With French economist Thomas Piketty’s book, ‘Capital’, shooting straight to the top of the bestsellers list, the need to tackle rampant inequality in the UK becomes ever clearer. Meanwhile, a quiet revolution in public finance has been slowly spreading across the UK, as local groups spring up to pursue new economic ideas which seek to address rampant regional inequalities.
Recently I had the pleasure of attending the Preston Social Forum after the council endorsed a campaign I am part of, which encourages residents to move their money and support alternative banks, building societies and credit unions.
Preston is joining a growing list of financial innovators including Bristol, which adopted the Bristol Pound to keep money circulating locally. Hull recently created the innovative ‘Hull coin’– crypto currency to generate new wealth for local residents.
Preston Council, who became the first UK local authority to endorse the ‘move your money’ campaign at City level are exploring ways of joining them. Preston are currently building their own council backed credit union, which hopes to be fully operational in 2015.
When asked why Preston was pursuing a local banking agenda, Preston Councillor Martyn Rawlinson replied: “Preston City Council has introduced a raft of ‘fairness’ policies, and banking and investments are next in the firing line”.
He said that following the failure of many international financial institutions, “publicly owned banks, using public resources for public good, are the ultimate response. While Preston council’s relatively small resources could not achieve the momentum required to create a new bank … we will be keeping one eye open for the slightest opportunity to explore such an option with public partners.”
In other parts of the UK, public banks are already a reality. Cambridge and Counties Bank was established by Cambridge Local Authority Pension fund and Trinity Hall to fund SMEs: a major generator of new jobs, yet a type of business chronically under-funded by high street banks.
Salford, an area which also suffers from chronic under-investment has other social objectives behind its move into the public banking realm. Salford City Mayor Ian Stewart said: “The plans are currently at a very early stage, but … I want the Bank of Salford to be an antidote to the greed of payday lenders and loan sharks – who prey on vulnerable residents of our city… A new Bank of Salford, working in the interests of the people not the profit margin, would help local people and local businesses.”
Local policy makers need to consider available policy and financial tools to stimulate growth and anchor jobs in the local area, ensuring residents benefit from development.
With this in mind, public banks that support local SMEs and ensure the benefits of development can be reinvested locally are a great alternative to handing lucrative public business to the big four high street banks.
It’s great to see local leadership being demonstrated with Preston, Salford and Cambridge all pursuing public banks, and if the current rate of progress is anything to go by, we can expect to see much more of this in future.