The Spirit of Co-operation – Livingston Lecture

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Hugh will be speaking at an interesting (and free) event this Thursday 01 May 2014:


The Spirit of Co-operation

West Lothian College
Thursday 1 May 2014
Registration: 6.00pm
Starts: 6.30pm – 8.00pm

Hear from industry experts the case for employee ownership of enterprise. Scotland has a rich tradition in this field, both in terms of practice and research, and this event will allow local businesses and individuals to explore the potential of employee ownership in West Lothian and further afield.


The Emerging Scholar Awards in Employee Participation and Ownership

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The Foundation for Enterprise Development and collaborators are pleased to announce the launch of a new, annual award ($1,500 per award, up to 3 awards) for promising research by an emerging scholar in the domain of broad-based employee participation and ownership.

The purpose of the award program is to identify innovative research in management or management-related disciplines that considers high-impact ideas in the context of business and society’s needs for employee empowerment, participative workforces, and wealth creation through broad-based equity and profit-sharing mechanisms, work practices, organizational structures, and innovation and entrepreneurial models. Research that has broad implications for practice and/or policy, and that addresses pressing economic and/or social problems are especially appropriate for this award.

The award is open to students (PhD) and post-docs worldwide; see the website below for full details of the award and its criteria.

Co-operatives and public health: some recent evidence

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Interesting talk from Teaching Scotland’s annual conference a few weeks ago. Sir Harry Burns, Chief Medical Officer for Scotland, spoke of the role autonomy plays in the health of Scottish citizens. He presented evidence linking stress levels with the level of autonomy people have in their working lives. Seems like a timely reminder of the role member-owned businesses can play in the Scottish economy in relation to improving the well-being of citizens. Similar research is being carried out in the Basque Country where academics are investigating the link between worker ownership and reduced risk of cardiac arrest.

Woollard & Henry manufacturers marks ten year anniversary of employee ownership with special roadshow event

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— Event will showcase success of employee ownership and celebrate the United Nations International Year of Co-operatives —

Co-operative Development Scotland and Woollard & Henry are hosting a special event at Stoneywood Park, Dyce, on Friday 7 September to mark the company’s tenth anniversary of employee ownership.

Woollard & Henry was founded in 1878 and has over 130 years experience as a provider of papermarking products such as the dandy roll* and associated watermarking systems.

At the event Fred Bowden from Woollard & Henry will explain how employee ownership has helped shape a decade of success for his company in the face of declining market conditions.

Sarah Deas, chief executive, Co-operative Development Scotland, will also provide an overview of employee ownershipand how it sustains businesses in their local communities.

The event will also be attended by prominent politicians including Sir Malcolm Bruce MP, Richard Baker MSP, Mark McDonald MSP and Brian Adam MSP.

The free event will take place at Stoneywood Park, Dyce, from 11.00am. The event will include a presentation, tour of Woollard & Henry’s factory, discussion and a lunch. For further details go to:

This is the fifth in a series of Co-operative Development Scotland-organised visits to successful employee owned businesses taking place across Scotland in 2012.

Two more will follow later this year: 5 November at John Lewis in Edinburgh and 16 November at Tullis Russell in Glenrothes.

There are over 550 co-operative businesses in Scotland with a combined turnover of more than £4bn and employing 28,600 people.

An employee owned business is one in which the employees hold the majority of the shares either directly or through an employee benefit trust. It gives employees a meaningful stake in their organisation together with a genuine say in how it is run.


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Co-operative Development Scotland (CDS) is offering £30,000 worth of cash and support to develop new consortium co-operatives in Scotland and will be hosting a series of free workshops with Business Gateway across the country in June and July for local businesses to find out more.

Launched earlier this year by First Minister Alex Salmond, the Collaboration Prize aims to encourage businesses to consider working with others to form a new consortium co-operative. Consortiums are collaborative vehicles that play an important role in creating globally competitive businesses. They enable employees, businesses and communities to work together to fulfil shared interests.

CDS is calling for interested parties to pitch an idea for a new consortium co-operative with up to three winning concepts each receiving a cash prize of £5,000 and a further £5,000 of support to get the business off the ground.

The workshops will run from 9:30am – 12:30pm and will take place in Stirling, Paisley and Inverness. The aim is to provide a general review of the consortium co-operative model and take attendees through the stages of forming a new consortuim business. They will also help applicants consider how best to respond to all aspects of the application form.


