The United Kingdom faces two momentous political turning points in the coming years. First up is the defining of the next Parliament in the general election on June 8, then follows the Brexit negotiations which will lay the groundwork for the future relationship we have with our nearest neighbours.
At such moments, the political and economic future can look murky and hard to unpick. But at Responsible Finance, our mission has never been clearer or more important. No matter who sits in Number 10 on June 9 or the outcome of the negotiations with Brussels, local economies in the UK will need to adapt and the responsible finance industry will be there to help them do it.
Our members empower people to take control of their financial futures who might otherwise have not felt able to do so, helping people start businesses, create good jobs, and enabling families on low incomes to save. This helps build an inclusive and resilient economy and contributes to strong and diverse industries. Importantly, in times of economic change it provides financial flexibility where it is critically needed.
In 2016, responsible finance providers lent £219 million to over 10,000 businesses and social enterprises, creating or protecting over 20,000 jobs. 37,000 people received £20 million in finance and almost 400 homeowners benefitted from £3 million to make essential repairs and energy upgrades – a significant boost to some of the most disadvantaged households in the UK.
A few weeks ago, we published the Responsible Finance Manifesto, which calls on all political parties to support the responsible finance sector now, detailing four key policy changes to help us in our mission to catalyse growth and prosperity in the UK.
The launch of a £150 million responsible finance fund would go some way to addressing the ongoing under-capitalisation of the responsible finance sector. A counterpart $200 million fund in the USA has helped the sector there achieve a $45 billion loan book.
Second, policy tools such as tax reliefs and guarantees need to be made fit-for-purpose to catalyse new investment into the sector. In particular, it should be permissible for the Enterprise Finance Guarantee (that reduces the risk of lending to small businesses) to be used alongside Community Investment Tax Relief (that encourages investment in disadvantaged communities).
The Chancellor has promised to maintain or replace access to EU funding for key economic development projects. It is important for the sector that we avoid this potential cliff-edge, as more than a few EU programmes play an important part in attracting commercial investment.
Finally, we call on the FCA to ensure that rules and regulations really designed for much larger-scale organisations are applied in a proportionate way to our members, while of course still being fit-for-purpose.
What we call for is robust and achievable. It is also incredibly important for the communities, people and businesses who depend on the support of the responsible finance sector, particularly in times of change.