Good Local Economics
Baroness Susan Kramer was one of several peers who fought a successful battle to amend the new Financial Services Bill to make it easier to set up small banks. She talks to David Boyle about the potential for new models of local finance to emerge.
HOW WILL THE NEW AMENDMENTS MAKE A DIFFERENCE TO THE BANK ‘DROUGHT’?
The key element of change in the bill was giving the new Financial Conduct Authority (FCA) a duty to ‘have regard to’ – though it is only a ‘have regard’ to – people’s ability to access financial services. When we first started this process, the Treasury was initially very opposed to it, but that changed over time. As a result, it is now a different world for the UK regulator: they can no longer just ask ‘is the competition out there fair?’, but need to ask ‘are there people who are not being served at all?’. They will have to ask whether the existing players are effectively acting as barriers preventing people coming in to serve those markets. I think what we have done now is to create a framework so that, for the first time, it is seriously possible that community or local banks could come forward, get approval and become successful. It will still take, however, an incredible amount of drive from the people who want to see those banks happen; it’s going to take charities, social enterprises, local authorities – and big banks which recognise they are not serving part of the market. I’m not sure who the players are, but they need to come forward and take advantage of it. The ‘access provision’ is a real shift in thinking for the FCA. Before, the attention of regulators was just on two things: risk and abuse. Access had never been on the agenda before. Well, it is on the agenda now, but it does require people to really put the pressure on.
The Dutch city of Delft is proving that collaboration between the local council, universities and businesses can help small cities keep one step ahead, as Jennifer Tankard explains.
Delft has a population of just under 100,000 and lies in the shadow of the Netherlands administrative centre, The Hague, and Rotterdam, one of the largest ports in the world. The city could easily become a dormitory town, relying on its history, its famous blue pottery, its links to Vermeer and its scenic canals to generate jobs in tourism while skilled workers commute out for employment.
