As we move towards the General Election and a probable Conservative majority of perhaps 20 seats (Mandelson might increase that to nearer 30 seats if he maintains his dire performances) it is worth briefly looking at the key events for Enterprise Britain over the last few weeks. This allows us to consider the future under a Conservative Government.
The Budget on 24 March produced nothing of real merit although the doubling of Entrepreneurs’ Relief on capital gains tax to £2m was sound. As much of the Finance Act cannot be passed before the Election we have to wait to see what happens to this proposal.
There is to be a £4billion UK Finance for Growth Fund which is now to be called the Growth Capital Fund except it isn’t. It is mezzanine debt (with a part conversion option). Hold your breath.
Now we have Lord Sugar heading the proposed Government’s Small Business Credit Adjudicator which will name and shame lenders (Mandelson’s words).
Even the director-general of the CBI (Richard Lambert in the likely event you can’t remember who it is) was stirred to say it is total and utter nonsense (“it is quite unworkable and pure political rhetoric”).
Britain’s banks will never change. They do not make money out of enterprising businesses and they have absolutely no intention of risking their capital apart from a few irrelevant political gestures.
No banker has ever earned a bonus by supporting enterprising businesses
Whilst BBC2’s ‘Dragons’ Den’ is great entertainment and allows Peter, Theo, James, Duncan and Deborah to inflate their ever growing egos and bank balances it is also dangerous. The possibility exists that as the economy recovers and private investors release their cash balances in their search for greater returns they will see themselves as potential dragons.
Many will try to replicate the Dragon’s approach and the result will be that over the next 2/3 years the con men will get going and there will be fraud everywhere.
As one example Peter Jones and Theo Paphitis took stakes in a satellite navigation system for skiers only to discover that the promoter had tried before and let angry creditors in his trail.
Taking equity stakes in enterprising businesses is very high risk and the Dragon’s Den programme misses the regulatory procedures that should be followed.
It may end in disaster.
Predicting the past is the easy bit. The future for enterprising businesses under the new Conservative Government? The debt situation and the need for cuts will so occupy George and Ken that for the next year it is likely that enterprising businesses will have to grind on unsupported and unloved.