BLOG 19th June 2012: What our banks need to do now
We are facing a financial crisis in our communities. Small businesses and households are finding it increasingly hard to access finance and credit. This makes them more reliant on expensive forms of finance. The announcement by Wonga that it is moving into business lending, highlights the failure of high street banks to invest in local economies.
Small and medium sized businesses (SMEs) are critical to Britain’s economic recovery. Small businesses provide 60% of the UKs jobs and half of GDP. But since the credit crisis, many are struggling to access the credit facilities they had in the past. Many households are getting by on high-cost credit provided by predatory doorstep lenders or illegal loansharks. It is estimated that over four million individuals are borrowing from lenders with very high interest rates. A recent report in the Guardian claimed that seven million households are one bill away from financial disaster.
CDF’s experience of working on the ground across the country shows that communities can prove very resilient to financial and other shocks. But for this to happen, they need a level playing field.
High street banks have received another massive injection of cash from the Bank of England. This is supposedly mainly to support SMEs. But how will we know where the money has gone and what impact it has had? At the moment there is no requirement for the banks to disclose this information on an individual or community level basis. It is information they have, but don’t communicate on a community by community basis.
CDF, working in partnership with CCLA, CDFA and LRS is campaigning to encourage banks to voluntarily disclose this information. Or for government to take the necessary action, if not. We believe bank disclosure is critical if we are to understand the true pattern of available financing in communities and the steps needed to make access to finance more equitable.
If you would like to help with this campaign, there are a number of things you can do. Write to your MP encouraging them to support bank disclosure. Speak to your council to see if they are using the new power of general competence to open up local banks or support credit unions. And consider moving your own money to support better banking.