Financial News

  • 19 May 2014, 13:30

Co-Operative Members Back Radical Reform

Members of the struggling Co-op have unanimously backed a major overhaul of the group.

It paves the way for radical reforms proposed by former City minister Lord Myners to go-ahead.

A timetable for carrying out the changes will be agreed at a board meeting later this month, as the Co-op warned tough times lay ahead.

Some reforms will need rules to be altered, and so require further votes.

Co-op Group chair Ursula Lidbetter, who announced she will step down after a transitional period, said the mood at the annual general meeting was "thoughtful and sober".

She hailed the vote as a "highly significant moment" for the group.

Speaking ahead of the vote, Ms Lidbetter told delegates "catastrophic failure of governance" had taken place at the Co-operative Group - but it was in its own hands to "make this business work again".

She said 2013 had been a "disaster waiting to happen".

Sky's City Editor Mark Kleinman said no-one had been expecting a unanimous vote, and Co-op executives were "breathing a sigh of relief" at the result.

After the vote Lord Myners said: "My job, when I was asked by the board, was to do a thorough review of governance and I have done that.

"Quite forthright, that upset some people, but I think it was necessary to be frank and straightforward, and people have obviously listened with care."

He has proposed a shake-up of the 150-year-old business which reported losses of 2.5bn for 2013.

The plans include sweeping away the existing 20-strong board of representatives from the Co-operative Group, who currently include an engineer, a plasterer and a retired deputy head teacher.

He wants to replace this with a slimmed-down "plc and beyond" structure staffed by professionally-trained directors.

The former Marks & Spencer chairman was appointed a director of the Co-operative Group in December, but is to leave following the vote.

He said it was apparent to him from the first time he attended a board meeting that not one of its members had the ability to address the complex issues faced by a group burdened with 1.4bn of debt.

Lord Myners believes that the Co-op will survive but faces the prospect of having to sell assets such as its 1bn funeral care business, in order to meet the demands of its lending banks, if it does not adopt reform.

Resistance to the changes saw chief executive Euan Sutherland leave the group earlier this year, saying it was ungovernable.

The decision on the reforms was taken by representatives of its independent societies and affiliated organisations - who hold 22% of the vote - and others voting on behalf of its regional membership boards making up the remaining 78%.

Ms Lidbetter said: "There is a huge task ahead of us if we are to deliver the reforms necessary to restore the Group's reputation and return it to health but the board will work hand-in-hand with our members to ensure that we seize this opportunity.

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