Friday, 15 August 2014

The Forward March of the Co-op Halted?

2012 was a great year for the Co-operative Movement. The United Nations had designated it as the International Year of the Co-operatives, Dame Pauline Green President of the International Co-operative Alliance addressed the United Nations and UN Secretary-General Ban Ki-moon reminded the world that,  “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.”

Co-ops UK and the Co-op Group rose to the occasion with a major conference and Expo in Manchester called Co-ops United (apologies to City fans). Even David Cameron was swept along by big society rhetoric and agreed to support one of the objectives of the Year, governments’ consolidation of Co-op legislation through a new Co-operatives and Community Benefits Societies Act.

Corporate capitalism was on the ropes the co-operative and mutual sector had weathered the banking crisis and was growing. Entering 2013 Co-ops had never had a more favourable press in the publics eyes we where a ‘good thing’.

Then the sky caved in. May 9th 2013 was the day of reckoning. That day ratings agency Moody downgraded the Co-operative Bank’s debt rating to “junk” status. It said the bank was vulnerable to potential losses and warned it may need “external support” if it could not strengthen its balance sheet.
The Bank said it was “disappointed.” As the Banks chief executive, Barry Tootell, resigned and Project Verde, the bid to buy 631 branches from Lloyds, collapsed.
The enemy was inside the gates, US Hedge Funds, described as “vulture funds”, Silver Point Capital and Aurelius Capital Management now had significant stakes in the Bank, they had their chance to do to the Co-op what they usually did with the distressed assets of developing economies.
Moody’s, ever helpful in these matters, said that the Bank will be forced to “take the axe” to costs. For a bank this was not new. The rest of the banks have had to be recapitalised some even taken into public ownership. But the banking environment had dramatically worsened ultra low interest rates having destroyed the margins in retail banking.
Some of this crisis had of course been caused by the bankers themselves, by their ridiculous growth strategies, reckless lending and of their taking risks on products they did not understand, in a mad greed driven feeding frenzy.
That is not to offer an excuse. We where supposed to be different, we had encouraged people who had an ounce of ethics to “switch their money”.
Now thanks to the effective demutualization of the Bank and the exposure of the private life of its chair the ‘Crystal Methodist’ Paul Flowers that switching was going in the wrong direction.
As Professor Johnston Birchall has said, “when a conventional investor owned company fails people ask why it failed. When a co-operative fails, people ask whether co-operatives can ever be made to work.”[1]
This debacle created a new industry - an investigation industry. Externally, the Co-op Group is now subject to regulatory investigations by the Financial Conduct Authority, the Prudential Regulation Authority and the Financial Reporting Council. The failure of the Bank has also been the subject of Treasury Select Committee hearings, and then there is the independent review by Sir Christopher Kelly commissioned by the Group.
Before any of these bodies could report we found ourselves in the Alice in Wonderland position of, “verdict first, evidence later”.
Since the collapse of the bank and its recapitalisation there had been a clean sweep of the management following the retirement of Group CEO Peter Marks who was replaced by former Kingfisher plc Chief Operating Officer Euan Sutherland.
He quickly recruited a completely new management team who wasted no time in calling for a review of the organisations governance. In the process appealing over the heads of the board and elected members to individual members through a strange opinion poll run by You Gov asking customers and members to “Have your Say”. This was such a crude piece of polling that it was quickly seen through by pundits and activists alike.
Sutherlands view seemed to be there was no time to waste and the governance of the Group was at fault and had to be reformed.  Lord Myners was made a Senior Independent Director of the Group and asked to lead, “an independent review of the Group’s governance.”
Now this is not completely ridiculous as Myners had previously lead a review of the governance of life mutuals (to which incidentally the Co-operative Insurance Society had submitted evidence – pointing out, “The co-operative model of trading is particularly conducive to strong corporate governance in that it involves democratic participation by customers.”)
There is no doubt that governance in large organisations is a concept with several strands. Clearly there is the question of the structure of the organisation, is there something inherent in large scale co-operatives that makes them difficult to govern?
Was there a healthy culture at the Group ie was there an open and respectful relationship between those who represented the interests of the members and the professional management?
Finally what of the qualities of the key personnel, the senior executives of the Group and the Bank and the lay chairs of the Bank and the Co-op Group?
Seems odd that Myners should begin before Sir Christopher Kelly, former chair of the Committee for Standards in Public Life had concluded his report. As his job was to look at the trail of poor decisions that lead us to this situation “to look at the management structure and culture in which those decisions were taken; lines of accountability which governed those decisions; and the processes which led to them” and “To identify lessons which can be learnt to strengthen The Co-operative Bank and the wider Co‑operative Group, and the co-operative business model generally.”
Seems like cart before horse to me.

