Deputy London Mayor: Bank's 'don't know' they have billions to lend
Isabel Lesto | Wednesday, 08 August 2012
Billions of pounds earmarked for small businesses are not being accessed, says Kit Malthouse
“We’ve been bringing 200-300 international big cheeses here to think about inward investment,” said Kit Malthouse (pictured), Deputy Mayor of London for Business and Enterprise, at an event on Monday. “We’ve had a range of announcements – from Amazon opening a 47,000sq foot facility, right through to Shianogi, a Japanese pharmaceuticals company, which is putting in a new cell for its marketing HQ for Europe.”
But he assured small business owners at the TradeUp Britain event that London’s focus was not purely on big business. “Over the next four years I’ve been set some pretty challenging targets – about 450,000 jobs in total, a quarter of a million of those as apprentices and about 70,000 part time jobs. Small businesses are a critical part of that.”
Malthouse has been involved in six start-ups, three of which have been successful and are still running today. “When I got this job at City Hall I particularly wanted to shift our emphasis away from some of the bigger employers and bigger businesses, largely because many of them can look after themselves, and shift the emphasis towards small businesses, not least because we need to recognise that 80% of people in the UK and London work for small businesses of fewer than 10 employees.”
He added: “One of the things I find frustrating about politicians when they talk about business is that they always surround themselves with big business people, mainly men. They’ll get FTSE 100 chief executives or chairmen and they’ll pretend that’s business, whereas you and I who are involved in start-ups will know that the two are completely worlds apart.”
He listed three things he would focus on to help start-ups; improve access to financing, lobbying for less regulation, and promotion. The Olympics are helping take care of the third one but financing and regulation remain stumbling blocks, only time will tell if he succeeds in easing the headache.
“There’s quite a lot of government support money out there in terms of borrowing and lending but not many people know how to get hold of it,” he said.
“My wife’s business went to get a small firms loan guarantee scheme at HSBC and they said they’d never heard of it. I had to show them on the website that they were part of the scheme.
"And then just because the man was a nice guy he went away, did the research and we got the loan, but by god it was painful. There are billions of pounds out there for business that is just not being accessed, because the banks don’t know.”
Another problem is that the small venture capital industry in the UK has almost disappeared, he added. “It’s fine if you want to get five million quid, but if you want 30 grand to open your second shop it’s almost impossible, unless you know somebody rich. So we want to try and do something on the equity side as well.
“Then there’s regulation. All of you will struggle if you are running businesses with having to be an expert in everything; tax, PAYE, health and safety, all those kinds of things, whereas the government employs people to be specialists and they persecute you on every single one if you get it wrong.
“We had a health and safety spot check. Some guy with a clipboard turned up at the office, he sat down in front of me and said: ‘Where’s the fire exit?’ And I said well there’s only one door, that’s it with the big green sign. OK. ‘Where’s your accident book?’ I said I think we have an accident book and Jo-ann my assistant nodded yes. OK. He said: ‘Where is it?’ so I said it’s over there. OK. He said: ‘What size is it?’ We’re shrugging our shoulders, so she holds up an A4 pad. I said: ‘It’s A4’. He said: ‘No, sorry, regulations are that now it has to be B5.
“But those kind of things happen on a daily basis and we will be getting out there talking to the government about some of those regulations, particularly around the dynamism of capital, setting people free to start their businesses without the headache of the government getting in the way.
“The third thing is really promoting British business to the world. I think one of the things we’ve seen over the last ten days is not just a magnificent display by a series of wonderful young people in this country but also a city which is being admired around the world. London is really firing on all cylinders at the moment.”
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