Doubling the Mutual Economy: Report Urges Gov to Act on Unlocking £93bn Sector

A new independent report shows that removing financial barriers will unlock growth for mutuals and co-operatives and deliver on Labour’s manifesto.

Image: Science Photo Library

In partnership with the Mutuals & Co-operatives Together (MCT) Group, the eoa is urging government to act on recommendations to address financial barriers to grow the mutuals and co-operative sector.

The recommendations, which will dial-up an already outsized economic and social impact in the UK, follow the release of a new independent report from WPI Economics.

‘Harnessing the Mutuals Sector’s Potential for Growth Report’ highlights how the 9,500+ mutuals and co-operatives in the UK – which represents the interests of 68.8 million memberships – are “punching well above their weight”.

A Vital Part of the Economy

The report found that mutuals and co-operatives currently generate £35 billion in direct Gross Value Added (GVA) and support over 1.5% of the UK economy, despite making up just 0.2% of businesses.

Together, they contribute £93 billion in total economic impact when indirect and induced effects are included, while simultaneously adding significant co-benefits in productivity, pay, resilience, community wealth, decarbonisation, and wellbeing.

Employee ownership falls under the mutuals and co-operatives umbrella.

Overcoming Growth Barriers

The MCT Group, which commissioned the research to support government’s work with the sector, highlights the reported barriers to doubling the sector as: 

1. Limited access to finance
2. Outdated legal frameworks
3. Lack of awareness among investors

The group urges the government to take early action to address financial barriers to growth. This includes directing enterprise funding through institutions such as the British Business Bank. 

It also recommends working with the Mutual and Co-operative Sector Business Council – which our Chief Executive, James de le Vingne is a member of – to help catalyse growth.

“This report offers key insights that support the government’s ambition and make a huge economic and social impact,” said Robin Fieth, Chief Executive of the BSA, speaking on behalf of the MCT Group. 

“By improving access to capital and removing legal and regulatory barriers, ministers can unlock mutuals’ full potential to boost economic growth and deliver real benefits for people and communities across the UK.

“With the right conditions, mutuals could grow at an annual rate of 7.2%. Achieving this would mean a 34% increase over this Parliament alone and would be double the economic growth forecast for the UK as a whole.”

The report recommends:

• Targeted reforms to improve mutuals’ access to capital
• Proportionate allocation of enterprise finance and business support to mutuals
• Swift implementation of the Law Commission’s review of mutual law
• Establishment of specialist investment institutions to support mutual growth
• Support for mutual leaders, including tailored advice and capability-building initiatives

James de le Vingne, Chief Executive of the eoa, said: “Government support has accelerated employee ownership with impressive results – but there is much more to be achieved. 

“Together, we can remove the barriers to growing the scale and impact of the mutuals and cooperatives sector to deliver sustainable growth for the UK economy and better impacts for people, planet, and place for the longer term.”

Rose Marley, CEO of Co-operatives UK, said: “Mutuals are resilient, sustainable, and inherently inclusive making them uniquely suited to address the UK’s biggest challenges. 

“From financial services and housing to energy and education, mutuals are innovating and investing in their communities.