Today in Parliament, Labour & Co-operative MPs held the Government to account on its botched sale of Northern Rock, which was poor value for taxpayers, home buyers and the co-operative movement.

The Treasury Minister defending the government’s decision to sell Northern Rock to Virgin, Mark Hoban, failed to explain why the Government did not properly explore the option of a member-led re-mutualisation as set out by the Co-operative Party.

The Co-operative Party believes that the government still has crucial questions to answer about the sale of Northern Rock:

  • When will the Treasury publish the advice of UKFI and Deutsche Bank so that the co-operative movement can see exactly why a mutual Northern Rock was ruled out?
  • The minister repeated today the Treasury’s claim that re-mutualisation would be ‘gifting’ value to members of the new mutual. Can the government explain whether using £250 million of Northern Rock’s existing equity is ‘gifting’ money to Virgin?
  • Did the Chancellor consider how much mortgage lending could have been made by Northern Rock as a mutual as opposed to as a shareholder owned bank? Does the asset stripping by Virgin mean that Northern Rock will be able to make fewer mortgage loans than would have been possible had the equity remained in a new mutual?

In response to the Treasury’s statement today, General Secretary Michael Stephenson said:

‘George Osborne has made it clear that he did not properly consider the Co-operative Party’s call for a mutual Northern Rock which would have made money back for taxpayers, but created a more sustainable building society bringing much needed diversity to financial services and increasing mortgage lending at a time it is desperately needed.’

Here is a link to a video of Co-operative Party MPs including Shadow City Minister Chris Leslie asking questions of the Treasury on the failure to remutualise Northern Rock.

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