Neale Andrews, partner at law firm Mundays, looks at the government’s new business bank and gives his wish list for things he’d like it to contain.
It was the Autumn Statement of 2011 that got the ball rolling when it was announced that government would set up a working group, ‘to examine structural and behavioural barriers to the development of alternative debt markets in the UK.’
Since then Tim Breedon’s group has made its recommendations prompting the announcement this autumn that the government proposes to establish the British business bank.
The business bank is being set up to, ‘address the long term problems affecting the provision of finance to small and medium sized enterprises (SMEs).’ Given the SME marketplace is the lifeblood and future of the UK’s prosperity, it is a laudable goal indeed.
Most recently it has been announced that Peter Burt will chair a group that will advise the government on the establishment and direction of the business bank.
This might all sound quite impressive, but in real terms there have been a lot of meetings, reviews, draft and final reports prepared, responses to reports issued and announcements made; but precious little in terms of practical achievement.
Government was probably ever thus, but for those in the real world whether they be employers, employees or job seekers it is incredibly frustrating to see so much time and cost wasted with no practical effect.
Replicate this ten, a hundred, a thousand or more times across all parts of government and it soon becomes clear to most ordinary people that government wastes an inordinate amount of our money, money best left in the tax payers’ hands where they can, as consumers, provide a very direct financial boost to UK businesses and the UK economy generally.
One step forward…
Until we have a mini political revolution in the way government should go about its business, we are stuck with what we have so, enough of the political diversion and back to practicalities and in terms of the business bank can it make a difference?
Well yes I think it can – if of course it actually ever gets off the ground in any meaningful way which is questionable given where we are in the electoral cycle, progress to date and the likelihood that the EU will become involved by dint of various state aid regulations.
So far though we have been given no substantive detail of how the bank might work but if it could become a hub for alternative funding and lending structures for SMEs then that surely would be a huge step forward – but these funding and lending structures must be open to as many types of business as possible, be simple to understand and operate.
All too often government business funding initiatives have failed because of their complexity, limited availability and the time and red tape that must be overcome to borrow sometimes modest sums on not particularly attractive terms.
Another of the government’s stated aims is to bring its own business finance schemes together within the new institution so that they are managed as a single portfolio. It says it will also seek to bring government-backed business advice services closer together, harmonise their engagement with customers and co-ordinate them closely with finance interventions, to improve accessibility for SMEs.
Simple, honest and direct
My wish list for Burt when advising on the establishment and direction of the bank is to keep it simple, honest and direct and make sure the detailed proposals are well publicised.
Simple means having only a small number of schemes or options that are clear and easy to understand in terms of eligibility and operation. Honest means schemes designed so they are genuinely intended to help businesses at a practical level, and are not simply cosmetic political gestures. Direct means the funding is provided quickly and efficiently with the minimum of red tape but with sensible protections from those who might try to abuse the system.
Finally, it is important that any schemes run through the new bank are well publicised – if ordinary businesses which might otherwise want to expand or diversify do not know of their existence then everything else that has been done will be for nothing.