Chuka Umunna MP

Pressure on the government to remutualise Northern Rock is growing as 100 MPs have thrown their weight behind the campaign by signing an EDM calling for the state-owned bank to be returned to the mutual sector.

The Early Day Motion, tabled by Labour MP Chuka Umunna, who sits on the Treasury Select Committee, has attracted cross-party support and is gathering support swiftly, having been signed by 19 MPs in the days since Parliament has returned from recess on Tuesday this week.

It has attracted the support of former Conservative cabinet minister Jonathan Evans and former Lib Dem leader Menzies Campbell and Liberal Democrat President Tim Farron.

The Treasury Select Committee’s report on competition and choice in retail banking, released on April 2, called on the government to do more to promote mutuals and diversity in financial services, as promised in the May 2010 Coalition Agreement.

Support for the campaign to remutualise Northern Rock has been growing in recent weeks outside Parliament. Earlier this month, economic modelling firm Landman Economics released its report The economic case for the re-mutualisation of Northern Rock arguing that re-mutualisation would secure better proceeds for the taxpayer in the long run, as well as decreasing the likelihood of another systematic crisis in the UK economy and increasing lending to businesses.

Coventry Building Society, the UK’s third largest mutual, announced earlier this month that it considering making a bid for Northern Rock.

The government is yet to outline a position on what form the future of Northern Rock will take. In May 2010, the coalition agreement promised to “bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry”.

In January, UKFI issued an invitation for corporate financial advisers to work with UKFI and Northern Rock in the evaluation of strategic options for the company’s future. Deutsche Bank was subsequently appointed to evaluate options and is expected to present these to UKFI imminently, although no official timetable has been announced by UKFI or the Treasury on when final recommendations can be expected.

In March, a letter organised by Treasury Select Committee Member Chuka Umunna MP calling for the remutualisation of Northern Rock was published in The Guardian. It was signed by MPs from all three main parties as well as the Adrian Coles, Director General of the Building Societies Association, Prof Jonathan Michie, President of Kellogg College Oxford and Len McCluskey, General Secretary of Unite amongst others. Philip Blond, Director of think tank ResPublica and author of Red Tory was also a signatory.

Northern Rock was formed in 1965 by the merger of two smaller mutuals which had formed in the mid nineteenth century respectively. It continued to grow and operated as a traditional building society until it demutualised and floated on the London Stock Exchange in 1997. It was listed on the FTSE 100 for the first time in 2000.

Commenting, Treasury Select Committee member Chuka Umunna MP said:

“Support is growing for remutualising Northern Rock both in Parliament and the country at large. Increasingly it is becoming clear that a mutual option will provide the best future for Northern Rock in terms of return for taxpayers, help for businesses, the stability and health of the financial services sector and the best deal for consumers.”

“Remutualising Northern Rock has been a longstanding commitment of the Labour Party – it is welcome that a cross party collection of over 100 MPs are now backing the cause.”

Commenting on the occasion of the Black Cultural Archives’ Uprising event to mark the 30th anniversary of the Brixton Riots this weekend, Chuka Umunna MP, Member of Parliament for the Streatham constituency (which covers part of Brixton) said today:

“One spring day in April 1981 my mother popped down to Brixton with her little toddlers to do a spot of shopping. Little did she know what was about to unfold; as the tension mounted and the violence started, she literally sprinted to our car with her two bundles of joy – my sister in her pushchair and me on foot – and fled the unrest.

“The Briton riots 30 years ago were a product of many things – a community that had had enough. Police brutality and prejudice yes, but also poverty, unemployment and a lack of opportunities. We’ve come a long way since then and things are far better for my generation than my father’s who arrived in this country in the 1950s and 60s.

“Yet, we still have our challenges – there is still prejudice, though it might also take on different forms. It is for these reasons that we should remember and never forget what happened – that way we fend off complacency and keep striving to be a better place to live for all our communities.”

A local day centre for elderly people could be facing closure as a result of government cuts – local MP Chuka Umunna has raised the issue in Parliament this week.

Lambeth Senior Citizens, which is based on Lambert Road off Brixton Hill provides a daily lunch club for the elderly as well as extensive pastoral care. For those who attend the lunch club, many of whom live alone, the club provides pastoral care and a chance to meet and socialise with others.

