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Five things you need to know about the Myners Co-op report

7 May 2014

The Myners Report into the Co-operative Group (pdf) has been published today, and it doesn’t make for pleasant reading. Following the discovery of a £1.5 billion black hole in their finances, followed by the Paul Flowers ‘crystal Methodist’ scandal, the Co-op commissioned the former City Minister Paul Myners to look into the group’s problems and put together a restructuring plan to make it sustainable and properly governed. Here are the key things you need to know from the 180-page report:

1. The Co-op group is still ‘manifestly dysfunctional’

Lord Myners is not impressed with the current state of the Co-op Group and warns it needs to radically change ‘soon’ or face breaking up. The report suggests there are still ‘deplorable governance failures’ and that the board is ‘still stuck in denial over this near ruinous failure of governance’. The scale of the change required to reshape the group is significant and throughout the report, Myners hints he isn’t confident the group will accept the speed and scale of reshaping necessary.

2. A smaller board should be adopted

The report states that the current board of the Co-op group is ‘not competent’ to perform the duties expected of it and there is ‘limited shared purpose among group board directors’. Myners blamed the board directly for the group’s troubles:

‘It is one of the great national business calamities and it is being led by a board totally unable – because of a lack of experience – to hold them to account’.


To replace the current bottom-up structure — the Co-op has 48 area committees with ~10 members, who in turn elect seven regional boards with 15+ members — Myners proposes a board with six or seven independent directors, two executives as well as a separate National Membership Council, to body to handle the concerns of members.

3. There should be a greater focus on being profitable

The group presently appears to have polarising priorities. As one anonymous shareholder told Myners:

‘Some want a dividend, some want low prices, some want to do social good and some want free range chickens.’

Obviously, the Co-op is a cooperative, which is not necessarily designed to maximise profit. But the report argues that the future safety of organisation’s financial health ‘can only be restored through steady, step by step, rebuilding of the Group’s profitability and repayment of its excessive debt’.

4. There is no easy route to fixing the group

With 90,000 employees and 600 elected members, the group has a lot of stakeholders shouting their concerns, including many with distinct ideas about how the group should change. In his summary, Lord Myners warns:

‘There is no short cut to recovery from its present weakened state. It will require retrenchment and some painful choices. After 150 years of development, and an extended period of financial decline, the organisation has seen more than half of its net assets wiped out in the past five years’

5. Shareholders will decide whether to back the reforms on 17 May

Approximately 100 members will meet to discuss and vote on a restructuring plan in just over a week. This would be the first major step towards reforming the group.

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  • monty61

    Utterly woeful organisation, possibly the worst-run large retail business in the country. Our local Co-op supermarket plays wall to wall noise pollution at high volume which surely scares the customers away (it’s empty compared to the Waitrose up the road). Though when challenged the staff seem to like it (I guess it fills up their meaningless days) which I guess shows where their priorities are. I only ever use it in extremis.

  • lookout

    Divesting from Israel has economic implications, it happens to lots of businesses.

  • MirthaTidville

    Its weakness lies in its local structures riven by nepotism and vested interests. A few years ago a friend of mine was appointed organist at a Parish Church in a small market town. The Vicar told him that he could be appointed to the board of the local Co-oP as it was traditional that the holder of his position joined them. He didnt but that attitude is why they are where they are today. They will not change and a slow decline and death awaits.

  • Paul Vickers

    The quicker this national embarrassment of a grocer is sent to Veritas, the better.

    • rtj1211

      Your attitude is that something which lasted 150 years should be shot through the head because of short-term difficulties.

      I suggest shooting the Board through the head and giving the organisation a chance.

  • you_kid

    He was fined £400. What else do you want?
    That’s how English Busyness and the Law works.

    • HookesLaw

      He was not a drug dealer, he was a user.

  • Flintshire Ian

    I buy my lunch and other bits and pieces for my office from my local Coop and I filled in an application for membership when the deli counter girl was running a campaign. I thought I had been blacklisted for being a Tory as 2 years on I have still not received the memership card, but it seems to be straightforward incompetence.