The year all this was going on the Co-operative Wholesale Society (CWS) had celebrated its 150th birthday and the occasion was marked by a splendid book Building Co-operation[2]. The first business history of the Group is an impressive piece of scholarship as the CWS is one of the best documented businesses anywhere in the world.

In all that time there has never been anything quite as extraordinary as the current crisis. Yet like all long history if you look carefully, as Marx pointed out, it does tend to repeat itself.
The obvious precursor was the collapse of the Scottish Co-operative Bank in 1973.  The bank had been investing in what where called Sterling Certificates of Deposit without the full knowledge of the board of SCWS. When it was clear that it could not meet its obligations and no other bank would lend to it a quick marriage between the SCWS and the CWS was arranged and over 100 years of independent trading came to an end in just a few weeks.
Needless to say prior to the collapse of the Scottish Bank the SCWS marked its centenary with a new headquarters building opened in 1968 by Her Majesty the Queen. Today the building houses Glasgow Council Offices.
Many of us attending recent Co-op Group Annual and Half Yearly meetings had been watching the construction of 1, Angel Square, the Co-op Groups new palatial headquarters, with a degree of trepidation. Such aggrandisement was a sign of hubris by a Chief Executive and almost always spelled disaster.  Also to be opened by the Queen it became subject to a sale and lease back described by Lord Myners as an expensive addiction.  Yet even the most cynical of us could not imagine the disaster that was to come.
Today’s crisis is the biggest since 1997 when the Lancia Trust attempted to take-over and demutualise the CWS backed by such City luminaries as Hambros, Schroders and Nomura.

That time we fought them off and in so doing learned lessons that sparked a revival based on two things a common brand and a degree of consolidation. The branding was effective, meaning that travel, pharmacy, funerals, food, insurance and banking where all clearly part of the same business. The idea was to encourage cross selling and reduce marketing costs.

Consolidation was another story. If any one individual is associated with this drive it was the former CEO Peter Marks who argued for a single national co-operative society. His climb to the top was thanks to a series of society mergers rising from CEO of Yorkshire Society via a merger with United Co-operatives to CEO of the Group when United in turn merged with the CWS.

Many people had misgivings in the way elected members had been persuaded to support these mergers with large pay-offs for loss of office. Grudgingly most commentators felt that at least the Co-op was at least back on the map. Mergers had bought some efficiency savings but Marks thought the Group was still too small to compete effectively with its rivals.

Building Co-operation has a section on Marks and the ‘Renaissance’ in retrospect the word is quite rightly hedged. Len Wardle became group chair in 2007 and Marks CEO in 2008. The authors argue that Wardle offered Marks ‘constructive criticism’.  It is hard now to see anything constructive about this partnership.

Absorbing retail co-op societies into the Group was one thing but now the target was non-co-op businesses. His predecessor, Martin Beaumont, had looked at the acquisition of the Somerfield Group (also an aggregation of other businesses including Kwik Save) and ruled it out as too difficult to absorb. Marks and Wardle had no such fears and in March 2009 they paid £1.57 billion to make the purchase.

Euan Sutherland before he left in huff after his exorbitant pay had been revealed told us that this year the Group will lose over £2billion. Mostly it would appear from ill judged acquisitions which according to Paul Myners are “breathtakingly value destructive” one of those was the purchase of Somerfield.

