Some thoughts to bear in mind before digging a grave for the Funding for Lending Scheme

FFS, FLS!

Six months into the Bank of England’s Funding for Lending Scheme (FLS), and we seem eager to anticipate its demise, like wolves padding after a limping bison.

The scheme, which offers banks funding at a discounted rate of interest so long as those lower rates are passed on to customers, has so far seen £13.8bn drawn from the Bank’s pot of £100bn, of which £9.5bn was accessed in last year’s final quarter.

The problem was, Q4 also saw overall bank lending drop by £2.4bn compared to the previous three months.

Oh those naughty, naughty banks. Lloyds Banking Group, RBS and Santander cut their lending totals by a combined £7.6bn during the quarter, despite drawing down £4.8bn between them through the scheme, while Barclays, despite growing lending during Q4, did so by only £5.7bn while drawing down £6bn.  

Of course, if banking was simple, we’d expect lenders to have squirted money into the hands of consumers and small business owners with wild abandon, in exactly the quantities drawn down.

But then, despite all our desires to the contrary, banking isn’t particularly simple. Here’s some thoughts to bear in mind before digging the FLS’ grave early.

First, as the Bank has already pointed out, the fourth quarter is never the strongest time for lending in the first place, and we would have been worse off without the boost of the FLS

Second, we shouldn’t forget the wider context, of major banks being mandated to shore up their capital bases in order to avoid being as exposed to ruin as they were in 2008. Unfortunately, the main way for them to do this is by cutting back on lending.

Third, there is a time delay on the reduced cost of funding offered by the scheme trickling through to customers, as it takes time for loans to make it through from application to payout. This has now been stated by the Bank often enough to feel a tiny bit “dog ate my homework”, but is still a fair point.

All things considered, I’m surprised people’s expectations were so high. Even before launching the scheme, the Bank predicted that we’d have to get some way into 2013 before we saw the real benefits of the scheme.

And before we expect miracles, let’s remember the fundamental obstacle facing the scheme: it can’t do anything at all about the cost of risk, i.e. what banks have to put aside in contingency for loan defaults.

Very small businesses, very new ones, and those in sectors considered by lenders to be on the ropes, will still have great difficulty being touched with a bargepole while the discounted funding can be channelled into lending to safe bets.

And who can blame the banks? We’ve spent five years pillorying them over subprime lending, so is it really a surprise they are so risk averse now? By demanding that banks pile more money into the SME sector, we are explicitly asking them to take greater risks.

So let’s give Threadneedle Street the benefit of the doubt and have this whole conversation again after Q1. If the scheme isn’t working, replacement isn’t out of the question - after all, the FLS was created to replace the underwhelming National Loan Guarantee scheme, which was quietly phased out after only six disappointing months.  

But let’s also revise down our expectations of what will constitute success for the FLS. If used correctly it will be able to soothe the symptoms of a deeply troubled system, but it’s never going to touch the roots of the problem.

Bank of England. Photograph: Getty Images

By day, Fred Crawley is editor of Credit Today and Insolvency Today. By night, he reviews graphic novels for the New Statesman.

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This is the new front in the battle to control women’s bodies

By defining all of us as “pre-pregnant”, women are afforded all the blame – but none of the control.

For several weeks, YouTube has been reminding me to hurry up and have a baby. In a moment of guilt over all the newspapers I read online for free, I turned off my ad-blocking software and now I can’t play a simple death metal album without having to sit through 30 seconds of sensible women with long, soft hair trying to sell me pregnancy tests. I half expect one of them to tap her watch and remind me that I shouldn’t be wasting my best fertile years writing about socialism on the internet.

My partner, meanwhile, gets shown advertisements for useful software; my male housemate is offered tomato sauce, which forms 90 per cent of his diet. At first, I wondered if the gods of Google knew something I didn’t. But I suspect that the algorithm is less imaginative than I have been giving it credit for – indeed, I suspect that what Google thinks it knows about me is that I’m a woman in my late twenties, so, whatever my other interests might be, I ought to be getting myself knocked up some time soon.

The technology is new but the assumptions are ancient. Women are meant to make babies, regardless of the alternative plans we might have. In the 21st century, governments and world health authorities are similarly unimaginative about women’s lives and choices. The US Centres for Disease Control and Prevention (CDC) recently published guidelines suggesting that any woman who “could get pregnant” should refrain from drinking alcohol. The phrase implies that this includes any woman who menstruates and is not on the Pill – which is, in effect, everyone, as the Pill is not a foolproof method of contraception. So all females capable of conceiving should treat themselves and be treated by the health system as “pre-pregnant” – regardless of whether they plan to get pregnant any time soon, or whether they have sex with men in the first place. Boys will be boys, after all, so women ought to take precautions: think of it as rape insurance.

The medical evidence for moderate drinking as a clear threat to pregnancy is not solidly proven, but the CDC claims that it just wants to provide the best information for women “and their partners”. That’s a chilling little addition. Shouldn’t it be enough for women to decide whether they have that second gin? Are their partners supposed to exercise control over what they do and do not drink? How? By ordering them not to go to the pub? By confiscating their money and keeping tabs on where they go?

This is the logic of domestic abuse. With more than 18,000 women murdered by their intimate partners since 2003, domestic violence is a greater threat to life and health in the US than foetal alcohol poisoning – but that appears not to matter to the CDC.

Most people with a working uterus can get pregnant and some of them don’t self-define as women. But the advice being delivered at the highest levels is clearly aimed at women and that, in itself, tells us a great deal about the reasoning behind this sort of social control. It’s all about controlling women’s bodies before, during and after pregnancy. Almost every ideological facet of our societies is geared towards that end – from product placement and public health advice to explicit laws forcing women to carry pregnancies to term and jailing them if they fail to deliver the healthy babies the state requires of them.

Men’s sexual and reproductive health is never subject to this sort of policing. In South America, where the zika virus is suspected of having caused thousands of birth defects, women are being advised not to “get pregnant”. This is couched in language that gives women all of the blame and none of the control. Just like in the US, reproductive warnings are not aimed at men – even though Brazil, El Salvador and the US are extremely religious countries, so you would think that the number of miraculous virgin births would surely have been noticed.

Men are not being advised to avoid impregnating women, because the idea of a state placing restrictions on men’s sexual behaviour, however violent or reckless, is simply outside the framework of political possibility. It is supposed to be women’s responsibility to control whether they get pregnant – but in Brazil and El Salvador, which are among the countries where zika is most rampant, women often don’t get to make any serious choice in that most intimate of matters. Because of endemic rape and sexual violence, combined with some of the strictest abortion laws in the world, women are routinely forced to give birth against their will.

El Salvador is not the only country that locks up women for having miscarriages. The spread of regressive “personhood” laws across the United States has led to many women being threatened with jail for manslaughter when they miscarry – even as attacks on abortion rights make it harder than ever for American women to choose when and how they become pregnant, especially if they are poor.

Imagine that you have a friend in her early twenties whose partner gave her a helpful list of what she should and should not eat, drink and otherwise insert into various highly personal orifices, just in case she happened to get pregnant. Imagine that this partner backed his suggestions up with the threat of physical force. Imagine that he routinely reminded your friend that her potential to create life was more important than the life she was living, denied her access to medical care and threatened to lock her up if she miscarried. You would be telling your friend to get the hell out of that abusive relationship. You would be calling around the local shelters to find her an emergency refuge. But there is no refuge for a woman when the basic apparatus of power in her country is abusive. When society puts social control above women’s autonomy, there is nowhere for them to escape.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle