There still aren't 120,000 "troubled families"

A zombie statistic refuses to die, even as the DCLG helps 3,000 real families.

The government is very happy that its "troubled families" intervention programme is having results, with the BBC reporting that:

Early intervention by a dedicated case worker has reduced crime among those people involved by 45%… Anti-social behaviour has gone down by 59%.

Those are good results, even if the vast majority of the report is case studies of a few of the families involved. As for the actual results, the vast majority of quantitative data presented is percentage changes. This is clearly important; but it's also crucial to know how many troubled families actually exist, and how many can be helped. After all, a programme which is targeted at just a handful of families isn't particularly useful in the grand scheme of things.

This is an area the government, and the BBC, fall down on severely. The Department for Communities and Local Government's report claims, three times, that there are 120,000 families.

This is incredibly unlikely to be true. We've explained before, in detail, why this is the case, but the short version is that the DCLG claimed there were 120,000 troubled families defined with one set of criteria, but then changed the definition and continued claiming 120,000 families existed.

Unless two markedly different groups of people both add up to 120,000, it seems likely that this number was just pulled out of thin air (none of the research which the DCLG has made available explains where it came from). And yet today's report, and the BBC write-up, repeats it.

The BBC also claims that 40,000 families are expected to be helped this year, which would be a twelve-fold increase from the 3,324 families who were actually helped in 2011-2012 (and, of course, would still be just a third of the claimed eligibility). That figure of 3,324 is not mentioned anywhere in the BBC's report, nor the DCLG's press-release.

The trouble families programme does seem to be a great help to those families successfully referred to it, as Casey's report makes clear. But it is helping far, far fewer families than media reports make out; and part of that may be because no-one seems to actually know how many families are even eligible.

Broken window. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation