The Co-operative Group’s outmoded governance structure has left it utterly unprepared for a grocery price war, reform champion Lord Myners has warned.

He said that the failure of the board to consider the changing food retial landscape was a prime example of a lack of business expertise on the Co-operative’s supreme governing body and urged wide-ranging change to safeguard the group’s future.

Myners said: “There has not been one long, fact-based evaluation of the grocery price war that is taking place.

“If we have a price war, which I think we do have, the Co-op is probably the least well-placed to confront the consequences.”

However Myners gave his backing to the Co-op’s retail boss, Steve Murrells, who is leading a push to improve performance by building on its convenience strengths. Myners said: “Steve Murrells is first class and if anyone can do it, he can.”

Myners said that the Co-op’s governance regime had failed it for many years.

He pointed out that 40 years ago the Co-operative movement was able to pay a dividend equivalent in today’s money to £1bn and controlled a much greater market share. “The decline is extraordinary and something has to be done to correct it,” Myners maintained.

In his governance review published today, Myners made several key recommendations.

He urged the creation of a “competent board of directors” who could challenge executive directors. Lack of business knowledge at group board level meant that previous management “ran circles around the board,” Myners said.

He recommended the establishment of a national membership council, including employee representatives, to hold the board to account, and the adoption of a one member, one vote structure to improve democracy at the organization.

He described the model he was proposing as “Plc-plus”, and as one that was used from state bodies to family companies.

His proposals will be voted on at a meeting on May 17, but the Co-op’s structure means that the votes of about 100 people rather than the 8 million members will decide the outcome.

He observed that the vote on his reform proposals would occur before the debate on them.