FEBRUARY 2018

PHONE CO-OP
Phone Co-op’s former chair raises questions over growth strategy
Simon Blackley, former chair of the Phone
Co-op, has expressed concern over the
society’s four-year growth strategy.
The strategy, which is noted in the
co-op’s annual report, aims to increase
annual sales by 250% to more than
£27m by 2021. It will do this through an
investment in business systems, processes
and people over the next two years, which,
it estimates, will lead to losses.
In a motion to the co-op’s annual
meeting on 3 February, Mr Blackley
argues that while members welcome the
ambition and want to see the society
grow, “such an attempt to achieve a step
change in growth rates may entail sharply
increased risks, it merits a full and open
dialogue with members”.
Mr Blackley was chair of the Phone
Co-op for two consecutive terms. He
stepped down from his role shortly after
moving to Belgium in 2005, but continues
to be involved as a member.
“It seems to me that the society has
not taken a radically new direction, not
necessarily a bad thing, but it seems to
imply a significantly increased risk,” he
said. “It is a fair question to ask and it is
not set out in the annual report what level
of increased risk we are talking about.
Because if we are talking about losses of a
million we are eating our resources.”
In the annual report, interim chief
executive Peter Murley wrote: “The
considerable investment in business
systems, processes and people over the
next two years will result in losses. In the
third year, the business plan is to make a
net profit greater than the average of past
years (i.e. in excess of 2.5%). The fourth
full year of our plan shows forecast net
sales of £27.7m with a net profit exceeding
7.5%. This means returning some £2m net
profit in 2012/22 – over 10 times more than
any previous year – enabling us to invest
in our business, provide good returns to
members and invest in projects which
complement our ethics and value.”
But Mr Blackley argues the report does
not clarify the impact of these losses on the
board’s established policy of maintaining
reserves between £900k and £1.1m, as
well as the possibility of increased risk to
Members’ Share Capital.
“This strategy is something quite new,”
he said. “It is presented as such with
enthusiasm and confidence, all of which
may be justified. I am hoping at AGM our
board will convince me and the others
that risks are under control and the losses
are limited.”
He added that the target £2m net profit
would be difficult in “a highly competitive,
regulated and low-margin sector”.
Mr Blackley’s motion calls on the board
to explain the process used to review the
plan from a risk management perspective,
to specify the upper and lower limits of the
range of projected profits and losses for
each year of the strategy, and to clarify the
possible impact on the security of members’
capital in best and worst-case scenarios.
The Phone Co-op has not published an
official response to the motions submitted
for discussion at the meeting in Sheffield.
A spokeswoman said the board will
respond during the meeting.
HOUSING
Co-op councils call for community-led housing
A report commissioned by the
Co-operative Councils’ Innovation Network
(CCIN) is calling for more Community Led
Housing (CLH) to increase the supply of
affordable homes.
The report, Community-Led Housing:
a Key Role for Local Authorities, comes
from the CCIN’s Housing Commission on
Community-Led Housing.
The commission aims to promote
good practice so councils can work with
communities to generate more affordable
housing and make best use of government
funding for CLH.
The report coincides with UK
government’s relaunched Community
Housing Fund in England, and funding
for community-led housing provided by
the Welsh and Scottish governments. It
argues that CLH should be “added to the
strategic mix” to increase the supply of
homes that local people can afford.
The report says different solutions are
required for different markets, but CLH
can make a contribution, whether through
new-build homes, returning empty
properties to use or introducing CLH into
the management of existing homes.
Cllr Sharon Taylor, chair of the CCIN and
leader of Stevenage Borough Council,
said: “I’m delighted at the outcomes of
this report. With 12 case studies, it shows
that there’s no one-size fits all approach
to generating community-led housing.
“Housing is at a crisis point in the UK.
Too often we hear that people are caught
in the private rental trap or unable to
get on to the housing ladder. Enabling
communities to create affordable homes
is something local councils can do, and
p Cllr Sharon Taylor
this report provides real examples of how
to do it. We’re encouraging all councils to
commit to supporting the development of
more community-led housing.”
u Download the report at s.coop/2607i
8 | FEBRUARY 2018