Co-op’s ex-boss says bank move a ‘tragedy’ but denies any blame
the nation’s finances, has forecast that underlying public sector net borrowing will hit £119.8bn for the current financial year, but a number of economists now believe the annual deficit is more likely to come in at about £105bn.
Markit chief economist Chris Williamson said: “Strong economic growth is likely to persist in coming months, boosting the government’s tax take further, especially from corporation tax, which should more than keep the deficit on target.
“A figure of £105bn for the year is currently looking more likely than the government’s £120bn target, which was set at a time when the economy was showing signs of renewed weakness, in contrast to today’s picture of robust expansion.”
The Treasury said the economy was “turning a corner” but Labour claimed that – while the fall in monthly borrowing was welcome – the Chancellor looked set to borrow more than planned.
Monthly interest payments on the nation’s debt fell by 5 per cent but still cost taxpayers £2.8bn in September – out of total government expenditure that grew 2.5 per cent to reach £53.2bn for the month. Co-oP Group’s former boss Peter Marks yesterday called the radical change in ownership of its banking arm “a tragedy”, but refused to take the blame for the ill-starred acquisition of the Britannia building society in 2009.
Marks told a meeting of the Treasury select committee: “I can’t take responsibility for something I wasn’t in full control of, which was the bank. I wasn’t driving the Britannia deal but I absolutely voted for it when it was proposed.”
He said he was chief executive of the parent group, and only a non-executive director of the “ring-fenced” Co-op Bank in line with the mutual’s unusual structure.
It came as the Co-op announced yesterday that longstanding chairman Len Wardle will step down next May at the end of his term of office, having recently led the search for Co-operative Financial Services. He said the group’s retailing arm had doubled profits in the final five years of his tenure.
But Andrew Tyrie, chairman of the committee, said the Co-op Bank comprised about 40 per cent of the assets of the mutual. “A good half of the Co-op has been wrecked by the other half?” Tyrie said.
Marks, who stepped down earlier this year after the Co-op’s failed bid for 630-plus Lloyds’ bank branches, agreed that “with a crystal ball” the Britannia acquisition was a mistake.
Britannia proved to be stuffed with bad loans, and there were chronic problems with the IT integration of the two mutuals.
But Marks said even though it looked the right strategy at the time he could not be held responsible as the acquisition was driven by then-banking boss, David Anderson.
The return of part of the government’s stake in Lloyds Banking Group to private hands was recorded as a £586m profit, which will go towards paying down the state’s debt.
Martin Beck, of Capital economics, said: “Although the economic recovery has taken its time to come though in the fiscal numbers, September’s figures suggest that the public finances are now beginning to reap the rewards of a stronger economy.”
However, the current net debt excluding bank bail-outs climbed to £1.21 trillion, reaching a new high of 75.9 per cent of UK GDP.