Transforming Finance – priorities for the next Parliament

The 2015 general election will take place nearly seven years after the financial crisis of 2008, yet the root causes of the crisis have barely been addressed by mainstream politics. This week the leading civil society groups working on transforming finance are calling for this to change.

A Manifesto supported by 11 organisations, which include Positive Money, Share Action, NEF, Finance Innovation Lab and FoE, is setting out the five major changes that the next government should put in place to create a finance system that serves the needs of society, environment and the wider economy.

Read the Transforming Finance Network Manifesto (pdf)

Put simply, we’re asking for:

• more diversity in banking, using the Competition & Markets Authority investigation in retail banking to accelerate growth in mutuals, peer-to-peer lending, community and stakeholder banks

• more responsibility in financial markets, encouraged by joining the EU Financial Transaction Tax (FTT) designed to curb unnecessary speculation

• more transparency in savings and investment, backed by a new Responsible Investment Bill

• more sustainability through the expansion of the Green Investment Bank into a broader state investor akin to those in other developed countries such as Germany, France and Japan

• more democracy by asking the Bank of England to carry out a review of all monetary policy options available to government and central banks to influence the allocation of credit in the interests of the whole of society and the economy, and a debate over these options in parliament.

Each of these recommendations is backed by a specific campaign with its own coalition of support, but together they form the pillars of a new, sustainable approach to finance. When public outrage at the failures of the financial system was at its height during the Occupy protests, the challenge posed was “what is your alternative?” In the years since the crisis, civil society has begun to show how to create a financial system that is democratic, responsible and fair.

Positive Money and others have highlighted the fact that the majority of credit created by banks in the UK is allocated to property or financial assets. Less than 10% goes to productive lending into businesses. Since the 1970s, monetary policy has had no view on where credit should be allocated, only how much. Now, Lord Turner and Martin Wolf are publishing ideas on how monetary policy could be used in more imaginative ways to help the real economy. NEF and IPPR have made specific proposals for credit guidance and strategic quantitative easing.

Changing the financial system isn’t just about avoiding another crash. We need to fundamentally rethink the purpose of our financial system to ensure that it delivers what we need for society, the environment and the wider economy. Civil society is leading the way. Will our politicians follow?

Read more in the article “Civil society urges politicians to transform the finance system” by Chris Hewett on the Guardian website

Read the Transforming Finance Network Manifesto (pdf)