Goodbye banks, goodbye inclusive growth?

Stand on a railway station primarily used by poor people, Southall in west London springs to mind, and in flash you can see how much the infrastructure is geared to the economics of trickle down rather than the economics of inclusive growth.

The trains rush by the crowded platforms to a triumphant chorus of recorded announcements – “the train now approaching platform 4 is not stopping here!”

In fact, only four trains an hour stop in Southall on their way to Paddington during the rush hour period, though it is on the busy mainline westwards. You have to ask yourself why? These people on the platform, where there isn’t even a clock for their convenience, are not on holiday. They are not on benefits. They are coming home from work. So why is the transport infrastructure not responsive to their needs?

The answer is that the passengers speeding past from Oxfordshire or the Thames Valley are wealthier. Their time is more valuable. The GVA measures confirm it and, anyway, they don’t want to stop in grimy, multi-racial, ignored Southall.

Then there is the banking infrastructure, on which so many ordinary businesses rely. My home town for the past two years in the South Downs (Steyning) has just lost two banks and bank machines, and seems likely shortly to lose the last.

The customers, whose decades of loyalty have been so let down, are told that they can use the post office to bank takings, and they can – though the post office in the next village has closed (there are two cash machines there too, which charge £1.99 to disgorge your cash).

The relatively well-heeled residents (some of them) are now being treated like the working commuters of Southall. And for the same reason: neither the post office nor the bank branches are selling enough insurance or other financial products. Nor are there enough ‘scale up ‘companies opening accounts.

That isn’t supposed to be their purpose, but that is how their success is measured so that is what it becomes. We are not rich, and if you are not rich, you are expected to pay.

Here is the great irony of inclusive growth. Our measurements, for investment or business are faulty, so resources are increasingly concentrated on a handful of businesses with growth potential as conventionally measured.

A handful of those might help the town I live in, but what we actually need are ordinary businesses, shops and services, which will not demonstrate stratospheric growth rates. Unfortunately, resources are now so targeted that they will have nowhere to bank cash, let alone – heaven forfend – take out loans.

Even public sector lenders, like those in South Wales are concentrating their resources now entirely on high potential growth start-ups. So who is going to provide for the rest? As in the Southall, the fast, the high net worth, get subsidised railway lines and roads, and basic banking services, but the vast majority of business gets taken for granted. There is something medieval about this situation, and it is directly relevant to the RSA’s Inclusive Growth Commission.

Because inclusive growth, though elusive and ambiguous, really won’t be possible without financial institutions for ordinary businesses, which they can rely on.

Why should commercial banks provide for ordinary business? They don’t want to and they should not, perhaps, be forced to. But who is going to provide it otherwise? Because it isn’t just inclusive growth which depends on an answer – and on basic banking infrastructure – it is the growth which depends on basic businesses which meet basic needs, and that means most of it.

David Boyle is a Research Associate for the Inclusive Growth Commission. You can find him on Twitter @davidboyle1958.