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The Co-op: It Must Be Saved

Graham Stringer, MP, says return to core values

Published on April 18th 2014.

The Co-op: It Must Be Saved

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

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 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

Dark clouds and all that

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14 comments so far, continue the conversation, write a comment.

Poster BoyApril 18th 2014.

+1 for Mr Stringer's analysis, but there are 90,000 reasons and counting why the Co-op must be saved, not just the protection of the City Council's public investment.

1 Response: Reply To This...
DavidApril 20th 2014.

You are right and it's bit cheeky,because the Labour movement has had plenty of money out of the Coop over the years and Mr Stringer is not suggesting they pay it back to help those Coop employees,he is shedding false tears over.

AnonymousApril 18th 2014.

I've never been convinced by all the 'ethical' eco-propaganda the Co-op has pushed over the years. It runs a large travel agency and some car dealerships! The whole organisation has been a classic case of the emperors new clothes for a long time, with many 'liberals' deliberately deciding not to see that the organisation has been no different to many others. It has made lots of redundancies, it has been involved in the PPI affair, it outsourced local jobs to India etc etc. It has acted like many other commercial organisations in cutting costs, for example by downgrading its staff pension. For anyone who took the trouble to look it has been obvious that the Co-op has been on the downward slide for a couple of decades at least. All this current surprise from socialist types is indicative of their own lack of curiosity. They preferred to idealise the co-op and hold it up as an alternative way. The reality was not convenient to know,

AnonymousApril 18th 2014.

It would help if the people on the Co-op Board had financial and retail skills. Astounded to learn from friend who works there, 90% of them don't, have blocked votes to reform. The employment backgrounds some have that are so irrelevant are just shocking! That voting system is just a nightmare. However, the Government did advise Flowers & co to take on debt ridden and failing banks, so there should be an inquiry into the ConDem Government misleading the Co-op scandal.

2 Responses: Reply To This...
AnonymousApril 21st 2014.

It was a labour government back when they rescued britannia.

AnonymousApril 21st 2014.

Financial skills like the bankers who caused the global crisis perhaps or those who advised Govt to sell Post Office off cheap? Retail skills like the "professionals" that run Tesco & M&S clothes or other suffering high st brands which are losing market share. Ordinary consumers & employees want an alternative to PLCs and a say in how the business they own is run. Yes they need to learn to question management and paid advisers rather than trust everything they're told but so-called professional boards are no better. The Co-op model is worth billions worldwide and playing a vital role in many economies. Governance will be changed at the Group but member control will stay. For a truly free market surely a choice of retail models is preferable?

Ghostly TomApril 18th 2014.

They need good people running it but they also need to be business literate. From what I have garnered from the TV and the press it's run by people with little understanding of business and financial matters. To save the business they may have to, well probably will have to, sacrifice some of their ideologies.

1 Response: Reply To This...
AnonymousApril 22nd 2014.

The investigations are showing, it wasn't the elected members but greedy retail management who behaved like kids in a sweetshop acquiring Britannia and Somerfield - yes elected Board need to toughen up to stop the "professional" executives behaving like vultures. Buck stops with Board but bad behaviour was from the "business literate"

DavidApril 18th 2014.

At least Mr Stringer has broken the vow of silence that the likes of Ed Balls,Kevin Peel have taken on the Coop.But what he also needs to do is accept some responsibility,because this organisation was ruined under the watch of the Labour movement.Reverend Flowers was a former Labour councillor.Clearly the management was quite happy to have this bunch of unqualified incompetents supervising them,because they could continue unchecked with their disastrous business decisions.The new Coop headquarters is surely a symbol of the folly of Labour in the North.

1 Response: Reply To This...
AnonymousApril 22nd 2014.

Sadly the Bank was a PLC and never allowed to be run as a true Co-op (against Regulator rules) perhaps if it had been PPI would never have been sold which would have saved SOME money

HieronymousApril 18th 2014.

Fancy seeing you here..

Mark FullerApril 19th 2014.

I used to feel quite smug and superior about having a Co-op bank account- not so now. Like many others I've long since lost my illusions about them. But I'll stick with them,even though they've become an embarrassment, not just out of habit and inertia, but because they are a Manchester institution and their demise would inflict a deep wound on the psyche of this area. Even though the Co-op may never recapture the spirit and integrity of the Rochdale Pioneers, it must, as Graham Stringer states, be saved.

1 Response: Reply To This...
AnonymousApril 22nd 2014.

Paul Flowers chaired the Co-op Bank not the Group didn't he?

Bob the BritApril 20th 2014.

To correct Anonymous, the Co-op's travel business was sold to Thomas Cook several years ago, while the motor dealerships were sold a year ago.

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