Taskforce to boost finance options for businesses
Progress on implementing the taskforce's recommendations
A breakdown of progress made (November 2012) in implementing each of the taskforce's recommendations is available for download:
Progress report on implementation of the Breedon review (XLS, 393 Kb)
Government response to the non-bank lending taskforce report
On 20 March, the Government published its response to the report by Tim Breedon's non-bank lending taskforce, looking at alternative sources of finance for UK businesses.
The Government welcomes the taskforce’s report and agrees that more can, and should, be done to build alternative markets and unlock new pools of capital. The Government agrees with the analysis set out in the report, welcomes the commitment shown by those named in the report in taking forward the recommendations, and commits to work with businesses and the broader finance community to address these important objectives.
A copy of the full Government response to the report (PDF, 74 Kb) is available for download.
Proposals to widen business access to new and alternative sources of finance were published by the independent taskforce on non-bank lending in March 2012.
The taskforce, chaired by Tim Breedon, CEO of Legal & General plc, was commissioned by the Government to examine a range of alternative and sustainable finance sources, particularly for small and medium-sized enterprises (SMEs).
The report, Boosting finance options for business (PDF, 1.0 Mb) , can be downloaded.
The main recommendations from the taskforce’s report to Business Secretary Vince Cable are:
- The creation of an alternative point of contact to the banks for information about raising finance: a second port of call. Industry to establish a kitemarked Business Finance Advice network.
- A single brand and delivery agency to increase awareness and enhance delivery of the government's range of SME finance programmes drawing on international examples such as Germany's KfW.
- Opening up access to capital markets funding for smaller companies through the creation of a new aggregation agency to bundle SME loans.
- An in-depth feasibility study led by AFME is the first step in this process. Programmes also to standardise and promote private placements, mezzanine and export finance, and encourage retail investment.
- Stimulation of the retail investor base for public bonds;
- Markets for innovative products including mezzanine finance and peer-to-peer lending to be considered for investment by the Government's Business Finance Partnership.
- Reinforcement of prompt payment, led by companies in the Government's supply chain. Support for greater use of invoice discounting to fund payment gaps, including use of electronic trading platforms.
- Encouragement for large businesses to utilise supply chain financing to invest in smaller suppliers.
- Government and industry to review impact of international prudential regulation such as bank and insurance capital rules on the supply of SME finance.
Business Secretary Vince Cable said:
“Tim Breedon’s taskforce has brought together industry, investors and advisers to provide evidence and ideas on increasing the range of finance sources available to small businesses. I thank them for their hard work and detailed recommendations, and I hope this will represent a turning point in business finance in this country.”
Tim Breedon, chairman of the non-bank lending taskforce, said:
“There is compelling evidence that access to finance is expected to become more acute as business confidence and growth returns, whilst continuing bank deleveraging is likely to leave a significant funding shortfall.
“Whilst there is no silver bullet to addressing this issue, we have made a number of recommendations which I believe will collectively help open up alternative financing channels for UK SMEs.”
The report outlines that anticipated growth in demand for finance as the economy recovers, and the expected constraint on availability from banks and other sources, could create a finance gap for businesses of £84 billion to £191 billion over the next five years.
Bank lending is by far the largest source of external finance currently used by businesses, but the taskforce believes there is significant potential to develop both the demand and supply of non-bank lending to match the financial landscape of countries like Germany and the US.
The taskforce focussed on businesses that are currently unable to access public capital markets traditionally used mainly by large companies. It recommends a number of measures to help break down the barrier to greater development of alternative sources of finance.