Notes from the Toby Perkins meeting held on 21st June 2012

Toby Perkins MP

Shadow Minister for Small Businesses

‘How can an active government strategy support Britain’s small businesses to better access finance and achieve growth?’

Ewan McCulloch – Acting Head of Government Relations, Lloyds Banking Group opened the briefing by thanking everyone for coming. He went on to explain that Lloyds Banking Group has retail, wholesale businesses and an insurance arm and as such are entirely linked with future of the UK economy.  Supporting home customers and businesses is at the core of what they do and he was disappointed to hear in the newspapers that banks aren’t lending to small business and yet Lloyds Banking lending is up in that respect.  He then handed over to Karl Snowden, Chief Executive, Westminster Forum, who introduced the speaker…………….Toby Perkins MP.

Toby explained that since leaving school at 17 his life had been spent in the private sector particularly in sales and recruitment.  He also ran two businesses – “one of which was even a success” – and so brings a good background to the small business brief.

He emphasised the commitment Labour has to business.  Ed Milliband used his first conference speech for Labour he set up the small business taskforce headed up by Bill Thomas Senior UK Vice President of HP.  The group is focussed on four issues.  One is access to finance.  Access to finance isn’t just about banks, but also looking at alternative ways of finance such as venture capital.  However, banking the small business sector is problematic.  Compared to America who have 10,500 banks, many with a local or regional focus, the UK has less than 450.

Labour recognises that failure is endemic in the smaller business market, and so the task force will be looking to credit easing to bring down costs.  It is also investigating the development of: government-backed lending programmes; a quasi-banking vehicle based on the US Small Business Investment Company programme; and finally a British investment bank for businesses struggling to get finance.  The model here will be Germany which through the heart of the banking crisis has seen no increase in failed loans.

On banking specifics the Labour BIS team has also met with the FSA and 50 businesses mis-sold Interest Rate Swap products, as rebuilding the banking sector’s reputation is fundamental to future UK success.  It is also investigating insolvency particularly the dichotomy that sees one-off ‘honest failures’ penalised while ‘serial bankrupts’ benefit from ‘pre-packs’ to the detriment of small business creditors.

The team are investigating how government can give support to businesses for procurement – particularly for government contracts – innovation in the high tech SME sector and in exporting products.  Labour really believes that exported products produced and made here in Britain will make a real difference to our economy.  Labour wants to “put the needs of business at the heart of government” by creating a ‘small business champion along the lines of the US SBA or the Singaporean SPRING.  As an extension the team is looking at skills in conjunction with the Shadow Education team.

After giving a full and detailed account of his Shadow team’s future policy thinking, Toby went on to answer questions from members.  He answered, freely and frankly, questions, from Christie+Co, KPMG, Kinvara, Barclays and GE among others.  Their questions covered topics which included: the possibility of introduce US-style Vendor Financing Notes to the UK; reconciling banker claims that SME lending is up with government claims that it is down;  exploiting UK language/time zone etc advantages for SMEs; and exploiting the ‘mittelstand’ of UK companies of whom 21000 generate 11m jobs.

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