At last the mutuality debate gets underway, starting with Northern Rock

This is going to present huge challenges and not a few opportunities. The biggest opportunity is to promote a reshaping of ownership and competition in the banking sector, the surest way of creating a future that looks significantly different from the immediate past. Introducing greater diversity of ownership and extending competition will do more to deliver the almost universally shared objective of not allowing a return to the market structures and conditions that drove the financial markets to the edge of collapse just a year ago than any amount of new regulation.

I wrote how a fresh look at mutuality as an option for de-nationalising the banks should be high on the agenda when the Treasury Select Committee commented positively on this option in its major report earlier this year. Now the concept has been given some intellectual credibility by the publication of report by Professor Jonathan Michie of Oxford University. He focusses on Northern Rock and calls for it to be mutualised rather than just returned to the private sector and has won immediate support from John McFall, chairman of the Treasury Select Committee.

These ideas deserve serious consideration. I was surprised that something along these lines didn't feature at the recent Liberal Democrat conference as it would have been an ideal way for them to start to differentiate themselves from the other parties, especially the Labour Party which they say they want to replace as the main party of the left. It may be that Labour will themselves be able to use such ideas to differentiate themselves from the Conservatives as the election approaches and this issue gets more pressing: mutuality has deep roots in Labour through its very long association with the co-operative movement.

For now, we should just be grateful to Professor Michie for developing the arguments about the role of mutual institutions in a re-shaped banking sector.