  • Redrose82

    Cannot speak about what sort of service the banking arm offers but on occasion I have visited their grocery stores and have always found their prices far higher than other outlets. No wonder they’re in trouble – they can’t compete even though they have no shareholders to please.

    • Andy

      Yes but as Myners points out 40 years ago the Co-op paid out a dividend equal to a £1 billion today. It paid nothing last year, this year nor will it next. And again as he points out 40+ year ago the Co-op was bigger than Asda, Sainsbury’s, Morrison’s put together. It is a badly managed business even if you ignore the disgrace that was its bank.

      • HookesLaw

        Correct. The co-op has been a case study for many years and whilst it may be a good idea to be a mutual (or not) it is not a mutual which is structured sensibly or managed properly. Its model worked post war but it did not change.

        • rtj1211

          And all those carpet baggers who demutualised the building societies for quick bucks?? Are those organisations managed properly??

          It was rapacious capitalism which assaulted the mutual sector, not a bad model, in the main.

    • HookesLaw

      A ‘grocery store’ will probably have higher prices than a supermarket. many co-op outlests are convenience store minimarkets.
      The co-op does give a dividend back (or it did when making a profit). It regularly gives vouchers for customers to spend. I suggest to you that comparing supermarket prices and offers is more complex that you are making out.
      It is also currently offering ‘square deal’ prices on essensials.

      • Mr Grumpy

        I live in a village with a Co-op and a small Tesco. They are comparable in size, their prices are not.

  • swatnan

    The Coop Bank model was commended by all for its resilience in withstanding the collapse of Capitalism post 2008. Pity it succumbed then to poor mangement. Practically the whole Coop Group Board remains as it is without any resignations. So Myners is basically right, there has to be change, and some of the measures suggested go towards that change.

    • Inverted Meniscus

      Except capitalism didn’t collapse in 2008; there was however a severe recession. Capitalism in the UK is now creating 100,000 jobs a month in the private sector and the UK is the fastest growing of the major western economies. France by contrast, pursuing typically lunatic socialist economic ‘policies’ is heading for oblivion with its economy shortly to be overtaken by the capitalist UK.

      • HookesLaw

        Its good to know that we are creating 100,000 jobs a month. And to think there are some people who are so stuck in their right wing views that they would happily hand the country back to Labour many of whose MPs are funded by the co-op.

        • swatnan

          ‘funded’, by the Coop Party, doesn’t amount to more than say £!000 per General Election; peanuts, when you think of it. and there are only 31 Lab & coop Party MPs anyway.
          The jobs created invariably are zero contract or Agency or temp or part time jobs. And apprenticeships are subsidised by the Govt.

          • Andy

            The Co-op bank was giving the Labour Party soft loans when it was technically insolvent. The Co-Op Group gave Ed Balls £50000 in 2012. In its last set of accounts it gave the Labour Party, via the CoOperative Party £800000+. It did this when its banking division was effectively insolvent and seems to be able to bung the Labour Party an odd million, yet is unable to pay a dividend. No wonder Myners has called for all the board (with one possible exception) to be sacked.

        • Colonel Mustard

          Says it all when a supposed conservative complains about people being stuck in their “right wing views”. The party really has been well and truly hi-jacked by wets. So the choice with mainstream parties is now what? Left of centre, lefter of centre and loony left. With influential elements of the latter in both the former.

          No wonder UKIP is doing so well.

    • Baron

      It’s amazing the big-bank-hater Myners doesn’t like the Co-op bank, it’s the vanilla model he favoured when he was kicking the bad boys at Barclays.

      • rtj1211

        I suspect it’s banks with big losses he doesn’t like. If Barclays was almost insolvent, he probably didn’t like it. Now the Coop is likewise, he has similar views.

        Hardly rocket science I would have said……

  • Andy

    Had the banks not been indulgent the Co-op would have gone bust.

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