Next Wednesday morning, EEF are hosting a breakfast seminar on financing the future growth in manufactuirng.
There was a not so helpful comment piece from a city financier - Nigel Rudd - in the FT today on the very subject.
His concern was about finding capital to invest in small businesses, and so is hopeful that a government sponsored programme to attract bank and pension fund capital could help solve the problem.
But while his piece taps into a rich vein about small business finance, he fails to set out why a new pool of capital from bank and pension funds would be any more successful than the current hodge-podge of government-sponsored venture and enterprise capital funds. Neither does he state what the investment criteria and the prospectus for this new pool of capital would be.
Throwing big pots of new capital at the seemingly intractable problem of small business finance won’t help unless we take a more strategic, longer-term view of our investment problems.
Yes, we need a better economy. But given the depth of the recession, it won’t build itself. Although tough choices on public finances could curtail growth in the coming years, we can soften the blow by investing in productivity growth: in new technologies that solve our very serious long-term problems, in growing businesses than can generate wealth and jobs and in much-needed infrastructure improvements.
But over the past decade, the funding gap for longer-term investments has widened. Longer-term, riskier investments in innovation are more likely to be funded by US investors than UK ones.
Buy-outs and flipping mid-sized businesses took priority over funding truly transformational longer-term growth by smaller businesses.
And a succession of reviews on transport, planning, housing, digital and energy infrastructure risk gathering dust because of a lack of long-term capital investment.
Our economy needs to move beyond its recent short-termist, debt-fuelled growth. We should start by providing the funding for these longer-term investments that don’t fit the narrow risk-reward profile of current capital markets. To ensure this finance goes further, it should be backed by non-executive level advice and guidance. This should be the primary purpose of any government sponsored National Investment Corporation or Bank for Industry.
But unless we’re clear on what we’re investing in and why, any new pool of capital isn’t likely to be the silver bullet solution Mr Rudd suggests it will be.