Levelling-up is declared as one of two pillars of current Government policy. The Prime Minister has said:
“…talent, energy, enthusiasm and flair are evenly spread across the UK…it is opportunity that is not”
I wouldn’t disagree with that – but I think I would go further. In the Welsh communities where Purple Shoots works, labelled by everyone as disadvantaged, we have found no shortage of talent, energy, enthusiasm and flair, but we have also seen opportunities and plans that exist and can’t be realized because the people behind them can’t raise the finance to make them happen. So it is fair and affordable finance that is definitely not evenly spread. This is what we provide – currently only in Wales.
The majority of our loans are to people on benefits who as a result are struggling to make ends meet, often resorting to high cost debt to cover essential living costs. Starting a business with our loan puts them on a pathway to greater financial resilience, better economic circumstances and eventually a much improved income. We have many clients who are now debt free because of the business they have created. Our lending is, therefore, a sustainable solution to the problem of personal indebtedness (with a caveat that the benefits system needs tweaking to enable these gains to be realized faster – more of that in a different blog) and a key to creating prosperity where it is most needed.
There are other benefits to individuals when they succeed at getting their business off the ground – improved confidence and self-esteem, the undoing of all the damage that their many knock-backs has done. There are also wider community benefits. In the recent lock-downs I was in awe of the resilience of our borrowers, many of whom did not qualify for any of the support packages offered by Government (central and devolved). They proved their entrepreneurialism by being agile, adjusting what they did, developing new plans, providing invaluable services in their local communities – as a result, most of them have survived and are re-opening, albeit on a shoe-string because all their reserves are gone.
Where we have supported individuals to start businesses and they have succeeded, the benefits of those businesses remain local. Money earned is spent locally, local people are employed, local suppliers are used. This is why the economic impact of our lending is 10 times the amount we lend and the net gain to HM Treasury is £3-£4 for every £1 we lend.
A recent report by the All Party Parliamentary Group on Fair Business Banking has acknowledged that our current financial system, dominated by four big banks who are now absent from many communities, is not fit for purpose and certainly not fit to achieve the levelling-up which is needed. The report acknowledges (pleasingly) that small businesses are the backbone of our economy and are at the forefront of enterprise and innovation and in the heart of even the most deprived communities. A key recommendation of this report is that Government should deliver a strong, local finance option by providing capital to the regionally based CDFIs (of which we are one.)
With a relatively small amount of support from Government over the next 6 years, we could leverage enough private investment to offer our form of microfinance, currently unique to the UK and only available in Wales, in 6 other regions around the UK. We know this works to change things for people and communities in areas where levelling up is most needed and we are ready to do it now. Supporting us is a great way to “Get Levelling-up done” (to use a new version of a well-known sound-bite).
Ref: APPG Fair Business Banking 07/09/2021 Scale up to Level up