It was fascinating to read the latest description of a two-tier Britain – in which meaningful job creation is lagging behind in vast swathes of the Midlands and the North compared with London and the South East, outlined in the new, annual Cities Outlook Report.
Fascinating, but all too familiar. Centre for Cities’ report found that 29 of the UK’s biggest cities have low-wage, high-welfare economies. And their Chief Executive Alexandra Jones says,
one of the most pressing issues is the need to tackle skills gaps…especially in low-wage cities, to help those places attract businesses and jobs, and support more people to move into work, particularly in high-skill sectors.
She’s right. But there are a group of organisations which are already investing in low-wage cities. And they already have a proven record of supporting businesses and creating jobs in local communities. They could do even more.
These responsible finance providers work throughout the UK, and in 2015 they lent £224m to 11,894 businesses and social enterprises, creating and protecting over 25,000 jobs.
Yet impressive as these figures are they sit against a backdrop of a 33% drop in capital available to responsible lenders to on-lend. It’s a stark reminder of the imbalance in supply and demand that our sector faces and it’s a missed opportunity to support more businesses where they are needed most.
2015 was a record year for the responsible lending market with a 45% rise in overall lending to small businesses, social enterprises and local communities. But it was a year in which demand surged too: to nearly 50,000 enquiries from businesses and 2000 enquiries from social enterprises.
And the gap in access to finance from mainstream lenders is still significant: over the past 4 years the banks have withdrawn £26 billion from the SME market. So our part of the financial services industry is needed more than ever before.
Growing and stimulating the economy through access to finance is also about quality of delivery. A responsible industry invests and reinvests locally, empowering cities, towns and regions especially those that have historically received little inward investment. If Government wants initiatives such as devolution and the Northern Powerhouse to truly succeed, they need a mechanism to deliver investment to the businesses in these places.
Responsible Finance is already a big part of the solution to the imbalanced economy in the UK. Our members need to be viewed as allies and as a crucial part of the local growth engine – and valued for the key economic contribution they make at a regional and local level.
Government must endorse responsible finance more. And crucially, Local Enterprise Partnerships could be leading the charge, and leveraging the Northern Powerhouse, Midlands Engine and the broader Growth Fund to collaborate with, and deliver investment through, providers of responsible finance.
We need urgent political backing for the only dedicated gap-filling part of the financial services industry.