Insight: Co-operatives: The pioneers live on

The alternative to both the state and the market created by a group of 19th-century Rochdale mill workers is currently very much in vogue. Mathew Little reports on the renaissance of the co-operative movement.

Co-operation in the UK began as an alternative to charity. When Lancashire mill workers were forced back to work following a strike, they declined the obvious option of appealing for charitable assistance. Instead they set up their own 'co-operative' food store. The shop, which opened in Rochdale in 1844, initially sold just butter, sugar, flour and oatmeal. But the outlet founded by the 28 Rochdale Pioneers was to grow into the modern co-operative movement that revolutionised retailing in the UK.

Co-operatives – defined by the Charity Commission as enterprises set up for the benefit of their members “with the intention of enabling them to share profits among themselves" - are still thriving today. Encompassing businesses as diverse as phone companies, wind power providers and pubs, the sector has an annual turnover of at least £22.5bn and a workforce of 100,000.

Farmers' markets are also frequently co-operatively owned, while the UK's healthy food revolution has planted the seeds for a number of cooperatives to grow up in that sector. One example is west country health food wholesaler Essential Trading. Formed 15 years ago, it has doubled in size in the past two years. It now has 110 worker-directors involved in the running of the business, with an equal say over the mission statement as well as the goods it sells. Turnover was £12m in 2005, up £3m on the year before. Other wholefood co-ops, such as Summa Wholefoods in West Yorkshire and Infinity Foods in Brighton, report comparable expansion.

Janet Sim, marketing director at Essential Trading, believes the nature of the business fits well with co-operative principles. "Our co-operative structure is linked to the ethics of the products we are selling," she says. "It goes hand in hand with people having an interest in how they work as well as with what they are providing."

According to Hilary Wainwright, socialist academic and former chair of the Community Sector Coalition, one reason for the current popularity of co-ops is the maturing of the anti-globalisation movement, which is now seeking alternatives, not just looking to protest.

"The ethical consumer is creating a market for ethically produced goods. More people are putting their labour where their mouths are and creating small but growing cooperatives."

While some co-ops are trying to survive in a market environment, others are creating a new strand in public service delivery outside state and market. "Co-operatives are also important as alternatives to privatisation," says Wainwright. "Many people want to resist corporate takeovers, but are critical of the old-style bureaucratic form of delivery. Co-ops offer another form of collective ownership and democratic management of public resources."

Residents on the Marsh Farm Estate in Luton - recipients of nearly 50m from the New Deal for Communities over 10 years - are
planning to use a 120,000 sq ft community enterprise and resource centre to develop a range of co-operatives to take over the running of local public services. Registered as community interest companies, the co-ops would assume responsibility for services such as waste collection, street cleaning and a £500,000 youth programme. There are even plans for a not-for-profit fast-food co-operative on the estate, which would ensure that the community retains some of the £1.7m it spends on fast food every year.

For community leader Glenn Jenkins, the co-operative model, in which not only workers but also service users are represented, is a way of averting the "consultant culture" of mainstream regeneration. "If we are going to change, the co-operative model is the only one that can ensure the future sustainability of community-organised enterprise," he says. "It's not an ideological position - it's a practical observation on the previous failure of regeneration.

"I think this could be the saviour of public service. Private enterprise always leads to exclusion within the community."

The roots of Co-operation

• The Welsh socialist thinker Robert Owen was the intellectual founder of the co-operative movement. Appalled by the exploitation of the Industrial Revolution, he created a model economic community in New Lanark, Scotland.

• Inspired by Owen and the periodical The Co-operator, weavers in ancashire formed the Rochdale Equitable Pioneers Society. They laid down the Rochdale Principles, including open membership and the equal distribution of surplus, which remain the basis of the co-operative movement.

• The Co-operative Wholesale Society, created in 1872, began the co-op movement's expansion into the grocery trade. It is the forerunner of today's Co-operative Group, which includes supermarkets, funeral directors and banking.

• On the political scene, the Co-operative Party, whose members must belong to a co-operative, is allied to the Labour Party and has 29 MPs.

• The International Co-operative Alliance, the umbrella body of the worldwide co-operative movement, has more than 800 million members in 100 countries.

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