Building societies are at the heart of their communities
Social historian Professor Carl Chinn MBE, speaking at Ye Old Cheshire Cheese pub in London’s Fleet Street to celebrate the 250th anniversary of the first Building Society.
It’s 250 years since the very first building society was set up but their value is greater than ever.
Building societies have been making a positive contribution to the nation for more than two centuries – from taking care of customers’ savings to helping them to buy homes of their own.
This year sees the 250th anniversary of the very first building society and the sector is stronger than ever, benefiting individuals, local communities and the wider economy.
Today’s building societies serve around 26 million customers in the UK. They have total assets of almost £525bn and employ around 52,300 full-time and part-time staff.
In the six months to September 2024 building societies grew their mortgage balances by almost £12bn, accounting for nearly three-quarters (72 per cent) of all UK mortgage growth. They helped more than 63,000 first-time buyers on to the property ladder during that time – showing their commitment to finding solutions to the challenges that face ordinary working people who aspire to be homeowners.
Robin Fieth, Chief Executive of the Building Societies Association (BSA), paid tribute to the sector’s achievements at an event at Ye Old Cheshire Cheese pub in London’s Fleet Street in January to celebrate the 250th anniversary of Ketley’s Building Society, the very first of its kind.
The BSA, which represents all 42 UK building societies, both mutual owned banks and seven of the largest credit unions, chose the venue specifically because Ketley’s started in a pub where patrons pooled their savings to buy land and build homes.
“This is a sector that is really strong and is growing again,” Mr Fieth told guests.
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Robin Fieth, Chief Executive of the Building Societies Association
“We start our 250th year with a fantastic commitment from the Government to double the size of the mutual and cooperative sector. The recognition that our business model is different and benefits consumers presents a unique opportunity to place building societies at the heart of Britian’s economy.
“Today’s building societies have never lost sight of their purpose. They will continue to tackle the challenges of low household financial resilience and difficulties in achieving and maintaining homeownership with innovative and customer-focused products and services.”
The first known building society was created in 1775, right at the start of the Industrial Revolution. As people flocked to towns and cities in the Midlands and the North for work, decent housing was so scarce that many of them were forced to live in overcrowded slums.
However, one man – Richard Ketley, the landlord of the Golden Cross pub in Birmingham – came up with an ingenious solution. Recognising the need for better housing for the families in his community, he stuck a tankard on the end of the bar and got his regulars to merge their savings.
When there was enough money in the pot, they used it to buy land and build a house, drawing lots to decide who would get it. They carried on saving until they had built a home for each member of the group – a life-changing outcome for the families and community and the birth of the first ever building society. The site of the old Golden Cross pub now has a plaque in honour of Richard Ketley and his role in establishing the first building society in the world.
Speaking at the 250th anniversary event, social historian Professor Carl Chinn MBE related the history of building societies from 1775 to the present day, explaining that the early building societies were all set up and owned by their members.
That’s still the case today. The UK’s building societies in the UK are all “mutually owned”. In other words, they are owned by their customers, which means they are not driven to maximise profits. They make enough profit to keep the organisations safe and sustainable but additional profits are invested back into the business, which is reflected in their rates, products and customer service, as well as support for their communities.
“It’s really important that we recognise that pubs were crucial to the beginnings of mutuals,” said Professor Chinn.
“Trade unions are mutuals, friendly societies are mutuals, building societies are mutuals. So what do we mean by that? For me it’s a meeting of a group of people who are cooperating towards the common good through a common goal. Each person contributed the same amount for the same share. Some of them bought more than one share but each share would be the same price and everything was shared equally so that every member would get a house at the end.”
Once the first building society was established in Birmingham, many more followed, including one launched by a forward-thinking female publican called Sarah Northwood. Next came building societies in Leeds and Sheffield and by 1835 there were around 1,000 across the country.
The structure of the building societies changed too. The original building societies terminated once each member had a home of their own. However, from 1840 onwards some building societies started to accept savings from members who weren’t necessarily potential homeowners, thereby creating the “permanent” building societies of today.
Mr Fieth also spoke of the sector’s resilience over the years and the fact that it has always remained true to its values. He said that “a properly diverse financial services sector” is vital, particularly when times are tough.
“In 1900 there were nearly 2,300 building societies in the UK with combined total assets of £60m (equivalent to £6.3bn today),” he said. “Today there are 42 building societies with combined total assets of £519bn. That is some success story.
“That is why we have been campaigning for so long to put financial mutuals back at the heart of the future of UK financial services. We want a properly diverse sector that is there to serve the UK people and to serve for the benefit of our society. That is the essence of what we are doing.”
Celebrations for the 250th anniversary of the first building society will continue throughout 2025, with events in Westminster and the devolved nations, a consumer-facing campaign and the Building Societies Annual Conference in May.
For more information about building societies, contact Kate Creagh at kate.creagh@bsa.org.uk or pressoffice@bsa.org.uk.
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