Letter to the Editor

I am occasionally asked by the ‘Evening Standard’ to submit ‘Comment’ pieces.

Please find below a letter sent this week.


The Editor

Evening Standard

5 August 2011


Dear Sir

Lord Oakeshott, who seems to know the contents of the final Sir John Vickers report on banking well before its publication on 12 September 2011, is talking wildly about the end of the Coalition (thank goodness) if “Cameron fails to act on banks.”

I doubt if the Vickers report will make much difference even if its proposals are enacted. The risks to the banking system seen in the Gordon Brown years are long gone. The vast lending to property speculators will not happen again for at least twenty years.

The real risk now is to overdo the antidotes to risk. My view will not be taken seriously because it does not follow convention. Its only merit is that as a corporate financier working globally with ‘small’ companies, I know exactly why growth in the UK has stalled and what is needed.

In 2006 I raised £2.8 million for Quercus Publishing Plc, which was then an embryonic publishing house with just a few titles. Now, five years later, having discovered ‘The Girl with the Dragon Tattoo’, they are flying high, making returns for their investors and employing more and more people. Their CEO, Mark Smith, is the 2011 ‘Publisher of the Year’.

That deal would not happen today. The system would not support that type of higher risk deal. The early investors in Quercus might have lost their money. “This is terrible” would be the cry of the establishment. The regulators dream of a risk market for smaller companies without risk. Simple. Close it down. That is what the Coalition government has achieved.

There are three main requirements if we are to provide a meaningful stimulus to Britain’s smaller businesses:

1) Increase Government support. This is because there is risk and it only Government that should shoulder it. I would advocate a subsidise system of competent advice which newer business people need and cannot get. The Department of Trade should work much more closely with the banks (most liaison at the moment is pure posturing).

2) The banks must restore the availability of the working overdraft. The banks are doing virtually nothing for Britain’s smaller businesses that involves ‘risk’. One of the biggest problems is the management of cash flow. Every day million of productive working hours are lost as owners dash around trying to pay their Government taxes (and God help you if you don’t). A solution is a flexible overdraft system which caters for unforeseen events (a major debtor delays in paying). Yes, the banks would experience some bad debts but many of their other customers would start to grow.

3) The Government and the Regulators must urgently look at the restoration of equity funding for smaller businesses. Put bluntly, there is virtually no ‘risk finance’ available in the London Markets. The AIM and PLUS markets are dead with just a few ‘cash shells’ and foreign and speculative mineral companies appearing. The small-cap brokerage market, which is the pivotal engine in this sector, has been almost closed down. There were some horrible abuses in the past but the crooks are now hiding in their Mediterranean villas.

This is a new era of austerity, better management, better regulation and better markets. The correction has gone too far. Britain’s smaller companies are hurting.

David Cameron justified making billions available to the Irish Government “because they are our friends”.

Well Prime Minister, Britain’s smaller businesses are desperately in need of a friend and it is unlikely to be Lord Oakeshott.


Yours faithfully,


Tony Drury


Axiom Capital Limited

Please leave a comment - we all like them