Tuesday 16 October 2012

Rights under attack

Chukka Umunna has written to Labour members asking them to lobby their MPs to vote against the plans  to strip away employment rights.  This is wha he says :

Dear Your rights at work are under attackFriend
Tomorrow the Conservative Party and the Liberal Democrats are launching their latest assault on the British worker and we urgently need your help to defeat a bill that could adversely affect the lives of millions of people.
Vince Cable and the Tory-led government will bring their Enterprise and Regulatory Reform (ERR) Bill back to the House of Commons to try and turn it into Law.
I need your help right now to make sure as many MPs as possible vote against the ERR bill tomorrow.
This ERR bill will:
  • Water down the rights of all employees in this country
  • The time an employee is required to be employed before they are able to claim for unfair dismissal has already been raised from one year to two, and now these proposals will reduce the amount of compensation unfairly dismissed workers can receive
  • Reduce protections for whistleblowers at work.
If the government can get this Bill passed they’ll also allow employers to make minimal offers to workers to leave, then gag those same workers from even mentioning this at employment tribunal.
Not content with action that will leave thousands in fear for their jobs – the government’s bill will also abolish the Human Rights Commission’s duty to promote a society free of discrimination. It is disgraceful that Ministers should pretend abolishing action to end discrimination should be part of anything called an ‘enterprise’ bill.
The Labour position is very clear – we will be voting against the Bill this week
We do not want to make it easier for bosses to sack people, we want to make it easier for firms to hire. Nothing less than real action to help the economy will do, and sweeping aside workers rights is only going to make things much, much worse.
We will not stand for it. 
Thank you,
Chuka Umunna MP
Member of Parliament for Streatham
Shadow Secretary of State for Business, Innovation &Skills

Monday 15 October 2012

De-mutualising fairness at work?

Perhaps if I owned a Bentley and was asked to give it up I wouldn’t find it that hard to do as I have never been in a position to own or use a Bentley, I don’t really know what they are worth. Just as the Tory frontbench think it will be all right for people to give up their employment rights. They have never had real jobs, never needed such rights and have no appreciation of what they are worth.
But I can’t understand how people would give up their rights to unfair dismissal from their jobs and their family income? Or, to put it another way, how could people give up their rights to be treated fairly? Do such rights have a value? To some they have no value and to some they are just a cost.
But we in the Labour movement, and I as a member of the Labour Small Business Forum, know they had a cost – one of over a 100 years of campaigning of hardships and struggle. To us they have a priceless value as those who went before us sacrificed to make them possible. They understood the fallacy of relying on just the good character of their employer or manager, of relying on their simple ‘benevolence’ or on their ‘charity’, or on their ‘paternalism’ – was flawed. They sought the dignity of work and fair treatment. Unions could help enforce such fair treatment, but in their absence (and outside the public sector they are largely absent) the guarantor of fair treatment is employment rights enshrined in legislation. They help make companies good places to work. To us they are priceless, but to the Tories they are valueless and costly and don’t fit inside their Downton Abbey-esque view of the world and so they propose to dispose of them.
George Osborne’s idea whereby employees can trade away their employment rights for a few plastic shares is the sort of scheme that would be rejected out of hand by the FSA as a consumer con-trick. It seems that there is to be a tariff on maternity and paternity leave and childcare. What price equality in the workplace? Ask George. What is the value of family life and the right to take time off unpaid when your children are ill? Ask George. Can Dad’s take time off too? What is the value of speaking out against bullies in the workplace? Ask George. They plan to buy us all off.
For Osborne has ready a great scheme to de-mutualise the fair society. I know that none of them have had a job outside of politics. They don’t know what it is like to start a new job and find slipped in with your new contract a form asking you to waive the working-time directive. They don’t know what it is like to see their friends lose their jobs because their faces don’t fit on the day before they acquire employment rights. I do. They don’t know what it is like to see a friend return from maternity leave only to see that they have been demoted. I have seen all this in past jobs.
But I have seen also the ashen faces of managers when they realise that they can’t get away with it, that they are being judged by both moral standards and legal requirements. That they have both moral and legal responsibility to the people they employ. What keeps bad managers in check are employment rights – they are the silent guarantors of fair treatment in the workplace because bad managers are forced to work within those parameters. They mean that we don’t surrender our civil rights when we clock on, that we are going to be treated with dignity and respect at work.
I know that some abuse their rights but, ironically, most of the cases I know of occur in the public sector and not the private sector. When cases do go to tribunals and the employees win, how can that be a travesty of justice? How can the fact that someone can prove that they have been discriminated against, abused or bullied be wrong?
I am all for employee ownership of shares and all for helping small firms recruit new staff and to grow small business ownership but there needs to be a fair balance of rights and responsibilities between staff and employers. Stripping away employment rights isn’t the solution.
Ironically if you own shares in many companies you can’t sell them on the open market and often have to sell them back to the company when you leave. So the company AGMs will be a hoot – since unless the staff vote through what the management want they could get the sack and lose their shares. It is Conservative democracy in action. Only they could come up with such a plan, as only they are so out of touch with the real world.
By Philip Ross - originally published by Progress 

