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This article was originally published on 24th February 2014 in The Ecologist

Special Investigation Planners’ pension funds set to win from fracking permissions
Jan Goodey, Will Cottrell & Ed Jones

Two Councils at the front line of fracking protests – Greater Manchester and West Sussex – have pension funds investing in the major fracking operators – while decisions on planning applications to frack are pending.

The findings – which have emerged from a special investigation for The Ecologist – reveal a serious conflict of interest as the value of planners’ pensions could be affected by the decisions they are making.

West Sussex County Council Pension Fund (WSCCPF) invests in IGas, Celtique Energie – and Cuadrilla, which made the news headlines in the summer at Balcombe.

Greater Manchester Pension Fund (GMPF) has the same interests in the big three with IGas currently facing protesters at Barton Moss near Salford.

The spreading tentacles

Lawrence Carter, energy campaigner at Greenpeace UK said: “After the business rate bribes promised by the government, it now turns out that councils have their pension pots riding on the outcome of fracking applications. These councils appear to have a worryingly large stake in the success of the UK’s fracking industry.

“Fracking is a highly controversial issue and council authorities owe it to their citizens to ensure that they are far beyond even the slightest suspicion of a conflict of interest. Local councils are institutions trusted by the vast majority of the population – they need to do all they can to retain that trust.”

In Balcombe, Cuadrilla is waiting on planning permission from West Sussex County Council to continue its controversial work from last summer with a series of flow tests to assess the viability of fracking.

WSCCPF invests in the US firm to the tune of £3.8m through its UK partner, Centrica. It has also invested in IGas, which has a licence block covering the West Sussex town of Storrington.

This investment is via IGas shareholder Ballie Gifford, a fund manager for WSCCPF. The firm is the recipient of the largest WSCCPF investment – £187m – an undisclosed proportion of which is invested in IGas.

Celtique Energie is looking to frack in nearby Fernhurst, Billingshurst and Wisborough Green. It too is a potential money-spinner for the Council, although to a lesser extent: WSCCPF has fracking investments through two portfolio funds, Partners Group and Pantheon Global Secondary Fund (under £5,000 in each).

‘No conflict of interest’, insists West Sussex

A West Sussex County Council spokesman told The Ecologist: “There is not a conflict of interest. Bailie Gifford has a discretionary mandate and make investments to fulfil the obligations on the pension fund. Whether or not we hold any stocks in our pension fund will not alter any planning decision that we do or do not take.”

The West Sussex Pension Fund, worth some £2.45 billion, is one of the larger local authority pension funds in England and Wales.

As well as the County Council it takes in the University of Chichester, Chichester College, Central Sussex College, several district councils in the area and more than a dozen town and parish councils – plus local housing associations and public and voluntary sector organisations.

The fund invests in a number of other controversial companies in arms and tobacco. It holds shares worth £8.5m in British American Tobacco and £4.5m in BAE Systems.

Manchester Councils – heavily committed

Further north, Salford and Trafford Councils, which have granted permission for IGas to drill at Barton Moss and Davyhulme, have investments through the GMPF, with £108m in the Henderson Group which through a subsidiary, is a major shareholder in IGas.

GMPF also has holdings totalling £73m in Cuadrilla via partner, Centrica and £10m in Pantheon Global Security Fund IV and £1.9m in Partners Group, both portfolio funds which invest in Celtique Energie.

While the permit IGas holds in Barton Moss is for coal bed methane exploration, the company has stated that it is also considering shale gas extraction by fracking in the future.

No conflict of interest that we’re aware of …

A Salford Council spokesperson told The Ecologist: “Planning permission for coal-bed methane exploration drilling was given in 2010, when the city’s Planning Panel considered all the issues carefully, heard a great deal of evidence, and granted permission for the exploration to take place.

“Councillors who took the decision to grant planning permission to I Gas in 2010 for coal-bed methane exploration were not made aware of GMPF’s investments in Henderson Global Investors. There is no conflict of interest that we’re aware of.

“The members of Planning Panel have no role in deciding where GMPF invests its funds and had no role in deciding that GMPF should invest its funds in Henderson Global Investors.

“Should the company or anyone else wish in the future to engage in anything further than they have been given permission for, they would have to seek separate planning permission from the Council. They would also require permits from both the Health and Safety Executive and the Environment Agency, which are the regulatory authorities for these issues.”

Conflicted responsibilities?

The Ecologist has looked into the possible conflict of interest should councillors work both in planning and pension fund management. On its website WSCC Pensions Panel states that it

“wishes to be an active shareholder and exercise its voting rights to promote and support good corporate governance principles, which in turn will feed through into good performance.

“The Pensions Panel has directed the fund managers, in acting in the best financial interests of the scheme, to consider, amongst other factors, the effects of social, environmental and ethical issues of the performance of a company when considering the acquisition, retention or realisation of investments for the scheme.”

