Re-mutualising Northern Rock “would be a good move”

Leaders of the two biggest mutuals today told the Commons Treasury select committee that the re-mutualisation of Northern Rock could be a "good move".

Leaders of the two biggest mutuals today told the Commons Treasury select committee that the re-mutualisation of Northern Rock could be a “good move”.

First up was Neville Richardson, the chief executive of Co-operative Financial Services, who was asked by Labour’s Chuka Umunna whether he would like to see Northern Rock re-mutualised.

“I think in terms of bringing another mutual into the sector, and another competitive mutual into the sector, I think that would be a good idea. There are issues that would have to be a dealt with, such as the capital, because the government is providing that capital at the present, and I think in terms of a diversity, that would be a good move.”

Umanna then asked this Nationwide’s chief executive Graham Beale whether he would like to see Northern Rock re-mutualised. Beale said that merging the lender with another mutual would be a benefit to the mutual sector, in allowing them to take on big banks.

Umanna went on to ask him whether he thought the government had been effective in promoting mutuals.

“You took evidence from Lord Turner a couple of weeks ago, where he was taking about de-liberalising building societies. That would have very severe consequences on our business model, in narrowing it, and making us unable to compete with the banks.

“I think the mutual sector has behaved incredibly well throughout the financial crisis… and I don’t think that has been reflected… by the government, who have made the sounding of wanting to promote mutuality but not put any substance behind that declaration.”

He added:

“I think it would be a very substantive gesture, if they were to re-mutualise Northern Rock.”

Watch the exchanges:

As Left Foot Forward reported last week, leaders of United Kingdom Financial Investments confirmed that re-mutualising Northern Rock was an option open to the government – but in an interview with JournalLive last year, business secretary Vince Cable ruled out a “quick sale” of the company, arguing that it would lose the taxpayer money.

The Co-operative Party has been campaigning for the re-mutualising of failed lenders since 2009. More information on ‘The Feeling’s Mutual’ can be found here.

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