Marking the 2025 International Year of Cooperatives and the third year of the workers.coop federation, we are publishing the first long-view interpretation of worker co-ops in this country since Jenny Thornley’s Workers’ Cooperatives: Jobs and Dreams in 1981. A slightly shorter version of this piece will form the UK context chapter of a global survey of worker cooperatives, to be published by Routledge in early 2026, called Cooperatives at Work. The book will be available for softback and hardback pre order in January, and we are looking forward to a low-cost PDF version in due course.

Abstract

This article details the history of worker cooperatives in the UK, beginning with the Fenwick Weavers’ Society (1761), the world’s first documented cooperative having cooperativised labour. It traces the development of worker cooperatives through various periods, including their rise and fall in the 19th and early 20th centuries, influenced by factors such as economic crises, political movements (Chartism, the Labour movement), and government policies. The chapter highlights key organisations like the Cooperative Productive Federation (CPF), the Industrial Common Ownership Movement (ICOM), and the Cooperative Development Agency (CDA). It also discusses the merger of ICOM and the Cooperative Union to form Cooperatives UK and the subsequent creation of workers.coop in 2023, a new federation aiming to revitalize and expand worker cooperatives. The chapter contrasts the UK’s approach to worker cooperatives with other countries, noting the tax advantages given to Employee Ownership Trusts (EOTs) but not to worker cooperatives. Finally, the chapter emphasizes the UK worker cooperative movement’s ongoing commitment to international collaboration through organisations like CECOP and CICOPA. 

The Fenwick Weavers’ Society in Ayrshire, Scotland, is the first association in the world to cooperativise labour for which there is complete documentation. It can be considered as a proto-worker cooperative.  The Society was founded in 1761, in the first phase of the industrial revolution, to enable handloom weavers to support each other, share equipment, co-purchase raw materials, resist pressure on their incomes from agents and manufacturers, and defend standards of production. The society subsequently expanded into workers’ education, a food cooperative, and basic financial services, and it operated for more than 100 years. Other early cooperative initiatives, for which there are fewer primary document sources, included flour mills and a bakery, built and operated by dockyard workers in Chatham, Kent from the 1760’s.

In the first half of the nineteenth century, textile and other skilled workers were at the forefront of struggles over political and economic conditions. Demonstrations of working class discontent were met with legal repression and violence, including the execution or penal transportation of participants in the Luddite movement of 1811-1816, and the Peterloo massacre of peaceful demonstrators in Manchester in 1819. The Chartists, a mass movement for working class political enfranchisement, failed to achieve its goals. Frequent industrial crises gave rise to widespread distress and mass unemployment. This is the background to the formation of the Rochdale Equitable Pioneers Society in 1844, and the spread of worker cooperation in Britain during the nineteenth century – taking the form of both workers’ unions and worker cooperatives.

The Rochdale Pioneers are sometimes claimed as a ‘proto consumer cooperative’, but the society’s original objects included setting up factories and workshops “for the employment of such members as may be without employment, or who may be suffering in consequence of repeated reductions in their wages.” While store-keeping became the most commercially successful activity of the ‘Rochdale model’ cooperatives that spread rapidly after 1844, there were also collaborations and investments in cooperatives such as the Hebden Bridge Fustian Manufacturing Society, which paid returns to both worker-members and cooperative society investors. 

In response to local economic problems and crises of unemployment, trade unionists and organised workers set up dozens of cooperatives – known as ‘productive societies’ – in skilled trades such as building, garment manufacturing, printing, woollen, footwear, iron and engineering trades, mainly scattered throughout Northern England, the Midlands and the industrial central belt of Scotland. Many of them were short-lived, suffering from lack of access to capital or credit, and fierce competition. After 1863, the Co-operative Wholesale Society began to set up its own, vertically integrated production facilities – sometimes in competition with the worker cooperatives.

The Co-operative Productive Federation (CPF) was founded in 1882. CPF’s aims were to promote unity of action among the members, find markets for their products, and secure capital for growth and development. By 1893, it had 113 members. However, by the end of the nineteenth century, worker cooperatives had already begun to decline as a mode of independent worker organising. Politically respectable and legally recognised trade unions and retail societies distanced themselves or became openly hostile to the ideas of worker ownership and control. Beatrice Webb, a powerful voice in the social democratic and cooperative movements, wrote against producer cooperatives. In 1923 there were 44 societies in membership of the CPF, and after that it continued to diminish in size and influence. By 1970 only a few remained, mainly in the clothing, footwear and printing industries of the East Midlands. Many of these surviving productive societies had been trading for more than 50 years.

In 1917, the UK’s consumer cooperatives formed a parliamentary political party to defend their commercial interests. In 1927, the Cooperative Party entered into a permanent alliance with the Labour – the UK’s main social democratic parliamentary party – and the exclusion of worker cooperatives from mainstream labour movement thinking was complete. This defined the political context until a revival of interest in worker cooperatives in the second half of the 20th century.