The biggest act of value destruction however was the Co-op Banks merger with the Britannia Building Society. The public pillorying of elected Paul Flowers has masked a key issue in that failure - the role of mangers and the Myners favoured independent non-executive directors (IPNED’s).
The Co-op Bank has never been a co-operative it began life as the Loan and Deposit Department of the CWS back in 1872 and ninety-nine years later it became a plc and a subsidiary of the Co-op Group.
The Directors had never been elected. They where appointed by the main Group board and to overcome any skills gaps in recent years they have included IPNED’s from the financial services and banking industry.
Of the appointments there was a minority of elected members. The annual report for 2012 states, “Of the 11 Non-Executive Directors four are elected members of the Co-operative Group Board, two are Co-operative Group Executives and five are independent and recruited for their specific financial services experience and expertise.”
All the key roles on the operational sub-committees of the board where taken by banking professionals of some standing. The Chair of the Risk Committee which had responsibility for “the management and control of all significant risks, including technical, operational, business model and external risks”, was Merlyn Lowther.  Her name maybe familiar you may have her signature in your wallet. As chief cashier of the Bank of England her signature was on our bank notes for four years.
Other Board members included Peter Harvey ex-chief executive of UK Business Banking at Barclays and William Hewitt ex-Group Finance Director of the RAC who was chair of the Audit Committee.
Then there are the external auditors KPMG who gave the Bank a clean audit including a review of their corporate governance statements by Andrew Walker an Audit and Transactions Services partner in KPMG’s Financial Services practice. 
The man who facilitated the merger with Britannia, was Tim Webb of J.P. Morgan Cazenove. Tim is an exceptional banker it says on their website. He represents “the stability of our management team and the depth of talent that allows us to maintain consistent service to clients year after year”.
That deal was a disaster. What ever political pressure there was it is clear now that something needed to be done about Britannia and the Nationwide could not swallow any more failing building societies. The Co-op Bank was a prudently run fairly boring bank indeed there was a time when the board had consisted solely of completely risk averse elected members.
Britannia was loaded with all sorts of toxic debts in both residential and commercial property. The new CEO of the combined business was Neville Richardson the former CEO of Britannia making it a sort of reverse takeover. Peter Marks the Co-op Group CEO determined to grow the business by acquisition at apparently any price.
With both the bank chair and the Group chair captured the stage was set for the step too far that finally bought the Group to its knees Project Verde. Collectively these bad deals have left the Group carrying far too much debt. The danger is the Group would no longer be owned by its members but by the banks or worse the same bond holders who prized open the Bank. Reducing the debt is the key challenge.

Academic’s attribute co-op failures to three key factors, “badly thought out business strategies, paying too much for acquisitions, and boards being out of their depth.”

They rarely point to the ‘over weaning CEO’ or non-co-operative managers. But that is what I think is the real problem here. Co-operative governance relies on mutual respect and understanding between professional managers and representatives of the members and a common set of values.

Sir Graham Melmoth an earlier CEO of CWS publicly stated that, “Peter Marks would not know a co-operative principle if it crept up and hit him in the face.”
As a former President of the International Co-operative Alliance he was in a particularly strong position to make that statement. Whilst he was CEO he instigated a co-operative values and principles programme – developed and run by the Co-operative College – for all senior managers. Sadly that programme was allowed to lapse when leadership in the CWS changed.
Surely such training in co-operative identity should be mandatory for all in leadership positions – be they managers or elected representatives of the membership. This gap is perhaps one of the factors in the governance failure.

I would argue that there has indeed been a failure of governance at the Co-op Group but it is not as simple as the one put forward by Lord Myners. The failure is much more comprehensive and systemic.

It includes the whole purpose of the business, the relationship with members and their representatives and the management. There is a critical crisis of co-operative education which has failed to produce elected directors or managers with the qualities or of the quality to run a large scale co-operative business.
This argument has been best expressed by Peter Davis in his work on Co-operative Management.[3]  When the Co-operative Bank was under the leadership of Terry Thomas with his Inclusive Partnership plus Sustainability model of management he was offering us a model of a co-operative value based management.
His philosophy focused on membership as the key. He recognised the social mission at the heart of what being a Co-operative really means and demonstrated how with good market research it could be re-interpreted for the modern age. In so doing the banks advertising and branding did not simply reflect what members wanted and this is the key point - it enlarged what they wanted, it educated them. 
All the surveys that put the Co-op at the top of any ethics survey are the legacy of this period. Not only did this recreate the co-operative brand it generated record surpluses to the CWS/Group keeping the whole retail movement afloat at a critical time.
Once he went however the rot set in. The ethos faded. We had lost the Co-operative Bank long before the hedge funds got their talons into it.
This is the real tragedy. The Co-operative bank the only real post-war success the movement had has been wiped out by a mixture of charlatans and poorly educated idealists.
Is the situation recoverable? Mondragon which until recently was roughly the same size as the Co-op Group has its own University. Across Europe there are institutions delivering the new co-operators as far apart as Italy and Finland  
This year the Co-operative College will be incorporated and able to redevelop itself. The mission we have is to rebuild co-operative education, this will not be cheap but it is a vital investment, without the necessary skills, firmly rooted in co-operative values, we will be doomed to repeat this cycle. We have to do this, build a co-operative organisational culture ourselves as there is no one else to do it. Otherwise we will simply keep re-infecting ourselves with the same alien and fundamentally non-co-operative culture.
The last generation of co-op mangers to come from the old home of the College at Stanford Hall included Ursula Lidbetter of Lincolnshire Co-operative Society and current Group chair. Maybe that is a small glimmer of light.


