The last 12 months has in the context of the 20 years before, been an excellent year – the movement’s share of the retail market rising for the first time in my generation; serious reform of co-operative law finally getting through the Houses of Parliament and government advocating the benefit of our values:-
Mutuality, democracy, co-operation:- for the public sector.
Twenty years from now will we look back on 2002 as just a better than average year or will it be a year that saw a decisive step towards strong ever more successful consumer co-operative businesses, towards a thriving social enterprise and worker co-operative sector and the beginning of a powerful, distinctive, public service part of our co-operative movement?
We face, as ever, a number of challenges and opportunities. How we address them will determine whether this year is just a better year than most or a decisive shift in fortunes.
The challenges
Top of the list of challenges must be to recognise that we are not doing enough to bring on future generations of committed cooperative leaders.
We need to consider how diverse and open to talent we really are. How long will it be for example before one of the top ten consumer coop societies has a black or woman Chief Executive?
Does it matter if the co-op movement is seen as being white, old, male, Victorian and provincial?
On the trading front twenty years from now will we really be maximising the movement’s financial strength or seizing the opportunities that collectively our buying power could offer?
Will the perception of the co-operative difference be more clear cut than it is now?
In the political world, will the co-operative ideal have driven reform of our public service and political structures or will the co-ops political leadership be once again the poor relation of a party in opposition?
Democracy
Many have predicted, even celebrated the demise of the co-operative and mutual movement.
Media suggestions that Standard Life may soon face a demutualisation resolution are a reminder of the dark days of the 1980’s and 1990’s when every mutual in the UK had to confront campaigns by carpetbaggers. We do not need to be reminded of the threat that the co-op itself has fought off.
The truth, I have always thought, is that our biggest threat is not an external one – is not from the carpet baggers – serious nevertheless as that threat was – or from other competitors, challenging though the business environment continues to be.
I have always thought that our biggest threat is an internal one – the loss of good lay leadership – democratically elected, imaginative, challenging and supportive to the professional management. When coop societies have failed the first reason for their failure has been poor leadership. Indeed a number of my predecessors have pointed out that all of the almost thousand coops that have gone since World War Two have failed at least in part because of poor leadership.
I don’t think that is surprising. Hundreds, even thousands of companies fail because of poor leadership. If you can find poor quality public services then you’ll certainly be able to find poor leadership of those services. There are examples of poor professional management, but poor management can only operate if the elected Board offers poor leadership.
So our biggest threat is from within – failure to engage our communities properly – the failure to persuade customers to become members – the failure to persuade members to stand for election – the failure to support and develop those elected to become good leaders.
We need to find the young co-operators bold enough to challenge conventional thinking, not to see them as a threat but to welcome their innovation. We need to consider, as some societies have begun to do, how we can encourage women and those from ethnic minorities in particular to run for election and succeed.
We need to find people with the right mix of technical competence and commitment to the co-operative purpose.
We need though to change our expectations of those coming through; to recognise that peoples’ working lives are busier than they have ever been, that the processes that have helped us all to emerge to play our roles within the co-op movement will not be enough on their own to ensure good quality lay leaders.
We need a vision of a thriving democracy, where people feel able to influence their organisations, for our structures to more effectively represent the diverse communities we serve, where we embrace new ways of consulting with and involving members in decision making, other than through the purely formal channels of today, and where democratic renewal is seen as a sign of success.
The number of elected representatives under 40 of one of the largest member societies is just 6%. That means that 94% of the elected representatives of that society are over the age of 40.
It is not enough for some in this movement to talk about age discrimination – now is the time to sort out where tomorrows leaders come from. Just expecting people to engage is a recipe for no change and for long term decline.
I hope that all societies individually and co-ordinated through the Central Executive will consider how to refresh and invigorate our most unique selling point – our democracy.
Business Performance
Recruiting people into a successful organisation is always easier than into a failing one. Maintaining and developing successful businesses must remain absolutely fundamental to our future.
On Bill Clinton’s desk famously was the line “It’s the economy stupid.” Well for our movement our profitability, the surplus we generate remains the essential pre-requisite for any wider ambitions we might have.
