Industrial bank call to help lift Black Country's growth

The Black Country needs its own industrial bank if economic growth is to be achieved, according to a leading professional.

Johnathan Dudley, Midlands managing partner at national audit, tax and advisory firm Crowe Clark Whitehill, said liquidity problems following the 2007-2008 banking crisis were still hampering companies almost five years on.

He said that with banks having to meet larger capital requirements and being reprimanded on almost a daily basis over a series of scandals, they continued to be circumspect about who they lend to, how much they will make available, on what basis they would make the capital available and what the changes are.

"With property prices slumping, collateral is reduced so there is a push towards debtor-based lending. The banks say that this gives greater visibility and, given the increased risks, charges have risen," said Mr Dudley.

"This is generally more expensive and often inappropriate for many businesses," he added.

Mr Dudley said there were continued complaints about the difficulty of obtaining finance, particularly among small and medium-sized enterprises.

"If we are going to build the businesses we need for the future and produce the jobs that are so necessary, we need to address this.

"The automotive industry has picked up enormously, led, in part, by the successful turnaround of Jaguar Land Rover (JLR).

"JLR is about to build its new engine plant near Wolverhampton. Suppliers are benefiting from this investment. We must capitalise on this because it is a great opportunity but our ability to do so is being jeopardised by a shortage of finance.

"More cash-flow lending for manufacturers is needed. In the present circumstances, with no sign of things changing, this means that a big initiative is required – an industrial bank," he added.

Mr Dudley said such a bank has been suggested at a national level, with Warwick Manufacturing Group's founder Lord Kumar Bhattacharyya lobbying ministers and raising the matter in the House of Lords.

"This could and arguably should be sited in the West Midlands, the heart of the manufacturing industry, although a big campaign would be needed to persuade the Government that this is the way forward.

"At the moment, various Government incentives to banks have just enabled banks to lend what they were already going to lend on 'copper bottomed proposals', but more cheaply. More marginal propositions still aren't getting a look in.

"Manufacturers and exporters need a ready source of finance at reasonable rates that they can rely on in challenging times. An industrial bank could deliver where mainstream banks have failed," said Mr Dudley.