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Phone Co-op bows out, not with a bang but a whimper 1 May 2018

Posted by cooperatoby in cooperative, Social enterprise.
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“And so we had to destroy the co-op in order to save it” was what came to mind after the special general meeting of the Phone Co-op in Sheffield last Saturday.

Ben Reid, Midcounties CEO, addresses the Phone Co-op SGM

It was a remarkably unanimous act of collective suicide, with no fewer than 202 of the 223 votes cast in favour of the merger with Midcounties. It was a good result, but a sad one. The Phone Co-op has grown and excelled for 20 years, but now finds itself out of its depth.
The debate did not start well, with the first intervention being an all-too-minutely detailed account of billing problems at Co-operative Energy 3 years ago – until the speaker was shouted down by members impatient to get to the nitty gritty. But the nitty gritty never really came. I had been secretly spoiling for a showdown, a revelation of the folly of the outgoing board and interim CEO. But the crunch never really came, thanks to the sure-footed leadership of the new chair, Jane Watts (the old chair was detained for family reasons).
The meeting quite rightly asked for the results of the vote on the merger motion to be announced before the second vote was taken, and the 92% majority surprised me (and cost me a pint in a side-bet). I began to feel a little out of control, as if forces beyond my ken had been orchestrating this all along. We had not really got to the bottom of why and how our strategy had gone wrong, or even if it had. Maybe it was meant to be this way.
I regretted the absence of constitutional stickler Richard Bickle – but his expertise was not needed, since the meeting was a procedural marvel, with neatly numbered and perforated voting slips (and even a spare in case of an unexpected ballot) all superintended by Emma Laycock of Co-ops UK, who is standing in as interim society secretary.

A bit more clarity on the growth strategy

The second vote, to approve the growth strategy, was paradoxical. New CEO Nick Thompson said that the board had presented it again because it was “judicious and considered” and hadn’t been properly explained at the AGM in February. But what we got was the same strategy we had criticised first time round – and with very little elaboration. We had none of the risk analysis that Simon Blackley’s motion had called for, and if anything fewer figures. According to Nick Thompson, the investment, which will lead to a £700,000 loss this year, is covered by guaranteed contractual revenues, and to succeed we only have to reach 486 of the 53,000 target business customers. The ‘green shoots’ are already showing. As for risks related to the merger, it seems probable that those brought out in debate – drop in member involvement, less personal service, staff terms and conditions – have been addressed in the heads of agreement between the two co-operatives.
The good point about discussing the strategy again is that it is forward-looking. It balanced the agenda and put the merger into context. Otherwise we might have felt we were at a burial service. It can be argued that Midcounties will find it a helpful starting point, but it can also be said that it was precisely this strategy that precipitated the co-op into the loss of its independence. Ultimately the debate was futile since the board of Midcounties will have to take its own view on what path to take.

Hobson’s choice – but a good choice

The merger is something of a Hobson’s choice. If we did not merge, what would have happened? Probably we would have struggled on for a few more years before running out of cash and merging anyway – if Midcounties wanted us by that stage. So we voted it through, albeit with a significant dissenting minority – the tally was 136 in favour but with 50 against (73%).
Anyway the members followed the board’s advice, as helpfully set out in a letter mailed out just beforehand. The growth strategy has a much higher chance of success given the potential to cross-sell telecoms services to energy customers and vice versa. As for governance, Midcounties plans to enlarge its current Energy Panel into a Utilities Panel, on which two ex-Phone Co-op board members will sit – presumably two of the more recently elected ones. And of course by a supreme irony Vivian Woodell, the Phone Co-op’s founder, is a vice-president of Midcounties.
All that remains is a confirmatory vote, on a simple majority, to take place after the Midcounties AGM in Droitwich on 12th May. And that will presumably be a shoo-in.
The result is a good one for staff, for customers, and for the co-operative movement as a whole. Ultimately, we did what we had to do efficiently and with little drama – and it was precisely this lack of drama that left me with a sense of anticlimax.

For a more balanced report of the SGM see Miles Hadfield’s article in Co-op News.

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Comments»

1. Peter Schneider - 2 May 2018

“And so we had to destroy the co-op in order to save it” …. yes, hard but true….
but under thoes existing circumstances the best solution I think.
I had a little tears in my eyes at the end oft the SGM, but I hope the merger will help to resolve the Problems and give TPC the chance to survive.
The discussion left many questions open, but like you said, with only a “little drama” the involved persons could save her face…….
wistful
Peter Schneider


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