This has been an excellent year for many of our societies, which we should rightfully celebrate this weekend. For example, Lincoln Co-op’s results show an increase in surplus of over 14% and encouragingly a 3% rise in membership. I am sure you would want me to congratulate Keith Darwin on his retirement and to wish Kevin Cooke well in his new role. Heart of England Society improved its profit performance over the past two years by an excellent 90% overall. It saw record trading profits for the seventh year in a row. Our friends from Scotmid have seen a threefold increase in pre-tax profits and this in a year of significant capital investment, the refurbishment of several key stores and the opening of the two new stores.
The merger of United and Yorkshire - two successful businesses merging from positions of strength - will I am sure see the new society becoming a strong performer in the retail sector.
Midlands Co-op too, had another record breaking year in terms of both turnover and trading profits, while Oxford, Swindon & Gloucester saw both a steadily growing membership, a much expanded Community Dividend scheme and a continuing strong trading performance.
It is also a particular pleasure to be able to celebrate the excellent performance of the Co-op Group and to pay tribute to its business leadership, Sir Graham Melmoth, Martin Beaumont & Mervyn Pedelty.
2002 proved to be a landmark year for the Co-operative Group. Its retail strategy received widespread industry recognition when it was awarded the Multiple Retailer of the Year in the prestigious Retail Industry Awards. Travelcare was named UK Travel Agent of the Year in the travel world’s equivalent to the Oscar’s and the Bank became the first UK business to be named as the world’s most socially responsible business in the Global Corporate Conscience awards.
In business terms, the acquisition of Alldays – billed by many industry pundits as the buy of the century – saw the Group take on the mantle of the UK’s number one convenience store retailer, adding 600 stores to its retail estate. It also helped the Group to deliver a 40 per cent improvement in the profitability of its trading activities.
I welcome the growing strength of the Co-op Retail Trading Group – thirty two independent societies with almost 3,000 stores nationwide and combined sales of £200 million coming together, pooling power to secure a better deal for all through one central buying operation.
Independent societies from around the country retaining their distinctive ethos, from Lothian & Borders Co-op down to Colchester and East Essex working alongside the Co-op Group and soon too the new United Co-op coming together to deliver a more powerful buying operation to benefit all.
The Co-operative Commission emphasised the importance of co-operative businesses working together to improve our collective business strength. The Trading Group is central to this.
We need to develop the Trading Group into other areas of our business, to secure ever better deals for our members, and improve competition for all consumers. I welcome the new initiative to form the Co-operative Travel Trading Group – the Co-op Group, United, Midlands, Leeds and the West Midlands Co-op coming together to build our movements share of the travel industry.
I hope we will see further initiatives to use our collective muscle to secure better business opportunities for our movement. I hope those societies not currently part of these trading groups will consider afresh the opportunity to join.
For me, this is all about a realisation of core co-operative principles of co-operation between co-operatives for the good of the consumer.
I welcome too one other example of closer business co-operation in the Movement with the formation of the Brand Panel. It is I understand making good progress in its root and branch review of the Branding issues facing the Movement. This is a big job, taxing the most senior leaders in the Movement. The results and recommendations will not appear over night, but when they do, will come the biggest test of the Movement’s willingness to work together to further the business and social goals of co-operatives.
Worker Cooperation and Social Enterprise
I am particularly delighted to be President of this Congress when for the first time our traditional friends in the worker co-operative and social enterprise sectors have joined us.
Pauline Green and Bob Burlton and the other members of the Central Executive deserve our thanks for their tireless work to bring together the various wings of our great movement under the one Co-operatives UK roof.
My route into the Co-op movement was through the social enterprise sector. An initial interest in credit unions and LETS schemes as part of the solutions to social exclusion was further developed by contact with the remarkable Coin St Community Builders, a social enterprise on the south bank of the River Thames less than a mile from Westminster.
