THE CO-OP'S REAL PROBLEM

Tribune column, 29 November 2013

Maybe I’m a naïve libertarian, but I can’t be that bothered whether the Reverend Paul Flowers, the Methodist minister who was chairman of the Co-operative Bank, took illegal drugs and had sex with rent boys.

Not that I think that the Mail on Sunday should have been prevented from exposing him: it’s not good for people who run banks to be off their heads on crystal meth, just as it’s not good for airline pilots to be drunk, and religious leaders who preach against prostitution and hire prostitutes on the side are fair game. Even if it turns out that the Rev Flowers got wasted only at weekends and never met rent boys on Sundays, there is a public interest in the intrusion into his privacy that cannot be reduced to prurience, even before his links with Labour Party high-ups come into the equation …

But that’s as may be: the Rev Flowers’ louche lifestyle isn’t what really matters in the extraordinary story of the Co-op Bank. He wasn’t at the helm when it took the fateful decision to take over the Britannia Building Society in 2009, and he was by no means solely responsible for the bank’s subsequent failed attempt to acquire 631 branches of Lloyds Bank. Although he was obviously not up to the job of chairing the bank’s board – his display of ignorance of its assets in front of the Commons Treasury select committee was breathtaking – he should not be made a scapegoat for systemic failures of which his appointment was a symptom.

And, boy, were there a few of those. The most important factor in the story is the hubris that infected the upper echelons of the Co-operative Group, which owns the Co-op Bank, in the mid-noughties. Thirty years ago, what you might call the official Co-op – the consumer organisation with shops, insurance, banking and funeral services rather than the myriad co-operatively run businesses in industry and agriculture – appeared to be in terminal decline. It was fragmented into regional societies, split between wholesale and retail operations, ludicrously bureaucratic at every level. Its shops were losing trade to the big supermarkets. Its accountability to its members was minimal, its business acumen non-existent.

But in the course of the late 1980s and 1990s, the Co-op got its act together, or so it seemed. Most of the regional societies merged into a national body, and in 2000 the retail and wholesale sides of the national Co-op became one. The Co-op Bank began a successful campaign emphasising that its principles were different from its competitors’. Managers with serious experience were given key positions in the retail and wholesale operations. By the mid-noughties, the Co-op seemed to be in good shape.

Then, however, its bosses got hungry for growth – and that’s where it all started to go horribly wrong. The Co-op expanded aggressively, encouraged by the then Labour government. As well as the Co-op Bank taking over the Britannia Building Society, the group swallowed the ailing supermarket chain Somerfield. Concerns that it was moving too fast and carelessly were given short shrift both by politicians of all parties and by the markets – and in 2010 the Co-op Bank was given the go-ahead by the Tory chancellor, George Osborne, to take over branches of Lloyds, temporarily nationalised to prevent its collapse, to enhance banking competition on the high street.

I’ll come clean: I thought that the Co-op becoming a serious contender in consumer banking and growing as a supermarket was rather a good idea. But I wasn’t in any position to know whether it had the necessary means or whether its actual or potential acquisitions were turkeys. The members of the Co-op Bank board were. They all screwed up.

So is this the end of mutualism, proof that complex stuff like banking has to be left to the experts with no input from the oiks? You’d think so from most of the press, but I demur. The supposed experts got it as wrong in 2007-08 as the amateurs. And the problem with the Co-op is not that it’s too democratic, but that it’s not democratic enough. As in every other large mutual, supposedly member-controlled, organisation, including the trade unions, hardly anyone votes. And one reason for this is that elections are depoliticised: candidates for office never declare their intentions, affiliations or beliefs beyond motherhood and apple pie. The Co-op, like most of the trade unions, is dominated by a Tammany Hall culture of stitch-up and buggin’s turn in which knowing the right people and being part of the right set matters more than competence, integrity or principles.

It’s an old story: the pioneering political sociologist Robert Michels identified the “iron law of oligarchy” more than a century ago in his seminal work, Political Parties. How to break that iron law remains the biggest quandary of radical politics.

SANDBROOK ON THE COLD WAR

I’ve just caught up on the first instalment of Dominic Sandbrook’s BBC TV series Strange Days: Cold War Britain, first aired on Tuesday.

It’s a very mixed bag. There is some good archive footage, not all of which I’d seen – but its tone is almost ridiculously sensationalist, and some of its elisions and simplifications are breathtaking.

I’m not going to give chapter and verse, but it’s really cheap to use the Cambridge spies and the idiotic “Red Dean” of Canterbury, Hewlett Johnson, as exemplars of inter-war left “idealism” about Soviet communism without making it clear that most of the key figures who had enthused about the Soviet Union in the 1930s changed their minds after the Hitler-Stalin pact in 1939. Sandbrook gives the impression that Churchill’s famous “iron curtain” speech in Fulton, Missouri in 1946 somehow determined British government policy – and misses out the role of Ernest Bevin in the creation of Nato. The list of Soviet sympathisers George Orwell handed to Celia Kirwan gets the over-the-top treatment that has now become familiar (please, it was a list of people it would be a bad idea for the Labour government to get to write democratic socialist propaganda, not suggestions for arrest and detention). There’s nothing on Greece, Yugoslavia or Malaya… 

This would have been an excellent topic for a World At War-style documentary – sober, considered, detailed, using film archives for the pictures. Instead, typically for a contemporary TV history documentary, the budget was spent sending the presenter to exotic locations around the world from which he speaks energetically to camera.

For all alternative view, I think more nuanced (but I would say that), buy this book by me and Kevin Davey.

A QUESTION

HONDOOTEDLY MOSSIS THATCHER

I had the privilege, briefly, of editing John Cole, who has just died, at the New Statesman in the 1990s, after he had retired from the BBC and became the paper's main political columnist. He was a very good writer, superbly informed and always a real gent on the phone and in person. He was a Labour soft-leftist too. We need more journos like him today. There's a warm obit by David McKie in the Guardian here.