Sector news: UK Business Secretary Vince Cable calls for examination of what private sector could learn from successful mutuals

Friday, 30 January 2015

Earlier this week the London Business School (UK) held a conference in Westminster entitled 'Is mutuality the answer to ownerless corporations?' The event, held on Wednesday 28 January, was attended by the Secretary of State for Business, Innovation and Skills, Vince Cable, and a host of industry leaders and economists including leading economist John Kay, Lord Myners MBE and Finance Professor Julian Franks. The aim of the conference was to debate whether the cooperative ownership business model could be the answer to the problems posed by other global businesses which are controlled by institutional investors and distant shareholders.

During the conference Vince Cable called for an examination of what the private sector could learn from successful mutuals saying, “How do we try to ensure that some of the attractive elements of mutuals apply to the corporate system more generally?

“Mutuals are more tuned into their customers. There is also the idea of long-term ownership, providing long-term stability.”

Cable cited mutuals’ proximity to their customers (members) as being a great benefit and that this could be an example for other businesses to follow. The retailer John Lewis (UK) was highlighted as an example of a successful and innovative mutual.

Cable recommended more analysis on how successful mutuals operated.

Ed Mayo, Secretary General, Co-operatives UK, attended the event and wrote a blog published by The Huffington Post entitled ‘It Might Not Be Sexy, But Ownership Matters’ in which he discusses the topic of ownership and the issues addressed in the Conference in more depth.

In his blog Mayo says the fact that a prestigious business school holding a conference like this says a lot; he feels it is a strong indication that even though we may be moving out a period of dramatic financial uncertainty, there are still questions to be answered at the highest levels about whether different ownership models can help to address some fundamental economic issues.

Mayo argues that whilst the cooperative (or mutual) option may not be right for every commercial context it is an adaptable model. There are employee-owned, customer-owned and supplier-owned cooperatives. He points out that worldwide, there are 1.4 million cooperatives and they can be found right across the economy.

A key issue to be addressed is government regulation says Mayo. Government regulation is designed as if there was only one form of business: the investor-model. Time and again, he says, we find stupid rules that stop cooperatives and mutuals, because no-one in government understands the diversity of business ownership that exists.

You can read Ed Mayo’s blog ‘It Might Not Be Sexy, But Ownership Matters’ in full here.

Read Co-operatives UK press release on the event here.