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					Co-operative Congress 1999, Brighton
President‟s address – by Bob Burlton


Mew Millennium – New Purpose

I      INTRODUCTION

         I have a purpose in standing before you this morning. A purpose that I think is
important; otherwise I would not be here, a purpose that is practical in its ambitions. I am
here to try to do a job of work for our movement. I think it is time for us all to roll up our
sleeves for our movement.
         And what is that job, the task I have set myself. It is a task that is not new, and it is
not unique to me. I know that there are many co-operators who share my views, and are as
anxious as I am for the co-operative movement to set its sights on success and to embrace the
actions and changes that are necessary for us to achieve the successes in the new millennium
that have eluded us these last few decades. I refer here, of course, to the consumer
movement. I realise that some other co-operative sectors have enjoyed success and growth
in recent times, but I shall be concentrating on the consumer movement in this address.
         Part of my purpose, part of my task, is to encourage this Congress assembly to reflect
on our recent history and to admit our failings. Because, unless and until we do, if we
continue to delude ourselves of our true situation, we will not have created the conditions in
which we can start to make plans for improvement and success, for moving the
co-operative model back to its former status of relevance and credibility. Those conditions
now exist and we find ourselves in a position where the world is open to co-operative and
mutual solutions. This is a position, incidentally, that new Labour has created, but is not
clear about how is should be filled. I believe that there is a massive opportunity for us to
seize – to demonstrate again the virtues of mutual and community organisation, in contrast to
the poverty of ideas and lack of human fulfilment that is inherent in the Thatcherite “I‟m all
right, Jack” model of society. Woe betide us if we fail to seize this opportunity; shame on
us, if we fail to use the inheritance passed to us by previous generations of co-operators; if
we do not unite to reverse the currently declining fortunes of our movement, to ensure that
we deliver co-operation to the new millennium and to the next generation of
co-operators in good heart, and vital with ideas.
         And this is my second major task; one that is significantly more difficult than the
first. As an illustrious predecessor – one William Henry Brown – said, in addressing the first
Congress in Wales, in Cardiff in 1900:
         “… I know it is easier to point out a defect than to provide a remedy …”
         It seems to me that the movement has become somewhat defeatist and we have
accepted decline too easily in recent years and, in some quarters, totally unacceptable actions
and performance. To reverse this, and to be able to march forward again, this movement
needs re-motivating, to regain its fighting spirit. In short, to regain its confidence in what it
is about. At this point in our history, as we approach the end of the millennium, I think we
need to rediscover our purpose, one that is faithful to our past, but not slave to it, one that
necessarily is born out of our circumstances of today, but a purpose that has more ambition
and vision that we can have shown this past four decades. Colleagues, we need to stride into
the new millennium with reinvigorated purpose, hence the title of my address: New
Millennium – New Purpose.
II     HISTORY AND PRECEDENTS

        As part of my research for this address, I thought it would be interesting to review
certain historical presidential addresses of significance. So I reviewed two different
categories of address:
    a)      firstly, those of 1899, 1900 and 1901, because I wanted to see the issues that
            occupied the last Congress of the last century 100 years ago, and also to see the
            hopes and dreams with which this century opened;
    b)      I also reviewed all those previous occasions when someone associated with
            societies that are now part of Oxford, Swindon & Gloucester Society was
            President. I though it would be interesting to see what preoccupied those
            presidents. I found the following:


Year      Location          President                                               Delegates
1875      London            Professor Thorold Rogers of Oxford                      114
1886      Plymouth          A H Acland MP                                           406
1893      Bristol           George Hawkins, President of Oxford Society             700
                            Joseph Clay, Gloucester Society
1902      Exeter            George Hawkins                                          1000
1927      Cheltenham        J T Jackson, General Manager of Gloucester Society      1734

         I also reviewed Alan Middleton‟s address of last year and saw again the clarity and
courage that shone through it. I hope to carry forward the debate that was sparked by Alan‟s
address last year.
         And what did I learn from all these researches? I found, perhaps surprisingly, some
interesting parallels between issues of concern 100 years ago and today. For example,
A H Acland in 1886 argues passionately in favour of the provision of education in
co-operation for members. George Hawkins, in 1893, drew attention to our poor market
share in London and counselled societies against paying dividends that the societies could
not afford. Joseph Clay of Gloucester was heckled and challenged in 1893 – I hope that fate
is not in store for me. One hundred years ago this month in Liverpool, Frank Hordern
presented two sides of an issue that has become contemporary again. That issue is the issue
of the Co-op‟s participation in politics. In a speech that could have been made at one of the
„Choices‟ sessions at this Congress, he said:

