By Kay Polley
29 MPs have written to John Healey to back a Fair Banking Act to spread growth and affordable credit across the UK.
As John Healey set out his ambition for “growth in every postcode”, a group of influential backbench MPs wrote to the Chancellor urging him to back a Fair Banking Act as part of the Government’s growth and financial inclusion agenda.
The signatories, including former Business Minister Gareth Thomas and former Shadow Chancellor Anneliese Dodds, argue that improving access to affordable credit could help deliver two of the Government’s central aims. As their letter says, “expanding access to affordable credit would help make life more affordable while also supporting growth.”
It is a timely intervention. Healey’s speech rightly focused on boosting investment beyond the usual places, with greater devolution, stronger local investment and more accountability for whether investment is actually delivered.
He also announced £150 million through the British Business Bank for a new Northern scale-up fund, aimed at backing high-growth firms outside London and attracting additional private investment.
But as the MPs’ letter makes clear, delivering growth in every postcode also means asking whether our mainstream financial system is serving businesses and communities in every postcode.
Growth needs finance that reaches underserved businesses
Large-scale investment funds are often well-placed to help larger firms expand, but they do not solve the whole problem. The new Northern fund, for example, is expected to make investments of between £5 million and £15 million. That is important growth capital, but it serves a very different part of the market from smaller businesses, start-ups and social enterprises struggling to secure everyday finance.
A business cannot invest, hire or expand if it cannot access appropriate finance. Driving investment into every community relies on having financial institutions who understand and are grounded in those communities.
Community Development Finance Institutions, or CDFIs, are already demonstrating what that infrastructure can achieve.
In 2025, CDFIs lent £181.4 million to start-ups and small businesses, helping to start 5,741 businesses and create 7,399 jobs. Some 43% of their small-business lending went into the UK’s most disadvantaged communities, while 98% of businesses borrowing from CDFIs had previously been declined by another lender.
CDFIs specialise in backing viable businesses that do not fit mainstream lending models. They help turn entrepreneurial ideas into businesses, businesses into jobs, and investment into stronger local economies.
The problem is that they remain small compared with the scale of unmet demand.
Turning political support into accountability
The letter from MPs calls for a Fair Banking Act to address that gap.
A Fair Banking Act would require major banks to disclose how well they are serving different communities, including people and businesses currently excluded from affordable credit.
Banks would be assessed and given a clear rating. Where they were falling short, they would be expected to improve.
That would not mean forcing banks to make inappropriate loans. Banks could improve their contribution by lending directly or by working with and investing in credit unions and CDFIs that are better placed to reach underserved customers.
This could turn isolated examples of good practice into a more systematic relationship between mainstream banks and community finance.
It also fits closely with Healey’s emphasis on accountability. If the Government wants investment that gets delivered, we need to know where finance is flowing, where gaps remain and what our largest financial institutions are doing to address them.
Making life more affordable
The MPs are also right to connect affordable credit with the cost of living.
Around 17 million people are underserved by the credit market. When someone already struggling to pay for food, heating or rent faces an unexpected expense, that cost does not disappear because affordable credit is unavailable. Too often, it means borrowing at higher rates instead.
There is a basic injustice when those with the least financial security can end up paying the highest price to meet the same everyday needs as everyone else.
High-cost credit can deepen financial hardship, taking still more from household budgets that are already stretched and turning manageable setbacks into serious debt.
A Fair Banking Act would create greater accountability for whether major financial institutions are helping to change that.
Healey has set an important ambition for growth to reach every postcode. Now 29 MPs are asking him to recognise that a fairer financial system is part of delivering it.
Growth that reaches every part of the country needs finance that does too.
A Fair Banking Act would help make that happen.