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Co-operative Group members vote for radical overhaul of struggling mutual Co-operative Group members vote for radical overhaul of struggling mutual
(35 minutes later)
Co-operative Group members have unanimously voted in favour of overhauling the governance of the troubled 150-year-old British mutual.Co-operative Group members have unanimously voted in favour of overhauling the governance of the troubled 150-year-old British mutual.
The decision at a special meeting in Manchester paves the way for a radical shakeup of the business after it suffered a "catastrophic failure of governance" and losses of £2.5bn in 2013.The decision at a special meeting in Manchester paves the way for a radical shakeup of the business after it suffered a "catastrophic failure of governance" and losses of £2.5bn in 2013.
The proposals by Lord Myners include replacing the Co-op's 20-strong board of representatives with a slimmed-down structure of professionally trained directors.The proposals by Lord Myners include replacing the Co-op's 20-strong board of representatives with a slimmed-down structure of professionally trained directors.
Announcing the unanimous vote, the Co-operative Group chair, Ursula Lidbetter, said the business had "let a great many people down and we owe them a considerable apology".Announcing the unanimous vote, the Co-operative Group chair, Ursula Lidbetter, said the business had "let a great many people down and we owe them a considerable apology".
She said: "Over the last year we have been a sorry sight for anyone who cares about cooperation. "We have to accept the seriousness of the mistakes we've made. And, even more importantly, the reasons why those mistakes were able to be made. We have to recognise that there has been a catastrophic failure of governance." She said: "Over the last year we have been a sorry sight for anyone who cares about cooperation. We have to accept the seriousness of the mistakes we've made. And, even more importantly, the reasons why those mistakes were able to be made. We have to recognise that there has been a catastrophic failure of governance."
Lidbetter, who took up the post at the end of last year, said: "It is vital that the right changes are put in place as soon as possible to build a more effective organisation for our members, customers and colleagues." But Lidbetter, who took up the post at the end of last year, hailed the vote as "a highly significant moment" for the group, saying: "I am delighted that our members have made clear their commitment to far-reaching reform of our governance with this unanimous vote.
"I recognise that the process we have gone through so far on reform has not been ideal. We have certainly not been helped by the serious crises caused by board leaks and resignations. But there is a need for urgency about what we must do next.
"It is vital that the right changes are put in place as soon as possible to build a more effective organisation for our members, customers and colleagues."
The business secretary, Vince Cable, also welcomed the decision as a step in the right direction. "It is important mutuals are strengthened as an alternative business model and the Co-op, which has 90,000 employees, is a major part of that movement," he said.
"Lord Myners has identified the key problem of governance and ensuring a consumer base of millions is democratically represented in ways that ensure professional, competent management. It is in this latter area that the Co-op has fallen short and why radical solutions are needed to get the Co-op back on track."
Delegates voted in favour of four key proposals, based on suggestions made by Myners:Delegates voted in favour of four key proposals, based on suggestions made by Myners:
• Replacing the board of representatives with an elected board of directors.• Replacing the board of representatives with an elected board of directors.
• Adopting a "one member, one vote" system for policy decisions. • Adopting a one member, one vote system for policy decisions.
• Creating a structure that makes the board accountable to members.• Creating a structure that makes the board accountable to members.
• Bringing in rules that protect the Co-op's mutual status.• Bringing in rules that protect the Co-op's mutual status.
Lidbetter hailed the vote as "a highly significant moment" for the group, saying: "I am delighted that our members have made clear their commitment to far-reaching reform of our governance with this unanimous vote. After the vote, Myners told the BBC he was thrilled with the outcome, saying that his "work here is done."
"We have been shocked. We do feel angry. Now we need to understand. I recognise that the process we have gone through so far on reform has not been ideal. "I think this is a turning point for the Co-operative," he said. "It has recognised the need for fundamental changes in governance and it has acknowledged the four basic pillars of my report. But there's still a lot of work to be done and not a lot of time to do it.
"We have certainly not been helped by the serious crises caused by board leaks and resignations. But there is a need for urgency about what we must do next. "The elected leadership of the Co-operative today has shown a degree of support for the need for reform which exceeded my expectations. I am very confident that there will be substantial change in the governance of the Co-op and the leadership of the organisation will have a strong and more accountable board."
She told delegates: "The governance structure has let us down. It's let down our 90,000 employees that depend on this business for their livelihoods; the eight million members who want to trust in our commercial integrity; the British public who thought we were different and better than the rest, and we've let them down too. At the meeting, Lidbetter admitted to delegates: "The governance structure has let us down. It's let down our 90,000 employees that depend on this business for their livelihoods; the eight million members who want to trust in our commercial integrity; the British public who thought we were different and better than the rest, and we've let them down too.
"We have tolerated a system that has proved unfit and that has led to a shocking devaluation of our society.""We have tolerated a system that has proved unfit and that has led to a shocking devaluation of our society."
Myners has said he believes the Co-op can survive but may have to sell assets like its £1bn funeral care business.
Adrian Jones, a national officer of the Unite union, said: "The vote for reform is a welcome step in the right direction and one which we hope will put the Co-op Group on the road to stability.Adrian Jones, a national officer of the Unite union, said: "The vote for reform is a welcome step in the right direction and one which we hope will put the Co-op Group on the road to stability.
"Going forward it is vital that our members and employees have a voice in the reform process for it to succeed and ensure the Co-op Group has a fighting chance while retaining its unique values and ethos.""Going forward it is vital that our members and employees have a voice in the reform process for it to succeed and ensure the Co-op Group has a fighting chance while retaining its unique values and ethos."
John Gorle, national officer of the shopworkers' union Usdaw, said: "Usdaw unequivocally supported the board's resolution as the best opportunity to take the business forward whilst retaining the mutual status of the Co-op group. We now have the foundations in place to put together a new governance structure that will strengthen the organisation and help safeguard our members' jobs."