       “Another question I would like again to bring before your notice ... is the growing
       necessity for our taking a deeper interest, and some share in the representation on
       the various public bodies in the country from the House of Commons downwards … .
       Since our Government is of the most democratic character all the way through … to
       my mind there is the strongest reason why we should take our part and our share in
       the government of the country, and make our principles felt and known from the floor
       of the House of Commons and through every municipality and council. I know I am
       treading on tender ground, but it is only right that I should try to put the matter
       clearly before you at this Congress. There seems to be a feeling whenever this
       question is introduced that it is a question of politics, of party politics. We have no
       politics, at least , no party politics; and yet our principles are the grandest in the
       catalogue of political economy … . As co-operators, we ought to take our share of
       every form of government in the country, not as Conservatives or Liberals, but as
       men – aye, and women, too ,,, , May I ask you to discuss it on its broadest lines … ?
Mr J Warwick was President at Middlesborough in1901. I do not know if he was a
mathematician, like me, but one thing we would have agreed on is that we have all got this
millennium thing wrong. Next year is the last of the century, not this year.
        Speaking at that Congress, he said:
        … It is also the first British Co-operative Congress held in the twentieth century ….”
        My predecessor of 1927, Mr J T Jackson of Gloucester, obviously shared some of the
concerns I have expressed already of our need for changes that are both radical and urgent.
He said:
        “… Slogans will not carry us very far, yet they have their uses, and if we need a
slogan, we can find one in the words: Modernise Business Methods Now! Lost time, to
whatever cause it may be due, is the worst of all business handicaps; and a business, like a
runner who loses a second at the start of the race, is often fatally penalised by it, and must at
the best make a special effort to avoid defeat.”
        He went on:
        “…I think the time has come when we should overhaul the whole of our business
organisation, from the centre to the circumference, and discard every method, every system,
and every regulation that is out of date… .”
        How appropriate for us; what better time than this, the turn of a century, the change
of a millennium – I‟m not going to quibble about dates. Let us not wait, let us seize this
opportunity and use it, let us embrace the theme of this address: New Millennium – New
Purpose.
        And why do I think that this theme is so important? I said earlier that I found
significant parallels in the presidential addresses of 100 years ago and mine today. But, there
are also important, no crucial, differences and the answer lies in the differences that I found.
        My predecessor of 100 years ago presented a report to the Congress of 1899 that
included a review of the movement‟s performance over the preceding decade; from 1888 to
1998. He was able to speak with pride of the movement‟s performance and growth over that
decade and look forward with confidence to continuing growth in the years ahead. I can do
neither, but I do think that the outlook for the movement is brighter than it was a year ago
and I will explain why. First, the figures for 100 years ago, at 1989 prices:

Late 19th Century Co-operative Trends
                                                                             +/-
                                              1888            1898           %

       Societies                              1,367           1,458            +7
       Members (000s)                           904           1,535          + 70
       Share Capital (£m)                       571           1,146          +101
       Turnover (£m)                          1,582           2,735          + 73
       Net Surplus (£m)                         207             427          +106
       Net Surplus (%)                         13.1            15.6           +19

        As you can see, our movement enjoyed strong growth in every way in the last decade
of the last century. Membership increased by 70% and share capital by 101%. Trading
enjoyed strong growth also, with turnover increasing by 73% and net surplus by 106%. The
rate of net surplus in 1898 was 15.6% expressed as a percentage of turnover.
        Contrast that with our movement‟s performance over this last decade in this century,
again with all money values at 1998 prices.
Late 20th Century Co-operative Trends
                                                                              +/-
                                              1988            1998            %

        Societies                                 85              48          - 44
        Members (000s)                        8,165           9,486           + 16
        Share Capital (£m)                      252             308           + 22
        Turnover (£m)                         8,792           8,366            - 5
        Net Surplus (£m)                        133               78          - 42
        Net Surplus (%)                          1.5             0.9          - 40

