Lord Myners reacts to Co-operatives UK’s governance review ideas

Suggestions put forward by Co-operatives UK to build on governance proposals from Lord Myners, has been met with a robust response from the peer. The former City minister,...

Suggestions put forward by Co-operatives UK to build on governance proposals from Lord Myners, has been met with a robust response from the peer.

The former City minister, who was appointed in December as an independent director at the Co-operative Group, has spent the past six months investigating the organisation’s democratic structure. Following the publication of his final report, Co-operatives UK has made a number of suggestions to enhance the proposals.

Three suggestions from the co-operative apex body outline changes to allow members to have a greater say over the nominations committee, for a single chair to govern the Group board and national members council, and for the main board to take responsibility for social goals.

Lord Myners said the organisation’s Myners Plus proposals were more “Myners Minus”. In his response, he said the suggestion that a single individual should act as a single chair was “internally inconsistent and impossible to implement without intolerable conflicts of interest”.

The peer believes that potential disagreements between the NMC and the Group board “would not be a sign of failure but of healthy tension in the governance engagement”. Thus, he argued, having the same individual occupy both roles would involve an impossible conflict of interests.

Co-operatives UK justified the need for their amendment by saying such an arrangement would help save costs and “avoid a drag on the business when they disagree”. Lord Myners emphasised that the potential for any disagreement would not be between the chair of the Group board and the president of the NMC, but between the two bodies. He explained that the individuals fulfilling the two roles would also need to show different experience and expertise, and, as a result, it would be difficult to have a single person occupying both positions.

Co-operatives UK’s comments on Lord Myners’ governance review also include references to his recommendation on social goals, highlighting that these are part of everyday business and should be overseen by the Group rather than a separate activity run by the NMC. But Lord Myners thinks his review places a strong emphasis on the social goals aspect of the business. He explained how the NMC should actively engage with the Group board and executive on matters related to social goals.

“With regard to this second suggested amendment, therefore, the Co-operatives UK contributors appear to have misunderstood the purpose of my recommendations.

“This aspect of the NMC’s role will also respond to the frustration expressed to this Review by members who feel that it is often difficult to influence outcomes through the current workings of Values and Principles Committees. The proposed NMC will provide an elevated and influential role for the expression of such views and concerns,” he said.

Another topic addressed by Co-operatives UK in its comments was the role of the nominations committee, which the report’s authors believe should be a committee of the NMC with a majority of its members. Lord Myners had proposed in his review that the committee was to be a part of the main board.

The core role of the committee, he said, is to ensure competence on the Group board. As envisioned by Lord Myners, the two NMC designated members on the committee would play a central role in building trust in the objectivity of the selection process.

“Constructing a well-functioning board is not an easy task. To do this effectively requires extensive relevant business experience and skills together with first-hand knowledge of how the board is working. That is the fundamental reason why the nominations committee has to be an integral part of the board,” added Lord Myners.

The peer also expressed concerns that by giving the NMC jurisdiction over the Group board’s composition and the evaluation of its work, potential board candidates might be put off. He said: “It would send an immediate adverse signal to potential board candidates and would seriously undermine the ability of a new board to attract the best talent and to help the Group achieve the turnaround in its fortunes that it so urgently needs.”

Co-operatives UK secretary general Ed Mayo responded: “Co-operatives UK is fully supportive of the modernisation process that The Co-operative Group has put in place. The Myners Review made a series of recommendations, which we have already recognised as authoritative and compelling, and it is entirely reasonable for the Myners team to stand by their conclusions.

“We are aware that due to the urgency of the situation, the review had to be a rapid piece of work, and, because of this it was perhaps not able to focus extensively on comparable good governance practice among co-operatives worldwide.

“Co-operatives UK has a high reputation and track record of support on co-operative governance and assists all our members with expert advice on best practice across the sector. Our three proposals, ‘Myners Plus’, are options, rather than prescriptions, and are intended to inform debate in the context of a consensus for the need for swift change.

“All three recommendations draw from high performing co-operative businesses and their governance structures from around the world, which, despite different legislative frameworks, can be emulated here in the UK. The suggestions are not spoiling, but healing options.”

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