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Is the government set to remutualise Northern Rock?

The Building Societies Association has today issued a report suggesting that the UK government should remutualise Northern Rock to prevent a repeat of the company's collapse in the future. There is also feeling that if this were to occur it would highlight the mutual sector again and potentially inject more confidence into a sector which has been battered by the recession and various financial difficulties.

However, the UK government is unlikely to remutualise when you consider that over £20 billion is still owed to the taxpayer, an investment on which the UK government promised to return. Even though there are significant benefits to mutual companies with regards to the local economy, local customers and actually giving customers a say in the business, there are some who would argue that the mutual society sector of today is very much different to the one which Northern Rock left some time ago.

While Royal Bank of Scotland and Lloyds Bank have taken many of the headlines over the last few months, the UK government still has a significant problem with regards to Northern Rock and an effective escape. The company has been supported by UK taxpayers for many months and despite making initial progress with regards to loan repayments, the amount owed to the UK taxpayer has actually increased of late.

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