Coin Street Builders emerged from a campaign in the 1980s by local people against a massive hotel development that would have blocked off any access to the river bank for local people and ended what remained of the traditional sense of community in the local area. Using innovative funding methods by borrowing against car parking revenues Coin Street has restored the famous London river landmark the Oxo Tower which was once a symbol of the decline of London’s docks and is now home to some of Britain’s brightest young designers and over 200 housing units which have some of the finest river views over London.
There is too the equally remarkable Tower Colliery in the Cynon Valley of South Wales. Led by the remarkable Tyrone O’Sullivan. 239 South Wales miners bought their pit when everyone else – the then Tory government, British Coal all thought the pit was uneconomic. They have not only kept it open, protecting the jobs of the original men but have also created extra jobs and won awards for initiatives they have taken in the local community.
This interest in social enterprise and worker co-ops led me to develop a wider interest in the potential power of co-operation to transform the lives of local people.
The coming together under one roof of traditional retail co-ops and the worker co-op sector offers the opportunity to develop new synergies between old and new forms of cooperation.
Co-op Action is a good example of our movement helping to facilitate new co-operation. I welcome the fact that the Blandford presentation will be to Co-op Action this year.
The co-operative difference
The co-op movement is more than just an economic response to particular business conditions. Of course we must never forget the imperative to trade successfully but our movement is different to other businesses and other public services.
Sometime the sense of difference hasn’t been too clear. Our business problems kept us looking inwards concentrating on survival. At other times in the past the success of mainstream companies or the strength of national public services kept our movement out of the public eye.
Increasingly though we’re creeping back into view. Success in business has been the first significant cause of this but increasingly too there is a growing sense that there is a real cooperative difference.
The success of the Co-op Bank in proving that environmental and socially responsible business can survive and prosper has been crucial – demonstrating that corporate responsibility is the essence of co-operative businesses – a virtuous circle of commercial success from social goals.
Who can not fail to have been delighted that refusing to provide banking services to companies exploiting their workers, engaged in nuclear power, in supplying arms to oppressive regimes continues to be not only right in its own sake but also commercially successful too.
I feel too a sense of pride that our insurance business CIS has led the way in challenging fat cat pay offs and other examples of the mindless corporate greed that seeks to reward failure and efficiency.
The Co-op Group has been at the forefront too of our movements gradual grappling with environmental issues. I hope soon to be able to visit the Co-op Groups first wind farm and I am delighted that more of our electricity will soon come from renewable energy.
We need to continue to develop the sense of the co-operative difference:- to continue to prove that being socially and environmentally responsible is both good business and fundamental to our sense of mission, improving our reporting in these areas will be crucial to promoting that sense of difference.
We need to continue to make sure we look outwards, so this year for the first time as Congress President, I hope during my year in office to support a charity called Piggybankkids. At the back of this booklet you will find details of this charity, which also has a special connection with research at Manchester University.
Politics and the Co-op movement
It is in the political arena too where 2002 has at last brought enduring change. Ever since I became active in the Co-op Party the desire for a new Co-ops Act has been a Holy Grail to be worshipped at, at each and every co-operative political seminar.
I do want to place on record my thanks to each and every society, each and every author of a letter to their Member of Parliament about the three Bills the Co-op Party has championed over the last 18 months.
I have been privileged to take one of those Bills through Parliament but your letters to MPs, ending up as they did in the Treasury and with Opposition frontbenchers helped to prevent both civil service indifference and active campaigns against not only the legislation that I was able to initiate but also Mark Lazarowicz’s Bill promoting employee ownership and this year Mark Todd’s Bill.
I would like to put on record my appreciation of the considerable skill and hard work of Peter Hunt National Secretary of the Co-operative Party. Without Peter and the focused Bill teams he has put together three times now, the legislative progress we have made would simply not have happened.
We need to be honest with ourselves though. Modernising co-operative legislation so that we have a fair and level playing field with our competitors in the private sector is still not complete.
The most pressing problem concerns the publication of interim accounts. Currently, Societies wishing to publish interim accounts must undertake a full audit (with associated costs). Companies can simply publish interim accounts and declare that they are un-audited. This is a major anomaly.
