EEF conference is told that the UK banking system needs urgent overhaul to support high value, innovative businesses.
Delegates at the Finance for Future conference, organised by the manufacturers organisation EEF, heard the views of panellists John McFall MP, chair of the Treasury Select Committee, Rex Vevers, financial director of combined heat and power specialists Ceres Power and Shantha Shanmugalingam, director of Innovation, Investment & Growth at Nesta.
The consensus from the panel and audience was that the current banking situation provides an ideal opportunity for change, in particular with strong support for a re-established Industrial Bank tasked with investing in the future.
This would combine the public sector setting overall objectives and providing support with private sector expertise.
EEF has called for a Bank for Industry which would also bring together various government mechanisms for supporting innovation into a single financial vehicle with the specific intention of supporting innovation. This would unite the various funding schemes – the new regional venture capital funding, the Enterprise Capital Funds, the Innovation Investment Fund, the Grant for Research and Development and the regionally delivered proof of concept funding.
EEF director of policy Steve Radley, who chaired the seminar, said:
“There is a growing consensus that the current banking system is unfit for purpose as far as innovative, high value manufacturing businesses are concerned. The current situation provides the ideal opportunity to take stock and reform the financial architecture of the banking system.
“This must include a national Bank for Industry to meet the needs of small and medium size companies that the current system is failing to address. Without this the growth of innovative small and medium size companies, as well as the economy overall, will be impaired.”
John McFall MP commented: “The British banking architecture is not fit for purpose and to achieve growth we need to get on with reforming the banking system. There is a clear case for government to intervene and enable investment in creditworthy businesses and individuals as without this the recovery of the private sector will be impaired in the longer term.”
Delegates also heard the need for greater regulation of the financial services sector to provide stability and firmer corporate governance, a broadening of the definition of the R&D tax credit, changes to the tax system to promote capital investment and a more strategic use of government procurement.
