Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): We welcome to our meeting Dr Bridget Meehan, who joins us remotely. Dr Meehan is a policy officer at Advice NI. We would really welcome an opening statement from you. Thanks very much for joining us.

Dr Bridget Meehan (Advice NI): Thank you. I submitted a written paper and some supplementary materials — the Northern Mutual business case and an independent research study — so I will summarise some of the key points from the written paper.

Advice NI's interest in your inquiry comes from our direct experience of working with people who are experiencing financial exclusion. We are keen to find practical remedies to that, but we are also looking at the wider financial problems that exist. We are taking the opportunity at your inquiry to demonstrate the wider financial problems created by our being part of the global financial system and how we can try to address those problems. Because of that global financial system, vast amounts of wealth are extracted from local economies, and that comes at the expense of people, the environment and the rural economy. In the North, all the wealth that is generated locally, whether it is from employee salaries, business transactions, public-sector employers, charities, pensions and so on, is deposited in commercial banks. Our wealth enters the global financial system through those commercial banks, and, when that happens, most of that wealth is invested outside the region, not in our region and not for our benefit. Therefore, the priority should really be trying to prevent that wealth leaking out.

A core issue is how we get access to our own wealth and how we are able to control it ourselves. Advice NI believes that one way that we can do that is through the creation of a mutual regional bank. That is why we support the Northern Mutual campaign, which was created with the sole purpose of establishing a mutual regional bank in the North. That kind of bank is distinctly different from a commercial bank in its ethos and principles. I have written about that in the paper, so I will not go into any detail now, but I will give a brief overview of the key distinctions.

A mutual is owned by its members and is regional, so it can operate only within the region that it is licensed to operate in. It is not driven by profit and is ethical in its lending, especially for small businesses. It focuses on financial inclusion, building trust with its members and being able to make decisions at local levels. A mutual bank offers all the same banking services that you would expect from a modern bank. You get your personal and business current accounts, overdrafts, business loans, debit cards, mortgages, electronic payments and foreign exchange — all of that. You get internet and mobile banking services. In the paper, I mention the QR code features that that mutual would offer, which would cut transaction costs for businesses. Being a bank means that it can avail itself of fractional reserve banking, which is open to all commercial banks, and that creates a multiplier effect whereby you are able to lend multiple times more in loans than what you hold in deposits.

With a mutual bank, there is also a focus on reintroducing banks into communities, which is of great interest to the inquiry. The idea is to have physical and automated branches. Rather than having flagship buildings that are very costly, those branches could operate out of existing community facilities such as a community centre, a local shop, a local credit union or a local post office. Therefore, they would not incur the same running costs. The automated branches are a kind of halfway house between a physical branch and online banking. An automated branch will have what looks like a very large ATM in a secure part of a building, and a member will be able to do all their online banking through that. However, if they need to talk to a member of staff, there is a built-in video facility, much like the video that we are talking on here, and they can talk to somebody directly at the bank. That is a kind of halfway house that allows branches to go into communities and give people access to banking services without incurring a lot of the overheads that having a flagship building would bring. Of course, all those automated and physical branches would operate under the tight security that you get at any bank or ATM. The security would be there too.

Regardless of the ethos of a mutual bank, the services that it offers and that whole thing about trying to bring banking services back into communities, having a mutual bank is not just about having those kind of services and more customer choice on the high street. It can have a more profound impact on the region and goes way beyond just offering banking services. With a mutual, you would immediately have positive social and economic impacts. A mutual would give you far more control over your own money. It would allow us to retain the money that is deposited in the bank and use the multiplier effect, which would increase the amount of money many times over. That would then enable us to unlock the potential of billions of locally generated pounds and invest that money in our economy, our infrastructure, climate action and tackling poverty — all the things that we so desperately need to do. It would also give us the resources to protect ourselves from future shocks and challenges that might come up due to the climate crisis or global events, as we have seen with the fluctuations in energy prices and the pandemic. By having our own major regional bank, all those opportunities would be open to us.

That is a summary of the paper. That is me finished talking. I am happy to take questions.

The Chairperson (Mr O'Toole): Thank you very much, Dr Meehan. We do not often hear from people who give their opening statement and then are candid enough to say, "That is me finished talking." You will have to listen to us, so thank you [Laughter.]

