2001:  Year Zero for the Co-op? 


The report of Tony Blair’s Co-op Commission
A renaissance of the Co-operative Movement in the UK is long overdue’ stated John Monks, the TUC General Secretary when introducing the report of the Co-operative Commission which he chaired.  But many people still feel that the Co-op is just a relic of a Victorian bygone age; important in its time but irrelevant today.  So does it have a future?  What relevance does it have in the era of the lap-top computer, WAP mobile phone and inter-active satellite TV? This is what the Co-operative Commission set up by Tony Blair set out to explore. The Commission consisted of people drawn from the world of politics, business, the trade unions and the Movement itself.  It published its plan to modernise the Co-op earlier this year.  Will it work? 
For many years, the co-operative movement has been in decline.  The Co-op started from humble beginnings in the Lancashire weaving town of Rochdale in the mid 19th century.  After false starts elsewhere, these early co-operators found away of running a  profitable and sustainable co-operative society.  From then on, the Movement really took off.  Its growth was astronomical.  It grew to pre-eminence in the middle of the last century.  By the early 1950s, it accounted for 22% of all UK food retailing.  But its collapse was even more rapid.  Today, the Co-op share is less than 5%.  In 1958, there were 932 independent Co--op societies as against about 40 today.  
The idea for the Commission came from within the Co-op itself.  The brainchild of Graham Melmoth, the highly respected chief executive of the Co-operative Wholesale Society, he suggested it to Tony Blair and John Monks. At first, there was some opposition from rank-and-file activists to the Blair’s Commission.  Prickly purists resented the ‘imposition’ of the Commission on the Movement.  It was undemocratic’, they cried.  However when people invoke ‘the democratic tradition of the Co-op’, one should be on one’s guard.  In most co-ops less than 1% of the   members bother to vote.
After some hesitation, most activists involved themselves in the Commission’s enquiries.  One reason was that they wanted a new Co-operatives Act. This would put the Co-op on a level footing with the private sector and protect it from the ‘carpetbaggers’. They knew that if they did not play ball with Tony’s Commission, they could forget about getting any help from Labour.  But this is not the first Co-operative Commission.  In 1958, there was one chaired by Labour leader Hugh Gaitskell.  It produced an enormous report.  Its recommendations were passed with acclamation at the Co-operative Congress (the Co-op Parliament) but over the years very few were acted upon.  Self interest, petty jealousies and people protecting little personal fiefdoms saw to that.  It really was a scandal.  
But hopefully times have changed and even the most die-hard traditionalists will recognise that the Co-op must change or die. The near collapse of the second largest co-op, Co-operative Retail Services Ltd (turnover £1.5 billion) nearly two years ago was also a factor.  This has now merged with the profitable Co-operative Wholesale Society to form The Co-operative  Group (turnover £4.5billion) which will account for 50% of co-operative trading.  It also includes the highly successful  Co-operative Bank and CIS-Co-operative Insurance, one of the UK's biggest insurers. The merger has meant that this  enormous organisation is also going through root and branch re-organisation.
It had its own version of the Co-op Commission running in parallel.  This came out with fairly radical proposals a few weeks before the Commission published theirs.  Both reports have to be agreed this summer.  So 2001 is Year Zero for the Co-op. The Co-op will never be the same again!  The Co-operative Commission dealt with the future of the entire movement.  But its detailed proposals are mainly aimed at the retail co-operative sector.  It emphasises the need to re-establish what it terms the ‘Co-operative Advantage’.  This means giving people a reason to want to be members because they personally benefit from it.  The Commission’s view was that much could be done to boost the lacklustre performance of many Co-ops.  
The Movement should expand into new areas where co-operative solutions are relevant.  These could include sheltered housing,  nursing homes and social care.  It felt that co-operative principles were still highly relevant in today’s world.  In practice, the  Movement’s ethical values of honesty, openness, social responsibility and caring for others, could give it an edge over  businesses driven simply for profit. The Commission believes that this virtuous circle of commercial success financing social goals which then enhances the co-op’s competitive advantage leading to further commercial success can be  created.  But how is that to be done? 
The Report contains 60 proposals which, if implemented in full, would transform the  Movement and make it lively and relevant. The first thing to do is to get the business side right i.e. profitable.  The commercial performance must be improved.  The  Commission suggests that Societies should aim to achieve a minimum of a 10% Return on Capital Employed.  Compared  with the private sector, this is a modest target.  The average for private sector retailers is about 18% with Tesco and  Morrison reaching almost 20%.  The current average for Co-ops is up to 3%.  This is less than the current annual rate of inflation.  The Report also suggests that a standard system of financial auditing should be introduced so that any Society’s  performance can be directly compared with peer Co-ops and the private sector. 
Normal commercial disciplines like Key  Commercial Performance Indicators should be introduced so that managers can measure how the business is trading   more accurately.  Cross-trading between the various sectors should be encouraged.  There should be greater synergy  between the Co-operative Bank and CIS Insurance.  Both their products should be available over the counter in   convenience stores.  Holiday information from Travelcare (the Co-ops travel agency) should also be available.  So should   information about Funeralcare, the highly respected Co-op funeral service. To achieve the Movement’s social goals, a similar system of Key Social Performance Indicators should also be   introduced. 
The Co-operative Union, the umbrella organisation for all Co-ops, should perform a social audit of the entire Movement once a year to ensure consistency.  Re-investment in the business should always have the first claim on any  profits. With the dividend, the aim should be that 10% of any profits should go to the dividend and that of this 70% should  go to the members and 30% to the community in the form of grants.  The Co-operative Retail Trading Group, which bulk  purchases on behalf of most of the Societies, should be revamped.  All Societies should join up.
It is common sense that the bigger the purchaser you are, the better the deal you can strike with suppliers.  In the private sector, it is the  supermarket chains that call the tune not the suppliers.  But, incredibly, several very large Co-ops still go it alone.  The  Commission was also very concerned about branding and image.  It wanted to see the development of standard store formats, layouts and fascias even down to he common design of store fixtures and fittings.  Whilst it is important to have common branding of  products when you are going to advertise on ITV, too much standardisation could, in my view, stifle   local diversity and choice. The existing Co-op logo ( ‘clover leaf design) would go too.
The Commission was very concerned about securing the Co-op’s assets.  This is not surprising, considering the ‘near  death experience’ that the Movement experienced at the hands of Andrew Regan, a City whizz-kid and would-be  ‘carpetbagger’ three years ago.  It recommended that the Societies change their rules and also called upon the  government to introduce legislation to secure Co-op assets.  This would be modelled on that found in other EU member states.
A big problem for the Co-op is that it doesn’t really know how many members it actually has.  To join a society,  there is a one-off payment of £1. This hasn’t changed since the time of the Rochdale Pioneers in 1844..  The effect today    is that the membership lists are woefully inaccurate.  The names of hundreds of thousands of dead members have never  been deleted.  In the era of the ‘carpetbagger’, this is extremely dangerous for any mutual.  The Commission recommends   urgent action to sort all this out.  It also calls on Co-ops to clean up their archaic voting system with the introduction of    postal voting and telephone polling.  Where postal voting has been introduced, it has produced a much livelier and   committed membership.  Without the latter, Co-operation has no meaning.
In closing the report John Monks says ‘It is up  to the Co-op Movement to decide whether it is prepared to grasp the opportunity and to put these proposals into .  practiceIf it fails to do so then I fear for the future of the Movement.  But if adopts them with enthusiasm and commitment and implements them in full, then I believe the prospects can be as bright as at any time in the    Movement’s history.’  Let’s hope that these wise words will be heeded by everyone who wishes the Movement well.  Only  time will tell if they are.

This article was published in CHARTIST in Sept/Oct 2001

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