Illustrative costs for societies to produce half yearly accounts are:
· Co-operative Group circa £250,000 pa
· Midlands Society circa £60,000 pa
· Colchester & East Essex circa £30,000 pa
Another problem is exemption from audit requirements for societies with a small turnover. Currently under £90,000 they are exempt from audit, between £90,000 and £350,000 they have to have an accountant’s report short of a full audit and over £350,000 they need a full audit. As noted above, since 2000, companies under £1 million turnover can gain exemption from the costs of any audit or accountant’s report.
Even before that last reform, they were free from any requirement under the £350,000 threshold. Similarly, if the realistic and full company accounting requirements were introduced for big societies the exemptions for small and medium sized companies which can file a consolidated or shortened balance sheet and profit and loss account could benefit societies.
This is unfair and unnecessary. Today I am launching a new campaign to seek to change this. In your copy of this speech, there is a suggested letter that I urge you to send to your Member of Parliament. We all have a part to play in keeping up the pressure for change.
We have to do more than just make the case for legislative reform of our sector. We have to make the case for mutuality and cooperatives to help solve other challenges facing our nation.
It is not a coincidence that government should be sympathetic to our legislation last year at the same time that social enterprise was being actively promoted by the Treasury and the Department of Trade and Industry as one key solution to the problem of social and financial exclusion.
If we want further legislative progress to help our sector we need to recognise that we need to campaign for mutual solutions in other areas. We need to work with our friends and allies in the building and friendly society sector and to spread the examples of co-operation driving reform in other parts of our public services.
Greenwich Leisure – an outstanding example of community ownership delivering excellent public services.
Childcare Co-ops are a new potential growth area, with many examples of community owned providers entering this important market.
Both examples where local authorities have helped to develop and improve local services using co-operation and mutuality.
It was in 1918 that the Webb vision of socialism took hold in the Labour Party, leading to the great state and municipal enterprises of the last century. Labour had defined itself through clause IV of its constitution. But this history masks a vibrant political debate that took place at the time.
In fact, many had argued that the mutual, indeed co-operative, nature of self help societies lended itself better to the interests of ordinary working people than did well-meaning paternalism.
It is no coincidence that it was also in 1918 that the first Co-operative Party MP was elected. At that time, this movement considered it necessary to organise to ensure that our co-operative vision was represented in Parliament.
But the Webbs’ version of Clause IV is no more. Labour itself has moved on from the sureties of 1918. The vision of co-operation and partnership is again at the forefront of Labour thinking.
Today’s debate about public service reform and particularly NHS Foundation Trusts are the same debate. Let us remember which side we are on. We have brought our thinking out of the doldrums of mediocrity – let us now put this to good use.
We have a role to play, an argument to make for mutuality to be part of the principles driving reform of our great public services. We are not advocating privatisation we are championing mutuality. We are not trying to shift public services towards a right wing minimalist public realm. Instead we are seeking to take the traditional coop movement principles of democracy and cooperation and use them to put the public back into public ownership.
2002 saw the first birthday of Mutuo an alliance of co-operatives and building societies, friendly societies and the mutual insurance sector.
In a short period, Mutuo has achieved major breakthroughs with Government, helping to kick start the debate on mutuals in public services and ensure balanced treatment of our sector in all Government departments.
The announcement last Autumn that the Chancellor, Gordon Brown MP is the lead patron of Mutuo is evidence itself of it’s credibility with Government.
Conclusion
The distinguished list of past Presidents reads like a roll-call of the great and the good of the Co-operative Movement. Given that the first Congress I attended was a mere five years ago, in Lincoln in 1998, I am more than aware of the honour that presiding over Congress bestows on me.
This is a weekend for celebration. 2002 has been an excellent year for co-operative businesses – increasing our surplus, building our market share and increasing the sense of our difference and our success in being different. We need to be bolder in using our buying and financial clout to win better business deals. Now is the time to explore too how we recruit younger people to our Boards, improve the diversity and gender mix of our Directors. It is also time to renew our demand for legislative reform and to challenge the out of date and lazy thinking that cooperation has nothing to offer the great public service reform agenda government faces.
I wish you an enjoyable and fulfilling Congress.
