European Scene: February 2012
By John Roper
Small business baffles politicians
By John Roper
Last year was one hell of a year. The global banking cock-up seems, over here, to have turned into a government cock-up.
Last year was one hell of a year. The global banking cock-up seems, over here, to have turned into a government cock-up. Euro-wide nobody seems to be able to get a grip on things, and in the U.K. the public sector unions have been running rings around the government as they fight tooth and nail to keep their members featherbedded. Notably, none of the perpetrators has ever had a real job or worked in the real economy. The result is the world economies are now being run by a bunch of yahoo casino operators colloquially known as The Markets.
As our whole economy seems to pivot on buying and selling bits of paper, those of us who actually make stuff are broadly ignored. The U.K. government does have a scheme in place – the Enterprise Finance Guarantee – which is supposed to help small and medium-sized enterprises.
Under it, the government acts as guarantor on bank loans between 1,000 and 1 million pounds.
There seems to be a bit of confusion going on, according to the chief spokesman of our Federation for Small Business. He cites companies going into banks and not getting a conclusive response to questions about the EFG. In a report in the Daily Telegraph he cites one company that was told the EFG is no longer available. The managing director of that company said, “At a local level, most of the banks actively dissuade you from trying to use it. They see it as a 25 per cent exposure to risk.”
When I started my own business back in the ’80s there was a small business loan guarantee scheme in place. It seemed like a good idea. But the paperwork was horrendous and, it turned out, the bank still wanted my house as a guarantee for the bit the government wouldn’t cover. In the end it didn’t seem worth the effort so I signed up the house for the lot and spent the next decade working for the bank.
(In case you are interested, I still have the house, I am still in business and I don’t owe the bank a penny.)
The problem is that, over here, the government cannot make its mind up what a small business is. The current EFG is available to firms with a turnover of up to 55 million pounds. In the past, other governments have announced measures to help small business and the only people who could benefit were self-employed, one-man bands. It comes down to what sounds good on the day – usually budget day.
As good as it is to bash the bankers – and they are an arrogant lot – the real root of the banking crisis worldwide was inept government. Back in the ’80s our government (under the almost legendary Margaret Thatcher) closed down our coal industry and then set about destroying our manufacturing sector in the idiotic hope that we could survive as a service nation. Things got worse with the last labour government’s drooling obsession with wealth and its obsequious relationship with the finance industry. Between them the politicians really cocked it up.
These days we do not see people who run businesses going into politics. In the main they are professionals who left university with an ambition to be politicians. Politics is just another industry that has grown up out of nowhere, like security, and health and safety. And, like security, and health and safety, it is parasitic on the people it is supposed to be serving.
The fact is recessions come and go. I can remember at least three and I was running my own business through two of them. The scars you pick up on the way are just part of the learning curve. This one seems a bit different right now but then they all have their character. Eventually there will be another distraction, and the banks will realize that they make their money by lending to, and supporting, the likes of us, not just gambling with bits of paper.
And one day someone will realize that the only way to actually make money is to make stuff.
John Roper is the editor for The Installer, The Fabricator, The Conservatory Installer and Glass Works magazine published in the U.K.