[1] The governance of large co-operative Businesses, Johnston Birchall, Co-operatives UK, Manchester, 2014
[2] Building Co-operation, John F. Wilson, Anthony Webster & Rachel Vorberg-Rugh, OUP, Oxford, 2013.
[3] Co-operative Management, A Philosophy for Business,  Peter Davis & John Donaldson, New Harmony Press, Cheltenham, 1998.

Sunday, 13 July 2014

When Nottingham Co-op Commissioned a Symphony




Just before Britain’s greatest music festival begins this year has seen the release of the very first recording of a piece of music that was first performed at a Promenade (that gives the game away) concert in July 1945. If I tell you that it was composed by Alan Bush, a victim of the cultural cold war, it may help explain why Fantasia on Soviet Themes, Op24, has taken so long to be recorded and released.

Alan Bush had studied under Frederick Corder at the Royal Academy of Music and in the late 1920’s studied music and philosophy in Germany. He had joined the ILP in 1925 and the Communist Party in 1935. He is probably best known today as being a founder member of the Workers Music Association in 1936.

He wrote a succession of musical pageants in the 1930’s, including the Pageant of Labour in 1934, Towards - Tomorrow a Pageant for Co-operation in 1938 and a Festival of Music for the People in 1939. The Bush Fantasia on Soviet Themes was composed in 1942, orchestrated in 1944 and consists of a succession of Soviet songs, Gramophone describes it as, “a tuneful medley of no great consequence”. The BBC Music Magazine however gave it 4 stars.

I suspect context is all and misses the emotional connection a simple medley of Soviet Songs would have in 1945 showing just how grateful we where for the Soviet sacrifice in the war.

On the disc this piece is one of the book ends of Bush’s 2nd Symphony, the Nottingham. In 1949 the City of Nottingham held a week of celebrations marking 500 years since its Royal Charter. The musical centrepiece of the celebrations was the premiere of the Nottingham Symphony which had been commissioned by the Nottingham Co-operative Society. Its first performance was on June 27 in the city’s Albert Hall by the London Philharmonic Orchestra.

Dedicated to the people of Nottingham a bound copy of the score was presented to the Lord Mayor. It is a fascinating work; it was the first major orchestral work by Bush after attending the Second International Congress of Composers and Musicologists in Prague in May 1948.

There he met with other Marxist composers and signed the document later to be known as the Prague Manifesto. He subsequently claimed that the conference had a significant affect on his approach to composition. The Nottingham Symphony was clearly influenced by the socialist realist principles that underlay the Manifesto.
In the symphony Bush adopts a direct musical language, clearly does not shy away from politics, and draws on an English national style rejecting avant-garde musical techniques. This all point to the impact of the Prague Manifesto on his work. The symphony opens with evocations of an Arcadian past in Sherwood Forest and ends with visions of a Utopian future in the Goose Fair.

It seems a long way from the war yet marks two moments in British cultural life: a time when the labour movement made a serious attempt to make musical culture available to all, and the convergence in Britain of international socialist realism and English national music.

Two years later this convergence was underlined by another Bush work, Wat Tyler. An opera described as a work of “English socialist realism.” It was a prize-winner in an open, competition to write a national opera for the Festival of Britain.

Clearly there was some disappointment that he had won as unlike the Nottingham he had to wait until 1974 for a public performance of Wat Tyler in Britain

Before the symphony on this splendid disc released by Dutton Epoch with pianist Peter Donohoe and the Royal Scottish National Orchestra conducted by Martin Yates is Africa. This is a Symphonic Movement for Piano and Orchestra, Op73, written in 1972. It was inspired by a UN resolution of that year and contains in one movement an Evocation of Sharpeville. Needless to say in Britain it has hardly been heard or performed.

Does music and politics mix?  Of course it does - this is a terrific disc and it is not too late to hear these impressive pieces for yourself and clebrate a time when the Co-op had the confidence to commission a Symphony! 

Thursday, 3 July 2014

Co-op Congress 2014



Co-op Congress last weekend in Birmingham could have been a very miserable gathering given the events around the Co-operative Group. Ironically if it had not been for that crisis around our biggest member this would have been one of our best ever years.

