The UK’s economy is in need of a democratic renewal. For too long, productivity has stubbornly underperformed, averaging around 0.5% a year since the 2008 financial crisis.1 Growth has been sluggish too, with GDP expanding at around 1.5% a year since 2010, while business investment remains among the lowest in the G7.2 The result has been an economy that struggles to generate rising living standards, build resilient public services, or a sense that progress is fairly shared.
At the same time, a culture of short-term extraction has too often trumped the long-term interests of the country. The shadow of privatisation in foundation industries, such as steelmaking, and utilities has failed even on its own terms. Rather than creating a ‘shareholding nation’, it has given way to a model dominated by private equity and infrastructure funds, too often loading with debt, extracting value, and underinvesting in long-term resilience.
England’s water industry is a textbook example of how not to run a vital public service. Since privatisation, more than £80bn has been paid out in shareholder dividends. From being debt-free on transfer, the sector has accumulated over £70bn in debt, while customer bills have risen sharply and our rivers, lakes and seas are polluted with raw human sewage.3
A similar pattern plays out across our economy and in our individual lives as we shift from being owners to consumers. Housing provides a stark example, with home ownership among young adults falling dramatically, with fewer than half of 25–34-year-olds now owning their home, compared with around two-thirds in the early 1990s.4 Today, around 4.6 million households rent privately, often with little security.5
At work as at home, many people generate value they neither control nor share in. The top 10% now hold nearly half of all wealth, while millions of working people remain just a pay cheque away from crisis.6 At its core, this is a question of ownership and power: who owns, who decides, and who benefits. Who decides when your home is made fit to live in? Who decides whether your workplace offers the pay, respect and dignity you deserve? That’s why alongside good regulation, ownership matters.
This is not a new challenge. In the smoke and clatter of the industrial revolution, the Rochdale Pioneers confronted similar forces. They built a different model based on democratic ownership, shared resources and distributed power. Their principle was simple. Contribution and reward should be linked, and when people build value together, they should share in the dividend.
Progressive politics has always been concerned with power: who has it, who does not, and how it is shared. The UK remains one of the most centralised countries in the developed world, and trust in politics has eroded in part because power feels distant and unaccountable. Rebuilding trust requires more than policy tweaks. It means changing who has a stake in the economy itself.
We know the challenges we face. We need a more productive economy, with the benefits of growth felt more by those who create it. We need to build 1.5 million new homes to meet demand, at a time when England alone faces a shortfall of more than 4 million homes and families languish on housing waiting lists.7 And we need to win public consent for a clean energy transition to secure supply and ensure affordability.
The good news is that we are not starting from scratch. The UK’s democratic economy, made up of co-operatives, mutuals, and employee-owned businesses, is already worth almost £180bn and employs around 1.6 million people. These organisations are more resilient, have higher survival rates, are rooted in communities, and focus on long-term value.8
As we approach the centenary of the sister relationship between the Co-operative Party and the Labour Party, there are real signs of progress. There is a commitment to double the size of the sector, including creating a million new owners of community energy through Great British Energy. New rights for communities to protect and buy local assets, alongside increased support for credit unions and community-led housing, show what is possible when government actively backs alternative ownership.9
Industry is moving too. The acquisition of the Co-operative Bank by Coventry Building Society, and of Virgin Money by Nationwide and its 16 million members, both widen ownership and ensure value is retained for members rather than extracted for short-term gain.10 But much more can be done.
First, this does not always require new spending. Co-operative and mutual must be afforded a level playing field, for example reforming the common bond rules for credit unions allows them to scale, serve more people and offer a wider range of services.11 But if we are serious about growing the co-operative and mutual sector, we cannot allow it to be easily unwound. Asset locks and stronger limits on demutualization in financial services such as building societies, can help ensure that collective gains are preserved for the long term.
Secondly, we should rethink how government responds to economic failure. Too often, intervention comes too late and at far greater cost. When companies collapse, workers lose jobs and communities are hollowed out. Other countries take a different approach. In Italy, the Marcora Law enables workers to buy out failing firms and turn them into co-operatives, using pooled resources that would otherwise fund unemployment. Many of these businesses survive and repay the investment, creating a virtuous cycle.12 There is no reason the UK could not adopt a similar model.
Thirdly, we need to reshape the relationship between government and community.
Across the country, people already show what shared ownership can achieve. The Co-operative Party’s Community Britain campaign has shone a light on the everyday acts which bind communities together. Community energy projects, local pubs, revived high-street shops, places of worship and community centres all demonstrate how collective action strengthens social and economic resilience. With greater power and targeted resources, Community Britain could go even further.13
An economy that works for working people must give those who create value through their efforts real power and a real stake in the future, as part of a determined democratic renewal.
Jim McMahon OBE has been the Labour MP for Oldham West, Chadderton and Royton since 2015 and Chair of the Co-operative Party since 2020.
Notes
- Office for National Statistics, ‘Productivity trends in the UK: July to September 2024’, www. ons.gov.uk, 29 January 2025.
- World Bank, ‘GDP growth (annual %) – United Kingdom’, www.data.worldbank.org; Institute for Public Policy Research (IPPR), ‘Revealed: UK business investment second lowest in G7’, www.ippr.org, 1 April 2026.
- Valentina Romei and Sam Fleming, ‘UK productivity almost flat since the financial crisis’, Financial Times, 9 November 2023.
- Office for National Statistics, ‘Housing and home ownership in the UK’, www.ons.gov.uk, 22 January 2015.
- Ministry of Housing, Communities and Local Government, ‘English Housing Survey 2022– 23: Headline report’, www.gov.uk, 14 December 2023.
- World Inequality Database, www.wid.world; Office for National Statistics, ‘Income and wealth’, www.ons.gov.uk.
- Samuel Watling and Anthony Breach, The housebuilding crisis: The UK’s 4 million missing homes, Centre for Cities, 22 February 2023.
- Cooperatives UK, ‘The Cooperative and Mutual Economy 2025’, www.uk.coop, 23 September 2025.
- Cooperative Party, ‘Building a democratic economy’, www.party.coop.
- Nationwide Building Society, ‘Bringing Nationwide and Virgin Money together’, www.nationwide.co.uk, 24 February 2026; BBC News, ‘Co-operative Bank takeover cleared by regulators’, www.bbc.co.uk, 28 November 2024.
- All Together Money, formerly Association of British Credit Unions Limited (ABCUL), ‘Common Bond Reforms Set to Open Credit Unions to Millions More People Across Great Britain’, www.alltogethermoney.coop, 10 April 2026.
- Co-operatives UK, ‘Why we back Marcora-like legislation in the UK’, www.uk.coop, 28 October 2021.
- Co-operative Party, ‘Community Britain’, www.party.coop.