Councillors clash over £1m 'Preston bank' investment
Preston City Council’s planned £1m investment in a new community bank is “worth every penny”, according to the man in charge of the authority’s finances.
Cllr Martyn Rawlinson was defending the Labour-controlled council’s involvement in the creation of the North West Mutual Bank, which will lend money and offer accounts only to businesses and residents based in the region.
The venture – a collaboration with Liverpool City Council and Wirral Council – has been in the pipeline for more than two years and will also provide banking services to those who might otherwise struggle to access them.
However, Liberal Democrat group leader John Potter told a meeting of the full council that the authority was “gambling” the money pledged to the scheme – £100,000 of which has been committed this year, with the remainder due to be invested in 2022/23.
During a debate on the financial challenges facing the authority in the years to come, Cllr Potter said that there were good reasons why he believed that the bank was a “stupid idea” – but he was unable to elaborate on them because they have only ever been presented to councillors in private.
“Members…should be absolutely aware that by putting that million pounds in, there may be service and job losses at this council that you could have prevented by not spending that money on the bank.
“If you think it’s worthwhile, that’s fine – but you have to live with that consequence. Servicing a million pounds worth of debt is not free,” Cllr Potter warned.
However, Cllr Rawlinson – cabinet member for resources and deputy council leader – rejected the charge of recklessness, claiming that the community bank was the only game in town if Preston was serious about being levelled up.
“The money coming from the government – the Towns Fund [Preston has received £20.9m] and the Levelling Up Fund if we get it [up to £20m] – will level nothing up.
“We will do the right things with it, we will do the best we can with it to make Preston vibrant and exciting and [to enable it] to thrive – but the bank is the only true levelling up scheme that is going to happen for this city…and everyone should support it, it’s worth every penny,” he added.
Meanwhile, Freddie Bailey, cabinet member for community wealth building, accused the Lib Dems of lacking ambition.
“[The bank] is a risk and we obviously know that…but if it works, we could potentially be investing millions and millions of pounds into small and medium-sized businesses and social enterprises.
“With the effects of Brexit and Covid, I really strongly believe that there is not a better time in [modern UK] history…to do it, because it is something we seriously need,” Cllr Bailey said.
Papers presented to the meeting show that the city council will need to make £600,000 of savings in 2023/24 – a year later than expected at the budget back in February, because of underspends.
The council has previously said that it has identified £1.3m in contingency savings which it could draw on from within its non-statutory services, but will first attempt to generate them through digital efficiencies.
The authority’s reserves are also forecast to drop from £7.2m this year to just over £2m by 2024/25.
Cllr Potter suggested that the council had been slow to try to address its financial woes.
However, Cllr Rawlinson said that the authority “always makes the big decisions when the time comes”
He added: “After ten years of austerity and three major savings exercises – reducing our overheads dramatically [and] halving the workforce – we still can’t balance the books without destroying vital services. Everything that we’ve got left is vital.
Councils need more funding from central government. Council tax and business rate payers are shouldering too much [of the] burden of the cost of local services compared to other taxpayers – it’s not sustainable.
“It’s time to invest in us, not push us over the edge.”
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