Co-operative Commission
Encyclopedia
The Co-operative Commission was an independent commission
set up by Tony Blair
at the request of leaders of the British co-operative movement. Its aim was to review the strategy and structures of the sector, with an aim to suggesting ways to develop and modernise the movement, and its members comprised "business leaders, politicians, trade unionists and co-operators" under the chairmanship of the General Secretary of the TUC
. It was the second review of its kind in the entire history of the Co-operative Movement.
The Commission was announced on 24 February 2000, and published its findings in the document the co-operative advantage: Creating a successful family of Co-operative businesses in January 2001.
- was initially set up to consider co-operative production, but had its mandate broadened to consider co-operative retailing
as well. The membership of the Commission - selected as "suitable persons not engaged in Co-operative management or administration" - was as follows:
The Commission was set up in response to the co-operative movement experiencing its first ever halt in its growth, caused by the massive changes in retailing following the end of rationing and the beginning of self-service. The co-operative movement still had a large presence in the retail market, with 30,000 shops, 250 factories and 967 retail societies paying dividend
s to their customer members of over £40m a year. However, these payments were often made at the expense of retained capital, and there was growing concern about the movements ability to fund its future development. There was also concern about the movement's market share, with 1957 seeing the co-operative share at 11.62% whilst the new supermarkets - luring customers away with competitive prices the movement's structure wouldn't allow it to match - had a 25% share.
Over nearly three years, the Gaitskell Commission held 35 meetings, carried out visits and launched formal and informal consultations before publishing its final report in 1958. The report made 51 recommendations on a variety of issues, including recommending that society's start selling products at market prices and stop expecting the dividend to compensate for high prices, whilst its final recommendation was that the movement should hold similar reviews "at least once a decade": this went unheeded until the 2000 Commission was established.
Despite being described by the 2000 Commission as "prescient in its analysis, and right in nearly everything it recommended", the report failed to have significant impact for the movement, with most of the recommendations being ignored or brought about by circumstance rather than by free adoption. In its 1967 Regional Plan, the Co-operative Union concluded that "If the serious warnings of the Independent Commission had been heeded, the Movement would be in far better shape to withstand the impact of new problems which have developed". Instead, supermarkets such as Sainsbury's and Marks & Spencer
emerged as serious competitors to the co-operative retail movement.
, whereby a society could be turned into a private company and its assets taken out of the hands of its members and under the control of private shareholders. The Co-operative Wholesale Society Ltd (CWS) was particularly attractive to "demutualisers" because of the size of its assets, turnover and customer base, and in 1997 entrepreneur Andrew Regan
began making an attempt to demutualise the CWS. He made a bid of £1.2bn for the co-operative, which was rejected by the members but led to two senior CWS executives being dismissed, and ultimately jailed for accepting a bribe for an unrelated transaction via a company that CWS sold to Regan. The bid had the benefit of shining a spotlight on the Movement's weaknesses, and it came to realise that its best long-term defence was to operate successful co-operative businesses: that they must succeed "as [businesses], in terms of [their] performance – and as [Co-operatives], meeting [their] social goals".
Combined with this, the UK's two biggest co-operative societies were in the early stages of merging. Co-operative Retail Services (CRS)
had been ailing for some time, reporting an operating loss of nearly £60m in 1999, and its board and members recognised the benefits that would come from combining with the CWS - large reductions in operating costs could quickly be achieved by a merger. CRS was originally CWS Retail, formed by CWS in 1934 to open shops in "co-operative deserts" and take over ailing retail societies, eventually becoming a separate entity and taking the CRS name in 1957. Members voted on the merger on 4 March 2000, and it would change the shape of the retail co-operative movement once confirmed.
Against this background, the Chairman of the United Kingdom Co-operative Council (Lord Graham of Edmonton), the new Chief Executive of the Co-operative Union (Pauline Green
), the Chief Executive of CWS
(Graham Melmoth) and the Chairman of CWS and Chief Executive of Midlands Co-operative Society
(Len Fyfe) sent a letter to the Prime Minister on 14 January 2000. The letter emphasised the Co-operative Movements' community involvement and ethical principles (as laid down by the Rochdale Principles
), and asked for Blair to help the movement develop and modernise to "meet the challenges of the next millennium": the Prime Minister was asked to create and sponsor a Co-operative Commission in the mould of the Gaitskell Commission, and was provided with terms of reference for the proposed group. The Prime Minister responded in a letter confirming that he would be "delighted to help in the establishment of the Commission, and to support your desire for a fundamental review", and that he had appointed John Monks
to chair the Commission.
