Saturday, 19 March 2011

The future of the Northern Rock: questions for the re-mutualisers

There's a new campaign being led by Labour MP Chuka Umunna to remutualise Northern Rock, with a letter supporting the proposal published in the Guardian and an EDM tabled in Parliament.

The proposal has cross-party support with two Conservative MPs co-signing the Guardian letter, along with a Liberal Democrat and even Unite General Secretary Len McCluskey.

As I argued in October 2008, there should be "a return for the public" for the huge loan bailout and subsequent nationalisation of Northern Rock.

I have to say I'm currently only lukewarm about the campaign. I'm instinctively sympathetic - my savings and current account are both with a mutual - but I'm just not clear on how re-mutualising Northern Rock would work, and if it would be fair to taxpayers who after all are the ones responsible for its continued existence.

Sadly, neither the letter, EDM nor campaign page answer these concerns - it just tells me mutuals are more accountable, democratic, and that it would be popular, none of which I would dispute.

The questions I have for the campaign are therefore:
  • What is the benefit for the taxpayer? The taxpayer collectively saved Northern Rock so why should only current customers benefit?
  • Why not just keep Northern Rock in public ownership and use future profits to fund public services?
  • Shouldn't former employees benefit too? Over 2000 have lost their jobs since 2008 - yet it was their taxes that paid to 'save' it as much as anyone else's. And would this be a building society model or would staff have a governance role too? If so, what?
For the time being my opinion remains that Northern Rock be publicly owned and publicly controlled. It's already the former, but we should be campaigning for the latter - it seems fairer than re-mutualisation.

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