Anne Snelgrove: Nationwide Building Society Let Down by South Swindon’s Tory MP and Government

Swindon’s Tory MP has missed the opportunity to stick up for Swindon companies like the Nationwide with his own Treasury Ministers. He needs to get a grip of this situation urgently and start representing a fine Swindon company and the Swindon people who work there. 

Following the Banking Regulator’s decision to levy an extra £400 million on the Nationwide Building Society (Headquarters in Swindon) I am very concerned that The Nationwide, as one of Britain’s biggest mutual building societies, is being disadvantaged. The Nationwide employs hundreds of people in Swindon and insensitive rule changes like this could threaten the long term health of one of our strongest companies.

The Nationwide deserves support from the Tory Government, not punishment, as one of the few responsible lenders to come through the financial crash. South Swindon’s Tory MP should be making the case for the Nationwide in Government, but as he does not appear to be doing so I have today lobbied the Shadow Treasury Team and asked Chris Leslie MP (Shadow Financial Secretary to the Treasury) to raise the Nationwide’s case in Parliament.

I strongly support tighter fiscal rules for UK banks but there seems little appreciation at Government level that the Nationwide operates on a different basis to shareholder owned banks, as it is wholly run as a mutual on behalf of its members.

The Nationwide’s lending is mainly individual mortgages on homes, meaning that if the home owner defaults on the mortgage there is an asset – the house – which the Nationwide will own.  This type of lending is a far lower risk than much of the speculative lending by shareholder owned banks. Yet the Nationwide is treated the same as far riskier banks.

The other big issue for mutuals such as the Nationwide is that it’s more difficult for them to raise capital as they don’t have equity. The need to raise capital due to the new rules is forcing building societies to act more like traditional banks and introduce profit sharing for investors (traditionally profits are used to lower mortgage rates or increase savings rates). It should be the other way round – the banks should work more like building societies.

It would be a tragedy if the Nationwide were penalised because it gives its members a real stake in the organisation. There needs to be more help for mutuals and more diversity in the ways they can raise capital. Both Ed Miliband and Ed Balls have emphasised the need for responsible ending and reforming the banking sector: the Nationwide is an example of this in contrast to many of the UK's banks and should be treated as such.

Swindon’s Tory MP has missed the opportunity to stick up for Swindon companies like the Nationwide with his own Treasury Ministers. He needs to get a grip of this situation urgently and start representing a fine Swindon company and the Swindon people who work there.

The Nationwide and its Swindon workforce have been badly let down by their local Tory MP and the Tory Government.