I have a few questions. Members should indicate if they want to come in. That was a really helpful, broad but concise, presentation. Your paper is really helpful and has footnotes in it; I have gone through the paper but not the footnotes. On the point about wealth being lent out, in the statistics that you use, Ulster Bank has about £7 billion in deposits in Northern Ireland, but its total lending is less than half that. Are those statistics from the bank itself?

Dr Meehan: Just let me double-check. The statistics are from the Bank of England. I got them just before I submitted the paper, so they are very recent. That is just a snapshot to show you the kind of money that we are talking about — the kind of wealth that we generate here that we are missing out on.

The Chairperson (Mr O'Toole): What would be your answer to the question, "How do you generate enough of a deposit base from a consumer base that would have to get used to the idea of a new brand and a new mutual?"? Even a mutually owned organisation would have to be marketed to people. How would we go about that? My concern is that, although lots of people might like the idea of a mutually owned bank that is involved in ethical lending and lending with a purpose rather than just maximisation of profit for a global bank — there are certainly people who are theoretically interested in that — we know that a lot of people just bank with the same organisation that they owned a bank account with aged 16 or 18. The money goes in and out of their current account, and they may have some savings. How would you go about marketing a new mutual or getting people to deposit money in it?

Dr Meehan: That is really what the campaign wants to focus on as well. Hopefully, we will be lucky enough to get to the point — I really believe we can — that we are worrying about the customer base. The research study, which was finished in November past, looks at that and highlights the key issues. They include what you mentioned about people who have banked for decades with the same bank. How would you convince them to move to another bank? Even if they liked the principles of it being ethical, and it being something for the region, how do you get them to move banks? Some of those issues came up, and the study has really good insights into how we could tackle them.

There would have to be a very good marketing campaign that comes from people who are trusted within local communities. One of the things that we are doing in the campaign is to try to gather up local champions in various areas — people who are trusted within a community whose vouching for the bank might encourage others. That could be done once we get to that point. You need to build trust in the brand because, at the end of the day, it is people's money. It is a very serious business. You have to make sure that people feel safe and secure with any institution that they place their money in. It is about how you build it as a trusted brand. We saw from the study that certain demographics in our society would be very interested in becoming customers. We could target those people first and help them to spread the word that this is something that others should and could be doing. It is a good question that you ask. It is a big issue for the campaign. The campaigns over in Britain have the same issue. It is about trying to build trust and having a solid marketing plan. There would have to be a professionally done piece of work and strategy to build it up. That is a longer-term issue for the campaign.

The Chairperson (Mr O'Toole): The mutual bank would have to have a banking licence from the Bank of England, it would need to hold reserves, it would need to meet all the rules on capital ratios, and all of that. Therefore, it is important to say that it would be making a profit in the sense that it wants to earn a surplus on its investments, but it is not a profit that is privately held or realised.

Dr Meehan: Yes, it is a bit like a cooperative. Nobody wants to operate an enterprise that does not make enough money to sustain itself and have extra money to invest, evolve and develop. Like a cooperative, because this would be a cooperative society, it would run so that it made a surplus. It is then about what it does with that surplus. The surplus would not go to shareholders and into private pockets; it would go back into the bank and then out as dividends to the members. That is the difference. There is nothing wrong with trying to make money. In fact, it needs to make money, otherwise who is going to fund it? It needs to sustain itself. As you mentioned, it would operate under all the rules that any bank does. Once it had a Bank of England licence, it would have to operate under all those rules, which are rigorous.

The Chairperson (Mr O'Toole): Technological changes in banking is one of the reasons why branch networks have closed, because fewer people are banking in person. The Committee has concerns about closures in branch networks and what those closures mean for certain small businesses and with regard to financial exclusion for elderly and vulnerable people. Is your view that a mutual bank should have a greater presence on the high street than, for example, the existing big four or five banks here, or that it would be better to be hard-nosed about it and just say, "Well, we need to minimise our costs because our priority is to earn a surplus", to invest in low carbon, poverty alleviation or the good causes that people want to bank with a mutual bank in order to invest in and to further? Should it have a high-street presence or limit its costs by not having a high-street presence?

