On Monday 8 July, the British Business Bank Advisory Group, chaired by Sir Peter Burt, made public its recommendations for the future of the Business Bank to Secretary of State for Business Vince Cable.
Manos Schizas, senior economic analyst at ACCA (the Association of Chartered Certified Accountants) explains: 'The Group recommends that the Business Bank should focus its activity on supporting the development of new debt and equity markets for SMEs and mid-caps; supporting challenger banks and other new finance providers; and increasing the supply of funding to ‘viable but underserved’ SMEs and mid-caps. We welcome this much needed clarity about the workings of this Bank.'
The Group also made nine specific recommendations regarding the future of the Business Bank:
- All existing and future government-funded business finance schemes should be brought under the remit of the Business Bank.
- The full range of financial advice should be signposted by, and signpost back to, the Business Bank. However, while the plan should be to bring government-approved or -funded financial advice under the Business Bank in the medium term, the Government should only do this after rationalising its business advice offering.
- The Bank should be an independent company with a single, public sector shareholder, operating at arm’s length from the Government.
- The Bank should have clearly defined, quantitative objectives and targets aligned to the mission it has been given by Government and report against these in a transparent way.
- The Bank should build on the resources of Capital for Enterprise (CfE), growing around the shared team developed by the BIS shareholder directorate and CfE. It should be headquartered in Sheffield.
- The Bank needs to have the discretion to manage its own balance-sheet and allocate its resources as a result of ongoing evaluation. Its governance should be assured by its own Board as opposed to an additional independent body.
- The Business Bank should have ‘excellent financial and risk management systems’ in place and aim to be self-financing in the medium term.
- The Bank should be able to decide on any new interventions on the basis of solid evidence, as opposed to stakeholder lobbying.
- The recruitment of a permanent Chair for the Bank should be prioritised and proceed immediately, followed by the recruitment of an interim CEO and leadership team.
Manos Schizas welcomed the Advisory Group’s recommendations, saying: 'We are delighted to see that the Advisory Group has called for a truly independent Business Bank that can manage its own resources. As we’ve repeatedly pointed out, the Bank needs to outlive an entire generation of politicians, and it must be structured accordingly. But we also appreciate that the Bank’s longevity depends on maintaining broad political support. It is therefore encouraging that the appointment of a permanent Chair for the British Business Bank and other initiatives under the Business Finance Partnership, have been brought forward and will be delivered ahead of targets.
'Aligning the supply of business advice to the same goals will take much longer, and hence we share the Advisory Group’s reluctance to extent the Bank’s remit to business advice. We are, however, working with Government and other stakeholders to ensure that an appropriate business advice landscape can be created in time.'
- The Government’s plans for the Business Bank are discussed in the March 2013 policy paper, Building the Business Bank (see the 'related links' section).
- Details of the Advisory Group are available on the Government press release announcing its creation in January 2013 (see the 'related links' section).
- ACCA takes an active interest in helping UK SMEs access finance and grow. We are represented on the Government’s Small Business Economic Forum; the BIS Access to Finance Expert Group; the Stakeholder Advisory Board for the ESRC Enterprise Research Centre as well as the Steering Group for the Independent SME Finance Monitor, the definitive account for UK SMEs’ access to Finance (see the 'related links' section).