There are over 15 million memberships in the over six thousand co-ops in the UK and despite the travails at the Group turnover in the sector is up to £37 billion. I was particularly delighted that Yorkshire based Suma, the wholefoods distributer, was named as Co-operative of the Year. Suma is a worker co-operative with 140 owner/members, no hierarchy, no CEO and with a radical commitment to equal pay.

It turns over £34million a year and has doubled sales in the last decade. Last year it was able to pay a well deserved bonus of £4,750 to each and every owner/member.
To celebrate they are receiving a visit by current TUC President Mohammad Taj of Unite to mark Employee Ownership day on July 4th.

There where other bright spots at Congress too. On the Friday before we went down  the Pershore Road in Birmingham with ICA President Pauline Green to launch Britain’s first ever student housing co-op.

If any section of society has been shafted by austerity it is young people. The Students Co-operative Movement grew out of the ant-fees movement. They argue that students have been led up a cul de sac by student union politics as a training ground for new labour apparatchiks.

Rather than passing resolutions and waiting they decided to get on and do things for themselves. They began with student food co-ops and bike co-ops and now they are trying to challenge the dreadful blight of poor quality housing and exorbitant rents.

This new Housing Co-op has received substantial financial support from the PhoneCo-op and technical support from Birmingham Co-operative Housing Services, a very good example of Co-op Principle Six in action - Co-operation amongst Co-operatives.

Whilst there was no escaping the shadow of the Co-op Group there was a confidence and vibrancy at congress this year. Sensibly we had changed the format to make the whole event as participatory as possible under the theme of Co-operation How?

The debates focused on two main issues, How do we promote the co-operative message and secure our identity? Also; How do we take participation in co-operatives to the next level? The discussions being both wide ranging passionate and informed.

BBC business news reporter Steph Mcgovern, who acted as facilitator on Saturday, commented that it was the best conference format she had ever experienced. Hopefully we have begun the process of making Co-operatives UK an open, democratic, participatory learning organisation. Truly practicing what we preach.

The sponsor of this year’s congress was symbolic of a new deepening relationship between the co-operative and trade union movements. It was Unity Trust bank, itself a result of such a partnership, and now marketing itself as ‘Proud to Bank Co-operatives’.

Also involved where the Musicians Union who are working to develop worker co-operatives to protect both musicians who work in entertainment and in music education.

One of the best and most articulate contributions to the weekend’s discussions came from the Deputy General Secretary of the NAS/UWT Patrick Roach who spoke about the challenges in education and the opportunity that Co-operative Schools present at the annual meeting of the Co-op College.

The rate of Co-op Schools development has been incredible and we are now working on a proposal to get the law changed so that they can be formed as Co-ops on a proper legal basis.

Other success stories included the work done by Peter Couchman and the Plunkett Foundation, who have worked tirelessly to protect pubs for their communities. They have estimated that community ownership has helped to date to save 4,000 years of pub history.

Of course we could not have a party without an end of the pier show. Except rather than an end this was a new beginning, as Simon Opie explained how Community Ownership had raised some £600,000 to save Hastings Pier. He explained that the previous owners had not understood that the pier was vulnerable to the sea!! And they had been required to rescue the pier form the dead hand of private ownership.

Clearly the home of Robert Tressell still has some Ragged Trousered Philanthropists’ working to make a better world. There is a lot of work to be done and we are not out of the woods with the Co-op Group yet but the whole event does give us some space for quiet optimism.

Nick Matthews is Chair of Co-operatives UK




Friday, 30 May 2014

The School of Eloquence



That great labour historian Edward Thompson in his finest work The Making of the English Working Class wrote, “In 1799 special legislation was introduced “utterly suppressing and prohibiting” by name the London Corresponding Society and the United Englishmen. Even the indefatigable conspirator, John Binns, felt that further national organisation was hopeless… When arrested he was in possession of a ticket which was one of the last ‘covers’ for the old LCS: Admit for the season to the School of Eloquence.

In the recent past we have lost some of the most eloquent voices on the left, from Stuart Hall to Bob Crowe and probably the greatest of them all Tony Benn. The current criticism of modern political leaders seems to me to be twofold firstly that they are all the same. I have some sympathy with this observation. I saw a photograph of Cameron, Clegg and Miliband last year at the Cenotaph in similar attire and all trying to look respectful. For a moment even an old political hack like me could not tell them apart.

The second and perhaps less well articulated point but even more damaging is that they are inauthentic. Political leadership has always had an element of theatre about it but modern politicians really are bad actors. They are incapable of “feeling our pain” and they speak in a carefully managed language that is completely meaningless. What’s more their experiences are so far away from ours they have no idea what we think or feel anyway. Encapsulated this last week when Ed Miliband had no idea how much his household spent on a weekly shop.