Dr Meehan: I mention that in the paper, and I briefly mentioned it in the summary. The point would be to bring those services back into communities, because that is important. The independent study found that people who are doing more of their banking online or on mobiles rarely go into a bank, but that it is as if, at times, they need to know that there is a branch there as a reassurance. When things go wrong, you want to have personal contact. You want to be able to access somebody easily and talk to them about your situation and try to deal with it.

I and the campaign believe that there is still a need for a physical presence on the high street. Knowing that that is there makes a difference to people. Yes, there is a thing about costs, but banks are not necessarily closing branches because of cost or because, as they say, nobody is using them. If you take away the service, fewer people will use branches because they have to go further to get to a branch. It is kind of a self-fulfilling prophecy when you start to close them. It is also about saving money. If a bank is driven by profit — under law, it has to seek profit, like any private enterprise — it will look at how it can cut its costs as much as possible, and closing branches is one way of doing that. That is what has been going on. We believe that you can still have a good service with physical access to branches, and you can do it at a low cost.

I mentioned briefly how it would not necessarily have to have its own flagship building. It could use a community facility and have a secure area there. It could have automated branches, which, as I said, are like large ATMs where you have all the online services but also video access to a staff member. You could even have a couple of clinics a week along with that. There could be another secure room — a private area — where a staff member would come once or twice a week. You would have a kind of a halfway house between the full physical branch and its being completely online. Again, that would reduce costs. That is how we see it happening. That would really integrate it into the community, because you would have it in community facilities that people use all the time.

The Chairperson (Mr O'Toole): OK. This is my final question: what needs to happen legally for this to happen? What legislation needs to be passed? Is there existing legislative provision for a mutual bank to exist?

Dr Meehan: Yes. It came into law in Britain in 2016 and here in 2018. Legally, there is nothing to stop us from doing it. When we talked to the Department for the Economy, some of the officials raised small issues that, further down the line once the bank is in operation, they may have to look at. However, right now, the legislation exists to establish one. The only thing that you really need is a licence from the Bank of England, which is a very formal process and requires certain things to be in place before it is granted.

The Chairperson (Mr O'Toole): It is the Financial Services Act 2012 (Mutual Societies) Order 2018. OK, that is helpful. As it is a reserved matter, is your view that —? I think that I have established that in my head, so that is fine. We will move on to questions from members.

Ms Forsythe: Thanks very much, Dr Meehan, for being here and for providing such a comprehensive piece of written evidence to the Committee. It has a lot of really interesting and useful statistics for our inquiry and for other things, especially with regard to my constituency. I want to thank you and your team across Advice NI. I represent South Down, and the Newry, Mourne and Down team, in particular, are really helpful and good to work with on the ground.

Dr Meehan: Thank you.

Ms Forsythe: Where do you, as the organisation that deals most with these issues at first hand across the region, feel the gaps are? Are they more in rural areas than in urban areas?

Dr Meehan: Do you mean gaps in banking services and what is available?

Ms Forsythe: Yes, and the impact that those gaps have.

Dr Meehan: The are clearly gaps in rural areas, but they are also very much in urban areas. You find that even the more deprived urban areas have fewer ATMs or have ATMs that you have to pay to use. Some of those areas do not have branches at all. There does not seem to be any discrimination between rural and urban in the way in which branches and ATMs are closing. It has been across the board. I think that the problem is greater for rural areas. In an urban area, you might be able to get to another service via a bus route, and it might not be that far away. However, in a rural area, you could be talking about quite a distance, and you might need a car to get there. That is why it hits rural areas more, although urban areas are being equally deprived. There are financial deserts in those areas. I put some information about that in my paper.

You can see the impact that being financially excluded in that way has on people. It was found that, here especially, a lot of people like to use cash, but there is an overall push to try to cut down on the amount of cash that is used and to get people to shift money electronically more. We should resist that. A lot of people budget better when they use cash, so, when they are forced to pay for things electronically, it is harder for them, especially if they are on a small budget. We found things like that in the advice sector; we found out about how people had been hit by that.

Those were some general points. Do you want me to elaborate on anything?