While there is no direct crossover between planning and pensions, in West Sussex, Conservative Councillor Steve Waight is on both the Pensions Panel, and the Performance and Finance Select Committee.

Two others – Conservative Cllr Liz Kitchen and Lib Dem Robin Rogers – sit on the same Finance Committee as well as on the Planning Committee.

Trafford Council’s Conservative Cllr Alan Mitchell is on the GMPF Pension Panel and at the same time is on the Executive Committee in charge of Highways and Environment. The Executive is responsible for all key decisions and the strategic management of services.

In nearby Salford, Labour Cllr Bernard Pennington is also on the GMPF Pension Panel and at the same a member of the Finance and Budget Scrutiny Committee.

Local MPs: ‘no comment’

Barbara Keeley, MP for Worsley and Eccles South (which covers Barton Moss), said she could not comment on the WSCCPF as it was not in her remit. When questioned about the wisdom of investment in extreme extraction over and above renewables she made no comment.

The Ecologist also approached Andrew Tyrie MP for Chichester in West Sussex who also did not comment.

This investigation follows a broader picture of local council investment in tobacco and arms companies at a time when NHS resources are stretched and Middle Eastern military repression continues apace.

‘We will not be bought off!’

Meanwhile closer to home other local councillors have rejected government plans to allow councils to keep 100% of business rates from fracking operations, rather than 50% as before.

In Hampshire, the Conservative leader of the county council, Roy Perry told the Portsmouth News that “the Council will not be ‘bought off’ by David Cameron’s offer of extra revenue if it approves applications for fracking.”

On a broader scale some pension funds are already pulling money out of fossil fuels, fearful of owning ‘stranded carbon’ assets. Nearly $2bn has been pulled out of fossil fuel shares with 17 of the world’s largest funds saying that they would reinvest their money in clean energy.

The Green Light Campaign has been set up specifically to encourage pension funds to pull out of the fossil fuel business altogether.

Lancashire – investing in renewables

This comes in the light of a number of leading scientists including Sir David King, the Foreign Office Special Representative on Climate Change, warning that fracking would have “enormous environmental consequences”.

In a positive example of what can be done, just down the road from Barton Moss, Lancashire County Pension fund has recently invested £12m in the world’s largest community-owned solar power station, Westmill Solar Cooperative in Oxfordshire.

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A friend has asked me to write my thoughts on the Green Party’s recent Economic Democracy Motion. Specifically, what I thought about this paragraph:

“We will grant employees the legal right to buy out their companies and turn them into workers co-operatives. Buy-outs would be funded by a Green National Investment Bank and contingent on the co-ops following green and ethical policies. These co-operatives would localise economic decision-making and give employees incentives for greater productivity.”

I think that the proposers of the motion had their hearts in the right place, however I can see many potential problems which could come from such a policy, some of which I will outline here. Please bear in mind that this is not a detailed analysis of this policy, but just some initial thoughts.

Ultimately, the aim of this blog post is to help bring forward a better motion in the future as well as to encourage more reading, thinking and discussion within the Green Party on this subject.

Before continuing, I need to let you know that I have a lot of love for workers’ co-operatives and I really want them to grow in the UK. I studied them during my Masters and wrote a few papers about them at the time (see the papers Are workers’ co-operatives schools of democracy? A case study of two UK workers’ co-operatives as well as Power in Utopia? Analysis of two UK workers’ co-operatives through Steven Lukes’ three-dimensional lens). I have also volunteered in a community bike co-operative, helped set up a small eco-village run on co-operative principles and just before I became unwell, I was starting to set up a workers’ co-operative with a few others.

During this time – through exploring theory, ideals and what actually works in practice – I have discovered several things which are relevant to the Green Party’s Economic Democracy Motion.

Co-operative education

Firstly, the level of knowledge in the UK about co-operatives is very low, especially when compared to many other countries. Most people don’t even know what a workers’ co-operative is and how they work in practice. People are not used to – or trained – to work in a co-operative way. Almost everything in our society, from school to multinational corporations, teaches us to work in another way. I’ve written about this before in other blog posts (See here and here). As Professor Anderson has written about schools:

“For centuries, leading educationalists have advocated learning by doing, instead of by listening passively to confusing dry abstractions. Even very young and unschooled children can understand complicated aspects of democracy, rights, justice and respect, through their activities and achievements.

“Democracy is practical and pervades all relationships. We cannot avoid either ‘doing’ democracy or else being actively undemocratic; there is no middle way. Undemocratic schools powerfully teach, by example, lessons of intolerance, mistrust, disrespect, repression and fear of change. If they preach democracy, they teach duplicity.” (see more here)

Unfortunately most people in the UK go to undemocratic schools. Most people work in undemocratic workplaces. Most people do not currently have the democratic skills necessary to successfully run a workers’ co-operative.

