Flagging Co-op loses its head

The Co-operative Group “confronts profound financial and strategic challenges”, says Lord Myners – who last week resigned from its board after being brought in in December to advise the group – in The Guardian. “The consequences of not addressing this do not bear contemplation by those who care about the group or who depend on it.”

After the Paul Flowers scandal, Myners proposed reforms that would simplify the mutual’s governance, making it more like a publicly listed company. These are due formally to be voted on next month.

The Daily Telegraph’s Anthony Quinn thinks that Myners’ departure “sums up everything that an outsider needs to know”. While his reforms were “sensible”, it sadly “looks unlikely that come the 17 May vote, his proposals will ever be heard of again”.

This is a disaster, because the current system “has allowed board members of both the group and the bank to hold their hands up in horror at the excesses of the past”.

While “political sensibilities” will prevent the banks, to whom the Co-op owes money, from “pulling the rug” from under it, Quinn wonders how long they will keep “supporting a
busted flush”.

Former cabinet minister John Prescott, writing in the Daily Mirror, has a very different take on Myners’ resignation. In his view, the former banker wanted “to slash the power of the smaller co-operatives which make up the group and give the board and chief executive more control but less accountability”. This was “just the kind of structure that messed up the big banks”.

Now, “instead of staying and trying to work out a compromise, Myners has taken his ball home, causing even greater instability”. We “should be proud of the Co-op”. After all, it has eight million members and 6,000 co-operatives committed to the principles of the Rochdale Pioneers, workers who banded together to open a store selling food they otherwise couldn’t otherwise afford.

The Financial Times seems torn between both sides. “There is no doubt that poor oversight contributed to the failures that have brought the group to its present pass.” Furthermore, it thinks that “there are things to like” about Myners’ proposals.

The problem is that, by vastly reducing the power of the board, they would “turn the Co-op into a halfway plc”. This could undermine the Group’s “unique selling proposition”.

While “it should be possible to achieve change while living within co-operative principles”, it also has to decide “whether to stay in the banking business and how it can restore its flagging retail arm”.