The Building Societies Association and other mutual bodies have written to the new Prime Minister urging him to stick to Labour’s manifesto pledge to “double” the size of the sector and unlock new finance.
The letter to Keir Starmer says: “The co-operative and mutual sector is united around an ambition for growth and clear policy priorities for unlocking it.
“Labour’s manifesto pledge to remove barriers to our growth, including access to finance, aligns fully with our preparations.”
It points out that mutual and co-operative businesses have combined annual revenues of £87.9bn, equal to 3.5% of the country’s gross domestic product.
The bodies also set out a ten-point plan to boost the sector.
This includes:
- A new government minister for mutuals and co-operatives
- The establishment of a council to partner with government to deliver the pledge to double the size of the cooperative and mutual sector
- Treasury to set up a British Business Bank fund specifically for new and growing mutuals and co-operatives
“We and our member businesses are a ready partner for your government,” says the letter signed by Co-operatives UK, the Association of Financial Mutuals, the Building Societies Association and the Association of British Credit Unions Limited.
The move comes after a bill to allow Building Societies to boost lending became one of the final pieces of legislation to make its way through Parliament ahead of the general election.
The Building Societies Act 1986 (Amendment) Bill, passed in May, was part of the “wash up”, which allows legislation to be passed quickly, before parliament dissolved ahead of the 4 July national poll.
The original bill was passed almost four decades ago, and at the time limited the portion of cash building societies could raise from money markets to 20%, with the rest from their members.
This has been gradually lifted and now stands at 50%.
The amendment keeps this limit but excludes three types of funding from the calculation, which in effect allows mutuals to raise more cash from outside sources.
These cover:
- Funds accessed from the Bank of England in stress scenarios
- Forms of loss-absorbing debt building societies may hold to ensure that, should the business fail, investors rather than taxpayers bear losses
- Sale and repurchase agreements for types of liquid assets building societies hold as capital buffers