        We can see at a glance that our trade has declined in current money terms by 5% at a
time of considerable growth in consumer expenditure. We should all be greatly concerned at
the decline in profitability, down in money by 42% and as a rate of turnover by 40%. These
are serious and sobering statistics and provide a quite different backcloth to my review of our
movement at the turn of this century compared with the backcloth for my predecessor 100
years ago.
        Further review of how the fortunes of our movement have changed during this
century shows some interesting trends:


        To borrow a phrase from the world of football, it has been a century of two halves,
with considerable growth and prosperity in the first half, only for our fortunes to show
significant and serious decline in the second half, the post war period, to our current position.
        Whilst turnover has declined to about 90% of its 1948 level, both profits and share
capital have fallen to around 10% of the levels that pertained in 1948. Our turnover peaked
in 1958. If we had maintained that volume, our turnover now would be £13 billion. If we
had maintained our market share, our turnover should be around £25 billion.

V       THE FUTURE: NEW MILLENNIUM – NEW PURPOSE

Congress, I said at the outset that I had set myself two main tasks. I have done all that I can
to present you with the evidence to convince you that we must change. This end of
millennium Congress is a major crossroads in the history of the movement. Our journey to
this crossroads in recent years has been difficult and damaging, and has involved significant
decline. If we do not commit ourselves to embrace major changes, we will simply go across
the crossroads – we will have picked a dirt track on the road to further decline and
irrelevance.
        Instead, and for a better future, I think that we need to focus on changes in three main
areas:

    -      Performance
    -      Structures
    -      Purpose.

        But, these are not separate areas; they actually all interrelate with each other. Let me
outline each of these areas and then develop them in more detail.
        We need to improve the performance of our movement, because it is simply not good
enough. We make less than a third of the trading profit that we should, there are several
loss-making societies, when no society should be loss making, we are losing market share
and shrinking rather than growing. These things matter in terms of our ideals as well as
commercially. Impoverished, or worse, loss-making businesses think they cannot afford
ideals, so they are most unlikely to be good advertisements for co-operation. A shrinking
co-operative trading movement is not the ideal base for making much impression on policy
makers, which is the nub of our problem with the leadership of New Labour. And, I remind
us all again of the opportunity that exists, at this time, for co-operation to contribute to key
areas in the government‟s policy agenda, including promoting active citizenship, developing
wealth creation and countering social exclusion.
        We need to review and challenge our structures, both trading and non-trading. In
doing so, we need to be prepared to go back to first principles and ask – why do we do this?
What purpose does this serve? And there has to be a better answer than “because we always
have”. Structures that lack clear purpose and focus, confuse us, and possibly worse, people
who have to deal with us.
        But we would be most unwise to attempt to make radical changes to our performance
and structures without being really clear about our purpose. There would be too much risk
of throwing away some currently undervalued, but nevertheless essential aspect of
co-operation. We need to remind ourselves as to what those essential aspects of being a co-
operative are, which includes and should never exclude, meeting the members‟ needs. In
any event, I think that the root cause of our decline over the last 40 years has been a loss of
purpose. In too many societies, there is a lack of genuine belief in, and commitment to the
cause and relevance of co-operation. If we do not address this fundamental, we will be
attempting a major refurbishment of our house, above ground, without attending to the
crumbling foundations, below ground. If we think of ourselves simply as a number of
independent regional retailers, with only loose federal ties, we will not be, we cannot be a
successful co-operative movement. If we do not value our heritage, particularly our
co-operative values and principles, and seek to use them to guide our future strategies, we
stand every change of wasting one of our greatest assets, the trust that the public places in the
Co-op, which many competitors would pay their eye teeth for, and of us ending up with
businesses which may or may not be successful, but will not look like and will not act like
co-operatives. Surely, CWS is right in stating that it wishes to be a successful co-operative
business and in meaning each of those words.

Performance

Let me address the issue of performance first and in doing so, I cannot help but refer again to
CRS, the largest non-federal society in our movement. The announcements that have been
made in the past few weeks are of enormous and positive importance and are of interest to us
all. Why is this?
         They are of importance first to CRS, because they will transform its performance and
make a major contribution to its turnaround. As I have already, I am sure that we all wish
Andy Meehan and his colleagues well in this task, and we will all give every assistance that
we can. But, because CRS is a leading member of our movement, its fortunes are our
fortunes. The problems of CRS cast a shadow over the whole movement. The trading loss
that it reported recently accounts for more than one half of the whole movement‟s shortfall in
trading profits of £200 million that we saw earlier. As the results of CRS improve in the
future, so will the results of the movement as a whole.
         But the decisions that have been announced, particularly the decision to join CRTG,
have an even greater importance. The fact that CRS and CWS and other societies will be
co-operating with each other should lead to substantial benefits in buying terms, in marketing
our food business, in distribution in due course and of course in the development of Co-op
Brand. We will all benefit from this, which is why I think that the Co-op landscape has been
transformed, and why we can be more optimistic than for some years past.
         I look forward, also, to more developments in CRTG. Some recent initiatives – like
the extension of centralised buying into important areas of fresh foods – are too recent to
have produced the benefits that will come in the future. There is scope also for CRTG to
apply the principles that have worked so successfully with merchandise, to equipment
procurement, especially in such expensive areas as IT, refrigeration and shop fittings.
         CRTG has been one of the most important Co-op developments for decades and has
shown beyond doubt the advantages that can accrue from co-ops working together. In doing
so, it has demonstrated clearly benefits flowing from the application of our value of
solidarity and the sixth Co-operative Principle of co-operation among co-operatives. There
have been some successes in other trading sectors, for example Co-op Travel Limited. We
need to try to extend such examples as much as possible, and I hope that we are all of a mind
to work together, wherever there are opportunities.
         Friends, this applies to us all. Each and every society needs to recognise the
importance of improving performance. The summary of society results that is contained in
the Statistics Review that the Union has published, shows clearly that the results of a number
of societies are indifferent at best, and the results of a number are unacceptable and
unsustainable.

Structures
        If we are to prepare our movement for the next millennium, if we are to accomplish
the radical changes that are necessary, we have no choice but to review and challenge many
of the structures that currently apply in our movement – “from the centre to the
circumference”. It is almost impossible to explain to non co-op people how the movement
fits together. We are swamped with committee structures that have a past, but a doubtful
relevance for today.
        This situation involves both trading and non-trading structures, but with more
emphasis on the latter. Inevitable, this involves and brings focus on the movement‟s non-
trading federal, the Co-operative Union. I said much earlier in this address that the current
Central Executive recognises its responsibility to be in the vanguard of change in our
movement. Notwithstanding the fact that the structural changes that Congress approved only
two years ago have not fully matured yet, the Executive has accepted the need to consider
further significant changes. It has established a sub-committee for this purpose and its work
will be progressed over the next few months, in which we will be challenging from first
principles the Union‟s role and its relationship with its member-societies.
        Any substantial review of the movement‟s structures and those of the Union must
take note of and address the current and future context in which they are placed. For
example, in the UK there are emerging issues surrounding the areas of devolution,
regionalisation and multi co-operative sector co-operation. In view of all these
developments, what changes in our structures are appropriate? How should those societies
operating in Scotland respond to the creation of the Scottish Parliament and the changes that
will flow from that? What is the best way for us to contribute to and take advantage of the
new Regional Development Agencies. One thing is for sure, we will not get much by
standing on the sidelines and watching the world go by.
        A start has been made with the formulation of regional co-operative councils. But
the message that they have brought back from this new world of regional government is that,
so far, we have done too little, too late. There are no seats at the table waiting for us. We
will have to earn them by showing that we have a relevance to the needs of tomorrow, not
yesterday, and that we are more interested in that which draws us together, rather than
spurious differences that pull us apart. However, I need to express a word of caution here,
which is, that we need to modernise and replace outdated structures, rather than just adding
the new structures that we do need, to those that exist today.
         Such work calls for new thinking. When my own Society introduced a policy of
donating one per cent of its profits to the creation, development and promotion of other
co-operative enterprises, we were overwhelmed by the impact. It completely rewrote our
relationship with local government and policy formers. By putting our money where our
mouth was, people start listening to us and taking note of us. When we had something
relevant to say, the seats were at the table for us to be heard, with a voice that spoke of
tomorrow, not yesterday. We have learned something valuable about, and for, ourselves
along the way, which is that by working alongside credit unions, worker co-ops, housing
co-ops, LETS schemes and other forms of co-ops, we not only have a greater relevance to
the outside world, we unlock a greater relevance inside ourselves.
         We must also be mindful of international developments. Through information
technology and travel, the world is getting smaller. Organisations need to be more
international in their outlook, and certainly those in Europe. We have much to contribute to
the international world of co-operation for example the work that the College is leading at
present in governance with Russian co-ops, and in the current initiative with the Department
for International Development on the co-operative contribution to solving third world
development problems. It would be folly for us to retreat from international scene at this
point.
         The Co-operative Union is engaged in change and that embraces this meeting,
Congress. Many co-operators and many societies see no value in Congress at all and regard
it as a necessary chore, part of their role. I admit that some recent Congresses have had little
content of substance. The Central Executive has decided to do something about it, to try to
make Congress a meaningful and worthwhile event again. Some changes were introduced
last year and there are more this year.

