Invisible Brand

Back in the 1840s, these men had a big idea, says Lucian Camp. 170 years later, it’s back

If there are any regular readers of this publication, I apologise to them. It’s true: I’m returning to a theme I’ve explored at least twice before, maybe even three times. And it’s a theme that’s relevant and interesting to people in a smallish minority of financial institutions, and not very relevant or, I fear, interesting to anyone else.

Yes, I’m back on mutuality again. And not for the first time, I’m arguing that maybe, just maybe, a new era of mutuality isn’t so far from dawning. What’s my angle this time? Well, it’s a sort of “what goes around comes around” piece. With the Internet making an important appearance towards the end.

Many years ago, I worked on the Co-op’s food retail advertising. I’ve tried hard, though sadly unsuccessfully, to forget the commercials we made – dire little cameos of happy families shopping while poor old Lulu, her chart-topping days far behind her, belted out jingles of appalling banality with admirable gusto. But I still do remember a lot of what I learnt about the history of the Co-operative movement and, effectively, about the history of mutual organisation in this country.

Don’t worry, I’ll keep the history lesson short. But it all started amid the dark satanic mills of Rochdale, back in the 1840s. A bunch of working people found they couldn’t buy decent food at affordable prices to feed their families. Maybe they were being cruelly exploited by capitalist hyenas; maybe the industrial revolution was taking place so quickly that an adequate food retailing industry hadn’t yet developed; maybe it was a bit of both. It doesn’t really matter. For whatever reason, this group of working people banded together as a community, put some money into a kitty and started a jointlyowned and jointly-run food shop. They went down in the history books as the Rochdale Pioneers.

Over the next hundred years, thousands of groups of people faced with responsibilities that they found hard to deal with as individuals got together with other people and formed other mutual organisations of all shapes and sizes. In retailing, in financial services, in healthcare provision, in housing, mutuals became massively important. But over the course of the 20th century, the climate changed. (We’re talking here about a metaphorical climate, obviously, not the real one – that’s changing now, in the 21st century). For a brief moment in time, a belief developed among two of the most powerful kinds of institutions in people’s lives – the State, and corporate employers – that it was right for them to take the responsibility for self-provision off people’s shoulders, particularly as far as their long-term health and financial security was concerned.

The century began with the first Old Age Pensions and National Insurance scheme: later on, millions of people benefited from local authority housing, final salary pensions, employer-funded life and health insurance and, of course, the National Health Service.

The mutuals’ raison d’etre faded away. Eventually, many of the biggest demutualised. And although a surprisingly large number maintained their mutual status, it seemed unimportant – an accident of history, with little contemporary relevance. That’s where we stand today – or at least, it would be where we stand if it wasn’t for the what-goes-around-comes-around piece.

What’s happened, of course, is that for big important reasons far beyond the scope of this article, over the last ten years or so the State and the employers have changed their minds about this taking-on responsibility thing. In fact, we don’t even think of it as “responsibility” any more. We think of it as “risk”.

Horrible, scary, giving-a-blank-cheque-to-the-future risk. And we don’t want to take it on. We want to get rid of it. We want to pile as much of it as humanly possible back onto the shoulders of the people we lifted it from in the first place. It’s down to you, pal. Your long-term financial security. Your family’s long-term financial security. Your health. Your family’s health. You mum’s care when she gets Alzheimer’s. You’re on your own.

Which is, of course, a frightening burden of responsibility not so very different from that felt by the Rochdale Pioneers back in 1840s, although admittedly with less of an emphasis on groceries.

And one way that people could, I think, try to manage and reduce that burden is by sharing it – in a new breed of 21st century mutual organisations. It’s at this point that, as promised, the Internet makes an appearance. The communities that created the first generation of mutuals were local, geographical communities, based in Rochdale or wherever.

But thanks to the Internet, geography, as they say, is history. Social networking sites like Facebook, or indeed business networking sites like LinkedIn, tell us a huge amount about how the 21st century mutual can work – with management effectively becoming facilitators, and members doing pretty much all the work.

It’s perfectly possible that existing mutual organisations – insurance companies, building societies, healthcare providers – could reinvent themselves in this kind of way, although the challenge for existing management teams to rethink the whole basis of their relationship with their customers and members would be huge. Alternatively, it’s exciting to imagine how new, legacy-free organisations could start from scratch. Either way, the opportunity for a genuinely community-based approach to planning for financial security is, in my mind at least, ridiculously exciting – not least, of course, because of the way it connects to the whole collapse-of-trust thing. In a financial world where, the moment I lower my guard, the biggest and bluest-chip names in the industry steal no less than £1.4 billion from my wallet in the form of useless Payment Protection Insurance, the opportunity to discuss, compare, learn from and benchmark myself against my fellow-members is incredibly attractive.

I suppose it all may not happen. Existing mutuals’ managements may be unable to let go of their legacy, and starting significant new ones may be too hard. But at the moment, I can’t think of any more timely or potentially more successful new departures – or should that be old departures? – in financial services.