Cooperatives and the idea of the Living Wage

I’ve written before on executive pay in cooperatives. What about pay scales at the other end?

Look at the list of UK companies which have signed up voluntarily to pay their staff at Living Wage levels (currently calculated at £8.80 ph in London and £7.65 elsewhere) and you won’t see many coops there. The Phone Co-op is an honourable exception, having joined the scheme last autumn.

But the Co-operative Group has not felt able to adopt the scheme. In response to a 2012 members’ motion from Central and Eastern Region, the Group reported back that it had calculated that the cost of adopting the Living Wage unilaterally would be around £52m. “A voluntary unilateral adoption of the Living Wage risks an employer disadvantaging themselves against competitors,” the Group pointed out.

On the other hand, AGM delegates also received a Board statement with the revealing comment that “in relation to the lowest paid members of staff (for example Customer Services Assistant (CSA’s) Food), the Group has, over a number of years, paid an hourly rate at a level above the National Minimum Wage, but often less than the hourly rate paid by the Co-operative Group’s main food retail competitors.” The statement went on to compare Co-op Group’s (then) hourly rate for CSAs of £6.25 per hour with the equivalent hourly rate in Morrison’s, Sainsbury’s and Tesco Express of £6.42.

What of other industries? Workers in the leisure industry are also poorly paid, and regrettably you won’t at the moment find the (normally highly regarded) social enterprise Greenwich Leisure (GLL) in the list of accredited Living Wage employers. One person trying single-handedly to change this is Alan Sealy, a member of the Chalfort St Peter leisure centre in Buckinghamshire (now run by GLL). Alan has contacted me to tell me of his efforts to persuade GLL senior management to think again.

“I have no doubt that the principal argument for GLL not paying the Living Wage is that if they did they would lose out on local government contracts,” he says. But, as he points out, increasingly local authorities are themselves committing to the living wage scheme – so there may well be growing pressure from authorities on GLL to follow suit.

I wish Alan Sealy well in his campaign. Incidentally, there’s a useful resource pack on the Living Wage issue produced by the Co-operative College. As this points out, the idea of paying a living wage has been a central theme of the cooperative movement for more than a century.

Hmm… Co-op Bank joins as member of Co-ops UK

An upbeat – and therefore brave – press release today from Co-operatives UK, announcing that the Co-operative Bank has now been admitted as one of its members.

Co-ops UK’s Ed Mayo is reported as saying that his organisation is “working closely with The Co-operative Bank through this period of substantial change and [is] pleased they are joining in with the wider co-operative movement through their membership”. The Co-op Bank’s Niall Booker proffers: “Co-operative values and ethics are at the heart of our bank. While much has changed, our commitment to this has not.”

The Bank is of course now only minority owned by the Co-operative Group, and it wasn’t long ago that Ed Mayo was publicly suggesting that its continued use of the name ‘cooperative’ would be problematic. There’s been considering rowing-back from this stance since then, but there does remain a legitimate question to be asked as to whether the Bank is really still within the cooperative fold.

My own view? Personally I think it isn’t.

Can the Co-op Group’s farms remain cooperatively owned?

I’ve been on holiday for a week (it’s allowed occasionally), so you’ve failed to hear much from me on the recent Co-operative Group General Meeting and where we’ve got to with the Group’s proposed governance reforms.

But as you’ll have gathered I was at Manchester for the ‘unofficial’ Co-operative Renewal conference organised on May 16th by Jo Bird of Co-operative Business Consultants – and a very timely and valuable event it was too. One workshop which particularly caught my attention was the session looking at possible ways of keeping the Co-operative Group’s agricultural holdings in some form of cooperative ownership. The Group has put a large part of its farms portfolio up for sale, and the question posed at the workshop was whether these inevitably had to end up outside the coop movement.

I’d like to think that it would be possible to come up with cooperative solutions, although there are challenges: a very tight deadline and a declaration by the Group itself that it would prefer for financial reasons to sell all the farms in one fell swoop.

Nevertheless steps are being taken and meetings held, focused primarily on the possible creation of a new cooperative to acquire one particular farm, the Tillington cider orchard in Herefordshire. I’m peripherally involved in these moves, and think the concept a strong one – although ultimately it depends on the business case being robust enough to attract the necessary capital in the very limited time available.

