It represents the bourgeois and intellectual left of British politics, drawing on the reformist and radical traditions of Victorian British politics. Policy-wise, they favour an extension of the welfare state while stressing the importance of municipal government and individual liberty. In this sense they're not all that different from the leftmost wing of the Liberals in terms of temperament (although now TTL's Liberals are more and more dominated by the OTL Liberal Imperialists and Asquithians) but in terms of policy there ended up being little more than a cigarette paper's difference between them, Labour and the Co-operatives, hence the alliance.
As regards Labour and the Co-op, both of them favour a more direct class politics, although Labour is more obviously a creature of the trades unions and the Co-op puts more importance on things like worker self-management and workplace democracy.