6 minute read
NACFB: The next level?
The next level?
Funding a more united kingdom
Norman Chambers Managing Director NACFB
In late March, the NACFB team and I met for a short workshop, part of which was titled, ‘What makes an NACFB Member?’. The purpose of the task was to identify greater membership commonality, highlight the unifying threads that bind brokers, and to shine a light on the shared drivers that motivate our Members to succeed. I’d be betraying no confidences to reveal that the task was incredibly difficult. For you see, as obvious as it may sound, no two NACFB Members are alike.
And therein lies the strength of the trade body, demographically speaking, the membership is as diverse as the businesses it funds. From property brokers based in London and farming machinery brokers in Derry, to Oxford-based medical equipment specialists and working capital experts in Cardiff, the NACFB remains proudly a broad church.
Delving a little deeper though, beyond locations and product specialisms, the personalities that sit behind brokerages do however share common traits. From the hundreds of firms I’ve spoken with I’ve gained a clearer understanding of what drives commercial finance brokers. I can say with confidence that core values of fairness and moral fibre combined with an unwavering belief in a level playing field lie at the very heart of successful Members. Such values are complemented by faith in the substantive; a substance of transaction, substance in partnerships and, above all, substance of character.
Which is why when the government announced it was to finally publish its Levelling Up white paper, our membership quite rightly expected to be met at least halfway in their efforts to empower UK SMEs. Brokers the length and breadth of the country have shared with me the need for well thought out policy measures that help to level the funding playing field, aid free market enterprise, and provide genuine substance. Has the white paper delivered on those expectations? Let’s find out.
Scaling red walls
In the aftermath of the Brexit referendum and the 2019 general election, the regions outside of London and the South East, and particularly in the North of England, have turned into political battlefields. ‘Levelling up’ the condition of these areas has duly become an urgent challenge for the government. But the concern is far wider than this. These areas also contain much social deprivation, especially in health and education. There is indeed a moral imperative to level up: it is appalling that the economic divide between north and south in today’s Britain draws comparisons with that between East and West Germany before the fall of the Berlin Wall, with its 18-year gap in healthy life expectancy. Above all, the UK has exceptionally large gaps in regional productivity. Raising the productivity of less productive regions could deliver big national gains. Boris Johnson and Michael Gove have described levelling up as a moral, social, and economic programme across the whole of government. It is within this context that Gove’s white paper on ‘Levelling Up the United Kingdom’ enters the picture. In short it contains some thorough analysis, clear aims, and sensible policy steps. The bad news is that many of the goals are likely to be unachievable and the plan, however well intentioned, is financially under-resourced.
Gove’s proposals are wrapped in quite an extensive document, providing history and analysis of the causes of economic and social disparities across the UK. Plans to address and narrow these differences are introduced, covering numerous areas of government structures and public policy. Some elements are new, while others are existing policies. The paper also sets out areas on which further policies will be announced. The white paper argues that a “fundamental rewiring” of the system of decision-making, locally and nationally, is required to address geographical disparities. To do that, the government is introducing a new approach based on five ‘pillars’. This includes 12 medium-term ‘missions’ reforming central and local government decision making and improving local data. The intention is for this “long-lived programme of change” to “embed levelling up across all areas of the UK government, local and national”, in partnership with the private sector and broader society.
The white paper’s 12 missions have been considered by some to be little more than a propaganda exercise. They range from achieving more first-time buyers in every area, to nationwide 4G coverage, to the somewhat loftier promise that every area will have a globally competitive city by 2030. With little new money, the Institute for Fiscal Studies has criticised the 12 missions as too broad and unlikely to succeed. But Gove’s decision to make them legally binding targets, overseen by an independent council, are an important device to focus Whitehall’s attention.
The baby and the bathwater
It’s an unpopular statement to make, so I’ll whisper it quietly: levelling up the UK should not mean levelling down London. Last
month, EY published findings that said the government will fail in its ambition to narrow regional inequalities by pushing to stimulate economic activity across the UK at London’s expense. The capital’s output shrank 3.6% during the pandemic, a steeper fall compared to other regions. However, by 2025, London’s economy is forecast to be 8.9% larger than it was before the pandemic. It is also predicted to regain or exceed its share of the country’s entire output by the same year. EY’s report warned the government’s levelling up plans will not succeed if they choke the capital by shifting activity to other regions.
The idea of levelling up is bedevilled by fears that it will simply shift taxpayer money from south to north. Already, the National Audit Office is warning that billions of pounds could be wasted by the new towns and levelling up funds. The acid test will be whether areas which are a net drain on the exchequer can become net contributors.
On our doorstep
There’s nothing new in politicians pointing to the north-south divide, but the UK has not always led the way in this inequality between places. Most countries had higher regional gaps than the UK for the majority of the 20th century. Indeed, the UK’s productivity gaps actually fell post-war and their surge is only a relatively modern phenomenon.
We also know countries can perform very differently. Since reunification of the wealthy West and poorer East Germany, a closing of huge regional gaps has been a national priority. Partly as a result, such gaps have come down since 1990, as Britain’s have increased. So, the lessons of history are that we can do better. But no one should pretend this will be easy – Germany has invested about €2 trillion in the east over the past three decades.
The government’s vaulting ambition should be applauded, but I am reminded of earlier lessons on what NACFB Members are seeking. Our old friend substance. However noble the intention, a plan without sincere will or sufficient funds to implement will remain forever that, a plan. Truly levelling up the United Kingdom is the task of decades, not soundbites. Plans must be substantive and tethered to genuine reality because that’s what NACFB Members and UK SMEs deserve, regardless of where they’re from.
