What are the business advice needs of co-operative enterprises? – Working Draft, not to be cited as the views of Co-operatives UK 2013

Executive summaryWhat were we asked to do?

Co-operatives UK invited Rocket Science to carry out research into the business advice needs of co-operative enterprises. This was partly around the co-operative nature of the enterprises involved and the way in which the values of co-operation are central to the mission of such organisations. But, equally importantly, it was around the need to demonstrate that co-operatives can be commercial and sustainable businesses that can have significant potential for growth.

Their concerns were identified as:

The range of guidance, expertise and support that is and may be required by co-operative practitioners in the future;

Analysing current areas of deficiency (both in terms of gaps and quality); Identifying opportunities for collaboration and the transfer (rather than

just the dissemination) of knowledge; How to make access easier to good quality business information and

advice for co-operatives (including those thinking of setting up a co-operative);

How to develop more effective marketing to promote the co-operative model;

The issue of a professional development programme for practitioners; and The merits of a professional institute for co-operative development (IPD).

This was seen as requiring desk research, a survey of both users and those providing a service, and interviews or focus groups to generate the information and ideas that could be turned into practical and achievable recommendations.

In discussions with the ‘Task and Finish Group’ we were asked, in particular, to look at the different needs of small, medium and large co-operatives and how these are being met.

What did we do?

The first part of our work was to look at the existing policy and practice framework and to describe those policies and activities that are already being delivered in different parts of the UK.

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The second part was to interview a number (27) of experts and practitioners on support services and assess the issues they raised, including the question of standards and the need for a professional institute.

The third part was to survey those using these services to see what use they made of them and what gaps and deficiencies they identified. The survey was completed by 132 organisations.

What did we find out?

Background

It is worth noting a number of broad issues raised with us during interviews. A majority of interviewees made the point that co-operatives were driven by a particular set of values and that any business advice which could not relate to, or understand, these values would not get to the heart of the matter.

But the point was made with equal strength by other interviewees that unless co-operatives are commercial and sustainable, they will fail as businesses. They linked this to a matter of perception – that co-operatives are sometimes seen as ‘alternative’ businesses and, implicitly, ‘not business like’.

One of the implications of this last point is the need to get more ‘technical’ expertise into co-operative support in the form of, for example, more accountants and lawyers who understand and want to support co-operatives.

A second implication was that those who share co-operative values as business advisors often lack the depth of business expertise to really help co-operatives grow and prosper.

Context

Business advice needs to be set in the context of reducing resources at a national and regional level with cuts in generic business support and the abolition of the RDA network. The cuts have also had an impact on specialist intermediaries at the regional level.

Co-operatives as a business model are, however, performing well in relation to other types of business. Overall, they have outperformed the ‘conventional’ economy since the recession.

Findings

National

All the interviewees were clear that the Co-operative Hub (the HUB) had made a positive difference. A practical example of this is in Northern Ireland where HUB support has helped eight new co-operatives in a single year, compared with five in the previous five years.

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A number of interviewees, however, took the view that this did not always translate down to individual advisors who were more concerned with, for example, a business plan as a document to be written, rather than the result of a process of development.

The second positive aspect of the HUB was felt to be the way in which it had enabled a national network of, in particular, specialist advisors to develop and be linked up. However, it was also pointed out to us that promotion of, and knowledge of, these networks was not yet as good as it might be.

It was suggested by some interviewees that a number of suppliers may become over-dependent upon the HUB for business. In this sense there is a real danger that the market is driven by supply, rather than demand.

A number of comments related to the question of (limited) resources and the constraints this imposes, both in terms of the level of support (a fixed number of days) and quality. One of the questions raised with us was the absence of any levy (as is the case in European countries) to fund development and support costs.

The national perspective also raised for interviewees the issue of providing a ‘voice’ to government through Co-operatives UK and lobbying on behalf of co-operative development. This is clearly an issue of perception, in the sense that this is precisely the role that Co-operatives UK takes and raises, for us, the question of whether this role is sufficiently explained or understood.

Finally at the national level, a number of points were made about the need for more collaboration with partners sharing a common agenda. One such partnership is with Locality around community shares (and might look at how other Locality services could be leveraged in) and another is with the Plunkett Foundation around community shops in rural or semi-rural areas and similar developments.

Regional (and smaller nations)

In Scotland, Wales and Northern Ireland there are distinctive approaches which relate to both the nature of co-operative development and the structure of devolved government and its funding.

Scotland has a separate organisation (Co-operative Development Scotland -CDS) which is part of Scottish Enterprise. CDS sits alongside other support agencies, in particular the Scottish Agricultural Organisation Society (SAOS). A number of local authorities in Scotland (for example Edinburgh) are also looking at a serious push on co-operatives in terms of service delivery.

Wales receives part of its funds from the European Union (EU) under the current structural funds programme, which imposes restrictions on types of enterprises to be supported, activities and outcomes required. But the Welsh Government is also currently consulting on the future of co-operative development and may wish to adapt or enhance its approach in the future.

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In Northern Ireland, the BIG Lottery has supported co-operative development infrastructure through its Building Changes Trust, though the pattern of co-operative infrastructure support is complicated by the need to relate to ‘the island of Ireland’ as well as the rest of the UK. There is a feeling that NI is ‘behind the curve’ compared with the rest of the UK.

In the English regions, the story we were told was of significant variation and ‘patchy’ coverage. This was true both between regions (in one region all assessments are done by the same member of staff) and within regions; with significant differences in support as little as 20 miles apart. We were told of significant differences in terms of quality, skills/expertise and practice, meaning support was still ‘a postcode lottery’.

Support needs and gaps: views of users and intermediaries

Vision and values first?

The most consistent, and strongest, message given to us was the need to place vision and values at the heart of co-operative development and to understand how this distinguishes co-operatives from both conventional business models and ‘cousins’ such as social enterprises and social firms.

The most consistent criticism of business support was where it failed to understand this and saw a business plan as being broadly similar, no matter what ownership structure was in place. This was linked by some interviewees to the fact that many business advisors had no actual experience of co-operative working or co-operative governance.

Interviewees were also clear that there were significant differences involved in ‘multi-stakeholder’ business processes and where democracy was an essential element in decision making. It was put to us that two central issues were around taking decisions and resolving conflicts in a democratic or at least ‘non-hierarchical’ way and the skills and support required to do this. It was also put to us that co-operatives had actually fallen behind conventional business thinking on employee engagement.

Generic or specialist support?

The broad consensus of those interviewed was that there are not enough specialists in areas where co-operatives need specific support. This ranges from particular sectors (technology was mentioned to us) to areas of technical expertise (“not enough accountants in our area understand co-operatives”).

Nor is there an accurate ‘map’ of specialist provision, by region, by technical area so that this can be drawn on at a national, regional and local level. Since the specific gaps in knowledge and needs are unlikely to be matched at a regional level this wider picture is crucial.

Recognising the limitations of generalists is an important point because, amongst other things, it takes pressure off generalists to pretend they know

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about things. Often the most useful comment by a business advisor is ‘I don’t know about this area’, followed by the second most useful comment ‘But I know someone who does’.

Having a wide range of specialists implies sufficient volumes of work to keep them busy and up to date in terms of their experience.

Support from teams or individuals?

The Plunkett Foundation made a number of interesting points in this area, which were also mentioned by a number of interviewees.

The starting point was that no individual would have all the skills required to create a successful enterprise and that the support from other team members was helpful in stimulating problem solving. In practice this means a mixture of national advisors/experts and local workers.

Any team based approach will be over a longer-period of time, but this also fits in with Plunkett’s view of relationship management (see below).

The other implication for this approach is in relation to accreditation, where it may be possible to see organisations being accredited, who then select advisors according to their own standards, rather than each individual advisor being accredited.

Relationship management

Those who felt they had received a good service from an advisor were clear that the quality of the relationship was central to the success of the engagement. This requires an effective matching process. Since the client is not paying for the service, there may be a tendency to accept support which would not happen if the client had to fund the intervention from its own resources.

Pre-start up support

A number of interviewees made the point to us about the need to have a plentiful supply of those at the pre-start up stage in order to create a supply of start-ups. It was put to us that because of the structure of support, advisors were keen to push people into the ‘start-up’ category so that funding could be drawn down, even when this was premature.

Moving from small to medium

Most interviewees felt that the biggest gap was around support and advice for co-operatives who wanted to grow from, say, five or six members (or around a turnover of 250K) to around 20 members (and a corresponding turnover of £1 million or more).

This raises issues of finance, of more complex organisational structures and hence of governance. It also raises the issue of the process by which new members are recruited and, in the longer-term to issues of succession planning

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beyond the original founders. We asked for examples of where this had been successfully achieved, but concluded that these are few and far between. Perhaps a better and more accurate way of putting this is that such expansion, where it has taken place, has taken a long time and, if the co-operative movement wants co-operatives to grow rapidly, then this is a key area to be addressed.

Better networks and peer to peer support

The final set of points made to us in the interviews concerned creating better networks and the importance of peer support. Networking is both relevant to co-operatives and advisors.

Many interviewees made the point that there is ‘hidden’ expertise locked in existing co-operatives (especially larger ones) and that one way of increasing the volume of specialist advice is by finding ways of making this available to both starting and (more likely) growing co-operatives.

The analogy used to us by one interviewee was that of ‘corporate social responsibility’ in the private sector. This could be turned into a structured offering and linked to a national network to share best practice.

One suggestion here was the use of a website/portal through which co-operatives could either identify projects/activities needing support or those with skills who could offer that support. This would function as an informal ‘dating’ agency and, rather like e-bay could have a mechanism for evaluating/rating the support offered.

Sustainability of intermediaries

Development and support have costs and that the current view is that more support is needed, deeper support is needed and support is needed over a longer period of time.

Interviewees had a wide range of views on how this should be funded. However, it is fair to say that the long-term solution was seen as customers choosing to spend their own resources on support. In short, the creation of a market mechanism.

However, with smaller and medium sized co-operatives, the problem is a lack of resources to pay for support. At a time of economic plenty this was less of an issue, because government was willing to pay for such services and to support intermediaries. This is not the case in the current economic environment. Clearly there is a question for Co-operatives UK to decide on the extent to which it wishes to (and has the resources for) support a series of regional intermediaries.

CPD and the IPD

No clear consensus emerged from our consultation. Though interviewees and organisations could see the value in accreditation, they also recognised a

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number of drawbacks, including the issue of who sets standards and accredits, the question of determining core skills and specialist skills and the problem of updating and renewing accreditation.

They also recognised the danger that, rather like Investors in People, accreditation can become a ‘tick box’ exercise rather than a genuine attempt to identify quality in provision.

The survey indicated a worry that the current age profile of advisors would mean that new advisors would need to be brought on and this would involve a quality threshold they would be required to meet.

A number of interviewees suggested that organisations might be accredited, rather than individuals and that the organisation could then identify suitably qualified and experienced business advisors.

Conclusions and recommendations

We have seen from the interviews and survey of users and providers that co-operatives share a number of features with other businesses. What makes them different is the underlying vision and values of co-operation. If we wish to understand how to support the growth of the co-operative model in current economic circumstances it follows that we need to understand these similarities but be able to focus on the differences.

For start-ups, the main issues presented to us were around ensuring that the support and advice was rooted in an understanding of co-operative values and being credible in terms of business expertise. Though this requires generic business skills, it also requires quite specific co-operative development skills.

The central issues raised with us were around the uniform level of support offered by the HUB (4 days) and the need for flexibility and variation along with the need for more support at the pre-start-up level in order to increase the volume of activity in this area.

We recommend that:

Support from the HUB is made more flexible in terms of time allocated (i.e. some organisations can receive more than four days support);

More work is done on the pre-start phase, and that incentives need to move away from encouraging inappropriate start-ups to gain funds;

HUB advisors are supported to develop more specialist skills and made more aware of specialist provision in their area.

For more established co-operatives, especially those who were looking to grow from say five workers to 20 workers, the main issues raised were around finding ways to finance growth (including the availability of soft loans) and ways to tackle more complex governance issues as membership increases. The need to both resolve differences and take decisions in a democratic way when larger

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numbers of people are involved requires more specialist support and more skilled support, based on experience of co-operative work.

Support in this area is patchy between regions (and often within them) in terms of access, availability and quality of advisors.

For the largest co-operatives, especially those in retail, we found that they were usually able to access the specialist support they needed from the market place. There seemed to be a level of disconnection between specific co-operative support agencies and this segment of the market place. We were told that of the 10 largest worker co-operatives, only one had been supported by a CDB.

We also found that the larger co-operatives were willing to consider how they could offer support to other co-operatives through staff skills and knowledge as, in effect, a corporate social responsibility (CSR) contribution.

We recommend that:

More specialist support is made available for medium sized co-operatives wishing to develop and grow;

Services should be developed around conflict resolution and decision making in expanding co-operatives;

Services should be developed around accessing appropriate finance for these co-operatives including linking to Locality on the development of community shares;

The Plunkett Foundation model of teams of advisors operating in clear market segments over a sustained period of time should be promoted and imitated;

The resources of larger co-operatives should be used to provide specialist advice. We would describe this as insourcing rather than outsourcing support. A pilot should best established to test out the benefits of the model.

The users of co-operative support agencies have different needs. The general points they stressed to us were around:

The importance of co-operative skills and understanding the values of co-operatives;

The need to root business support in long-term relationships with advisors; The need for more specialist rather than generic advisors; The importance of experience and ‘word of mouth’ recommendation over

formal qualifications; The regional variations in terms of access to support and the quality of

support; The need for support intermediaries to be more pro-active in the market

place and not just respond to demand; The need for Co-operatives UK to look at how to support co-operatives

wanting to grow beyond the initial start-up phase.

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One of the biggest issues is that of survival and sustainability. At the moment there appears to be a huge dependency on clients via the HUB or on EU funds.

This raises the important long-term issue for intermediaries of what happens should funding reduce from either source. One way of funding the work of intermediaries, other than Co-operatives UK, would be through some form of levy on larger co-ops, but there are other options around going to the BIG Lottery for a specific project, in the way that the Plunkett Foundation has done.

There is a potential for both a more strategic relationship and a more practical relationship with the Plunkett Foundation and Locality. The work on community shares with Locality is an example of collaboration that could be developed.

In looking at the Plunkett Foundation we were impressed by a number of features that could be adapted by intermediaries supporting co-operative development. The most important of these are:

The use of teams, rather than individuals, to support organisations (which allows for a combination of generic and specialist support);

The acceptance that a long-term engagement is important to long-term success (96% of community shops are still open);

The importance of shared learning and networks amongst advisors; The need to be proactive and look for people to support; The need to focus on a few areas and be good at them.

An important caveat here is that we are not suggesting all intermediaries should be promoted or preserved at all costs so that the ‘map’ of intermediaries is complete in terms of UK coverage. In our view, the failure and closure of poorly performing CDBs may be essential for the re-allocation of resources to more effective organisations. High quality coverage, which meets the advice needs of co-operatives, is not the same as local geographical monopolies or cartels of suppliers who are not meeting customer needs.

Finally, though advice users were keen to stress the co-operative credentials of advisors and support agencies. We would also argue that understanding how a co-operative works is not a substitute for business skills and this was reflected in a number of comments from practitioners about the quality of business advice.

1.IntroductionWhat we were asked to do

The tender from Co-operatives UK identified two audiences. The first audience was that of co-operative development practitioners.

Their concerns were identified as:

The range of guidance, expertise and support that is and may be required by practitioners in the future;

Analysing current areas of deficiency (both in terms of gaps and quality);

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Identifying opportunities for collaboration and the transfer (rather than just the dissemination) of knowledge;

The issue of a CPD programme; and The merits of a professional institute for co-operative development (IPD).

The second audience was that of Co-operatives UK itself, where the issues were identified as:

How to make access easier to good quality business information and advice for co-operatives (including those thinking of setting up a co-operative);

How to develop more effective marketing to promote the co-operative model.

This was seen as requiring desk research, a survey of both users and those providing a service and interviews or focus groups to generate the information and ideas that can be turned into practical and achievable recommendations.

In discussions with the ‘Task and Finish Group’ we were asked, in particular, to look at the different needs of small, medium and large co-operatives and how these are being met.

What we have done

The first part of our work was to look at the existing policy and practice framework and to describe those policies and activities that are already being delivered in different parts of the UK.

The second part was to interview a number of experts and practitioners on support services and assess the issues they raised, including the question of standards and the need for a professional institute.

The third part was to survey those using these services to see what use they made of them and what gaps and deficiencies they identified. The survey was completed by 132 organisations.

This has enabled us to describe some features of the landscape and to identify areas for further investigation.

A list of the 27 people we have interviewed is included at the end.

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2.What we have found outBackground

Because people often tend to focus on organisational structures, rather than business activities, co-operative development has been seen as a specialist and niche field. Despite the existence of separate business support organisations in Scotland (CDS) and Wales (WCDA) –or perhaps because of them – those seeking support on co-operatives are pushed into a discussion of how to set up a co-operative at a technical level, rather than exploring whether this is the right route and, more importantly, what are the consequences of setting up a co-operative in terms of aspirations, values and behaviours.

An extreme example of this in the past was the way in which establishing a co-operative was seen as the solution to conventional business failure (Meriden, Fisher Bendix) without asking the question whether a co-operative model suited the aspirations and skills of the workforce and management and was credible within the market the ‘new’ business would operate in. This debate is currently going on again in the context of Remploy, where threatened factory closures are being met by the possibility of a co-operative taking over parts of the operation in order to preserve the jobs of people with disabilities.

It is also connected with changes to generic business advice services in the UK and its constituent parts, where the abolition of the Regional Development Agency (RDA) network and the reduction of support for intermediaries (especially in the social enterprise/not-for-profit distribution space) has led to resources being spread too thinly to be useful or effective for a number of types of business. It has also led to services being delivered on line , which hinders any

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real exploration of business values and often turns the exercise into a technical ‘box ticking’ exercise where the template for the business plan is more important than why people want to go into business in the first place.

Our understanding of co-operative business models

Though the co-operative business model is defined by a number of key characteristics (especially around governance and the use of profits) this still permits a number of variations. For example, a Credit Union (as a financial co-operative) is still very different from an employee buy-out of a former family business in terms of both its vision/values and way of operating.

For the purposes of this work we have used the following typology to differentiate between different co-operative models:

Mutuals – where users as well as staff are involved; Employee ownership and Workers’ Co-operatives (including buy-outs of

non-co-operative businesses); Community co-operatives – where shared ownership is vested in an area

(through, for example a community shares issue); Consortia – where several co-operatives come together as individual

businesses to bid for more substantial contracts.

The implication is that though co-operatives have a certain ‘family resemblance’ to each other, there are important differences which need to be teased out at the beginning of the journey towards setting up a co-operative. One point made to us in the interviews was the tendency (especially by advisors who have not worked in co-operatives themselves) to almost take an Industrial and Provident model as given so that the structure is determined before the strategy is articulated. We return to this issue later on.

The current state of the Co-operative movement in the UK

Although it is not the purpose of this report to examine and comment upon the state of the wider co-operative movement in the UK, some general remarks are in order and may be helpful in terms of promoting the business support agenda.

The first point is the extent to which the co-operative movement has weathered the economic storm better than many conventional business models. Between 2008 and 2011 co-operatives increased their output by 19.6%, compared with a 1.7% fall in the UK economy as a whole.

The balance of activities in terms of numbers of co-operatives is heavily weighted towards those defining themselves as leisure services (49%), retail (14%) and finance (5%; but in terms of turnover, some 71% is generated by retail co-operatives, followed by agriculture with 11% and finance with 5%.

The second point is that the co-operative movement (partly because of its values) is well placed to take advantage of a number of growth areas such as the

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field of green energy/renewables, ethical retailing and production (beef lasagne anyone?) and what might be termed ‘trust based’ services such as banking and finance, child care and social care in general.

The third point is that although the vast bulk (97%), of the £37Bn in co-operative revenues are generated by the 178 co-operatives with a turnover in excess of £5 million, there is vibrant growth in newer and smaller co-operatives. Some 26% of co-operatives have a turnover of less than 25K and 65% have a turnover of less than 250K. The question, as we shall see later, is how these might be grown into ‘middle range’ co-operatives with a turnover of 500K - £1 million. This is not just a matter of preference for the co-operative movement. As an interviewee put it, “If you want to grow more co-ops, you need more co-ops to grow.” It is also related to the issue of longevity. Many interviewees made the point to us that there were co-operatives with a long history and an increase in new/start-ups, but a shortage of co-operatives founded in the 1980s/90s.

What then are the barriers to growth within the co-operative movement? These are not uniform within sectors and within different sizes of co-operatives. If we look at external and internal barriers then it is possible to suggest that the external barriers are those thrown up by current market conditions. For example large retail co-operatives and large agricultural co-operatives are faced with very tough trading conditions and smaller retail operations are affected by lower margins caused by increases in primary product prices and low/no growth in consumer spending.

Internally, barriers to growth can often come together around how co-operatives resolve differences and take decisions within a democratic framework. They are also related to the availability of specialist advice that meets the needs of the co-operative as a particular business (in retail or manufacture), rather than in generic terms, along with the issue of raising finance to fund growth in an affordable and sufficiently flexible way (equity as opposed to increased borrowing).

Initial conclusions on existing support services

There are a range of services available to co-operatives businesses at national, regional and local scales. Much of this advice is concerning business planning, appraisal and feasibility studies, as well as through training opportunities and consultancy services.

From a number of interviews with those providing support services and those receiving services we can see that a number of views and questions emerge. These are, to a certain extent, affected by size.

An initial observation concerns the cultural context of co-operatives within the UK. A number of interviewees made the point that ‘Britain is not Europe’ and that it is not possible to look at successful co-operative models in, say, Spain or Italy and to simply import them. They may have lessons, but the lesson cannot

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be one of simple replication; in much the same way that the excellence of childcare in Sweden cannot be brought into the UK without turning the British into Swedes.

National

All the interviewees were clear that the Co-operative Hub (the HUB) had made a positive difference and that those at the centre understood the co-operative agenda and understood the specific and distinctive nature of co-operative development. A practical example of this is in Northern Ireland where HUB support has helped eight new co-operatives in a single year, compared with five in the previous five years.

A number of interviewees, however, took the view that this did not always translate down to individual advisors who were more concerned with, for example, a business plan as a document to be written, rather than the result of a process of development. Given that (according to the survey carried out by Jim Brown) a majority of HUB advisors have not had the experience of being/working in a co-operative, this may not be surprising. Of course, we need to be careful here about definitions, and there are certainly concerns about how ‘experience of working in a co-operative’ is defined in the survey mentioned. Our point is that interviewees had a varied experience of advisors and that advisors themselves had strong views on the quality of some of their peers.

The second positive aspect of the HUB was felt to be the way in which it had enabled a national network of, in particular, specialist advisors to develop and be linked up. However, it was also pointed out to us that promotion of, and knowledge of, these networks was not yet as good as it might be. For example, the distribution of interest in establishing community pubs is unlikely to be explained by differences in drinking habits.

In addition it was suggested by some interviewees that a number of suppliers may become over-dependent upon the HUB for business. In this sense there is a real danger that the market is driven by supply, rather than demand. This is masked by the availability of what is ‘free’ support rather than customers choosing to spend their resources on support.

A number of comments related to the question of (limited) resources and the constraints this imposes, both in terms of the level of support (a fixed number of days whatever the issues) and quality. One of the questions raised with us was the absence of any levy (as is the case in European countries) to fund development and support costs.

The national perspective also raised for interviewees the issue of providing a ‘voice’ to government through Co-operatives UK and lobbying on behalf of co-operative development, in the way that Social Enterprise UK or the CDFA sees itself as lobbying for sustainable income streams to support the development of their members and changes in public procurement to enable their members to compete for public service contracts on the basis of best value rather than

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lowest cost. Several interviewees made the case for a clearer, more coherent and better promoted ‘prospectus’ for co-operatives, which could be used with government. This is clearly an issue of perception, in the sense that this is precisely the role that Co-operatives UK takes and raises, for us, the question of whether this role is sufficiently explained or understood.

Finally at the national level, a number of points were made about the need for more collaboration with partners sharing a common agenda. One such partnership is with Locality around community shares (and might look at how other Locality services could be leveraged in) and another is with the Plunkett Foundation around community shops in rural or semi-rural areas and similar developments (where its team approach, advisor networks and long-term involvement might have lessons). It was felt that the HUB had helped to create a national understanding of these other providers/partners.

Regional (and smaller nations)

In Scotland, Wales and Northern Ireland there are distinctive approaches which relate to both the nature of co-operative development and the structure of devolved government and its funding.

Scotland has a separate organisation (Co-operative Development Scotland -CDS) because of a manifesto commitment, which is part of Scottish Enterprise, even though a more logical home might have been within Highlands and Islands Enterprise which has a history of this sort of community and co-operative based development. CDS sits alongside other support agencies, in particular the Scottish Agricultural Organisation Society (SAOS) in the area of agriculture, and is not the biggest player in Scotland. A number of local authorities in Scotland (for example Edinburgh) are also looking at a serious push on co-operatives in terms of service delivery.

Wales receives part of its funds from the European Union (EU) under the current structural funds programme, which imposes restrictions on types of enterprises to be supported, activities and outcomes required. But the Welsh Government is also currently consulting on the future of co-operative development and may wish to adapt or enhance its approach in the future.

In Northern Ireland, the BIG Lottery has supported co-operative development infrastructure through its Building Changes Trust, though the pattern of co-operative infrastructure support is complicated by the need to relate to ‘the island of Ireland’ as well as the rest of the UK. Because of reductions in funding for co-operative development after the 1990s there is a feeling that NI is ‘behind the curve’ compared with the rest of the UK and needs to invest more time and effort in the ‘pre-start-up phase’ of co-operatives.

In the English regions, the story we were told was of significant variation and ‘patchy’ coverage. This was true both between regions (in one region all assessments are done by the same member of staff) and within regions; with significant differences in support as little as 20 miles apart. We were told of

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significant differences in terms of quality, skills/expertise and practice, meaning support was still ‘a postcode lottery’. This was often influenced (we were told) by the availability of EU funding (especially through the European Social Fund - ESF) in a region. Currently this is awaiting the agreement of the next programme period to take effect in 2014.

Support needs and gaps

Vision and values first

The most consistent, and strongest, message given to us was the need to place vision and values at the heart of co-operative development and to understand how this distinguishes co-operatives from both conventional business models and ‘cousins’ such as social enterprises and social firms. At one level this is surprising, since in work we have done for SME and social enterprise development agencies, the most consistent message is about viability and sustainability. It may, of course, be that the need to be sustainable is implied in any discussion of co-operatives and need not be stated explicitly.