So, just granting people the legal right to buy out companies as is proposed in the motion, without any previous co-operative training, whether in school or elsewhere, could potentially be disastrous.

In the UK, many are just plain alienated from each other and very far from having the skills necessary to make decisions together in a co-operative workplace. This is not to say that it isn’t possible. Just that you need a lot of support and training, preferably from a young age (The organisation Young Co-operatives does great work in this area. Please read a previous blog post I have written about them).

In this country, workers’ co-operatives often start out small with a few people who are dedicated to the cause, who are knowledgeable about the co-operative ideology, who do research on what works and what doesn’t. They experiment and, if they do well, expand and add new members, often with a trial period so that they don’t introduce people who wont fit within the co-op ethos.

If workers just decide to buy-out workplaces and turn them into co-ops, they sidestep this whole process, with all of the learning that comes with it. That makes it much more difficult for it to function. If workers just buy-out a company and turn it into a co-operative it will take a lot of time and effort for everyone to learn how to run it and make decisions together – this doesn’t really fit in with the capitalist system we live in, where there is a lot of pressure to produce and get good returns. It takes time for people to develop:

– financial management skills (e.g. working with budgets),
– skills related to meetings (facilitating, minute taking, working to agenda, consensus or voting methods, the self-confidence and ability to speak in public meetings, the ability to work towards a common goal),
– conflict resolution skills
– community organisation skills (working with and supporting local communities),
– knowledge about laws and political systems that affect the workplace and co-operatives
– and much more besides.

If workers buy-out an existing company, it would also make it much more difficult to exclude people who do not fit in to the co-operative ethos as there would be no initial trial period for all of the workers who buy into it.

Again, it is possible for people to do this and to make it work, as some examples in Argentina, Venezuela and elsewhere around the world have shown. However, it is more difficult and needs real determination – and ideally a lot of support from experienced co-operators – for it to succeed.

Cultural questions

One of the reasons why co-operatives have done so well in other countries or regions is because of very specific cultural, economic and social circumstances. It is not just about granting employees the legal right to buy out companies.

The best book that I know of which explores these specific circumstances is:

La Lega: The making of a successful cooperative network by P. Ammirato (1996) (see the first 10 pages of this book here)

It discusses the development of co-operative networks in Italy, Spain and the UK and is well worth a read.

Other insightful books include:

The Anarchist Collectives: Workers’ Self-management in the Spanish Revolution 1936-1939 by Sam Dolgoff (find the .pdf of this book here)

Making Mondragón: The Growth and Dynamics of the Worker Cooperative Complex by William Foote Whyte and Kathleen King Whyte

The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town by Sharryn Kasmir

I am not going to expand in this blog on the specific circumstances which enabled co-operatives to flourish in some of these regions. For more information read some of these books.

In 2012, Co-operativesUK estimated as part of their co-operative review that there are approximately 493 worker owned and controlled co-operatives in the United Kingdom which employ 78,500 people (see page 21 – these workers’ co-operatives vary in size, ownership and management structure). (please also see this document which has a much lower – and likely more accurate – estimate of the size of the UK co-operative sector which states there are around 3,000 employees in 431 workers’ co-operatives. It all depends on how you measure the sector.)

If the Green Party wants to have a much larger worker co-operative sector in the UK it must seriously engage with the history of how co-operatives have developed in other countries, and look at why co-operatives have succeeded in some regions and not others. The economic democracy motion, as it is currently written, does not reflect that kind of serious analysis.

Economic questions

Moving on to the economic question, how much would this economic democracy motion cost? What would happen if lots of people suddenly wanted to buy-out multinational corporations? Would the Green National Investment Bank be lending the entire amount the corporations are valued at, therefore effectively transferring ownership to the state bank until the workers pay the loans back? Or would the workers put up part of the money so they shared initial ownership with the state?

Also, who decides the value of these corporations? Would this policy massively decrease the value of corporations as they would know that they could potentially be bought out? What effect would that have on the wider economy? Also, how would this policy practically work, when some of these companies have hundreds or thousands of employees? What kind of infrastructure would need to be introduced for this to work?

And what would happen if lots of these new co-ops failed because the workers didn’t have adequate training on how to run a co-operative or couldn’t compete against existing corporations? Would the Green National Investment Bank then go bankrupt? Then what?

I’m sure there are many more economic, costing and organisational questions which could be asked about this motion.

For this to even begin to work, there would have to be massive knowledge sharing between the UK and countries with much bigger co-operative sectors. There would also have to be co-operative training, ideally from a young age, on a very big scale.

It would be easier – although not as far reaching – for the Green Investment Bank to focus on lending to new start-up and existing workers’ co-ops. If it wants to go further than this much more detailed proposals need to be put forward on how this would practically work.