Ms Forsythe: Thank you very much. On the way that we use banking services across Northern Ireland, the Committee has previously taken evidence about the banking hubs that are being set up. One in Kilkeel in my constituency was operating long enough for data to be taken from it. From that, they found that our businesses in Northern Ireland use banking hubs significantly more than they do in mainland GB. That reflects the point that you made about there being a drive to use cash and people wanting to have that access. I find that to be the case in rural areas in particular, where there is the additional cost of travelling to access different banking services.

You talked a little bit about a model for this proposed bank that could have a clinic set-up. Do you see that mirroring the way that the banking hubs operate in pockets of Northern Ireland? When you were explaining it, it sounded similar to the way in which the banking hubs operate. If a mutual bank were to be brought forward, perhaps it could link in or partner up with those banking hubs as somewhere for them to sit within.

Dr Meehan: For sure. I suppose that banking hubs are banks clubbing together to try to reduce costs while bringing services into an area. I heard an anecdote about one of those hubs where a printer did not even work. I am not sure how those hubs are working for people: that was just one anecdote and may not be reflective of the whole thing.

There is no reason why, if there were a mutual bank, you could not have that kind of hub set-up as well. That is almost the idea that the mutual bank would have anyway: have its own branch network with automated and physical branches being set up in facilities that are already there in places that are at the heart of the community, rather than have to create a whole new structure or to pay for really expensive real estate in the middle of town. To do that would probably work and complement it quite well.

Ms Forsythe: Thanks for that.

Dr Meehan: You talked about businesses using cash and about people not using cash but using cards. Many businesses talk about the cost of those transactions for them, saying that, although they are easy and convenient for the customer, they take a huge amount of money away from small local businesses. It eats into their profit. That is the reason for the QR code idea whereby, if the customer and the business were both members of the mutual, they would not pay for a card transaction.

When you pay by card, that is another way that money is extracted from the region, because providers such as Mastercard take a small percentage. That is money that never gets to stay in the local area. There are all those different ways that, although they look convenient, always lead to money leaking out of the region and into the global system where it is used for investments and all sorts of financial activity that does not benefit us here; it probably does not benefit anybody except for the private investors.

Ms Forsythe: Over the past two weeks, certainly in my constituency, when our power, broadband and internet connections were cut off after the storm, we saw how people were unable to access their money. The importance of keeping cash in the community so that people can pay for things and go about their day-to-day business has been highlighted again, especially in rural areas where there are a lot of small businesses. When the broadband is down, it is their only option. Thank you for that.

Mr Carroll: Thanks for that useful paper, Bridget, and thanks to Advice NI for its work in helping our office over the years.

The Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC) is mentioned in the paper. I am not sure how familiar you are with how it works. I am not overly familiar with the pension fund. It has a value of £10 billion. Have you done or are you aware of any research that says that a portion of that could be used for borrowing or loans? I presume that that fund is stable, given that it is a pension fund. Pension funds tend to invest in various things, some ethical, some not. Can people avail themselves of loans from NILGOSC, or is that not possible? Would that require legislation? I am curious to know whether you have any information on that.

Dr Meehan: Rather than giving out a loan, NILGOSC would invest, in the way that it invests in other ventures and opportunities. That is what it does: it invests the money and makes sure that the investments are secure, longer-term, more stable and less risky. The mutual bank would simply be another investment, but it would have a double advantage, because it would be an investment in the region as well. Part of NILGOSC's ethos is to make ethical investments and do what is best for the region. Investing in such a bank would meet its set of principles. There is nothing to stop it. I do not believe that NILGOSC would need any legislation to make an investment in something like this, any more than it needs it to make investments in other things.

The Welsh have a campaign for Banc Cambria, which is their version of the Northern Mutual. They are moving on at pace with that campaign. The campaign has the support of the Welsh Parliament, but it is the Wales Pension Partnership that is looking to invest in the bank. That public pensions partnership is going to invest in that campaign, so I cannot see why NILGOSC or any other public pension provider here would not be able to do the same thing.

Mr Carroll: Thanks, Bridget. That is useful. Perhaps, Chair, we can ask for a breakdown of what NILGOSC already invests in, if we do not have that information. That would be useful.

