The Co-operative group believes the bids undervalued its insurance arm. Photograph: Getty Images.
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Five questions answered on the Co-operative Group's decision not to sell its insurance business

How much is it said to be worth?

The Co-operative Group has announced that it will not to sell the general insurance arm of the business. We answer five questions on the group's decision.

Why has the Co-operative decided to pull out of selling the general insurance part of its business?

The group has reportedly decided it no longer needs the money the sale would have generated. It was originally initiating the sale to fill the bank's £1.6bn financial black hole. The Co-op management is said to have thought the bids they were offered undervalued the business, in light of its potential for growth.

How much is this side of the Co-op business said to be worth?

According to the Telegraph, analysts have valued its worth between £250m and £600m. Legal & General and private equity house AnaCap are believed to have made second-round bids.

What has the Co-operative said about its decision to halt the sale?

Co-operative’s chief executive Euan Sutherland, in a statement, said:

Having considered the sale process, and in light of the changed requirements on us under the Bank recapitalisation process, we believe it is in the best interests of our members, customers and colleagues, that we retain this strong business and develop it further.

What were the Co-operative's original plans before it decided to cancel the sale?

Originally, the group had planned to part with the business in March 2013, in a bid to boost the Co-op Bank’s capital position. The life insurance arm of the group, which was sold to Royal London for £219 million, and the general insurance arm, were intended to be used to safeguard the future of the bank.

The discovery of a £1.5bn capital shortfall at the bank last summer intensified the need for capital. Under the original recapitalisation plans, the bank was due to find part of £1bn with £500m from bondholders. However, the groups funding needs reduced from £1bn to £462m after a redrafting of those plans in November resulted in distressed debt funds opted to inject a greater amount of funding.

What other changes is the group making in a bid to get its finances in order?

Over the weekend, the Telegraph reported that the Co-op Group will cut its £850 annual donations to the Labour Party. Lord Myners, who is carrying out a review of the group's corporate governance and relationship with third parties, told the newspaper: "The scale of giving to others cannot go unaffected by the change in the Co-op’s economics.”

“It’s got less money to spend on everything,” he added.

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Why Chris Grayling is Jeremy Corbyn's secret weapon

The housing crisis is Labour's best asset - and Chris Grayling is making it worse. 

It feels like the classic Conservative story: wait until the election is over, then cancel spending in areas that have the temerity to vote Labour. The electrification of rail routes from Cardiff to Swansea – scrapped. So too is the electrification of the Leeds to Manchester route – and of the Midland main line.

But Crossrail 2, which runs from north to south across London and deep into the capital's outer satellites, including that of Transport Secretary Chris Grayling, will go ahead as planned.

It would be grim but effective politics if the Conservatives were pouring money into the seats they won or lost narrowly. There are 25 seats that the Conservatives can take with a swing of 1 per cent from Labour to Tory, and 30 seats that they would lose with a swing of 1 per cent from Tory to Labour.

It wouldn’t be at all surprising if the Conservatives were making spending decisions with an eye on what you might call the frontline 55. But what they’re actually doing is taking money away from north-west marginal constituencies – and lavishing cash on increasingly Labour London. In doing that, they’re actually making their electoral headache worse.

How so? As I’ve written before, the biggest problem for the Conservatives in the long term is simply that not enough people are getting on the housing ladder. That is hurting them in two ways. The first is straightforward: economically-driven voters are not turning blue when they turn 30 because they are not either on or about to mount the first rungs of the housing ladder. More than half of 30-year-olds were mortgage-payers in 1992, when John Major won an unexpected Conservative majority, while under a third were in 2017, when Theresa May unexpectedly lost hers.

But it is also hurting them because culturally-driven voters are getting on the housing ladder, but by moving out of areas where Labour’s socially-concerned core vote congregates in great numbers, and into formerly safe or at least marginal Conservative seats. That effect has reached what might be its final, and for the Conservatives, deadly form in Brighton. All three of the Brighton constituencies – Hove, Brighton Kemptown and Brighton Pavilion – were Conservative-held in 1992. Now none of them are. In Pavilion they are third, and the smallest majority they have to overcome is 9,868, in Kemptown. The same effect helped reduce Amber Rudd’s majority in Hastings, also in East Sussex, to 346.

The bad news for the Conservatives is that the constituencies of Crawley, Reading, Swindon and in the longer-term, Bracknell, all look like Brightons in the making: although only Reading East fell to Labour this time, all saw swings bigger than the national average and all are seeing increasing migration by culturally-driven left-wing voters away from safe Labour seats. All are seeing what you might call “Hackneyfication”: commuters moving from inner city seats but taking their politics with them.

Add to that forced migration from inner London to seats like Iain Duncan Smith’s in Chingford – once a Conservative fortress, now a razor-thin marginal – and even before you add in the appeal of Jeremy Corbyn’s person and platform, the electoral picture for the Conservatives looks bleak.

(It should go without saying that voters are driven by both economics and culture. The binary I’ve used here is simplistic but helpful to understand the growing demographic pressures on the Conservatives.)

There is actually a solution here for the Tories. It’s both to build more housing but also to rebalance the British economy, because the housing crisis in London and the south is driven by the jobs and connectivity crisis in the rest of the United Kingdom.

Or, instead, they could have a number of measures designed to make London’s economy stride still further ahead of the rest, serviced by 5 per cent mortgages and growing numbers of commuter rail services to facilitate a growing volume of consumers from London’s satellite towns, all of which only increase the electoral pressures on their party. 

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