Mar 01, 2010
Cameron’s Conservatives Have No Right To Lecture on Financial Services
David Cameron has spent a lot of time lecturing about the economy and the mistakes that have led us into this financial crisis. It is perhaps unsurprising that one of the major factors that has impacted us in this crisis has been missing from his analysis.
Through thir 1986 Building Societies Act, the Conservative Party facilitated the waves of demutualisation that plundered generations of assets from mutual societies, replacing prudent mortgage providers with some of the worst culprits of casino capitalism.
It was a move that was bitterly opposed by the Labour and Co-operative Parties. As Oonagh McDonagh, the then Shadow Treasury Minister stated ‘the Bill contains proposals which in the long term could mean that the building societies movement as we know it will disappear from the scene. Its loss is something that we could well live to regret.’ This seems almost prophetic now.
It’s no accident that the end of 18 years of Tory misrule was crowned by one of the worst cases of corporate misdeeds and intergenerational theft of the modern era. Building Society boards, city investors and carpetbaggers all came, saw and they cashed in. Billions of pounds worth of assets, accumulated by generations of building society members, were sold for the price of a windfall; the value of which was (on average) clawed back by the demutualised societies within four years from their customers.
For Michael Heseltine, writing at the death throes of the last Conservative Government, demutualisation was an ‘extraordinary and exciting change’ in tune with the ‘central tenets of Conservative philosophy.’ Far from embarrassment at the destruction of these community assets, he declared that ‘this outcome flows directly from the (Conservative) Government's policies, its determination to deregulate business and promote competition.’
Over a period of just over ten years, ten societies demutualised. Of these, 6 now form part of entities in receipt of government support, 3 have been taken over by major banks – and one (Bristol and West) was effectively remutualised in 2005. Not a single one has survived as an independent entity. Institutions that had survived and grown over 150 years as mutuals were bankrupt after less than 15 years as PLCs.
If David Cameron is serious about learning lessons from the past, perhaps he should begin with apologising for the role his party played in the past...
Through thir 1986 Building Societies Act, the Conservative Party facilitated the waves of demutualisation that plundered generations of assets from mutual societies, replacing prudent mortgage providers with some of the worst culprits of casino capitalism.
It was a move that was bitterly opposed by the Labour and Co-operative Parties. As Oonagh McDonagh, the then Shadow Treasury Minister stated ‘the Bill contains proposals which in the long term could mean that the building societies movement as we know it will disappear from the scene. Its loss is something that we could well live to regret.’ This seems almost prophetic now.
It’s no accident that the end of 18 years of Tory misrule was crowned by one of the worst cases of corporate misdeeds and intergenerational theft of the modern era. Building Society boards, city investors and carpetbaggers all came, saw and they cashed in. Billions of pounds worth of assets, accumulated by generations of building society members, were sold for the price of a windfall; the value of which was (on average) clawed back by the demutualised societies within four years from their customers.
For Michael Heseltine, writing at the death throes of the last Conservative Government, demutualisation was an ‘extraordinary and exciting change’ in tune with the ‘central tenets of Conservative philosophy.’ Far from embarrassment at the destruction of these community assets, he declared that ‘this outcome flows directly from the (Conservative) Government's policies, its determination to deregulate business and promote competition.’
Over a period of just over ten years, ten societies demutualised. Of these, 6 now form part of entities in receipt of government support, 3 have been taken over by major banks – and one (Bristol and West) was effectively remutualised in 2005. Not a single one has survived as an independent entity. Institutions that had survived and grown over 150 years as mutuals were bankrupt after less than 15 years as PLCs.
If David Cameron is serious about learning lessons from the past, perhaps he should begin with apologising for the role his party played in the past...
