Northern Rock

Debate between Mark Hoban and Jonathan Reynolds

Monday 21st November 2011 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Like my fellow Co-operative party MPs, I strongly wanted to see a mutual solution for Northern Rock. The Government’s reasons for not going down that route seem to change every time the issue comes before the House. The Government were happy to sell at a discount and use vendor financing, but are not those the very reasons why the Government used to say they could not proceed with remutualisation? Further to that, the Minister’s statement that “no mutual came forward with a bid” suggests that he does not really understand the issue at all. Surely the point of a mutual is that the members themselves would buy it out and become the owners.

[Mr Hoban]

I question whether the hon. Gentleman himself understands mutuals. There are situations where mutuals come forward and make bids. We have seen the consolidation of the mutual sector in recent years as a consequence of the financial crisis, so there are different ways in which a mutual option could arise. Let me reassure the hon. Gentleman and his hon. Friends. We looked closely at the mutualisation option, and we were open in reaching out to Mutuo, Adrian Coles, the Building Societies Association and Jonathan Michie to encourage them to come forward with a workable solution for how Northern Rock could be remutualised. No one came forward with such a solution. That is why this deal is the best one for the taxpayer.

Regulatory and Banking Reform

Debate between Mark Hoban and Jonathan Reynolds

Thursday 16th June 2011 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point about diversity in the financial system. One of the points that the Governor of the Bank of England made in his Mansion House speech last night was about the need to reduce the barriers of entry to the banking system in order to encourage more competitors to come forward. That is an excellent way in which we can promote choice and competition and get a better outcome for consumers, whether individuals or businesses.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I, like many hon. Friends, believe the Government’s decision to proceed so quickly with a sale process for Northern Rock shows that they are willing to miss a golden opportunity to learn the lessons of the financial crisis and diversify the UK banking sector. On remutualisation, will the Minister undertake to release all the advice he has received, information on all the meetings he has been to and all the rest of the paperwork, so that we can decide—Co-operative MPs such as myself, and other Members—whether remutualisation has been taken as seriously as it should have been?

[Mr Hoban]

The hon. Gentleman makes an important point. I reiterate what I said before. Yes, Northern Rock has been put up for sale. The purchaser could be a proprietary company or another mutual. An acquisition by another mutual could actually help strengthen the mutual sector. I have made it clear that as the sale process proceeds, we will compare the outcome with either an initial public offering or a stand-alone remutualisation. The challenge that those supporting a stand-alone remutualisation need to address is how we ensure that the taxpayer gets value for money from that.