Co-op can't limp on for another 55 years: back the Myners reforms
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Version 0 of 1. Another day, another Co-op report. If some of the material sounds familiar, Lord Myners would agree. He has an entertaining passage in which he wearily points out that the question of how to improve governance and commercial performance was first regarded as urgent in 1958 when Hugh Gaitskell led the Co-operative independent commission. "Don't defer and defer and defer," recommended Gaitskell. The Economist commented at the time: "This is a radical report aimed at a stuffy, conservative organisation which has fallen badly behind the times. After such a report, no movement could possibly sit back and do nothing." But the Co-op did defer and did sit back, and Myners worries that the response to his report will be the same. "I have no doubt that the Co-operative Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident that it will choose to do so," he says. Why has it been so hard for the Co-op, despite commercial woes (especially on the supermarket side) that have been shockingly obvious, to change its ways? Myners offers two explanations. First, that size and complexity create tensions: democracy versus professionalism; local and regional autonomy versus central direction; the interests of activist members versus those of "shopping members". But it's the second explanation – the "more disturbing" one – that is the bigger obstacle today. "The resistance of traditionalists owes much to the culture of entitlement that has grown up within a very small but highly active proportion of the membership," he says. In a nutshell, that's the real problem here: the Co-op has been captured by insiders more interested in advancing their own careers than protecting the group's commercial health. As Myners does not observe (but others do), there is an old piece of careers advice: if it's not working out for you within the Labour party, try the Co-op. Being led by eager, earnest but unqualified amateurs is no way to run an organisation with 90,000 staff and a turnover of £12bn when the main competitors are fierce beasts like Tesco, Sainsbury's, Asda and Aldi. The report contains an extraordinary quote from an anonymous board member: "In a democracy, if I am elected and not adequately trained, then is it my fault?" Yes, it is, actually. You shouldn't have gone for a job on the main board in the first place and you should recognise that part of the responsibility for the Co-op's financial condition lies at your door. It is astonishing that mass resignations from the boardroom have not followed the £2.5bn loss and the accumulation of heavy debts. Myners names no names but is all too easy to believe there really are directors who are confused by the difference between a creditor and debtor. It also astonishing that his proposals are regarded as so contentious. Myners calls his plans "radical" but it is only the context that makes them so. The Nationwide Building Society has a board containing a couple of executives, an independent chairman and a majority of non-executive directors, which is what Myners is proposing for the Co-op. Plenty of successful non-plcs operate similarly. And the staff-owned John Lewis Partnership has long accepted the need to have experienced outside voices in its boardroom. Nor would Myners' proposed national membership council be a toothless body. It would have powers to hold the group board to account and guard the co-operative soul. Finally, Myners says it's about time the Co-op enfranchised its ordinary members and introduced the principle of one member, one vote. So it should, it is meant to be a democratic organisation. This time nobody can pretend the Co-op is capable of limping on for another 55 years without reform. Its lenders are watching warily and a mini-price war has broken out in the food grocery market. The "elected democrats" hold most of the votes on 17 May. Their duty is clear: they should support the proposals enthusiastically. |