WITH immaculate timing the People’s History Museum is currently hosting an exhibition celebrating the success and history of the Co-operative movement, ‘The Peoples Business – 150 years of the Co-operative’.
The Co-op shouldn’t be a PLC camouflaged as a mutual. This is a hazardous path as many in the City just see the Co-op as an asset ready to be stripped. There could be no control on these people in the event of another failure.
The Co-op Group is of course in turmoil; the announcement by the Co-op Chief Executive Richard Pennycook that after a ‘disastrous’ year the group had losses of £2.5billion brings into question whether or not the Co-op will still be around in another 150 weeks, let alone 150 years.
The Co-op promotes itself as an ethical, mutual business yet it has behaved in an unethical and un business like fashion.
Lord Myners, the ex Labour City Minister, has been appointed as a director to help restructure the governance arrangements at the Co-op. His analysis of what went wrong is devastating. He described the decisions to purchase the Britannia Building Society and Somerfield supermarkets as ‘catastrophically inept’, leading to crippling debt and that this happened because the former managers were ‘allowed to run amock like kids in a sweet shop’. He is just as critical of the board that failed to control these incompetent managers.
This is the board chaired by the ‘crystal Methodist’ Paul Flowers who has been charged with being in possession of Class A drugs. His incompetent and lewd behaviour has appalled and amused in almost equal measure.
Many good people remain but the decline in ethical standards has gone through the organisation like Blackpool goes through a stick of rock.
Looking down from the top of the CIS Tower, let's hope the only way is up for the Co-op
I, together with millions of other Co-op members was informed just before Christmas that we would not be receiving our usual Co-op dividend vouchers, ‘because we made a loss this year’. Yet at the same time Rebecca Skitt, the HR Director, was paid £2million for 11 months work, half of that was a retention payment although she was not retained. The then Chief Executive, Euan Sutherland was offered a package of £3.25million. Receiving this did not inhibit him from claiming reimbursement of hundreds of pounds for a blow out lunch in a Michelin starred London restaurant. The contrast between how members were treated and the top executives indicates the Co-op Group had slipped its ethical moorings.
The Co-op tragedy has happened at precisely the moment that society is aching for a business alternative to capitalism. The Western world is still, after nearly 7 years, in economic shock after the crisis in international banking.
The question then is; is it possible to rescue and rebuild the Co-op returning it to its ethical and mutual founding principles married to an effective business model?
Lord Myners’ solution is not as good as his analysis of the problem. He wants a PLC board of City types, overseen by a national membership council who would be there to ensure ‘Co-op principles and values are upheld’. However in the critical areas of hiring and firing the board, and determining general business direction, this board would be toothless.
Lord Myners’ protestations that by giving members a voice but not control this would not be a PLC are risible. The Co-op would be a PLC camouflaged as a mutual. This is a hazardous path as many in the City just see the Co-op as an asset ready to be stripped. There could be no control on these people in the event of another failure.
I prefer a more genuinely Co-operative model where the members have their full voting rights restored (they were taken away more than 20 years ago to stop the carpet baggers who turned many building societies into banks).
They would vote directly for the board and remove the current unwieldy structure. It should be possible for an organisation, structured in this fashion, to outperform its competitors because it has the advantage of not having to make a profit for distant shareholders.
This doesn’t just matter as an alternative to red in tooth and claw capitalism, it matters here in Manchester. Six years ago the City Council supported the expansion of the Co-op in the City Centre by investing £20million in roads and infrastructure; this public investment should be protected. Three thousand local jobs depend on the success of this organisation. It is vital that the Co-op survives not just to challenge the current commercial orthodoxy but to support the future growth of Manchester.
Graham StringerGraham Stringer is the Labour MP for Blackley and Broughton with a majority of 12,303. He was elected to Parliament in 1997 for the now abolished constituency of Manchester Blackley.
Prior to this he was the Leader of Manchester City Council from 1984-1996.
He is one of the few MPs to have science experience, as a professional analytical chemist. He is a member of The Science and Technology Committee at Westminster.
Confidential welcomes columns from all sitting MPs in the area regardless of political party as long as they are able to write interesting articles.
The images for this article came from this Confidential piece about the CIS Tower.
Dark clouds and all that
