Chuka Umunna's speech on a better capitalism: full text

"The global economy is changing – but that doesn’t mean we’re powerless to shape our destiny."

This is the full text of Chuka Umunna's speech to the Cooperative Congress in Cardiff.

Thank you very much for asking me to speak to you today.

I am so pleased to be here, so honoured to have been asked to give this opening keynote address at your Congress.

I’m also exceptionally humbled to have been asked to speak today by this man – Ed Mayo.  Ed – thank you.

Ed does a fantastic job leading Co-operatives UK.  And, of course, his record before being appointed as your Secretary General speaks for itself:

Director of the World Development Movement;

Director of the New Economics Foundation, pioneering ethical market activity, local economies and public service reform;

The strategy lead on the Jubilee 2000 campaign that helped alleviate debt for developing countries;

A national consumer champion, who we are grateful to for producing an independent report which will shape the consumer rights agenda in the lead up to Election 2015.

So Ed is a man who brings people together.

A man who looks at the present, with his mind on the future, and knows it can be better.

And then he sets about making it happen.

So, inspired by Ed, I want to talk today about a more co-operative future for our economy – and for our country.

This is a great country which has achieved great things.  Have no doubt - we have the potential to carry on doing so.  But, the world is changing at speed, and we must adapt.

We find ourselves at a crossroads.  We know the status quo won’t do.  Why?

Because our economy has been flatlining for months, there are too many people out of work, they are working harder but earning less.

Because, if we are to bequeath a more sustainable future to our children, we can’t go on with output coming from a narrow range of sectors and regions.

Because if we are to build a better capitalism, we must stamp out the fast buck irresponsible practices that precipitated the crash for which our communities are still paying the price.

I think we can do better.  Actually – I know we can and we must do better. I’m pretty sure you do too. That’s why you’re here today.

You are here because you know we stand taller when we stand together.  It is at the core of the co-operative movement – it is the first line of a history you know well.

Last month I visited The Rochdale Pioneers Museum - the original store of the Rochdale Pioneers and birthplace of the modern co-operative movement.

Those pioneers were flannel weavers, cloggers and joiners who were struggling under the harsh economic reality of 19th Century Britain when they set up shop.  They faced what you might call a “cost of living crisis.” Sounds kind of familiar doesn’t it?

But, in those times, they weren’t even able to look to the government for support.  They looked to themselves and to each other.  And by forming the world’s first sustainable co-op they were able to achieve together what they could not achieve alone.

First there was the store, then the housing, then manufacturing, even – perish the thought - a temperance hotel.   It was economic development – by the people, for the people – as participants in social change.

“For the improvement of the social and domestic condition of its members” – that is how they described themselves.  And those remarkable people and their families were the catalyst for a movement that would light up communities the world over thereafter.

Look at the huge energy and broadband co-ops in free market America, or big brands like Ocean Spray.  Look at Mondragon in Spain, the largest worker owned co-operative in the world.  Or Fonterra, a dairy co-operative founded in 1874, now owned by more than 10,000 of New Zealand’s farmers.  It is New Zealand’s largest company and the world’s largest dairy exporter.

Or look at Dulas, the British renewable energy experts and a co-op.  One half of all the child vaccinations in the world are kept at the right temperature by solar powered fridges made by them.

This is a living legacy of ordinary people who – by coming together – achieved quite extraordinary things.

The other political parties can speak for themselves but let me be clear: those pioneers’ values, the values upon which you are founded, are values which we share deeply with you.  They are enshrined in our constitution – a constitution which says: “by the strength of our common endeavour we achieve more than we can achieve alone.”

It is a belief that Ed Miliband reaffirmed when he set out our vision of One Nation Britain at our conference last year: a country where everyone has a voice, everyone has stake, everyone has part a play to play in writing the next chapter of our story, our shared destiny.

So armed with that history and those principles, when I look towards our future – that shared destiny – I know we can do better.  And we have to do it now.

Now, because families are struggling in an economy that is sluggish and unequal.

