BLACKPOOL MP Gordon Marsden is calling for a new system of local banks to boost growth and jobs.
The Blackpool South Labour MP who said the move was designed to release finances for local businesses which needed a cash injection to expand.
He said the system would be based on the successful German system of sparkassen – regional banks whose job was to lend to businesses but whose primary function was to promote local growth
A system he said which in part had helped Germany escape the worst effects of the credit crunch.
He said: “I was fortunate enough to visit Germany two years ago to look at these sparkassen in action and report back to Labour’s small business task force.
“I think this is something that would be welcomed by small businesses across the North West and not least in Blackpool and the Fylde.
“We are not lucky enough to have investment banks like some bigger cities.”
He said part of the problem was national banks simply did not have the local knowledge to know where best to invest and a network of regional banks would be well placed to hand out the money that small and medium sized organisations on the Fylde coast needed to grow and create more jobs.
He added: “Although they will have to operate on sound financial principles their key remit will be to spark economic growth in their area.”
He said they would need an arm’s length control mechanism which could come for example from a partnership between local authorities and chambers of commerce.
And he added capitalization need not be too onerous and once they were up and running they would attract private finance.
Labour leader Ed Miliband launched the idea at the British Chambers of Commerce conference in London and said £200m of government seed corn funding would lead to £2bn of capital for the local banks.
He said: “We need regional banks with a mission to serve their region alone. Not banks that like to say ‘no’, but banks that know your region.”
Paul Maynard, MP for Blackpool North and Cleveleys, said: “I think there is merit in regional banking, however we have to be careful about what definitions we use and how their equity stacks up.
“It is more important in my mind that banks, whether regional or national, have sufficient capital and make the right lending decisions.”