As well as a low-cost lunch, the elderly people who use the centre are given help and assistance and regular outings are organised. Mr Umunna recently visited the centre and met with many of the elderly people who use it, who told him of what an important part of their lives it was.

Because of government cuts in local authority funding, the future of Lambeth Senior Citizens is in doubt. In Parliament this week, Mr Umunna asked whether ministers would visit the centre to see the affects of cuts to local government budgets on the ground, but this invitation was not accepted.

The Centre provides food and a place to go during the day for elderly people, helping them stay fit and healthy and ensuring that they do not become lonely and isolated so it helps prevent them needing costly treatment and care from the state.

Under the government’s local authority funding settlement, the most deprived 10% of single-tier authorities will see their total spending power reduced by nearly four times as much as the least deprived 10% of single-tier local authorities.

Cuts made by the Conservative-led government to council budgets will mean that per resident, Lambeth’s budget will fall by £104.10 per person in 2011/12 and £55 in 2012/13. Research undertaken by the House of Commons Library, shows that Lambeth’s revenue spending power will fall by £29.88 in financial year 2011/12 and £15.9m in financial year 2012/13.

Commenting, Mr Umunna said: “Lambeth Senior Citizens provides an invaluable service to its users – many of whom are elderly people living alone.

“The cuts which the government is imposing on local council budgets hit the poorest communities hardest and are putting frontline services at risk. Ministers are going too far too fast and areas like ours are paying the price.”

Further government cuts to police funding will hit frontline policing, Chuka Umunna MP has warned, having learned that police officers are having to carry out tasks such as emptying bins in local police stations because of cuts to back office functions.

Speaking in a debate in the House of Commons this week, Mr Umunna said: “In my local area, the police tell me that their back office is already cut to the bone. We now have the ridiculous situation of front-line police officers taking time to do things such as empty the bins in a police station in my constituency.

“That was done by the back office, but it is no longer a back-office function as the back office is not there. The police are spending time emptying bins rather than being on the street fighting crime. How on earth is that justifiable?

Mr Umunna’s intervention was greeted with heckling and laughter from the Liberal Democrat and Conservative benches in the House of Commons Chamber.

Project Hannah, an innovative pilot programme, is currently being put in place by Lambeth Police. The project does not involve a reduction in officers, but is a reorganization to maximize resources and create additional coverage on beat patrols. There are fears that reducing resources while the programme is being implemented could put these improvements in jeapoardy.

The government is cutting the police budget by 20 per cent over the spending review period. In real terms, this means a cut of 7.5 per cent in 2011/12 and 8.7 per cent in 2012/13. Around 80 per cent of police forces’ budgets is spent on personnel.

Commenting, Mr Umunna said: “Ministers talk of police forces making efficiency savings, but back office functions and operations have already been cut back to the bone.

“Community safety in our area is no laughing matter and it is an affront to local people who will find it deeply disrespectful that MPs on the government benches think it is. This shows how deeply out of touch the Liberal Democrat-Conservative government is becoming from the lives of my constituents”.

Chuka Umunna MP, who sits on the influential Treasury Select Committee, has released a research paper looking into the claims the government has made as part of Project Merlin.

In a speech in the House of Commons this afternoon, Mr Umunna will highlight the shortcomings of Project Merlin and call on the government to take further action.

Project Merlin was unveiled by Chancellor George Osborne on February 9 after the announcement had been repeatedly delayed. Agreed between the four main UK banks, RBS, Lloyds, Barclays and HSBC along with Santander, the agreement promised to increase lending and improve customer service to SMEs, reduce bonus payouts, make banks’ pay more transparent and ensure that banks pay more in taxes.

The research report Project Merlin: an Appraisal, released by Mr Umunna’s office today, demonstrates that on all these counts the agreement comes up far short of its promises and expectation. It has been compiled using evidence gleaned since Project Merlin’s announcement through Parliamentary questions and Treasury Select Committee hearings.

Under Project Merlin, the four main UK banks committed to making £190bn of credit available to businesses in 2011, £76bn of which would be made available to SMEs.

The Chancellor stated that “in order to ensure that progress against these lending commitments can be monitored, the Bank of England has agreed to collect the relevant data”. However, when giving evidence before the Treasury Select Committee on March 1, Bank of England Governor Mervyn King said: “We’re not monitoring. What we are doing is putting up on our website the data that banks submit after a fairly cursory plausibility check.” No sanctions have been established to ensure that Project Merlin’s lending targets are met, and the targets are entirely contingent on whether sufficient demand materialises.

