Labour to cut ties with Co-op Bank as it continues to slash debts

24th April, 2014 9:14 am

The BBC reports this morning that the Labour Party is to cut its near century long relationship with the Co-op Bank:

“The Labour Party is looking to sever its links with the troubled Co-op Bank, bringing to an end one of the oldest political partnerships in the UK.

The BBC has learned that Ian McNicoll [sic], Labour’s general secretary, is looking to move loans worth more than £1m to the trade union-owned Unity Trust Bank.”

Speaking to LabourList this morning, Labour sources indicated that this move had been planned for some time.

coop_bank.jpg

The move comes as the party seeks to pay down all debts by the summer of 2016. Debt has been a significant issue for the party organisationally over the past decade – ballooning to in excess of £25 million after the 2005 election. That’s now down to less than £4 million, and is being paid off at a rate of £2 million a year. Currently the party has two secured loans, both of around £1 million – one with the Co-op Bank and the other with Unity Trust. Those loans will now be combined and held by Unity Trust, who will also be responsible for the party’s current account.

However, claims that the party has a substantial overdraft facility have been refuted by party sources. In fact, the party will only be able to spend what it is able to raise in the run up to the election, as it seeks to become debt-free. That’s likely to tie the party’s hands somewhat, especially with hires such as David Axelrod placing extra pressure on the party’s purse strings. In turn, that will mean a redoubled focus on fundraising – from large donors and small donors alike.

For the Co-op movement, it looks like another bad news story, although it seems that the Co-op bank are starting to orient themselves away from mid-level corporate accounts and towards a focus on their retail sector. However that’s unlikely to stop more negative headlines from hitting an already battered Co-op movement.

 

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  • treborc1

    The question is of course why not move it to the RBS or one of the many banks labour helped out, why to the Unions own bank.

    After all that fighting to try and end your in the pocket of the Unions, your now back into the Tories saying your in the Unions bank.

    Why not use one of the main stream banks, would they not have loaned to you, or even given you the over draft.

    This has to be a real serious hit on labour being seen as a stand alone party.

    • Danny

      Eh? You’re having a moan about Labour using a bank owned by the Unions?

      Would you rather Labour were a party who allowed their internal operating policies to be dictated by the fear of a headline in the Telegraph and what the big bad Tories might say about the party?

      I’d wager that had they opted for RBS over Unity, you’d have posted something along the lines of, “Labour relying on high street banks, they’re no better different to the Tories”!

      Ditching the Co-op link and going with Unity Trust is a good course of action to take.

      • treborc1

        But we all remember Falkirk and labour statements and then when the police said nothing wrong here, Miliband had no choice but to make a big show about one man one vote which was smoke screen.

        The idea of not being in the Union pocket has been big on labour agenda that’s gone out the door, so why not be like all other firms and companies in the UK and go with a state own firms.

        Live within your means we all have to…

        I would have said nothing about labour being like the rest of us and going into one of the many bank available.

        But to the Unions bank, come on …out of the frying pan into the fire knowing damn well the Union will give to labour as they have been doing right through Falkirk, Games.

        • Redshift1

          Labour have also banked with Unity Trust for an incredibly long time. That isn’t anything new.

          The only news is the severance with the Coop Bank

          • treborc1

            So nothing has changed then, so why this article, what we are hearing is that the Coop at a meeting have decided to end all political affiliation as it goes from the Coop to your bog standard bank

  • Steve Stubbs

    I am missing something here. the co-op bank legally controls the Unity Trust bank through its articles of association, appoints the chairman, MD and the majority of the board members.

    Someone explain how this is labour breaking its links with the co-op bank?

    • Quiet_Sceptic

      I think some other articles mentioned that the COOP bank was intending to sell their stake in the Unit Trust bank, so sounded like moving the loans across to get rid of them when they sold it off.

    • Danny

      Ok, I’ll explain.

      The Co-op announced months ago that they were to offload their stake in Unity Trust and it is only a matter of time before it is acquired, almost certainly by the Trade Union movement who have first refusal over any buyout.

      So very soon the Co-op won’t have any involvement in the Unity Trust bank.

      • Steve Stubbs

        Reported elsewhere that the co-op have majority board control despite only having 27 or so percent holding as the regulators required a supervisory bank in the loop. If correct that would preclude the unions taking that stake. Finding another bank prepared to risk a similar screwing to Lloyds over TSB may make that a hard task and possibly lengthy ……..

        • treborc1

          In January 2014 the Co-operative Bank announced its intention to sell its 27% shareholding in Unity Trust Bank. Commenting on this, Peter Kelly said: “We continue to work closely and positively with The Co-operative
          Bank, the Regulator and our other major trade union stakeholders to effect a smooth transition as we move towards a wholly independent
          business model. We remain on track to conclude the share sale during this calendar year and look forward to welcoming and working with new shareholders as we continue to further develop our unique socially centred business plan.”

          I believe in what I’ve heard the Unity bank is working towards becoming a stand along bank, they are seeking all the legal requirements.

  • Doug Smith

    The trade union’s bank is good enough for Labour. But trade unionists aren’t good enough to stand as parliamentary candidates for Labour.

    If, as a member of Unite, I had any say in this matter I’d tell the Unity Trust Bank to slam its door in the Labour Party’s face.

    • treborc1

      I cannot wait to hear the rebuttal team take on this, nope Labour’s not in the pocket of the Unions, just well in the bank.
      The Coop said yesterday it would not be funding political parties, which means the labour party, it will not be funding politicians so that will end the political arm of the Coop.

      The question is like always why did labour not then move it’s money accounts away from the Coop into say Lloyds or one of the many state own banks.

      Why go into the pocket of the Union after battling for so long to end that association.

      • Doug Smith

        The Labour elite won’t object to donations and ‘assistance’ from trade unions at top level – and it gives TU leaders the opportunity for an update on the price of a peerage.

        And Miliband will always be able to point to Falkirk as evidence of his ‘toughness’ on the unions.

        But in the main, it is the ordinary trade union members the elite don’t like, particularly as PPCs in safe seats.

  • Steve Stubbs

    And now it seems that this is spin, the Indy is reporting it is the co-op who want rid of labour, not the other way round. The bank wants to divest itself of non core business, which includes labour apparently. But the main impact will be the loss to the party of the million pounds or so a year the bank has been donating……

    Why does nobody in politics ever tell the truth?

    • Minnooli

      I was just thinking the same thing…I know this is a Labour-loyal blog, which is fair enough, but Labour supporters can handle the truth, can’t they?

  • EricBC

    Meaningless unless reason clearly stated.

  • Leon Wolfeson

    I remind people that the Co-Op Bank is NOT a cooperative, despite the name.

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