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Poor areas need cash-flow too, says Bishop Welby

06 July 2012


The Bishop of Durham, the Rt Revd Justin Welby

The Bishop of Durham, the Rt Revd Justin Welby

DEPRIVED parts of the country are "virtually demonetised" and in danger of being forgotten by Parliament as it concentrates on the "macro picture" of the economy, the Bishop of Durham, the Rt Revd Justin Welby, has warned.

In the Lords on Tuesday, he spoke in favour of an amendment from Lady Kramer to the Financial Services Bill which would make the Financial Policy Committee (FPC) responsible for promoting "a stable and sustainable supply of finance of the economy" and government economic policy "including its objectives for economic growth and employment". As the legislation stands, the FPC - created by the Financial Services Bill to address "systemic risks" - would be responsible for promoting financial stability.

The "present situation" was "not working" in many parts of the country, the Bishop argued. Areas of "economic stress" were home to "microeconomies, which may be much weaker or stronger than national averages may indicate". It was important to enable finance to reach those "less fashionable" areas.

Among those who spoke against, Lord Davies of Stamford opposed the amendment as "coercive" and "likely to result in a conflict of objectives". It was eventually not moved, and the House voted for an amendment by Lord Sassoon, commercial secretary to the Treasury, which gives the FPC a "secondary objective" to "support" the Government's economic policy, including growth and employment.

The House of Lords will continue to debate the Bill this month. Bishop Welby will propose that the Financial Conduct Authority (FCA) - a new body set up to regulate financial-services firms - be given a "deprived-communities objective".

On Tuesday, he suggested that the FCA should consider opening up the market to other sources of finance such as credit unions.

The City is under scrutiny after the revelation that Barclays bank manipulated interest rates. Both the chairman and the chief executive have resigned, and the Chancellor has announced a Parliamentary inquiry into professional standards in the banking industry.

Bishop Welby said on Tuesday that the Government's plan to reform the banking sector was "a very good crack" at reform.

But Stephen Beer, of the Christian Socialist Movement, said that the Government should "break up banks where necessary".

In a joint statement on Tuesday, the Church Commissioners and the C of E Pensions Board said they did not believe that the fixing of Libor would have had a "direct impact on asset values", but that they would have been affected "indirectly, in so far as Libor rates will undoubtedly have had some effect on the interest received on deposits".

At close of business on Friday, the Commissioners held approximately £5.6 million of shares in Barclays, and the Pensions Board approximately £5.1 million. Barclays' share price fell by about 17 per cent between the close of Wednesday, when the FSA announced the misconduct of the bank, and the close of Friday.

Leader comment
Paul Vallely

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