The Group’s farms have been inherited from local cooperative societies’ old landholdings, and in some cases have been in the movement for over a hundred years. Nostalgia alone is not a good enough reason to ‘save’ them, of course, although it’s to say the least regrettable when coops dispose of long-held capital assets to fund revenue losses.  Martin Large of the Biodynamic Land Trust has a piece on the issue (“Our last chance to save Co-operative Farms”)  in the latest Co-operative News.

We’ll have to wait and see what materialises.



Co-op Group AGM tops the news bulletins

With the media obsessing today about the Co-operative Group’s AGM in Manchester, I feel almost obliged to add my own short blog.

Journalists like a simple story, and have built up today’s event as a make-or-break occasion. It’s certainly significant, but only one step on the road to a new governance structure for the Group. My two predictions are these: the motions before delegates will pass, and the Myners proposal won’t in the end be implemented as it stands. What will happen after today is a period of further discussion (ie, compromise). What will emerge will be something which gives the regional coop societies more of a role and (I hope, although this is perhaps less certain) produces a board which is not simply made up of executive directors and traditional business-background non-executives but also includes a cohort of ‘ordinary’ elected member-directors.

I was at yesterday’s Cooperative Renewal conference, where ex-CWS chief executive Graham Melmoth weighed in to the debate. His comment on today’s event was as follows: “The [Special General Meeting] motion I think has sufficient elasticity to permit a short filtering process to be introduced into the Reform Architecture without unduly impeding progress, eg a small group of Members would be commissioned by the Board to review the Myners Report, reflect on it and produce a final blueprint”.

Elasticity is the key word here. In other words, there is still much to play for.

However, governance is just one aspect of the necessary renewal of the Group. I was arguing yesterday at the Renewal conference that a root-and-branch reform of the corporate culture of the organisation is even more important… and perhaps more difficult to bring about.  More on that another day, perhaps.

On ‘phoenix’ coops. And Tony Benn.

Tony Benn’s death in March has failed to be adequately acknowledged in cooperative circles, I think. Benn, when he was Secretary of State for Industry in the 1974 Labour government, helped facilitate a number of attempts to establish worker-controlled cooperatives to take over major companies which had failed, including motorcycle manufacturer Triumph Meriden and white-goods manufacturer KME.

This was at a time when the old productive cooperative wing of the movement in Britain was more or less invisible and when the new wave of collectively-run workers’ cooperatives in sectors such as wholefoods and bookselling had yet to arrive on the scene.

Benn’s contribution to the re-emergence of worker cooperation in Britain (partly I think inspired by the Upper Clyde Shipbuilders) has tended to be played down probably because none of the ‘phoenix’ coops he was associated with managed to break through to enjoy a commercially profitable second life. There were things done wrong in those experiments, too, albeit often for the best of reasons. Tony Benn was very sound, though, on the importance of cooperatives being genuinely member-led and bottom-up. He wrote, in 1976, that “the impetus, the imagination, the energy, the organisational ability was coming from the people on the shop floor itself”. And he added, “Unless a Labour Government can find some way of discovering and encouraging, harnessing and working with this sort of feeling, it is inevitably going to be driven back on to a plan for industry thought out at the top and imposed from the top”.

I’ve been reminded of Tony Benn’s engagement with coops because I’ve been writing today on some successful very recent initiatives in France, which – partly through trade union involvement – have seen insolvent businesses brought back to life as workers’ coops. These include the 150-year old textile company Fontanille in the Auvergne and the printing company Hélio-Corbeil in the Loire region, both significant local employers. (You’ll find some interesting short films about both on YouTube).

It’s always hard to turn around a failed business and create a successful genuine cooperative. But it can be done. And Benn’s pioneering efforts in this respect should not be forgotten.

Here’s my suggestion for the Cooperative Risorgimento

There’s a lot I find valuable in Lord Myners’ report. But I have one difficulty with his approach – his proposals are focused solely on a top-down approach to governance reform.

If the Co-operative Group is to change, there also needs to be bottom-up reform. The Group’s shops need to be radically different in their relationship with their customers than the competition.

I see a lot of my local coop. I shop there pretty well every day (it’s my corner shop). I chat with the staff. I bump into friends. I sometimes bemoan the stocking disasters (there was even a time when the shop ran out of potatoes). But my close relationship with my shop does not have any link to my distant relationship as a member with the Group.

Here’s my suggestion: Area Councils should go. Members should be invited to identify with their local shop. There should be meeting of member-shoppers at least every year, where we’d be given crisps and something to drink and get to talk to the store manager and an appropriate more senior member of staff. We’d probably moan a bit, but we’d also contribute good ideas, which would make the shop better. And we’d feel engaged.