The Commission was formally announced on 24 February 2000, with its members meeting for the first time on 29 February 2000. Its members comprised:
set for it in the Movement leaders' original letter. These included aims to enable the Co-operative Movement to show that it could survive in the modern marketplace whilst still delivering on its social goals, and for the larger retail societies to help smaller co-operatives in other sectors to grow and thrive. Also included was the importance of ensuring that co-operatives could strongly resist any threat of demutualisation and prevent "the liquidation of assets built up by prior generations of co-operators".
Early in the Commission's history, rumours began to spread that it was in fact a "quasi-government" inquiry into the funding relationship between the Co-operative Movement and the Labour Party
, through individual co-operatives' donations to some Labour and Co-operative Party MPs. Commission member Pauline Green dismissed the suggestion as "nonsense", and the final report has only one recommendation relating to the Co-operative Party: recommendation 47 calls for the Party and the Labour Party to continue to work closely to increase "participation and political activity". The Commission also received criticism from ex-CRS director Barbara Rogers, who accused it of not consulting the Co-operative Union (despite the Union's Chief Executive being one of the commissioners) and of being hijacked by CWS to further its "agenda to mop up surrounding independent societies". Supporters of the CWS' Chief Executive dismissed the claims as "ludicrous".
The Commission's original terms of reference were divided into three key questions:
The Commission worked for six months to try to answer these three questions, receiving submissions from experts and interested parties, and holding regional hearings at the Co-operative Congress
in May 2000 and the October 2000 Labour Party Conference
. They also received a number of collective and individual submissions, and engaged in debate in the pages of Co-operative News. Technical reports and advise were commissioned from independent advisers and consultants, and many co-operative societies also provided the Commission with research and statistics that they had compiled themselves.
Writing in the New Statesman
, John Monks said:
The Commission met formally on nine occasions, and the final three were dedicated to drawing conclusions from all the submissions, debates and findings to decide what changes the Movement would need to make. A series of recommendations was carefully drawn up, with the commissioners being aware that they needed to be "radical, but deliverable" if they were to have any success in the real world. The chair of the Commission maintained hope, writing "In Britain, the co-operative movement is widely seen as dated and out of touch. But the principles it embraces are in tune with modern thinking; the democratisation of communications offered by the internet and other technological developments could yet herald another golden age for co-operation". The final recommendations were published in the Commission's final report.
In writing the report, the Commission had been very mindful of the Gaitskell Commission's report, whose recommendations had been widely ignored despite being "right in nearly everything it recommended". However, this time the Movement proved more willing to put into practice the Commission's recommendations: at the 2005 Co-operative Congress, it was announced that 43 of the 60 recommendations had already been completed, and that a further 14 were "well on their way to being completed". Following the Commission's report, the Co-operative Movement reported a "profound" restructuring of its business, a "large" increase in profitability and a "considerably greater" delivery of social benefit.
Executive agency
An executive agency, also known as a next-step agency, is a part of a government department that is treated as managerially and budgetarily separate in order to carry out some part of the executive functions of the United Kingdom government, Scottish Government, Welsh Assembly or Northern Ireland...
set up by Tony Blair
Tony Blair
Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...
at the request of leaders of the British co-operative movement. Its aim was to review the strategy and structures of the sector, with an aim to suggesting ways to develop and modernise the movement, and its members comprised "business leaders, politicians, trade unionists and co-operators" under the chairmanship of the General Secretary of the TUC
Trades Union Congress
The Trades Union Congress is a national trade union centre, a federation of trade unions in the United Kingdom, representing the majority of trade unions...
. It was the second review of its kind in the entire history of the Co-operative Movement.
The Commission was announced on 24 February 2000, and published its findings in the document the co-operative advantage: Creating a successful family of Co-operative businesses in January 2001.
The Gaitskell Commission
The first Co-operative Commission was the Independent Co-operative Commission set up in 1956, following a resolution by the 1955 Co-operative Congress of the Co-operative Union calling for a Commission to prepare a report and recommendations "designed to secure the greatest possible advantage to the Movement from its manufacturing, wholesale and retail resources". The Commission - which was also known as the Gaitskell Commission after its chair Hugh GaitskellHugh Gaitskell
Hugh Todd Naylor Gaitskell CBE was a British Labour politician, who held Cabinet office in Clement Attlee's governments, and was the Leader of the Labour Party and Leader of the Opposition from 1955, until his death in 1963.-Early life:He was born in Kensington, London, the third and youngest...
