Banking and Financial Services (Community Investment)

Hazel Blears Excerpts

Tuesday 14th December 2010 Commons Chamber

[Hazel Blears (Salford and Eccles) (Lab)]

I beg to move,

That leave be given to bring in a Bill to make provision for a voluntary mechanism through which banks, building societies and other providers of financial services can support community projects through reinvestment of part of their profits and assistance in kind; and for connected purposes.

This Bill is intended to address the challenges facing communities and voluntary organisations throughout Britain, and I hope to show the House that the funding shortfall facing such groups is of such significance that without urgent action we run the risk of losing them. The Bill then proposes a solution that I hope the Government will consider to be an equitable and practical means of remedying the situation.

A recent New Philanthropy Capital report found that the Government’s deficit reduction plan will lead third sector income to drop by between £3.2 billion and £5.1 billion, and that that gap is far too large to be filled by philanthropy and charitable giving alone. Only last week, Mr Thomas Hughes-Hallett, the chief executive of Marie Curie Cancer Care, warned of signs that charitable giving might fall sharply, and dramatic figures, such as Croydon council’s 66% reduction in grants for voluntary organisations, are causing all such groups to fear for their future.

This means that organisations such as Wooden Hill in Bedford, a social enterprise that trains adults to work with and mentor young people, and Accept Care, which operates in Northern Ireland and works with disabled people to give them skills to be active in their communities, face possible closure. It is those organisations that this Bill is intended to help.

Everyone agrees that we cannot have a big society without money, and the Bill seeks to demonstrate that, if we really are all in this together, that has to include the financial sector as well. During the global financial crisis, when the financial sector was in trouble, banks turned to the public to provide the vital funds needed to help stabilise the financial sector. Now, community projects need help, and the Bill would give banks and financial institutions the opportunity to put something back and to provide communities with the funding and stability that they need.

A recent report by the Institute for Public Policy Research into the financial sector estimates that next year, in 2011, profits and bonuses in the UK financial sector could be as high as £90 billion. Even during 2007-08, only months before the bail-out, the financial sector reported gross trading profits of £58.2 billion. The IPPR report projects bonuses to increase to almost £15 billion by 2011-12, and it shows that the average bonus in the financial sector is more than eight times larger than the average bonus in the rest of the economy.

I do not use those statistics to bash the banks, because it is in all our interests to have a strong, vibrant financial sector in the United Kingdom; I use them to demonstrate the enormous figures involved. Given the size of the bail-out that the public provided, I believe it only fair that financial service providers consider investing some of their profits in our communities. By creating a mechanism through which they can do so, the Bill would ensure that community enterprises have the funding that they need to thrive and prosper and to serve local people.

Many of our banks, building societies and financial service providers are already active in our communities. Last year, the Barclays community finance fund was launched, giving grants to organisations that provide affordable credit to people in deprived areas. The scheme has been so successful that it is being extended, and over the next three years it will allow local authorities, other organisations and Members to nominate local community finance organisations, such as credit unions, to receive money from the fund. Furthermore, Barclays staff now voluntarily participate in various community schemes, making it a real partnership between the corporate sector and local community enterprises.

Last year, the Co-operative Foundation, with which many Opposition Members will certainly be familiar, invested £11.3 million in our communities, and more than 50,000 people responded to a survey to ensure that that funding was directed to the areas and projects that really needed it. Part of the success of the Co-op and Barclays schemes is that they use resources in places where they can make a real difference, leveraging other investment and making sure that our communities are sustainable for the long term.

The problem is more than just purely financial, however. The fundraising expectations survey of more than 900 voluntary groups showed that 70% are having difficulty recruiting staff and getting people into their organisations to do the work. That impacts most heavily on groups in the north. Understandably, many financial institutions focus their community work in the areas where they are based, and that is often in the south-east. By creating a fund that is accessible to all voluntary groups throughout the country, we can address that issue and ensure that funding for voluntary groups is not governed by their proximity to a financial centre. The Bill would also provide for non-financial contributions, for example, mentoring, help with personal development and practical measures, such as room hire. It would therefore create a framework to allow for an ongoing relationship between business and communities, instead of merely creating an extension of philanthropic giving.

The Bank of New York Mellon has been operating in my community of Salford for two or three years. It has 300 volunteers in the community who work with Salford young people. They give them experience, provide role models, go out to our schools and read in our schools. The bank has a fantastic relationship with the community and it is able to do that—and is encouraged to do that—because, in America, there is a system of tax credits for companies that take part in voluntary and community activity.

It is important to stress that the Bill would create a voluntary mechanism. It would not create duties or obligations but would provide incentives and opportunities for the providers of financial services to build a constructive partnership with their communities. There would be real benefits for the banks and financial institutions if they chose to take part. Through co-operation with their communities, the Bill would allow them to market themselves as being fully embedded with local people, and they could use that as a way of demonstrating their real commitment to corporate social responsibility. The Bill would not penalise those companies who chose not to take part, but it would certainly reward those who did. If banks get involved in such work, their reputation will rise—and goodness me, the banks’ reputation certainly needs to be repaired in the light of recent events.

The aims of the Bill are to ensure a sustainable source of funding for community projects; to establish a strong framework to support them; and to increase fairness by giving every community the opportunity to access the fund. That would benefit every area that we serve in the House. I am delighted that the Bill has received cross-party support, and I know that many members of the public will agree that developing the relationship between finance and communities can only be a good thing.

Hon. Members may have seen that senior bankers and customers of the Royal Bank of Scotland have recently enjoyed a £250-a-head Harry Potter Christmas party. They have enjoyed shopping in Diagon Alley and they have played Quidditch on broomsticks. That must be the financial wizardry we so often hear about. I hope that the House will join me in urging our banks and bankers to consider supporting our community projects; otherwise, we might have to get the Ministry of Magic involved and, unlike the British public, it might be willing to let some of our banks simply disappear.

Question put and agreed to.

Ordered,

That Hazel Blears, Jon Cruddas, Dr Stella Creasy, Chris White, Tim Farron, Mr David Blunkett, Harriett Baldwin, Siobhain McDonagh, Ms Gisela Stuart, Mr Bob Ainsworth, Paul Goggins and Simon Danczuk present the Bill.

Hazel Blears accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 18 March 2011, and to be printed (Bill 127).

superannuation bill (programme) (no. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Superannuation Bill for the purpose of supplementing the Order of 7th September 2010 (Superannuation Bill (Programme)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement at today’s sitting.

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mr Dunne.)

Question agreed to.