This means that most of us have simply stopped listening to them. Even people who are paid to listen to them like the BBC’s political editor Nick Robinson have the ability to make a government announcement like the bedroom tax, sound like a minor kerfuffle in the Westminster tea shop, rather than the brutal attack on the poor that it really is.

Political discourse has to start with the articulation of representative experience. So when was the last time you heard a Labour leader talk about catching a bus? They just do not sound like normal people. In democratic systems there is a kind of decay. When a new party or movement breaks through it has a broad scope and is full of ideas and talent giving a voice to the previously unheard. Then over time it narrows.

This is understandable the threat to leaders comes from within their own parties so they seek to control who is chosen to represent the party. The gene pool the party draws from gets narrower and narrower and unless the party is truly democratic and has the ability to renew itself eventually it simply collapses.

This is the very dangerous position that Labour finds itself in. Its base is too narrow. The leader and its spokespeople are dull. They speak with out feeling or belief. They are inauthentic.

This is a deeper problem than just policy. Even if they adopted all the policies we would like to hear the wider public cannot hear them. So when an able political actor like Nigel Farage turns up he is like a breath of fresh air.

This is something hard to say - I feel sorry for Nick Clegg. Why? At least he took Farage on and did not just pretend he wasn’t there. In the authenticity stakes however he lost. He made the classic mistake of trying to fight the irrational rationally. You cannot fight emotion with logic.

Labour ought to have been able to capture the anger of those who voted for UKIP. They are not aliens from another planet they are people whose lives have been turned upside down by neo-liberalism and deregulation. They are seeking stability and security and looking for someone to blame for their plight and all they see from the three main parties is more of the same.

Labour however has been unable to break out of the ideological straight jacket that got us into this mess and therefore has no plausible explanation of how to change things. They have been unable to alter the Tories narrative of the recession being caused by excessive debt or that falling living standards are the fault of migrants. These explanations are now the conventional wisdom.

It has also been unable or unwilling to be critical of the past Labour Governments embrace of neo-liberalism.  Sadly in this regard Labour has become part of the problem not part of the solution. So we need new voices to harness this anger, to articulate this experience and turn it in a progressive direction that does not attribute the cause of austerity to its victims but attacks the real culprits and does so in a language that everyone can understand.

This may or may not require a new political party but it certainly requires a new School of Eloquence.



Workers Control in the Coal Industry



Thirty years after the heroic miners strike there is an enormous contradiction in UK energy policy. Despite everything last year coal remained the main source of power generation producing 41% of all output, requiring us to import around 50 million tonnes of coal.

Yet last month the Government announced they would contribute to the costs of closing two of the very last three deep coal mines in the country (you cannot make this up). This weeks Turkish mine disaster shows the true cost of imported coal.

I would be happy to give up coal for a green alternative but UK coal is being replaced by Russian, Columbian or American coal. It is also not a question of cost does anyone think nuclear is cheaper?

UK energy policy is crazy and so is the structure of the coal industry. It is interesting that the last deep mine in England, Hatfield, and the last deep mine in Wales, Tower, are both employee owned.

I remember the heated debates we had back in the late 1970’s about workers control and the coal industry. There is a seminal pamphlet by Arthur Scargill and Peggy Kahn, “The Myth of Workers Control”, published in 1980. Arthur makes the case against workers control in favour of collective bargaining. He argues that the relationship between capital and labour is fundamentally one of conflict and that workers control under capitalism is a contradiction in terms.

He is not against the increase in the influence of workers on the work process through their unions. The process of class conflict requires unions to exercise both their industrial and political power. In these circumstances therefore workers control is a dangerous myth that diverts and weakens the class struggle.

I understand this argument but still I wonder.

There is a history of bitter struggle between the colliery owners and the miners. In the early days there was deep suspicious of co-operative ownership. When in 1865 Henry Briggs and Son after a decade of bitter industrial relations decided to turn their pit into a co-op one worker is reported to have said, “ All coal masters is devils and Briggs is the prince of devils, (this co-op system) it was instituted in order to destroy the union.”

The following decade saw numerous examples of co-op coal mines being successful, at least for a while, mining is always subject to geology, and individual pits where vulnerable to the coal owners rigging the market.

