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 17^th 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 17^th 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.