Friday 12 October 2012

PradRad meeting to take up small business issues

The next PradRad meeting on Wednesday 17th October has speakers taking up small business issues :

Proactive Small Business Promotion Agencies In Central and Local Government Small and medium sized businesses employ around half the UK work force. We need to end the Thatcher/Reagan consensus about unfettered free markets and instead have SME advocates in the heart of government charged with encouraging growth in this sector.
Cllr Steve Cowan, Leader of Opposition Hammersmith and Fulham Council

Tackling Late Payment to Help Small Firms Survive and GrowToo many organisations still manage their cashflow by stringing their smaller suppliers along, which makes it harder for small firms to grow and can drive them under. Suppliers have the right to sue for payment but understandably rarely use this, and the voluntary approach to encourage prompt payment has its limitations. Large firms, public bodies and charities – including privatised utilities, local authorities and subsidiaries of overseas companies – should be required by law to publish their independently audited payment practices in their annual reports, enabling the worst offenders to be publicly named and shamed.
Ben Coleman, Self Employed,  Member of Labour’s Small Business Taskforce. (Secretary of Hammersmith CLP).

See : 


Why we must teach girls to code

by vijay riyait.

In the current debate about the schools exam system, the discussion has been based on the type of examination system that kids leaving school at 16 should undertake. While this is an important issue it fails to focus on the type of knowledge we would like our children to develop and how that learning should be relevant for today’s society and for the economic success of our country.

In the film, Dead Poet’s Society, there is a great scene in which Robin Williams explains that medicine, law, business, engineering are noble pursuits and necessary to sustain life but that poetry, beauty, romance and love are the things we stay alive for. So, I want to be clear before I set out my argument that STEM subjects (science, technology, engineering and maths) are not the only important ingredients for a successful country and our children need to have a broad based educational background for as long as possible before specialising.

Having said that, if we look at the statistics, women only make up 12 per cent of engineering graduates and just 2 per cent of girls take physics A Level. There has been an enduring and growing gender imbalance in STEM which severely limits the growth of this country and hugely distorts the available labour market. Computing has been falling in popularity overall as a subject and at degree level, 91 per cent of computing/engineering students are male. The last Labour government set up the UK Resource Centre for Women to advance gender equality and diversity from the classroom to the boardroom in science, engineering and technology. However, progress has been slow, painfully so. What we need, and the thing which government is bad at doing, is leading a cultural shift about the way we see the role of women and how women view the opportunities available for themselves. In India, you are far more likely to a see a female programmer than in the UK and this is in a large way due to the fact that computing is seen as a valuable part of the overall economic engine. It is a way for women to have careers and get paid well and be respected in Indian society.

