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Co-op needs to implement reforms faster, warns Lord Myners Co-op needs to implement reforms faster, warns Lord Myners
(35 minutes later)
Lord Myners has urged the Co-operative Group not to let negotiations over his recommended reforms delay the changes he believes are necessary if the supermarket and funeral homes business is to survive. Lord Myners has urged the Co-operative Group not to let negotiations over his recommended reforms delay the changes he thinks necessary if the supermarket and funeral homes business is to survive.
Speaking after Co-op members voted to adopt principles based upon his reform agenda, the former City minister warned against backtracking on his recommendations. "My biggest single fear is that the process of discussion will be used as an excuse not to do much very quickly," he said. Speaking after Co-op members voted to adopt principles based on his reform agenda, the former City minister warned against backtracking on his recommendations. "My biggest single fear is that the process of discussion will be used as an excuse not to do much very quickly," he said.
At a crucial meeting in Manchester on Saturday, support was given to four principles: the creation of a board of directors that is qualified to run a business the size of the Co-op; the creation of a structure that holds the board to account; the principle of one member one vote; and provisions to avoid demutalisation. At a crucial meeting in Manchester on Saturday, support was given to four principles: the creation of a board of directors that is qualified to run a business the size of the Co-op; the creation of a structure that holds the board to account; the principle of one member one vote; and provisions to avoid demutualisation.
Discussions over how to implement these principles began on Sunday. Members of the regional boards, which currently control 78% of the Co-op – held talks with Ursula Lidbetter, who chairs the Co-op, which lost £2.5bn last year.Discussions over how to implement these principles began on Sunday. Members of the regional boards, which currently control 78% of the Co-op – held talks with Ursula Lidbetter, who chairs the Co-op, which lost £2.5bn last year.
The regions are thought to be keen to retain a presence on the board, where they currently hold 15 of the 21 seats, even though under the principles drawn up by Myners they would no longer have a place. Instead, under the Myners blueprint, the board would be chaired by an independent director and have around seven professional directors and two executives from the Co-op. The regions are thought to be keen to retain a presence on the board, where they currently hold 15 of the 21 seats, even though under the principles drawn up by Myners they would no longer have a place. Instead, under the Myners blueprint, the board would be chaired by an independent director and have around seven professional directors and two executives from the Co-op.
The influence of these regional board members – dubbed "democrats" – is expected to be at the heart of the discussions with Lidbetter; further votes will need to be held if changes are to be made. The regional boards – the means by which the views of eight million Co-op members are heard – would also be abolished under the proposals outlined by Myners, who was chair of the Guardian Media Group – the publisher of the Guardian – until he joined the Labour government during the 2008 banking crisis. The influence of these regional board members – dubbed "democrats" – is expected to be at the heart of the discussions with Lidbetter; further votes will need to be held for changes are to be made. The regional boards – the means by which the views of eight million Co-op members are heard – would also be abolished under the proposals outlined by Myners, who was chair of the Guardian Media Group – the publisher of the Guardian – until he joined the Labour government during the 2008 banking crisis.
Myners told the Guardian that a "commercially credible and experienced" board needed to be created. "They could create a smaller group with more expertise tomorrow. They won't do it but I believe there is a better than 50-50 chance they will move to a transitional board by the end of June," he said.Myners told the Guardian that a "commercially credible and experienced" board needed to be created. "They could create a smaller group with more expertise tomorrow. They won't do it but I believe there is a better than 50-50 chance they will move to a transitional board by the end of June," he said.
Myners resigned from the board at the annual meeting, having tendered his resignation a month ago in the face of opposition to his reforms and after a brief four-month stint as senior independent director at the group. He was the only independent on the board, where the other five seats are held by representatives of the independent societies – such as Lincolnshire, which Lidbetter runs – and which together own 22% of the Group.Myners resigned from the board at the annual meeting, having tendered his resignation a month ago in the face of opposition to his reforms and after a brief four-month stint as senior independent director at the group. He was the only independent on the board, where the other five seats are held by representatives of the independent societies – such as Lincolnshire, which Lidbetter runs – and which together own 22% of the Group.
The need for reform has forced Richard Pennycook, the interim chief executive, to delay his strategic review of the group. It has also delayed the publication of the findings of the "have your say" survey that former chief executive Euan Sutherland launched with much fanfare to establish what the public wanted the Co-op to represent.The need for reform has forced Richard Pennycook, the interim chief executive, to delay his strategic review of the group. It has also delayed the publication of the findings of the "have your say" survey that former chief executive Euan Sutherland launched with much fanfare to establish what the public wanted the Co-op to represent.
The survey also asked whether the group should stop making political donations to the Co-operative party, which is affiliated to Labour. In 2012 the Co-op donated £805,000 to the Co-operative party and its councillors. This included donations to 32 Labour and Co-operative MPs, as well as a one-off £50,000 grant to the office of the shadow cabinet.The survey also asked whether the group should stop making political donations to the Co-operative party, which is affiliated to Labour. In 2012 the Co-op donated £805,000 to the Co-operative party and its councillors. This included donations to 32 Labour and Co-operative MPs, as well as a one-off £50,000 grant to the office of the shadow cabinet.
At the AGM held before the vote on reforms, there was a revolt against a remuneration report, with 30% of votes against the pay deals for Sutherland and others . A vote on adopting pay ratios was rejected by the board. Only members of the regional boards and independent societies can go the AGM, which is attended by approximately 100 individuals.At the AGM held before the vote on reforms, there was a revolt against a remuneration report, with 30% of votes against the pay deals for Sutherland and others . A vote on adopting pay ratios was rejected by the board. Only members of the regional boards and independent societies can go the AGM, which is attended by approximately 100 individuals.
A full-scale strategy review is now not expected until November, although Pennycook is already overseeing the sale of the group's farms and the pharmacies to relieve pressure from the banks which are owned £1.4bn by the Co-op.A full-scale strategy review is now not expected until November, although Pennycook is already overseeing the sale of the group's farms and the pharmacies to relieve pressure from the banks which are owned £1.4bn by the Co-op.
It is not clear when the findings of "have your say" will be released, although Pennycook said at the AGM that the traditional dividend to members would instead be ploughed into community and charity causes.It is not clear when the findings of "have your say" will be released, although Pennycook said at the AGM that the traditional dividend to members would instead be ploughed into community and charity causes.
Pennycook said on Saturday that debt repayments of £100m a year were holding the group back. "That's £100m we could not invest to make our food stores better," he said. "£100m we could not share with our members. £100m sucked down in the City of London rather than staying in the communities where our members live and work."Pennycook said on Saturday that debt repayments of £100m a year were holding the group back. "That's £100m we could not invest to make our food stores better," he said. "£100m we could not share with our members. £100m sucked down in the City of London rather than staying in the communities where our members live and work."
Patrick Gray, the president of the Midcounties Co-operative, the biggest of the independent societies, said there was a "measure of flexibility" in the reforms but that reform was vital. "The reform of the group is important for us not least for commercial reasons," he said.Patrick Gray, the president of the Midcounties Co-operative, the biggest of the independent societies, said there was a "measure of flexibility" in the reforms but that reform was vital. "The reform of the group is important for us not least for commercial reasons," he said.