Thank you, Madam Deputy Speaker, for the opportunity to speak to my new clause 15. It is a modest proposal for a full Government consultation on the potential for local stakeholder banks to be carried out before we sell off RBS or any other taxpayer-owned banking assets.
I was interested to hear the Minister mention yesterday his trip to Germany and how he saw in the pages of the Handelsblatt a big headline saying, “City of shame”,
referring to the City of London. I agree that this is a stark illustration of the impact of financial mismanagement and of our current banking system on people’s views of the City. However, although I also agree that this highlights the need for improved standards in banking, I think it highlights, too, the need for a radical reappraisal of ownership and accountability structures, if we want to have a banking system that we can be proud of, not ashamed of.
I hope that during the Minister’s trip to Germany he also found time to look at the savings banks, the Sparkassen, that we have spoken about this afternoon and which make up about one third of the German banking system. They are run commercially with dual financial and social objectives, to make a profit and to support the local economy. Professional bankers take responsibility for day-to-day running of the banks and if they make incompetent lending decisions, they are more likely to get sacked than their counterparts in giant commercial banks. Local stakeholders, including local politicians, business leaders, employees and customer representatives, sit on a supervisory board. That is just one example of the sort of local stakeholder bank that my new clause seeks to promote.
The New Economics Foundation analysed data from 65 countries where such alternatives thrive. They include co-operative banks, credit unions, community development finance institutions and public interest saving banks. The common characteristic is the goal of creating value for stakeholders, not just for shareholders, and some exciting and incredibly positive trends emerge. First, a greater focus on the needs of customers, including more competitive products, better service and longer-term lending; secondly, provision for customers who are currently under-served by regular banks; thirdly, a boost to local economic development through lending to small and medium-sized businesses, preventing capital drain from the regions and maintaining branch networks; and finally, a positive impact on financial stability through less volatile returns, high levels of capital, prudent balance sheets and expansion of credit provision after the financial crash.