Final thoughts

There are examples of the state trying – and failing – to use the co-operative model to save British companies in the past, for example  Scottish Daily News and the Meriden Motorcycle Co-operative (click on the link to see a good report on this). The state can help the co-operative movement expand, however it must be done in a way which learns from the mistakes of previous governments.

It is very important that the Green Party gets it approach right in regard to co-operatives. As I wrote in one of my papers, “because workers’ co-operatives demonstrate unique opportunities for work reorganisation, democratic management structures, economic self-governance and even a redefinition of work and property, as Adams et al. put it, “Worker-ownership offers a vision of what ought to be.””

Some people within the Green Party have studied co-operatives in-depth, such as Molly Scott Cato (see here for some of her work on co-operatives). I hope that they can put forward more detailed – and thought out – economic democracy proposals in the future which learn from the lessons of other countries and from the past.

Source of picture: Made – and promoted – by Calverts workers’ co-operative

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First published on Mon, 2006-05-08

I’m not going to go into detail about the contents of Saturday’s Power Conference. For that, you can look at Davide Simonetti reporting/blogging it here.

What I will say is that I got the chance to ask David Cameron whether he supported participatory budgets. My question was more or less as follows: “Mr Cameron, one of the main things that I took from the Power Inquiry is the lack of power that I have as an individual over decisions that affect my life. What do you think about participatory budgets, like the one in Porto Alegre, where citizens have control over 17% over their local budget? There have been initial experiments in the UK with participatory budgets, such as in Harrow. Do you support these in the UK?”

In typical politician fashion, he did not directly answer my question. He did not address the idea of communities and individuals having control over a portion of the budget, or the idea of truly giving power to people. Instead, he talked about the fact that police commissioners should be elected and that visionary civic leaders are needed. Bastard! I should have shouted out that he didn’t answer my question, like other people did later when he didn’t answer their questions. Oh well, I’ve learnt my lesson there. Instead I sent him an email, although I doubt he will respond.

Apparently the event will be covered this week on BBC Parliament, so people out there will be lucky enough to see me ask my question (and David Cameron’s rubbish answer).

Exploring Active Citizenship

I have just finished reading a book which I picked up from the Power Conference which has gone straight onto my list of favourite books of all time: Beyond the Classroom – Exploring Active Citizenship in 11-16 Education which is edited by Benjamin Linsley and Elisabeth Rayment.
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First published on 2007-06-26 13:20

(The Fairtrade shop at Pentrehafod School is run by a student workers’ co-operative – Source: Times Educational Supplement)

At the recent co-operative congress, I went to a fringe meeting hosted by the UK Society for Co-operative Studies on ‘Where are the co-operators of the future to be found?’ Kevin McGrother (Young Co-operatives), Kirsty Palmer (Woodcraft Folk General Secretary), Mags Bradbury (Membership Diversity, Co-op Group) and Pam Walker (East of England Co-op Education Dept.) all spoke about their experiences in this field.

This was one of the most eye opening events of the Congress. I had not realised that co-operative educators had been teaching kids in schools across the country how to set up their own workers’ co-operatives. Kevin McGrother talked in detail how Young Co-operatives had been advocating the worker co-operative model in schools. They help small groups of young people to set up their own workers’ co-operatives to sell Fair Trade products. Apparently, they have been involved to some extent in around 350 schools.
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First published on Sun 2008-06-22

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As I said in my last blog post, after I sent an email to the Cranks mailing list we discussed the politics of Cranks in one of our bi-weekly meetings. I haven’t been able to post these thoughts up sooner because I have been offline for a month building a roundhouse with Tony Wrench in South West Wales. More on that later, but for now..

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First published on Thu, 2008-04-17 14:49

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I have been helping out in Cranks, a community bike workshop in Brighton, since last September. A few days ago I sent the email below to our mailing list about the politics of Cranks. I thought I’d put it online because it reflects some of my current thinking as well as giving an insiders view of Cranks. Yesterday we discussed some of the points in the email in a group meeting. I’ll be posting in a few days some of the outcomes from the meeting and my thoughts on them.

Please note before you read this email that some of the ideas in this email come from my paper on workers’ co-operatives and two previous blog posts on capitalism.

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First published on Fri, 2008-04-04

(Source of image)

I have written extensively about what is wrong with the mainstream media and the benefits of co-operative ways of working. The article below outlines one of the most interesting alternatives or synergies that I have come across – The Dominion paper based in Canada.

What is especially fascinating is the multi-stakeholder co-operative ownership structure it is using:

“As opposed to the more common consumer or worker co-op models, organizers have set up what they call a “solidarity co-op” to allow for three different classes of members—readers, writers and editors—giving each different rights and responsibilities while still ensuring that each can influence how the co-op functions and the kinds of issues it tackles.”

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