Now, because unless we change our economy so it makes use of everyone’s talents, providing people with the wherewithal and skills to succeed, this country will not be able to pay its way in the world.

Now, because we don’t want to win a race to the bottom - where we compete by making people more insecure at work and grinding down their wages - but by a race to the top with quality jobs paying decent wages people can live off.

And, yes, the global economy is changing – but that doesn’t mean we’re powerless to shape our destiny.  We are not the economic super power we once were – people talk about the BRIC economies, the fact China is forecast to become a bigger economy than the US (never mind us) by as early as 2025.  They talk about the emerging African Lions – with 7 of the 10 fastest growing economies in the world sitting on that continent.

But these need not be threats to our economy – in fact, they present massive opportunities.  I was in Ghana and Nigeria last month and I left there buzzing – electrified by the energy of people reaching for success, by their boundless optimism.  You know what they said to me?  Where are the Brits – you are our preferred trading partner, we like doing business with you, we know you deliver quality goods and services and on time.  The British brand is strong and they want our products and services.

So their optimism should also be our future. Yes, times are tough now and we have challenges behind us and ahead of us. But this is a country that has not only adapted to change in the past – we have spearheaded it, changed the world and created new opportunities for ourselves and everyone else.

Take computing.  It was Alan Turing who invented the computer.  It was Jony Ive that made it easy enough for anyone to use.  And it was Tim Berners-Lee who opened up the internet to all through his invention of the World Wide Web.  British people who have changed all our lives.

However, to compete in this world and to take advantage of these opportunities it offers we need a new model of growth where we invest in our rich diversity of talents.

A model oriented towards long-term value creation.

A model where social and environmental concerns are a source of competitive advantage.

A model where we realise this truth: ask any business person what their most precious asset is and they will tell you it is their people.

So we need a model where businesses engage their workforce, listen to them, invest in them.  And here the UK is behind others.  If we matched the engagement levels businesses have with their work force in the Netherlands, it would be worth more than £25bn a year to our economy. This year.  Next year.  Every year.

Now, it is not for government to dictate the ownership structures, business models and competitive strategies firms choose.  But neither should government remain indifferent to them.

Our goal in framing the rules is this: to ensure that business which is most socially valuable and sustainable is also the most profitable.

And therefore Co-operatives must be central to our future, to a better and more productive capitalism.

You already contribute £36.7bn to our economy.

The resilience of the co-operative model has been proved in the wake of the global economic downturn, with revenues up by 20%.

Co-operative models of business encourage the longer-term decision-making we need. They focus on member value, not shareholder value.

Money spent in Co-operative stores often stays within the local economy.  This ‘sticky money’ enhances the vitality and sustainability of our local communities.

Co-operatives can also be stable members of the community as it is more difficult for a co-operative to be taken over, or to shift its headquarters off-shore.

However, of course, co-operative business models won’t be the right strategy for all.  While I was preparing for this speech, someone put it to me this way: “Not every business should be a co-operative, but every business can benefit by being more co-operative”.

And co-operatives are not guarantees of special wisdom or perfect foresight.  We see this clearly with the recent problems at the Co-operative Bank.

It is still too early to make a proper assessment of what went wrong.  As new Chief Executive, Niall Booker has said, “there are lessons to learn and clearly there will be a time to look back and do that”.

Right now the issue is the ‘bail-in’, meaning that tax payers won’t be on the hook - it will be bond-holders who will have to take the haircut.  But what really concerns many is the fear that the ethos of the bank will change, now that its shares can be bought and sold - it would be a great shame if that ethos were lost.

The experience of French mutual Credit Agricole who – for different reasons – went through the same experience a dozen years ago suggests that this doesn’t have to be the case.  According to Jean-Marie Sander, the Chairman, the bank has been able to develop considerably, without losing its “mutual DNA”.

But, my central point is this: too much economic policy of the last three decades has relied on the magic of markets.  Don’t get me wrong: competition in markets is good – and we need more of it, especially in our energy markets.  It is the discipline every firm needs, whatever its ownership structure – driving efficiencies which benefit consumers.