Independently of cooperative movement representative bodies, there existed a few independent employee-owned businesses in the UK, mostly transferred to the workforce by philanthropic owners who wanted to create more equitable business structures. Prominent among these was the retailing chain John Lewis Partnership, which described itself as ‘the UK’s largest employee cooperative’ in its Annual Report until as late as 2004 – although it was never a member of a cooperative federation. Another was the chemicals manufacturer Scott Bader Ltd, founded by the radical pacifist and Quaker entrepreneur Ernest Bader. In 1958, Bader co-founded a network called the Society for the Democratic Integration of Industry (Demintry). By 1963, Bader had completed the transfer of his company to its 260 employees. 

In 1971, Demintry transformed into the Industrial Common Ownership Movement (ICOM). Five of ICOM’s ten founding members, including Scott Bader, were located in the historically important east Midlands region. Nevertheless, the founders of ICOM chose not to make common cause with the old CPF, which they perceived to be moribund. ICOM’s founders became committed to a relatively radical form of exclusive and indivisible worker ownership – another ground of difference with the CPF, whose model permitted external investor shareholdings.

A wider rediscovery of the worker cooperative system, starting in the late 1960s and early 1970s, was associated with a general rise in working class confidence and real wages. This was a period of political and economic contestation, with new worker cooperatives energised by the goals of rising social movements and currents such as ecology, libertarian socialism, feminism and anti-imperialism.

In 1973, to mitigate the common problem of access to capital for new worker cooperatives, ICOM initiated a revolving loan fund called Industrial Common Ownership Finance (ICOF). The Fund borrowed from existing cooperatives such as Scott Bader and from supporters, and lent out relatively small amounts to the worker cooperatives, on easier terms than mainstream commercial banks. The fund continues to operate today, as Cooperative and Community Finance.

In response to a wave of unionised worker militancy, including a national coal miner’s strike in 1973, the Labour government of Harold Wilson began to examine the conversion of firms to the worker cooperative form as a potential way to bolster business resilience and secure industrial peace. ICOM lobbied in favour of support for emerging grass roots cooperatives, but instead the government decided on large buyout investments in three troubled private businesses – Kirby Manufacturing, Scottish Daily News and Triumph Motorcycles – on condition of conversion to different degrees of worker participation and nominal ownership . These ‘top down’ experiments were unsuccessful, and all three businesses failed, although Triumph struggled on until 1983. For the next thirty years, critics of worker cooperatives would use the example of these state-sponsored failures to ‘prove’ the unviability of the model.

A high point for the workers’ control movement in the 1970s was the Lucas Plan of 1976. Union shop stewards at Lucas Aerospace published an Alternative Plan for the future of their company, in response to its announcement that thousands of jobs were to be cut to enable industrial restructuring in the face of technological change and international competition. The workers’ combine argued for their right to develop socially useful, non military products, drawing on the tacit expertise of the workforce to propose up to 150 new manufacturing lines. Lucas management rejected the proposals outright, and the Plan was never implemented. But the Lucas workers’ initiative’ vision has provided inspiration to worker cooperators over the intervening decades. The New Lucas Plan was cited in 2018 by the Labour shadow chancellor John McDonnell as a reference for the party’s reindustrialisation policy. When workers at GKN Driveline near Florence, Italy, began their continuing factory occupation in response to closure moves in 2021, and elaborated a conversion plan based on socially useful and non military/dual use technology, they identified the Lucas Plan as an inspiration.

In 1975, ICOM was invited to assist with drafting a new law, to provide a legal definition of worker common ownership enterprise and empower the Industry ministry to make funds available for cooperative development. Passed with cross-party political support, the resulting Industrial Common Ownership Act of 1976 helped to spread awareness of the cooperative system, and there was a surge in new worker cooperative registrations. The Act also provided for a grant of £250,000 to ICOF for lending to emerging worker cooperatives.

After further political lobbying, a national Cooperative Development Agency (CDA) was formed in 1978, augmenting the work of approximately 30 small local agencies in municipalities around the UK. The legislation to establish the CDA was one of Labour’s last Acts, before the election of Margaret Thatcher’s Conservative government in 1979 signalled the end of the ‘post war consensus’ in British politics, and the neoliberal pivot. 1973-1978 is therefore the only period in British history when the national government actively supported worker cooperatives, although the devolved administrations in Scotland and Wales have generally adopted a more positive policy stance since the 1990s.

The CDA’s first Directory, in 1980, listed 330 worker cooperatives. Its third edition, in 1984, showed 911. Although government policy moved sharply to curtail all expressions of working class power in the 1980’s, there was still momentum in the movement, and in 1989 – perhaps the modern high point – the Cooperative Research Unit identified 1,400 worker cooperatives.

The national CDA was finally abolished in 1990. Over the following decade, the majority of local cooperative development agencies also experienced a withdrawal of municipal funding and loss of political support. Most of them closed completely, or moved into other types of local economic development activity for which money could still be obtained. This loss of patronage and cooperative infrastructure was associated with the closure of many small primary worker cooperatives, especially those providing services of general public interest, and dependent on contract or grant funding from the local authorities. 

