Labour to leave Co-op bank for Unity Trust deal

 
Kate McCann
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LABOUR is in discussions with Unity Trust Bank after it emerged the party plans to end its long-standing commercial relationship with the troubled Co-operative.

Labour is understood to be planning to move a loan worth over £1m to the trade-union owned bank, although a spokesperson would not confirm the deal had been done yesterday.

“The Labour party is constantly reviewing its financial arrangements. All decisions, including any loan consolidations, are taken for commercial reasons,” the spokesperson said.

The new board at the Co-operative Bank, which has come in for intense criticism in recent weeks over its former chairman Paul Flowers and huge financial losses, was already reviewing its relationship with the Labour party.

The announcement yesterday is understood to represent a desire from both parties to distance themselves from the other, although a Labour source said political ties with the Co-operative movement would not be severed. Labour is already a long-standing customer of Unity Trust.

Although the deal could see Labour free of the Co-op bank in name, it will not be entirely financially independently of it, at least not yet. The Co-op is a 27 per cent shareholder in the Unity Trust Bank and appoints the board, chairman and the managing director. The Co-op announced its intention to sell its share in the social enterprise in January this year.

Speaking about the potential deal, Peter Kelly, director of business development and marketing at Unity Trust Bank said: “We welcome this opportunity to extend our relationship.

“We continue to work closely and positively with the Co-operative Bank, the regulator and our other major trade union stakeholders to effect a smooth transition as we move towards a wholly independent business model.”

Conservative party chairman Grant Shapps said: “These proposals would hand the trade unions even more control over Ed Miliband and the Labour Party. The unions already pick the candidates, buy the policies and choose the leader. Now Ed Miliband wants them to hold the purse strings as well.”