Comment: Myners review gives Co–op both barrels

Lord Myners has not pulled any punches in his independent review of the Co-operative Group. It is the nearest thing to a boardroom disembowelling we have had for some time.

Martin Flanagan
Martin Flanagan

Myners says the Co-op board is not up to the job of restoring the fortunes of the 150-year-old mutual, is massively unwieldy and that some members are reluctant to accept necessary cultural change, partly to protect their self-interest. He sounds pretty on the money to me.

The board, riven with infighting, a drug-taking religious chairman, and having driven its chief executive to quit in sheer exasperation at breaches of confidence, looks a busted flush.

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Even now some members are said to be unhappy at the debt-laden Co-op’s new strategy of selling its farms and considering offers for its pharmacies, and having just a minority stake in the flailing Co-op Bank.

To use the vernacular, too many senior people in the mutual just “don’t get it”. There are too many boardroom ostriches with their heads in the sand.

It is no good coming over all priggish if your business ignorance means you risk going to hell in a handcart commercially.

A core Myners’ recommendation is that the Co-op’s 21-member board is abolished in favour of a sleeker version comprising a couple of executive directors, half-a-dozen non-execs and an independent chairman not tainted by previous association with the mutual.

This doesn’t look like the end of democracy at the organisation as we know it, because there was not much democracy there in the first place. The Co-op rank and file have for too long gone along for the ethical ride, while opaque regional boards and head office effectively called the shots or, to be more accurate, missed them.

This new structure would also involve giving ordinary members more powers to attend meetings, elect board members and approve big transactions. All positives, and more democratic.

Myners is surely correct that the resistance from traditionalists reflects a culture of entitlement within a Co-op cadre, if that is not too dynamic a word for enlightened inertia. In short, the Co-op is currently set up to serve vested interests.

And how can this be put right?

Some turkeys need to vote for Christmas at the AGM a week on Saturday in the wider interest, otherwise the Co-op’s lender banks are likely to even more gimlet-eyed on extending credit to the body than they are already.

A part of the fabric of British society is in an existential crisis, with a hidebound and incompetent board, parts of which seem blithely unaware of the cliff-edge.

A severe and chronic outbreak of commonsense and selflessness in the organisation’s higher echelons would be very welcome.

Sainsbury’s shows its chops in tough times

Yes, Sainsbury’s has only posted a 5.3 per cent rise in annual profit, its slowest earnings growth in nearly a decade. But given the increasingly brutal environment Britain’s supermarkets are operating in – including the march of the discounters, big store over-capacity and cash-strapped consumers – it is quite an achievement to be striking any profit rise. Ask Morrisons and Tesco.

It is unfair to say Sainsbury’s boss Justin King is getting out at the right time. He grew the business well in the good times, and gave it a resilient base for this tougher climate.