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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PMQs review: Jeremy Corbyn turns "the nasty party" back on Theresa May

The Labour leader exploited Conservative splits over disability benefits.

It didn't take long for Theresa May to herald the Conservatives' Copeland by-election victory at PMQs (and one couldn't blame her). But Jeremy Corbyn swiftly brought her down to earth. The Labour leader denounced the government for "sneaking out" its decision to overrule a court judgement calling for Personal Independence Payments (PIPs) to be extended to those with severe mental health problems.

Rather than merely expressing his own outrage, Corbyn drew on that of others. He smartly quoted Tory backbencher Heidi Allen, one of the tax credit rebels, who has called on May to "think agan" and "honour" the court's rulings. The Prime Minister protested that the government was merely returning PIPs to their "original intention" and was already spending more than ever on those with mental health conditions. But Corbyn had more ammunition, denouncing Conservative policy chair George Freeman for his suggestion that those "taking pills" for anxiety aren't "really disabled". After May branded Labour "the nasty party" in her conference speech, Corbyn suggested that the Tories were once again worthy of her epithet.

May emphasised that Freeman had apologised and, as so often, warned that the "extra support" promised by Labour would be impossible without the "strong economy" guaranteed by the Conservatives. "The one thing we know about Labour is that they would bankrupt Britain," she declared. Unlike on previous occasions, Corbyn had a ready riposte, reminding the Tories that they had increased the national debt by more than every previous Labour government.

But May saved her jibe of choice for the end, recalling shadow cabinet minister Cat Smith's assertion that the Copeland result was an "incredible achivement" for her party. "I think that word actually sums up the Right Honourable Gentleman's leadership. In-cred-ible," May concluded, with a rather surreal Thatcher-esque flourish.

Yet many economists and EU experts say the same of her Brexit plan. Having repeatedly hailed the UK's "strong economy" (which has so far proved resilient), May had better hope that single market withdrawal does not wreck it. But on Brexit, as on disability benefits, it is Conservative rebels, not Corbyn, who will determine her fate.

George Eaton is political editor of the New Statesman.