Investment boutique Rothschild advises Co-op Group, Members Council ‘toothless’

In August some disturbing news was published in the Letters columns of the Co-operative News.

The first letter, from Robert Jones of Chelmsford, deplored a lack of co-operation leading to competition between co-operatives; the second came from John Macbeth, Stoke-on-Trent with a similar concern from Nick Palin in Leeds about the closure of smaller stores in deprived areas as almost 200 new stores are being opened in relatively affluent areas, with hundreds more planned, according to Steve Murrells, chief executive of retail for the Co-op Group.

As Mr Jones notes, there is local opposition to the Galleywood store, for which a planning application has been made.


EssexLive News reported the views of residents opposing such a development on a busy, congested crossroads and think that the loss of parking on the site which was formerly the garden of the Eagle public house. Earlier one of them, opposing the development of such a store behind an attractive listed building said: “We already have one Co-op store in the village, less than a mile away from the pub, so we don’t need two. It is felt by many to be greedy, unnecessary and excessive.”

John Macbeth, Stoke-on-Trent, refers to an earlier letter about the sale of 298 convenience stores to McColl’s Retail Group. Elsewhere we read that the Co-op hired highly paid advisers at Rothschild’s boutique investment bank to find prospective buyers for these shops.

rothschildHeadlined ‘Sign up to a boutique investment bank for a big pay day’

He describes the Co-op, which was once a ‘significant retailing presence’ in the area as ‘almost a complete irrelevance after having traded successfully and profitably in the area for over 100 years’. His verdict:

“(T)he new Member’s Council is . . . completely incapable of holding the board to account despite the rhetoric . . . “

Nick Palin in Leeds also focusses on the McColl sale – about which members (‘as usual’) have not been consulted. His letter gives rise to a question, “Is the policy now to dispose of stores in deprived areas and open new ones in relatively affluent areas? “

Retail Gazette reports that a source close to the Co-op confirmed that the sale will not deter it from carrying out plans to open 100 new stores and refitting 150 additional sites this year.

Robert Jones ends: “One is inclined to believe delighted anti-co-operative detractors, who say that the group is now being run by all-for-profit, private capitalist entryists who have little interest in or understanding of co-operative principles.”



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People from these countries visited the site this month


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Manifesto places not-for-profits and co-ops at the heart of Corbyn’s plans for a “publicly run, locally accountable energy system”


The latest issue of the Co-operative News follows up earlier reports that Jeremy Corbyn has launched an environmental manifesto that outlines his plans for the UK to achieve 65% of energy from renewable sources by 2030 – without fracking.

corbyn-eee-manifestoHe has promised to promote over a thousand local energy companies in the next parliament and legislate to give community energy co-operatives the right to sell energy directly to the communities they serve.

In a speech in Nottingham, the Labour leader said, “We want Britain to be the world’s leading producer of renewable technology. To achieve this, we will accelerate the transition to a low-carbon economy, and drive the expansion of the green industries and jobs of the future, using our National Investment Bank to invest in public and community-owned renewable energy. This will deliver clean energy and curb energy bill rises for households; an energy policy for the 60 million, not the Big 6 energy companies.”

It would launch a National Home Insulation plan to insulate at least 4 million homes and phase out coal-fired power by 2025. The Labour leader estimates over 300,000 jobs would be created in the renewables sector as a result of these measures.


Labour would reinstate the department for energy and climate change in its first month of going back into government, as part of its plan to rebuild and transform Britain, “so that no-one and no community is left behind,” he said at the event in Nottingham.

Jeremy Corbyn also encourages the British public to take action as individuals to help to meet the Paris climate agreement.




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The independent difference: Midcounties Co-operative

mid-counties logo

After reading the last post, a concerned co-operator sent word that he was pleased to say the Midcounties was different. Members did get to vote on the report at the AGM and decide on how much to donate to the charitable work and to staff. The directors (executive) salaries and bonuses were declared in writing, name by name. Salaries were median for their job. Bonuses were modest and very small compared to, say, a supermarket chain.

He recently attended their first energy group panel (3 hours on a Saturday). So far so good – they had good news to report (they’d solved a huge problem with their website billing system). He has submitted some suggestions and will see “if we are there to provide a glossy coat or hold the managers we employ to account” and ends: “I am hopeful”.

A search found that this 150 year old society covers a wide and diverse area, including the Black Country and the Forest of Dean. It is one of 21 co-operative retail societies independent of the large Co-operative Group, listed on this Wikipedia site. Its website adds that it is now the largest independent co-operative in the UK with gross sales of over £1 billion and more than 500,000 members.

In its news section, as well as the usual donations to community projects, we read that volunteers from the Midcounties Co-operative Food store on High Holborn Road, Sedgley, have begun work on the restoration of Ladies Walk alleyway which had ‘fallen into disrepair’ and become a ‘hotspot’ for anti-social behaviour – the only entry about it online being an ad for mobile security patrols . . . Lee Brown, manager of the store, which is adjacent to the alleyway, took action after hearing several complaints from local residents about the issues surrounding the area. Dudley Council provided litter pickers and bow saws to the team of 30 volunteers to clear the alleyway and the next task is to level the ground and restore the area, helped by people from the local community centre and gardening club. The project, also supported by the police, aims to install security lighting and cameras before winter.

tom ley yoghurtIt is cheering to read that last year Midcounties moved towards using local produce. It is now stocking a range of hand-blended yoghurt, with blackberry, mango, strawberry and kiwi flavours, made by a local resident Tom Ley (left) using only milk and real fruit – with no added sugar, flavourings, colourings or starch.

Phil Ponsonby, Group General Manager at The Midcounties Co-operative Food, said: “As a co-operative, we’re committed to supporting local suppliers, and with consumers increasingly looking for healthier options, Yokel Yogurt is already proving popular in our stores in and around Aylesbury.

Other societies providing local choices for their consumers include the East of England Co-operative, which has nurtured 140 local suppliers and ploughed more than £25m into its region’s economy since 2007, and Lincolnshire, whose Love Local range rose by 11%.

The British co-operative movement in recent years failed to supply stores with produce from its own farms and rarely offers organic or other pesticide-free produce, but moves like this bring some hope for those looking, as Phil Ponsonby said, for healthier options.




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Ten years ago co-operators anticipated the 2013 crisis but their misgivings were not heeded . . .

This website was inspired by the truthful and trenchant remarks of readers in the Letters pages of the Co-operative News. A few found in the 2005 database are recorded below.

Ron Hunter writing from Sussex reminded readers succinctly that “Democratic control must not be treated as an optional extra”.

Vic Parks, chair of the Group’s Surrey and Berks Area Committee, writing in a personal capacity, said that the overarching strategic aim should be to keep alive the aims and ambitions fought for by previous co-operators – so convincing others that there is a real alternative.  Staff members at all levels should genuinely embrace co-operative ideology and “walk the talk”. Savage cuts had been imposed upon committees in a cavalier and undemocratic manner, without taking into account the fact that ordinary members, rather than management, own the society . . .

A self-perpetuating lucrative sinecure for an under-achieving hierarchy

Philip Rapier, a member of the Group’s South Wales Regional Committee, also writing in a personal capacity said that the decline of the movement’s democratic heritage must be stopped by changing the status quo, which is a vehicle for creating a self-perpetuating lucrative sinecure for an under-achieving hierarchy. These people are well represented on the Remuneration Committee, which has awarded them excessive pay and pensions, comparable to those earned by industrialists who built their own businesses, often risking everything they had, including their own homes.

M.D Mathieson questioned the whole concept of the Co-operative Group as it now exists: The Co-operative Group now operates on such a scale that it has lost an important co-operative asset, a sense of belonging to a community . . . the individual members do not vote for Board members, do not have a vote on the annual report and accounts and cannot attend the AGM. Representatives elected by an obscure transferable vote system do all this for them.

Former Midlands Society Chief Executive and Co-op Group director Willie Tucker said he passionately believed in the co-operative model, which was as relevant today as it was over 100 years ago. At a retirement meeting, 120 col­leagues, friends and family includ­ing Government Minister Margaret Beckett, heard him say: “There are still too many exam­ples of individuals – sometimes at the highest levels – who are using the Movement for their own personal convenience having lost sight (if indeed they ever had sight) of what exactly it is we are trying to achieve through co-operation”.

Lincoln Co-op director and former Congress President Alan Middleton echoed Mr Tucker’s concerns in a letter in the September issue of the Co-operative News, saying that the movement is “over-dominated” by paid officers: Readers need to be quite clear, there are still officials around – employ­ees of the Movement – who will not rest until the voice of the lay member has been completely silenced”.

