A remutualised Northern Rock would be a shining example of the difference between Labour and the Tories, writes Michael Stephenson

This week the chancellor will announce his next move in deciding the future of the banks the government wisely bailed out at the height of the credit crunch. When he makes his statement to the House of Commons he may wish to reflect on an once-in-a-lifetime opportunity before him.

Although a lot of the focus of recent media coverage has been on the disposal of the Government’s stake in Lloyds and RBS the Co-operative Party believes the most important decision concerns the future of Northern Rock.

A once proud and successful building society, the Rock, like so many others, de-mutualised and became a bank following the Tories’ infamous Building Societies Act. The downward spiral from prudent and responsible lender to bankrupt economic disaster soon followed.

The taxpayer now effectively owns the Rock, having stumped up several millions of pounds to keep it afloat. Yet the government seems intent on selling it as soon as it can find a willing buyer. This would be a grave error.

Rather than simply selling the bank the government can reverse the damage done by the Conservatives and return it the mutual sector from where it came.

Furthermore, a recent independent report from Oxford University shows that it can be re-mutualised and also give value for money to the taxpayer. Through an innovative financing model, a new mutual Northern Rock can be created and the taxpayer can be reimbursed in full over time.

That has to be preferable to a simple sale that puts this asset back in the hands of the sort of people who caused the financial mess we are in today.

If re-mutualised, Northern Rock would be a shining symbol of the differences between the values of Labour and the Tories in government. A prudent, sustainable building society owned and run by its customers and based on the progressive principles of mutuality and community as opposed to a profit-driven machine, controlled by shareholders whose only interest is short term gain.

If we as a government are ever going to establish a genuine dividing line with our opponents in the minds of voters we have to be bold and take the less obvious but politically compelling option. The Co-operative party’s campaign ‘the Feeling’s Mutual’ is all about giving our supporters the means to highlight that dividing line in the most practical and telling way. Thousands of people have already signed up to the campaign and are looking to Labour to keep open the door to a solution that puts people before profit.

If Labour is going to emerge from the credit crunch as the party that cares about the impact of economic change it has to acknowledge the importance of mutuality and give its supporters something to point to as a legacy of a progressive approach to the big decisions of the day. Re-mutualising Northern Rock is the perfect way to do that.


This article first appeared on the website of Progress