Purpose
        Colleagues, the second task that I set myself is no less than to try to suggest ways of
waking the sleeping giant. I can see very clearly ways in which our co-operative societies
can become more effective retailers, and I really do think that some steps have been set in
motion for this to happen. Also, I can see very clearly some changes in movement structures
that would make us better equipped for the new millennium. What concerns me more and
where I am less certain of progress, is for the Co-op to regain the heart and soul that it had
when it was enjoying its greatest successes.
In those days, the Co-op had purpose; it needs purpose again. That purpose needs to be more
inspiring and to provide more motivation than the objective of surviving for another year that
seems to be the motivation for some societies today.
        We need to develop a clear sense of purpose for important positive reasons. At a
time when the Co-op is a target for predators, we also need to clear sense of purpose for
important defensive reasons. Organisations that have lost their sense of purpose are more
vulnerable to attacks from predators that those that use their understanding of their purpose
as a motivator, and in promoting strong performance.
        Yet there is no point in harking back to the days of our former successes and wishing
for those days to return again. They will not. The economic and social conditions of today
are fundamentally different to those of the first century of the Co-op‟s existence. In those
days, we were the first and best food retail multiple. Today, the consumer is blessed with a
range of first class multiple retailers that are scrambling for his or her custom. Today‟s
leading food retailers are all consumer conscious, because they know that is good business.
No adulterated food from them. Individually and collectively, they are bigger and stronger
than we are. Is it any wonder that they have more influence with New Labour?
        So our new sense of purpose must be contemporary and forward looking, not
retrospective. It must be relevant and inspiring, not small time and low key. To be
contemporary, it needs to recognise the realities of today‟s societies. These show little
similarity to those that led the co-operative movement into this century. Crucially, they are
significantly larger and that has important consequences for the major stakeholders in
today‟s consumer co-ops.

Co-operative Society Major Stakeholders


                                           Customers
                     The
                                                                  Members
                 Co-operative
                  Movement
                                             The
                                           Consumer
                                            Co-op
                  Community                                        Staff



