Cllr John Clancy has welcomed Birmingham City Council’s economy and jobs overview and scrutiny report dated 5th November, adding further recommendations to the council which may be seen and heard on the TV portal.
The Cabinet Member for Development, Jobs and Skills, Cllr Tahir Ali, set out key statistics relating to local micro, small and medium enterprises (MSMEs) in the local economy, including:
- Micro enterprises comprise around 79% of the total business base in the city (-10) and SME businesses (10-249) comprise approximately 20% of all businesses.
- Micro, medium sized businesses account for 99% of all local business units in Birmingham;
- It is estimated that micro enterprises and SMEs account for 57% of Birmingham’s annual economic output.
Stable long-term business support needed
The report cited Lord Heseltine’s comment that the British approach to business support is constantly changing as organisations, programmes and services come and go, leaving little long-term legacy (4.2.6). This approach was said to compare unfavourably with other advanced industrial countries which have developed a strong and stable business support infrastructure.
Cllr Clancy noted that on page 25 of the report it was made clear that the dominant way of funding small and medium businesses is still by bank overdraft and has been for 50-60 years, commenting that London-centric banks don’t like to engage with business folk in the Midlands and the North and prefer to create financial instruments for big business in the City of London. As Cllr.Timothy Huxtable says, there has been a market failure in respect of access to finance for SMEs.
Various government schemes which had failed – ending up by lending less than usual – were listed; the exception being the Help to Buy scheme, welcomed as much more familiar practice by banks, which might well create another housing ‘bubble’
Cllr Clancy acknowledges the success of Finance Birmingham and sees it as the big way forward: “We should try to get big funds into Finance Birmingham for direct equity investment into SMEs across the city”. He added that he would rather see the council borrow £60m for this purpose rather than for the LEP.
There is £220bn in our local government pension schemes – in total, the 5th biggest pension fund on planet – but most of the wealth created here is going out of the region to London and down the economic pathways of the world. That pension money could be brought back and invested in the region’s small, medium and micro businesses.
The regional pathways to enable that to happen must be created. It could be through municipal banks, it could be through Brummie bonds.
His conclusion was applauded: “Let’s start to back Birmingham businesses, let’s be a city of a thousand small, medium and micro sized clusters.”