Community Wealth Building
Making Financial Power Work for Local Places
Introduction
In our ongoing exploration of Community Wealth Building (CWB), we turn our focus to the second pillar: making financial power work for local places. This concept is important in reshaping our local economies and ensuring that financial resources are leveraged for the benefit of our communities.
The Challenge
The UK banking sector has increasingly oriented itself towards global markets, often neglecting the needs of local investment and economic development. In recent years, we have witnessed a concerning stagnation in lending to small businesses and the closure of numerous local bank branches. This trend has weakened the connection between lenders and their communities, leaving many small and medium-sized enterprises (SMEs) struggling to access the credit they need to thrive. Without access to affordable credit, these businesses find it challenging to compete with larger firms, which ultimately impacts their ability to provide goods and services to local consumers.
A Community-Centric Solution
CWB seeks to address this issue by enhancing the flow of investment within local economies. Rather than relying on external national or international capital, CWB encourages communities to harness their own wealth. For instance, local authority pension funds can be redirected from global markets into local schemes, fostering economic growth right where it matters most. Additionally, the establishment of mutually owned banks and regional banking institutions dedicated to local economic development can further channel investment into our communities.
Community ownership and control of financial institutions should be a priority. This means that communities should work to establish and support financial institutions that are owned and operated by local residents, such as community banks and credit unions. These institutions can be more responsive to the needs of the local community and can prioritise lending to local businesses and community development projects.
The Role of Community Banks
Community banks represent a promising alternative to traditional commercial banks. With a deep commitment to their localities, they are equipped to meet the specific financial needs of SMEs, individuals, and community organisations. Unlike their commercial counterparts, community banks operate with a focus on ethical investment, acting as regional anchor institutions that prioritise the well-being of their members and communities.
GALE, as part of DTAS, has been a contributor to the work of Community Shares Scotland, which exemplifies the essence of local investment. Community shares enable individuals to invest in enterprises that meet their specific needs, allowing community members to buy shares in businesses that provide essential goods and services. This model ensures that the enterprises are controlled and governed by the communities they serve, fostering a sense of ownership and accountability. Community shares have already helped launch and grow a wide range of thriving community businesses.
The Community Savings Bank Association
In an effort to bolster this movement, the Community Savings Bank Association (CSBA) has been established by a group of innovators, including RSA Fellow James Moore, who collectively bring over 150 years of banking experience. The CSBA aims to facilitate the development of a network of independent, customer-owned local banks across the UK. Their work, supported by the Royal Society of Arts, Manufactures and Commerce (RSA), promotes a regionally focused, mission-led model that seeks to revitalise the banking sector by placing sustainable development and community welfare at its core.
By moving towards long-term community development and ownership of financial institutions, we can build a more equitable, sustainable, and thriving economy for all. For those interested in exploring this innovative approach to banking in our region, you can learn more and register your interest with the Community Savings Bank Association (csba.co.uk).
Conclusion
As we continue to delve deeper into the principles of Community Wealth Building, we encourage our readers to consider how financial power can be harnessed for the benefit of our local communities. Together, we can work towards a more equitable economic landscape where resources are reinvested in the places we call home. Stay tuned for our next article, where we will examine the third pillar: fair employment and just labour markets.