                                 Funders              Suppliers



        In order to explain my point, I want to develop briefly the concept of multiple, major
stakeholders. In doing so, I wish to acknowledge and pay tribute to the work of The
Co-operative Bank and the College, in the development of this model and its application to
co-operatives. Put simply, this model says that these are the main groups who are involved
in, or who are affected by, our business.
        Today‟s consumer co-op has customers, some of whom are members. A co-operative
exists to serve the needs of its members. That implies that we should be working towards
encouraging the largest possible proportion of our regular customers to become members.
This is not rocket science, and it is not new, and I highlight, particularly, the Lincoln
Society‟s recent positive experiences in this area. They seem to have come to no harm. My
own Society launches an initiative on Tuesday which has an objective of persuading large
numbers of our customers to become members.
Surely, the customer who identifies himself/herself as a part owner of their shop, which
exists for their benefit, and not the benefit of the City, is more likely to be loyal to their shop.
So we have the opportunity to develop a customer loyalty that none of our competitors can
rival. The central question is how we can use our co-operative identity to unlock value in
our customers that our competitors cannot. We need to forge a new relationship with our
customers based on reaching out to deal with them in a way that inspires them to share their
ideas with us and to participate in the society.
         Let us consider briefly the position of our staff. They certainly have an interest in the
society and are affected by it. If anyone needs any persuasion of this, we need to do no more
than think of who pays when societies fail. Those who pay most are those who do so with
their jobs and livelihoods.
         The wider co-operative movement is affected by what happens in each society. The
Millom experience is all I need to say. Perhaps what this points to, to try to answer a
question that I posed earlier, is that the Union should have the right to appoint a
representative to attend the Board meetings of societies with a trading loss, or with a net loss
for two consecutive years.
         A new purpose will necessarily recognise the interests of these principal stakeholders
and will seek to achieve appropriate balances between them. I want to outline an idea that
has developed in my mind as I have been mulling over a number of apparently unrelated
problems. You could say that I have had a number of balls in the air. Let me describe some
of them. Before I do, however, I need to emphasise that what follows are my own, personal
thoughts. Specifically, they are not the policy of the Oxford, Swindon & Gloucester Society
and have not been discussed with its Board.
         Anyway, back to these balls in the air. First, there are some issues to do with how
co-operatives are actually working at present. We still have a number of governance issues
to concern us. Democratic participation is not as healthy as it should be in some societies,
and we are more familiar than we would like to be with the consequences and costs of
governance failures. Low levels of member participation are a concern even in those
societies that work hard to encourage it. In the face of this apparent lack of interest in
co-operative democracy, what can be done to increase the commitment of societies,
especially the commitment in practice, to co-operation? In other words, what can be done to
make us a more cohesive movement, with societies bound together more closely?
         I move on to a range of issues concerning our employees. As far as I am concerned,
it is an article of faith that our employees should recognise and enjoy a positive difference in
working for a co-operative rather than a plc. If not, how do we try to persuade our
employees that co-operation is a superior form of social organisation? Our thin profit
margins constrain our ability to pay top wages or provide superior benefits. Is there a better
solution to the question of employees‟ involvement as members in our democracy, which is
currently limited by the Registry? Are there ways of resolving the tensions that can exist in
some societies between groups of lay members and employee groupings? If we aspire to
provide superior service to our members as a form of co-operative difference, how do we
motivate our employees to achieve this? Should not all of our employees enjoy a share in
our success, but how can that be meaningful? What lessons can we learn from the John
Lewis Partnership, which is a form of employees‟ co-operative and which generates
enormous loyalty and commitment from its staff? What advantage could we achieve if we
could realise that kind of added value from our staff, like John Lewis does, and combine it
with the added value of customers who are loyal to their co-op because they part own it?
         Next, there are a number of issues to do with the future funding of societies. I have
been involved in discussions with HM Treasury about the Co-operative Deposit Protection
Scheme. This enables societies to take loan capital deposits from members of the public, but
it expires next March and we now know that it will not continue after that date. Also, new
regulations flowing from the government‟s review of financial services and the setting up of
the Financial Services Authority are likely to impose new requirements on us regarding share
capital. The Treasury published a consultation document on this just a week ago. The
overall effect of all these changes is likely to be the loss to co-operative societies of some
sources of their current funding.
        Finally, I was reflecting on a number of government policy and legislative factors
that provide the backcloth against which any new initiative would have to be judged. This
included the ending of the tax beneficial Profit Related Pay schemes that some societies have
been using. We should be aware of the growth in recent years in employee share ownership
plans. Also, the clear signals that the government has posted about its commitment to
policies that support the idea of employee involvement in the business of their employer,
including having a stake in the business. Now that‟s a co-operative idea, isn‟t it? This last
point was most clearly expressed in Gordon Brown‟s last Budget speech when he announced
the government‟s intention to introduce as soon as possible a tax beneficial system for
businesses to provide employees with shares in the business. That set me thinking whether
this was an opportunity that could be of benefit to co-ops and their employees.
        So, I had all of these balls in the air and the question was – is there a way of pulling
them out of the air in some way that makes sense and solves some, if not most, or all of the
problems that I have just highlighted? I have to say that I think that there could be such a
solution, which could be very attractive to some societies.
        The main elements of this solution are as follows:
    1. We accept the validity of the multi-stakeholder concept of today‟s co-operative
        societies.
    2. Next, we accept that the traditional model of staff as members, with their
        participation in the society‟s governance achieved through membership, is often quite
        unsatisfactory. Typical problems that have occurred are:
              Either weak and ineffective participation, or
              Control of the society by a management group, or
              Tensions with lay members who are suspicious of staff involvement.
    3. So, we provide for separate representation of staff on the society‟s Board. For
        example, the current maximum limits of staff on the Board, which is usually about
        one third, could be converted to an entitlement. The staff and consumer members
        would be elected to the Board from separate constituencies.
    4. Clearly, it would be necessary for new objectives for the society to be confirmed, but
        it is important that they are clear on the balance of the interests of the employees and
        consumers. The CWS experience shows that it is perfectly possible for a Board
        comprising people drawn from different interest groups to operate effectively and
        harmoniously.
    5. The precise arrangements for the operation of the staff and member constituencies,
        including electoral arrangements and participation in lower committees, may vary
        from society to society, as they do now.
    6. I wish to make it clear that this model of co-operation implies no dilution whatsoever
        in the importance of converting customers to members and then encouraging member
        participation. Everything that I said about the benefits of that stands intact.