I have two other questions, Bridget. You talked about Ulster Bank's £3·4 billion that is invested outside the North. Do you have a rough idea of what that is invested in? I am not asking for a pound-by-pound breakdown. Does it go on the stock market? I would call that "wasted money", because it involves gambling on the stock market, which is a rigged, wasted system. Is it invested in that? Do you have any idea where it goes? I appreciate that the Ulster Bank figures are up to date, but do you have any rough figures for how much the other banks in the North invest outside of here?

Dr Meehan: I do not have figures for any of the other banks, offhand. I just took those figures. I am not picking on Ulster Bank; I bank there myself. You can get easy access to that data. I can send a link or several links so that people can see the latest figures. Where is the money invested? NatWest, which is associated with Ulster Bank — NatWest is the overarching corporation — invests in extractive industries. If you were looking to see where ethical investments go, you would see that that bank is not the most ethical. Once the money gets into the global financial market, it can go anywhere that those investors and venture capitalists want it to go. I do not want to start naming specific banks and to say where they might invest or not invest, but once the money goes into the global financial system, we do not have any control over it, we certainly will not be getting any benefit from it, and we do not have any say in where it should be invested. They are allowed to invest it wherever they choose. They will not care about the environment or about destroying communities — that does not matter to them. It is about how they can make money, fastest. That is what it is about. The global financial system is sort of like a gambling den, and, unfortunately, even the crash in 2008 did not reel in that behaviour very much. It is almost back to what it was, with very few checks and balances. We are all helping to fuel that. That is driving poverty, worldwide and locally; it is driving climate change; it is doing all the things that do not help people and communities or the planet. There is, therefore, a big political reason why we should have more regional mutual banks.

Mr Carroll: Thank you. I have a final question, Chair. It would be useful to get a breakdown of the investment figures for the fossil fuel industry, and the rest of it. Obviously, Barclays has faced criticism for its connection with Israel. I am not asking you to give your view on certain unethical investments, but is there a list of the banks and investments that they are pursuing, beyond what you have mentioned, which have been questioned as being unethical? If that were available, it would be useful for the Committee to get sight of it.

The Chairperson (Mr O'Toole): Gerry, what are you saying that you want a list of?

Mr Carroll: There are two things. Bridget has cited the investment in the fossil fuel industry, which, I think, is important and urgent. I am asking whether a list exists or whether she is aware of any unethical investments of the banks here. Obviously, there is a question of connection to Israel that I and others would say is unethical, but it is much wider than that. I do not know whether a breakdown of those figures exists, but that is what I am enquiring about.

The Chairperson (Mr O'Toole): I will say a couple of things. First, on the comments about the ethical, or otherwise, activities: there are specific banks, and then there is global capital writ large. I am not saying that I agree with the actions of individual banks or investment decisions — a lot of what has been said is correct, and I would agree with it — but we do not have the capacity to go and hunt information, nor is it within the realm of this Committee inquiry. However, I would happily receive any bits of information and specific concerns about, in particular, locally based and UK banks here. Dr Meehan, if you have anything specific that you want to flag to us, I will be happy to receive it, and we can discuss it in the appropriate way.

Mr Carroll: Ethical investment is the question. It is a fair question to try to —.

The Chairperson (Mr O'Toole): It is definitely a fair question; that is why we are taking evidence, Gerry. I am not saying that it is not a fair question. I am saying that we do not have the capacity to investigate every investment made by every bank. That is the point that I am making.

Dr Meehan: There are summaries of the types of investments — general headings and the general amounts of money that are, perhaps, spent by various banks. We have only five or six big banks. It is not that we have loads of them. I can try to source some of that. I have some, but I will try to source some links and documents and get them sent to the Committee.

Mr Carroll: Thanks, Bridget.

The Chairperson (Mr O'Toole): That is fine.

Mr Tennyson: Thank you, Chair. Just before I ask my question, to be fair to Gerry on this point, if one of the reasons for our talking about a mutual bank model as being beneficial is the fact that it can engage in ethical lending, the ethics of banks that operate in Northern Ireland —.

The Chairperson (Mr O'Toole): I did not say that it was not, Eóin. Sorry, I did not say that it was not. I said that the Committee does not have time to go and look at every global finance institution. It is entirely —.

Mr Tennyson: I am not singling —.

