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18 February 2010

Beware of Tory co-operatives

The proposals are a back-door device for more privatisation.

By Peter Wilby

When the Conservatives use words such as “co-operative”, it is wise to count the spoons. Their proposals for allowing state employees to take over primary schools, nursing teams and so on, and to keep and distribute among themselves any surplus, may possibly signify a belated conversion to workers’ control, perhaps prompted by the self-styled “Red Tories”. But I think it safer to treat the proposals as a back-door device for more privatisation of the public sector.

I am reminded of the demutualisation of the building societies under Tory governments in the 1980s and 1990s. These were owned by their customers — that is, savers and borrowers, known as “members” of each society — and could trace their lineage back to the self-help institutions started by working-class communities in the 18th and 19th centuries. An Abbey National boss, Clive Thornton, once called them the highest form of socialism.

The Tories systematically undermined them by introducing legislation that encouraged them to behave like banks, advancing unsecured credit and raising funds from the wholesale money markets rather than from their savers. Most important, they were urged to demutualise and become conventional shareholder-owned banks, with members getting windfalls in compensation for their loss of control.

Some Tories were so intent on destroying the mutual model that they wanted to compel all building societies to convert to plcs within a decade. Happily, that didn’t happen, but most large societies, including Northern Rock, took advantage of the new legislation, with consequences that are now familiar.

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All this was sold with a leftist slant. The building societies, we were told, were a conspiracy against the workers, limiting their access to credit and operating as a cosy cartel.

Beware Tories bearing red-tinted gifts.

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