Date: Tuesday 12 June 2012

Time: 9:30am – 12:30pm

Location: Business Gateway – Stirling, STEP, John Player Building, STIRLING FK7 7RP


Date: Tuesday 26 June 2012

Time: 9:30am – 12:30pm

Location: Business Gateway – Paisley, 9b Gilmour Street, PAISLEY PA1 1DD

Places for these events can be booked through the Business Gateway website or by calling 0845 609661.


Date: Thursday 12 July 2012

Time: 9:30am – 12:30pm

Location: Ness Horizons Centre, Kintail House, Inverness

To book a place please contact Lesley Allan on 01463 713889 or email

Applications for the Collaboration Prize can be submitted online at:

Deadline for entries is 31 July 2012 and winners will be announced in August later this year.

Businesses of any size and type (company, partnership, sole trader) can apply but you must:

  • Be based in Scotland
  • Have identified potential partners for the proposed collaborative venture

With a combined turnover of £4bn and employing around 28,000 people, Scotland’s 550 co-operative businesses currently play a key role in driving Scotland’s economic growth.

For more information about the Collaboration Prize or Co-operative Development Scotland, please visit: or call 0141 951 3055.

Employee ownership and share schemes

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The Glasgow branch of the Co-operative Party organised an event to celebrate the International Year of Co-operatives on 31 May 2012. Held at the STUC building in the West End of the city, the event attracted two very prominent speakers: Graeme Nuttall, partner at European law firm Field Fisher Waterhouse and the Westminster government’s advisor on employee ownership; and Bernard Daly, Employee Share Ownership Plan (ESOP) director and board member of EFES. The theme of the event was employee ownership through financial participation. In Graham’s case, this referred to Employee Benefit Trusts (EBTs) while Bernard spoke of the history and effects of ESOPs.

While I won’t provide a transcript of their presentations, it is worth commenting briefly on the findings of their respective research. Graeme’s presentation examined the barriers to employee ownership in the UK. The consultation is ongoing (readers can contribute here) but already a number of (expected) obstacles have been identified, including:

  • general lack of awareness of employee ownership amongst entrepreneurs;
  • poor understanding of the model by advisors (financial, legal, and political);
  • existing information relating to employee ownership is often misunderstood; and
  • a lack of teaching and research of employee ownership in education.

Bernard’s presentation then sought to explain the role employee ownership, in particular ESOPs, can play in the privatisation of state-owned companies. He particularly emphasised the need for trade unions to embrace employee ownership and not cling desperately to ideologies that do not benefit their members.

Both of the speaker’s presentations are provided below:

Graeme Nuttall – Using employee benefit trusts for employee ownership

Bernard Daly – ESOPS And The Irish Crisis

Co-ops and public health

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CETS was delighted to play host to a one-day event held in Scottish Enterprise’s HQ in Haymarket, Edinburgh on the 8 May 2012. A small group of co-operators discussed emerging research linking co-operatives, in particular those that are employee-owned, with wider public benefits, especially in relation to health. The aim of the event, besides being a useful networking opportunity for individuals geographically distant, was to produce a consensus on the role co-ops can play in providing public benefit.

Firstly, employee ownership expert David Erdal discussed his pioneering research in the Emilia Romagna region of central Italy. Selecting three towns in the region – each with different levels of the population working in employee-owned businesses – David analysed a number of different social metrics, looking for an association between worker ownership and public benefit.

Next to present were two academics from Mondragón University, who are concluding a study based on David Erdal’s original research. Examining the link between worker ownership and public health benefits in the Basque region of Northern Spain, the researchers have found a positive correlation between worker ownership and public health.

Finally, Virginie Perotín from the University of Leeds presented the findings of her report into the size, benefits and sustainability of worker-owned businesses throughout the world. Virginie’s research provides the economic business base for worker ownership, giving it a robust platform in the public benefit discourse.

This summary does not do justice to the depth and breadth of each of the research findings presented at the event but the main point to highlight is enormous opportunity for co-ops to play a larger role in the achievement of public benefit, in particular the impact on public finances and health. The next stage of this initiative is to make policy-makers and politicians aware of the role of co-ops in delivering public benefit.

Some of the presentations from the event can be accessed at:


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Co-operative Development Scotland (CDS) is offering £30,000 worth of cash and support to develop new consortium co-operatives in Scotland.

