Pressure mounts to remutualise Northern Rock as 100 MPs support campaign
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.”
