The Mutual Tradtion — Tessa Jowell’s full speech

June 19, 2010 3:45 pm

I just want to start by saying what a privilege it is to be here at the launch of Co-operatives Fortnight and I look forward to hearing more about the 52 ways that I can change the world co-operatively here today.

I feel extremely privileged to be here, not just because the Co-operative Movement is such a proud part of the Labour Party’s history – but because I believe that co-operation is an idea whose time has come again.

The Mutual Tradition

I want to take a moment to go back to our shared tradition and history.

Against the backdrop of nineteenth century powerlessness, the new working classes realised the need to take charge of their own affairs and stepped outside the control of the state to organise for themselves.

Weary of profiteering and exploitation, they set up a network of organisations dedicated to fair trade, a moral economy and mutual support.

In Manchester, the followers of the early socialist Robert Owen came together to establish a series of co-operative shops – ‘labour exchanges’ for the direct marketing of goods, and trade unions to advance the cause of Labour.

From this culture came the meeting in 1868 of the Manchester and Salford Trades Union Council which set in train the establishment of the Trades Union Congress and, ultimately, the formation of the Labour Party.

This culture was based on a simple premise.

That we do better for ourselves if we co-operate with each other rather than just seeing ourselves as isolated individuals.

And this resonates with the new clause four in the Labour Party – that we can achieve more together than we can alone.

That self interest and altruism are not actually in conflict – but are actually in our own direct interests and those of our families.

That economic and social success can come hand in hand, for our collective mutual benefit and the benefit of others.

Being Honest About Labour’s Legacy

Given that we were defated six weeks ago, it’s entirely right that we succeeded, where we fell short, and how we can rebuild a Labour party that is the force for change that this country needs.

Listening to some people talk about the current state of the Party you almost get the feeling that we achieved nothing during our time in Government.

That is absolute rubbish. We should not disavow our past – but people will ask what we stand for

We should not let the post-election post mortem, or indeed the leadership debates obscure what we achieved in Government.

We have to remember that it was Labour that redefined the progressive consensus in British politics, so much so that the Coalition are forced to define their approach to cuts in relation to fairness – the defining test for New Labour.

Well let’s see how fair these cuts will be

We have to be honest – we did some very good things during our time in Government and we should never forget that legacy:

Record investment in our schools and hospitals.

Half a million children taken out of poverty.

Maternity pay, paternity leave and the creation of Sure Start.

Crime down by a third.

The minimum wage and the right to four weeks holiday.

Civil partnerships and equalities legislation.

The cancelling of debt, the trebling of aid and the first ever Climate Change Act.

And the list goes on.

But of course we know where we faltered. Too often we were too timid, too cautious, too managerial.

There were many good reforms but not a wholesale transformation.

The Founding Principles of New Labour

Often the philosophical basis of New Labour is better remembered for what we cast off rather than its underlying philosophy of Government.

People remember that we quite rightly ended our default attachment to the centralised delivery of state power, mechanistic planning and the idea that society could be administered from Whitehall.

We quite rightly abandoned the notion that we were in some way hostile to business and the creation of wealth.

But what has resonated less were some of the ideas that were put in its place.

The vision of a stakeholder economy – as brilliantly articulated by Will Hutton in his book ‘the state we’re in’ – where businesses are run as much in the interests of the people that depend on them as they are in the pursuit of profits.

The vision of a decentralised state – where – as much as possible – services are built around the frontline experience of staff and the needs of service users rather than dictated from the centre.

The vision of a political movement built around inherent human values – to rebuild a sense of community purpose and shared promise – and to give new energy to the traditions of self-help and mutual aid.

In many of our actions, spanning the range of Government departments, we were faithful to this vision.

Indeed if we look at where this was achieved through mutual structures, we have much to be proud of

As a result of Government action there are now at least 2 million more members of new mutuals than there were in 1997.

Helping football fans have a real say over their clubs through the establishment of Supporters Direct and the promotion of football supporters trusts.

Supporting credit unions to provide affordable credit to those whose only other option is often the scourge of loan sharks and doorstep lenders.

Providing the most wholesale reform of co-operative law for a hundred years to encourage the creation of new co-operative organisations

Radical reform in the public sector, including the creation of new mutual providers in public services with more than 50 co-operative trust schools and 129 foundation trust hospitals.

But much of the message and focus was lost in the managerial intensity required to bring our public services into the 21st Century.

We had many great initiatives but we could have taken them further.

Too often we didn’t listen to our friends, such as the co-operators in this room, but were instead fearful of what might be said by our greatest detractors

To quote Mario Cuomo, ‘we campaigned in poetry but we governed in prose.’

And by the end we campaigned in prose as well.

The Future of the Labour Party

But now is the time to look to the future

After the Financial Crisis, the original vision of New Labour – not bound by the orthodoxies of either the market or the state – has never been more necessary than it is today.

Because in the last 18 months we have seen a period of profound and unprecedented change for our economy and our society. In the wake of the credit crunch, the public have made it very clear that they are no longer willing to put their trust in organisations that they feel are not run in their interests and operate outside of their control

Our economy is still fragile. We await the Chancellor’s announcement on Tuesday and the reaction of the economy to it.