The most consistent criticism of business support was where it failed to understand this and saw a business plan as being broadly similar, no matter what ownership structure was in place. This was linked by some interviewees to the fact that many business advisors had no actual experience of co-operative working or co-operative governance. Equally importantly, ownership structure was seen as a ‘values based’ rather than ‘technical’ issue. Put simply, there are different types of co-operative solution which will meet the aspirations of the workers or communities, rather than a single solution (such as an Industrial & Provident Society).

It does not follow from this that there will not be areas in which a non-co-operative expert cannot add value to building a co-operative business. A cash flow forecast could be produced by such an outsider and a good HR professional may well have insights that would be useful for a co-operative. What matters is the context within which these sit and understanding why this might be different. It is often said that 80% or 90% will be the same in terms of a conventional business and a co-operative. Though this may be true, the crucial question is about the 10%- 20% that is different and how important this is. Though I share 95% of my DNA with a dolphin, the 5% becomes important if I want the dolphin to produce a cash flow forecast for me.

Nor does it follow from this that a business focus is not important. In other words, if the business idea is not sound, then a co-operative will fail just as easily as any other model. Credit Unions can be a very good example of this failing, where the price charged for money cannot cover the cost of overheads and the risk of the potential borrowers if the Credit Union does not achieve sufficient scale and lends to the wrong sort of customer. It does follow that those offering

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advice need experience in business (and in that sort of business) as well as in co-operative development.

Interviewees were also clear that there were significant differences involved in ‘multi-stakeholder’ business processes (compared with discussing a plan with the two founders of an SME) and where democracy was an essential element in decision making. It was put to us that two central issues were around taking decisions and resolving conflicts in a democratic or at least ‘non-hierarchical’ way and the skills and support required to do this. It was also put to us that co-operatives had actually fallen behind conventional business thinking on employee engagement.

Generic or specialist support?

The broad consensus of those interviewed is that there are not enough specialists in areas where co-operatives need specific support. This ranges from particular sectors (technology was mentioned to us) to areas of technical expertise (“not enough accountants in our area understand co-operatives”). And, the point was made to us that this was a lack within the co-operative movement, rather than co-operative intermediaries.

Nor is there an accurate ‘map’ of specialist provision, by region, by technical area so that this can be drawn on at a national, regional and local level. Since the specific gaps in knowledge and needs are unlikely to be matched at a regional level this wider picture is crucial. Moreover, it is crucial that any map can be updated frequently and with some degree of accuracy so that it remains contemporary. Perhaps of more importance here is the difference between having a map and understanding the terrain. By this we mean having a map is not as useful as having local knowledge about the ‘lie of the land’ and understanding who is a good and effective advisor as opposed to who meets certain technical criteria.

Recognising the limitations of generalists is an important point because, amongst other things, it takes pressure off generalists to pretend they know about things. Often the most useful comment by a business advisor is ‘I don’t know about this area’, followed by the second most useful comment ‘But I know someone who does’.

Having a wide range of specialists implies sufficient volumes of work to keep them busy and up to date in terms of their experience. In a different field, the Bristol heart surgery scandal shows the dangers of ‘specialists’ who do not get enough practice. Frequency and regularity are important features of keeping specialist skills up to date.

Support from teams or individuals?

The Plunkett Foundation made a number of interesting points in this area, which were also mentioned by a number of interviewees.

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The starting point was that no individual would have all the skills required to create a successful enterprise and that the support from other team members was helpful in stimulating problem solving (as opposed to dealing with issues as technical ones). In practice this means a mixture of national advisors/experts and local workers.

Clearly any team based approach will be over a longer-period of time, but this also fits in with Plunkett’s view of relationship management. And, as above, it will require sufficient volume of work to make specialist expertise worth finding and retaining.

The other implication for this approach is in relation to accreditation, where it may be possible to see organisations being accredited, who then select advisors according to their own standards, rather than each individual advisor being accredited.

Relationship management

Those who felt they had received a good service from an advisor were clear that the quality of the relationship was central to the success of the engagement, not just ‘expertise’. One issue this raises is of the matching process and two points were made to us by interviewees. The first was the effectiveness (or not) of the HUB process in terms of matching advisor to client. Since the client is not paying for the service, there may be a tendency to accept support which would not happen if the client had to fund the intervention from its own resources. The second was the perceived emphasis in some regions that it was the funders’ choice, rather than the clients in terms of the personnel used. In other words, a funder might pay for an advisor from their own approved list, but not necessarily the advisor who would have been selected by the client.

Pre-start up support

A number of interviewees made the point to us about the need to have a plentiful supply of those at the pre-start up stage in order to create a supply of start-ups. This journey can take some time, depending on the complexity of the issues and the willingness of those wishing to set up a co-operative. It was put to us that because of the structure of support, advisors were keen to push people into the ‘start-up’ category so that funding could be drawn down, even when this was premature. There was also the view put to us that the HUB turned down too many ‘pre-starts’ because they did not fit its criteria.

The point is not that pre-start-up support should not be funded; rather the point is that it should be funded for what it is and that it may take some considerable time before even reaching the start-up stage. For example, setting up a co-operative in Aberdeen on the current Remploy site has taken over two years of discussions and support.

Moving from small to medium

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Most interviewees felt that the biggest gap was around support and advice for co-operatives who wanted to grow from, say, five or six members (or around a turnover of 250K) to around 20 members (and a corresponding turnover of £1 million or more).

As we have noted elsewhere, this raises issues of finance (loans or members’ equity?), of more complex organisational structures and hence of governance. It also raises the issue of the process by which new members are recruited and, in the longer-term to issues of succession planning beyond the original founders. We asked for examples of where this had been successfully achieved, but concluded that these are few and far between. Perhaps a better and more accurate way of putting this is that such expansion, where it has taken place, has taken a long time and, if the co-operative movement wants co-operatives to grow rapidly, then this is a key area to be addressed. For example, Unicorn Grocery has grown to employ over 40 staff with a turnover in excess of £4 million, but the journey has taken 13 years.

Better networks and peer to peer support

The final set of points made to us in the interviews concerned creating better networks and the importance of peer support.

Networking is both relevant to co-operatives and advisors. Here we are concerned to think about ways where advisors can create networks that are about learning as well as communication and about the transfer of good practice as well as its dissemination.

Many interviewees made the point that there is ‘hidden’ expertise locked in existing co-operatives (especially larger ones) and that one way of increasing the volume of specialist advice is by finding ways of making this available to both starting and (more likely) growing co-operatives.

The analogy used to us by one interviewee was that of ‘corporate social responsibility’ in the private sector. In short, larger co-operatives have the potential to offer ‘pro bono’ support to smaller co-operatives and at the same time use this process to develop their own staff and tap into both expertise and enthusiasm. This could be turned into a structured offering and linked to a national network to share best practice.

One suggestion here was the use of a website/portal through which co-operatives could either identify projects/activities needing support or those with skills who could offer that support. This would function as an informal ‘dating’ agency and, rather like e-bay could have a mechanism for evaluating/rating the support offered.

Sustainability of intermediaries

We have noted that development and support have costs and that the current view is that more support is needed, deeper support is needed and support is needed over a longer period of time.

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This raises the question of how this should be funded; through a grant funder such as the BIG Lottery or EU, through a levy or through clients purchasing services. Interviewees had a wide range of views on this issue. However, it is fair to say that the long-term solution was seen as customers choosing to spend their own resources on support. In short we need the creation of a market mechanism. Such a market operates at the level of larger co-operatives, who have the funds and knowledge to choose effectively, often because they need specific rather than generic support and have a very precise view of the benefits they expect.

However, with smaller and medium sized co-operatives, the problem is a lack of resources to pay for support. At a time of economic plenty this was less of an issue, because government was willing to pay for such services and to support intermediaries. This is not the case in the current economic environment. Clearly there is a question for Co-operatives UK to decide on the extent to which it wishes to (and has the resources for) support a series of regional intermediaries.

An important caveat here is that we are not suggesting all intermediaries (usually CDBs) should be promoted or preserved at all costs so that the ‘map’ of intermediaries is complete in terms of UK coverage. In our view, the failure and closure of poorly performing CDBs may be essential for the re-allocation of resources to more effective organisations. High quality coverage, which meets the advice needs of co-operatives, is not the same as local geographical monopolies or cartels of suppliers who are not meeting customer needs.

Survey resultsIn addition to the insights gained from interviewees, we also need to consider the survey of users.

The survey of users ran for four weeks, until 14th February 2013. There were 11 questions and 132 responses. We suggest that the survey results need to be treated with some caution, given the number of respondents. We were unable to draw any significant conclusions about differences between different sizes of co-operatives from the survey. However, we were able to use follow-up interviews to draw some opinions on this matter. These are discussed later on.

Category of co-operative

Worker owned 38%Agricultural 8%Housing 3%Credit Union 2%None of the above 49%

How much support do you feel you need to be available?

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We asked respondents to choose on a range between 1 (very little) to 5 (a lot) in terms of general business support, business support relevant to a sector (such as retail) or support specific to co-operatives, social enterprise and so on. The average across this question was 2.6, indicating a modest shortfall in requirements, but with a bigger shortfall (score of 2.9) in specific co-operative support.

How much support do you perceive is available in your area?

Here the average score was 2.2, indicating that respondents felt there was not enough support already available to them.

Ranking the type of business support required

We offered respondents nine categories of support:

Business planning Business ideas Marketing advice and support Sales advice Tender winning advice/support Finance/funding advice/support Financial management Legal advice Employment/recruitment advice/support Co-operative governance

There was no clear pattern here, though employment/recruitment and sales advice were the two highest scoring categories. Our conclusion is that respondents felt they needed support across the whole range of subject areas.

Factors preventing access to external business support

We gave respondents six choices to rank:

We don’t know our needs We don’t know providers We don’t know high quality providers Support is too expensive We don’t think we would benefit We receive sufficient support already

Respondents indicated that cost and lack of knowledge of providers were key obstacles and that they were not inhibited because they did not see benefits or did not know their own needs. They were divided on the issue of receiving sufficient support already with equal numbers saying this was the case and that it was an issue for them.

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How much would you pay for advice/support?

We asked respondents to indicate what they would pay ranked by experience in the sector and/or qualifications, and to distinguish between freelance support and support organisations. Experience and qualifications received almost exactly the same ranking and, overall, support organisations were more highly valued than freelance support in each category.

The highest levels were for peer support, that is to say support from a person working in another co-operative. Nearly 24% thought that support was too expensive.

Satisfaction with enterprise support

We asked respondents to rank support they had used:

Type of support % using support

% Satisfactory % Unsatisfactory

National/local social enterprise support organisation

38 84 16

Sector support organisation (eg retail)

44 91 9

Business support provider (including private sector)

48 87 13

National/local third sector support organisation

30 80 20

Co-operative development body

76 92 8

Respondents were both more likely to use co-operative support and rated it most highly.

In terms of what the survey is telling us around gaps in quality we can conclude that there is overall satisfaction with what is provided. This is borne out by written comments on the flexibility and helpfulness of staff. On the question of gaps in provision, respondents felt on balance that there was a shortfall in both sector specific (i.e. their business area) and co-operative specific support.

Interviews with users

One issue raised in interviews was the fact that the Hub offered four days of support and that this was seen as a ‘one size fits all’ policy. This is not an unusual approach, for example the ‘Just Enterprise’ programme for social enterprise in Scotland offers eight days of consultancy. However, there is a feeling that some variation might be appropriate and that, in particular, some

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organisations would benefit from a more extensive period of support. This, of course, raises issues about resources and the balance between depth and breadth in coverage.

In this sense, it is clear that the HUB is part of the solution to developing co-operatives but not the whole story. Interviewees were adamant that there needed to be other support and in particular that there needed to be alliances with others (e.g. Locality, Plunkett Foundation) to help co-operative development, especially in potential growth areas such as green energy, new technology and social care.

A second issue worth raising is that of peer support from co-operative to co-operative. A number of discussions made the point that those receiving support trusted the source of the advice and were more likely to grasp the practical application of what was being offered. It was also pointed out to us that such a mechanism could also be an important source of personal and professional development for the individual giving the support and increasing their own skills and capacities. Mentoring and shadowing are both good ways of both parties absorbing learning and good practice.

Moreover, at a time when additional external resources are becoming harder to come by, it may be the case that a more effective use of internal resources in this way (where a larger co-operative has the spare capacity to help a smaller or new-start co-operative) will be important.

This issue relates to the important question of shared values. At the HUB conference, a number of contributors made the point that a key aptitude was ‘understanding co-operative principles’ rather than formal business planning skills. In this sense they are referring to ‘soft’ rather than ‘hard’ skills. There is clearly a point here. One observation made to us was that since all the CDS staff were former Scottish Enterprise staff, they had no initial experience of co-operatives and needed time and support to move from seeing co-operatives as a business model like any other.

This, in turn, is connected to the point that most users felt that the support given was worthwhile when they had a good relationship with the advisor, based partly on confidence in their knowledge and abilities and partly on their ability to listen and solve problems rather than dispense pre-digested solutions. A key skill for advisors was identified as being able to appraise both the business and softer issues quickly.

Finally, a number of interviewees made the point about the importance of bringing through new people into the co-operative movement and the worry that a number of co-operatives were suffering from ‘universal ageing’ of the workforce.

Key issues and conclusions

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We have seen from the interviews and survey of users and providers that co-operatives share a number of features with other businesses. What makes them different is the underlying vision and values of co-operation. If we wish to understand how to support the growth of the co-operative model in current economic circumstances it follows that we need to understand these similarities but be able to focus on the differences.

We have noted that the make-up of co-operatives as a sector can be looked at both in terms of size and in terms of activity.

For start-ups, the main issues presented to us were around ensuring that the support and advice was rooted in an understanding of co-operative values and what was involved in them. This meant that the technical issue of how to put together a business plan, what legal structure to adopt and how to finance the activities would need to take second place to the process of establishing co-operative principles as the guiding values of the organisation. Though this requires generic business skills, it also requires quite specific co-operative development skills. For example, a community shares issue (now quite a popular method of raising finance because of the investment in the Community Shares Unit) is not just a way of raising funds. The shares are not tradable in the way that ordinary shares in a public company are.

The central issues raised with us were around the uniform level of support offered by the HUB (4 days) and the need for flexibility and variation along with the need for more support at the pre-start-up level in order to increase the volume of activity in this area.

For more established co-operatives, especially those who were looking to grow from say five workers to 20 workers, the main issues raised were around finding ways to finance growth (including the availability of soft loans) and ways to tackle more complex governance issues as membership increases. The need to both resolve differences and take decisions in a democratic way when larger numbers of people are involved requires more specialist support and more skilled support, based on experience of co-operative work.

As we have noted above, the view of users was that support in this area was patchy between regions (and often within them) in terms of both access/ availability and quality of advisors.

For the largest co-operatives, especially those in retail, we found that they were usually able to access the specialist support they needed from the market place. There seemed to be a level of disconnection between specific co-operative support agencies and this segment of the market place. We were told that of the 10 largest worker co-operatives, only one had been supported by a CDB.

We also found that the larger co-operatives were willing to consider how they could offer support to other co-operatives through staff skills and knowledge as, in effect, a corporate social responsibility (CSR) contribution. We also found one

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large retail co-operative that was developing an academic qualification in co-operative studies with a local university.

As we can see, the users of co-operative support agencies have different needs. The general points they stressed to us were around:

The importance of co-operative skills and understanding the values of co-operatives;

The need to root business support in long-term relationships with advisors; The need for more specialist rather than generic advisors; The importance of experience and ‘word of mouth’ recommendation over

formal qualifications; The regional variations in terms of access to support and the quality of

support; The need for support intermediaries to be more pro-active in the market

place and not just respond to demand; The need for Co-operatives UK to look at how to support co-operatives

wanting to grow beyond the initial start-up phase.

If we switch to the perspective of those providing advice and support, we can see that one of the biggest issues is that of survival and sustainability. At the moment there appears to be a huge dependency on clients via the HUB or on EU funds.

At one level there is nothing unusual about this, but it does raise a number of important long-term issues for intermediaries should funding reduce from either source. It also raises the question of how important is customer choice (as opposed to funder choice) and the discipline (on both sides) that results from a co-operative paying directly for a service it receives. One way of funding the work of intermediaries, other than co-operatives UK, would be through some form of levy on larger co-ops, but there are other options around going to the BIG Lottery for a specific project, in the way that the Plunkett Foundation has done.

We were struck, in our discussions with providers, with the potential for both a more strategic relationship and a more practical relationship with the Plunkett Foundation and Locality. The work on community shares with Locality is an example of collaboration that could be developed.

In looking at the Plunkett Foundation we were also interested in a number of features of the way in which it works that could be adapted by intermediaries supporting co-operative development. The most important of these are:

The use of teams, rather than individuals, to support organisations (which allows for a combination of generic and specialist support);

The acceptance that a long-term engagement is important to long-term success (96% of community shops are still open);

The importance of shared learning and networks amongst advisors (both web based and face to face);

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The need to be proactive and look for people to support; The need to focus on a few areas and be good and knowledgeable within

them.

Appendix 1: CPD/ICDWe were also asked to look at the question of CPD and to gather views on the importance and relevance of establishing an institute for co-operative development as a mechanism for accrediting and maintaining standards of business support. The survey and interviews produced a wide variety of views on the matter.

The issue of professional standards and their accreditation for co-operative development practitioners depends on the answers to a number of other questions. By accredited we mean something that is both regulated and has brand recognition in the market place.

First amongst these is the question of whether there is a business case for such standards. That is to say, do customers want such an accredited standard in order to help them choose support? The evidence from interviews was that users were more interested in experience and ‘word of mouth’ recommendation than in formal qualifications (though this does not mean that respondents thought there was no value in a qualification).

This leads into another set of questions about what should be included in such a standard (and the balance between core and specialist features), how they should be accredited (and who by) and how they should be monitored and evolve as circumstances change? Is a new professional body required to oversee standards and does it need to be set up in advance of the standards being agreed upon? This also implies willingness by those who are accredited to engage in further professional development (CPD) and have an implicit (and possibly explicit) code of ethics for practitioners.

This will also raise issues about resources to do this.

One view expressed by several interviewees was the possibility of looking at accrediting organisations rather than individuals and then allowing the organisation to offer appropriate advisors. This would be along the lines of models such as Investors in People (IiP) and the European Quality Management Standard for organisations.

The core competencies pilot programme currently being run by Jim Brown with 16 people is part of the move to this longer-term goal; but it is important to understand that nine single day courses/workshops will be limited in what it can deliver and that specialist, more detailed training/development may be required in a number of areas, such as Community Shares.

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Jim Brown has also recently conducted a survey of all co-operative development practitioners who provide services to the Hub. The purpose of the survey was to find out about the professional practices, work experience and qualifications of practitioners, with a view to establishing minimum criteria in these areas for the next round of Hub support services contracts, starting in 2014. The results of this survey need to be treated with some caution, but respondents indicated that:

40% had practical involvement in a co-operative; 90% had provided support to at least two co-operatives in the last two

years; 29% have no vocational or academic qualification in business support; 20% have no qualifications, nor experience of working in a co-operative; 64% are not members of any professional body;

If we make the assumption that co-operative businesses want an advisor who has knowledge of co-operatives and relevant qualifications in business support, the implication is that only 28/123 current advisors meet all the relevant criteria and 89/123 meet more relaxed criteria.As part of the journey towards professionalization and accreditation, the Hub has put together a proposal for contractor requirements that will come into operation in 2014 in conjunction with Jim Brown. These are:Co-operative development body registrationFrom 2014 onwards, Hub-funded support will only be delivered by practitioners working for a CDB registered with the Hub, or members of an equivalent regional body that provides professional support services. To register, CDBs will need to show that they have professional practice arrangements in place to plan, conduct and record the following activities:

Personal reviews: Systems to review and record the professional development of individual practitioners

CPD: Systems to plan and record the continuing professional development (CPD) activities of individual practitioners

Service reviews: Systems to review and record the quality of business support service provided by individual practitioners to clients, including some form of client feedback and peer review.

According to the recent practitioner survey, approximately a quarter (26%) of all CDBs already have these arrangements fully in place, and another half (46%) have these arrangements partially in place. Training will be available during 2013 to help CDBs develop in-house professional practice arrangements. Individual practitioner registrationFrom 2014 all practitioners will need to fulfil any two of the following three registration criteria:

1. Certification: Qualifications and assessments in business support2. Co-operative experience: Business development and/or management

experience as a member of a co-operative (not a co-operative development body)

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3. Practitioner experience: Experience of providing co-operative development support.

1. Certification requirements: Any one of the following categories of certification will be accepted;

A. Possess, or be studying for, a QCF vocational qualification in social enterprise support

B. Assessed against SFEDI national occupational standards in social enterprise support by SFEDI, ILM, CMI or IoC (2006 onwards, including expired assessments)

C. Possess a QCF Level 5 vocational qualification in (generic) business support

D. Assessed against SFEDI national occupational standards in (generic) business support by SFEDI, CMI or IoC (2006 onwards, including expired assessments)

E. Possess a vocational qualification or certification awarded by a professional body in some form of business support related service (accountancy, marketing, HRD etc)

F. Possess an academic qualification in a business or management related subject at, or equivalent to QCF Level 5, or above.

Other equivalent qualifications or certificates will be considered on application to the register. The practitioner survey found that 60% of practitioners already meet one of the certification requirements A to E, with a further 12% of practitioners meeting category F.

2. Co-operative experience: This will be defined as current or previous (within the last 10 years) experience as a member of a co-operative (not a co-operative development body or equivalent) fulfilling business development and/or managerial duties as a member of the governing board or equivalent. According to the practitioner survey only 40% of all practitioners have this experience.

3. Practitioner experience: This will be defined as the ability to provide evidence of delivering support services to at least three co-operative clients in the last two years. Currently, nearly three-quarters of practitioners (73%) already have this level of practitioner experience.The table below shows how many of the existing 129 practitioners meet the individual registration criteria. The Hub is proposing that practitioners should be required to meet any two criteria, although it is current unresolved about whether the certification criteria should be extended to include level F (academic qualification in business/management related subjects).The data in the table is based on the practitioners’ survey, conducted in October 2012. This 100% survey of practitioners is the first time such an exercise has been conducted. It contained a number of open-ended questions designed to elicit data that practitioners felt was relevant to their role in co-operative development. However, as a result, some practitioners may not have provided information that would have shown they meet the registration criteria set out in

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this document. As a consequence the number of practitioners that already meet two or more registration criteria may be far higher than is shown.

Table: Number of practitioners currently able to meet the registration criteriaCertificationCriteria

Certification requirements A-E

Certification requirements A-F

Meet all three registration criteria 28 33Meet certification requirement plus one other registration criteria 71 84

Meet any two registration criteria 89 102

Meet only one registration criteria 123 125 Support will be offered to new and existing practitioners who are unable to meet any two criteria, through the following provision:

Certification via the Core Competencies programme leading to the ILM Level 5 Certificate in Social Enterprise Support (for those unable to meet the certification criteria). This will include the standard nine-day course completed over one year and a more flexible CPD option to be completed over a longer period

Supervision and assessment of their co-operative client case work (for those unable to meet the practitioner experience criteria)

Training and assessment of the understanding of co-operative enterprise (for those unable to meet the co-operative experience criteria).

Clearly this agreement will move things forward in 2014. It does not, however, solve any of the conceptual and practical issues raised earlier in relation to the importance and relevance of accreditation. In order to do this we still need to look at whether there is both an appetite and a consensus around what skills/capacities should be formalised and accredited, how they should be accredited and who should accredit them, how this should be monitored and how it should be resourced and paid for.As we have noted, the idea of a professional body or institute is one way forward, as is using an existing qualification framework (though the latter raises the question of whether there would be a sufficient volume to attract an external agency to provide such accreditation).

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Appendix 2: Business support services available to co-operatives in the UKThis section provides an overview of some of the support services that are available for co-operative organisations at the national, regional and local level and gives examples of organisations that deliver this support.

The UK Scotland, Wales and Northern Ireland all have their own bodies providing support to co-operatives to both help organisations establish themselves, as well as offering guidance to organisations on how to develop, survive and diversify.

Co-operative Development ScotlandCo-operative Development Scotland (CDS) provides advice to companies considering the co-operative model to help them “choose the best co-operative business model for their organisation.” They also provide guidance on “access to funding and legal models.”1 It offers advice on four areas of cooperative development:

Consortium co-operatives: The CDS offers advice for businesses seeking to collaborate, offering advice to help businesses “explore and assess opportunities; develop shared objectives; establish memorandum and members’ agreements; assist your ongoing development; structure the company; finance the business; [and] develop member participation.”2

Employee ownership: CDS helps organisations to “assess the feasibility of an employee buyout, develop a business plan, source and coordinate funding, set up an Employee Benefits Trust and Share Incentive Plan [and] Development employee participation.”3

Community co-operatives: CDS offers support to “gauge community support for the idea, assess the availability of the assets, consider the need for financial investment [and] determine the funding potential within the community.”4

Mutualisation: CDS offers guidance to help organisations “understand the opportunity and connect you with the best sources of support and advice for your area.”5

CDS is a subsidiary of Scottish Enterprise (receiving around £600K each year) and its staff have been recruited from Scottish Enterprise. This means that it can also connect potential co-operatives to the broader suite of enterprise support available from SE and its network. The 15 strong advisory board of CDS is, however, drawn from across the broader co-operative movement, including manufacturing and agricultural co-operatives..1 Co-operative Development Scotland – supporting co-operative enterprise in Scotland, http://www.scottish-enterprise.com/microsites/co-operative-development-scotland.aspx 2 Consortium co-operatives | Business model | Co-operative Development Scotland, http://www.scottish-enterprise.com/microsites/co-operative-development-scotland/Business-models/Consortium-cooperatives.aspx 3 Employee ownership | Business model | Co-operative Development Scotland, http://www.scottish-enterprise.com/microsites/co-operative-development-scotland/Business-models/Employee-ownership.aspx 4 Community co-operatives | Business model | Co-operative Development Scotland, http://www.scottish-enterprise.com/microsites/co-operative-development-scotland/Business-models/Community-cooperatives.aspx 5 Mutualisation | Business model | Co-operative Development Scotland, http://www.scottish-enterprise.com/microsites/co-operative-development-scotland/business-models/mutualisation.aspx

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CDS created/supported 30 co-operatives in each of the last two years, compared to a target of 20, the majority (21) being consortia, with five community co-operatives and four employee owned co-ops. This means Scotland now has 578 co-operatives with a total income of over £4 billion.

Wales Co-operative Centre In Wales, the Wales Co-operative Centre has been in operation for 30 years and offers a range of support to co-operatives, through its Social Enterprise Support Project and its Communities 2.0 digital inclusion initiative, as well as through private consultancy support and training.6 Its funding comes mainly from the Welsh Government and ERDF.

Interestingly, the Centre has moved into a number of related areas such as social enterprise (rather than just co-operatives).

