COMMENT: At last, a building society that puts up a fight

`In the Nationwide vote, we have probably witnessed the first significant backlash against the carpetbaggers. It is plainly neither moral nor justified for these people to be able to whip in at a moment's notice and share in the spoils of conversion'

Geoffrey Robinson, Paymaster General, could have been speaking for the previous government when he said recently that building society conversions were a matter for market forces and society members. In attempting to wash the new Government's hands of the matter, he profoundly misjudged both the mood of the country and the needs of that dwindling band of building societies which has chosen to resist the stampede, as yesterday's overwhelming vote for mutuality at the Nationwide amply demonstrates. Brian Davis and his board have won as clear a mandate as they come against conversion, but without action the carpetbaggers will be back. The vote could so easily have gone the other way, and may still do for others. The Government must act, and act swiftly.

To be fair on Mr Robinson, he's hardly alone in failing to spot the growing backlash against the likes of Mr Hardern. Nearly everyone believed the Nationwide would fall, incredible though the slate of pro-conversion rebels seemed. Nobody could quite believe members were going to look a gift horse in the mouth and turn down the chance of free shares. How wrong they were. So what's really happened here?

People often forget that the Nationwide building society used to be called the Cooperative Permanent and it is still stuffed full of Old Labour, thoroughly decent and honourable types. Plainly there's more to it than that, however. This is really the first time members have had an opportunity to hear something different. Other building societies have caved in and failed to put the case against conversion. Nationwide argued it in compelling and forthright fashion.

In the Nationwide vote, we have probably also witnessed the first significant back lash against the carpetbaggers. It is plainly neither moral nor justified for these people to be able to whip in at a moment's notice and share in the spoils of conversion. Building society membership should carry certain duties of trusteeship, for members are in effect guardians of assets build up over generations. It seems quite wrong that feckless, disloyal carpetbaggers should be allowed to nip in in this way and steel the family silver.

The Government's starting point, therefore, should be to invest in membership certain duties of loyalty and longevity. This could easily be done, as Mr Davis and others point out, by introducing a two to five-year qualifying period for membership. The hatches could be further battened down by reversing the ill-thought out Building Societies Act, rushed through by the last government in its dying moments, which gives all building society depositors equal rights of membership. The old distinction between long-term savers and short-term hot money might reasonably be reintroduced so as to make membership a reward for loyalty.

Another useful reform would be to up the level of support members need to stand for election from the present 50 to 500 or more. This would prevent a repeat of frivolous and disruptive campaigning like Mr Hardern's.

Building societies obviously do still have an important and constructive role to play in the provision of financial services, helping to ensure a more vibrant and competitive market place than would exist in a world populated only by banks. It is a tribute to Nationwide's members that that they were prepared to vote for the public good over narrow self interest. Perhaps New Labour might learn a thing or two from them.

The economy needs to cool down gradually

No shopping spree is ever for free and the one caused by the pounds 38bn in shares from converting mutuals is fast coming home to roost. Unfortunately, it is industry that is being forced to pick up the tab.

Yesterday's figures for high street sales were uncomfortably upbeat and undeniably back to boom levels. They did not even include some of the goodies the windfall money is likely to be spent on, such as cars and holidays. Nor are the windfalls the only consideration. Wages are rising faster than prices, job vacancies are at the highest levels in recent memory, and the strong pound is boosting spending power on imports.

For the time being, home demand seems strong enough to offset falling export orders. The British Chambers of Commerce Survey was presented as a tale of struggling exporters, but the detail showed higher turnover, new job creation and skills shortages in both manufacturing and services. This presents a policy dilemma in the sense that raising interest rates to cool the domestic economy is driving the super, soaraway pound ever higher. There has not been an appreciation of sterling on this scale since 1981, and we all know what happened to industry then. In another sense, though, there is no dilemma. If the economy is expanding fast enough to run the risk of higher inflation, it needs cooling down. The bigger the boom is allowed to grow, the bigger the bust that will follow.

Contrary to popular belief, both levers of macroeconomic policy, monetary and fiscal, are already being applied, a tight Budget and rising interest rates. Unfortunately, the UK is the only big economy in this position. The US is the only other country where growth is buoyant, but Alan Greenspan's testimony this week has made the prospect of higher rates across the Atlantic recede. The reaction of the foreign exchanges means that British exporters must pay for the windfall-financed shopping boom.

This does not mean that the cost of borrowing will have to climb all that much higher. The Bank of England is likely to opt for a quarter-point increase in the next month or two, but it will proceed cautiously. As Martin Weale, head of the National Institute of Economic and Social Research, explained to MPs earlier this week, running the economy is like taking a shower. If you find the water is too hot, you reduce the temperature. But there is a danger of turning the taps too far, too fast, and before you know it your shower has turned cold. The latest figures point to the need for another notch on the dial, but the trick is to turn gradually.

Ecclestone's formula for clarifying issues

Bernie Ecclestone, or to be more precise his lawyer, helpfully decided to put the record straight yesterday about the on-off flotation of Formula One Holdings. Yes, a public offering remains the preferred course of action and, yes, Salomon Brothers remains Mr Ecclestone's exclusive financial adviser.

Considering this was Mr Ecclestone's first formal statement on the matter and considering the mountain of speculative press coverage his plans have attracted, it was a masterpiece of non-clarification. What's more, no sooner had the faxes stopped whirring than Bernie was back in the chicanes, confiding to the London Evening Standard that he still thought about calling the whole thing off and placing financial advisers somewhere beneath used car dealers in the evolutionary chain.

Given the extraordinary antics of the investment banking community as it has fought to win the FOH mandate, Mr Ecclestone's disillusionment is understandable. Perhaps he should forget about a listing and stick to the more sedate and altogether less cut-throat world of motor racing.

PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
video
Arts and Entertainment
Martin Amis: Taken to task over rash decisions and ill-judged statements
booksThe Zone of Interest just doesn't work, says James Runcie
Life and Style
life – it's not, says Rachel McKinnon
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
Travel
travelFrom Notting Hill Carnival to Zombeavers at FrightFest
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Service Delivery and Support Manager

£55000 - £75000 per annum + excellent benefits: Harrington Starr: Service Deli...

Corporate Tax Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - HIGHEST QUALITY INTERNATIONAL ...

Relationship Manager

£500 - £600 per day: Orgtel: Relationship Manager, London, Banking, Accountant...

Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home