Trade Union and Employment Forum

Trade unions and cooperative ownership: the Wales Coop Development and Training Centre

History & Policy Trade Union Forum

24 November 2012

This meeting of the Forum set out to examine a key example of trade-union involvement in the establishment of workers' cooperatives, to throw light on the potential of a relatively neglected avenue of activity in the movement's recent history. The main speaker was Dr Denis Gregory, Director of the Trade Union Research Unit at Ruskin College, Oxford who combined the roles of historian and participant in the events discussed.

Dr Denis Gregory

This trade-union sponsored initiative developed as an imaginative Welsh response to the rapid run-down of the region's industries in the early 1970s, especially coal and steel, with pit closures and job cuts. It was led by the Wales TUC, the General Secretary of which, George Wright, was then also the dynamic regional secretary of the Transport and General Workers' Union. He was a protégé of that union's powerful leader Jack Jones, who was himself very supportive of the new initiative. In addition to leading campaigns against the job losses, the Wales TUC commissioned an interim report from the Trade Union Research Unit (TURU) at Oxford College, in which he, Denis, was then the Senior Researcher and as a result came to work closely with George Wright for the next decade.

The TURU report was presented to a Wales TUC conference in 1973. It laid bare the nature of the weaknesses of the Welsh economy: over-dependence on traditional coal mining and steel production; a narrow manufacturing base dependent on branch factories vulnerable to re-location by the parent UK or multi-national companies; a large public services sector then facing government expenditure cuts; and a dearth of private sector entrepreneurs. It called for an investment agency to address these major weaknesses in the structure of the Welsh economy.

As a result, in 1974, the Wales Coop Development and Training Centre was launched by the Wales TUC, despite some misgivings at the TUC in London which was then worried about a possible nationalist focus, with Plaid Cymru on the rise at the time. The British Steel Corporation (BSC) also set up their own company, BSC Industry Ltd, and engaged a consultant to scout alternative job-creation ventures. However, despite some excellent reports, this did not provide sufficient alternative jobs to mitigate the devastation in some of the areas worst affected by the steel industry rundown (600 jobs at Ebbw Vale, East Moors and Shotton).

In 1978, the Wales TUC went further, setting up a Cooperative Development Agency, to explore the feasibility of workers' cooperatives in creating sustainable businesses and permanent jobs. There was not much enthusiasm from the traditional sources of funding - the Cooperative Bank plc included. There was also a good deal of scepticism even in the trade union movement. For many such initiatives at the time had failed despite initial enthusiasm. Most notable were those disparagingly referred to as the 'Benn Co-ops' which had been funded by Department of Industry maverick, Tony Benn: for example the high-profile experiment of Triumph Motorcycles at Meriden in the Midlands, which struggled along with massive debts. So in some quarters the whole idea of workers' cooperatives was dismissed. The TUC's General Secretary Len Murray initially dismissed them as 'not our role', though he did later come round to accepting them. They were also rejected by many in the unions influenced by Webbian or Marxist ideology, whose preference was for nationalisation or 'workers control' theories.

So, the Wales TUC set about it cautiously, first by way of a commercial feasibility study which they were pleased to get funded with a £40,000 grant from a sympathetic Welsh Office minister. The European Economic Community (EEC) Social Affairs and Employment Committee also funded a Resource Centre after a notable presentation about the plight of Wales at the Abyss.

It was a BBC programme on the Mondragon Worker Cooperatives in Spain which provided the main inspiration for the Welsh experiments. An enthusiastic consultant of Basque extraction, Chris Logan, who had been involved in the BSC Industry company, and had just written a book about Mondragon, arranged a week-long visit to Mondragon for the key Wales TUC people as well as three unemployed workers who were already willing to invest in the project. This group had helpful discussions with the Basque cooperators and their bank, Caja Laboral Popular, around which their system revolved and then went away with a new confidence of making a go of it in Wales. This trip was also conducted in a blaze of publicity as the local and national media showed a lot of interest.

