While it is convenient for the Lib-Dem/Tory Coalition to place the blame for all our current woes at the doorstep of the previous Labour Government, sometimes that strategy becomes a little absurd.
Recently, I heard one pundit say the economic problems in Europe were to a large extent all the fault of the British Labour Party for not saving Lehman Brothers Bank. Apparently, had Labour had borrowed billions of pounds more and saved the bank, this would have maintained the integrity of all the problems associated with Lehmans that now have to be dealt with piecemeal. So Labour are damned for borrowing too much and damned for not borrowing enough!
That having been said, we are all, politicians and bankers alike, looking for a way forward with the banking sector, the deficit and economy. With the Lib-Dem/Tory “Merlin Project” being an abysmal failure, all the Tories can suggest is “cutting red tape” for the banks. I think this is hardly the answer and we need better regulation of banking rather than less of it.
One local success story that has been seized on nationally has been David Fishwick’s “Bank of Dave”. I understand there has even been a presentation by David Fishwick in November, 2012, to MPs and peers in Parliament to explain how he has been able to lend out money while other banks appear struck down with intertia. Seema Malhotra MP, chairman of the Labour Party Backbench Business, Innovation and Skills Group, says there are no reasons why Dave’s model of banking cannot be emulated more widely.
Figures from the Bank of England show lending to businesses has contracted and fallen by more than £13 billion, while the Ernst and Young ITEM club has predicted bank lending has fallen to its lowest level since 2006. And, according to the Insolvency Service, over 37,000 businesses have gone bust since the 2010 general election.
Although “Bank of Dave” is not really a bank but more like a series of interlinked products and services called “Burnley Savings and Loans” that has restricted cash turnover to £25,000 a week, over the last 12 months “Bank of Dave” has overseen £700,000 of loans to local small and medium enterprises. The key distinctive feature appears to be the importance of relationships in his banking model – knowing the entrepreneur and the business as part of the assessment of risk a much more personalised risk assessment than a centrally driven “conservative” formula.
The Labour Party has a vision for our country of a more competitive banking industry, where small businesses know there is a banking system working for them. What we see with “Bank of Dave” and Metro Bank (in Hounslow) is exactly the change in the relationship between branches and community businesses which Labour is calling for – a streamlined relationship-based access to finance to support local enterprises. We do, however, need more than just individual entrepreneurs helping businesses in odd parts of Britain: we need action from this Government to encourage and support entrepreneurs across the nation in all communities by providing access to finance.
The Labour Party is also developing plans for a proper British Investment Bank, and has commissioned a report that has laid out the case for such a bank, looking at comparisons abroad and how to boost finance to small and medium-sized enterprises, such as high growth firms, and to infrastructure too. The UK is alone among the G8 countries without such a state investment institution.
Labour Candidate, Pendle East, LCC 2013