Bank of England must create new fund for local banking to promote recovery, urges think tank

Press release

The government’s support packages during the pandemic are neglecting communities and are overly focussed on larger banks, a new report argues.

In The Road to Resilience: how community financial services can help level-up Britain, the Royal Society for the encouragement of Arts Manufactures and Commerce urges that additional funding and new approaches towards the third sector, start-ups and local banks are needed to ensure the survival of communities after the pandemic. The report is live here.

The report urges a re-think of how our financial infrastructure and support is organised, owing to the bulk of pandemic support being given to larger players in the sector. A focus on community banking, start-ups and civil society groups would ensure that financial support is getting to those who need it most.

Enhanced support is also needed for the UK’s burgeoning fintech (financial technology) companies. These have seen meteoric success over the past decade but are threatened by the turbulence created by the pandemic, and have been underutilised in the government’s emergency business loan schemes.

The report calls for:

  • The Bank of England to create an endowment fund for community stakeholder banking. Known as a Local or ‘Levelling-Up’ Investment and Finance Trust (LIFT), this would support the long-term resilience of the financial system. Local authorities would be encouraged to apply for and hold LIFT funds to support the UK’s growing number of community banks, alongside banking services driven by social entrepreneurs in their area.
  • LIFTs should form part of a wider package of support for community banking,such as providing match funding to councils, allowing shares in mutual banks to be eligible for Enterprise Investment Scheme allowance and other tax reliefs. Barriers to regional banks cooperating in networks created by UK competition law should also be reviewed. 
  • A digital transition strategy, including more government collaboration with the UK’s growing financial technology sector. The report suggests that the Bank of England should explore the creation of a single digital currency in order to prevent a private monopoly.
  • Support for underserved communities, such as a social investment fund for the development of new citizen-focussed financial products and a pledge to ensure all homes and businesses have access to full fibre broadband by 2025.
  • Legislation to protect free access to cash. The pandemic has accelerated a shift towards digital and contactless payments, but 8 million people in the UK would find life near impossible without cash. To ensure that vulnerable groups can still access services, the government should legislate to ensure that access to cash is protected, and that cash is still accepted by the retail sector.


The RSA has previously made the case for financial services that better serve communities, and has supported the development of an emerging nation-wide layer of community stakeholder banks in the UK.

The organisation has recently called for greater support to tackle economic insecurity during the pandemic. In June the RSA released A Blueprint for Good Work, which calls for an immediate cash payment to citizens, alongside a wider reform of the welfare system and union regulation.


Asheem Singh, Director of Economy, said:

“If the Government is serious about levelling up Britain it needs to reshape Britain’s banks. Our levels of regional equality are comparable to those in Germany at the fall of the Berlin Wall. This is in part because banks are not lending enough to small businesses and individuals, and are instead focussing on safe products like mortgages. Branches and ATMs are leaving our poorest communities.

“The government depended on businesses to distribute its Covid-19 loan scheme and that meant that cash it didn’t get quickly enough to businesses that needed it most. Good businesses have gone under, not because they were unviable, but because they banked with the wrong bank. Government must take responsibility for this, but so must the banks, who had sufficient headroom to loosen their lending criteria.

“Enough is enough. We at the RSA have put our money where our mouth is and supported the creation of a layer community banks across the UK. From Plymouth to Preston, Mutual banks are emerging, one at a time. We already have support in this endeavour from opposition parties, but we want the Government to become a key player in this movement.

“We urge the Bank of England to Create the conditions for a new layer of local banks. LIFTs – local investment and finance trusts – would capitalise local community-owned financial vehicles, with managers who know their communities. LIFTs could be influential in creating jobs, wealth and career progression in financial services outside of the square mile.”



Matthew Taylor, CEO of the RSA, said:

“As the world faces up to the economic devastation wrought by Covid-19 – and as we continue to suffer from the aftershocks of the 2008 global financial crash – reform of the financial services system has never been more overdue and never seemed so remote.

“This pandemic has cut communities to the bone. It is vital that we get economic activity happening on the ground and ensure individual livelihoods. But this crisis also presents an opportunity for change. Going forward we hope that the government will take steps to build a financial system which is more resilient and people-focussed than that which has served us so poorly in recent decades.”


Contact: Will Grimond, Media & Communications Officer, Royal Society of Arts, 0797 247 0135, [email protected]  




The RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) is an independent charity which believes in a world where everyone is able to participate in creating a better future. 


Through our ideas, research and a 30,000 strong Fellowship, we are a global community of proactive problem solvers, sharing powerful ideas, carrying out cutting-edge research and building networks. We create opportunities for people to collaborate, influence, and demonstrate practical solutions to realise change. 


Our work covers a number of areas including the rise of the 'gig economy', robotics & automation; education & creative learning; and reforming public services to put communities in control. 

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