The Government has today announced the sale of state-owned Northern Rock to Virgin Money. The Co-operative Party has campaigned for Northern Rock to be returned to the mutual sector as a new co-operative building society. We have argued that this would represent much better value for taxpayers and customers as building societies are less risky and so less likely to require future bailouts.

Michael Stephenson, General Secretary of the Co-operative Party, said:

“Today the Chancellor has signed a bad deal for the future of Northern Rock. George Osborne has missed a real opportunity to return the Rock as a new mutual, which would have signalled the government had learnt crucial lessons from the banking crisis. The sale to Virgin is a resurrection of the failed former model. This fire-sale demonstrates Osborne is not willing to think long term about how banks can serve their customers and reduce risk for taxpayers.”

UPDATE: 22:04 – In his letter to George Osborne today, Shadow Treasury Minister and Co-operative MP Chris Leslie made the following point:

The Coalition Agreement said that you would “bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry”. There will be many who are concerned that in making this decision you gave no serious thought to making Northern Rock either a building society or a mutual.

The mutual option was put to you by a number of groups including the Co-operative Party, however your announcement of your intention to sell Northern Rock was made before you could have had a chance to consider those proposals or meet with any of those putting them forward.

Are you satisfied that this decision is consistent with the pledge made in the coalition agreement and  what grounds did you consider in rejecting the mutual option?

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