But that should not be the be-all and end-all. We must also understand the vital role co-operation can play between firms to solve common problems, to the benefit of all.  Things that improve productivity, but are difficult for one firm to create alone: like a pool of skilled workers to draw on; research breakthroughs that can benefit a whole sector; functioning supply chains; and intelligent, patient finance.

Take the central purchasing function of a co-op like Anglia Farmers, achieving a good deal together.  It’s so good, even the Queen is a member. They’ve set up a bank too – allowing those with extra funds to lend to others, providing the patient finance that too many firms in Britain must survive without.

Co-operation and collaboration can take many forms and consist of many different partners.  They could be co-ops, based on the initiative of firms.  Research partnerships between universities and local firms.

Sometimes it will take government to be the catalyst, acting as an honest broker to bring competing firms together – as we have seen with the Automotive Council and now in aerospace and other sectors.

We can have a proactive Government working to shape our economy of the future – partnering with business to set direction, to create and transform markets, to develop our national potential, and to invest in the next waves of innovation.

This is the way we will create a more broad based economy, delivering success abroad and fairness at home.  More co-ops, certainly.  But a whole lot more co-operative working too – within firms and between firms, and with government too: the business and spirit of co-operation threaded right through our economy.

That is a vision of the future we can have. But we have to begin now.

That is why Ed Balls – the country’s first Co-operative Shadow Chancellor – asked Peter Hunt to lead a review into the role of mutuals in financial services and more widely in the economy. Peter has formed a working group and will be going out to consultation with co-ops and mutuals in due course.  We expect Peter to report back in 2014.

As Ed Mayo’s Consumer Investigation showed, inequalities in market power work against consumers.  When consumers act together, they can equalise power relations.  Labour is interested in cooperative models for consumers in the energy market – doing for everyone what Anglia Farmers does for Her Majesty the Queen.

I’m keen to encourage greater employee ownership – not in exchange for employment rights as the Chancellor wants but as an enhancement of economic citizenship.  Not just in public services – although there is plenty of scope to build on what Labour began there – but across the private sector too.

We are looking carefully at what President Hollande is doing in France where he has made this a priority to see what lessons can be learned.  I’m interested in the Marcora Law in Italy that allows workers who are made redundant to pool their accumulated unemployment benefits to fund a co-operative buyout.

And I understand the concerns expressed to me about capital gains tax rules for employee share schemes – designed with the Plc in mind, they may act to disadvantage co-ops trying to achieve a similar outcome.  This isn’t the intention but it is why we need more intelligent policy making that can work for a variety of business models, including co-operative models.

In fact, it may be that merely levelling the playing field is not enough.  Maybe we need to go further in taking action in favour of co-operative models.

Part of the challenge of setting up or transferring a business into employee ownership – or structuring it for employee benefit – is that there are few off-the-shelf models to draw from, and insufficient expertise in our business services industry to advise.  Just as John Lewis had to invent his own model in 1929 – which has turned out to have been a rather good one – things aren’t much better today.  When Steve Parfitt wanted to turn Parfitt’s Cash and Carry into an employee owned business in 2008, he also had to design a bespoke model.

Here in Wales and in Scotland there are dedicated co-operative development bodies and I am keen to understand whether there is a need for something similar in England.  We can certainly do better in ensuring that the Cooperative model is better understood in Whitehall, starting in BIS but right across government.  Occasionally probably the spirit of co-operation as well.

We – here at this Congress today – know that together we are stronger, more vibrant and more optimistic than when we are apart.

To create a better and more productive capitalism that benefits us all.

A One Nation economy that generates sustained, sustainable and inclusive growth that allows us to thrive in the modern world.

We must do more to return the business and spirit of co-operation to the mainstream of British economic life and society.

Just as I can point to Ed and say he is a role model – other companies and organisations must be able to point to you for inspiration.

