The FT reports this morning that:
The number of people who feel ‘locked out' of the financial system shot up by 40 per cent last year as lenders reined in their risk appetite amid a cost of living crisis, new data from peer-to-peer lending platform Plend shows.
They added:
This year's survey found that 28 per cent of people now feel locked out of the UK's financial services market, up from 20 per cent when the inaugural research was done last year. The percentage who feel financially excluded rises to 45 per cent for black and ethnic minority groups.
There is a simple comment to make. It is that we cannot have a fairer, more inclusive, path to funding the sustainable path to a better economy that we all need without inclusivity and what is apparent that existing financial services providers are not willing to provide that.
Time and again I have discussed the need for that inclusivity here, always suggesting that the need is for a state-run bank to ensure that those who want access to conventional banking facilities and the opportunities that they provide should not be denied that fundamental need by market forces.
We need a state-run bank that guarantees access to finance for all. Simultaneously, it should provide a safe place of deposit as well. It is absurd that the recklessness of bankers denies this to too many.
What we need is something like the Girobank that bolder readers will recall, which provided all the basic facilities of bank, including mortgages without any of the risks from being associated with investment banking.
It would, of course, be entirely possible for the state to do this. It need only cite market failure as the reason to get around state aid rule-based objections and it could be done.
But will it happen? I wish I could imagine Labour doing it. We know the Tories won't. I fear we have a long time to wait.
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I agree, that the state should be doing more, as is also clear in your blog post on the NHS. We at Labour Affairs have been making this point, although we neglected to mention market failure in providing finance for those who need it. We share your doubts regarding Labour’s capacity or will to strengthen the State where the market fails.
Starmer, by stopping Corbyn being a Labour candidate in a future general election, is sending a clear message to the establishment. They have nothing to fear from a future Labour government. Such a government will spend more on the NHS, schools and climate change. But that’s about it. On the international front it will be a reliable supporter of the US and NATO and hostile to Russia and China.
The problem with this strategy is that a Starmer government will be severely limited in what it can achieve. Britain needs a much strengthened state that will take ownership of the many areas in which private enterprise has failed: housing, transport, energy, education, health, water, climate change. Without a stronger state nothing will change.
Starmer may win an overall majority by assuaging the qualms of some middle class voters but he will assume government without a mandate to make the radical changes that British society needs.
Yes.
Not only would it tackle the obvious exclusion issues but it would do so much more. The Post Offices network would be the branches that so many of us need from time to time…. but are disappearing fast at the existing clearing banks. It could link seamlessly into NS&I.
The main barriers are political dogma and a strong banking lobby that is terrified of such a rival.
Agreed
A nationalised bank offering basic services is the obvious answer and it would introduce healthy competition for the City-based banks whose whole modus operandi is competition.
Another option, perhaps in parallel, would be the introduction of personal digital accounts with the central bank. Here is a link to a recent interview with Yanis Varoufakis where he exposes many of the weaknesses with the current system. I expect you will agree with much of what he says, Richard.
https://greekreporter.com/2023/04/02/yanis-varoufakis-let-banks-burn/
Much to agree with in the Blog and the comments. I would simply add that I see the huge rise in exclusion, which I surmise is most problematic among the poorest, has two principal causes; the erosion of cash for instant cards (credit not cash), and the closure of bank branches. This descent into surveillance capitalism should terrify everyone; but the gullible and selfish prefer the convenience; this is how the road to perdition is paved, by the victims
Not just banking. If it’s not fit for business, or is broken or breaking, or is profiteering (energy companies), then there should be nationalised alternative. The private sector has nothing to fear because it always claims that it can do better, and more cheaply (assuming the nationalised industry is not sabotaged by the government).