- was initially set up to consider co-operative production, but had its mandate broadened to consider co-operative retailing
Retailers' cooperative
A retailers' cooperative is a type of cooperative which employs economies of scale on behalf of its retailer members. Retailers' cooperatives use their purchasing power to acquire discounts from manufacturers and often share marketing expenses. It is common for locally owned grocery stores,...
as well. The membership of the Commission - selected as "suitable persons not engaged in Co-operative management or administration" - was as follows:
- Hugh Gaitskell (Chair)
- Tony CroslandAnthony CroslandCharles Anthony Raven Crosland , otherwise Tony Crosland or C.A.R. Crosland, was a British Labour Party politician and author. He served as Member of Parliament for South Gloucestershire and later for Great Grimsby...
(Secretary) - Miss Margaret Digby
- Professor D T Jack
- Dr J B Jefferys
- Lady Hall
- Colonel S G L Hardie
- Mr. J T Murray
- Alderman F Pette
The Commission was set up in response to the co-operative movement experiencing its first ever halt in its growth, caused by the massive changes in retailing following the end of rationing and the beginning of self-service. The co-operative movement still had a large presence in the retail market, with 30,000 shops, 250 factories and 967 retail societies paying dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
s to their customer members of over £40m a year. However, these payments were often made at the expense of retained capital, and there was growing concern about the movements ability to fund its future development. There was also concern about the movement's market share, with 1957 seeing the co-operative share at 11.62% whilst the new supermarkets - luring customers away with competitive prices the movement's structure wouldn't allow it to match - had a 25% share.
Over nearly three years, the Gaitskell Commission held 35 meetings, carried out visits and launched formal and informal consultations before publishing its final report in 1958. The report made 51 recommendations on a variety of issues, including recommending that society's start selling products at market prices and stop expecting the dividend to compensate for high prices, whilst its final recommendation was that the movement should hold similar reviews "at least once a decade": this went unheeded until the 2000 Commission was established.
Despite being described by the 2000 Commission as "prescient in its analysis, and right in nearly everything it recommended", the report failed to have significant impact for the movement, with most of the recommendations being ignored or brought about by circumstance rather than by free adoption. In its 1967 Regional Plan, the Co-operative Union concluded that "If the serious warnings of the Independent Commission had been heeded, the Movement would be in far better shape to withstand the impact of new problems which have developed". Instead, supermarkets such as Sainsbury's and Marks & Spencer
Marks & Spencer
Marks and Spencer plc is a British retailer headquartered in the City of Westminster, London, with over 700 stores in the United Kingdom and over 300 stores spread across more than 40 countries. It specialises in the selling of clothing and luxury food products...
emerged as serious competitors to the co-operative retail movement.
Establishment
The Co-operative Movement existed under the threat of demutualisationDemutualization
Demutualization is the process by which a customer-owned mutual organization or co-operative changes legal form to a joint stock company. It is sometimes called stocking or privatization. As part of the demutualization process, members of a mutual usually receive a "windfall" payout, in the form...
, whereby a society could be turned into a private company and its assets taken out of the hands of its members and under the control of private shareholders. The Co-operative Wholesale Society Ltd (CWS) was particularly attractive to "demutualisers" because of the size of its assets, turnover and customer base, and in 1997 entrepreneur Andrew Regan
Andrew Regan
Andrew Regan is a British-born polar explorer and entrepreneur. He is the chief executive officer of Corvus Capital, an investment company.-Personal life:...
began making an attempt to demutualise the CWS. He made a bid of £1.2bn for the co-operative, which was rejected by the members but led to two senior CWS executives being dismissed, and ultimately jailed for accepting a bribe for an unrelated transaction via a company that CWS sold to Regan. The bid had the benefit of shining a spotlight on the Movement's weaknesses, and it came to realise that its best long-term defence was to operate successful co-operative businesses: that they must succeed "as [businesses], in terms of [their] performance – and as [Co-operatives], meeting [their] social goals".
Combined with this, the UK's two biggest co-operative societies were in the early stages of merging. Co-operative Retail Services (CRS)
Co-operative Retail Services
Co-operative Retail Services Limited was the second-largest consumer co-operative society in the UK. In 2000, it was dissolved by its members, merging with the larger Co-operative Wholesale Society, to form the Co-operative Group Ltd.- History :In 1933, CWS formed a retail division tasked with...
had been ailing for some time, reporting an operating loss of nearly £60m in 1999, and its board and members recognised the benefits that would come from combining with the CWS - large reductions in operating costs could quickly be achieved by a merger. CRS was originally CWS Retail, formed by CWS in 1934 to open shops in "co-operative deserts" and take over ailing retail societies, eventually becoming a separate entity and taking the CRS name in 1957. Members voted on the merger on 4 March 2000, and it would change the shape of the retail co-operative movement once confirmed.
