North West Mutual Community Bank
Decision Maker: Cabinet
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
Councillor Janette Williamson introduced a report by the Director of Finance and Investment which informed the Cabinet that local authorities had a role to play in shaping regional financial services as part of their policies and partnerships. These policies and partnerships supported residents, developed local economies and met strategic objectives for promoting economic development; and also supporting small and medium-sized enterprises’ (SMEs) business growth and financial inclusion for all members of the Wirral community.
The Cabinet noted that the current UK banking institutions and infrastructure did not provide a diverse and inclusive financial service. Many individuals and businesses had been excluded from a basic banking offer, as they were considered unprofitable or too risky, within the standard banking business model. In the Wirral environment, this had been noticeable in multiple branch closures, withdrawal of free to use ATMs and increased reliance on a digital offer.
The impact of this had been keenly felt by the most vulnerable individuals and businesses. Reduced access to basic banking services had increased costs, placed unfair limitations when accessing other services / products and had reduced social mobility.
Councillor Williamson reported that a growing number of local authorities were now investing in community banks, challenger banks and other initiatives outside the mainstream financial services sector to help meet their local priorities.
Wirral and other authorities in Cumbria, Lancashire and Merseyside (the North West) had the opportunity to support the setting up of a regional bank called the North West Mutual (NWM) Bank.
The Cabinet was informed that the Community Savings Bank Association, registered with the Financial Conduct Authority was seeking to develop 19 regional community banking models across the UK, with London and the South West already in the pipeline and Wales and some other regions following close behind.
Prior to and once established, the Bank would need to approach potential social investors and regional anchor institutions, that shared the social and economic ethos of the mutual, to invest circa £20m of the share capital required. The Cabinet noted that it was intended to hold a potential investor day together with Liverpool and Preston Councils, once the appointment of the banking expert had been made.
It was noted that a due diligence exercise would review the case to establish a North West Regional Community Bank (The Bank) creating a regional community bank for the North West of England covering Cumbria, Lancashire and Merseyside.
The Cabinet also noted that the Council could use due diligence information that Regional Partners provided in conjunction with internally-sourced demographic information. This had not been explored further as the scale and reach of the project would benefit from an expert approach, and provide greater insight in specific requirements for Wirral residents and businesses.
This matter affected all Wards within the Borough and was a key decision.
Appended to the report was:
· Appendix A - Background to CSBA and recent history of Regional Mutual Banks; and
· Appendix B – A detailed analysis of Wirral Demographic Financial Inclusion.
Councillor Williamson told the Cabinet that the Community Bank was, and would probably remain, her proudest achievement, as a politician. It was ground breaking and exciting and she felt privileged to be leading on it and being involved with it all. £5m had been included in the Capital Programme to invest in a Community Bank where the Council had partnered with both Liverpool and Preston City Councils.
Councillor Williamson sought the Cabinet’s agreement to draw down a small amount of that money in order to undertake a due diligence exercise which would advise the Council on the case for a North West Community Bank. Due diligence provided intelligence by looking at the customer base and potential community reach risks could be more easily identified, quantified and mitigated when it came to making the bigger investments. Councillor Williamson had no doubt that the Council would go on to make the final investment. There were a large number of Wirral residents that had been completely let down by high street banks. They have been financially excluded. They did not have a branch to go to and often they could not get a bank account because they were on a very low income. Banks were not in the business of helping people, they were there simply to make money from them and unfortunately, a lot of Wirral residents were not the kind of customers that banks were interested in.
Councillor Williamson reported that the Community Bank was Labour values in action, helping people who had been excluded from the mainstream. It would help small businesses and sole traders, another part of the Council’s community wealth building strategies to build wealth up from grassroots. The bank would keep the profits on the Wirral, they would be ploughed back into the Borough and people would be helped to grow their businesses that had hitherto been unable to do so because high street banks would not lend them any money. This was an enormously progressive policy and Councillor Williamson was really proud of it.
Councillor Anita Leech informed that due diligence was a very important and essential tool for moving forward with this very exciting project and that she was in agreement with the recommendations set out in the report.
Councillor Chris Spriggs reported that she had always been supportive of this idea and had been following how successful it had been as a programme in Wirral and she was pleased that the Council was playing its part in doing something really innovative and exciting. There were so many young entrepreneurial people coming forward now, as a result of the Borough of Culture, inspired to set up their own small creative businesses.
Councillor Spriggs informed the Cabinet that she had attended the recent Make Hamilton Grow Party. There were nine tenants already in the building including a local silversmith, a fine artist. They were all small businesses and sole traders. People had come to her with ideas in respect of businesses they wanted to set up. They were about giving back and social good but were creatively based and there was a real synergy there between the Community Bank, culture and creativity, mental health, social wellbeing and social isolation. This was tremendous and Councillor Spriggs was looking forward to seeing what came next.
Councillor Tony Jones added regeneration and growth to Councillor Spriggs’ list and informed that he fully endorsed and supported the recommendations. He considered the Community Bank initiative to be a first class example of what he termed as municipal socialism which he considered to be well overdue. Councillor Jones thanked Councillor Williamson for her hard work on this project.
Councillor Liz Grey told the Cabinet that she thought the Community Bank initiative was very exciting and was going to be really life-changing for a lot of people particularly, some of the Borough’s most vulnerable residents. It showed that the Council really cared and was looking after people.
Councillor Pat Hackett informed Members that the Community Bank project would help the Wirral’s small and medium sized businesses who needed to access credit, whilst at the same time, bringing banks back to the Borough’s high streets at a time when the high streets were really suffering and being told to change and do things differently. This would help them do this. A lot of high streets were now offering more than the traditional shops and things that people were used to. They were offering cultural, creative and digital services now as well and having a high street bank there will help.
Councillor Hackett also informed that at a time when free to use ATMs were being removed from the least affluent areas he considered that community banks would make a big difference. This initiative was trailblazing for the Wirral.
Councillor Williamson reported that in keeping with the Council’s community wealth building and social values she was pleased and that the Council had won an award from the Association of Public Sector Excellence (APSE) a few weeks ago at the APSE’s National Service Awards for the Best Innovation and Demand Initiative having beaten of competition from several other councils. She thanked the Officer Team for their hard work and asked that her thanks be conveyed back to everyone who had been involved.
Councillor Williamson went on to say that this award recognition was the highlight of an incredibly successful year for this programme. The Council had been recommended at the National Social Value Awards, the Go Procurement Awards and the Local Government Chronicle Awards which demonstrated the invaluable contribution it had made to the lives of young people and the innovative programme that it had developed. This pioneering programme, with enormous long term benefits, showed that the Council working with its supply chain provided opportunities for disadvantaged young people through full time work and apprenticeships. This had enabled young people to feel valued, supported and optimistic about their futures and they have recognised the benefits of full-time employment. This tied in with Councillor Spriggs’ comments and Members were beginning to see a fully developed strategy around community, community wealth building, young people and the Council’s role. Labour values were embedded in all of this.
(1) the requirement for a North West Mutual Community Bank be endorsed; and
(2) authority be delegated to the Director of Finance and Investment to carry out a due diligence exercise into the establishment of a Community Savings Bank.
Report author: Shaer Halewood
Publication date: 22/10/2019
Date of decision: 30/09/2019
Decided at meeting: 30/09/2019 - Cabinet
Effective from: 30/10/2019