Keeble: concerned for Nationwide

Government Gives Reassurance on Building Societies' Future

Labour MPs condemned a "hostile takeover bid" for the Nationwide Building Society which would turn the last national mutual society into a plc. But Paymaster General Geoffrey Robinson told them the Building Societies Act, introduced at the end of the last Parliament, would protect customers.

A short Commons debate on the issue was opened by Sally Keeble (Northampton N). she criticised moves to convert the Nationwide as a "simple dash for cash" with people lured by the appeal of a windfall payment. "That a large financial institution which holds the mortgages of a million homes in this country should be decided on a whim is quite appalling," she said.

"The arguments in favour of the mutual building societies are rational but not immediately as attractive as a £1,000 cash handout." she added.

Ms Keeble warned the long-term cost to the customer of converting could be great. She urged the Government, in her maiden Commons speech, to take action to protect savers, especially those with just small amounts in the building society accounts.

In reply, the minister dismissed the MPs' concern about the long-term effects that conversion could have for building society customers. He told them: "You can be reassured that the experience to date has not been discouraging. Abbey National has in fact largely maintained its customer profile and indeed it would be strange if it didn't, because that is where their expertise lies."

"Both the Halifax and Woolwich have both said they intend to follow those principles and practices of business that have served them well in the past." he added.

He promised ministers would watch the long-term effects of the changes. Mr Robinson emphasised the need for savings schemes aimed at people on low incomes. "I am sure we will be introducing ways of encouraging savings schemes which embody the principles of the mutual. I think this is of the essence, to make loaning accounts open to low income earners. That is very much at the heart of our thinking - to encourage savings among those who are not naturally inclined to do so." he said.