UK Treasury asks banks for ideas to boost 'left-behind' Northern towns

By Iain Withers

LONDON, Jan 21 (Reuters) - Britain's finance ministry has
canvassed banks for ideas to boost the country's "left-behind"
northern towns and cities, weeks after the governing
Conservatives won an election promising to boost the regions
outside London.

The call comes as figures show lending by banks to small and
medium sized businesses has shrunk rapidly in the north of
England.

Treasury officials have requested policy ideas for fuelling
growth in the north of England in meetings with banks and
finance industry trade bodies including since the new year,
banking industry sources told Reuters.

Policy ideas drawn up by finance firms include developing
better technical skills locally, setting up regional specialist
hubs and moving financial regulators from London to give
start-ups better support in meeting requirements when setting
up.

Banks have attracted criticism for doing too little to
support Britain's regional economies, including slashing their
branch networks in small towns and rural areas.

Outstanding lending to small firms in the northwest and
northeast of England fell by 15% and 8% respectively between the
end of 2014 and June last year, according to data from trade
body UK Finance, compared to a 2% increase in London. The
regional lending trends were first reported by the Times
newspaper.

A spokesman for the Treasury confirmed officials had asked
finance firms how they could play a role in boosting the
regions.

"The financial services sector is vital to our economy,
which is why we are working closely with firms to ensure that
together we promote growth, create jobs and boost investment
across the whole of the UK," the spokesman added.

The request comes ahead of finance minister Sajid Javid
presenting the government's budget in March. Javid has said
injecting cash into the regions will be a priority.

"We've been asked what do people in financial services need.
It's very northern-specific and very northern-focussed," a
banking source said. "There's a recognition from officials that
it can't all be about delivering shiny new infrastructure
projects."

NORTHERN FOCUS

Prime Minister Boris Johnson's Conservative Party won a big
majority last month, winning scores of seats in the north of
England, traditional heartlands of the opposition Labour Party.

Since then Johnson has pledged to 'level up' the regions to
repay his new backers' support, although opposition politicians
have expressed scepticism and blame the Conservatives' previous
austerity policies for harming the regions.

Finance jobs are heavily skewed towards London, although
several other cities each employ more than 30,000 people in the
sector, including Glasgow and Edinburgh in Scotland, and Leeds
and Manchester in northern England.

Britain has struggled for decades to find ways of fuelling
regional growth outside London. The government already spends
more than it generates in taxes in every part of Britain apart
from London, the South-east and the East, according to Reuters
analysis of public spending data.

Miles Celic, CEO of TheCityUK, a finance industry trade
group, said: "Ensuring the industry's future as a national asset
will require a concerted effort. This includes more regionally
focused policies and initiatives."
(Reporting by Iain Withers
Editing by Peter Graff)