Jeremy Bosk, Whatisname and Anonymous 1

We are getting to the nub of this issue. High Street banks can too easily pull out the rug and we need a US style process that puts a hold on this and enables companies to continue trading to find a way back to stability. The Japanese have done this through the Keiretsu link as they hate to lose face.

Good medium sized businesses and start-ups are having one hell of a time getting funding from banks to grow or even maintain their cash flow. VC's are difficult to deal with and could not bring enough cash into the equation to push UK Ltd forward. Their motive is to maximise profits by selling out their positions within 3 years - they have no long term view and normally invest just a few £100k-£3m for a 30-40% stake in the business; so its small beer when we are talking about significant manufacturing businesses employing thousands.

An Industry Bank(s) with a focus on specific sectors might work, but this would depend on ensuring it did not operate like the VC market. The devil would be in the detail but it could be made to work if the political will existed. A bank like this would have to take a long term position in the businesses it funded and provide additional management resources to ensure its investments did not founder. The bank would have to provide management added value as well as cash.

Tax reliefs for start-up businesses would be welcome as would more tax incentives for capital equipment - but not on a 20-year reducing balance basis - a 5-year reducing balance basis for sums up to £5m would be better for companies engaged in new technologies like NANOCO..

I am less enthused about grants as this can be distorted by political expediency and is enveloped in regulation.

Jeremy

Your comments about tax releif are correct of course, but in the context of existing companies, tax reliefs can be a very useful way to encourage re-investment, especially if they can be rolled over several years.

Start-ups are a different matter and I favour equity over grants because these grants are usually small. I started my own consulting company with a grant of £1200 but still would have done so without it. At the other end of the scale, I sat on the Government's Selective Financial Assistance Group in the late 70's and grants running into 8 figures were sometimes given to multinational corporations to bribe them to stay in the UK or invest in a politically sensitive area such as South Wales. These discussions are still covered by the Official Secrets Act.

This is surely not the way forward. These grants were never focussed on technology but always on cost-per-job and political benefit. The European limits on this probably remain but in my experience the truth was carefully edited.

In the end an Industrial Investment Bank with real interests in say nanotechnology, green energy and another discipline would be a better long term bet as it could raise its own finance, get large sums of government grant aid money to manage and would provide essential back office links across like minded companies. In this way we could encourage the development of business that could employ thousands.

Some of he decline in manufacturing employment is down to reclassification e.g. a works canteen was once run by the company. The cooks were employed by the company and classified as manufacturing employees. Nowadays it is outsourced to the likes of Sodexho or Compass and reclassified as a service industry. Same people, same job, different industry. A great many other "non core" functions such as payroll, HR, property maintenance, security... you name it are now often outsourced and reclassified as services.

This is not to deny that whole swathes of manufacturing have genuinely disappeared, just a call for cautious interpretation of the figures.

There has apparently been a similar debate at the Economist:

"This house believes that an economy cannot succeed without a big manufacturing base"

http://www.economist.com...te/debates/overview/207

Interestingly, the debate has been sponsored by Siemens.

Anonymous 1 needed this 'Off the Record'

Jeremy
Seems that The Economist debate reached similar conclusions to our debate.
Prof Eman