The current government has taken steps to change the way ICT is taught in schools and a move away from just teaching computer packages and towards a curriculum which has had input from companies such as Microsoft, Google and organisations such as the British Computing Society. This is all goods news but we can do more and we can and must do more at grass-roots levels as the ICT changes won’t occur until 2014. There has been a growing movement to take computing for girls into the heart of communities and to inspire them to work on simple programming tasks. I would like Labour to support not only changes to the school curriculum but to support these initiatives at the local level (in our poorest areas) and to put them higher up the political agenda.  I would also contend that KS3 is not early enough to catch the imagination of many girls and to challenge stereotypes and this must be done by at least KS2. We need young role models to take the message that computing is for you as a girl and that you can still do all the things that other girls do and not be considered ‘strange’ and ‘weird’.

A major part of our future economic success in our evolving digital age in the 21st Century will depend upon whether we can involve our young women and not so young women (computing skills are blind to the age of the person) in taking up careers in software development. The best way to see what can be achieved with people willing to make a difference can be seen by the energy and passion of a daughter of a good friend of mine in Canada who is an award winning technology business woman. Her daughter, Genevieve L’Esperance has been teaching girls coding and this video conveys more than my words can ever do.

(From Progress)

Party of Small Business!

By vijay riyait.

As a former secretary of the Federation of Small Businesses in Leicester, the easiest way for me to bring an unnerving quiet to a room of small business owners used to be to say that I was a Labour party member. In my experience, small businesses have had a distrust of all politicians for many years, believing that they favour the corporates of the world. They know that politicians always promise to understand their concerns and their struggles but deep down they are not really convinced that they do. With the decline in trust in the political class in general, this, I believe, is echoed in the small business world. Small business owners, like many ordinary people, wondering whether politicians or even politics has the answer. Labour has to show that politics does matter in small business in supporting and valuing it.

So, where has this attitude come from about Labour from small business owners? There is the usual that Labour can’t manage the economy effectively. This is normally expressed by them saying ‘if we ran our businesses like Labour ran the economy, we would’ve been bust long ago’. Then there are the regulations, which they see as Labour dramatically increasing in their time in office. But really it’s the fact that they do not believe that Labour shares their values of entrepreneurship, hard work, self-reliance and building wealth.

If we look at the numbers, there are 4.5 million small businesses. SMEs account for 99 per cent of all businesses, 58.8 per cent of private sector employment and 48.8 per cent of private sector turnover. SMEs employ an estimated 13.8 million people and have an estimated £1,500bn turnover. From these few facts, it’s clear that SMEs are the life blood of our economy. They’re the engine room of growth of the UK and the employer of most of our fellow citizens.

Labour needs a culture shift to understand small businesses and their owners and what they contribute to the economic success of our nation but also, just as importantly, what they contribute to the wellbeing of local communities. I work with a project called ProHelp run by Leicestershire Cares, which brings together SMEs who give pro bono support to charitable and community organisations. They regularly give tens of thousands of pounds of vital support per year, often being the difference between the community organisation surviving or failing.
While Labour was right to bring in the minimum wage and champion current campaigns like the living wage we also have to work to make the life of small business owners easier, allow them to grow, find new markets and adopt innovative practices. Labour does have a good story to sell on enterprises with our strong links with the cooperative movement and the social enterprise model.

How do we make this cultural shift? It requires building relationships with small businesses in our community, understanding their issues and campaigning with them to bring about change which helps the businesses to be more successful. In Leicester West CLP we’re working together with Movement for Change to set up a Leicester Business Forum where the local Labour party can engage with business owners, listen to them and act on their concerns. This is vitally important for us in Leicester Labour as the national conference of the Federation of Small Businesses is in Leicester in 2013, so this presents us with a huge opportunity to show Labour can be the party of small business and entrepreneurship. It’s only through true understanding at a grassroots level can Labour hope to build the national policies that will see the SME sector lead us out of this economic depression.

Fringe Success!

There were many themes to this years Labour conference, but a strong one much to surprise was that of small business. Labour ran a business day on the Monday in which the shadow cabinet met with business people from all over the country. Then on the Monday there was an open microphone session in Manchester Central where delegates and representatives could put their questions to the Labour business team. There were a few good fringe events too, with the Fabians doing one on the changing nature of work. The Federation of Small Business also invited Ed Balls a meeting. There had been much talk about finance, innovation and the changing of the work place. That small business will be the driver that propels the economy forward was common currency.  The recovery will not be led by a few large firm but by many small ones. The need to empower small business isn’t just about the economy it is about empowering a generation.

