The Good Funeral Guide Blog

Will The Co-operative Group throw Funeralcare to the wolves?

Sunday, 10 November 2013

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On 2 July this year the Co-operative Group’s executive team visited Rochdale. The chief exec, Euan Sutherland, tweeted: “Spent the day at Rochdale Pioneers Museum with the Exec immersing ourselves in Co-operative heritage. Fantastic, inspirational, relevant”.

All very heartening if you’re one of those who inclines to the view that capitalism is essentially sociopathic, and that therein lie the seeds of its destruction. 

Disillusionment with capitalism does not in itself boost the credentials of co-operation. The history of consumer co-operatives is not especially glorious. They tend to start well then lose their way, demutualise, play copy-fatcat.

The history of worker co-operatives shines more brightly — as John Lewis and Waitrose testify.

Ethical values in themselves are no determinants of commercial fertility. The history of ethical values demonstrates that, actually, they are best exemplified by those people who renounce material things. Had Gandhi been driven everywhere in a Rolls Royce and dressed in a Prada suit, the story of Indian independence would read otherwise.

For this reason, the words ‘ethical business’, attractive as they are, have something of the flavour of an oxymoron.

But this is what The Co-operative Group claims to be, ethical, never more stridently than in recent weeks from amidst the twisted wreckage of its wretched bank. It is now 70 per cent owned by its creditors, including a bunch of American hedge funds. Rather than die of shame it instead proclaims new life: “By continuing to have regard for the highest standards of ethical principles we are more committed than ever to ensuring the Co-operative Bank remains just as special for years to come.”

Ethical schmethical. The bank has lost the title to call itself a co-operative in the sense of a jointly owned and democratically controlled enterprise. To call itself co-operative is now patently misleading and is rightly being legally challenged.

Where did it all go wrong for The Co-operative Group (as opposed to co-operative values)? The Daily Telegraph reports ceo Euan Sutherland conceding with refreshing honesty that “the organisation has lost it way, and, referencing the founding Rochdale Pioneers, that its recent controversial history was not what the organisation was set up for.” You can easily see the shades of the Pioneers nodding in sorrowful assent.

Whether or not, fuelled by the Rochdale Principles, The Co-op can in the future succeed in its core mission of enabling working people to buy those things that they would otherwise be unable to afford we shall have to wait and see. We simply note that, at a time when there is increasing anxiety about funeral poverty, Co-operative Funeralcare has offered no lead and generated no initiatives. Nothing.

The Pioneers surely would have.

Having said all of which, it may already be too late to lose any more sleep over the way Funeralcare has fallen short of — betrayed, some would say — its ethical values. Because it’s beginning to look as if, in order to bring the Group back into profitability, The Co-operative Group may be about to shed its funerals operation and throw it to the capitalists. The same Telegraph article tells us:

Mr Sutherland, who took control of the mutual from May 1, said that in order to reduce the current £1.3bn bank debt, it must look to productivity, efficiency, and selling some of its assets. Divisions which will not be sold include its food retail business and its pharmacy business, it is understood. Non-core arms are thought to include the funeral business and its security business, but Mr Sutherland would not comment further.

Given the deep loathing with which the top chaps at Funeralcare regard the GFG (good morning, Mr Tinning), we can forgive you for supposing that we’d celebrate this with a day at the races. But we emphatically wouldn’t. First, our politics here are pink. Second, we’d deplore the impact of this on the many excellent people in Funeralcare, especially on the shop floor (not the management). When Sutherland talks of productivity and efficiency, he’s using the language of the time and motion man. We can only imagine the effect that ‘efficiencies’ are having on good men and women right now.

Third, we regard the funerals business as pre-eminently suited to a social enterprise business model. We’d like to see Funeralcare given another chance to get it right and be what it says on its tin.

The Sunday Times has been told by Sutherland that “every private equity group in Europe” wants to buy Funeralcare, but that he is not minded to sell.

Time will tell. The man needs to find £500 million fast. If he’s minded to sell, let him talk to an excellent worker’s co-operative that we’ve long thought would make a very good fist of it. Tune in, please, John Lewis. 

12 comments on “Will The Co-operative Group throw Funeralcare to the wolves?

  1. andrew plume

    Tuesday 12th November 2013 at 6:33 pm

    …………….and here’s the link to the current F’care “Ethical Strategy’ brochure:

    http://www.co-operative.coop/Funeralcare/PDFs/012405_Ethical_Strategy_Brochure_AW_Co-op_PDF.pdf

    mighty fine stuff, yes, – of course, I’m fully in favour of the ‘objects’ mentioned

    but when ones profits are garnetum, then these ‘aims and goals’ can clearly be achieved

    what I want to see is cheaper funerals, at the coal face, pse?

    andrew

  2. andrew plume

    Tuesday 12th November 2013 at 6:25 pm

    Would I wish to see the Co-op Group sell Funeralcare? Yes, unreservedly, absolutely no question at all. My main concern is quite simple. With the price expected, it will take an enormous amount of ‘vulture capital finance’. If this meant that the already excessively large bill to your average punter for instructing F’care significantly increases, then I would be very uncomfortable. Charles has quite rightly flagged the issue of “funeral poverty”. F’care have done absolutely nil to address this issue, they have instead constantly driven up their prices and then there is their policy of ‘credit checking’ new clients, which undoutedly makes them feel comfortable (sic). Many independent firms are doing a great deal for the cause and keeping their prices as low as is possible. The prospect of ‘the Hedgies’ putting the Group into administration cannot be ruled out. If this happens, then said vulture capital funds may be able to pick F’care up cheaper (and hopefully drive down costs)