The Chairperson (Mr O'Toole): Sorry; through the Chair. It is entirely proper that we get any relevant information on the ethical lending activities of banks, but, please, do not misquote me.

Mr Tennyson: I am not singling you out, Chair. It was not you who objected, in fairness.

The Chairperson (Mr O'Toole): OK.

Mr Tennyson: I do not know why you are being so prickly. It is a legitimate —.

The Chairperson (Mr O'Toole): I am not. Sorry —.

Mr Tennyson: No, you are, Chair. It is a legitimate point for me to raise: I think that looking at ethics is appropriate. That is all that I said.

The Chairperson (Mr O'Toole): Right, Eóin. I did not say that it was not.

Mr Tennyson: I did not say that you did.

The Chairperson (Mr O'Toole): Yes, you said that we were —. Could we just be clear? It is entirely proper for Dr Meehan to send us information on ethical lending practices that pertain to banks operating in Northern Ireland, and I would welcome that. I made a point about the resource and focus of our inquiry. OK? Can we move on?

Mr Tennyson: Yes, we can, Chair. May I ask my question to the witness?

The Chairperson (Mr O'Toole): Please do.

Mr Tennyson: Dr Meehan, thank for you that evidence. I add my thanks for the important work that Advice NI does. Like others, my constituency office has relied heavily on the expertise that you provide.

The briefing that you provided was really useful in setting out the advantages of the mutual bank model and was really persuasive. Do you foresee any limitations in the operation of a mutual bank model in Northern Ireland? Are there any problems that, you think, might arise that we need to be aware of or need to try to overcome?

Dr Meehan: It is like any enterprise that you are trying to start. It will have all the same sorts of risks. The model that will be used for that is the one that is being used in Britain and that was developed by the Community Savings Bank Association (CSBA). It has put together a package where it has reduced the potential risks as much as possible. It is said that there needs to be about £20 million to get started, but you do not actually need that for the Bank of England; it does not require that. It was a figure put there by the CSBA to have capital reserve. It would never be money to be lent out or used in the operation of the bank. It would be put into the Bank of England and left there as capital reserve for any potential failure — you would hope that that would not happen — or any shocks or bad debts that would occur. That is one way of mitigating financial risk.

There is rigour that you have to go through in the banking licensing process. You are dealing with the Bank of England. It is not going to let just anybody have a licence, so by the time you get to the point where you have a licence and can open the doors, you have already been scrutinised, and there has already been a certain level of security given to the Bank of England that it is viable and can work.

With the business case, an initial piece of work has been done at a high level, but we would like to do a more in-depth study of the financial element of it, just to prepare exactly what the market would look like, what share of the market you would need, how many customers you would need in the first year, the second year, and so on, and to plan that ahead for about five years. The business case does that to a certain extent, but more of an in-depth study needs to be done of that. However, we now know, through the business case, that the bank is viable with the population size that we have here. If it had only a 5% to 6% share of the current accounts and the business accounts that exist already, which is quite a small share of the market, that would make the bank viable. Then, it would come down to having the professional level of management and staff that you would need to run the bank and having a very conscientious board, elected by the membership, to hold the management to account and make sure that the bank was adhering to its own principles and adhering to all the regulations that are required from a bank.

Putting all those checks and balances in place — belt and braces — would be how to try to reduce the risk for a start-up such as this. It is not a trivial undertaking by any means, but there is a whole movement. It is not just a case of, here in the North, a few people deciding that we want to have a bank and plucking it out of thin air. This is part of a movement. There is a model already there. There are several campaigns, and some of them are very close to getting a licence. That gives us a level of confidence that it can be done. We are lagging behind those other campaigns, and, very soon, we will see some of those banks beginning to open. Again, that gives us more confidence that, yes, it can be done.

It is worth pointing out that a mutual bank might be a new thing for us here, and even new in Britain or anywhere else in Ireland, but it is not new in most other places in the world. We are different here in Britain and Ireland because we do not have one of those things. They work, are sustainable and serve their regions well in other places, so I cannot see why, with all the checks and balances that we have in mind for this bank, we would not be able to do the same. I hope that that answers the question.

Mr Tennyson: That is really comprehensive, Dr Meehan. Thank you.

