John McDonnell will lay out in a speech today at the TAS Partnership in Preston, an employee owned transport company, Labour’s commitment to supporting the growth of the co-operative sector in our economy, which could unlock a £40 billion bonus to the UK economy.

In the speech, Labour’s Shadow Chancellor will announce a consultation for new legislation in the next Labour government that will help to unlock capital funding for small business by enabling mutual guarantee societies to be formed.

Labour will restore the Conservatives’ cuts to tax reliefs for community owned energy, helping funnel funding to community schemes.

John McDonnell MP, Labour’s Shadow Chancellor, will say:

On co-operatives:

“The UK’s co-operative sector is currently worth £37 billion. This is far smaller than Germany or certainly the US. Our co-operative sector is just 20 per cent of the size of Germany’s. But it’s grown by 15 per cent since 2010 – faster than the rest of the economy. And fifteen million people now own a share in a co-operative. That’s up 16 per cent since 2010.

“The evidence suggests that co-operatives are more resilient than conventional businesses. Twice as many co-operatives survive the crucial first five years as other businesses. And worker-owned companies have a clear productivity advantage over conventional businesses.

“So we should be more ambitious about what can be achieved here. We want to see resilient, high-productivity businesses in an economy that is fairer for everyone. The next Labour government will look to at least double the size of the co-operative economy. That’s a £40 billion boost to the economy.

“It’s not good enough that the Treasury has only two members of staff concerned with the co-operative sector.

“I would like to build on the example set by the Musicians Union, organising music teachers into co-operatives rather than letting them sink or swim as individual freelancers. Unions, government, and the co-operative sector themselves can all play a part here.

“We are facing a choice as a society. We can either stick fearfully to the failures of the past and of this government in particular. Or we can see the opportunities ahead of us, and seize them with confidence.

“Co-operatives and new ways of owning and managing society’s wealth are an essential part of Labour’s vision for a better, fairer economy.”

On employee ownership:

“Labour must be a party that is concerned about ownership of wealth and assets, not only the distribution of income. This is much closer to an old tradition in the Labour movement of decentralised ownership and democratised wealth.

“It is the tradition of RH Tawney, GDH Cole and of course the co-operative movement. It was why I’ve spoken previously of the need to create a “Right to Own.

“We want to empower local authorities, communities and workers to think and act creatively when it comes to building a fairer, more prosperous economy.

“I think workers in workplaces threatened with closure or takeover should have first refusal on buying out and running their place of work. With two-thirds of Britain’s family business at risk of closure when their owners retire, employee ownership can help solve our brewing succession crisis.”

On Preston:

“I know the council here in Preston has already started working on this, providing help and support to those business owners retiring and making sure viable businesses stay locally owned.

“I’m very pleased to be in Preston as I think the council here has provided a model of how an innovative local Labour administration can start to think and act creatively to secure sustainable economic growth. This kind of radicalism is exactly what we need across the whole country.

“Councils in the richest 10 per cent of the country have seen their funding cut by £28 per person since 2010. But the poorest 10 per cent of councils have seen their funding fall by more than ten times that, £228 per person.It’s been Labour councils, dealing with multiple social issues in areas of deprivation that have borne the brunt.

“I’m not of the opinion that we should just grumble about this, or wait for something to turn up. I believe in campaigning today and I’m in favour of taking action now to defend jobs, services, and local communities.

“That’s why the kind of innovations Preston is putting in place are so important.

“We want to create what Prof Marianna Mazzucato has called an “entrepreneurial state” that looks to the future. This means a complete break with the failed ideology of standing idly by and pretending only markets can decide.

“This isn’t just something for national government. What Preston is showing us, like other local councils, is that we can create entrepreneurial local states, too.”