That demands that you live up to the standards set by your proud heritage.

But it also means you shouldn’t be shy about sharing your successes, or - even more importantly – why you do what you do.

The values that allow ordinary people to do the extraordinary.

Because ours is a shared economy.

Because this is a shared endeavour.

And above all, because we have a shared future.

Thank you.

Shadow business secretary Chuka Umunna speaks at last year's Labour conference in Manchester. Photograph: Getty Images.

Chuka Umunna is Labour MP for Streatham and Chair of the All Party Parliamentary Group on Social Integration.

Hulton Archive/Getty Images
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Roy Hattersley: Labour is far closer to extinction now than in the 1980s

 If the takeover of the party by the far-left succeeds there will be no opportunity to rescue it from the wilder shores of socialism, says the former deputy leader.

The comparison with the Eighties is irresistible but misconceived. Labour is far closer to extinction as a major party than it was 35 years ago. That is not because Jeremy Corbyn is incapable of leading the party to victory — although he is. Nor is it because his supporters threaten the political assassination of anyone who says so — although they do. It is because, for the first time in its history, Labour is in real danger of a permanent domination by the unrepresentative and unelectable left.

All the other regular crises in the party’s history — German rearmament, nuclear disarmament, the defection of the Gang of Four to found the SPD — were resolved by mistakes being rectified, resolutions reversed and Labour resuming its place in the mainstream of British politics. Nor was there any genuine risk that the infiltrators from the far left would play a decisive part in national policy making. The Militant Tendency controlled municipal politics in Liverpool and attempted, with mixed success, to unseat vulnerable mainstream MP’s. But there was no possibility of them subverting the whole party. Now the far left operating through Momentum  aspires to make a decisive, and irreversible shift in Labour’s core ideology by initiating a purge of mainstream Labour MPs and a cull of headquarters office staff, reducing the part that the parliamentary party plays in choosing the leader and making the election manifesto the preserve of the annual conference. If the putsch — described by its instigators as an extension of party democracy — succeeds, there will be no opportunity for a latter day Neil Kinnock to rescue Labour from the wilder shores of socialism and the odds on its survival lengthen.

The crisis could have been averted. The parliamentary party  with the exception of a handful of residual Blairites  is ready for some sort of compromise. That is why, three weeks ago, it gave its overwhelming support to the proposal that the shadow cabinet should be elected by Labour MPs rather than chosen by the leader. The change was intended to allow an honourable return to the front bench for the shadow ministers who resigned in the spring. As a move towards unity, it is no more than papering over the cracks but better that than gaping fractures. Although Corbyn had neither the sense nor the grace immediately to accept the gesture of conciliation, the choice between an uneasy peace and continued guerrilla warfare still lies with him. If — as his victory speech suggests — he regards last Saturday’s victory as a mandate to impose his sectarian will on the party, the battle is likely end with mutual self-destruction.

Even if Jeremy Corbin succeeds in his attempts to create a permanent far-left hegemony, the Labour Party is unlikely to split as it did 30 years ago . The fate of the SDP — absorption into a Liberal Party which kept the Tory-led coalition in office or defiant independence that ended in the ignominy of polling fewer by-election votes than the Monster Raving Loony Party — has dampened enthusiasm for a breakaway movement. Nor are there charismatic potential leaders who stand ready to lead their followers into battle in the way that Roy Jenkins and David Owen (the Fidel Castro and Che Guevara of social democracy) marched a dozen Labour MPs into the valley of political death. But a futile attempt to form a new party would at least imply the hope of some sort ofresurrection. The more likely outcome would be the product of pure despair — the parliamentary Labour party would not divide and instead would begin slowly to disintegrate.

If the worst happens some Labour MPs will suddenly discover previously undetected virtues in Corbyn and Corbynism and line up behind him. Others will grow weary of being abused by local extremists and fade away. Contrary to public opinion, most MPs could earn more from less demanding jobs outside parliament. The politically dedicated, determined to be candidates in the next election, will accept the challenge of reselection. More will succeed than fail, but the harm to the party’s reputation will be immense.

