Black Country business leaders are calling for “radical” action from the Chancellor in tomorrow’s Budget to boost industry and commerce, and has warned that efforts to increase bank lending to smaller companies are failing.
Black Country Chamber of Commerce president Paul Bennett says a “fundamental lack of understanding of business finance” means all the Government’s schemes are flawed and fail to reach the companies that need help most.
And the organisation, which represents thousands of large and small businesses across the area, is urging Chancellor George Osborne to concentrate more on supporting economic growth than on cutting the UK’s deficit mountain.
The Chamber wants the Government to make a priority of measures and expenditure that boost overseas trade and generate infrastructure development, at the same time as more action to make investment funds available to increase job creation and economic activity.
The Chamber has always backed the Government’s efforts to cut the deficit, but is now calling for it to “adapt to changing economic circumstances”.
“While we fully support deficit reduction, the lack of growth and recent downgrading of the UK’s AAA credit rating by Moody’s suggests that the Chancellor will have to look into more radical measures that support enterprise and growth.”
Mr Bennett said: “Accessing affordable finance remains a critical concern for SMEs (small and medium-sized businesses employing less than 250 people), yet it is evident that the various Government schemes to assist, such as the Enterprise Finance Guarantee Scheme and the Funding for Lending Scheme, have done little to improve the situation.
“It is likely that all Government-developed schemes will be flawed and will fail to reach the companies that need finance most, due to a fundamental lack of understanding of business finance.”
And he warned: “Funding is failing to reach the fast-growing and new firms.”
Mr Bennett said this was borne out by the latest lending figures, which showed British banks and building societies drawing £9.5 billion from the Funding for Lending Scheme in the last three months of 2012, at the same time as net lending actually fell by £2.4bn.
Funding for new businesses was one of the biggest problems, he said, and he urged the Government to make loans of up to £20,000 made available to companies less than 12 months old if they could raise a matching sum.
“Making loan repayments interest-only for the first 12 months, then repayable over five years, would be affordable.
The Chamber is also proposing a string of changes to business finance, restricting the fees that invoice finance companies can charge if a client company becomes insolvent and using the R&D tax relief concept for company’s staffing costs - so called “human tax credits” – to encourage firms to take on new workers.
Mr Bennett added “We firmly believe that all policy decisions must be pro-business growth, tackling the obstacles that prevent businesses from getting ahead. It is the role of the Government to create the conditions that enable strong and sustainable growth. If these conditions are created, the private sector will be able to deliver that growth.
“Government spending needs to be more focused on measures that generate prosperity and wealth creation, through the growth of private sector jobs, investment and confidence.
“Measures should pass the test of assisting the private sector to increase productivity, entrepreneurialism and employment growth.
“This should be achieved by reprioritising programmes away from any unproductive measures and wasteful spending towards spending that supports economic growth and capital investments”
The Black Country Chamber of Commerce and Alliance 4 the Black Country are hosting an exclusive event for businesses on Budget Day, with delegates watching the Chancellor live and hearing immediate reaction from a panel of industry leaders and professional services specialists.
The Express & Star will be providing a live internet link from the event to enable delegates to provide live comment and analysis on the newspaper’s web pages, at expressandstar. com/business