A mutual crisis

In the first of our series on faith in a financial crisis the Presbyterian Church in Ireland's Moder

‘Britain must have confidence’ said the prime minister, Gordon Brown, a fortnight ago.

His comment underlined the lack of confidence that is dogging the financial system, which he propped up with the introduction of a credit guarantee scheme to the banks last October.

Alert to the implications, some investors in the Presbyterian Mutual Society, based in Belfast, realised their money was not covered by the guarantee. This triggered a run on the liquid assets of the Society.

The Society operated an easy access policy to savings, so savers withdrew their money to the tune of £21 million within a short space of time. The directors applied to the Department of Enterprise, Trade and Industry (DETI) of the Stormont Executive, to put the Society into Administration, and an Administrator took over on the 17th November 2008.

No new business is being accepted and savers cannot gain access to their money. This has placed many people in difficulty since they cannot pay bills due, nor meet commitments undertaken. Not only is lifestyle affected but also property and businesses, with a knock-on effect to jobs and livelihoods.

There are various links between the Mutual Society and the Presbyterian Church in Ireland. Only members of the Church can invest, and the Board of Directors is made up of Presbyterians appointed by the annual meeting of the shareholders. The Church has never had any operational involvement with the Society and the accounts are not presented to it for approval, but each year at the General Assembly meeting of the Church, a verbal report has been given commending the attractive dividend distributed. With that understanding, the Church, in general terms, drew the attention of members to the benefits described with a view to possible investment.

No one anticipated the difficulties that swiftly overwhelmed the Society in the autumn. We now realise that no financial institution is fireproofed against the credit crunch. The god of materialism has clay feet. There are those who feel the Church has misled them, and, because it has been pointed out that the Mutual is an independent organisation, that the Church has disowned them. Confidence in both the Presbyterian Mutual Society and in the Presbyterian Church has been shaken.

The Church is being pressed to do something to free up people’s savings or to return their money. However the Church has had no access to the books of the Society. The Administrator is severely constrained by law from divulging information. Recently he published his initial report revealing a deficit of around £100 million. People fear they will lose a substantial proportion of their money. Investors have had the opportunity to vote on five resolutions proposed by the Administrator in which he indicates how people might vote if they wish an orderly wind down over a period of time and thus get the best return. The alternative seems to be liquidation, increasing the losses. This will only become clear when the Administrator indicates what rate of distribution he can make.

The Church is able to offer limited help through some benevolent funds to those in dire need. As Moderator of the Presbyterian Church in Ireland, I have written to the Prime Minister, asking for a meeting to put our case for government help, which would include the guarantee, but, also, to find some means to improve the liquidity of the Society and so stabilise the situation.

The Prime Minister has agreed, in principle, to meet the First Minister and Deputy First Minister of the Stormont Executive. I have also met several of the Northern Ireland MP’s at Westminster, local MLA’s at Stormont, and the Minister responsible for DETI. We have been encouraging Presbyterians to sign a petition on the Downing Street web site asking ‘…the Prime minister to provide similar guarantees to UK mutual societies as for banks.’ Printed copies of this have been provided for Presbyterians to sign in their local churches.

Christian faith is being tested, and, just as the principle of mutuality in financial terms has been under severe pressure, so the bond of caring fellowship is under strain. At such a crucial time, it is vital for all in the Church ‘…to carry each other’s burdens and in this way…fulfil the law of Christ.’ (St Paul’s letter to the Galatians chapter 6, verse 2)

Rt Rev. Dr W. Donald Patton
Moderator of the Presbyterian Church in Ireland

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Novelty isn't enough for Emmanuel Macron and Martin Schulz

The two politicians have caused excitement - but so far, neither has had to articulate a programme. 

Emmanuel Macron’s rally in London last night was overshadowed by polling that showed him slipping back slightly as he reaped the consequences of his excessive candour on the matter of France’s rule in Algeria.  Third with Elabe, and joint-second with centre-right candidate François Fillon with Opinionway and Ifop.

As far as the polling and French history show, what matters in this contest is the race to second-place and a ticket to the second round run-off against the hard-right Marine Le Pen.

Macron’s difficulties have intensified as this is the first Wednesday in months in which Le Canard Enchaîné has not brought fresh scandal involving Fillon and his finances. The question of why Penelope Fillon and the Fillon children were paid to act as parliamentary assistants while doing no work will run and run, however, so there may be a way back for him.

Macron’s problems have an echo in Germany, where for the first time since his return to German politics, Martin Schulz is facing serious criticism over his proposed changes to the Agenda 2010 reforms of the last SPD-led government. We wait to see what if any impact that row has on his standing in the polls.

But the difficulties of Macron and Schulz speak to a wider reason why their improved standing in the polls means that the talk of the end of the European centre-left’s crisis was just that, talk.

So far, neither of them has had to articulate a programme beyond “I’m new!” in the case of Schulz and “I’m new and attractive!” in the case of Macron.

We’ve seen that Macron, a neophyte politician, has put his foot in it when asked to add substance to his considerable style. He might improve and Fillon’s ongoing problems might give him a get out of jail free card. Schulz has been around for a bit longer but he has to keep this up until October. It’s a reminder that while being new and shiny is a useful asset for a leader – it isn’t enough on its own. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.