asking central banks to create new money to lend to banks who, in turn, were supposed to increase their lending to businesses and individ-uals. But rather than benefiting the real economy, government bonds were largely used to buy finan-cial assets, such as pension funds, and according to campaigners Positive Money, “boosted bond and stock markets nearly to their highest level in history.”

Alongside this monetary policy, the UK govern-ment introduced another controversial fiscal policy – austerity. Given the economic losses from the financial crisis, the Coalition government decid-ed it was necessary for a deficit reduction pro-gramme of £30bn of cuts in spending on welfare payments, housing subsidies, and social services. These cuts in the public sector translated into the loss or poorer delivery of existing services and the sale of 75,000 public assets, such as playing fields, community centres, and swimming pools. Taking only the case of public libraries, numbers have fallen by 17% – 4,482 to 3,718 – since 2010. Despite the narrative of the Big Society, a recent report by IPPR estimates that local councils have sold off assets that are worth in the region of £15bn, with only just over 3% of these assets being trans-ferred into community ownership.

The UK job market also became more insecure, as another legacy of the financial crisis was an  increase in the controversial practice of zero-hour contracts in UK workplaces. These new levels of precarity represented a new opportunity for pred-atory lenders, such as the now defunct Wonga – a payday loans firm that was founded in 2006, shortly before the crisis. Exploiting high levels of personal and household debt, Wonga was charging annual percentage rates of up to 5,000%. Just a decade later, it fell into administration under pressure from politicians, the Financial Conduct Authority, and the cost of claims. Ultimately, it was a decade in which almost every financial institution failed taxpayers, customers, and investors.

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20 years of the CIC

Adrian Ashton

20 years in – have we finally found the question that the CIC is the answer to?

The concept of ‘social enterprise’ predates the rise of the Community Interest Company (CIC), introduced in 2005 under the New Labour government. This legal form has come to monopolise the concept of social enterprise in the UK, adopted by a wide range of community groups, co-operatives, and larger-scale organisations, whose activities and objectives must fall under the banner of being ‘for the benefit of the community’. But given its numerous problems, and the other more democratic options available, why is it still seen as advantageous?

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