‘People before profit’. Why the refrain of ‘08 still matters in 2012
In the aftermath of the banking crisis of 2008, the Cooperative party launched The Feeling’s Mutual campaign. Its aim was simple: to campaign for a fairer, more diverse financial sector that was accountable to the public and that embraced the ethic of ‘people before profit’. As we now enter 2012, this is an opportunity to take stock and look at some of the outstanding progress made, as well as focusing our minds on the challenges ahead.

The campaign championed an increased role for credit unions and building societies in promoting good financial practice and providing moral competition for the shareholder-controlled banks. It argued vigorously that the once proud building society Northern Rock should be remutualised as the start of a programme of wholesale financial reform. The campaign successfully highlighted the coalition’s abject failure to promote mutual finance and accountability, despite making an explicit promise to do so in the coalition agreement. It highlighted the problem of financial exclusion and the social impact that this modern plague has on disadvantaged communities. On legal loan sharks, the campaign challenged those offering loans at eye-watering rates of interest.

But as with any political campaign, there have been low points as well as highs. Watching the government condemn Northern Rock to a future as another mid-sized, shareholder-controlled mortgage bank, with no accountability and no moral fibre, was a disappointment. But as the year drew to a close it was announced that the Co-op Bank had been granted ‘preferred bidder status’ in the sale of Lloyds Bank assets, a fantastic result for the mutual sector. If the deal is secured it would give the Co-op Bank a 7.6 per cent share of the UK current account market. This was a ‘festive tonic’ indeed, as the Co-op News put it.

It is clear that some key challenges remain. The banking sector remains largely unreformed, leaving the public vulnerable to future banking crises. SMEs are still struggling, nearly five years on, to get the access to affordable credit that they and our economy so desperately need. The Business Growth Fund, a measure the coalition said would provide the urgent support necessary, sat on its hands for almost a year before any investments were made. The ethics of the financial sector also remain substantially unchanged. In fact, the government has colluded with the city by refusing to implement legislation introduced by Labour that would mean all bonuses exceeding one-million pounds must be publically disclosed.

The shareholder banks have shown equal scorn towards the new ethical regime required. The RBS group has announced that it is going to restrict access to ATMs for their basic bank account customers. It means that hundreds of thousands of customers will only be able to use ATMs operated by RBS, NatWest, Tesco and Morrisons. This will affect some of the most vulnerable in the UK who are unable to access other conventional accounts and will entrench the problem of financial exclusion still further. Given that this is a policy from a supposedly restrained 83 per cent state-owned bank, it doesn’t bode well for the future. Increasingly the banks operate with the view that their customers exist to serve their needs, not the other way around.

2012 looks set to be another turbulent year for the global economy. This disaster movie which started playing out in 2008 has yet to reach its conclusion. As progressives and cooperators, we know that a return to business as usual is not a viable option. The campaign for mutual finance and real reform must continue apace in 2012. We know that unless real reform is enacted this disaster movie will have a sequel – and sequels have a habit of always being worse than the original. The refrain ‘people before profit’ has not been learnt by the banking sector, or by their protectors in the coalition. But it’s a lesson they need to learn, and learn fast. Only then will any economic recovery be sustainable in the long term.

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Daniel Carey-Dawes is a Labour and Cooperative party activist, and writes here in a personal capacity.