In 1873 the Northumberland Miners Association set about forming a Co-operative Mining Society. The prospectus said, “To give the miner the fruit of his skill, economy and care in production is nothing more than the barest justice…To this end the miners of Northumberland and Durham have resolved to have collieries of their own.”

Their aim was not just to own the pit but also the pit villages too. Their first pit was Monkwood near Chesterfield, a bit of a way from Northumberland, which they purchased for £68,000. Sadly things did not go well the miners at Monkswood where less than keen on being member/owners of the pit and despite reassurances it only had a couple of years of economic life in it.

Nevertheless co-operative pits sprang up as far apart as Ayrshire and Lancashire. When one pit near Bolton got into financial trouble it ended up being owned by the Bolton Retail Co-operative Society. 

The ownership question was central to that incredible out burst of industrial militancy that produced in 1912, The Miners Next Step. The South Wales miners argued that nationalisation of the mines does not lead to workers control but “simply makes a national trust with all the force of government behind it”.

Industrial democracy was the objective, “Today owners and shareholders rule the coalfields. They own and rule them mainly through paid officials. The men who work in the mine are surely as competent to elect these as shareholders who may never have seen a colliery.”

In the 1984-5 dispute the NUM certainly took on an NCB with “all the force of government behind it”.

That defeat led to the deliberate destruction of the industry. Yet the last deep mine in Wales was the miner owned Tower Colliery which was successfully mined for 13 years. Today with deep coal mined out the site is in the process of regeneration and is still producing benefits for miners and the local community via the “Tower Fund”.

The very last deep coal mine in Britain is also owned by miners in the form of the Hatfield Colliery Partnership. Saving 400 desperately needed highly skilled jobs in South Yorkshire the Doncaster pit was bought by an employee benefit trust in December last year.

The economic history of the industry is full of wasted opportunities now the bankers who funded the privatisation and could not get out of coal production and into property development fast enough have left millions of tonnes of accessible coal trapped underground.

Couterfactual history maybe but what would have happened to the UK coal industry if it had gone into worker ownership in 1947?

Would we have more than one pit left today?







Friday, 9 May 2014

Saving the Co-op



The great Brendan Behan, the drinker with a writing problem coined the phrase, “there is no such thing as bad publicity.” The experience we co-operators have had over the past year proves this is not true. A week has not gone by without some further dreadful exposure of the Co-op Group’s failings.

The most recent are the Groups financial statements. They are truly shocking showing an unbelievably badly run business which has squandered its assets and is now deeply in hock to a consortium of banks.

There has been much activity on social media and in several conferences amongst co-op activists to discus what is to be done about the Co-op Group. Sadly the situation is so bad that what ever we now do we have to do it very quickly. Control is slipping away from members and directors to external financiers.

Those financiers quite understandably want to know their money is safe and they want to see the management and board are getting a grip on the situation. The Co-op movement is not famous for quick decisions or for making them under so gaze of so much public scrutiny.

The good news is that the Group Board are finally waking up to the scale of the debacle.  £2.5 billion in losses does tend to concentrate the mind. The bulk of those losses are from the Bank failure, however the Somerfield acquisition was also disastrous, and the accounts also reveal the huge size of the pension liabilities.

There is no getting away from the fact that this is an enormous failure of governance.
The board have drafted a resolution for the annual meeting on May 17th to begin the process of governance reform. Whilst far from perfect it is a resolution that everyone who cares about the Group needs to get behind. The resolution makes four key points.

Firstly that a reformed Group needs to have a Board of Directors elected by members that is totally qualified to lead an organisation of the size` and complexity o of the Co-op Group.  

Secondly; that there needs to be a structure that empowers the members enabling them to hold the board to account both for the performance of the business and for the adherence to Co-operative values and principles.

Thirdly there has to be a move to one member one vote in the election of Directors.

Lastly and very importantly there have to be the necessary provisions in the rules to protect the Group from demutualisation.

This is a sensible resolution that will enable the Group to swiftly get on with working with all the members to prepare the necessary rule changes that can hopefully be put to members by the autumn.

Reforming the governance has to be done however whilst still running the business, this is a bit like fixing a puncture whilst still riding the bike. Impending governance change does not excuse current directors from doing some deeply unpalatable things including staff cuts and asset sales.

The Co-op Group could have gone bankrupt last year, it is a failing society. The type that at one time would have been recued by the Co-op Group. But this time there is no lifeboat.

The business within it will almost certainly be much smaller and a great deal leaner and some of the actions now required to save it will be very brutal. We must not delay as every day that passes debts increase and more control is seeded to the banks.

