It was in 1844, during a time of chronic poverty, a group of working men in Rochdale banded together to open a grocery shop. While initially only offering meagre pickings – butter, sugar, flour, oatmeal and candles – the Rochdale Pioneers offered the world a prototype of a business designed for the common good.

Not only was the shop co-owned by its customers, any profits made were distributed among them. It gave them access to affordable and unadulterated products, reducing their dependence on both unscrupulous traders and fickle philanthropy. Today, faced with the rapid retreat of public and private provision in local economies across the UK, communities are increasingly turning to the spirit of the Rochdale Pioneers to get together and help themselves.

Rise of the commons

The UK is awash with stories of community-owned football clubs, pubs, local shops, housing developments, libraries, leisure centres, renewable energy projects, organic farms, cinemas, green spaces, community land trusts and local newspapers. As Mark Gordon, a director of Power to Change, set up to support community business with £150m of lottery money, says: “Anything that can be a business can be a community business.”

Dave Boyle, director of the Community Shares Company and former CEO of Supporters Direct, which supports football fans to set up cooperatives to take over their clubs, says: “Even five years ago, there’d be an enormous amount of explaining to do if you suggested a community could set up its own business. Today, it feels totally different. Not only is there better support and more access to finance, but people know about this stuff because so much of it is happening on their doorstep – it’s gone viral.”

Common ownership is becoming normal – an increasingly mainstream and sophisticated part of the economy. Indeed, the UK is now home to a proud network of organisations working to equip communities with the knowledge and resources. The Plunkett Foundation, Cooperatives UK, the Supporters Direct, Locality and Power to Change are to name but a few.

In addition to support, new forms of finance are emerging to back this new wave of common ownership. Crowdfunding, community bonds and community shares are being used to enable ordinary people to invest and become co-owners of this new generation of businesses nationwide. The Community Shares Unit, which was set up as a joint partnership between Cooperatives UK and Locality, estimates this newly emerging investment vehicle has resulted in 120,000 people investing over £100m to support 350 community businesses throughout the UK since 2009.

All this is having an impact. According to Cooperatives UK, the number of active members of UK co-ops grew from 11.9m in 2015 to 13.6m in 2017. Power to Change estimates there are 6,600 community businesses in England alone, many running services traditionally delivered by in the public sector.

Common capital

This year, Triodos Bank launched a dedicated crowdfunding platform to help businesses raise risk capital by setting up community bonds. The bank’s corporate finance team also helps businesses raise risk capital from a growing number of social investment funds, such as Big Issue Invest. Meanwhile, the Triodos business banking team, using the savings of customers, has a long history of lending to community-based organisations and projects.

Boyle says: “Triodos Bank is living proof there are many people in the UK who don’t swallow the idea investments are simply about maximising returns. Triodos customers balance returns with impact, which shows the economy is not simply made up of charities and hard-nosed capitalists.”

For Triodos Bank, community business offers a growth market clearly in line with its own values. Dan Hird, the bank’s head of corporate finance, says: “Community ownership is essentially about democratising ownership and encouraging people to work together in ways that have a positive impact beyond maximising profit. We’re being approached with more and more innovative ideas.”

Devolving control

Many community businesses become viable when a local authority transfers land or assets over to a local community at below market value. A local authority might do this either because it cannot afford to maintain it themselves or because they simply recognise communities are better placed to deliver these services.

John Dawson, a development manager at Locality, says: “Community ownership links local people with the spaces they care about most. It devolves responsibility and management to the people most likely to use the spaces, and with most to gain in them thriving. This can unleash new energy to remodel space, improve a booking system, increase a building’s usage, manage costs more carefully and innovate new services to meet unmet needs.”

Dawson cites the example of the Bramley Baths leisure centre in Leeds (header image). Under local authority ownership, the centre was threatened with closure and so a group of residents successfully campaigned to take over its management. In 2013, a refreshed and imaginative new events programme – designed by the people who’d be using it – turned around the fortunes of this locally loved Edwardian bath house. It delivered a surplus after just one year of trading. Power to Change estimates there could be as much as £7bn worth of assets currently owned by local authorities ripe for transfer to community ownership.

A private retreat

Common ownership is also on the ascendency in parts of the economy traditionally dominated by the private sector. Gordon says: “The recent collapse of Carillion is just one of many signs the private sector is in retreat in ways that will affect communities. We’ve seen the same thing happen in housing and local pubs. Communities are stepping forward to fill the vacuum left behind. It’s easy to see how something community owned would have a competitive edge in these areas of business. For one, they wouldn’t need to make the same margins that a large outsourcing company or pub chain would – and any surplus would be reinvested back into the community, giving customers even more reason to offer their custom again.”

Indeed, Boyle believes it is no coincidence levels of common ownership are rising in parts of the economy where customers have been ignored the most. “While austerity politics is undoubtedly a factor in fuelling interest in common ownership, our treatment at the hands of utility companies, football clubs, pub chains and housing developers was always going to cause a backlash,” he says.

“When life gets hard there’s going to be a reaction. While some will simply shrug and say ‘oh well’, others will resist, push back and create. The conditions since the 2008 crash have accelerated all this.”

Disrupting and challenging

Common ownership is not only gaining traction in parts of the economy no longer lucrative enough for the private sector. Successful cooperative businesses are also holding their own in spheres dominated by large corporates.

For example, the Phone Coop is an ethical telecommunications provider, 100% owned by its customers, whose offerings include a smartphone made without conflict minerals. In exactly the same way its forebears, the Rochdale Pioneers did in the mid-19th century, the business pays out a share of profits to its customers, who all have an equal say in the running of the business.

Meanwhile, Riverford Organic Farmers has transferred its ownership to its employees. The thinking is this will not only give more control to those best placed to run the business, but it will also resonate with their customers’ values. Rachel Lovell, head of content and one of the owners of Riverford, says: “Our founder thinks the brand name would be abused to sell mediocre food were it to be bought by venture capitalist investors – who own many of our competitors. The aim is to protect the ethical values of Riverford.”

Dan Gregory, a director of Social Enterprise UK and former Treasury and Cabinet Office adviser, says: “You don’t have to be the biggest business to have a big influence on your competitors. And we’ve got to the point where even the establishment – by which I mean leading members of the royal family, the Bank of England governor, the Archbishop of Canterbury – they are becoming increasingly vocal about the failure of the capital markets to tackle inequality,” he says.

“There’s a growing case we should use all this energy coming from local communities to hardwire the markets to solve it.”

Words: Henry Palmer

Triodos Bank UK has lent to a number of cooperatives across sectors, from community housing to energy production and retail organisations. Find out exactly where we lend despositors’ money on knowwhereyourmoneygoes.co.uk