Lord Myners quits the Co-op: It's not who owns a company that matters – but how it's run

We are unlikely to create a new Co-op or set of mutuals, but the spirit they embody should be saved

Share

There is a bigger question than the future of the Co-op Bank; bigger even than the future of the co-operative movement. Is it how to foster a variety of different forms of corporate ownership – mutuals, building societies, co-ops, employee-owned enterprises, partnerships and so on – rather than make a bet on a single legal structure, the private or public limited company.

A generation or more ago, we had such a variety. The most innovative life assurance companies were mutually owned. Building societies had financed the boom in home ownership. Trustee savings banks had promoted the idea of saving. As my colleague Archie Bland notes today, in the 1950s, the co-op movement had a large chunk of the UK food market. Now, most of the mutual life assurance companies have been taken over – and one, Equitable Life, collapsed in spectacular fashion. Every single building society that converted to PLC status has been taken over by banks. The TSB survives as only a brand, and when it is floated off in the next few months, it will be a PLC. And in retailing, co-ops have just 5 per cent of food sales. The banner flies high at the Nationwide and at John Lewis, but that is just about it.

Now you might say that this is the Darwinian outcome of the world of commerce. These forms of ownership have failed to adapt, and proved inferior to the PLC. Rather the same argument can be applied to nationalised industries, another form of ownership that did not work very well. The quality of leadership of mutuals and co-ops has been no better than those of their competitors and, arguably, has too often been worse. As Lord Myners, who quit the Co-operative Group's board last week, observed in his interim report, he was "deeply troubled by the disdain and lack of respect for the executive team". So it seems in this instance some leading figures in the movement were not only incompetent; they were not very decent either.

Lord Myners is both decent and robust, so we can trust his judgement on this. I suspect that the co-op movement as a whole will continue its gradual decline, and it is a fine irony that the main rescuers of its bank should be New York hedge funds – enterprises that stand at the opposite end of the corporate spectrum. But I don't think we should give up on mutual ownership, because we need different forms of corporate structure as a spur for better stewardship at every level.

Consider this: one of the shining stars in recent British manufacturing has been Tata's transformation of the Jaguar Land Rover group. It has succeeded where two competent and much more experienced global automotive companies, Ford and BMW, failed. I suspect that it has something to do with the long commitment that Tata has been able to bring, a commitment consistent with its own company structure as a family business, with some two-thirds of its shares owned by a philanthropic trust.

Look around the world at the great innovative businesses, and the striking thing is the variety of different forms both of corporate history and of current ownership structure. Frequently, they are the creation of a single, driven individual (Apple); sometimes they are spin-outs from another larger enterprise (Vodafone); or a co-operative turned into a quoted company (Wesfarmers in Australia); and sometimes a state-owned enterprise is transferred to mixed ownership (the state of Lower Saxony still owns 13 per cent of Volkswagen).

It is true that the tendency among larger enterprises has been to shift towards shareholder ownership. That is happening everywhere in the world, including China. But some countries have been better than others at fostering family companies. Much of the Mittelstand, that great engine of German manufacturing industry, is still family-controlled. But these companies have a high degree of co-operation between employees and management.

Maybe there's a lesson for us here: being realistic, we are not going to create many new mutuals or co-ops. I think that the near-destruction of the building society movement in the 1990s was a disaster, though I have to acknowledge that it was the takeover of a building society that had got itself into a mess, the Britannia, that brought the Co-op Bank down. But I do think that the co-operative spirit of the building societies, or indeed of the Mittelstand, is something we have to find ways of supporting. Housing associations are another important model, and so are small-scale enterprises backed by local authorities.

The big lesson from this sorry story, surely, is that there is no particular form of ownership that is optimal, and what matters is quality of management, not ultimate ownership. But it is impossible for management to function if it is treated with disdain.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: National Sales Account Executive

£25000 - £30000 per annum: Recruitment Genius: This company leads the market i...

Recruitment Genius: Sales Manager - Cyber Security

£30000 - £40000 per annum: Recruitment Genius: A Sales Manager for Cyber Secur...

Ashdown Group: Service Desk Analyst - Application Support - Central London

£30000 - £35000 per annum + Benefits: Ashdown Group: Service Desk Analyst (App...

Ampersand Consulting LLP: 3rd Line Support Engineer (Windows Server, Exchange Server)

£35000 per annum + Benefits: Ampersand Consulting LLP: 3rd Line Support Engine...

Day In a Page

Read Next
Ice skating in George Square, Glasgow  

How many Christmas cards have you sent this year?

Simon Kelner
 

Al-Sweady Inquiry: An exercise in greed that blights the lives of brave soldiers

Richard Kemp
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum