Community financing Bournemouth’s future

While you were reading New Start’s April edition ‘The community finance revolution’, we had started our own in Bournemouth.

We want to keep our talented entrepreneurs and those leaving our universities and colleges, for the future benefit of us all. One of the ways we can help people to live and work in the town is by offering access to finance for homes and businesses to those who can afford to pay. We are providing local lending for local people, with decisions made locally, on a case-by-case basis.

Bournemouth Council is investing up to £15m of reserves in our community finance Initiative. As a council we are providing mortgages and Bournemouth Community Finance Company Ltd, a company wholly owned by the council, is offering loans to Bournemouth businesses to help them expand and grow.

Councils have been offering residential mortgages for a long time – Bournemouth Council was lending up to the 1980s. We can offer mortgages now through the 1985 housing act. It’s not new of itself, but it is effective and links with our housing priorities.

At the same time, we’ve set up a company, got our consumer credit licence (CCL), and set up our procedures to be compliant with the Financial Conduct Authority, who took over regulation of CCLs on 1^st April this year.

As a local authority, we have a duty to promote the economic wellbeing of our town, and that means supporting a healthy jobs market and thriving business community – a duty that has been reinforced recently by the localism act 2010.

Businesses have been telling us for some time that their expansion is being stalled by difficulty in either securing the necessary finance or only being able to secure such finance on terms that are so unfavourable they are not able to move forward. We believe we know the local economy well. We liaise regularly with businesses and work with our local Chamber of Trade and Commerce. They are collectively telling us that the town’s economic prosperity would be enhanced if more accessible finance were available.

We have reserves in national banks earning a relatively low rate of interest, and we need to find new revenue streams with better returns for our residents. By investing this money locally, we are helping to create and retain wealth in the area for for the benefit of our residents.

And all the profits from these ventures are returned to the council to support services and the needs of our communities in difficult economic times. Unlike the big banks, we pay no bonuses and the individuals involved in this work are doing so as part of their normal duties at no extra cost.

Of course, with greater financial rewards for the council comes the potential for new risk. We are the guardians of public money, and we have therefore been very careful to ensure we have the right policies and procedures in place to minimise the risk to this capital. We’ve got experienced staff and we’ve done this properly and well.

As a council we are in a unique position to break the banking mould and can deploy a mix of resources, experience and relationships built up over time in bringing this forward successfully. We also have a long term vision concerned with the social return on investment, as well as our financial objectives. We are ‘Building a Better Bournemouth’ not just for this generation, but for those to come but using our resources innovatively to support a stable local economy.

We feel that Bournemouth’s community finance initiative is a key element to ensure Bournemouth’s talented youth and key workers stay to help us build a better Bournemouth.