And if we are to once again put our economy on a sustainable path – we do not only need to look make the right decisions about the approach that we take to supporting the economy – but also to ensuring that values become integral to the way that we do business.

Because the causes of the Financial Crisis and our subsequent economic difficulties were not just about a misunderstanding of risk, under regulation or the greed of a small number of individuals.

They were also about a corporate culture that was too focused on short term enrichment.

Where there was a lack of accountability between firms, their customers, and their ultimate owners.

Where businesses were too often run in the interests of the very few – and left the many to pay the price of their short term judgement and errors.

And this will also need to be tackled if we are to put our economy on a sustainable footing.

So where do we start in reconstruction?

A Stakeholder Economy

We need to start by reasserting the founding principle of New Labour

An economic approach that marries long term economic success with social progress.

And there is no better living example of this economic approach than the co-operative and the wider mutual movement.

In banking, where trust has been severely hit, co-operative banks, mutual institutions and building societies stand out as ethical, values-led businesses, behaving responsibly in an industry where too many have not.

The transformation of the Co-operative Group’s business in recent years has also been dramatic.

No longer is it the retailer where corporate structures were deemed more important than whether or not the shelves were empty. Through reconnecting with its core values and mission it has risen once again to meet the aspirations of the people that it exists to serve.

And you will not need me to tell you that recent years have seen the Co-operative Group double its market share in food, create a new Super-Mutual with Britannia and deliver record profits and sales through what has been a difficult time for us all.

All at the same time as maintaining an ethical and sustainable approach to all of its different operations.

And the fact that John Lewis was named as ‘Britain’s favourite retailer’ again this year testifies to the way in which the public is willing to get behind a company where employee ownership generates greater engagement, loyalty and co-operation amongst its staff and greater trust with its customers.

People trust the ethos

And as a recent report from the International Labour Organisation has shown – at a time when businesses are struggling across the globe, co-operatives across the world are showing tremendous resilience.

Financial cooperatives remain financially sound; consumer cooperatives are reporting increased turnover and worker cooperatives are seeing growth as people choose the cooperative form of enterprise to respond to new economic realities.

From some of the smaller credit unions in Canada, to the Co-operative bank in Taiwan, and the retail giant that is Rabobank in Holland – there is evidence that the co-operative movement is thriving across the world.

Changing the way that we do business

Clearly part of our new vision has to be for us to support the creation of a much larger co-operative and mutual sector in our economy.

Not reliant on the capricious nature of capital markets, investor mood swings or complicated investment instruments – mutuals are sustainable businesses that put everyone with a stake in their success at the centre of their operations.

Fundamentally this comes down to their reason for doing business – driven by a belief that people can achieve most when they work together, and that business should seek to serve wider social ends than short-run profitability.

But it is about more than that.

Within a growing economy there will always be diversity in our economic structures, and that is something that we should celebrate.

And for the foreseeable future, it is likely that most significant enterprises will continue to be owned by shareholders.

If the experience of the Financial Crisis has taught us anything, it is that we need a fundamental change of the corporate culture that underpins many of our largest businesses.

A corporate culture that is as much about values as it is about outputs.

That cares about its customers’ experiences as much as their wallets.

That devotes the same attention to cutting emissions as it does to cutting costs.

In short, a corporate culture that seeks to act in all of our interests – as employees, customers, investors and members of the society that we live in.

A fundamental change in the way that we do business – based on the co-operative values that we can see thriving around the country.

Creating a movement for change

Of course this is a challenging vision.

But we have to remember that that the single biggest owners of UK companies are not foreign oligarchs or wealthy individuals, but us, as ordinary members of the public.

Through our private pensions and our long term savings we indirectly own almost half of the stock market in the UK.

At the moment most of the people that we trust to look after these shares, the institutional funds, do not exercise their role as owners.

Instead of taking a responsible long-term approach to ownership, they usually fail to take an active role – relying instead on their ability to trade out when prices change in the short term.

This is self-defeating for those charged with delivering pen­sions over many decades into the future but it remains the predominant form of behaviour.

And this is bad for our economy. We only have to look at the performance of the FTSE 100 over the last ten years – which is 18% lower than it was a decade ago, despite the fact that the British economy has grown by more than 40% in the intervening years.

As well as the fact that too many of our companies are out of step with our needs as workers, customers and citizens of this planet.

So the power resides with us to change our corporate culture. But it requires us to build a movement to make it happen.

Like so many of the biggest challenges that we currently face, from preventative health to climate change, it requires a delicate calibration of collective and individual action – the very type of action embodied here in the co-operative movement today.

And I hope that as we take time today to think about how we can change the world co-operatively, that this is a cause that you will look to play your part in.

Conclusion

Let me be clear: the argument that I am making today is not that bringing co-operative values into business is a panacea for the challenges that the Labour party faces.

Rather it is a strong and tested example of the wider impact that the underlying values of mutualism can bring to creating a new kind of politics built around the fundamentally human values of equity, solidarity and reciprocity.

So if we work together we can begin to campaign in poetry, and I hope govern in poetry as well in the years to come.

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