I’m proposing to call my idea the ‘Cooperative Risorgimento’: it sounds better than ‘cooperative resurgence’. (And maybe if it happens Garibaldi biscuits will come back on the shelves, too).


Myners webinar

Martin Meteyard has correctly pointed out to me (see comments) that the webinar with Lord Myners is on Friday (the link to register for this is as on my last blog).

Co-operative Group Chair Ursula Lidbetter is also undertaking a webinar about the Myners report, and that is indeed scheduled for next Monday.  The link to register for that is  Apologies if I’ve confused you.

First thoughts on the Myners report

I am going to resist the temptation to pronounce immediately on the Myners report on the Co-operative Group’s governance. I downloaded it this morning and have read it quickly right through. I now want to give more time to the report.

But I am going to offer some immediate thoughts. Firstly, I think it will be hard to fault the critique of the Co-operative Group’s current governance arrangements which Lord Myners puts forward. He is right to remind us that it was the Group Board who led the business into its present plight (perhaps ‘led’ is the wrong word: the Board has clearly not been great at strategic leadership recently).

I think Myners is right to draw attention to what he describes as the ‘practice of hiding behind ‘values’ in order to deflect or stifle criticism and protect self-interest’. Calling yourself a guardian of cooperative principles doesn’t necessarily make this the case.

It is Myners’ proposed remedies which should be the real issue of debate. There are numerous ways in which a very large cooperative business could make itself accountable to its members, and Myners has very firmly plumped for one particular solution. His proposal, as well as other possible solutions, needs proper discussion.

Lord Myners does seem to have damaged his case somewhat by managing to unite against him both the more radical wing of the movement (those who ought to have been his natural allies for democratic rejuvenation of the institutions) with the traditionalist and often uninspiring contingent who are there in the Group’s democratic structures. I would hate to have to spend the time necessary to play the internal political game at the Group, building alliances and offering reassurances, and it would seem that Myners feels much the same way as me – but if reform is to be achieved that is probably what he should have tried to do.

I have signed up for the public webinar next Monday evening when Myners will be answering questions. I am not sure it has been widely publicised, so will give you the link:

The issue we have to get right: governance in cooperatives

Expect yet more headlines about the Co-operative Group this week, as Lord Myners’ report on corporate governance in the Group is published.

Pretty well everyone involved in the cooperative movement thinks that the Group’s governance structure needs reform, but that’s about as far as consensus goes at the moment. One of the problems is that many activists fear that governance reform is effectively a euphemism for a comprehensive sell-out of cooperative principles, leaving management in charge of a business which would rapidly become almost indistinguishable from a plc. Some of the voices raised after Myners’ initial report come from this perspective. These get muddled, though, with special pleading from cooperative apparatchiks who have spent their lives working their way through the democratic ranks and now have much to lose (in terms of both power and money) if their role in the Group’s governance is reformed.

An intelligent debate becomes more difficult when the enemies of the cooperative movement are also actively at work in the media and elsewhere in trying to do down the whole idea of a democratic cooperative business model.

What’s the right way forward? Personally, I am rather more interested in the idea of a dual governance structure for the Group, with a members’ supervisory board and an executive board, than the Board of the independent Midcounties society (a group who are usually at the more radical end of things, but who are leading the battle against this proposal of Myners). There are, I think, some successful examples of dual board structures working well for larger cooperatives abroad, where the members’ board acts as the guardian of the organisation’s strategic adherence to cooperative principles. And just consider Britain’s building societies for a moment: isn’t it possible to imagine that a large society such as Nationwide might actually be more accountable to their members if its board had a members’ supervisory board watching over its actions – and the scale of its directors’ remuneration?

Britain’s cooperative movement has become remarkably insular and is almost entirely ignorant of how coops abroad do these things. So an absolute must-read in Johnston Birchall’s latest report for Co-operatives UK, The Governance of Large Co-operative Businesses. As Birchall says in his report “we need to engage in some serious mutual learning on the question of how to ensure member-centred governance in very large co-operatives”.

I concur. And we urgently need much more research work undertaken internationally. Even with Birchall’s considerable academic knowledge, I still feel that we aren’t yet at a position where we know just how well the managements of large coops around the world are working to meet their members’ needs. Some of the coops mentioned in his report have, I suspect, governance structures just as rackety as the Co-operative Group’s own practices