Opposition parties have accused Preston City Council’s ruling Labour group of trying to rush through a controversial decision to invest in a new regional bank ahead of the local elections.
A meeting of the authority’s full council on Thursday (16 April) will consider plans to commit £750k to the North West Mutual, which describes itself as an “ethical” bank. The embryonic institution aims to improve access to finance exclusively for individuals and small or medium-sized businesses in the region after which it is named.
If approved, the move would take the town hall’s total investment in the customer-owned facility to £1m, after it provided £250k of financial backing last September.
Read more: Preston City Council local elections 2026: Full candidate list, how to vote and more
The full amount to support the venture – which is set to be headquartered in Preston and have its first branch there – has been earmarked in the city council’s budget since 2019.
However, the prospect of formally sanctioning the cash injection less than a month before residents go to the polls on 7th May, has led to claims that Labour is trying to make political capital out of a council process – during a period governed by special rules known as ‘purdah’.
Opposition politicians – who are against the principle of the council’s involvement with the bank – are also accusing the ruling group of trying to sew up a policy that would likely be abandoned should control of the authority change hands after the election.
Council leader Matthew Brown says other bank investors are waiting in the wings – meaning the time was right for the authority to hand over the money it has long since pledged.
But John Potter, leader of the Liberal Democrat official opposition group, told the Local Democracy Reporting Service (LDRS) there was “no urgency whatsoever” about the share purchase decision the council is being asked to make.
“This is just about Labour trying to get one of their pet projects into the papers before an election and before they lose power.
“It would be very easy for me to let them go ahead with it, because when you tell people that they want to spend Preston taxpayers’ money funding [the bank], it goes down really badly – and they’ll say, ‘Why don’t you spend it on our parks or any other services that Preston City Council runs?’
“But it’s the principle of it – they’re trying to cheat in the elections and that has to be called out,” Cllr Potter said.
Conservative opposition leader Harry Landless echoed concerns over the scheduling of this week’s vote.
“I’m very surprised why we suddenly have to make a decision [in purdah]. I can’t help being cynical [in thinking that] the complexion of the council might be somewhat different after 7th May – and I think they are trying to get it through before that,” Cllr Landless said.
Meanwhile, the lone Reform UK member on the authority, Stephen Thompson, said he was exploring whether the investment could be stopped “through legal means, because I think it’s a…misuse of public funds”.
“And I really think the timing of the meeting is not good at all – they should wait until after the election,” Cllr Thompson said.
Purdah largely affects how local authorities use their resources for generating publicity. It prevents the use of public funds in ways that could be seen to benefit one political party over another in the six weeks or so before an election.
Day-to-day council business can continue during that time of so-called ‘heightened sensitivity’, but the LDRS has seen advice produced by one of Preston City Council’s own legal officers which states that local authorities “should avoid initiating long-term or highly controversial decisions that could be postponed until after [an] election”.
“A council can make a controversial decision during purdah, but it is generally advised against,” the document adds.
However, Cllr Brown told the LDRS there was a good reason for getting on with the investment in the bank – which intends to have 60 high street branches within nine years of its launch – and he hit out at those opposed to the concept itself.
“This is a longstanding [Preston Labour] manifesto commitment – it’s no surprise, we’ve wanted to do this for some time.
“One of the reasons we have been waiting is…for other investors – and we’ve now got one other investor, in addition to ourselves and the Community Savings Banking Association. I’m not going to reveal who they are, it’s for them to do that, [but]…then there are [also] further investors…looking at it very seriously.
“So now’s the time to actually invest what we said we would invest. Councils invest in banks everywhere across the country – this is us investing locally to create jobs and…a banking network that’s got to work for people and [give them] an alternative [to] the kind of banking that’s caused so much damage to our communities and small businesses.
“In many ways, we’re quite pleased we have a coalition of Liberals, Reform and Tories…opposing what [are] quite practical, common sense ways of doing banking [seen] in the rest of Europe,” Cllr Brown said.
Thursday’s council meeting will be told that the North West Mutual is currently progressing through the authorisation process for the establishment of new banking institutions – and is currently concluding the pre-application stage with regulators.
A total of £5m will be needed in order to obtain a banking licence, with a further £4m required in order to remove the heavy restrictions that would initially be placed upon it.
Overall, £30m of capital will be necessary for the bank’s operation. The current level of available finance has been garnered from what is described in papers to be presented to the meeting as “founder investment” of £1m, along with the city council’s previous £250k purchase of shares.
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