The centre is currently focussing on two strands, building co-operative consortia and supporting employee buy-outs of existing firms.

In terms of the work on consortia, the Centre identifies a number of benefits including access to larger procurement opportunities, joint marketing and purchasing, shared risk, mutual support, quality standards and localised collaboration. It sees opportunities in a number of sectors including tourism, retail, food & drink, creative industries, energy and the environment, construction and the media.

In terms of employee buy-outs, the Centre recognises that selling to competitors and retaining family ownership in SMEs have significant defects and can lead to business failure. Given that the value of employee owned companies in Wales is already over £1 bn (with 33% being employee buy-outs) and that 57% of co-operatives anticipate growth, the Centre argues that extending employee ownership is a way of developing the SME base in Wales in a sustainable way.

The Centre has spent some time commissioning research to identify particular gaps around legal advice, access to patient finance and creating awareness of co-operative solutions.

Northern Ireland Co-operative ForumThe Northern Ireland Co-operative Forum “is the regional body representing the interests of existing and emerging co-operatives in Northern Ireland.” Its main aim “is to provide a framework of mutual support among co-operatives and to communicate the practice and ethos of co-operation to policy makers, at Government and community level.” The Forum provides “information on the co-operative business model, the benefits that co-operatives can offer, the development process and the Northern Ireland co-operative sector.”7 The

6 Business support for co-operatives and social enterprises in Wales | Wales Co-operative Centre, http://www.walescooperative.org/business-support-wales 7 About | Ni Co-Op Forum, http://nicoop-forum.co.uk/?page_id=2

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organisation aims to increase “co-operation among co-operatives and across regions: England, Scotland, Wales and Ireland.”8 Its main activities include:

“Building relationships and influencing policy at Executive and local council level to create an enabling environment for co-operatives in Northern Ireland

Supporting and encourage co-operation among co-operatives, creating networking opportunities and stimulating innovation

In partnership with the Co-operative Group and Co-operatives UK and many other organisations North and South of the border, we support and develop the co-operative business model to benefit individuals and communities in Northern Ireland.”9

The position in Northern Ireland is one of expansion (mainly through the growth of credit union membership) where there are around 4,500 employees in co-operatives. The majority of assets are held within agricultural co-operatives.

As in Wales, the issues identified are around access to appropriate finance and business management education, with additional points about developing research capacity, e learning and the need for an institute to co-ordinate education, training, consultancy and accreditation.

There is a variety of support offered by the different regional bodies across the UK. The CDS in Scotland offers advice to help co-operatives assess business feasibility and establish themselves, rather than focusing on organisational development once already established. In comparison, the Wales Co-operative Centre offers consultancy support and training, while the Northern Ireland Co-operative Forum is more focused on networking opportunities, mutual support and increasing the communication between co-operatives across the UK.

Other national support organisationsThere is a range of other organisations operating nationally (or in a number of regions spread across England/ the UK even if they do not cover the entire country). The services they offer are generally aimed at both new start-ups and those organisations seeking to expand, with a range of services including consultancy, business advice, training, guidance on accessing funding, feasibility studies and support with business planning.10

The Co-operative Enterprise Hub The Co-operative Enterprise Hub was established by the Co-Operative to promote co-operative development by providing organisations “with the necessary skills and knowledge to grow their co-operative and, in turn, the UK co-operative economy”.11 The Hub acts as a “one-stop shop for free advice, training and access to finance for new and existing co-operatives.” 12 It helps organisations at the onset in preparation, at the onset while they are still 8 About | Ni Co-Op Forum, http://nicoop-forum.co.uk/?page_id=2 9 About | Ni Co-Op Forum, http://nicoop-forum.co.uk/?page_id=210 See, for example, Co-operative Assistance Network (CAN) – Welcome, http://www.can.coop/index.php; Business Development Consultants | Co-operative Futures, http://www.futures.coop/about-us/11 Co-op Enterprise Hub | Co-operatives and Mutuals Wales, http://www.cooperatives-wales.coop/?page_id=273 12 About the Hub | The co-operative enterprise hub, http://www.co-operative.coop/enterprisehub/About-the-hub/

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establishing themselves and growing, if they seek to expand, and if they seek “to change their management structure.”13 The Hub offers “four days’ free support” by “co-operative development advisers” to both new start-ups as well as already established businesses.14 They also offer “free advice, training and consultancy on how to set up, run and grow a sustainable, co-operative business and achieve great things.” 15 The Co-operative Enterprise Hub has a special commitment to those cooperatives seeking to work in the renewables sector.

The Hub has seven priority areas:

Advice and training; Finance (including a small grant scheme); PR support; Purchasing; Supporting Employee Buy Outs; Renewables; Supporting overseas co-operatives.

Over three years it has offered advice and training to 985 co-operatives (72% new and 60% worker or community co-ops) with 89% of customers saying expectations were met or exceeded.

The Hub plans to launch both a ‘buddy’ scheme as a precursor to advice and training and a young people’s scheme in 2013.

Plunkett Foundation

The Plunkett Foundation (established in 1919) is the only national organisation supporting rural communities to take control of issues affecting them through community ownership. It does this through support for 273 community shops, community food enterprises, 13 community pubs and rural community enterprises (through the BIG Lottery sponsored Village SOS, Community Assets Funds and Community Transport schemes). The Foundation has 26 staff based in Woodstock and a larger team of specialist consultants that it can draw on.

Community shops are currently growing at the rate of 22 each year even during the recession, with like for like sales growing by 9.6%. This has led to an increase in interest in Plunkett’s activities with 184 further shops in the pipeline, implying that the rate of 20 openings a year will continue.

Co-operative Business Consultants (CBC)

CBC was set up in 2002 with 12 consultants and aims to “help co-operatives to start up, grow and thrive” and offers a “range of advice, mentoring, training and

13 About the Hub | The co-operative enterprise hub, http://www.co-operative.coop/enterprisehub/About-the-hub/ 14 About the Hub | The co-operative enterprise hub, http://www.co-operative.coop/enterprisehub/About-the-hub/How-we-can-help/ 15 About the Hub | The co-operative enterprise hub, http://www.co-operative.coop/enterprisehub/About-the-hub/How-we-can-help/

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research, on issues including business and financial planning, governance, legal structures and human resources.”16 Its services include:

Research, reports and feasibility studies Business plans Business process and organisation audits Promotion, representation and negotiation Membership engagement Fundraising, lobbying and bid writing – within the co-operative sector Hands on problem solving and management support Practical training, events and seminars Mentoring ‘when you need it’– face to face, by e-mail, phone and/ or

Skype Reliable referrals Free advice for first hour.17

In addition to these national bodies, are a number of smaller consultancies offering support and advice to cooperatives. These include:

Adrian Ashton Training Advice and Consultancy Baker Brown Associates18

Co-operative futures19 (operates in the South East, South West and West Midlands

Co-operative Assistance Network Limited (CAN) Community Empowerment Limited Consultancy Coop (Wales) Green Marque Mutual Advantage Natty Platty Sustainable Enterprise Strategies CIC

Regional support

A number of organisations operate solely on a regional basis, for example through Co-operative Development Agencies (CDAs) operating at a regional level. Some of these services are quite small-scale, for example those that are offered through the Coventry and Warwickshire CDA listed below, whereas organisations such as Co-operative and Mutual Solutions (CMS) Ltd offer higher level support, such as with legal matters and asset transfer.

Co-operative and Mutual Solutions (CMS) LtdCMS is a consultancy offering “business advice to co-operatives and social enterprises.” It is based mainly in the north west of England, although it is currently expanding across the UK and has previously worked in “the Czech Republic, Bahrain and the USA.” It provides a range of services including 16 Co-operative Management | Co-operative Business Consultants, http://www.cbc.coop/ 17 Co-operative Management | Co-operative Business Consultants, http://www.cbc.coop/ 18 Home | Baker Brown Associates, http://www.bakerbrown.co.uk/ 19 Business Development Consultants | Co-operative Futures, http://www.futures.coop/about-us/

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“business support, training and consultancy solutions,” with particular expertise in:

“… Consortia of small businesses or third sector organisations … Asset transfer to community led organisations Legal or governance structures for social enterprises Project management of social enterprise support projects whether these

are area based or sector based… Customised training, seminars and events management Marketing and promotion Design and implementation of business mentoring schemes.”20

South West Co-operative Support Limited The SWCS is a member of the Co-operative Enterprise Hub and is an umbrella organisation for six co-operative development bodies in the South West: CDA (BRAVE Ltd), Co-operative Futures, Co-operative Assistance Network (CAN), the Fruit Tree, Social Economy and Co-operative Development Cornwall (KABIN Ltd), and Somerset Co-operative Services (formerly Upstart).21

The Co-operative Gateway East of England (CGEE)The CGEE was established in 2009 as a consortium of “several co-operative development bodies (CDB’s) to promote and support co-operative development across the Eastern Region.”22 Its aim is to “support and develop co-operatives and other social enterprises on the Eastern Region of Great Britain.”

Local support

There are also a number of co-operative development groups operating at a local level which offer a range of services to businesses to local organisations; organisations, such as the Tower Hamlets CDA, offer these services free to members of the borough.

