In rural areas of the UK, 13% of adults aged 55 and over, or who are younger and have a physical or mental health condition, have difficulty getting to a bank. 3% of UK adults are unbanked. 20% of these are in London. 4.1 million UK adults are defined as ‘in difficulty’ because they have missed domestic bills or failed to meet credit commitments. Only 16% of adults in London are highly satisfied with their finances, and only 26% of people in Northern Ireland are highly confident in managing their money.[1]
Since the FCA’s Financial Lives survey was carried out, bank branches have closed, even more have been earmarked for closure, free ATMs have been put under threat, real wages have fallen, and household debt has increased. Its latest analysis provides stark evidence of not only the disparities that exist between different parts of the UK, but of the fact that our financial services system is failing us. Whether urban or rural, Northern or Southern, consumers are being collectively let down.
People are starting to get more engaged in thinking about what banking means to them and their communities. One idea gaining traction both here and across the Atlantic is that banking should be a public utility; a shared resource like water, roads and the National Health Service.
This month in New York, a coalition of community, worker rights, economic justice, and environmental groups descended upon Wall Street to launch its campaign. It is calling on New York City to create a public bank. It is calling for it to divest from the Wall Street banks that are financing environmental and economic devastation, and invest in sustainable, community-led development. It is calling for the creation of a public bank to allow New York City to deposit public money with a bank that belongs to New Yorkers, expressly chartered to serve the public interest.[2]
Similar movements are springing up across the UK. The Public Bank for Wales Action Group is a growing collaboration among several shared interest groups (including Arian Cymru, Responsible Finance, Wales Co-operative Centre and Robert Owen Community Banking) campaigning for a locally structured public interest bank network. The bank will recirculate wealth within the Welsh economy, provide access to finance for SMEs, and build a network of commercial bank branches in towns and rural areas across Wales to replace those that have been lost.
The Community Savings Bank Association (CSBA) is working towards creating a network of 18 independent, local banks across the UK, owned by the customer on a one member one vote basis. They will serve the everyday financial needs of ordinary people, local community groups and SMEs. They will have a commitment to inclusive growth and recycling local savings to make local loans, working in partnership with local authorities, CDFIs and credit unions. One of these will be the Greater London Mutual. It will be a bank working for, controlled by and answerable exclusively to London and Londoners.
Community wealth building has been pioneered in Lancashire by The Preston Model. In 2013 the council hired the Centre for Local Economic Strategies (CLES) to identify 12 large institutions anchored to Preston. It then looked at redirecting the annual spending power of these anchor institutions to local businesses, which totalled £1.2 billion. CLES found local businesses that could win contracts, such as a £1.6 million council food budget that was broken up and given to local farmers. The model is part of a wider programme of getting wealth to remain local, and has been transformational.[3]
We are all economists; everyone is making complex financial decisions on a regular basis. For too long it has served too many people’s interests to make finance seem as complicated as possible. The public needs to take back ownership of financial services, as well as the ownership of the narrative and debate.
[1] https://www.fca.org.uk/publication/research/financial-lives-consumers-across-uk.pdf
[2] https://www.commondreams.org/newswire/2018/06/05/new-york-community-worker-rights-economic-justice-and-environmental-groups-call
[3] https://www.theguardian.com/cities/2017/apr/11/preston-cleveland-model-lessons-recovery-rust-belt