An independent report commissioned by the Mutuals & Co-operatives Together (MCT) Group argues that addressing financial barriers to the sector will help deliver an outsized economic and social impact in the UK.
The Harnessing the Mutuals sectors potential for Growth report, produced by WPI Economics, says the 9,500+ mutuals and co-operatives in the UK, which represent 68.8 million memberships, are “punching well above their weight”.
But to build on this, it says, the government – which has pledged to double the size of the UK co-op and mutual economy – needs to remove barriers such as limited access to finance, outdated legal frameworks, and lack of awareness among investors.
Leaders of the co-op movement have made repeated calls over the years for these changes, scoring some successes such as the passage in 2023 of the Co-ops, Mutuals and Friendly Societies Act. But more action is needed, with the act’s sponsor, Labour / Co-op MP Mark Hendrick, describing it at the time as “a first step in the co-operative agenda“ for the incoming Labour government.
Restating the case for reform, the new report says that mutuals generate £35bon in direct gross value added (GVA) and support over 1.5% of the UK economy, despite making up just 0.2% of businesses.
Together, it adds, they contribute £93bn in total economic impact when indirect and induced effects are included, while adding significant co-benefits in productivity, pay, resilience, community wealth, decarbonisation and wellbeing.
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The MCT Group, which commissioned the research to support government’s work with the sector, wants ministers to take early action to address financial barriers to growth – such as directing enterprise funding through institutions such as the British Business Bank – and to work with the Mutual and Co-operative Sector Business Council to help catalyse growth.
“This report offers key insights that support the government’s ambition and make a huge economic and social impact,” said Robin Fieth, CEO of the Building Societies Association, on behalf of the MCT Group.
“By improving access to capital and removing legal and regulatory barriers, ministers can unlock mutuals’ full potential to boost economic growth and deliver real benefits for people and communities across the UK.
“With the right conditions, mutuals could grow at an annual rate of 7.2%. Achieving this would mean a 34% increase over this Parliament alone and would be double the economic growth forecast for the UK as a whole.”
The report recommends:
- Targeted reforms to improve mutuals’ access to capital.
- Proportionate allocation of enterprise finance and business support to mutuals.
- Swift implementation of the Law Commission’s review of mutual law.
- Establishment of specialist investment institutions to support mutual growth.
- Support for mutual leaders, including tailored advice and capability-building initiatives.
Rose Marley (pictured), CEO of Co-operatives UK, said: “Mutuals and co-operatives are built to serve people, not shareholders. They are resilient, sustainable, and inherently inclusive making them uniquely suited to address the UK’s biggest challenges. From financial services and housing to energy and education, mutuals are innovating and investing in their communities.
“The sector is ready to do more. Now is the moment to work together to remove the barriers that hold them back and deliver on the government’s ambition to double the size of the UK’s co-operative and mutual economy.”