The inaugural Collaboration Prize aims to encourage businesses to consider working with others to form a new consortium co-operative. Co-operatives are collaborative vehicles that play an important role in creating globally competitive businesses. They enable employees, businesses and communities to work together to fulfil shared interests.

CDS is calling for interested parties to pitch an idea for a new consortium co-operative with up to three winning concepts each receiving a cash prize of £5,000 and a further £5,000 of support to get the business off the ground.

First Minister Alex Salmond, who has backed the initiative, said: “I am determined that the Scottish Government does everything possible to get more businesses thinking about how they can work better together, and the Collaboration Prize is a very valuable opportunity.

“I hope the new prize will stimulate new thinking.”

With a combined turnover of £4bn and employing around 28,000 people, Scotland’s 550 co-operative businesses currently play a key role in driving Scotland’s economic growth.

The deadline for entries is 31 July 2012 and winners will be announced later this year in August.

For more information about the Collaboration Prize or Co-operative Development Scotland, please visit: or call 0141 951 3055.

The Big Society, mutually employee owned, John Lewis style, social enterprise public service delivery vehicle!

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It has been rather a strange month or so for the co-ops, mutuals and employee owned sector.  And education.

 First we had the news that Central Surrey Health (CHS) , held up as the employee owned model to create the Big Society, had not succeeded in the tendering processes for other parts of the Surrey NHS.  This brought forth claims of unequal playing fields and too much emphasis on financial costs at the expense of social benefit.  Then we learn that Circle, again a company who describe themselves as an employee owned social enterprise (can someone tell me what that is along with an employee owned mutual) were successful in securing a hospital contract and £40M of debt.  (Maybe someone should inform the board of Glasgow Rangers FC about this organisation which is willing to shoulder massive debts, just in case they lose their tax tribunal with HMRC).  The coalition were adamant this was not a privatisation but the media invariably referred to Circle as a private concern with no reference to the employee involvement or Big Society (Haven’t read the Guardian yet)  So we have a flagship “Big Society” business losing out and an employee owned privatisation (or not) succeeding.  Confused?  You should be! 

 To add to my confused state of mind, I then encounter the news that the NAHT has balloted its members and found them in favour of strike action.  The first time in their 100 or so year’s history.  Their spokesperson suggests that this is an indication of how dire the economic situation is but I can’t help thinking how you could be a trade union for over 100 years and never have considered strike action!  Did they miss the Great Depression and the 1970s?  Again, much of the media coverage focussed on the disruption to parents child minding needs, presumably because they perceive education as much of a child minding service as an investment in society?

 Next up to highlight the confusion and unrest in the public sector we had students marching against fees.  As someone who had their university tuition fees paid plus an enhanced grant as a mature student I am wholly supportive.  When are we going to accept the fact that education is necessary investment in our younger citizens and not a cost to be minimised.  Yes, we have decisions to make with limited resources about where we incur public expenditure.  We had them before the greedy bankers blew a hole in our PSBR – it’s called economics, deciding the best use for scarce resources and recognising that if you spend on one item , you can’t spend on lots of other things (opportunity cost).  Surely, investing in our future workforce and citizenry is a fairly basic concept in any civilised, modern democracy.  Instead we are trying to create a market in education services.  I have said before and will keep saying, if I am being asked to buy a degree at £36.000 then I will be demanding (yes, in a market economy the customer is always right and his demands have to be satisfied) a first class honours.

 So, are we on the road to a new Big Society or are we simply looking to reduce the role of the state. 

Are we as confused as the US Republican presidential candidate who was most certainly for reducing government but couldn’t, despite some very helpful prompts from competitors and the audience, decide exactly which parts he wanted to cut.  Does the creation of a public sector as commissioning agent rather than the delivery mechanism fundamentally change a national health or education service so long as it continues to provide on a basis of need and not an ability to pay.  If it is on the basis of need, does it matter who delivers as long as the quality is assured and value for money is achieved.  But what about wider social benefits, which brings us back to Central Surrey Health and level playing fields.

 I have come across a couple of academic papers in the past week making the point that when we try to measure the performance of co-ops with traditional scientific management tools they don’t necessarily come out looking too good in comparison to investor driven models.  Co-operatives are not profit maximising, rational economic entities.  Until we get government and society to stop measuring everything in monetary terms and start recognising and accounting for wider social benefits then we will remain stuck in the mind blowingly confused state highlighted above.

