Tories admit demutualisations were mistake: Co-operative News

Posted on December 31, 2008 · Posted in Co-operative News

 

Building society demutualisations had been wrong, a Conservative Treasury spokesman admitted at the first ever Mutuals Forum.

“We can see with hindsight what a mistake they were,” said Mark Hoban, the shadow financial secretary. “Those institutions were too small as listed entities to survive.”

 

However, Hoban resisted a suggestion from conference delegate Vivian Woodall – chief executive of the Phone Co-op and representing the Mid-Counties Co-operative at the Forum – that the Government should now ‘re-mutualise’ Northern Rock. “I can see the attraction of it,” responded Hoban, “but I am not sure that you can do that now.”

 

Adrian Bailey, a Labour/Co-op MP speaking alongside Hoban at the conference plenary, reported that he and other MPs had unsuccessfully tabled an amendment to the Banking Bill currently going through Parliament that would enable Northern Rock to be remutualised, but that he was not yet sure whether that was the right approach. “There has to be a balance between the [Government’s] responsibility to taxpayers and the benefits of mutuality,” said Bailey.

 

The Forum’s keynote speaker was communities secretary Hazel Blears, who told delegates she was a long-time and committed supporter of co-operatives, other mutuals and community organisations.

 

“I think we need to do more [as a government] than just have a level playing field [between mutuals and PLCs] and see where mutuals can offer us an opportunity to do things,” Blears said. She added that mutual organisations were already doing the kinds of things “we are trying to do in communities across the country”. Blears explained that she believes that mutuals “are better placed” to weather the recession than are PLCs. “There is a new hankering for solidarity and a new interest in people taking control of their own affairs,” she suggested.

 

Blears made a promise to delegates on behalf of the Government that further legal reforms would be introduced to enable co-operatives and other mutuals to run their businesses more effectively, including reforms of the need for paper-based communication. New legislation will be proposed to allow mutuals to make greater use of electronic communication. Other intended measures include helping mutuals to bid to act as agents for the Government in its welfare reform and other programmes. Blears said there was more of a mood to support co-ops and mutuals following the collapse of the banking system.

 

In return, Blears said, the mutual and co-operative movement should do more to explain to the public how big, how important and how useful the sector is. Blears added that the first ever Mutuals Yearbook was an important step forward in achieving this. The Yearbook – which was launched at the Forum – contains statistical information and key facts about the largest parts of the mutual movement.

 

The Forum heard from executives of the Building Societies Association, the Association of Mutual Insurers, the Association of Friendly Societies and the Employee Ownership Association, who each explained how large their sectors were. The 58 remaining building societies have nearly 52,000 staff, 23 million members and £380bn in assets. Mutual insurers in the UK control £83bn in assets and have 15 million policyholders. And employee-co-owned businesses – not including workers’ co-operatives – have an annual turnover of £25bn.

 

Closing the Forum, David Anderson – chief executive of CFS and chairman of the Mutuo think-tank, which organised the event – told delegates that they should expand the size of the sector by increasing inter-trade at the expense of existing contracts with PLCs. “Let’s get out of our silos and start doing business with each other,” he urged, to enthusiastic support from delegates.

 

The event attracted 200 delegates from the co-operative, building society, mutual insurance, co-operative trust schools and foundation trust sectors.