Archive for the ‘Co-operatives’ Category

The Co-operative’s new era

cooperativelogoSo, the members have voted to accept the Mynors recommendations for a new structure that will limit the influence of the regional societies. Hence the CEO of the largest of the regional societies, Ben Reid of the Midcounties, has resigned from the national board (now leaving three vacancies). Despite the criticism of Reid, his own society has recently reported revenues of £1.2bn, suggesting they are doing something right and against the trend in the national society with its £2.5bn loss. Reid received particular criticism by Mynors as a member of the Audit Committee of the Co-operative Bank when the £1.5bn shortfall was revealed.

So, we may ask, what is about to happen? Already it is clear that the local societies will no longer occupy their 30 per cent or so of seats. Instead, the intention is to ‘professionalise’ the Board. The new members will be professional executives and no longer voluntary. This business is so big, goes the argument, it cannot be managed by non-professional co-operators. It is indeed they that got the Co-operative into its fix in the first place (see post 24 April 2014: https://weiterzugehen.net/2014/04/24/what-is-going-on-at-the-co-operative/).

The proposals are, according to the Guardian newspaper, the following:  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.

The latter is quite interesting. It confirms that asset strippers – or carpet baggers as they were known in the era of building societyCarpetbaggers demutualisations in the 1980s- will not be tolerated and will not gain advantage by such conversion. That is inherently a good thing. One-member-one-vote also has merit, though professional Boards do not always practice such equivalence. Structures clearly should be such that executives are held to account. However, more important is the skills mix on a board to know what that means. (As we have seen from Banking, some executives are ‘infallible’ and charismatic, professional or not.) But being a co-operator should not disqualify one from membership of the Board of the Co-operative.

Image and further details about carpetbagging: http://news.bbc.co.uk/2/hi/special_report/1999/02/99/e-cyclopedia/297982.stm

 

What is going on at the Co-operative?

Hull_coop_storeWhen I was growing up there was the local Hull Co-operative Society with its flagship department store (left) in the centre of the City. Local supermarkets were dotted around the suburbs. All rewarded customers with dividend stamps. My grandmother collected them – I built a record collection out of them. The insurance company functioned through agents. As a family, we had various policies. There was even a soft drinks delivery service. The ‘pop man’ caDivi-stamps-4-228x230me on a Monday and delivered a bottle of something chosen by my mother.

The Hull Society basically collapsed in the early 80s. The department store closed leaving a building to fall into dereliction. The supermarkets also closed.

My time in South Yorkshire was punctuated by visits to department stores in Barnsley. And in coop_NuneatonNorwich, the East of England Society plodded on. Not so good in Brighton where the department store closed a few years ago. The shop was eccentric. Land in Brighton, however, is highly prized. The empty shop has not lingered too long. The façade has been retained with student accommodation being built on the land. From what I can see, the most powerful regional society, The Heart of England, still manages department stores. For example in Nuneaton (above left).

It has often been quite difficult to be with the Co-operative. The food shops were always lacking something. The bank, despite its ethical mission, ripped off savers. I left. When I bought a van, the insurance company was one of the few that would insure van as a non-commercial vehicle, but I still needed the endorsement of the agent. A bit of a nuisance.

The Co-operative’s difference was its ownership and management structure. It is notionally owned by the members (I am a member, though clearly insufficiently active) and managed by them.  To quote John Harris in the Guardian, “At the base are around 48 area committees, each with 10 to 12 elected members who put in three-year terms. These people, in turn, elect seven regional boards – which duly elect 15 of the 21 members of the national group’s board of directors. Of the remaining six, five come from big regional Co-ops, and there is also an independent director.” (http://tinyurl.com/n3yjznb) In recent years, the governance structure has failed.

coophq_MenziesThere seems to be something about size. In 2002 retail and wholesale were merged and housed in a hubristic new HQ in Manchester (left). Growth had traditionally been organic – from within rather than by acquisition. Both the bank and the supermarkets seem to have cast that principle aside. The bank failed its due diligence on buying the Britannia Building Society. Had someone looked closely they would have seen ‘sub-prime’ bad debts and walked away. So far the bank has been bailed out to the sum of £1.5bn with another £400m needed. It is now 70 per cent owned by hedge funds and private equity.

The supermarket in 2009 financed a takeover of the failed Somerfield supermarket chain. Somerfield had been a basketcoop_Peter_Marks case for many years, but for some reason the Co-operative’s chief executive, Peter Marks (right), convinced the board that speedy expansion was necessary and a takeover of Somerfield the right vehicle. The Somerfield assets have been written down by over £260m and a percentage will be sold.

Last week the Co-operative announced a loss of £2.5bn. Whilst the bank claims a good part of that, the other parts of the group are also ‘underperforming’. Turning this around is not going to be easy. I for one am not convinced that it will survive as an entity. Some of the more influential local societies such as the Heart of England Society have rejected such a plan put forward by Paul Mynors, now himself resigned from the Board. The AGM on 17 May 2014 will be one to watch.

Ironically, the analogue for the Co-operative, the John Lewis Partnership, is built on department stores and food retailing. Its management structure is very different. It is run as a PLC with the employees, as partners and members, sharing in the profits rather than managing the generation of profits.

