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”.

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.

http://twitter.com/coopparty/status/32484539838234625 Co-operative Party

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj
http://twitter.com/seemamalhotra1/status/32484662790062080 Seema Malhotra

RT @CoopParty: RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj
http://twitter.com/kevpeel/status/32484739092840448 Kevin Peel

RT @CoopParty: RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj
http://twitter.com/richard_horton/status/32484793518133249 Richard Horton

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj ft. @ChukaUmunna
http://twitter.com/hellsbells265/status/32484953891540993 Helen Thomas

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj ft. @ChukaUmunna
http://twitter.com/duncanweldon/status/32485546102095872 Duncan Weldon

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj ft. @ChukaUmunna
Neil Foster

If anyone in favour of remutualisation of Northern Rock is on facebook, please join the group ‘Return the Rock’ at

http://www.facebook.com/#!/pages/Return-the-Rock/143551995706636?v=wall
http://twitter.com/wdjstraw/status/32496238809059328 Will Straw

After probing from @ChukaUmunna Nationwide and Co-op bank bosses join call for Northern Rock remutualisation http://bit.ly/gwqWfJ
http://twitter.com/puffles2010/status/32498606170701824 The Dragon Fairy

“@wdjstraw: After probing from @ChukaUmunna Nationwide & Co-op bank bosses join call for Northern Rock remutualisation http://bit.ly/gwqWfJ”
http://twitter.com/northerntuc/status/32501880680611840 Northern TUC

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj ft. @ChukaUmunna
http://twitter.com/mike_wiltshire/status/32506019330396160 Mike Wiltshire

RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj ft. @ChukaUmunna
Mark Stevo

I’m a little puzzled by this one and will confess to not having read any detailed proposals from any of the parties mentioned, is the suggestion that instead of selling the business and raising cash proceeds, it would instead be given to the customers? That doesn’t sound like a good deal for taxpayers.
Andrew Climo

I guess it all depends on whether you take a short term or long term view. Traditionally mutuals have provided better returns than private banks and one could argue that a strategy of diversifying banking options could be a more powerful benefit than a short term return to the Treasury.
http://twitter.com/philntaylor/status/32547901892722688 Phil Taylor

RT @CoopParty: RT @leftfootfwd: Re-mutualising Northern Rock "would be a good move" reports @Clairee_French http://bit.ly/ih48Rj
Mark Stevo

Maybe, although I haven’t seen anyone articulate clearly what the wider benefit to taxpayers of increasing the number of scale mutuals from 2 to 3 is.
JC

So we’re seriously suggesting that we take whatever the value of Northern Rock is (billions) from us, the population, and just giving it to a small number of people wealthy enough to have money saved in the bank? Doesn’t sound like socialism to me!