With a declining federal membership in the 1990s but substantial fixed operating costs, ICOM itself became increasingly reliant on partnership work and European Union (EU) funded projects. For example, in 1994 the EU commissioned ICOM to create a manual for worker cooperative development advisers, aimed at promoting new worker cooperatives in the former East Germany – a response to rapid deindustrialisation and the privatisation of state-owned businesses following Germany’s political reunification.

By 2000, ICOM was in crisis and on the verge of financial insolvency. The solution was a  merger in 2001 between ICOM and the Cooperative Union, the UK’s consumer cooperative federation, which was itself facing a generational loss of confidence after decades of business consolidations and loss of market share. This ‘marriage of convenience’ protected the jobs of ICOM’s staff, while enabling primary worker cooperatives to continue in membership of a representative body. The new organisation, Cooperatives UK, was able to brand itself as the ‘apex’ organisation for all the UK’s cooperative sectors by bringing other sectoral cooperative bodies into a form of associative agreement, including the independent organisations for housing, agricultural producer and financial services cooperatives, as well as political and social clubs.

Around 140 worker cooperatives were represented in the new organisation.  They were mainly small and medium sized enterprises (SMEs), with a backbone of established worker cooperatives in food wholesaling, media, engineering and manufacturing, many founded in the 1970s and 80s. Under the terms of the merger, they elected a consultative committee called the Employee Cooperative Council – later renamed the Worker Cooperative Council (WCC). This body in turn nominated two Directors to the board of Cooperatives UK, giving worker cooperatives a considerable formal profile, considering their tiny economic weight in relation to the multi billion turnover consumer cooperatives. 

In the early years of the new arrangement, the two sides worked in good faith to understand each other after more than a century of alienation. The worker cooperatives were seen as bringing energy and new ideas, with the consumer cooperatives providing deeper resources and a more secure home. Nevertheless, the merger marked a low point for the UK’s worker cooperatives, little more than a decade after the high of the mid-1980s. The WCC struggled to make sense of its ‘advisory only’ role. A key weakness was the Council’s lack of an independent secretarial function. It did not have direct communication access to the base of worker cooperative members, and was unable to confidently articulate a member-driven agenda outside of discussions in quarterly meetings.

In 2012, the WCC’s remit was expanded to include working with Cooperatives UK staff to design bespoke services for worker cooperatives. In 2013 it delivered an education module for new workers in primary worker cooperatives, and in 2014 hosted a worker cooperative congress called Worker Cooperative Weekend – the first national in-person gathering of UK worker cooperators for 15 years. The Weekend created a new sense of purpose and energy, and the participants launched an initiative called the Worker Cooperative Solidarity Fund (Solidfund), whose purpose is to generate new money for worker cooperative education, mutual support and organisation. 

Solidfund enrolled individual worker cooperators and supporters, each contributing £1 per week. Within four years, the Fund had 600 subscribers and was able to begin making micro finance distributions for worker cooperative exchanges, events, training and solidarity appeals. Since 2014, the Fund has generated more than USD 430,000 – a significant achievement for an organised sector numbering no more than around 2,000 workers employed in 140 primary worker cooperatives.

The years after the economic crisis of 2008 saw a renewal of interest in worker cooperation among precariously employed university graduates, and the start of a wave of new worker cooperative formations in the information technology sector. By 2019 a new industry network called CoTech had affiliated around 45 small and micro worker cooperatives, mainly trading in web development, software, IT infrastructure and creative production services.

In 2021, the WCC resolved to form a new independent worker cooperative federation. Under the terms of a ‘dual membership’ agreement with Cooperatives UK, primary worker cooperatives affiliating to the new network could maintain their direct membership of the apex body, while the new federation would be recognised as the sectoral lead for worker cooperatives. Strategy and structure were debated at Worker Cooperative Weekend in 2022, and the new organisation – called workers.coop – formally launched in January 2023. 

At the time of writing, workers.coop has around 90 enterprise members, and a number of individual worker-members who are persons contributing paid or voluntary labour to the federation. In addition to developing resources and services, workers.coop has a ‘movement building’ focus. Its declared mission is to reach out to new generations and sectors of workers in the UK with an authentic narrative about worker cooperation as a lever for the emancipation of workers, while building alliances with progressive working class currents in the economic, social and climate justice movements.

The distinction between worker cooperatives and businesses owned by their employees through conventional shareholdings or benefit trusts is drawn quite sharply, compared with other European and Anglophone countries. The UK has strong tax incentives for private owners selling their business to a ‘holding’ intermediary called an Employee Ownership Trust (EOT), with the buyout being financed from surpluses generated by the operating company. These incentives and tax breaks are not available to groups of workers wishing to assume direct ownership and control, and so the EOT mechanism is not generally used for cooperative conversions.

Since 1979 when ICOM became a founder member of CECOP, the European confederation of industrial and service cooperatives, the UK worker cooperative movement has shown a consistent commitment to international organising, learning and solidarity. The workers.coop federation remains active in CECOP and CICOPA, the International Cooperative Alliance’s sectoral organisation. It cultivates mutual support and trading links with worker cooperators, worker cooperatives and networks around the world.

Acknowledgements and further reading: Workers’ Cooperatives – Jobs and Dreams Thornley, Jenny, Heinemann, 1981