Set up a People’s Bank to invest in local businesses

Prosperity requires money. In the past, too many of our banks have behaved irresponsibly, causing a global financial crash. I will establish a regional People’s Bank, owned by its customers, with an explicit remit to do business only with people and organisations in the North East. The People’s Bank will operate to the highest ethical standards to rebuild trust and direct relationships – there will be no “computer says no”, but direct relationships with personal customers and SMEs. It will have a full range of services – current accounts, mortgage lending, and business banking, with physical branches and 24 hour automated services. There will be no casino banking, just solid, ethical trading with local people and businesses.

The bank will operate on a pay ratio maximum of 10:1 – meaning the highest paid will never earn more than ten times the lowest paid member of staff. All profits will be retained in the region – by customers, and through supporting a Charitable Foundation. It will be owned by its customers, and run on a one-person-one-vote co-operative basis, and legally asset locked so it can never be privatised.

It will take approximately two and a half years to complete the regulatory process. The first stage is a due diligence investigation costing approximately £40,000 to look over the business plans, then an initial investment of £700,000 to recruit the necessary professionals and navigate through the regulatory period. Once a banking licence is granted, the core capital requirement will be £20 million. This can be raised from ethical investment funds, including public sector funds, and any private citizens wanting to invest. The Mayoral Authority will remain a non-voting shareholder and once the bank is mature, will gain a return from its initial investment – this is a money maker for the tax payer in the long term.

Over 40% of Germany’s banking system is made up of similar independent, locally managed banks – which is why their manufacturing base is so much more robust. Regional banks of this nature across the world weathered the financial crisis far better than the large banks we taxpayers had to bail out. It’s the safest model of banking there is.