I may sound like a pessimist but I am not. All is not lost. We can recover. We began from a much smaller position than we are now in. We can rebuild the Co-op retail sector in the UK. It is going to be tough but can be done if we stick together.

We have to be honest with ourselves about what has gone wrong. We have to regain control of our own destiny and the confidence of our members and customers and those of us who chuntered behind our hands about past foolish decisions need to be more vocal in future. Not wanting to “rock the boat” almost led to its sinking.

Om May 17th I urge every elected member of the Co-op Group to get behind this resolution and then to fully engage in the process that follows to ensure we save what can be saved from the Co-operative Group. We must begin rebuilding a vibrant Co-operative retail business that gets all of its publicity in future for the right reasons.


Wednesday, 23 April 2014

Tony Benn and Workers Control



In all the memorials to Tony Benn one period of his career seems to have been missed. The 12 years he was associated with the Institute for Workers Control. He first encountered them in 1971 when he visited the Upper Clyde Shipyards.

That contact was initially a bit circumspect, as Ken Coates said, “He was not rated very highly, although he would be given credit for having done some good things on the Clyde. He was felt to be too dodgy a customer by far. They thought he was a careerist, born with a silver spoon in his mouth, that he got his position in the Labour party because of his father. I bought them round to see that he represented a better left then the more conventional left, more adventurous, more dynamic, more liable to do things that we believed in.”

The IWC had been formed in 1968 by Ken Coates and Tony Topham it had the support of Hugh Scanlon of the Engineering Union and Jack Jones of the Transport and General Workers.

Their conferences where lively, well attended events they debated a broad range of proposals to introduce industrial democracy challenging management’s right to manage. In the first pamphlet by the IWC by Hugh Scanlon he reclaimed the radical history of British Trade Unionism from before World War One,

“The whole question of workers' control is once again becoming an important issue in the British Labour Movement. In some ways, today is analogous to that before the First World War.  Expansion of industry, coupled with inflation, up to 1914, provided the basis for aggressive union action and the growth of ideas concerning workers control, culminating in an historic pamphlet, ‘The Miners Next Step’. It provided the impetus of the growth of the shop stewards movement which arose during the war years itself.”

Benn became deeply involved in these discussions and contributed to over a dozen pamphlets for the IWC or Spokesman’s press many of which are still available and well worth reading.

In 1975 he called for the “Labour movement to intensify its discussion about industrial democracy,” but he not only made the case he offered support to. Many now look on the experiences of the Fisher-Bendix on Merseyside; or of the Scottish Daily News; or of the Triumph Meriden motor-cycle co-op as heroic failures, which in a way they where, of itself workers control cannot make a bad business good.

The Rochdale Pioneers are famous because their co-op model worked and set the scene for retail co-ops for 150 years. But before them there where hundreds that did not survive before the pioneers got it right. These experiments which will always be associated with Tony Benn are just as important in the realm of worker co-operation.
Like in many of his ideas Benn was way ahead of his time. His thoughts on Technology and Democracy where also important as he said in a pamphlet published in 1978,

“The general case for political democracy applies with equal force to industrial life. Industrial democracy, workers self-management, must develop to permit the sharing of power and responsibility at the national level and at all places of work in industry – including technological work places, and those in academic institutions.”

Further “In my submission, science can best flourish in a democratic society which shares power and responsibility more widely and in which the knowledge science has at its disposal is used to strengthen the people as a whole and allow them to harness this power to the advancement of mankind.”

Tony had more faith in us than sometimes we had in ourselves. “I had always thought it was a great pity that working people in Britain set their sights so low.” He said in a speech on Industrial Democracy in 1971.

Raising their sights the workers of Lucas Aerospace developed an astonishing plan for their business. As Bob Cryer MP said in the House of Commons in February 1979,

“I am grateful for the opportunity to raise what is one of the most important moral crusades that this country has seen in the twentieth century. I refer to the Lucas Aerospace combine shop stewards' committee, its corporate plan and the work it has done over the past three years. The shop stewards' imaginative method of tackling the question of providing jobs for peace and not for destruction is an important moral crusade of which the House and the nation must take note.”

The moral crusade for workers control is unfinished Tony Benn’s epitaph is that “he encouraged us!” Speaking in 1975 he said, “If I may finish with a tribute to the Institute for Workers Control, of which I am a member and have come to through my experience: the strange experience of being a Labour Minister makes me see in this organisation something that has real contribution to make to the debate within the movement as a whole and I would wish you luck in your future work.”