We need banks with boots on the ground

It is a nerve-racking business summing up a debate at a party conference. Will you be able to reply effectively on the podium? Will you think on your feet? Will you trip over the steps?

But I have worked a long time to formalise the Lib Dem commitment to community banks – and now they have.

I also took the opportunity to pay tribute to the work of Susan Kramer and John Sharkey and their colleagues in the Lords, who did the political spadework for this in recent years, and so successfully.

As I got off the platform (see what I said, from 2:36:10), I got a text from friend of mine who had been watching the debate from London (thanks, Emma) who said this:

“Since the recession, I’ve been able to borrow enough to buy a house, but [husband] still can’t raise a business loan from the bank, and he employs about 15 people. Bonkers isn’t it.”

It certainly is, and the story illustrates the peculiar way the centralised UK banking system has developed – designed primarily to fuel and profit from asset bubbles rather than financing productive business.

Still, Ian Swales did an excellent proposing speech and there was only a little opposition.

It now commits the Lib Dems to working for a new local banking infrastructure, alongside the big banks and the credit unions, which is capable of supporting small or medium and social enterprises.

I know only too well that this commitment won’t be taken seriously unless the party explains how – and now they do: the big banks will fund and mentor the new infrastructure, as they do in the USA.

The real argument will now be with people who say that challenger banks are emerging anyway. There are more than 30 new banks awaiting licences from the regulator. They will emerge.

The problem is that they will emerge far too slowly and mainly in the places which need them the least desperately – and which don’t provide the crucial element: an ability to asses local risk properly.

I’m not saying that the new generation of community and co-operative banks will look exactly the same as the old ones. They may not have bricks and mortar branches in the old style.

But we need an alternative to the current ‘drone’ style of banking, operated virtually from Wall Street or the City of London. When it comes to the kind of surgical lending we need locally, it is a hit or miss affair, often with civilian casualties.

What we need, and what we will get if the Lib Dems can turn this commitment into reality, is banks with boots on the ground.