Councils challenged to ‘use their money twice’ and make banking and investments work harder.
Banking campaigners Move your Money (MYM) are challenging local authorities to release untapped potential from their banking and investments to secure benefits for their community and help change British banking for the better.
MYM’s new local authority banking toolkit guides members through the process of moving public money to support local alternative forms of finance, dispelling key myths about local government finances along the way.
It calls on councils, which collectively direct £31 billion into banks, to firstly review their transactional banking, beefing up how they procure the services; then review their investment strategy and move investments to providers that deliver community benefits; support local banks and community development finance initiatives; and demand greater transparency and social value from council banking, investment and financial services providers.
Chief Executive of Move your Money, Laura Willoughby MBE said:
“With Councils under pressure to get more for less, securing social value from banking and investments represents a major untapped opportunity. Councils can move their money to somewhere better, deliver benefits for their community, and demand greater transparency.
“It’s about time councils leveraged their customer power and got the finance industry to help deliver investment and growth within local economies.”
The toolkit is timely as the Parliamentary Commission on Banking Standards report ‘Changing Banking for Good’ highlights the negative impacts of existing DCLG advice to councils, calling for reviews allowing small challenger banks to compete for deposits with too-big-to-fail banks.
“DCLG’s suggestion that deposits are placed with institutions with high credit ratings can have an adverse effect on banks without formal ratings. While Government stresses the importance of encouraging new entry into the retail banking market, the current DCLG guidance acts in a way that puts new entrants at a competitive disadvantage.” (Paragraph 338 – 339)
In the wake of the Iceland crisis, council investment in local building societies dropped from Â£10.4 billion in 2008 to just Â£1.9 billion in 2012. Building societies lend more money locally and are key financial businesses in the regions – especially as the UK continues to experience a housing crisis, and a collapse in new house building (www.bsa.org.uk/mediacentre/press/monthlystats_dec12.htm) activity.
Move Your Money is calling on local government to support a growing movement of 2.4m people demanding positive change in the financial sector by moving their money to local, mutual and ethical banks that actively support the local economy and invest for social value.
You can download the report here.