Then on the Tuesday Ed Milliband had used his conference speech to tell people the small businessman Arthur Henderson whose firm had been let down by the banks and the financial institutions. Bank are there he noted to serve business it is not the other way round. This echoes strongly opinions and discussions already taking place in the City among institutions themselves about where it all went wrong and what they need to do to fix it.

In the evening it was the turn of the Labour Small Business Forum. The Forum is a network of Labour members and supporters who work for themselves or in a small business and we held our fringe meeting and invited speakers to come and talk with us. Instead of being external organisation coming to talk to Labour the idea of the forum is for us to talk about small business ourselves as we are the party of small business. The distinction is that instead of small business coming to the party to talk to the members to raise issues, we the network  and members ask them to discuss with us. The distinction between the two positions may sound small but it is important. The aim of the Labour Small Business Forum is that Labour if is to become the party for small business, it needs to be the party OF small business. Which means that we need to organise the thousands of people in the party working for or in small firms or as self-employed.

We had the best small business line up at conference. After my introduction in which I stressed the importance of modernising the way we work and supporting emerging firms and freelance working, John Walker the national chairman of the Federation of Small Business picked up on my comments about IR35 and agreed that it was a complicated and unwieldy tax that has not been resolved and was a bar for going into business. He reiterated the familiar problems that small businesses have with getting hold of finance from the banks. Confidence in financial institutions is a problem and he made reference to the mis-selling of interest rate swaps to many of his members. This chimed with what Ed had said during his speech. As a policy call he suggested that it was hard for small firms to initially grow and take on people and suggested offering an NI holiday to firms that did this.

He was followed by Dr Jo Twist of the UKIE (the trade association for the UK’s games industry), her points neatly dovetailed with his as she talked about the phenomena of crowdfunding which was a way that investors could lend to companies directly using the internet as a platform and thereby circumnavigating the banks. Which the chair noted that commentators saying that pouring subsidy into banking may end up destroying this new innovation’. Jo explained how in the USA they have passed the JOBS Act which makes it easier for this sort of lending to take place and now places like Silicon Valley are a light with such funding. She said the FSA need s to make similar allowances in the UK. She had discussed this recently with Harriet Harman at a round table session.  The other issue have for their members and the growing number of small micro-firms that start in the games is the training and skills and they have lobbied successfully to reintroduce coding into the curriculum at school. So people will not only know how to use WORD but could write one too. Her policy call was to offer to collaborate with Labour in delivering an excellent technical baccalaureate.

Following on the theme of innovation was RichardLittle from the PPMA. Richard who has a manufacturing background whose success comes in part from design and development talked about the need for Britain to celebrate its status as a nation of inventors and innovators, rather than being embarrassed by it. He suggested also a scheme whereby people could sign over unwanted patents to the state as an endowment and also for Government to make it easy to take advantage of new inventions and innovations in places like the NHS. He said he would know we were successful when we started putting up statues to inventors again, like the one for Greathead near Bank Station in London.

Emily Thomas, who had been a special advisor at the Treasury and the DTi talked about the difficulties in setting employee owned business and the amount of bureaucracy that is in involved. She noted that only 14-15% of entrepreneurs are women and we need to do something to level the playing field so women can go into business. She noted that women are often suited to business as it can offer flexibility. Discussions noted  that it was also about modernising both tax and public services too so they work for the 21st century. She noted that Government spends billions of pounds each year on procurement and needs to do more to ensure that more of these contracts go to small firms.
In answer to the other panellist Shadow Minister Toby Perkins MP, who had run his own firm before entering Parliament acknowledged the concerns raised by the other speakers and was interested in the points raised by Richard Little on patents. He pledged that Labour would support
Vince Cable's plans for a British Investment bank, though he suspected that the coalition may not complete delivery of it but Labour would finish off when re-elected.  He noted the importance of skills and the technical baccalaureate and welcomed Jo Twists discussions about crowdfunding. He noted too the diversity of ownership but the need to encourage and support more enterpreneurs (as he had been himself).

