The Co-op pays a high price

Cooperative

Reform must maintain cooperative principles

— Even for a seasoned cooperator it can be difficult to have faith that the Co-operative Group can survive its latest setback – another £400m black hole in the Co-operative Bank books revealed last month.

With 70 per cent of the bank now owned by hedge funds, the chief executive of the group jumping ship within a year of taking over (despite a £3.6m pay package), and the financial pressures on it, there is no doubt the board of the Co-operative faces challenges.

Cooperatives were never a proxy for being unbusinesslike and all who support the Co-operative Group should back steps towards reform, but not at the cost of its cooperative principles. It is not a PLC.

An ethical ethos must go hand in hand with being good at what you do. I joke to staff in my own local Co-op store about the scribbled, tatty paper signs about forged £5 notes, advising you can only use credit cards at the service till, and the well-used one saying ‘out of order’. And, dare I say it, my local Tesco Metro has shorter queues and working tills. This matters.

The Co-op should have had an inbuilt advantage as it always had a strong convenience store presence and, conversely, few high street bank branches but good telephone and internet banking. In its grocery stores you could always be sure that products were fair trade, British farmers were paid a fair price and that decisions were ethical. But the Co-op needs to provide good value as well as being ethical and focused on members.

In the firesale of assets the cooperative principle must not be lost: farms and pharmacies are being sold off to the highest bidder, but tenant farmers and local cooperatives might be keen to buy these and maintain the principle of mutual ownership for mutual benefit. Given the Co-operative Group’s roots in assuring quality in food in an era where adulterated goods are commonplace, supporting quality from field to store should be a priority. This does not mean giving away assets at a knockdown price but at a fair price to those farmers it has worked with for years. It is ethical business practice and would maintain a good supply chain.

There are also challenges about leadership and governance. Former City minister Paul Myners became a director and was tasked with a review of governance to report in May. After the chief executive of the Co-operative Group, Euan Sutherland, quit, Myners rushed out a progress update calling for two parallel boards – one fully made up of executives and one of elected members representing the different regions and local cooperatives of the group. The current board does include members who run large Co-op businesses (including vice-chair Ursula Lidbetter, chief executive of Lincolnshire Co-op), but Myners was scathing about the elected members and democratic structures.

The Cooperative Commission, which reported in 2001, made a number of recommendations about group governance that were not followed through, including the appointment of external directors. Change must be done with members, not to them, so why not revive the commission and work with expert cooperators rather than leave the job to one man?

The board of the Co-operative Group is under pressure to push through rapid change, but it must not have its hand forced by those outside the cooperative sector. It needs to be confident in its values. Let’s have an honest review, not one forced on us by PLC chiefs. Moreover, some in the group want to cut its bank links and let it sink or swim as a PLC. But the high street would lose a richness if customer choice was between the large banks and the few remaining building societies. It is important to fight for the alternative.

I have been heartened by ordinary bank customers and Co-op members up and down the country keen to fight for ‘our Co-op’. These are not activists but citizens trying to make the right choice about what business they support. Multimillion-pound executive pay and the push to become a PLC does not go down well with them. The new management needs to recognise that part of its brand is ownership by members. It ditches this at its peril.

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Meg Hillier is member of parliament for Hackney South and Shoreditch

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Photo: harrypope

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  • Anonymous

    As for the Coop’s “ethical” practices, so far this has extended to discrimination against Israeli products which it perceives as being from the “occupied territories” which means produce from Palestinian farmers on the West Bank who also market their produce through Agrexco, Mehadrin and other Israeli companies. This is pure racism. If the Coop were to boycott goods for all the countries whom they perceived to behave unethically, they would have nothing left on the shelves! The Palestinian Authority itself is opposed to these boycotts that discriminate as much against the Palestinians on the West Bank as they do against Israel. This selective boycott (not applied to the pharmacy) has been imposed by racist elements in the Cooperative Party and is utterly disgusting. On the contrary, the Cooperative Party should be looking to Israel as a role model, the whole Israeli economy was founded on cooperatives!

  • Roy Steele

    I remember a line in the tv comedy “Porridge” : “Its us and them, don’t forget that” and can’t help thinking this vast class and political divide in United Kingdom will never really go away until some fresh-thinking, uncluttered young brains are brought to bear on issues like co-operatives. As the name implies, co-operation is what we all need in this country at present – if we can’t sort out a Grocery store’s few glitches without having a fit, then God help us all.
    Give the CO-OP a refit, re-brand and clean some cobwebs out from top down : was that what Lord Myners thought and told in his report to ‘The Board of Directors’? Who knows? Who cares?
    Get on with it, Politicians, and find me a job so I can feed my kids and pay my utilities as its still cold outside.

  • Old Grassroots Geezer

    I have just published “Co-ops and Mutuals: Armageddon or Watershed?” and can be seen/previewed at Amazon, Kindle. Sent to Myners, Kelly, Select Committee Enquiries, it is a detailed expose of how CG Management and “quislings” in the “UN-democratic” structure victimised, bullied and drove me out (as happened with others). It includes emails, SE Regional Board Minutes, some of 30 letters with the Company Secretary. I was Area Committee Chair and high profile writer. My “crime” was being outspoken, “saying what others don’t,” our fundamental duty.
    In Co-op News Dec 13, I accused the CG as being “secretive, controlling, autocratic, vindictive, having Control Freak Management and “The servants have become the masters.” It was not rebutted.

    Bullying, victimisation and harassment are endemic in CG. 20% of employees reported bullying. Main Board and lower tiers are bullied as was Myners! Allegedly, CEO Marks was a bully. Management’s fear and gagging contributed to the collapse of the CG. However, whatever reforms are adopted, if any, it is likely that the same old faces, cronyism, side-lining and cultures will still exist in any new structure and things will carry on as before. So much depends upon the
    quality, ethics, attitudes and integrity of those within the organisation. Caring, just, decent and dedicated Co-operators are needed in a Co-operative; but how can the system percolate them to the top and into positions of influence?

  • Old Grassroots Geezer

    Sorry, Roy. CG debacle is not “just a few glitches.” It has done great damage to the Co-operative and mutual sector. This is not just my view, but many high profile Co-operators. Those of us who have advocated Co-operation and Mutualism as a realistic alternative to rampant, obscene Corporate Capitalism for years have had our argument severely undermined.