Evans calls for funding shake-up

MANCHESTER financier Malcolm Evans has labelled the UK a nation of “bad capitalists” and warned that we will fall further behind our international competitors without radical new action on funding for small and medium-sized businesses.

In light of ongoing poor balance of trade figures, a weak recovery and continued falls in bank lending, he is campaigning for reforms to the way business finance is handled and has written a paper called Building Britain’s Balance Sheet which sets out his case.

Mr Evans runs the UK Manufacturing Accelerator which will support manufacturing businesses with equity finance. He expects to close its first external investor round within the next few weeks.

He believes there is a lack of commitment from politicians around business growth and says “naive assumptions” have been made around the channels which allocate capital to business.

Mr Evans argues that government cash channelled through the Regional Growth Fund is often earmarked for “safe bet” public sector bids or those from large corporates. And he believes European Union-backed funds are “chronically under funding” growth businesses.

“At least half of the just-announced £80m for the North West [from the Regional Growth Fund] is destined to end up in various schemes instead of going into real business,” said Mr Evans who has based his research on interviews with business leaders, politicians and other organisations over the last two years.

He added: “A core systemic problem of business funding is worsening: whilst US business is funded two thirds on equity and one third on debt, the opposite is true in the UK. With no signs of UK bank lending easing, despite the government’s Funding for Lending Scheme, the already unhealthy over-reliance on debt is now exacerbated by a debt drought.

“Add to this that the banks are now concentrating much more on asset backed lending and trade cycle funding to the exclusion of growth capital.”

He is skeptical of the soon-to-launch Business Bank and wants “co-ordinated action” on national enterprise culture, an open debate about the banks’ role, a focus away from schemes in favour of real businesses, and more seed capital.

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