Access to Finance

We’ve re-imagined the People’s Bank pledge in my manifesto.  Since my election we’ve probably had the most turbulent economic time in the last 100 years.  We completed a due diligence on the People’s Bank as soon as I was elected and it was found to be financially viable on a wider North East footprint.

Through the pandemic I made the decision to prioritise financial support for businesses.  Start-ups, small businesses, social enterprises, and co-operatives often struggle to find the money they need to grow and thrive. The big banks based outside the North East do not have a good track record of lending to the full range of businesses based here.

The North East has the lowest rate of business start-ups in England. To address this, we need investment capital. Private equity simply isn’t investing here with sufficient scale or expertise. In particular, there is a dearth of patient equity capital. The existing North East Fund, backed by the European Investment bank, is winding down. Debt funding is invariably only available with security, creating a catch-22 for business scale-ups.

Our Access to Finance programme is the initial stage of the People’s Bank and supports its future creation.  It includes:

• £10 million SME Innovation Fund which will make it easier for local businesses to access money so they can grow and innovate.  This will mean more secure well-paid jobs in the region.  The Fund will also leverage in private capital which would not be possible without our initial funding.
• £4 million Social Finance Fund which will focus on helping socially trading organisations (STO) access finance. These are businesses which deliver social benefits and trade commercially like community interest companies and co-operatives.  They have traditionally had difficulty in getting access to the financial backing they need. Where financial support has been available, it is provided mostly via commercial banks or hedge funds meaning that repayment extracts wealth from our local economy.  There are 5,000 STOs in our region, employing 30,000 people, and so are a crucial part of our local economy.  This fund is being co-designed with the organisations it is designed to help.
• £900,000 to help SMEs access existing finance.  This includes high quality advice and mentoring as well as linking up business and investors.

This embryonic People’s Bank and a future Regional Wealth Fund that works for the people of the North East are key parts of the answer – recycling money in our region.

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