Speaking at the Building Societies Association annual conference, Coles said: “It’s clear from conversations I’ve had with politicians and officials that the big lump sum from selling Northern Rock immediately into the market or to an existing institution is pretty high up in people’s minds.
“How you get that if you turn it into a mutual is a question that’s often put to us. I think you can’t because you have to look at other issues about better customer service, about products – that doesn’t deliver immediately the windfall that some politicians are interested in.”
During the same session Philip Collins, former speech writer to the Prime Minister and public policy expert, revealed that he did not think it was politically expedient for the government to remutualise the Rock either.
He said: “There’s an argument going on between the Cabinet office who are absolutely gung ho for the mutual agenda and then the Treasury on the other, who for their own entirely understandable reasons are fixed on when they’re going to get the money back.
“A big part of the strategy is that at some point in the not too distant future the big banks will yield a profit for the public, that will be returned into the private sector and that money is a lovely windfall to have if you can align it with a political cycle.”
Collins added that the mutual sector did have an opportunity to fight for Northern Rock being mutualised but that it would have to persuade the Chancellor, George Osborne, that the move would be more politically popular than a cash windfall.
He said: “The argument for mutualisation is easy to make in principle – it’s a good case with a lot of headwind from Labour behind it and from some Liberal Democrats – but I strongly suspect that in the end Treasury will prevail.
“It’s feasible to return the money through mutualisation but it’s more likely to be a slower burn. And it’s very probable they are going to want the money right there and then.”
Robin Smith, chairman of Leeds, agreed mutualisation looked unlikely but added: “A lot depends on the political will. It seems to be that a government that knew what it was about would hand the business back to its members when the balance sheet is ready. What a huge political gesture that would be.”
