I was extremely disappointed to learn this morning that George Osborne has decided to ignore the sound advice from the Co-operative Party over the sale of Northern Rock.
The Co-operative Party’s proposals, which I support, advocated for a re-mutualisation of Northern Rock. Mutual ownership is the best solution for ensuring a stable long-term future for these companies, and ensuring that the expense undertaken in their nationalisation will deliver for consumers in the long term.
During the 1980s the Conservatives under Margaret Thatcher embarked upon an ideologically-motivated demutualisation of co-operative financial institutions. It was many of these institutions, such as Northern Rock, which then subsequently failed due to over-risky lending, plunging us into a financial crisis.
Given that the policy of enforcing a complete privatisation of the financial sector has shown not only to have failed but to have done so with dire consequences to the entire country, it is clear that this decision is motivated by blind ideology rather than the best interests of the country.
In addition to the lessons of history there are other reasons why this decision is catastrophic. Firstly, if Northern Rock is auctioned off now then the taxpayer will actually make a loss on the sale: according to the Times the bank, which was given an injection of £1.4 billion of taxpayers’ money, is only expected to fetch about £1 billion when auctioned. This means that taxpayers money will be used to subsidise a private purchase whose profits will then go to line the pockets of the City’s wealthiest.
Secondly, in privatising the bank the government is relinquishing any opportunity it has to force its practices to be more consumer friendly. The least the taxpayer should gain from such an expensive purchase is the assurance that the currently nationalised banks will be pressured into providing accessible lending for those struggling during these difficult times. George Osborne however, has now demonstrated just how little he cares for those small businesses and first time homeowners who were most affected by the crisis and who our financial services are currently failing.
This is simply another example of how this deeply political chancellor is putting his own personal beliefs above the needs of the people and future economic stability and growth. It also highlights just how unfit he is to be in charge of our country’s economy. I urge you to support the Co-operative’s proposals by signing up to their campaign to reverse this decision.