Treasury financial secretary Mark Hoban has defended the decision to sell Northern Rock to the private sector telling MPs no credible option for remutualisation was put forward.
During a ministerial statement on the sale in Parliament yesterday, Shadow Treasury financial secretary Chris Leslie said not enough consideration had been given to remutualisation.
Hoban said the sale means £747m goes to the Treasury now to help pay down the deficit while remutualisation would have involved the free transfer of shares to members of the mutual with no certainty of a return to the taxpayer.
Hoban said: “No one put forward a workable plan for a stand-alone remutualisation of Northern Rock. No mutual came forward in the final round with a bid to acquire Northern Rock. There is no point in hoping for a white knight to appear to remutualise Northern Rock when the reality is that none was forthcoming.”
The coalition agreement published after the general election last May commits the Government to promoting mutuals and fostering diversity in financial services. Leslie said that given the commitment the Government should have pushed for a mutual solution. Hoban said the Government’s attempts to work with the Building Societies Association and mutals to remutualise the Rock had been fruitless.
Treasury select committee member and Conservative Party deputy chair Michael Fallon welcomed the sale saying it would provide a “strong challenger retail bank”. The TSC has raised concerns about there being too few players in the UK retail banking market.
Pressure had been building in Parliament for the Rock to be remutualised with 111 MPs signing an early day motion calling for the Government to give the move equal consideration to a sale to the private sector.