Against this background, the Chairman of the United Kingdom Co-operative Council (Lord Graham of Edmonton), the new Chief Executive of the Co-operative Union (Pauline Green
Pauline Green
Dame Pauline Green DBE is a former Labour and Co-operative Member of the European Parliament and former Leader of the Parliamentary Group of the Party of European Socialists...
), the Chief Executive of CWS
The Co-operative Group
The Co-operative Group Ltd. is a United Kingdom consumer cooperative with a diverse range of business interests. It is co-operatively run and owned by its members. It is the largest organisation of this type in the world, with over 5.5 million members, who all have a say in how the business is...
(Graham Melmoth) and the Chairman of CWS and Chief Executive of Midlands Co-operative Society
Midlands Co-operative Society
The Midlands Co-operative Society Limited is a regional consumer co-operative in the United Kingdom. It is a registered Industrial and Provident Society, a member of the Co-operative Union Ltd., the Co-operative Retail Trading Group, the Co-operative Travel Trading Group and a corporate member of...
(Len Fyfe) sent a letter to the Prime Minister on 14 January 2000. The letter emphasised the Co-operative Movements' community involvement and ethical principles (as laid down by the Rochdale Principles
Rochdale Principles
The Rochdale Principles are a set of ideals for the operation of cooperatives. They were first set out by the Rochdale Society of Equitable Pioneers in Rochdale, England, in 1844, and have formed the basis for the principles on which co-operatives around the world operate to this day. The...
), and asked for Blair to help the movement develop and modernise to "meet the challenges of the next millennium": the Prime Minister was asked to create and sponsor a Co-operative Commission in the mould of the Gaitskell Commission, and was provided with terms of reference for the proposed group. The Prime Minister responded in a letter confirming that he would be "delighted to help in the establishment of the Commission, and to support your desire for a fundamental review", and that he had appointed John Monks
John Monks
John Stephen Monks, Baron Monks is a member of the House of Lords and was the General Secretary of the Trades Union Congress in the UK from 1993 until 2003, when he became the General Secretary of the European Trade Union Confederation .-Early life:He attended Ducie Technical High School John...
to chair the Commission.
The Commission was formally announced on 24 February 2000, with its members meeting for the first time on 29 February 2000. Its members comprised:
- John MonksJohn MonksJohn Stephen Monks, Baron Monks is a member of the House of Lords and was the General Secretary of the Trades Union Congress in the UK from 1993 until 2003, when he became the General Secretary of the European Trade Union Confederation .-Early life:He attended Ducie Technical High School John...
(Chair) - Alan DonnellyAlan DonnellyAlan Donnelly is a British politician from Jarrow who served as a Labour Member of the European Parliament and leader of the European Parliamentary Labour Party....
(Secretary) - Hazel BlearsHazel BlearsHazel Anne Blears is a British Labour Party politician, who has been the Member of Parliament for Salford and Eccles since 2010 and was previously the MP for Salford since 1997...
MPMember of ParliamentA Member of Parliament is a representative of the voters to a :parliament. In many countries with bicameral parliaments, the term applies specifically to members of the lower house, as upper houses often have a different title, such as senate, and thus also have different titles for its members,... - Lord Simon of HighburyDavid Simon, Baron Simon of HighburyDavid Alec Gwyn Simon, Baron Simon of Highbury CBE is a British businessman.He graduated from the University of Cambridge in 1961 and joined British Petroleum as a management trainee, became chief executive of BP Oil International in 1982, managing director of BP in 1986, chief executive of BP in...
- Lord Fyfe of Fairfield
- Gerard Hill
- Mervyn Pedelty
- David Pitt-WatsonDavid Pitt-WatsonDavid Pitt-Watson is a Scottish business and social entrepreneur and author. He is currently a Senior Advisor to Deloitte Consulting and Hermes Pension Management Limited...
- Bill ConnorBill ConnorWilliam Joseph Connor was a professional football player who spent two seasons in the National Football League with the Boston Bulldogs in 1929 and the Newark Tornadoes in 1930.-Notes:...