“A flawed culture and a system of governance which led to serious failures of oversight”

The findings of Sir Christopher Kelly, appointed by the Co-operative Group to review the bank’s failure, will be reinforced next week, by two warning voices with less familiar names – member commentators – recording and appraising the current actions of the co-operative group, which is often mistaken for the whole movement by the general public.




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Failing housing market – a co-operative solution?


In June the Co-operative News informed readers that the UK Co-operative Economy 2016 report records – in eye-catching graphics – that around 17.5 million people are now owners of the country’s 7,000 independent co-op organisations – up from 17.4 million the previous year, and showing an increase of 1.3 million over the past five years. The report, published by Co-operatives UK, finds that the sector supports 223,000 jobs and is worth £34bn a year to the economy, showing resilience in the midst of wider economic uncertainty. Despite a slight dip on last year’s figures, the sector has seen a £3.5bn (or 10%) increase in turnover during the last five years.

 Rochdale co-op housingBH-3

An earlier article in the News recorded the finding of the 2004 official review of housing supply, that Britain needed to build 250,000 houses a year and a couple of questions were asked at the annual conference of the Confederation of Co-operative Housing (CCH), Loughborough University:

  • Can co-operative housing help solve Britain’s housing crisis?
  • And, if so, what can be done to encourage the development of more housing co-ops?

Claire McCarthy, general secretary of the Co-operative Party, gave the example of Wales, where the previous Labour government legislated to enable mutual housing associations to grant assured tenancies:

methyr valley homes logo“New build co-operative housing schemes have been completed which are not only providing affordable rents for local families but have also provided high quality apprenticeship opportunities and training for tenants in managing their homes within a co-operative structure. “In addition, Merthyr Valley Homes has become the largest housing mutual in Wales and only the second mutual housing association (the other is Rochdale Boroughwide Housing – above centre) to be owned by both residents and staff.  Recent developments, particularly in student housing co-ops, are also providing inspiration for what is possible . . .

“Government ministers have re-stated their commitment to co-operative housing and committed to examining the progress in Wales to see if lessons can be learned in England. This provides us with a good opportunity for the future . . .

“Challenging failing markets is what co-operation is all about. Our housing market is failing a growing number of people and we can and must be part of the solution,” she concluded.





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Labour leader Jeremy Corbyn welcomes profit-sharing and employee-ownership

prem sikka 3Prem Sikka, Professor of Accounting at Essex Business School’s Centre for Global Accountability, opened a recent article by reflecting that corporations, such as BHS, are being run entirely in the interests of executives and shareholders, with little concern for anyone else.

Moving away from this model, Labour MP Gareth Thomas, with the support of the Co-operative Party put forward a bill, Profit-sharing and Company Governance (Employees Participation), which proposed to make businesses with 50 or more employees set aside at least 5% of their total profits for staff. Labour leader Jeremy Corbyn was said to have supported the proposal. Read more here.

eo4 uk graphic

Visitors to this site sometimes open the worker co-operatives directory which has a few instances of co-ops financed by employee buyouts. On rare occasions, notably the company now known as the Scott Bader Commonwealth, the owner has given the company to its workers. Read more here. The work of the Baxi Partnership should also be mentioned.

chelsea green2

Earlier this month, a web search, following news from a colleague who has become Chelsea Green Publishing’s Commissioning Editor for the UK/Europe, led to the news that in 2012 Chelsea Green decided to become an employee-owned company, creating an employee stock ownership plan (ESOP) in which employees control 78% of the company’s privately held stock; the remaining stock is held by the founders.

In 2014 the owners of Outlandish, based in Finsbury Park, gave up their ‘fat cat bonuses’ by giving the business to their employees. The company, which builds next-generation data tools websites for organisations like the BBC and King’s College London, now has an annual turnover of £1million. Co-founder Tamlyn Rhodes said: “Like most knowledge-based companies the value of Outlandish is the people that work for it, not the machines that it owns. If people are creating the value through their hard work and ingenuity, it’s only right that they should get to own what they create.”

Speaking at the re-launch of Outlandish as an employee-owned company Jeremy Corbyn, as MP for Islington North, said: “I welcome and applaud this great local effort to create fulfilling jobs and provide training in Islington and hope that Outlandish’s model can be replicated in many areas.”

Note that on the Political Concern website Professor Sikka argues that the possible demise of retailer BHS draws attention to the need to change the way major corporations are governed.

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