Portfolio Business
little appetite for wholesale change – Business Gateway is generally fit for purpose and a well recognised brand that should receive further investment in it, rather than any diminution of it. Te next phase should be about making important modifications and increasing the quality and impact of support without reducing its reach.” Te report said Business Gateway was
well regarded for start-up businesses, and is developing as a service for existing businesses. Market segmentation – although “not perfect” – allows for prioritisation. More recognition of locally significant businesses could be made. Better communication between Scottish Enterprise and Highlands and Islands Enterprise and local authorities should certainly occur, notably in connection with companies progressing to account management and this process has started. Te lack of formal aftercare risked reducing the overall effectiveness of the service, which ought to be linked to an increased focus on start-up survivability. Te new contracts must be built around giving firms the support they need to sustain and create employment, according to the Federation of Small Businesses (FSB) in Scotland. Colin Borland, the FSB’s Head of External Affairs in Scotland, said: “What [the] core services are and how they are delivered is going to be vital to Business Gateway’s future success. Today, there is no bigger issue facing us than getting more jobs
Beyond the headlines Banking reform
The banking industry is set for a major overhaul under proposals unveiled by the Independent Commission on Banking. A ‘retail ring-fence’ will protect everyday high street
banking services, such as current account deposits, from riskier investment divisions. Ring-fenced banks would be separate legal entities and have an independent board. The commission also wants banks to hold at least 10 per cent of equity capital to act as a buffer against potential losses or financial crises. In addition, the banks should have a so-called loss-absorbing capacity of between 17 per cent and 20 per cent of its total assets, including the equity capital base. To increase competition, the commission wants
a current account redirection service to be set up to assist customers who want to switch accounts, which should be set up by September 2013. It said customers should be able to switch accounts within seven working days. The commission has recommended that the
banks are allowed until early 2019 to implement the reforms. This would be in line with the time the Basel Committee on Banking Supervision has given for European banks to increase their equity capital levels. But it said it would be beneficial, not least for financial
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www.holyrood.com 19 September 2011
markets, if the Government could establish its policy by the end of the year – and pass the legislation before the 2015 general election. It is estimated that these reforms will cost the
industry between £4bn and £7bn and the wider economy, between £1bn and £3bn. Banks, business leaders and some economists
warned significant reforms could upset an already fragile economic recovery. Dr Neil Bentley, CBI deputy director-general, said the Government must
into the Scottish economy. We cannot build a sustained recovery while unemployment, and the fear of it, is draining consumer and hence business confidence. “We are seeing headline employment figures beginning to move in the right direction, but the claimant count is still up, and with a reduction in public sector headcount on the cards, there’s a real need for more private sector jobs. We know that it is our small
FSB show that small businesses vastly prefer one- to-one business advice over seminars and other group events. Tirty-seven per cent said one-to- one was their preferred service delivery method, whereas only 8 per cent cited events or seminars. However, the FSB has also cautioned that, whatever core services are included in the new contracts, they must have sufficient flexibility so that they can be adapted as economic circumstances change over the contract period. Borland pointed out that the
“Backing for businesses to retain and increase their workforce must be the cornerstone of enterprise support”
businesses which can and will create them, but, on the scale required, they cannot do so alone. Backing for businesses to retain and increase their workforce must therefore be the cornerstone of enterprise support.” Prioritising job retention and creation, the FSB stressed, would mean ensuring small businesses who are looking to recruit can access the sort of one-to-one support previously only enjoyed by those “who hit arbitrary growth criteria”. Figures from the
targets which the Business Gateway contractors were given, “were set at a time when the economy was buoyant. However, the UK economic
downturn started almost as soon as the Lowland Scotland contracts became operational making most of the original targets unrealistic and out of step with the economic environment.” He added: “We don’t know what the economic landscape will be like in a few years, so we need to make sure that these new contracts allow us to respond quickly and effectively to whatever lies ahead.” Te Scottish Parliament’s economy committee is undertaking an inquiry into the service (see panel, page 71).
“rigorously examine’’ how and when to implement the proposals, otherwise they risk damaging businesses and threatening growth. He warned the proposals would mean British banks were tougher than the Basel rules, which would put them at risk from overseas competitors. Prior to the publication of the report, forecasters
at Ernst & Young warned the reforms could knock 0.3 per cent off the UK’s economic growth as it will increase the cost of lending to businesses. Banks may have to slash business lending levels to improve capital holdings. The reforms will potentially reduce profits so banks are likely to put up charges in order to protect their margins. The banks’ response to the report was muted.
Lloyds said it would be assessing the full implications before making a comment. The British Bankers’ Association said it was vital that the full impact any further reforms will have on the economy, the recovery and banks’ ability to support their customers in the UK is understood. Previously, bank chiefs warned of increased risk and costs to the system. HSBC chief executive Stuart Gulliver indicated potential job losses in the UK would depend on the ICB’s findings. It is understood he thinks that the bank’s corporate lending division would have its ability to lend severely reduced if UK retail deposits are separated from its business lending arm. Barclays chief Bob Diamond said ring-fence would not be his “first choice’’ but was working with the ICB on the assumption one would be put in place.
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