One of the many peculiarities of the UK economy is that, unlike nearly every other country in Europe and the USA too, we have almost no local banks. It is one of the reasons why, apart from Hungary, the UK is the only country in Europe where SME lending is still going down.
It is no great secret that the Lib Dems are hoping to make local banking for SMEs a key plank in their economic policy for the general election, so it makes sense to work out how this might be a campaign issue at local level.
Luckily, we have some evidence now. Lib Dems in the Lords provided the opportunity by forcing the banks to reveal details about where they are lending money. This is something banks have had to do in the USA since 1977 and the UK banks were unwilling at first, but have been now revealing the data quarterly since the end of 2013 (HSBC, the least willing, is refusing to provide the data except in PDF format so that it is hard to share).
Otherwise the data is being collated and made available by the British Bankers Association down to 10,000 postcode sectors (broadly ward level). It is available now covering three kinds of lending: loans and overdrafts to SMEs, mortgages and unsecured personal loans (excluding credit cards).
The total amount of lending in each postcode sector is set out now quarterly. For campaign purposes, mortgages simply reflects the level of house prices, so that isn’t so helpful. But personal loans is important – it is clear from recent research that, where bank branches close, payday lenders move in (there are postcodes in Haringey and Southwark, both Lib Dem constituencies, that are among the ten worst hit areas in the country on this).
The loans and overdrafts to SMEs are also important, because UK SMEs are supported badly compared to other European countries, both through bank branch closures and especially through loans. These things matter. Now, for the first time, we can compare areas against each other – and hold banks to account nationally. But we can also hold them to account locally. Hence this story.
Of course it isn’t entirely straightforward. The banks don’t have to reveal postcode data if there are so few loans locally that it would risk identifying the recipients. The other problem is, of course, that not all postcode sectors have the same population. Nor to the boundaries correspond with boundaries for constituencies or wards.
But don’t give up. The opportunity for campaigning is too good to miss. This is what you need to do.
- See if anyone has done any research on the basic data in your area. This probably only applies to Birmingham, which has done some amazing work comparing the data with other information and mapping it together. You can find the details for Birmingham’s personal loans here: http://citysavecreditunion.files.wordpress.com/2014/01/personal-loans-birmingham.pdf
- Look up the population of the postal sector (5 digits) you are campaigning in. You can find this information here: http://fairbrum.wordpress.com/?attachment_id=3960 (This is Birmingham’s website and the data covers England and Wales, but there are various other places you can find this information). The basic data is also at: http://www.nomisweb.co.uk/census/2011
- Look up similar sectors with similar populations and levels of economic activity – or obviously richer areas. If you want to be precise, you will need postcode boundary information, which normally has to be paid for (http://www.ons.gov.uk/ons/guide-method/geography/beginner-s-guide/postal/index.html)
- See what kind of SME lending is going on in your patch by looking at the data here. It is a crude way of working out whether it is higher or lower than it should be, but it gives a general idea. https://www.bba.org.uk/news/statistics/postcode-lending/lenders-set-out-levels-of-borrowing-from-across-the-country/#.U7FO3JRdVOc (you can look up specific postcode sectors and look at them in order of amounts, scroll own to links at bottom).
- If the SME lending is clearly lower than it should be, weave a campaign around finding out why – ask the banks why they are not lending more, especially if you know SMEs being denied loans or overdrafts. Ask what the local authority is going to do about it? Ask if there is a link with local growth of payday lenders? Hold bank executives to account.
- Link campaigns to local credit unions, if you have any, or CDFIs (community development financial institutions, see www.cdfa.org.uk).
- Go for it! Don’t forget to link it to information about bankers’ bonuses.
In the meantime, you can find out more here:
The Community Investment Coalition’s briefing:
The Community Investment Coalition’s community banking charter:
http://www.communityinvestment.org.uk/?page_id=486
Nottingham University’s research into bank branch closures and the implications: http://www.nottingham.ac.uk/business/businesscentres/crbfs/documents/crbfs-reports/crbfs-paper3.pdf
The British Bankers Association’s briefing on the April 2014 data: https://www.bba.org.uk/news/statistics/postcode-lending/lenders-set-out-levels-of-borrowing-from-across-the-country/#.U7FO3JRdVOc
About David:
David Boyle is the author of a range of books about history, social change, politics and the future. He has been editor of a number of publications including Town & Country Planning, Community Network, New Economics, Liberal Democrat News and Radical Economics. He is a fellow of the New Economics Foundation.