- Bob Burlton
- Pauline GreenPauline GreenDame Pauline Green DBE is a former Labour and Co-operative Member of the European Parliament and former Leader of the Parliamentary Group of the Party of European Socialists...
- Alan Middleton
Work
In its first meeting, the Co-operative Commission formally adopted the terms of referenceTerms of reference
Terms of reference describe the purpose and structure of a project, committee, meeting, negotiation, or any similar collection of people who have agreed to work together to accomplish a shared goal. The terms of reference of a project are often referred to as the project charter.- Terms of...
set for it in the Movement leaders' original letter. These included aims to enable the Co-operative Movement to show that it could survive in the modern marketplace whilst still delivering on its social goals, and for the larger retail societies to help smaller co-operatives in other sectors to grow and thrive. Also included was the importance of ensuring that co-operatives could strongly resist any threat of demutualisation and prevent "the liquidation of assets built up by prior generations of co-operators".
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
, through individual co-operatives' donations to some Labour and Co-operative Party MPs. Commission member Pauline Green dismissed the suggestion as "nonsense", and the final report has only one recommendation relating to the Co-operative Party: recommendation 47 calls for the Party and the Labour Party to continue to work closely to increase "participation and political activity". The Commission also received criticism from ex-CRS director Barbara Rogers, who accused it of not consulting the Co-operative Union (despite the Union's Chief Executive being one of the commissioners) and of being hijacked by CWS to further its "agenda to mop up surrounding independent societies". Supporters of the CWS' Chief Executive dismissed the claims as "ludicrous".
The Commission's original terms of reference were divided into three key questions:
- What is the vision of the Co-operative Movement as we enter the new century – in terms of commercial objectives and social goals?
- How close to delivering the vision are we?
- What structures do we need to close the gap between the vision and the reality?
The Commission worked for six months to try to answer these three questions, receiving submissions from experts and interested parties, and holding regional hearings at the Co-operative Congress
Co-operative Congress
The Co-operative Congress is the national conference of the UK Co-operative Movement. The first of the modern congresses took place in 1869 following a series of meetings called the "Owenite Congress" in the 1830s...
in May 2000 and the October 2000 Labour Party Conference
Labour Party (UK) Conference
The Labour Party Conference, or annual national conference of the Labour Party, is formally the supreme decision-making body of the Party.-Conference decisions:...
. They also received a number of collective and individual submissions, and engaged in debate in the pages of Co-operative News. Technical reports and advise were commissioned from independent advisers and consultants, and many co-operative societies also provided the Commission with research and statistics that they had compiled themselves.
Writing in the New Statesman
New Statesman
New Statesman is a British centre-left political and cultural magazine published weekly in London. Founded in 1913, and connected with leading members of the Fabian Society, the magazine reached a circulation peak in the late 1960s....
, John Monks said:
Over the past six months, as chair of the Co-operative Commission, I have been hearing evidence from organisations and individuals with a wide range of views on the direction that the movement should take. My colleagues and I have been impressed by many things: first and foremost, the goodwill towards the co-operative movement that is to be found in many, many places. There is also a willingness to embrace change and an awareness that no change is not an option.
The Commission met formally on nine occasions, and the final three were dedicated to drawing conclusions from all the submissions, debates and findings to decide what changes the Movement would need to make. A series of recommendations was carefully drawn up, with the commissioners being aware that they needed to be "radical, but deliverable" if they were to have any success in the real world. The chair of the Commission maintained hope, writing "In Britain, the co-operative movement is widely seen as dated and out of touch. But the principles it embraces are in tune with modern thinking; the democratisation of communications offered by the internet and other technological developments could yet herald another golden age for co-operation". The final recommendations were published in the Commission's final report.
Final report
The Commission's final report, the co-operative advantage: Creating a successful family of Co-operative businesses was published in January 2001. The report contained sixty recommendations for ways in which the Movement could improve and survive into the new century, covering topics as diverse as the creation of a single brand for the consumer co-operative societies to securing co-operatives' assets for future generations of their members. The report was formally presented to the Movement at the Co-operative Congress in May 2001.In writing the report, the Commission had been very mindful of the Gaitskell Commission's report, whose recommendations had been widely ignored despite being "right in nearly everything it recommended". However, this time the Movement proved more willing to put into practice the Commission's recommendations: at the 2005 Co-operative Congress, it was announced that 43 of the 60 recommendations had already been completed, and that a further 14 were "well on their way to being completed". Following the Commission's report, the Co-operative Movement reported a "profound" restructuring of its business, a "large" increase in profitability and a "considerably greater" delivery of social benefit.