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Liberal Democrats to support community banks

by Steve Ayris on 8 October, 2014

Originally posted by The Liberal Democrats on 08 October, 2014

The Lib Dems have today voted to support measures that will increase diversity in the banking sector, encouraging real alternatives to break up the monopoly held by big banks.

The Liberal Democrats recognise that co-operative and savings banks play an important role in encouraging the growth of SMEs.

Without adequately supporting local banking systems, smaller businesses will be limited in their ability to grow. The lack of this lending infrastructure puts our economy at a disadvantage, and makes our cities and regions too dependent on London.

The proposals include measures to allow smaller banks to collapse safely, reducing the risk to the public. A similar system already exists in the USA.

The measures go further than Labour’s proposals to break up the big banks, which do not provide adequate support for diversification of the banking sector.

Ian Swales, the MP who moved the motion, says:

“We need financial institutions which have the local knowledge they need to invest earnings locally. They know the local market, they know the people and the risks.

“It’s one of the greatest factors still holding the UK economy back compared to our continental competitors.Britain is still over-centralised, and it isn’t just about political decisions it’s about economic ones too.

“On tax, on regeneration and on banking – we’re still operating in an unimaginative straitjacket of centralisation. This motion forges a path towards doing something about it.”

Vince Cable MP, Secretary of State for Business, added:

“Increasing the range of bank lending options will be a real help to small business. It is vital to our economy that we provide all the assistance we can to small enterprises and start-ups. Encouraging new “challengers” to the established big banks helps grow our economy by supporting new businesses across the nation.”

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