       So what advantages do I see from this suggestion and what problems are likely to be
       raised? Taking the latter point first, I know that some co-operators here will recall
       bad experiences that there have been with employee participation in co-operative
       democracy.
         I am talking about the importance of recognising employees as distinct, but
different, stakeholders in the society, whose stake (their job and livelihood) is much
greater than members, and certainly greater than the stake of lay leaders as
individuals. If we believe in co-operation, are we not obliged to provide for the
employees of large consumer co-ops to participate co-operatively in their employer?
         I consider that this model offers a number of distinct advantages:
     It confronts and overcomes the ambiguity about the role of employees in the
         society;
     It provides a valid, contemporary purpose for some societies;
     It should provide a powerful motivator to employees to contribute to
         improved service to members and improved performance by the society.
    With regard to this last point, I see another possibility that I am confident would
increase significantly the prospects of securing this enhanced motivation. It flows
from current government policy, especially its plans to encourage the growth of
employee share ownership schemes. The Main steps involved in this possibility are:
    1. The society establishes an incentive scheme for all staff, along the lines of
         allocating some of its profit to provide employees with shares in the society.
         Employees would be required to hold the shares for three years in order to
         receive that value of shares tax free. Interest payable on the shares would be
         tax free. The society would be relieved of National Insurance on the value of
         shares provided.
         So there could be a scheme that could replace Profit Related Pay schemes in a
         number of societies. Such a scheme is perfectly feasible, based on initial
         discussions that the Union has had already with the Treasury.
    2. Because employees would be required to hold their share capital for three
         years to gain the full tax benefits, this scheme has the effect of providing
         societies with a source of capital, which could be of benefit in the post-CDPS
         scenario, when loan capital is withdrawn and share capital, as we know it
         today, could be reduced.
    3. It increases employee membership of the society, which is an objective that
         we all surely have, and would definitely have in the model I have outlined of
         distinct employee participation in the society‟s Board.
    I struggle to see how we could fail to achieve those win-win benefits that would
flow from incentivised staff, motivated by a sense of ownership, and with a
reinvigorated consumer membership participating in a society that is responsive to
their interests and needs.
    The next question for us to address is how such a co-operative should be viewed
by the Movement? My own judgment is that we should welcome it. Surely, better a
hybrid co-operative that actually works like a co-op and shows that it is, than a retail
business that struggles with operating as a co-operative should.
    Friends, it is now time for me to conclude this address and for the rest of
Congress to commence. I hope I have provided some encouragement for us all to
participate in and gain from this Congress.
    I set myself two main tasks at the start of my address. I hope that I have
persuaded you all of the need for us to embrace change, if we are to reverse the
apparently remorseless decline in our movement for most of the last forty years. If
you are not convinced now, I honestly do not know what other evidence would
persuade you.
    I hope, also that I have provided some interesting, useful suggestions as to what
form those changes need to be. They need to be substantial, “from the centre to the
circumference”. They need to be urgent; we cannot afford to lose any more time –
already, we will have to work twice as hard to make up for all that has been lost in
recent years.
    The time has surely come for us all to roll up our sleeves to change our
movement. The time has surely come for new thinking to give us new energy and a
fresh identity, but more than anything else, to take us into the new millennium, we
need a new purpose!

				
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