The main surprise about Myners' resignation from the Co-Op board is that it took so long to happen

He knew his proposals were unlikely to be welcomed

Share

The main surprise about Lord Myners’ resignation from the Co-Op board is that it took so long to happen. Myners has known for many weeks that the Co-Op “democratic” governance structure was unlikely to welcome his proposals, and so it has turned out. He follows Chief Executive Euan Sutherland out of the door, for similar reasons; mutuality and co-operation are just too quaint for the modern world. So they say.

Except that it isn’t, or at least not generally. There are many, many successful business models that do not follow the usual publicly quoted PLC pattern. Private partnerships still dominate areas such as the law and accountancy, including very large international firms; John Lewis (owner of Waitrose) is another super profitable firm that has no shareholders; and the various building societies still in business, such as the Nationwide, are also mutuals. None is immune from business problems and economic downturns, as the demise of some building societies such as the Dunfermline and Britannia (itself bought by the Co-Op Bank, of which more later) demonstrate. OK, none would have hired the Reverend Flowers; but plenty of PLCs have had crazed chief executives, for whom crystal meth was entirely unnecessary as an aid to insanity.

The truth is very prosaic. By 2008 the Co-Op was bumbling along in a state of sedate long-term decline, as it has been for many decades, until the fateful decision was taken to rescue/take over the Britannia Building Society during the banking crisis. At that point the Co-Op, presumably unwittingly, inherited a vast amount of toxic debt, a problem so dire it not only infected the Co-Op Bank but the wider parent and movement – including businesses such as funeral care that were doing perfectly OK and far distant from US mortgage-related synthetic collateralised debt obligations. And all that.

In its way the Britannia/Co-Op bank deal was like Lloyds’ forced (by Gordon Brown) marriage with Halifax/Bank of Scotland – the latter being an entirely PLC affair. The authorities were desperate for a “private sector” solution to avoid nationalising a bank (damaging for Brown and what was left of new Labour’s credentials) and costly to the public purse. In other words it doesn’t matter if you’re a mutual, privately owned or publicly quoted. If you buy something defective it’s going to bring you down.

The Britannia purchase in late 2008 was a disaster; those who were responsible bear an awful burden; and if anyone in the Treasury or Bank of England were urging the Co-Op on to take the risk, then they too should hang their heads in shame. Indeed the Co-Op and its members have a good case, if any of this is is true, for compensation from HM Government and the Bank of England if they did indeed intervene or encourage this rescue, to save the taxpayer the bother and cost of propping up the Britannia. The Co-Op and the Britannia’s management of the time also obviously have questions to answer. It is the part of the story we know least about, and which matters the most. Let’s hope it won’t take the collapse of the entire Co-Op to bring the facts out into the public domain.

React Now

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

Recruitment Genius: Support Workers - Mother's Help / Buddy Support Role

£8 - £11 per hour: Recruitment Genius: A gentleman with congenital achondropla...

Recruitment Genius: Training Officer

£30000 - £35000 per annum: Recruitment Genius: A Training Officer is required ...

Recruitment Genius: Technical Support Specialist - Document Management

£30000 - £40000 per annum: Recruitment Genius: A leading provider of document ...

Recruitment Genius: Legal Secretary

£17000 - £17800 per annum: Recruitment Genius: This is an opportunity to work ...

Day In a Page

Read Next
 

Daily catch-up: How much difference does the wording of a referendum question make?

John Rentoul
 

An unelectable extremist who hijacked their party has already served as prime minister – her name was Margaret Thatcher

Jacques Peretti
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent