The way to change banking is to change your bank

So, the deal between Lloyds and the Co-operative Bank is off.

It held the prospect of being a game changer in banking, simply by extending the branch network for the Co-operative Bank across a far wider reach across the country. In addition to 630 branches, over four million customers would have come across, the result, ultimately, of a decision by the regulator that Lloyds, for taking the shilling of the state, needed to sell some of its branches, to limit its sway.

This was always a huge financial deal, with high risks for the co-operative sector balanced out by a long-term view of the benefits of being in retail banking at a scale on which the Co-operative Bank could be a competitor that could help shape good practice and make returns for members. It is to the credit of the Co-operative Group that it explored it, was up for it, and that it had the business nous now to step away. The concerns, which were around regulatory requirements, capital backing, payback periods, are real. No one wants to bet the bank when it comes to the largest co-operative business in the country.

We will now have a TSB, we expect, as the branches are floated off separately. But can this be anything like a Trustee Savings Bank – something with its own proud record of ethical action?

The story of savings banks, begins in 1798, when Henry Duncan became minister of Ruthwell, a small village on the edge of the Solway Firth in South West Scotland. Professor Johnston Birchall, who has a book out next week on customer owned banks worldwide, has charted Duncan’s early efforts.

Duncan set out trying to improve the lot of his desperately poor parishioners, buying flax for women to spin in their cottages, employing men to turn his land into a model farm or to work on the roads, reviving a local friendly society and importing grain at wholesale prices. In 1810 he then decided to set up a parish bank. Local landowners backed him as they liked the idea of getting people off parish poor relief through their own savings.

Duncan had the right skills, as he had spent three years working in a bank in Liverpool before becoming a minister. The idea, says Birchall, was simple. People could open a savings account with just six pence. The business model was easy to copy and within five years of the first bank opening, there were savings banks throughout the United Kingdom, then spreading around the world.

As Johnston Birchall says, though, “unfortunately, they had a flaw; they were not really owned by anyone, but administered as trusts by whoever could get their hands on them.” The co-operative and mutual model in turn offered a remedy, through membership and board election.

There is one authentic savings bank left, the Airdrie Savings Bank in Scotland, but the big question for the new bank is whether it will operate with an ounce of the motivation that inspired Henry Duncan.

For now, the best way to change banking, as the move your money campaign suggests, is to change your bank. Four million customers won’t have that as an automatic option now, but whether to the Co-operative Bank, building society or the credit unions that offer it, the offer to switch is still on the table.

Having and being – thoughts after the death of Margaret Thatcher

“What we think, we become. My father always said that…” was something that Margaret Thatcher said and signed up to. Given the influence of her ideas on political and economic life, it seems right, on her death, to consider what we think and who we are.

Her idea that society is simply the sum of individuals was clumsily put and widely and probably unfairly pilloried, but it is a prompt to think about something fundamental, which is the extent to which we act alone or act together. Martin Buber, last century, characterised this as looking to the ‘I’ or the ‘we’.

Eric Fromm, who wrote The Sane Society in 1955 – a powerful case for co-operative economic democracy, builds on this distinction between individual and society by looking at what we have and who we are. His ideas on ‘having’ and ‘being’ are set out in a short interview before he died.

In conversation with Pat Conaty, Robin Murray and John Restakis – colleagues and associates in our work at Co-operatives UK – prompted by this, it becomes clear that if value rests in what you have, rather than who you are or what you are part of, then sharing and co-operation can be seen as a threat to the identity of the haver. In contrast, if value rests in who you are, then there is a wider sense of identity and meaning that comes from sharing, and from collective affiliation. Hence the importance of the experience of co-operation, at home and work, and of festivals and dance, of common meals, of working together on a common task. This is widely affirmed in all the great work of recent years on ‘well’ being – where co-operation and social reciprocity is the outstanding predictor of happiness.

This is the real sense of society as something not just natural, rather than artificial, but also adaptable rather than fixed. The society that we are part of, or rather the multiple communities that we affiliate or adhere to, are not given but made and remade by what we think and how we act. With co-operative and mutual models of enterprise, we are doing just that – by sustaining, exploring and affirming models of ownership, investment, work and reward that find a better balance.

If it is possible to think about both the ‘I’ and the ‘we’, we can become more fully human and more fulfilled in how we live.