Unfortunately, it took another two years to get enough funds together to make a proper start, and some valuable time was lost. However, a breakthrough came when the EEC agreed to match-fund the Welsh Office's grant for three years initially. Most local government councils in Wales also contributed £10,000 each, showing the breadth of support the idea had generated. So by 1983, the Wales TUC's cooperative centre was able to start encouraging and facilitating the setting up of a number of viable worker cooperatives from an office in South Glamorgan. Each one had to operate on the lines advised by the centre - by establishing an 'integrated support system' - and it was a requirement that there be a financial stake from the workers themselves. Most of these ventures were sustained for about 20 years, in the course of which they created over 200 jobs and trained some thousands of workers for alternative jobs. They also developed a Credit Union side. Summing up the experience in the history of the Wales TUC, it was described in 2004 as 'a modest but distinctive Welsh development'.

Discussion

One participant asked how the cooperatives' finances were handled, given the high risk to the individual workers' investments?
Denis replied that the Resource Centre provided guidance and ideas about how to minimise such risks. Finding venture capital for such projects was always difficult and the avoidance of bickering over assets was managed. The lack of technocratic management, when things broke down, was another real problem. 'Who do you recruit as entrepreneurs and directors'? These were scarce in Wales and advisers were not always the best at doing things. George Howarth, (later an MP) was one successful cooperative director.

Another related question was how they handled ownership issues: was the profit-sharing at enterprise or company-levels? And what was the role of trade unions in the factories and the rights of trade union reps?
Denis replied that by 1984 there were 80-150 cooperatives of a variety of types and sizes. One magazine publishing coop he worked in was riven by warring factions amongst a group of ten, but that was exceptional.

Was the main steel workers' union, the Iron and Steel Trades Confederation interested? Yes, but not at the forefront, nor was the South Wales region of the National Union of Mineworkers. They did have worker directors on the board of BSC, though the miners rejected that Labour government proposal.

A participant raised again the point about workers' cooperatives not sitting well with the traditions of the British trade union movement generally, as Royden Harrison's biography of the Webbs, for example, and their own 1894 book Industrial Democracy illustrated.
Denis agreed that there had been real tensions here. Active Marxists and syndicalists at that time, such as Ken Coates who promoted 'workers control' ideas, rubbished worker cooperatives. Nationalisation with workers' control, appealed much more widely as the preferred model.

It was pointed out how close the cooperative movement had been to the unions in the nineteenth century and how closely many of its activists had been involved in Labour's emergence as a fully independent party in 1918. Perhaps this relatively fluid relationship might have panned out differently and Labour in power might have looked at more options than just the nationalisation route?
Denis accepted that this might have been possible at an earlier stage but by the time of his own involvement in the 1970s Len Murray's 'not our role' was representative of the view at TUC level; access to the European Iron and Steel Community structural funds lacked any institutional priority in the British trade union movement; and even the workers' cooperatives that seemed to be doing well, such as Triumph Meridan, were tainted by association with the 'Benn co-ops'.

There was some discussion of the technicalities of the internal constitution of workers' cooperatives. For example basing ownership on a 'one-member-one-vote' basis usually limited the size of each initial stake and prevented any further accumulation or recruitment of outside capital. So democratic principles could limit enterprise growth. On the other hand the Co-operative Bank promotes the 'employee stock ownership plan' model, with shares held in trust, so is not interested in the Welsh experience or that type of cooperatives.
Denis remarked that the Welsh centre did take an interest in employee stock ownership and also examined the US experience of that route, but start-up capital was too difficult to get. The Tower Colliery employee buy-out (with Tyrone Sullivan as its leading figure), was a classic example of employee share ownership working effectively, and had been very well received in the US at the AFL-CIO union federation's convention. However, if local government became involved as a result of concerns for local regenerative projects, this would often be in partnership with large contractors, and would usually involve quite complex multi-agency governance models.

Concerns were expressed that the emergence of ever larger multi-national capitalist companies since the 1980s was making workers' cooperatives on a national basis impossible, and on the other side of the coin that the advantages of large bureaucratic structures for the emergence of strong collective bargaining relationships would be lost in fragmented smaller companies. However, it was generally agreed that the cooperative model deserved more attention both in British labour history and in contemporary practice, where it might still provide a particularly good alternative vehicle in the service sector.

James Moher and Alastair Reid