    Followers of this blog will recall that I have been fairly keen to take a pop at F’care in the past. Said ‘pops’ are not connected to the loyal troops on the ground but those at Co-op Towers and all of the completely unnecessary areas of local management etc etc. There has clearly also been much waste, look at the lovely TV ad’s, the ridiculous new branch opening programme (just to keep up with the rest), the cars for the area management and gawd knows what investment in the funeral fleet. As has been mentioned on here previously, “economies of scale” just never take place – do they? Instead of using their colossal financial muscle to stabilise and/or reduce funeral costs, F’care continually drive the costs up

    F’care have an enormous avaricious appetite for growth and when taken with their excessive media role, it’s way over time that this was curtailed. If and hopefully, there is a new owner, I really wish that they would get down to the grass roots problems and not take a ‘top of the tree corporate outlook’ and cannot be fussed with what lurks below the surface. F’care have been a business that really does justify the expression “conflict of interest”. From operating the Patients Bereavement Centre at Whipps Cross Hospital (and heaven knows where else) together with their nationwide involvement in acting for the Coroner, then on to their own Crem’s and oh, of course, not forgetting their separate Legal Services Division. It’s easily to envisage a completely ‘seamless after death service’ here – (a) we do the Coroner’s removal; (b) our Bereavement Centre point the punter in the direction of a F’care branch; (c) it’s then on to their own Crem; and (d) and oh by the way, here’s the number for our Legal Call Centre…………..it’s fairly sickening stuff

    There’s also the endless attempt to ‘cross sell’ between all of the CWS Group’s businesses, from travel to food, from pharmacy to death. Mr and Mrs average literally have no idea how expensive their funerals are, they’re just brainwashed media style

    CWS Group have become way way too large, have bitten off too much and it’s time for a significant scaling back

    regards

    andrew

    • Rosie

      Tuesday 12th November 2013 at 10:53 pm

      Hi Andrew

      Let’s not forget that they are forging forward, acquiring and headhunting natural burial sites. They have taken over 4 stand alone sites and are including “woodland” burial areas in most of their new crem’ planning applications. Green and attractive fellows.

      NB natural can be woodland but woodland is not necessarily natural.

      Rosie

  3. Tuesday 12th November 2013 at 8:59 am

    I think I would welcome a private equity owned funeralcare! The existing business, the one making £60 million in annual profit despite this being the worst recession the UK has ever known, is no longer what people think it is.
    It certainly doesn’t seem to serve the poorest very well?

    A fresh new funeralcare, owned by ruthless venture capitalists would be a far more honest and transparent business model for us to compete with.

    I am glad the name ‘cooperative bank’ is being challenged legally. The public will usually believe anything when there is no visual change to a business. The new co-op bank is definitely no longer in a position to uphold and maintain the Rochdale pioneer values is it?

  4. Jonathan

    Monday 11th November 2013 at 12:44 pm

    “Funerulaonecare”. It sounds the pits to me.

    • Jonathan

      Monday 11th November 2013 at 12:47 pm

      …sorry, I forgot we’re upside down now – that won’t make much sense till you’ve read RR’s comment.

      (Postscript: Is there some way of inverting the comments section so you can read it without confusion?)

      • Kitty

        Monday 11th November 2013 at 5:19 pm

        Jonathan asked: Is there some way of inverting the comments section so you can read it without confusion?
        No. As in life, you have to start at the bottom and then try and work your way up.

        • Kitty

          Monday 11th November 2013 at 5:20 pm

          Unless you reply to a reply.

          • Jonathan

            Tuesday 12th November 2013 at 10:39 am

            But then it’s all even more out of sequence, Kitty!

          • Kitty

            Tuesday 12th November 2013 at 8:23 pm

            Yes J. Especially when the Reply button mysteriously disappears and I’ve now had to reply to my reply. Is there a reply quota?

          • Tuesday 12th November 2013 at 8:57 pm

            Gosh this is getting confusing.

  5. Richard

    Monday 11th November 2013 at 11:17 am

    Modern mutuals are libertarian, not socialist, as they’re member-owned limited companies, neither public-owned, nor state-owned.

    The oh-so middle class John Lewis Partnership is a shining beacon of quality product and service delivered by motivated employees who share profits. So much so that politicians and economists are looking to it as a model for making councils, health services and schools more independent of the state and taxpayer.

    When a mutual such as the Co-operative Group goes toxic (its bank arm needs to plug a shortfall of £1.5bn), it must do what any company run on capitalist lines must do: modernise and streamline until it returns to self-sufficiency and productivity.

    Co-op Group has two options (the third option of state intervention for a nationalisation bailout is out of the question).

    First, it can sell off parts of the company to the private sector. The companies that have made advances to buy out its funeral arm are not successful mutuals such as JLP but CVC Partners, controlling shareholder of Formula 1, and Montagu Private Equity, former owner of Dignity.

    So far, Euan Sutherland has rejected advances as Funeralcare is profitable (£60m last year). But it has to find the money from somewhere to modernise its bank, which is ailing largely due to the foolhardy takeover of the Britannia building society in 2009.

    Its second option is to consolidate internally to pay off its debt itself—redundancies and stopping the dividend payment to members. It can make small savings, too, such as stopping donating £1m a year to the Labour Party.

    Freezing income payments to bondholders seems the least ‘mutual’ of the two options as it puts the burden on employees and pensioners.

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