Mr Cameron at the Convervative Party Conference. Photo: www.conservatives.com
The Conservative Party Conference gave the Prime Minister the perfect opportunity to act for business – but it was left to the Chancellor to come up with the ideas.
Small businesses in the UK face a unique and troubling set of challenges. With the economy on the rocks, and ever more ominous rumblings coming from Europe, business owners are understandably nervous.
Last week, Britain’s SMEs were looking to the Conservative Party for reassurance. The Tory Conference was the perfect opportunity for the Prime Minister to assuage some of the concerns that the business community has been nursing, and set out some new plans to help kick-start the ailing recovery.
Mr Cameron’s speech was heavy on motivational vim – but sadly rather light on concrete proposals.
The Prime Minister spent much of his speech setting out what he sees as the causes of the renewed slowdown. We are in a “debt crisis”, he said, instigated by “too much borrowing, by individuals, businesses, banks, and most of all, governments.”
This may or may not be true. But today, with widespread and genuine concern about a return to recession, and with further talk of the need to bail out major banks, small business owners need more than reasons – they need solutions. The Prime Minister’s speech contained just two policy suggestions. Disappointingly, neither related to business.
For SMEs, the most promising announcement from the Conference came not from the Prime Minister, but from the Chancellor. In his speech George Osborne set out plans for a new “credit easing” scheme, which will effectively see the government invest directly in businesses that are otherwise struggling to secure credit.
It is thought that the scheme will initially be available to firms that already have experience in raising money through the bond markets. But on Newsnight Transport Secretary Philip Hammond suggested that smaller firms would eventually be able to benefit from credit easing – and that the government’s investment would be determined by demand.
There are a few outstanding questions that need addressing. For example, who will decide which businesses get investment? Who will determine the risk involved? What guarantees are there that the smallest businesses will not be overlooked?
Broadly, though, schemes like credit easing seem to be a step in the right direction. If the government can’t force the banks to lend to businesses, then credit easing may turn out to be a reasonable alternative.
The economy is entering a new and dangerous phase. While innovative, agile businesses can still thrive in these challenging conditions, they need the support of an innovative, agile government. In the coming weeks small business owners need fewer soothing speeches – and more concrete announcements like credit easing to help them ride the economic wave.
