Labour’s plans to build a “new public banking
ecosystem” so finance works for the many, not just the
few, include:
-
setting up a Post Bank based in the Post Office
network at the heart of our communities;
-
setting up a National Investment Bank to
support small businesses and overdue infrastructure
upgrades;
-
keeping RBS in public ownership when it returns
to profitability, a decade after it was bailed out by
taxpayers.
Labour’s Post Bank
Labour’s publicly owned Post Bank run through the
post office network will ensure every community has
easy access to face-to-face, trusted and affordable
banking.
Labour’s Post Bank would have by far the largest
branch network of all UK banks. The Party estimates it
could create up to 3,600 Post Bank branches, helping to
revitalise High Streets by bringing foot fall back into
our town centres.
A
network of Post Bank branches would help stem the tide
of post office closures, uniting important banking,
business and community services under one roof and
creating skilled jobs within one of the country’s most
trusted brands.
Research
by Which? has revealed that the UK has lost nearly
two-thirds of its bank and building society branches
over the past 30 years, from 20,583 in 1988 to just
7,586 today, leaving a fifth of the population two
miles away from their nearest branch. Over the past
five years the Post Office has announced the closure of
around 150 Crown Post Offices, 40% of its 2013 Crown
Post Office network.
As
well as offering banking services to individuals, the
Post Bank will provide relationship banking with small
businesses, acting as an “on-lender” for the regional
development banks, to kickstart SME
investment.
Halt
the sell off of Royal Bank of Scotland and keep it
permanently in public
ownership:
-
The scandal
hit bank, which received a £46 billion bail out in
2008 from the public, will stay in public ownership
for the long term. Privatisation has already lost the
public £3 billion of that investment. The management
team will be completely overhauled.
-
The bank will be given a new mandate to end the
abuses of the past and focus its activities on
productive investments.
-
An end to the programme of branch closures,
which has left just 54 branches in all of England and
Wales. A Move Your Money report estimates that “bank
branch closures dampen SME lending growth by 63% on
average in postcodes that lose a bank branch”. The
Federation of Small Businesses has also highlighted
the impact of bank branch closures on SMEs, saying:
“Bank branch closures damage high street footfall,
restrict cash flow in local economies and force
business owners to waste time travelling to and from
their next nearest branch, which could be miles
away.”
Set up a £250 billion National Investment
Bank and network of Regional Development Banks to give
our businesses, infrastructure and industries of the
future the funding they need through:
-
An enterprise focus on lending to SMEs, start
ups and co-operatives in every region and nation of
the UK. The banks will “on-lend” through favoured
institutions, including the Post Bank and RBS, to
build lasting relationships with the businesses they
lend to.
-
An infrastructure focus to upgrade our
infrastructure in every region and nation. Our
creaking infrastructure is the worst for comparable
countries.
-
An innovation focus to develop world leading
industries of the future, including new green
manufacturing and businesses in our towns that have
had their industries ripped out. This focus will
support Labour’s plans for a Green Industrial
Revolution and help make sure that the technological
advances, automation and the industries of the future
benefit the many, not just the few.
MP, Labour’s
Shadow Chancellor, said:
“Finance is the central nervous system of the
economy. It directs investment, deciding which
businesses and projects get off the ground and which
fail. For too long, this vital part of our economy has
been solely in the hands of the big banks and the
speculators. As the financial crisis, scandal
after scandal and the chronic lack of investment for
our SMEs, manufacturing and in our infrastructure show,
this model has failed.
“When the financial crisis struck, the banks were
bailed out but the rest of us were sold out. It’s time
to secure the investment that we all made and use it to
benefit the many not the few.
“Poor access to local bank branches hurts our
town centres and local communities, particularly
affecting elderly and more vulnerable customers, as
well as damaging the ability of local small businesses
to invest.
“Labour will build a new, public banking ecosystem to
promote vital national priorities and give our SMEs,
start ups and co-ops the best chance of
success.”
Ends
Notes to editors
-
At the 2017 general election Labour committed
to setting up a National Investment Bank, publishing
alongside our manifesto a recommendations document
from external experts. It recommended an initial
capital injection from the National Transformation
Fund with the NIB’s balance sheet expanding to £250bn
of lending after ten years funded byissuance of NIB
bonds on the financial
markets.
https://labour.org.uk/wp-content/uploads/2017/10/National-Investment-Bank-Plans-Report.pdf
-
State investment banks are established features
of the finance sector in countries as diverse as
Canada, Germany, Puerto Rico and South Korea.
-
Following Brexit the UK will lose its stake in
the European Investment Bank which has led to almost
€50bn over the last decade. The House of Lords
European Union Committee recommended the
establishment of a UK infrastructure bank and noted
that others including the National Infrastructure
Commission have said
the same.
https://publications.parliament.uk/pa/ld201719/ldselect/ldeucom/269/269.pdf
-
The lending of the NIB will complement the
£250bn of spending through the National
Transformation Fund to upgrade the UK’s
infrastructure – regarded as among the worst in
the G7.
https://www.oecd-ilibrary.org/economics/improving-infrastructure-in-the-united-kingdom_5jrxqbqc7m0p-en?crawler=true
-
The independent report ‘Financing Investment’
by GFC Economics last summer highlighted the
underinvestment of the UK economy, especially in
R&D:
-
Lending to SMEs was lower in 2018 than in 2011.
Banks lent £136bn for “buying and selling real
estate” in Q1 2018, compared with £43bn to the
manufacturing sector.
-
Information technology companies make up just
1.6% of the MSCI index for the UK, compared with 6.3%
for the rest of Europe, 12.7% for Japan and 24.1% for
the USA.
http://labour.org.uk/wp-content/uploads/2018/06/Financing-investment-final-report-combined.pdf
-
The Post Bank will be given initial set-up
funding of £2.5bn from Labour’s National
Transformation Fund to end the existing partnership
with Bank of Ireland UK and take over the services
currently offered through Post Office
Money.
-
As part of the Modernisation Programme, there
has been a significant restructure of the Post Office
network. Most notably over the past five years the
Post Office has announced the closure of around 150
Crown Post Offices, 40% of its 2013 Crown Post Office
network .
-
By utilising the extensive network of Post
Office branches, the Post Bank would have by far the
largest branch network of all UK banks – we estimate
over 3,600 Post Office branches are suitable to
provide banking services, or would be with a small
amount of capital investment. With these branches are
spread evenly across the country, every community
would have easy access to face-to-face banking in
their local branch of the Post Bank.
-
In 2010 the Coalition Government stated the
Post Office’s ‘network subsidy’ would ‘’reduce
substantially over time’’. It is currently projected
to fall from £200m in 2013 to £50m in 2020
.
-
According to a 2017 survey carried out for
Citizens Advice, almost all individuals (97%) and
most small businesses (95%) describe the Post Office
as ‘trustworthy’. 60% of those with an
impairment or disability say that the Post
Office is either extremely or very important to
them.
-
Around 20% of firms are under-investing because
they are unable to access bank credit needed to
expand, while around a quarter of small and medium
sized enterprises report that the need to provide
collateral has constrained their borrowing.
-
One report has estimated that “bank branch
closures dampen SME lending growth by 63% on average
in postcodes that lose a bank branch”
https://drive.google.com/file/d/0BxHxIVSxtvx2YVRtLTZDdkI0a0E/view
