Ideas for enabling mutual growth – the Hunt review

Mutuo, the leading co-operative think tank, published the Hunt Review at the end of 2014. It is a wide-ranging document that seeks to advise the government (or perhaps a future government) on practical actions that could be taken to support the growth of mutuals.

The Education sector is tackled as a part of the public sector, where Hunt notes that:

“Mutuality offers a way of harnessing and expressing the public interest, whilst maintaining the independence of businesses. Government can act to bring these bodies closer to the people that they serve.”

(Hunt, 2014. p.33)

 

Drawing on the extraordinary success and rapid growth of the Co-operative Schools movement, Hunt recommends expansion:

“Taking Co-operative and mutual models to other parts of the education sector”

(Hunt, 2014. p.34)

This can only mean the FE and HE sectors. There is, of course, only a small amount of work on what this might look like in HE. For all that they are educational institutions, Universities are vastly more complex than schools, and as independently incorporated bodies, are unlikely to rush into a new business model without careful consideration (whereas forced academization arguably played a significant role in the rapid growth of the co-operative schools movement). However, the development of a benefits-led case to support experiments in co-operative higher education could bear fruit.

Hunt also recommends a review of “the power of the private sector in the examination system and explore the potential of a school/college owned mutual alternative “. This might be a fertile area for a mutual experiment in higher education, especially given the groundwork that Michael Gove put in with drawing the Russell Group into A-level reform – there may be a greater appetite for this sort of work if Universities feel they are overseeing something that has broad backing from the schools sector, rather than being implicated in a top-down government drive to change exams.

Many of the other recommended provisions in the report are tangential to education, but would have a fundamental impact on a university converting to co-operative status. These include establishing a level playing field with other corporate forms, tax incentives, improved government support for mutuals, collection of data to support evidence-based policy relating to mutuals, legally-binding protection from asset-stripping and demutualisation, and crucially, new capital instruments for raising funds. All of which, if implemented, could make mutualisation a more attractive prospect for universities.

References

Hunt, P. (2014). The Hunt Review An independent review of the contribution that mutuals can make to growth, prosperity and fairness (p. 39). London: Mutuo. Retrieved from http://www.mutuo.co.uk/news/mutuals-policy-review-published/

National Center for Employee Ownership

I have discovered (through an endnote in Erdal, 2011) a great resource in the US National Centre for Employee Ownership, which describes itself as “a nonprofit membership and research organization that was founded in 1981 to provide most objective and reliable information possible on employee ownership at the most affordable price possible.”

(http://www.nceo.org/pages/nceo.php)

The NCEO also does a nice line in infographics:

The Economic Power of Employee Ownership

Infographic by National Center for Employee Ownership (NCEO) from The Economic Power of Employee Ownership

If you’re wondering what an ESOP is, there’s a snazzy infographic for that, too, which explains about Employee Share Ownership Plan legislation in the US:

What Is an ESOP

Infographic by National Center for Employee Ownership (NCEO) from What Is an ESOP?
In case you think this might be a minority thing in the US, over the pond it is understood as ‘shared capitalism’, and has a wide reach:
ESOPs in the U.S.

Infographic by National Center for Employee Ownership (NCEO) from ESOPs in the U.S.

While employee ownership does not necessitate identification as a co-operative, it is an element of co-operative identity. ESOPs do not have to have a majority share in company ownership, but many do, and there are considerable numbers at 100% ownership.

Central to the ESOP concept is the idea that a well-run firm will pay for itself over the long lerm, and so a loan can be used to purchase a company, rather than workers requiring access to capital (perhaps through a redundancy payout and savings) at a time of crisis. This framework makes an orderly transition towards employee ownership possible, and is something that bears wider attention. It has especial relevance to the HE sector, where institutions are normally fairly stable and long-lived organizations, and hence offer a sound bet for long-term loan financing.

 

References

Erdal, D. (2011). Beyond the corporation: humanity working. London: Bodley Head.