The Myners review is ‘painful’ reading, but will lead to a 21st century co-operative

The Myners Interim Report is a carefully thought-out but blunt piece of work that faces up to a lot of realities to improve the existing system. The idea...

The Myners Interim Report is a carefully thought-out but blunt piece of work that faces up to a lot of realities to improve the existing system.

The idea for the new board would ensure director competence and the accountability of executives to people with commercial experience. But what about member control, including election by members, and other mechanisms for members to influence their society?

The proposed NMC is not the same as, for example, the old Co-operative Retail Services council, which had no powers.

It can propose people to the nominations committee for board-approved nomination in the board elections, it protects the Group from demutualisation by being able to veto certain rule changes, it oversees the social programme, and holds the board to account on ethics, stewardship, strategic leadership and operational performance.

Much will turn on the precise roles and responsibilities of the NMC, and the powers underpinning those roles and responsibilities; but clearly a radical new constitutional settlement between commercial competence and democratic representativeness is needed, and this proposal has real credibility.

There is an important and necessary tension between those two elements of member-based governance, and any new settlement must capture that tension. Importantly, it is proposed that the NMC has a secretariat of its own, and this needs careful thought.

The electoral process is similar to the one used in building societies, but there are member reps on the nominations committee. If people pass the nomination process they are board recommended candidates in annual elections in which all members participate. I assume that there would also be a rule allowing other nominations from the membership but only those vetted would be “board candidates”.

There will be much debate about whether this approach preserves ultimate member control but, assuming that nomination to the board by members as well as by the board would be possible, it is clearly arguable in electoral terms.

The principle of one member, one vote – both to the board and the NMC – is fully preserved and indeed extended fully within the Co-operative Group for the first time.

The NMC would have two primary roles: first, as guardian of the values and principles of the Group’s constitution. The NMC would protect the Group’s position as a member-owned organisation. In this capacity it would hold certain powers to veto further changes in the revised constitution; nothing would be done to increase the vulnerability of the Group to takeover or demutualisation. Secondly, the NMC would also hold the Group board to account on ethical matters and oversee the Group’s social goals programme.

A “significant transaction rule” will also be introduced, giving the entire membership a vote on large deals which can currently be approved by the Group board alone. This will give co-op members, for the first time, the same legal rights as PLC shareholders to decide on major transactions instead of a more watered-down “consultation meeting”, as the Co-operative Code  for Consumer Societies currently recommends (but most society rules do not require). That boosts democratic control.

Many will find this interim report painful reading. But, while much detail needs to be worked out, these proposals have the makings of a practical and democratic structure for a large 21st century co-operative.

The absolute priority for all of us is to secure a basis for the survival of the Co-operative Group as a co-operative. This means engaging with the process and supporting the development of detailed arrangements which will be fit for purpose; fit for purpose for a business of this scale, but also fit for purpose to provide an even stronger basis from which to challenge conventional investor-owned businesses.

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