The Leader of the Opposition and of the Liberal Democrat Group on Oldham Council, Shaw Councillor Howard Sykes MBE, has written to the Cabinet Member for Employment and Enterprise Cllr Shoab Akhtar asking him to explore establishing a community bank for Oldham and may be for Greater Manchester.

Cllr Sykes said: “In Hampshire, a community bank is about to commence operations later this year. The bank is a partnership between Liberal Democrat run Eastleigh Borough Council and other social partners. It is based on a successful local banking system from Germany. The bank will support small and medium sized businesses to secure money for investment more quickly and at lower interest rates.

“Such a bank would be a stimulant for local jobs and local businesses. As the emphasis is on lending locally to green projects and recycling profits as a community windfall there will also be improvements to our environment and benefits for local communities.

“This looks like a real winner to me, and would be another practical example of co-operative Oldham in action. Following on from our suggestion to establish a Community Shop in our borough, this is the latest in a long line of initiatives the Liberal Democrat Group has proposed to help Get Oldham Working”.

Text of letter below:
26 Feb 2015

Cllr Shoab Akhtar
Cabinet Member for Employment and Enterprise

Dear Cllr Akhtar,

You may be aware of the newly-established Hampshire Community Bank, a partnership between Liberal Democrat Eastleigh Borough Council, Local First CIC and Future Solent. It is anticipated the bank will commence operations in the summer of 2015.

The community bank model is based on a successful local banking system from Germany. However unlike the credit union, borrowers will primarily be small and medium sized local businesses seeking finance to help them invest in new projects, technologies, and services, and so create new jobs.

Companies from all sectors can apply, including local authorities, but ‘green projects, helping to meet public sector carbon reduction targets’ will be prioritised. Applicants can benefit from low interest loans from as little as 2.5% with decisions on loan applications made locally and more quickly.

Local authorities across Hampshire have backed the business model with £7.5 million, matched equally by the Department of Business, Innovation and Skills, with investors being guaranteed a reasonable rate of return of up to 6%.

The bank itself will be wholly owned by a charity, with profits invested in Hampshire communities.

The bank expects to generate more than 150 new jobs in Hampshire in the first three years of operation and loan up to £200 million by the end of the second year.

Like the Community Shop model, the Community Bank model looks to me like a winner – low cost finance available for local businesses seeking to expand or become more efficient, more jobs for borough residents and a ‘greener’ borough as a result, a repository for local authority capital that guarantees a higher rate of return than the commercial money markets, and a windfall for the community.

I know from contact with lead partner, Future Solent that establishing a community bank is neither straightforward nor quick, but it is seemingly a worthwhile endeavour.

I would like therefore to ask you to explore with other GM authority colleagues the level of interest in establishing such a bank for Greater Manchester or perhaps to be sufficiently emboldened to set one up for the Metropolitan Borough of Oldham alone.
I look forward to hearing your response to my request and am of course happy to meet to discuss the proposal.

Yours sincerely

Cllr Howard Sykes