Economy
UK councils urged to move their £31bn to alternative banks
Local authorities have been challenged to make banking and investments work harder for their communities.
In a new report, campaign group Move Your Money describes how councils collectively have £31 billion invested in British banks.
The study urges the local authorities to use that influence and review their transactional banking services and investment strategies. Move Your Money advises the councils to support local and community-based banks, and to move their investments to providers that deliver social and environmental benefits as well.
Speaking to Blue & Green Tomorrow, chief executive Laura Willoughby said, “There is huge dissatisfaction with your banking system and it needs to change. Councils can be part of making that happen.
Click here to read The Guide to Sustainable Banking 2012
“They are big and important clients for financial institutions but they have never really demanded much in return for their contracts or looked at what powers they have to develop alternative initiatives. The means are there and we want councils to use their leadership role to challenge that.”
A number of local council pension funds across the UK have been criticised recently for investing in the tobacco industry. Gloucestershire council defended its actions by saying that this was done to ensure the maximum return for investors. However, Willoughby said, “Return for taxpayers can and should be more than just pounds, shilling and pence.
“Using the procurement process to demand banks helping deliver local priorities or to develop affordable local lending schemes is worth a lot and can help councils deliver for local residents in the face of massive cuts. It’s about being creative and seeing that more can be delivered than a positive balance on a statement.”
In June, Move Your Money revealed that the market share of Britain’s biggest five banks had dropped by 5%, or over 2 million customers, in 2012. Scandals such as Libor and the mis-selling of payment protection insurance have boosted the popularity of ethical and sustainable alternatives.
Move Your Money expect this trend to continue, with some research suggesting as many as 14 million customers may soon switch providers – away from the big banks.
Further reading:
British councils announce £44m investment in tobacco firms
Big five’s banking monopoly at risk, with 2.4m closing accounts in 2012
Saving the world or getting healthy returns is a false choice in finance