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.