Co-op to vote on £1m for Labour

Members to decide on future of its traditional link with party

MEMBERs of the Co-op will today vote on whether to pull the plug on political donations of £1m a year to the Labour Party.

The vote will be held at the group’s annual meeting in Manchester, which is also likely to hear criticism of lavish pay and perks handed to bosses – including a £2.5m package for chief executive Richard Pennycook.

The focal point of the meeting is likely be the Co-op’s close ties with Labour, which have made it an easy target for political opponents.

The mutual broke with tradition by not recommending that its 2.9m members who are eligible to vote back a resolution to make up to £1m in donations to the Co-operative Party.

But this decision has been overruled by members who have reinstated the motion anyway.

The members’ council argues that the group technically does not make donations to the Co-op Party but pays a subscription to it.

The Co-operative Party is an offshoot of Labour with 24 MPs in the house of Commons, i ncluding shadow chancellor Chris Leslie.

The most high-profile Labour Cooperative MP was Leslie’s predecessor Ed Balls, who lost his seat at the General Election.

Members will today be asked whether the Co-op Group should make political donations, whether it should donate money only to the Co-op Party, and whether it should donate to a range of parties.

The new management team of the Co- op Group, led by Pennycook and chairman Allan Leighton are trying to make the mutual more professional – but are leaving it to members to decide whether to sever ties with Labour.

The long-standing affiliation has proved an unwelcome distraction in recent times.

Cheap loans provided by the Coop Bank to the Labour Party were a source of controversy for the scandal-hit lender and made it an even easier target for criticism over its finances.

The Co- op Group relinquished control of the Co-op Bank as part of an emergency deal in December 2013 to rescue the bank from collapse after a £1.5bn black hole was found on its balance sheet.

The bank was further hit by scandal when former chairman Paul Flowers, a Labour councillor, was arrested and later convicted for drugs offences.

Last night Conservative MP Mark Garnier said the vote was crucial.

‘Any significant business needs to think incredibly carefully about links with political parties. The Coop Bank has demonstrated that it can be very damaging,’ he said.

The withdrawal of financial support from the Co- op would be a blow to Labour which is seeking to reduce its reliance on backing from the trade unions.

The Co- operative Party has pleaded with the members to vote to continue donations.

Karin Christiansen, general secretary of the party, said: ‘The Conservative Party has returned to government with enormous financial support from business and wealthy individuals.

‘Now, more than ever, Britain needs the Co- operative Party speaking up for a powerful, cooperative alternative that puts people at the heart of business, and for an economy where the ownership and profits are more widely shared.’

The Co-op also hopes it has managed to avoid another row over its decision to reject three board candidates out of six nominated by the members. This means the election will be uncontested. The powerful Mid-counties Co- operative had threatened legal action after advice from lawyers that the results of the election would be void.

But it will withdraw the action after the Co-op promised to reform the nominations process and make it more transparent.