The UK Business Secretary Vince Cable has today announced his plans to oversee a successful period for British industry. The first part of the plan will ensure that the UK government lifts the barrier that poor access to finance puts on growth by creating a state-backed institution that will help companies invest. Robin Johnson, chair of the industrial engineering group and partner at international law firm Eversheds comments:
“All this is very positive as rhetoric but it needs implementing in practice and funding to support it.
“We have seen the Business Growth Fund (BGF) set up already, but companies still feel there are many hurdles, such as red tape, to go through. It would be great to see in each region some company champions of the BGF in practice to convince the sceptics.
“If a truly new investment institution in industry is set up, it will need to be flexible in its approach, broad in its investment criteria, document light for a mixture of loan stock and minority equity positions without tight investor control and staffed by businessman rather than accountants and lawyers.
“Most SMEs do not want to give up control of their business and need convincing the proposals are genuine and that the controls will not inhibit them in implementing their business strategy. Getting serial entrepreneurs and mentors in the new organisation will be crucial. Profit should not be the primary objective, instead key performance indicators that focus on job creation, training, apprenticeships, tax revenues, regional development, regions of excellence and export markets, should be considered.
“The other massive untapped area is university research departments. There are not enough collaborative projects between local businesses and local universities. Incentivising universities through the research council or more general funding grants to support local businesses should be a priority. Sharing costs, utilising high class research departments and creating hubs of excellence should be part of the government strategy for future and sustained growth.”