The meeting rounded off with a number of questions from the audience whose number now included Chris Leslie MP who came to listen and seemed also pleased at the enthusiasm and passion that the meeting was showing for small business and Labour.

Monday 8 October 2012

Invention and Innovation - Foundations for success

Our small business fringe meeting was addressed by Richard Little of the PPMA. He talked about the great British success story of innovation and invention and his contribution was widely discussed by members of the forum and those at the the event. Below is an article by Richard covering his main themes.

Friday 5 October 2012

Ukie CEO offers to work with Labour on new ‘TechBacc’ to create a new generation of digital creative entrepreneurs

 October 2012 - London, United Kingdom – 

CEO of games and interactive entertainment trade body Ukie, has today used a speech at the ‘How Labour can put small business first’ event, held at the party’s Conference, to comment on the announcement by Ed Milliband that Labour would introduce a new Technical Baccalaureate qualification.

Commenting on the 'TechBacc' announcement, Dr Twist said: "We need more young people knowing how to code, how to be creative with code, and how to be the next generation of digital entrepreneurs, so I welcome any announcement that looks at how we can improve how people learn relevant skills that allow them to work with and create technology. I would welcome the opportunity to work with the Labour party so that the Technical Baccalaureate can be rigorous and relevant to create this new generation."

Dr Twist further emphasised the importance of skills to the UK’s games and interactive entertainment industry, particularly of getting children learning computer science and art:

Dr Twist said that work should continue with this government to deliver the skills required by the games industry: “Through our Next Gen Skills campaign, we have successfully called for computer science to be introduced on to the national curriculum and as of this month it is there. But the job is not yet done and we now need enough teachers to teach it, in an engaging and exciting way.

But we also need artists, as it is in the mix of technology and art that much innovation comes from. Our education system needs to recognise this and encourage cross over and collaboration between different educational disciplines.”

Dr Twist also used the ‘How Labour can put small business first’ event to call for more to be done to improve access to finance for the UK’s games businesses, citing crowdfunding as a viable and sustainable source of non-bank lending.

Dr Twist said: “As an innovative industry, the games industry is always embracing innovative funding models. And we’re seeing more and more games companies successfully use crowdfunding to bring money to their businesses.”

The Labour SmallBusiness Forum panel, Jo Twist, Richard Little Philip Ross (chair), Toby Perkins MP, John Walker (FSB) and Emily Thomas
“We’re also seeing a number of UK crowdfunding platforms emerge. We believe that crowdfunding can fill a real gap that exists for games businesses that cannot get support from banks or VCs. However, the current regulatory system is, understandably, not designed with crowdfunding in mind and creates barriers for crowdfunding platforms to be established and to operate as effectively as possible.
“Recognition from the FSA of the existence and potential of crowdfunding as a separate, unique form of financing, followed by the creation of regulations covering crowdfunding as a distinct model or platform, will be crucial in accelerating the growth of this industry and its offering to the wider UK economy.”

Small Business Fringe Great Success!

With an attendance of about 50 people, our fringe was a great success, a more detailed report to follow.

Thursday 13 September 2012

Small Business Forum at Labour Conference





All are welcome to attend our fringe event at the Labour conference. We have the best small business thinkers and speakers at the whole conference who will be discussing how Labour can put small business first covering issues such as finance, innovation, tax and development.  

The meeting will be chaired by Philip Ross who will ask each panelist to speak for 5 minutes followed by discussions and questions from the floor.

We have the Shadow Minister for Small Business - Toby Perkins - who before entering Parliament ran his own small firm.

John Walker - Chairman of the Federation of Small Businesses - who will explain the issue facing their members.

Dr Jo Twist CEO of the UKIE the trade association in part for the UK's Video Games industry, she will talk about the creative opportunities ahead and the need for skills and innovative funding such as crowdfinancing

Richard Little from the PPMA will talk about innovation and invention and patents and how Britain needs to harness, protect and celebrate its creativity.