 If Big Society is simply about motivating employees to be more productive then it totally misses the point.  If those who advocate public sector delivery can’t take on board the need to be more efficient with our scarce resources then we are in danger of doing a Berlusconi on our economy.  We need, more than ever, to get across the message that co-operatives understand the need to be viable and efficient but at the same time recognise the need to consider social and community objectives.  There is an opportunity cost in pursuing social goals, in terms of reduced profitability but there is also the need to generate surplus to support the pursuit of those social goals.  That’s a balancing act the co-operative sector has always had to perform.  Let’s hope government and the rest of our society can finally get their heads round that and we get to the point where I could have headed this piece “The Co-operative Option” and it would have been clearly understood.

Co-operative innovation: lessons from the Basque country

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Diarmuid, Hugh and Morag from the Co-operative Education Trust Scotland, as well as three students from the Scottish Agricultural College, visited the Basque country in Northern Spain to research co-operative models of enterprise. For the next week, we will publish a series of blogs on our experiences. In this post, Diarmuid outlines some of the ways in which the Basque co-operatives have developed innovative solutions to meet member needs.

A trip to visit the co-operatives of the Basque country, in particular the Mondragón Co-operative Corporation, is quite a popular excursion for global co-operators; Mondragón itself facilitated over 5000 visitors in 2010. Rather than recount the details of these co-operatives (much better examples exist – see the notes at the end of the article), I will share the most important insight I derived from the trip: the willingness to innovate to meet member needs.

1. Dealing with the downturn

While co-operatives have dealt with the current economic crisis better than other models of enterprise, they haven’t been immune to its effects. Mondragón has attempted to negate some of the worst effects by implementing measures aimed at protecting member interests. Some of the measures they take include withholding the 7.5% dividend paid on members’ capital accounts; reducing the working week to four days; letting non-member workers go; and relocating members from poorly performing co-ops to ones that are not in financial difficulty. These range of measures are designed to protect employment levels amongst members and to dilute the amount of risk borne by any one member or co-operative.

2. Getting capital onside

Day three of our trip took us outside of Mondragón to a potato processor, Udapa. Udapa is a secondary co-operative consisting of three member classes: a producer co-operative, a worker co-operative, and a credit union. Now, there is nothing hugely innovative about secondary co-operatives but I was intrigued by the role the credit union played; I just couldn’t figure out the need the secondary co-operative solved in terms of the credit union. It turns out that the credit union’s role is central to the financial stability of the co-operative: as well as contributing 20% of the capital requirements of the co-operative, the credit union forgoes its claim of the surplus in return for the co-operative conducting its banking with it. Udapa’s financial support might just be replicable here in the UK and could significantly increase the probability of smaller co-operatives surviving and subsequently prospering.

3. Involving multiple stakeholders

Following on from the previous innovation, the Mondragón co-operatives are particularly adept at productively managing multiple member classes. Take Eroski, the equivalent of the Co-operative Group. It successfully balances the needs of worker and consumer members to operate a multi-billion euro business. Representation on the board is equal: 6 worker-members and 6 consumer members. The co-operative bank, the Caja Laboral Popular, is no different: the needs of its co-operative members are balanced with those of the bank’s workers. In this case, representation is weighted 8:4 in favour of co-operative members but the result is the same i.e. a highly successful enterprise. And finally, Mondragón University is a secondary co-operative whose members are the different faculties, who in turn have three member classes: students, lecturers and collaborative partners (local businesses, authorities, community organisations). Co-operative practitioners and scholars will be aware of the challenges associated with operating a hybrid co-operative but the Mondragón experience, while not offering an off-the-shelf solution, could possibly offer a way of galvanising the disparate consumer and worker movements here in the UK.

Many co-operators consider the Mondragón co-operatives to be one of the best examples of a co-operative network in the world. They are not without their problems though. The key for the UK movement is to analyse its strengths (a well established consumer movement and an increasing presence in local communities) but look to the lessons from Mondragón to help address some its weaknesses (a divide between the consumer and worker movements, insufficient support structures for new and established co-ops). With the 2012 Year of the Co-operative fast approaching, now is the time for the UK movement to draw inspiration from Mondragón and instigate its own program of innovation.

Notes: contains details of some of the great pieces of work that discuss Mondragón. Have a look at the work of Oakeshott, Ellerman and Whyte for further analysis also.

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