Partner Article

Cable outlines Britain’s industrial strategy

Business Secretary Vince Cable is due set out his vision for the future of British industry today, at a speech at Imperial College, London.

Mr Cable will say the Government needs to be more consistent and strategic in its plans, moving away from what he calls an “ad hoc” approach to governing the British economy.

The Business Secretary will say: “Our first part of the plan is lifting the barrier that poor access to finance puts on growth. By helping firms to invest capital, businesses expand, and create jobs.

“We will work in a strategic partnership with industry, focusing our support on specific sectors. This is our commitment to growth in action.”

The “industrial strategy”, as Mr Cable will refer to, includes a new business bank, which is still under discussion.

It is suggested such an institution could operate through alternative providers such as the new challenger banks and non-bank lenders, with the aim of boosting lending capacity and corral existing provision such as co-investment and guarantees to support business expansion.

Mr Cable will add: “We need more competition and more diversity of supply. There is also a real shortage of long-term, patient capital for businesses. Try and secure a loan for more than 5 years or venture capital, and options are very limited, especially for innovative, high growth potential firms.”

34 bids will be announced as successful in the first round of the Employer Ownership pilot scheme, which gives businesses access to £250m funding for vocational training.

The successful bids are expected to support nearly 11,000 new apprenticeships, including 4,400 for 16 to 18 year olds, and 27,000 vocational courses such as NVQs.

Elsewhere, Mr Cable will set out plans for accelerating the process of academic research to commercial application.

Part of this focus will include a Knowledge Centre in Synthetic Biology, one of the areas identified by the Technology Strategy Board as high economic potential sector.

Procurement will also be on the agenda, as an assessment of £70bn of future government contracts planned in 13 sectors will be used to inform collaborative working with industry.

Mr Cable will say: “Clearly we need to strike a balance between buying strategically with an eye on long-term capability and saving money in the short run by going for the cheapest off-the-shelf options. Either way, government can and should be a responsible customer, developing a considered, long-term relationship with our supply chain, and that is what we intend to do.”

Commenting on the speech, John Cridland, CBI Director-General, said: “British business has been challenging the Government to put in place firm foundations on which our companies can build their long-term futures and rebalance our economy.

“The UK is a world leader in many sectors and if we are to secure significant growth in the decades to come, the Government must enable them to capitalise on their competitive advantages and stay ahead of international rivals.

“Politicians of all persuasions need a laser-like focus to provide a stable and supportive policy environment. Today’s commitment from the Business Secretary is a valuable first step on this critical path to future success.”

On the idea of a new business bank, Mr Cridland added: “Our small and medium-sized businesses are often those with the greatest potential to grow, but this has been hampered by tougher regulation on banks and lending has been restricted.

“The Government has introduced a number of funding schemes to assist smaller businesses, so to help them make best use of these, a business bank that acts as a ‘one-stop shop’ for these initiatives is a priority.

“While we don’t believe a state bank lending directly is necessary, there is a critical need for an aggregation platform which bundles loans to kick-start a bond market for medium-sized businesses and provide new alternatives to traditional bank financing.”

Anil Stocker, head of policy at Next Generation Finance Consortium (NGFC) welcomed the Business Secretary’s points.

He said: “Subsidising bank loans might provide temporary relief for banks struggling to hit their SME lending targets, but we must continue to move towards a future in which UK businesses are not over-reliant on a handful of financial institutions. The banks will always play an important role in the life of SMEs in this country, but it is important to allow alternative finance institutions like the members of the Next Generation Finance Consortium (NGFC) to share the responsibility. The role of the Business Bank should be to provide support to both banks and alternative finance institutions, and also to educate business-owners about the financial options they have.

“A number of innovative new alternative finance institutions have sprung up in the wake of the banking collapse, helping UK businesses to find funding while the banks struggle with their balance-sheets. New solutions now exist for every stage of the life-cycle of a business, from equity finance through to long-term loans, credit unions, and working capital finance. A truly diverse lending landscape is within sight, and public sector initiatives must ensure that they embrace it as a goal.”

This was posted in Bdaily's Members' News section by Tom Keighley .