Emily Thomas from Aequitas Consulting and former Treasury and DTI Special Advisor.

Friday 3 August 2012

Is the City changing?

There is a lot of thinking going on in the City of London. If you were to walk around the Square Mile and attend meetings at the various market groups, thinktanks and at Gresham College, you would be pleasantly surprised at what is being discussed. As well as ritualised complaints about victimisation on bonuses and regulation a new theme is starting to emerge, for a long time fledgling but one that is now starting to fly above the other topics – it is the issue of ethics and values. Last year Charles Moore questioned capitalism and now some of the bankers themselves are viewing it in a new light. Whatever next?
In March, Stephen Green, former chair of HSBC and now minister for trade and investment gave a Gresham Colleglecture entitled ‘Values and Value’ and suggested that capitalism was still ‘on trial’. In its defence he suggested that profitability and social responsibility weren’t mutually exclusive and neither were shareholder value and ethical values in conflict. He commented on the truism that there is a new generation emerging from university that believes that it is right to question the corporate ethics of the organisation they may work for.
A week earlier Merrill Lynch hosted the spring conference for the City’s Long Finance thinktank which discussed ‘into the folly of value – reforming sustainable finance’. The keynote speaker, economist and former Bank of England committee member Professor Charles Goodhart,  spoke of the pro-cyclical nature of regulation. He noted that after the South Sea Bubble crisis in 1711 it was decided that such a crash should never be allowed to happen again so they regulated and outlawed limited liability companies (which remained broadly banned until 1844).
Goodhart noted that consensus about the current crisis was centring on it being a failure of regulation and supervision and the reaction was for more regulation. But he argued that regulation is not so important because at present the market has no appetite for risk or lending. He noted a tendency both to regulate and deregulate at the wrong times: after the 1929 crash, the response in the US was the introduction of the Glass-Steagall Act which separated out retail banking from investment banking. By 1999 it was decided that the act had been inhibiting growth so it was dismantled.
For the future, Goodhart suggested a gradual implementation of regulation as the market grows combined with changes in governance to transfer it from managers and shareholders to stakeholders. He suggested that we should rely on governance for the future as regulation is, as demonstrated, pro-cyclical particularly for the larger banks. To me it follows that the larger a bank becomes the more socially responsible and accountable it needs to become to the community at large because, as the last crisis showed, it was the community that ultimately stood surety for them.
Since then we have had the Libor crisis and, if ever there was a crisis about ethics and values, then this must be it. The irony is that Barclays was founded as a Quaker bank but Bob Diamond when asked by Treasury select committee member John Mann did not know what the founding ethical principles of the bank were (honesty, integrity and plain dealing).  At the recent Tomorrow’s Finance conference David Pitt-Watson in part called for a return to the principles of Alfred Marshall – one of the founders of economics – which was that success came through ‘honesty and uprightness’. Ethics and values are not a new or quaint idea, or a product of wishful thinking, but were what our financial system was original built from. The City is starting to recall that.
But it is hard to say how long this reflective mood will last. The jury is still out, as the debate about what it is that the finance does, how it does it and why it does it continues. The lead argument is that shareholder value and social ethics and values, and profit and corporate social responsibility, can be married together in a combination of both regulations and ethics. Perhaps good regulation and accountable corporate governance can be the glue that marries these partners together and the offspring will be a more prosperous and fairer society, and a financial system that works for the benefit of us all.
Philip Ross

Speaking for small business

Speaking for small business - From Progressonline
by Parry Mitchell

Baroness Jan Royall, the leader of the opposition in the House of Lords, emailed me recently asking whether I could come and join her for a five minute chat.  When the leader summons you, you are prepared for the worst, but I was very pleasantly surprised.  Jan asked me whether I’d like to take on a front bench position shadowing  the government’s BIS department.
I asked whether I could consider it over the weekend , but in truth my mind was made up in two nanoseconds.
For nearly 40 years I had been in the information technology industry, most of it as a serial entrepreneur.  I had created, developed and eventually sold three international IT service companies. I know what it’s like to build a company from a couple of people sitting round a table to eventually becoming a global player.  My expertise comes from the coal face (well not quite the coal face!).
I was ennobled in 2000.  If you are an ex-MP or have been involved in any form of politics beforehand fitting into the House of Lords is seamless, but if you come from a non-political background it’s tough.  I’ve been there over 12 years and now I really know the place well, though I must admit I struggle remembering the names of Cameron’s recent intake.
So why did I take this job as shadow business minister?  Not for the salary – there isn’t any.  And not for the power – in opposition you are impotent.  And certainly not for ambition – I am way too old for that.  I took it because I really do have something to say on a subject I know very well.
My brief is SMEs and my boss is Chuck Umanna – he is less than half my age, but he is terrific and knows his subject.  I am looking forward to working with him and the shadow BIS team.
You have only to look at the statistics to see that unemployment in the UK comes from job reductions in the large company sector and from the public sector, whereas small and medium companies are more than holding their own.  You only have to look at exports to also see that SMEs are doing well and its the large company sector that is struggling.  In a depressed economy it is the SMEs who are nimble and stepping up to the challenge.  But we should be doing more to encourage them.
I refuse to accept that Labour should be anything other than the party of business – we mustn’t let the Tories claim business as their sole preserve.  It is SMEs that will lead the recovery and it is SMEs which will provide new employment – my brief will be to contribute to the front bench BIS team’s thinking and policy making as well as to hold the government to account.
Just a word about the banks.  I speak to many SMEs and despite quantitative easing and despite all the programmes this coalition government have announced, precious little finance is getting through from the banks to the SMEs.  There are many companies out there who have battled through this recession, cut costs, restructured their business models and are now well on the way to recovery. They have done everything right in an economic crisis they did not create, but the banks still treat them like lepers.
The banks failed. The nation bailed them out. It’s their job to perform and we should be holding their feet to the fire.
Parry Mitchell is a entrepreneur, member of the House of Lords and the newest addition to the shadow BIS team

Thursday 19 July 2012

Labour is regaining the trust of British business.

Labour is regaining the trust of British business.
Under Ed Miliband’s leadership Labour have already made huge strides on the journey from the foothills of our dismal 2010 election failure to the lofty peak of returning to power.
On Tuesday another significant step felt like it was taken as Ed Miliband, Ed Balls and Chuka Umunna addressed around 500 businesspeople at Labour’s Annual Business Reception at the Chartered Accountants’ Hall in the City.
One of the greatest signs of the challenge that faced the leadership team was the extent to which we lost the business vote in 2010. Virtually no significant business figure came out in support of a Labour government at the last election and, even more significantly, a chasm opened between the voting intentions of public and private sector workers with those not working under the umbrella of the state much less likely to vote for us.
While Tuesday was by no means the resealing of the deal between Labour and the country’s wealth creators, it was perhaps the ‘end of the beginning’ of that process.
Meeting businesspeople from across the country, from Norwich to Manchester and from Sussex to Yorkshire I was struck again by the extent to which they are keen to give Labour a hearing now in a way that they wouldn’t have nine months ago.
Chuka Umunna laid out the challenges that faced Labour. The party was listening and learning, but more businesses every day were telling him they didn’t want government to get out of the way, they wanted it to get behind them and support them in the way their international competitors could expect. He recognised that recovery would only come from a vibrant business sector working in harmony with government.
Subsequently Ed Balls was on top form highlighting the areas of agreement that exist between Labour and the government on the need for a credible deficit reduction strategy, but stipulating that the disagreement was about how it was achieved. They have created a flatlining economy with cuts that have been too far and too fast, choking off the growth needed. The public and private sector should be in partnership because both will play a part in getting Britain back on its feet. We will reduce the deficit but through a stable programme of business growth not an overreliance on public spending cuts.
Ed Miliband spoke of his recent encounter with Heather Small of M People who had said she was supporting Labour because she had seen the fear in the eyes of her 20-year-old niece, and recognised how many other young people saw their hopes abandoned by the Tory government. He made the case for why tackling the obscene practices that have existed in the banking sector was a resolutely pro business thing to do.
He stressed how his government would look to support business and why recent policy studies around the British Investment Bank and the review of long-termism demonstrated how Labour wanted to be on the side of the vast majority of businesspeople who contributed towards the success of the nation, while delivering on the bottom line.
He also introduced the special section of the Future Candidates programme which was designed to encourage more businesspeople to represent the Labour party in parliament and on councils across the country.
The feedback from attendees was overwhelmingly positive. Despite the fact that many of them would not consider themselves natural Labour supporters, hundreds waited behind to meet the two Eds and Chuka and to push their particular ideas or concerns about how the British business environment was shaping up.
The final word went to a Shropshire-based accountant who told me: ‘I haven’t voted Labour in quite a while, but seeing those three up there, I have to say they looked like they were serious, I really think they’re going to win.’
Toby Perkins MP is a member of the shadow business team and MP for Chesterfield
Originally published by Progress

What is the City for?

What is the City for? It is not just a question that I am posing but is a question that the City of London is asking itself at the meetings of various financial think tanks and conferences. It is just as well because the rest of the country - families, small businesses and individuals are all asking it.
Long Finance rhetorically asks ‘when will we know that our financial system is working?’. Of course we can take today’s position as the false positive, meanwhile the financial industry itself offers technical reasons and procedural solutions to each of its failings and suggest that all these faults can be considered separately and discretely. They consider there to be just a few rotten apples, whereas others suggest that it is now the whole barrel that is rotten.
Does it matter now how many apples are rotten? Whether it is some or all, or whether the system can be technically fixed by a few modifications and a bit of extra regulation? Because at the heart of it is an issue of confidence in the entire financial system and of those who run it. For example, how can we persuade people to put money aside for their retirement in such a financial system? Once people pooled their funds and resources to create mutual organisations, they would save together and lend to each other through their own trusted institutions, whether as building societies or mutual insurance companies. The loss of the Mutuals and their disconnection from their grassroots is significant, while their financial resources and reserves may have been squandered, what it seems was also lost was the principles and ethics that underlined them. The fact is that they existed to collectively serve their members (the savers, borrowers and policy holders) and not to exploit them or their communities. Other institutions though not mutual were also founded on similar ethics, for instance Barclays was founded as a Quaker bank. It was very telling that Bob Diamond didn’t know what the Quaker principles were when asked at the Select Committee.
Now the image - and perhaps the reality - is that the banking system exists to enrich those that run it (the bankers, fund managers and the like), not those that it serves and the only control we have it is not through ethics, accountability or principles but just regulation. Therein is the root of our financial crisis. (Further regulation is not the answer as it favours the large not the small).
Instead of endowing members with the profits from its schemes, the image is that the only endowments done are into bonuses. While it is true that we need to reward people for their effort, why is it that banking and the senior public sector are the only areas where profitability and performance don’t seem to matter?
The banking crisis suggests incompetence; the Libor crisis corruption and rate fixing scam on small business (interest rate swaps) suggests exploitation.
On this evidence the banking system doesn’t seem to be there for us or small business. Why should hard working families entrust their hard earned monies to such institutions? We can all see the advantages of prudent saving for old age and the need for insurance and can work through our dislike of the system to make such savings, but not everyone will. This dislike of the system and belief that they are being ripped off is a strong motivator. There is a need to persuade people that institutions can be trusted to look after their money; that they won’t just use it to enrich themselves, but will use it for instance to grow sustainable pensions for them and in that process they won’t be exploiting the struggling small businesses in our communities. Some say it is not in the banks interests to exploit small firms and the market understands the need to act in a sustainable way. In the book ‘The Price of Fish’ they compare the financial system to fishing and point out that it wasn’t in the fisherman’s interest to overfish and ruin the seas, but they did it time and time again.
How close are we to ruin? The fisherman never knew, do we? Do we need a new ethical and principle based revolution? To me that means more mutualisation perhaps at a lower level; failing that at the very least we should go back and implement those original Quaker and Barclay principles that seem to have been forgotten of ‘honesty, integrity and plain dealing’.

Philip Ross
Also published by Long Finance