One feature of the 1980 desertion will certainly be replicated. When the Gang of Four defected, the damage done by the loss of glamorous leadership was more than matched by the loss of hard working membership. If Labour MPs begin to believe that the battle for reason and recovery is no longer worth fighting the disenchantment will become infectious. Jeremy Corbyn’s devotees would still turn out for the rallies. But the enthusiasm with which they would tramp the streets on rainy nights, or spend boring weekends telephoning target voters, is in doubt. Reliance on the notion that the election can be won online is the refuge of politicians who either have not identified or do not understand the floating voters.

The haemorrhage has already begun — increased by the behaviour of recently recruited Corbynites who do not seem to have heard that their hero has an olive tree outside his office door. All over the country they are bullying and filibustering their way into the control of local parties — excoriating mainstream members, manipulating the rules of debate and postponing votes until late in the evening. Of course, the men and women who oppose them could play the same game. But they are, by their nature, reasonable people and they want to lead reasonable lives. That is why they represent the sort of Labour Party with which voters can identify. 

Unfortunately, many of the Labour MPs who should have led the campaign to recreate an electable party have spent the last year either sulking or complaining. They have been anti Corbyn but pro very little. Owen Smith’s leadership campaign ended in disaster not because of the size of the incumbent’s votes but because of the challenger’s failure to set out an alternative vision of the society that socialists hope to create. Angela Eagle would have won fewer votes, but she would come closer to reassuring party members that "moderates" (a deadening description which should be abandoned) have principles and policies. A campaign that relied on nothing except the obvious truth that Jeremy Corbyn would lead Labour to defeat was doomed from the start. A majority of the party members who joined before 2015 voted for Smith. Think of how many more would have done the same had he offered them more to vote for than disapproval of his opponent.

Corbyn, and many of the Corbynites, are unmoved by the evidence that they are heading straight to defeat. That is, in part, because Corbyn himself is in what psychiatrists call “total denial.” There were times last year when he seemed to be implementing a carefully coordinated plan to alienate all the middle-of-road voters on whose support a Labour victory depends. He has proposed the unilateral abandonment of the British nuclear deterrent, refused to back Britain’s continued membership of the European Single Market and defended his historic association with apologists for terrorism — all items on the curriculum vitae of a Labour leader who might have been invented by Conservative Central Office. No political leader in British history has been so careless about his party’s prospects at the ballot box. But that is only one of the reasons why the threat of defeat will do little to halt the party's leftward gallop.

There is, within the ranks of Corbyn supporters, a substantial number of activists who — since they do not believe that parliamentary democracy can create the socialist Utopia of their dreams — regard the election of a Labour Government as an irrelevance. Indeed they believe that a prolonged period of Tory misrule will bring forward the day when a spontaneous uprising will herald the new dawn. It is near to inconceivable that Corbyn believes in such millenarian nonsense. But he appear to subscribe to the equally fatuous view that the first task is to make Labour a genuinely socialist party and that winning elections can wait until it is accomplished.

That is clearly the view of those correspondents to the New Statesman who complain about Corbyn’s critics obsession with what they call “electablity”. It is easy for their cynics to sneer about putting power before principle, but winning is a matter of principle too. Labour exists to make those changes in society which can only be achieved in power. In 2016 the fight — to quote the former Labour leader Hugh Gaitskell in 1962 — is less about saving “the party we love” than about rescuing the nation from long years of  Tory bigotry. To behave in a way which diminishes — indeed for a time extinguishes — Labour’s chance of fulfilling its historic purpose is worse than self indulgent. It is betrayal.

There are major figures in the current drama of the Labour Party whose attitude towards the prospect of government is both inexcusable and incomprehensible. Chief among them is Len McCluskey, the general secretary of Unite and a man whose every bombastic television appearance is worth thousands of votes to the Tories. The members he represents have the strongest possible vested interest in a Labour victory at the next election. Yet many of his policies and pronouncements — particularly his risibly unsuccessful attempts to bully MPs into supporting Jeremy Corbyn’s leadership — contribute to the Conservatives’ opinion poll lead and increases the danger of massive defeat at the next election turning into total destruction.

Anyone who doubts that Labour could be reduced to the status of the Liberal Democrats or the Greens — struggling for influence without even hoping for power — should be sent to canvas for the party in Scotland. But the near oblivion north of the border is not yet inevitable in the south. Recovery will take time and before Labour can begin effectively to deal with the challenges from outside the party it must struggle back into the mainstream of politics — a process which has to begin with an acceptance that Jeremy Corbyn’s first election was more than a combination of the Peasants’ Revolt and the Children’s Crusade. For many of the men and women who voted for the first time in 2015 his victory represented the end of a decade of disillusion. At first they had felt no more than disappointment at opportunities that successive Blair Governments missed — their delight in the landslide victory of 1997 fading away until it was finally extinguished on the battlefields of Iraq.

The Peak District village in which I live is home to more Labour party members than the tourists may imagine. Two of them  —  a retired bank manager and an emeritus professor of cardiac surgery — voted for Corbyn in 2015. In part they were motivated by a desire to “give socialism a chance for once.” But they also thought that they were drawing a line under the years of “the third way” and triangulation. New Labour, in which they had once devoutly believed, had come to mean private enterprise edging its way into the health service, the surreptitious extension of secondary selection and light regulation of the City of London. Jeremy Corbyn, like the Scottish National Party, has much to thank Tony Blair for.

For some people Jeremy Corbyn was, like Donald Trump and Marine LePen, a welcome alternative to the politics of the establishment. To many more he was, by the very nature of his unelectability, the antidote to the opportunism which they (wrongly) believe characterises life in Westminster. Now, a mainstream candidate for the Labour leadership will have to make clear that they are guided not by opinion polls but by a vision of a new and better society. The next leader must concentrate every nerve and sinew on winning, but they must have faith in their ability to carry the country for reasonable revolution.

Unfortunately the members of the Labour mainstream are notoriously reticent about  discussing first principles. They find talk of “the vision thing” embarrassing and believe that the task which faces them is too obvious to need justification by any “fancy theories.” Yet there is a great body of work — by the likes of TH Green, RH Tawney. Anthony Crosland and John Rawls — which set out the theory of democratic socialism and descriptions of why it is especially relevant today – Joseph E Stiglitz’s The Price of Inequality and The Spirit Level by Richard Wilkinson and Kate Pickett — abound. The recovery of reason has to begin with Chukka Umuuna explaining the virtues of equality, Yvette Cooper describing Britain’s obligations to the developing world and Dan Jarvis defining the role of the state in protecting the weak against the strong. Or any of them talking about what they stand for instead of assuming that their convictions are taken for granted. The Daily Mail might not report their speeches, but moderate party members will treat the related Fabian Society pamphlets like water in the desert.

If, as they must, the reasonable majority of Labour MPs choose to stay and fight, they have to organise — inside the parliamentary party and, more importantly in the constituencies. I have spent much recent time insisting, to sceptical friends that the occupants of the opposition back benches are as competent and committed as were members of any of the governments, or shadow governments, in which I served. But I do not even try to argue that they are as active as my contemporaries once were in reclaiming the party. Success and survival depends on the constant demonstration that reasonable radicals still have a home in the Labour Party.  

One refugee from Corbyn’s original shadow cabinet assured me that like-minded Labour MPs do occasionally meet. When I asked what they discussed, I was told that they “wait for something to turn up.” But, something will only turn up if it is prepared and promoted by the men and women who have the courage and commitment to lead Labour out of the wilderness. The journey will be long and hard and there can be no guarantee of arrival at the desired destination. But those of us who believe that Labour can still provide the best prospect of a more equal society have to begin the trek toward the promised land — and we need to set out straight away.

Roy Hattersley was deputy leader of the Labour Party from 1983 to 1992.