Last week, over in the Guardian, Vince Cable wrote:
A common complaint I hear when I am out and about meeting sole traders or entrepreneurs is the struggle to get finance through mainstream sources. This is a serious challenge to UK growth.
It’s why I have made it one of my priorities to get credit flowing again and why only last week I announced further detail of the government-backed Business Bank. This will facilitate the provision of loans to more firms through banks and other financial institutions.
But what about those firms and organisations which still need finance but struggle because they are deemed more risky and too expensive to administer in disadvantaged areas?
…
Well today I will be speaking at the annual conference for the Community Development Finance Association (CDFA) to show how Government funding is supporting their members to meet the growing demand from small business for alternative sources of finance.
The association will receive £30m from the government’s Regional Growth Fund (RGF) which has been matched with a further £30m by the Co-operative Bank and Unity Trust Bank to provide lending to small, micro and social enterprises.
This £60m funding will create or safeguard over 8,000 jobs over the next six years and when you see the projects that will benefit then you realise the impact it will have in the community.
* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.
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5 Comments
While this is good, I wonder if Vince has comprehended the magnitude of the task he is supposed to be doing?
> 8,000 jobs is a drop in the ocean, less than one-half-of-one-percent of today’s jobless.
> None of these jobs are certain, especially if the investment is “more risky, more expensive to administer”
> £30 million is one third of one percent of the extra £10 billion cuts that are planned.
Ok, many little steps make a mile. But these are very, very little, uncertain steps and the mile is a very long one.
£60m? It was £2bn in episode 3 of the Thick of It.
It is indeed far too small.
As well as a capital investment programme, the government needs to lend directly to businesses in competition to the banks. The aim would be to kick start demand and bank lending.
Excellent initiative, Mary. As well as private sector (although Co-operative Bank and Unity Trust Bank are a bit of a niche there) and national government/regional growth fund, would it not be great if local councils got behind this sort of thing. IMHO we need a new spirit of local economic development, with councils very much involved. That might well need some change in powers (and certainly more devolved resources). It also needs lots more LibDems elected locally with a can-do approach…. from pavement politics to community finance!
The real problem with small business funding is that along with Quantitative Easing, banks’ deposit/lending ratios were also increased, meaning that the QE money has got stuck with the banks to shore up their ratios, rather than being disbursed in business lending. This anomoly should be corrected to get the QE money into circulation.