26th March: 11.00am
We have a wealth problem!
What if we don’t have a poverty problem? What if the problem is wealth and the fact it is not being distributed fairly? The Alternative Economists invite you to explore with them the considerable wealth we already have in place and how it could be better used to create a fairer society with less poverty. By wealth we mean the spend of our public sector, our assets in the banks and Credit Unions and local government pension funds.
The statistics, articles and TV documentaries demonstrating the extent of poverty are plentiful. Poverty was at high levels before the current pandemic but now many more people are experiencing poverty. The current rising costs of utilities and food means that poverty is constantly being discussed but what if we are having the wrong conversation? Maybe we should be talking about wealth rather than poverty. Reports about poverty tend to show how bad it is and how the symptoms are being alleviated by charity; they do not question the existence of poverty or ways we could begin to tackle the cause.
Most of us think that this is a poor region, but we are in fact blessed with a substantial amount of wealth. For example, billions of pounds of our personal and business savings are deposited each year in commercial banks through the current and savings accounts in NI. Any deposits not loaned to customers are invested outside the region for the purposes of profits for shareholders. In 2019 alone, Ulster Bank had deposits from savers in NI of £7bn but only loaned out £3.6bn while the remaining £3.4bn was invested outside the region. To put this sum in perspective, £3.4bn is nearly double the 2020/21 budget for the Department for Communities and the Department for the Economy combined.
Savings in the Credit Unions suffer a similar fate. Credit Unions currently have assets valued at £1.6bn. But due to regulations they’re limited in how much they can invest in the region. As a result, the bulk of the money saved with them is deposited in commercial banks. And as much as they might like to invest this money in the region, they cannot.
Then there’s the local government pension scheme for NI which is administered by the Northern Ireland Local Government Officers’ Superannuation Committee (NILGOSC). This fund has a total value of £7.878bn and it is the responsibility of NILGOSC to invest it prudently, taking into account the “impact corporations have on the environment, workers and communities”. Currently, the vast majority of that fund is invested outside of NI. Our public sector employs 28% of the workforce and spends billions purchasing goods and services every year. What if they intentionally used this wealth for the public good by ensuring everyone is paid at least the real living wage and they purchased goods and services from local businesses?
Several places are realising that they are already blessed with wealth and are beginning to make the most of it. In Preston, public sector organisations are using their procurement to support local businesses and have invested some of their local government pension funds in local projects such as housing. In the south of Ireland, The Central Bank has approved the Credit Union Approved Housing Body Fund to oversee up to €800 million investment in social and affordable homes. Other places, such as Islington, are giving local people the opportunity to invest in local climate action projects through innovative finance mechanisms such as Community Municipal Investments.
This event aims to change the conversation about poverty by looking at the substantial wealth we have in place and exploring practical ways that would facilitate its fairer distribution thereby reducing poverty.
Learn more: Mary McManus on the Imagine! blog