This bonkers situation has long been opposed by Liberal in Britain. We have argued that other stakeholders interests are at least as important as capital's. We have seen this most graphically in Southern Cross where a quick buck was made on a property deal . There seems to be little interest in the needs of the care home residents or the staff. Activities like this need long term stability.
Now my children reckon my cloths become fashionable every ten or so years. Personal I can't see that a tweed jacket is subject to the demands of fashion. Some political ideas are the same. Liberals have been arguing the case for employee ownership/mutuals and not for profit organisations for decades.It maybe that these ideas are coming around and it would be mighty sad if having championed them in the dogs days we gave up on them just when they make be becoming achievable Writing in today's Independent.Hamish McRae observed:
On the first the thing that stood out, aside from the sorry details of what was happening to Southern Cross itself, was the way the not-for-profit care homes scored best for the quality of their care, better in general than either state-owned or purely private-sector owned ones. Why should that be? Well, no one really seems to know. Maybe the fact that any profit is ploughed back into the business helps. Maybe the culture of not-for-profit attracts a different quality of management. But it does seem an observable fact and that should make us stop and think about how this form of ownership might be encouraged.
And later turning his attention to the financial sector:
If not-for-profit organisations perform so well, why are there so few of them? Actually it is worse than that: the movement has been in decline. It used to be much more important in financial services, with building societies and life assurance companies seemingly particularly suited to this form of ownership.
The conversion of many of the building societies from mutual to shareholder ownership has been a catastrophe. Not one building society that converted remains an independent entity. They have either been taken over or gone bust. Those that remained mutual have continued more or less successful, with the weaker ones taken over successfully and the biggest, the Nationwide, coming through the downturn is good shape.
Many of the mutual life assurance groups have also converted or simply been taken over. Of course mutual ownership is no certain route to success or indeed survival: the Equitable Life was a mutual. Nevertheless it is hard not to regret the decline of a form of ownership that has lasted a couple of hundred years and more.
Sadly, there is not much sign of a turnaround. You might imagine that popular hostility to banks would have created some space for new financial institutions but it is not happening. There was some talk of Northern Rock being reconstituted as an old-style building society but that seems to have died. So while we still have some successful institutions that occupy that space between government and the market-owned sectors we are not creating new ones. John Lewis is universally admired. The Co-op does some things well. But there is nothing new, at least in finance or retailing.
Let us hope that when we get the banking reforms re-mutualisation is back on the agenda. It offers far more hope than issuing shares to the state owned banks Yelsin style.