The Chancellor also promised that “the pay of the Chief Executives of each bank, as well as the relevant business area leaders, will be linked to performance against the SME lending targets.” However, at a Treasury Select Committee hearing last week, under questioning from Mr Umunna Treasury officials were unable to specify what weight SME lending would hold in the performance metrics determining pay of Chief Executives at the four banks.

Furthermore, in answer to a Parliamentary question tabled by Mr Umunna the Financial Secretary to the Treasury said: “The calibration of performance metrics of chief executive remuneration is a matter for each individual bank.” As Project Merlin’s lending targets are gross rather than net, they do not take into account loan repayments and it is impossible to assess the real impact on the amount of new credit available to businesses they will have.

The banks promised under Merlin to improve customer service for SMEs, including through the establishment of a mentoring service, transparent appeals and published lending principles. Mr Umunna has since learned through an answer to a Parliamentary question that no independent means to monitor these commitments has been established – only the British Bankers Association, which represents banks, will assess whether they have been met.

On bonus payouts, according to answers received by Mr Umunna the government has not yet made any assessment of whether fixed pay will rise at Lloyds and RBS to compensate for reduced bonus payments. Notwithstanding the bonus provisions, the small print of the agreement gives banks a get-out clause freeing them from their commitments if they deem it necessary in the interests of their shareholders.

Under Project Merlin’s requirements, pay disclosure will extend only to five senior executive officers and two executive directors for each bank. However, the government has made no estimate of the number of employees at each bank who earn more than these individuals.

Commenting, Chuka Umunna MP said: “It is important that our major banks lend more, particularly to small businesses, as well as paying more tax and increasing transparency and disclosure over pay.

“Unfortunately, on each of these objectives Project Merlin falls far short of expectations. It is not clear how the government’s lending target will be enforced or evaluated and there are a number of questions which the government needs to answer.

“The government needs to look again at these issues and come up with a lasting, more robust solution – the Project Merlin settlement was welcome at the time but now doesn’t seem worth the paper it was written on.”

Landman Economics has recently published The Economic Case for the Remutualisation of Northern Rock.

The report argues that re-mutualisation would secure better proceeds for the taxpayer, decrease the likelihood of another systematic crisis in the UK economy and increase lending to businesses. It also explores the benefits of remutualisation in terms of the mutual sector’s strong track record for customer service and deep roots in local communities.

Chuka’s Early Day Motion on Remutualisation of Northern Rock now has almost 80 signatures from MPs.

Commenting, Chuka said:“This report sets out clearly and robustly why a mutual option will provide the best return for the tax payer – it makes sense in terms of value for money, good customer service, help for small businesses and improving financial stability in the financial services sector overall.”

“Remutualising Northern Rock has been a longstanding commitment of the Labour Party – it is welcome that a cross party collection of over 70 MPs is now backing the cause.”

Chuka met with volunteers at Streatham’s Oxfam charity shop and signed Oxfam’s petition urging the government to do more to protect the world’s poorest people from the effects of climate change.

Commenting, Chuka said:

“I congratulate Oxfam on this campaign and in particular the volunteers at Oxfam’s Streatham shop for all their hard work. It is crucial that we tackle the causes of climate change and keep up the pressure for action”

Important elections – presidential, gubernatorial and legislative – will be taking place in Nigeria beginning this weekend. Legislative elections are taking place on Saturday April 2; the Presidential election on Saturday April 9 and state assembly and gubernatorial elections on Saturday April 16.

Commenting on elections in Western Africa in the House of Commons on 31 March 2011, Chuka Umunna MP, Vice Chair of the All Party Parliamentary Group on Nigeria, said:

“It is of paramount importance that democracy is allowed to flourish and is respected, and that people get out and vote in …elections in the region, in particular those starting in Nigeria this weekend.”

Speaking today on the Nigerian elections from his constituency of Streatham, which has one of the largest Nigerian diaspora communities in Britain and covers large parts of Brixton, Mr Umunna said:

“Nigeria is a great country with a wonderful people and has huge potential to be greater still but for that to happen good governance is essential and democracy should be allowed to thrive and flourish. This won’t happen unless the process is transparent, fair and people are able to freely exercise their right to vote – I very much hope that will happen.”