The financial services of the future
Clear goals in uncertain times
Like many recent votes, the general election on June 8th didn’t produce the expected result. The Prime Minister has lost her majority and gained a tough workload. As the Queen’s Speech made clear, Brexit is going to dominate Parliament over the next two years. Eight major Brexit bills were announced, leaving very little room for manifesto pledges.
Theresa May said that the Queen’s Speech was about “delivering a Brexit deal that works for all parts of the UK while building a stronger, fairer country by strengthening our economy, tackling injustice and promoting opportunity and aspiration.”
She wants to build a country that works for everyone. If, as her opponents say, she is lacking ideas on how to do this, we can help!
The UK’s responsible finance industry plays a vital role in increasing opportunity for all, in increasing productivity and in creating sustained economic growth. These are all key to the Government’s plans.
Responsible finance providers are active in all parts of the country; they are busy creating economic success.
How are they doing this?
They are investing in the businesses, social enterprises and people that others aren’t. Their support for viable businesses and consumers who can afford to repay enables money to go back into the local economy, creates jobs and opportunities. Last year, their lending enabled 8,200 entrepreneurs to set up new businesses, created and saved over 20,000 jobs and contributed £0.43 billion to the economy.
The responsible finance sector is ambitious. While we are very proud of these figures, we want to do so much more. And that is why we are calling on the Government to take four simple actions to support the responsible finance industry. These four steps will help to build strong, resilient local economies.
In his recent Mansion House speech, Chancellor of the Exchequer Philip Hammond talked of the need for greater investment in the private sector.
Mr Hammond announced the broadening of the UK Guarantee Scheme to support infrastructure projects and said that other credit enhancement tools are being considered, including first loss guarantees.
It is these kinds of fiscal and policy tools that are needed by the responsible finance industry. It is not just large capital projects that need the Government’s support, but also the funding mechanisms that reach Britain’s micro and small businesses — the backbone of our economy.
The four actions we are calling for are:
- Launch a £150 million Responsible Finance Fund
- Ensure Tax Reliefs and Guarantees are fit for purpose
- Maintain or replace access to EU funding and facilities
- Ensure proportionate and appropriate regulation
Further details about these four steps can be found here.
These steps will enable responsible finance providers to create competitive businesses, tackle inequalities and build opportunities.
For example, Purple Shoots provided a loan and support to the Furniture Den in Swansea. The furniture recycling business was started by Claire and Kevin Richards — the couple were previously struggling on benefits after they both had to give up work so that Kevin could look after Claire when she developed a serious health condition.
ART Business Loans, meanwhile, provided a loan to M&BG Group to enable the cleaning and maintenance company to expand. With the support of ART, the company created nine new jobs and has grown its turnover from £1 million in 2011 to £3 million in 2016.
Responsible finance providers have local market knowledge and reach, a customer-centric approach, and provide support alongside finance. It means that for every £1 responsible finance providers lend, they generate £7 in economic value.
As we prepare to leave the EU and Theresa May clarifies her vision of a ‘Brexit for Britain’, we urge her to plan for the financial services of the future: a system that is competitive, diverse, inclusive, and underpins a fairer society; a system that allows everyone access to the services and products they need for economic inclusion and prosperity; a system that includes a thriving responsible finance industry.
Communications and Membership Manager