Coventry and Warwickshire Co-operative Development Agency The Coventry and Warwickshire Co-operative Development Agency “provides a range of enterprise, employability and financial inclusion services, helping our communities to become stronger.”23 Services include “free business advice” ranging from “pre-start through to trading, sustainability and expansion,” “social entrepreneurship training,” and consultancy services, such as “organisational development and business planning consultancy services for clients and projects, adding value using our sector knowledge and partner networks.”24

20 Our Services | Co-operative Mutual Solutions, http://www.cms.coop/index.php/2009/06/17/our-services/ 21 South West Co-operative Support Limited, http://www.swcs.coop/ 22 Co-operative Gateway East of England, http://www.cgee.coop/ 23 Coventry & Warwickshire CDA, http://www.cwcda.co.uk/home 24 Social Enterprise :: CWCDA, http://www.cwcda.co.uk/social-enterprise

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Northamptonshire Co-operative Development Agency (NCDA)/ Enterprise Solutions Northamptonshire (ESN) The NCDA provides “information, advice, counselling and training, assisting with sourcing relevant finances premises. NCDA is part of a network of business enterprise agencies that can help you get business ideas off the ground. It is funded by Local Government and therefore a free service for residents of Northamptonshire.”25

Humberside Co-operative Development Agency Limited (HCDA) The HCDA largely offers “free support to Co-operatives (and people looking to set one up) and commercial support to Social Enterprises and other Not for Profit Organisations (and people looking to set one up).”26 It is funded by the Co-operative Group. It offers a number of services, both “in house and through [its] network of trusted subcontractors” including “general advice and guidance,” “business planning,” “legal structures and governance,” “financial planning,” “project management,” “management systems,” “identifying and getting grants,” “social auditing” and “IT services.”27

Lincolnshire CDA The Lincolnshire CDA has “a growing membership of enterprises operating throughout Lincolnshire.” It “works in partnership with Ellcee Ltd, who offers specialised social and cooperative advice for emerging, potential and existing enterprises in addition to their other services.”28

Sheffield Co-operative Development Group (SCDG)The SCDG aims “to promote the development of co-operatives and other enterprises which offer people opportunities to increase their control over their working lives.”29 Thus, its primary function is networking.

Tower Hamlets CDA Tower Hamlets CDA “provides a range of business services that are free and confidential.”30 It offers services to “new and existing businesses” and starts by offering organisations an “initial one to one interview” which is then followed by “assessing [the] viability of proposal; assistance with business plan; development of cash flow; advice on legal structures; registration of the business; promotion and marketing; finding premises; raising finance; bookkeeping; training in participative management; enterprise skills training; [and] advice on promotion and marketing.” 31 Services are free to residents of Tower Hamlets.

25 Northamptonshire Co-operative Development Agency | Co-operatives UK, http://www.uk.coop/organisation/Northamptonshire%20Co-operative%20Development%20Agency 26 Humberside Co-operative Development Agency, http://www.humbersidecda.info/index2.htm 27 Humberside CDA, http://www.humbersidecda.info/index2.htm 28 Lincolnshire CDA | About Us, http://www.lincolnshirecda.coop/index.php?option=com_content&view=category&layout=blog&id=3&Itemid=30 29 Who are we? | Sheffield Co-operative Development Group, http://www.scdg.org/who.html 30 Tower Hamlets Co-operative Development Agency, http://www.co-operation.coop/ 31 Tower Hamlets Co-operative Development Agency, http://www.co-operation.coop/

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Leicester Co-operative and Social Enterprise Development Agency (CaSE-da)The Leicester CDA is a co-operative that offers “advice and support to enterprises that are people-centred, accountable and ethical.”32 CaSE-da offers “business advice, training and support” to social enterprises and co-operatives, “both start-up and established and also to employee buy-outs,” for example with advice on how to write a business plan, “guide your research, find sources of grants and loans to help get you started, assist you with financial and marketing skills, make sure your proposals are viable before you commit yourselves, draw up the most appropriate legal structure to achieve your aims, understand the benefits of working co-operatively, organise your co-operative or social enter-prise effectively [and] offer ongoing support to help your business grow.”33

Southampton Area Co-operative Development Agency (SACDA)SACDA aims “to promote and support the development of co-operatives and social enterprises.” Its “formal objectives are: a) to promote job creation and job retention and urban regeneration through the development of co-operative enterprises in the area and to provide appropriate support facilities, [and] b) to relieve poverty and advance education.”34 It provides services including:

“promotion of co-operative values and principles Information on co-operative and social enterprise options available Identification of aims and suitable form of co-operative or social enterprise

to meet needs Feasibility assessment Market strategy development Start-up development support Business planning and business development support Identification of appropriate forms of finance Registration consultancy – drafting the correct legal structure and

assisting with registration Training services – from a range of courses to bespoke sessions meeting

client needs.”35

Other local organisations operating within the UK include:

The Hackney Co-operative Developments CIC (HCD)36

Greenwich Co-operative Development Agency (GCDA)37

Local support in the south west There also appear to be a number of organisations operating in the south-west, perhaps due to a larger co-operative movement in these areas. These include: 32 Co-operative and Social Enterprise development agency | About Us, http://www.case-da.co.uk/?page_id=2 33 Co-operative and Social Enterprise development agency | How we can help, http://www.case-da.co.uk/?page_id=36 34 Southampton Area Co-operative Development Agency | About SACDA, http://www.can.coop/sacda/ 35 Southampton Area Co-operative Development Agency | Services available from SACDA, http://www.can.coop/sacda/ 36 Welcome to Hackney Co-operative Developments, http://www.hced.co.uk/ 37 Greenwich Co-operative Development Agency :: About us, http://www.greenwich-cda.org.uk/about-us/

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Kabin – Social Economy & Cooperative Development CornwallKabin operates in Cornwall and its services include: “information & advice; consultancy; support & mentoring; project development; delivery and management; company and society secretarial; incorporation agents; marketing; performance diagnostics; carbon footprinting; social and environmental accounting and audit; permaculture design; [and] presentations.”38

The Fruit Tree – Business advice, support and trainingThe Fruit Tree for business is a “co-operative of experienced and accredited business advisers who offer practical business advice and consultancy services for social enterprises, co-operatives, small businesses and social entrepreneurs, local authorities and agencies.”

They are based in the south-west and offer services including: “business advice for start-up, growth and diversification; business planning and strategy; legal structures and governance; marketing; feasibility studies; training and business mentoring; impact measurement; financial management; research; [and] consultancy services.”39

CDA (Brave) LtdCDA (brave) is based in the Avon area and is funded by Bristol City Council and the Co-operative Fund.40 It hosts a local Co-operative Business Forum and any cooperative in the Former Avon area is allowed to join. The Forum was made in response to the “apparent gap” in the need for “a central ‘forum’ to trade ideas, network or form alliances,” with support from Bristol city Council. “Local co-ops, individual as members of local co-ops and individuals involved in co-operative development or lobbying (e.g. Co-op Party, CDA etc)” are all eligible for membership.41 The forum “aims to facilitate a strong local co-op identity within the co-op sector itself by bringing co-operators together” and aims to “promote mutual aid and trading between co-operatives” by hosting a minimum of three events annually.42 However, the most recent event listed was in April 2009, so it is difficult to know the current situation of the Forum.

The CDA also offers “training in business skills” including: “roles and responsibilities of Company Directors and Company Secretaries and also new member training.” BRAVE provide specialist training including monthly “Starting in Business” courses and “start Right” seminars, bi-weekly Business Planning clinics, one day courses in subjects such as Bookkeeping, Marketing, Customer Care and sectoral seminars such as “starting a Small Food Business” and “Making it in Music.”

38 Services << Kabin, http://kernowkabin.wordpress.com/services/ 39 The fruit tree for business LLP | Co-operatives UK http://www.uk.coop/organisation/The%20fruit%20tree%20for%20business%20LLP 40 Avon Co-operative Development Agency, http://www.cda.coop/ 41 Avon Co-operative Development Agency, http://www.cda.coop/ 42 Avon Co-operative Development Agency, http://www.cda.coop/

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Appendix 3: List of intervieweesMartin Meteyard CDS/Green CityDave Hollings CMSKevin Marquis SunderlandGlenn Bowen Wales CDADonna Coyle Wales CDASarah Deas CDSJim Maxwell CDSCraig Carey Social Enterprise UKBrian SmithTiziana O’Hara NI Co-operatives

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Bob Cannell Suma/CBCEmma Laycock Co-operatives UKJo White Co-operative FuturesDawn Whiteley NENHugh Rolo LocalityMike Perry Plunkett FoundationJim Brown ConsultantGraeme Oram Tees Valley Credit UnionSimon Borkin Community Shares UnitKevin McCubbin Highland WholefoodsBarbara Morton Natty PlatyDave Boyle PrinciplesixAli Kurjit Heart of England Co-operative SocietyDavid Strode-Willis Anglia Co-operative SocietyNathan Brown Co-operanticsChris Funnell CANBritta Werner Unicorn Grocery

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