Co-op Group looks to its better angels as crucial vote nears

In mid-May, The Co-operative Group’s elected members were dubbed the ‘Pioneers of Angel Square’ when they voted in favour of wholesale changes to the society’s corporate governance.

The vote paved the way for the creation of a new rule book and looked set to put behind a disastrous 18 months for The Co-op Group in which it has leapt from one crisis to another.

If that vote was historic, then this Saturday’s special general meeting – when the same elected members will return to Angel Square to vote on The Co-op Group’s now detailed governance proposals and rule book – is momentous.

No one knew which way May’s vote would go, and Saturday’s vote is looking just as dicey, despite considerable efforts by the society to drum up support.

The Co-op Group has published a series of videos on its website in which interim CEO Richard Pennycook, chair Ursula Lidbetter and highly respected figures in the wider co-operative movement such as International Co-operative Alliance president Dame Pauline Green, independent legal adviser Ian Snaith and Co-operatives UK director general Ed Mayo all urge members to vote the proposals through.

But there is also a growing campaign for members to reject the proposals because some believe they are not fully consistent with co-op values and principles. A petition by Co-operative Business Consultants on change.org has gathered 455 signatures so far.

Despite The Co-op Group going against the recommendations of Lord Myners in his review of the society’s governance by proposing three member-nominated directors to sit on the group board (Myners recommended none), the petition believes the proposal that the group board should have a majority of independent directors is “directly opposed to the co-operative principle of democratic member control”.

It also wants the proposed changes to be “open to future change by members exercising one member one vote without requiring the agreement of the board and/or council”.

Video messages

However, in the videos posted on The Co-op Group’s website, Lidbetter details just how much effort has gone into creating a rule book that she is confident will “create a solid foundation to build a co-operative”.

“We’ve had the regional board chairs every week on a telephone conference - feeding in, feeding back, giving ideas, and they’ve been getting feedback from their own regions and areas. So it’s been a really rich seam of really good advice, knowledge, thought and challenge,” Lidbetter says.

“We’ve had a steering group and that’s been working really hard to get this done. We’ve had some excellent legal advice that’s really helped as well to create a rule book that really feels like ours.

“We’ve all worked very hard to make sure this is the very best model we can come up with for our very extraordinary circumstances and the rules create a solid foundation to build a co-operative,” she insists.

Pennycook, meanwhile, uses his video message to spell out the business case for elected members to vote through the proposals.

He points out that the society has been in crisis mode for nearly 18 months, but this would end if the proposals are approved and then rubber-stamped by the Financial Conduct Authority later in the month.

“It’s a very long time to be going through one crisis after another,” he says. “What we’re really looking forward to is on 1 October signalling the end of the rescue phase and saying that we are now in the phase of the turnaround where we start to rebuild the society.”

‘Heavy responsibility’

Green, Mayo and Snaith’s messages are more measured. Although all three back the proposals, they warn the decision will be a difficult one for the elected members who will cast their vote on Saturday.

“You have a very heavy responsibility. And it’s important that you think very carefully what you have to do. And remember that you’re dealing here with 87,000 people’s jobs,” Snaith, who wrote the handbook of Industrial and Provident Society law, tells members.

Last week, Snaith separately addressed the Co-operative Business Consultants’ petition on his blog. He wrote that this was a time for “clear thinking and a calm rational approach” and “not a time to reject reforms on the basis of a simplistic view of member control with fingers crossed in the hope of avoiding more problems”.

“For everyone who cares about our movement this is a time for responsible solidarity in support of reform,” he added.

Mayo’s video, meanwhile, asks members to be decisive. “Think co-operatively and act co-operatively,” he says. “It’s right to have plenty of concerns about how this moves forward, so, if members vote on it, how is it going to be implemented? How is it going to be lived out?

“People ask whether it is a plc model - a corporate model that has been landed in. Our advice is very clear. The new governance rules are compliant with the international co-operative values and principles that are set out. Those voting on this set of rule changes can do so with confidence that it doesn’t call into question the fundamental, underlying co-operative identity of The Co-op Group.”

And Green adds: “I hope they will vote in favour but I hope they won’t suspend critical judgement over the next three years. We need them to keep a very close eye on what’s good about it and what needs perhaps a little bit of structuring later on.”

With crunch time fast approaching and with a 66% majority needed for the proposals to be passed, The Co-op Group started a new discussion on its recently launched Let’s Talk online forum this week for everyone to have their say. It has already generated 143 comments – both for and against.