I have one other question. One of the benefits associated with the mutual model is that it can prioritise lending to small businesses that are often underserved by commercial banks. Given that having a mutual bank set up looks like a relatively long-term aspiration, is there anything, from Advice NI's perspective, that government should be doing in the interim to ensure that commercial banks better serve those customers?

Dr Meehan: We do not normally have a lot to do with business customers. Business debt is maybe where we come across it. It is not even loans that businesses generally need; it is maybe a very small amount of cash for a very small amount of time to get over a payment that is coming in or to get over a lean time. They might just need an extension of an overdraft or they might just need a bit of extra cash at a certain point in time, and they do not want the responsibility of having a very large loan taken out over a period. The flexibility of being able to offer them the ability to keep their cash flow going is more important to a small business than being able to get a loan. Maybe the banks could do something like that, although I do not know whether they can or would because, again, that may not be that profitable. At the end of the day, banks are duty-bound to think about profit and their shareholders first. I do not know whether they can be flexible in the way that small businesses need them to be, but it is about the cash flow and being able to get money to them for short periods that does not mean a five-year loan. That could be useful to small businesses.

Mr Tennyson: Thank you, Dr Meehan. That is really useful.

Chair, as I hand back, I ask you to reflect, because I was expressing, I believe, a legitimate view about something that should be within the scope of this inquiry. I respect your role as Chair, but it is not for you to muzzle politicians on this Committee who are expressing those views. It was not intended as a criticism of you, Chair, to be clear, and I ask you to reflect on that.

The Chairperson (Mr O'Toole): I have reflected. I did not muzzle you, but you have put your points on the record. In my time as Chair of this Committee, I do not think that I have muzzled anybody at any time. In fact, I think that I have probably done exactly the opposite. I clarified my own position, which, I felt, was not entirely being reflected, but that is fine. You have put your views on the record, and like all members, Eóin, you are always entitled to do that.

I have one final question, Dr Meehan, about mutuals. Some people will think of some of the continental examples and the credit union, which is different because it is not a bank and does not have a banking licence. In relation to some of the mutuals that have existed in the UK — the building societies — what is the difference between a building society and a mutual bank? I have a rough understanding. The difference between the Northern Mutual, which you are campaigning for and advocating, and a building society is that, even though a building society is not a bank and is, in fact, mutually owned, it does not necessarily have an ethical purpose. Is that about right, or is there anything else that I have missed?

Dr Meehan: There are a couple of things. Most of the mutuals that have existed in Britain have been through building societies; they have never been mutual banks. There has never been one of those. Even the Co-operative Bank was a private company that had the cooperative front, if you like, and was operating in that way. Until the legislation of 2016 — it was 2018 here — came into force, you could not set up a bank as a mutual or cooperative society. That was never available before. That is why this campaign and the movement over in Britain have come into play. Taking advantage of that new legislation means that you can have proper mutual and cooperative banks.

Some building societies operate by ethical principles, but the difference is that their prime purpose is mortgage lending. That is their primary business. As they are not banks and do not have a banking licence, they are restricted in certain things that banks can do. They are limited in how much they can lend to businesses; not all of them can provide current accounts; and not all of them provide personal loans. Most of their business is in mortgages. It does not mean that you could not take a building society through the process of becoming a mutual bank; in fact, that would be a shortcut to having a bank. That is, sort of, the track that they are on in Wales. It would be excellent if we could get a partner like that here, because that partner is already known by the Bank of England and is under a lot of financial regulations through the FCA. It is almost like it would get an upgrade to what it is already licensed to do, and it would be a shorter process. There is no reason why a building society could not morph into an actual mutual bank.

The Chairperson (Mr O'Toole): OK. Good.

Thank you very much. No one else has indicated that they wish to ask a question. Thank you, Dr Meehan. That has been useful. Unfortunately, we have given you a couple of bits of homework slash added things, including something to do around some of the ethical investments that we talked about. There was something else, which I have forgotten about, but I am sure that the Clerk's staff will, helpfully, have made a note and be able to liaise with you on that. Thank you for your time; thank you for providing the briefing note. We may be asking you for more, unfortunately.

Dr Meehan: No problem.

The Chairperson (Mr O'Toole): Thank you.