Sunday, 26 January 2014

The Weekend Read: Community banks

I had a meeting on Thursday with the Northumberland Credit Union where I talked to them about my hopes for local banking and the transformation of savings and lending in Tynedale. Last week I gave a speech in the House on Local banking:
Guy Opperman (Hexham, Conservative)

"Greater competition, the desire for local banks and the Labour policy to close regional branches are the issues of this debate. I have held two local banking conferences over the past six months—one in Gateshead on 6 June and the other in London in December—and they were attended by in excess of 350 people from various organisations, banks, accountancy firms and start-ups. It was very striking that, contrary to what Mr Meacher has recounted, there was a tremendous desire for a large number of new banks, and that is in fact the reality.

I have met the likes of Metro, Aldermore, Handelsbanken, obviously Virgin, Cambridge and Counties—it was set up out of a local authority pension fund—and the Hampshire bank. A fantastic bank has been put forward by the Unite union, on behalf of Labour, in Salford, and it is doing wonderful work. I have met Alex, who is the linchpin of that. He is a fantastic lad, who is doing great stuff to try to transform how that local community bank provides services to the local community of Salford.

I therefore disagree with the doom and gloom approach about there being no competition or new entrants. Certainly, when I meet those from the Financial Services Authority and the Prudential Regulation Authority, including Sam Woods and all the individuals involved with the regulators, they tell me that they have had in excess of 25 separate pre-applications that they are now considering.

On 23 April 2012, when we debated local banks and the need for greater competition—this is my seventh speech on local banking in the House in the past three and a half years—the Labour party chose to vote to delete clause 5 of the Financial Services Bill, which was designed to create greater ease for new entrants to enter the market and related to how far competition can encourage innovation. I welcome the fact that the Opposition seem to have changed their policy and would now like more competition, but the proof of the pudding is always in the eating, is it not?

An announcement has been briefed to Nick Robinson of the BBC that the Labour party, if it gets into government, will ultimately close regional and local branches. As my hon. Friend Steve Brine made clear when he questioned the shadow chief Secretary, Chris Leslie, that would have a massive impact on our local communities.

I am certainly trying to have more bank branches opened in my area. I am negotiating with my credit union to see how far it can do that. Similarly, I am trying to create new banks in the north-east. As my hon. Friend Ian Swales has made clear, there is great scope for new entrants to do so. The very fact that the big five are so complacent and have had so many problems, gives new entrants an opportunity, which is certainly being exploited by all those we have spoken about today.

In that context, I want briefly to touch on two matters—credit unions and the Church, neither of which have been discussed. It would be a failure of this debate if it did not deal with both of them. All of us should support our credit unions. I am certainly wholeheartedly behind the Northumberland credit union. We must acknowledge that even though this Government have done more to give credit unions greater clout, power and ability to lend, credit unions are still incapable of filling the banking void and overcoming the current difficulties.

The only way forward is the creation of local community banks built on a credit union. I can give the House at least three examples. I have already mentioned the bank in Salford, which is the former Salford credit union. The Glasgow credit union is probably the biggest and most successful in the country: it is effectively a bank in all but name. Finally, I have the Prince Bishops community bank in Durham, which is the former Stanley credit union. All are very successful and have great potential. We need to follow such examples.

To touch briefly on the Church, I welcome the fact that Justin Welby is the new Archbishop of Canterbury. It is savage irony that 500 years have had to pass for us to have the new type of God’s banker, who is encouraging the Church to become involved in banking. It can only be good if the clergy move from being reactive to poverty and social deprivation—to their great credit, they are amazingly good at reacting in that way—to being proactive.

I suggest that the Church has a role, acting with their credit unions and local community banks, effectively to become the offshoots and outlets of those community banks. After all, all the vicars that we, as constituency MPs, know and deal with know which people are in great social deprivation, going to the food bank or having problems with high-cost credit and need debt advice. There is massive scope for the Church to take a greater role by dovetailing churches with credit unions and community banks. I welcome the fact that the Church has chosen to buy branches of Williams and Glyn’s bank, and is setting something up so that we can go forward. If we can do that and become more proactive in our local communities, a huge amount can be done.
In seven days’ time, I will meet my Northumberland credit union in Hexham to discuss how we can promote the idea of taking the credit union, building it up and creating a larger bank to make the situation so much better. If we do that, we will have in our regions and communities a bank that we can trust, with a proper brand name and identity, and one that is part of the community, rather than something based in London or Frankfurt and completely divorced from that community. That is the problem that we all face and have identified and, to their great credit, that is the problem that the Government have made great efforts to address.
In the interests of brevity, I will draw to a close, but I very much urge all parties to make sure that they get behind local community banks. We have not always done so, but we should do so in the future."