Picture credits 

Hull store: http://hullvalley.blogspot.co.uk/2011_10_01_archive.html

Stamps: http://150.co-operative.coop/150-to-150/our-collegues-113

Peter Marks: http://en.loadtr.com/Peter_Marks-493978.htm

Co-op HQ: Walter Menzies

 

coop_Peter_Marks

Co-operatives

Readers of this blog know that I live in a housing co-operative where all members input into the management of the enterprise. Like all forms of organisation, it is imperfect. The structures that facilitate equitable governance can seem bureaucratic. But once established all members have resort to them and unless everyone agrees that they should be changed, they guide the collective towards prudent and non-exploitative management.

Not surprisingly in these recessionary times, co-operatives are very much in the news. Not just in housing, however. Co-operative businesses are much discussed even by this wretched government as a bulwark against forms of capitalism. One can always hear about the John Lewis model without actually understanding what that means. (John Lewis, arguably is a very special example of a co-operatively-owned business.) The capitalists resist co-operative principles because they cannot extract the profit as a dividend. In the days of de-mutualisation of building societies, these people resorted to ‘carpet bagging’ and rewarded us with Northern Rock. None of the demutualised buidling societies now survive. All have been absorbed into failed or failing banks. Halifax became HBOS, Abbey National had to be ‘rescued’ by Santander (Alliance and Leicester and Bradford and Bingley, too).

Peter Day’s current series of ‘In Business’ on the BBC has been exploring co-operative ownship of firms. Here is a link to the latest programme on co-operatives: http://www.bbc.co.uk/podcasts/series/worldbiz

Mike Weatherley MP – not representing Hove and Portslade

Weatherley celebrating criminalisation

My Conservative MP, Mike Weatherley (pictured), is quite a self-publicist. He ‘sends’ me his monthly newsletter in his quest to inform and influence. Increasingly this newletter is used to express his uninformed prejudices which I am increasingly offended by. I am sure that I am not the only one he offends in his constituency. I want to use my blog to make clear to him and others that he rarely represents my interests and I do not want to be associated with his intolerence.

For example from his recent newsletter:

Victoria Gardens campsite

 Having recently been successful with my campaign to criminalise squatting, I have also taken the campers on Victoria Gardens in Brighton to task. Long-term camping in public spaces as a form of protest is unacceptable. The point of the protest was made long ago and it’s now just about a group of lazy campers hanging around for a fun time in front of our Royal Pavilion. This is not something that the public should have to pay for or put up with. Hard working taxpayers have had enough of these freeloaders. After publicly condemning the camp, I popped down to put my concerns to them in person. They claim to represent “the 99%”, so I informed them of the views of the REAL 99% – and told them to tidy up and go home.

Readers of this blog will know that I have posted on the subject of squatting before. Mr Weatherley is quite clearly a fan of the housing Minister, Grant Shapps, who ineptly equates squatting and murder. Mr Weatherley, some of us owe our homes and wellbeing to squatters. The country as a whole owes much to the squatting ‘movement’ such that it is. Moreover, there are not too many bulwarks against the property owning class that Mr Weatherley’s elitist party celebrates. Squatting is one of them in its demonstration of the inequity associated with housing that is a malaise in our society. And I suspect that Mr Weatherley, like the housing minister, Grant Shapps, thinks that he is protecting people who find their houses squatted after they have been away on holiday or business. I do not condone this, but this is rare. Most squatting is targeted at criminally empty properties that can and should be brought into habitation, preferably under some collective ownership and/or management. I would have thought that was a better use of his time, criminalising empty property. Mr Weatherley seeks to criminalise expressions of liberty and freedom in the name of protecting it.

There is more to say about Mr Weatherley.

Giving Northern Rock away

The sale of Northern Rock  to Virgin at a loss to the taxpayer of £450m demonstrates something. First, nothing has been learned from recent experience. All this nonsense about bringing competition to the high street is meaningless in the world of financial services. One would have thought that if the government had wanted to develop competition then a second option might have been better.

That second option might have been remutualisation. Was it not the demutualisation of Northern Rock that got it into bother in the first place? And what happened to the government’s proclaimed love affair with co-operative ownership? I would have thought that mutual ownership was a viable and desirable option. The high street would have benefitted, businesses short of capital might have benefitted? But oh no. The taxpayer subsidises the transfer of a valuable asset – tens of thousands of viable mortgages – to an already very wealthy man. However, Jill Treanor writing in the Guardian on 2 December sees that large sums of money will also be transferred to existing senior managers:

The annual report for 2010 states that:

“The company will operate a long-term incentive plan for senior employees that will deliver financial rewards if the company achieves certain targets over a three year performance period. As the company did not make Ltip [long-term incentive plan] awards in 2010 it is the company’s intention to make awards in 2011 covering 2010 and 2011. The 2010 award will vest in March 2013 and the 2011 in March 2014 or upon successful exit from temporary public ownership if earlier” (emphasis added).

How convenient that the transfer occurs before the close of the year saving all of that unnecessary waiting around until 2014.

Now I understand.

Grant Shapps

Grant Shapps, the Tories’ Housing minister is demonstrating consistent imbecility. For example, on the Radio 4 programme earlier this week on squatting (From Frestonia to Belgravia: The History of Squatting: Frestonia_R4_1111), he equated the ‘crime’ of squatting with that of murder to Robert Elms. Today, on the Today programme, he demonstrates that he cannot organise his diary or coordinate announcements with the release of contradictory statistics. I feel compelled to record these for readers. He is truly egregious and dangerous. The Today recording can be heard here: Shapps_251111