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IPPR’s report , “Definancialisation a democratic reformation of finance”, sets out an ambitious agenda for ‘definancialisation’, for rolling back the “socially useless aspects of modern finance” and advancing both its productive potential and the democratic interest over its activities and objectives.


Financialisation – the “increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies” – is arguably the most important structural change in British capitalism in the last 30 years. The rise in the scale, scope and profitability of financial activity relative to the size of the UK’s economy in this period is well-known. For example, the balance sheet of the UK banking sector grew from 40 per cent of GDP in 1960 to 450 per cent in 2010. The consequences of financialisation more broadly, both positive and negative, are also well understood.


According to the report the financial implosion of 2007–08 should have been used as a “provocation to rearrange the place of finance in our economic lives”. Instead, six years on from a financial crash that cost British society the equivalent sum of fighting a major war, too little has changed. Financial crisis has ossified into relative political stasis. Contemporary policy debates are either inadequate or focus on treating the consequences of our financial system rather than changing its underlying structures.


In this report IPPR argue for structural reform to address the deeper institutional arrangements that underpin financialisation. The report says that by doing so, its recommendations should help to build a financial system that operates without public subsidy (the ‘bailouts’), where rent-seeking is limited, and where the relationship between finance and production is substantially tightened.


IPPR set out two principles for this programme of reform:

  • The financial system is a vital utility and the flow of credit to the real economy an essential public good which should be guided by and made accountable to democratic institutions. However, this does not mean it believes rigid, explicit targets should be set. Rather, an overarching framework should be established to ensure that credit is better directed into expanding the productive capacity of the economy.
  • It believes that there are limits to regulation, necessary though it is. This will require building or reforming institutions, both public and private, that are better able to create and sustain equitably shared growth.


These principles lead to three broad objectives:


  1. Targeting credit at the productive economy – principally by giving the Bank of England the mandate to monitor and guide credit creation and flow
  2. Reassert the public interest in the financial system
    1. Establish a Monetary Commission to investigate the UK’s monetary system
    2. Strengthen equity ratio requirements to remove the implicit public subsidy to banks
    3. Create a Financial Product Board to approve new UK-traded financial products
    4. Establish an EU credit-ratings agency funded by the financial transaction tax
  3. Invest the gains of financialisation to help fund public expenditure – by establishing a national wealth fund that is able to accumulate some of the gains of financialisation and support the country’s long-term service and investment needs.

This week, the Community Investment Coalition (CIC) launched a Community Banking Charter. CIC believes that every adult, household and business should have access to a basic package of fair and affordable finance tools including:


A transactional bank account
A savings scheme and insurance
Affordable credit
Physical access to bank branch facilities
Independent money management advice.


It sets out the action it believes is required by regulators and politicians to achieve this goal.


The Charter was launched at a briefing session in the House of Lords.  Hosted and chaired by the Bishop of Birmingham, speakers included Guy Opperman MP, Lord Sharkey and Lord McFall of Alcluith.  Other guests included MPs, Peers and financial services sector industry representatives. You can read and download the Charter here.


CIC will continue to campaign for implementation of the key actions set out in the Charter.


To support the Charter, CIC partner Local Trust released a video and case study setting out the problems faced by local communities who struggle to access basic financial tools.  You can watch the video and read the case study here. You can also read the blog that Jennifer Tankard, the lead of the Community Investment Coalition, wrote for the Barrow Cadbury Trust on community banking and the Charter on the day of the launch.



Nearly half of all payday lenders have pulled out of the UK market in the last 18 months. The UK’s high-cost short-term credit market has been coming under relentless pressure from the media and campaigners to change its ways.


Jennifer Tankard, the director of advocacy and research at the Community Development Foundation and leader of the Community Investment Coalition, noted that the Consumer Finance Association, the trade body for payday lenders, has repeatedly expressed concern about the impact of regulation on the industry, arguing that a regulated and innovative financial services industry will be replaced by unregulated and illegal lenders.


While the number of payday loan providers may be declining, credit unions and community development finance institutions (CDFIs) are slowly scaling up and offering a wider range of services, such as short-term loans, at affordable prices. The government is investing £38m to support credit unions to modernise and grow. The Community Development Finance Association, the trade body for CDFIs, estimates that in 2013, almost 10,000 small and social businesses were able to launch and grow with a CDFI loan. These businesses created and saved more than 17,000 jobs, many in the UK’s most disadvantaged neighbourhoods.


However many of the credit unions and CDFI’s potential customers are not aware of their existence. Community projects such as Big Local and Community First are helping to tackle this. The £38m invested in credit unions is almost the same amount as the top five payday lenders spent on advertising in 2013 (an estimated £36.3m). The financial services market remains still distorted.


In an article in the Guardian, Jennifer Tankard summarises the need for tighter regulation of payday lenders and the scaling up of credit unions and CDFIs to serve poorer communities.

Income inequality has become an increasingly important political issue in recent months. The High Pay Centre has released a new 3 minute animation to outline the size of the paygap and compares the situation with other European countries, where similar levels of total income are shared much more evenly, meaning that people at the bottom and in the middle have more.


The film highlights how:

  • pay for top bosses nearly doubled over the past decade, while ordinary workers wages remained the same


  • a FTSE 100 CEO earns four times as much in one year as the average worker does in their entire lifetime


  • if total incomes in the UK were divided as evenly as in Denmark or the Netherlands, 99 per cent of households would be better off by nearly £3,000 per year



You can watch the first film here and you can access additional reports and information on income inequality and excessive pay on the High Pay Centre’s blog and publication pages.

Follow the High Pay Centre on Twitter @HighPayCentre and join the conversation about the video using #paygap!


IPPR’s ‘Purchasing Power’ report states that living standards of households in the UK have fallen over the last six years due to a combination of exceptionally low increases in wages and larger increases in prices. Substantial rises in the price of essentials, including energy, public transport and childcare, have been a particular problem for some families, with those on the lowest incomes feeling the biggest squeeze.


Consumers are trying to fight back. The internet has facilitated websites that compare prices and the quality of goods and services, making it easier for consumers to make the right decisions.


But some markets are so complex that they require special analysis and regulation. In this paper, IPPR consider four such markets:

  • energy
  • public transport
  • childcare
  • housing.


Making markets more competitive – such as increasing consumer information and banning practices designed to exploit consumers – is the best approach for many consumer markets. But complex markets require more innovative solutions. This is about finding alternative ways of achieving the best deal for consumers.