The big news on Monday was how the Government’s Project Merlin had failed to meet its lending commitment to small business.

Although in the grand scheme of things the shortfall of £1.1b was just short of the £76b target pledged by the big four banks, it’s still a huge sum of cash, access to which would no doubt have made a significant difference to many thousands of SMEs. 

Here’s a thought though: would that figure have been any less – and the target maybe even achieved – had the relationship between the banks and small business not been so fractured?

It’s quite possible that if banks had been lending in a more considered way, with each application determined on a case-by-case basis, by a local decision maker, there’s a very good chance the answer would be yes.

The acrimonious breakdown of relationship between lenders and business, and thereby the communities that they serve, may have started pre-credit crunch, but the crash has certainly accelerated the situation.  

Banks have been systematically pulling back from the communities they’ve been serving for years, taking the ‘local’ out of banking in favour of centralised hubs, happy only to deal with their customers at arms length via the Internet or telephone.

Branch closure figures show more than 2,000 branches pulled down the shutters permanently over the past decade. Go back even further to the early 90s and the number is an eye-watering 7,500 branches – all gone for good.

It’s time to say enough is enough though, which is why this week we have partnered with the Campaign for Community Banking Services (CCBS) to address this matter with Government, which must act without delay to address the situation.

The banks genuinely need to start thinking locally again, and consider branch sharing as an option. Competition between banks is clearly important, but branch sharing shouldn’t be seen as an anathema to it.   

CCBS figures show 414 rural communities in the UK have just one bank left, with 190 of these completely unprotected by banks’ questionable ‘non closure’ pledges.

While those qualifying as ‘last bank in town’ are currently protected to some degree by this, the pressure to close in dual and multi bank communities, in order to avoid being last, has increased.

Banks are an important part of the high street. In many cases they are regarded as a ‘linchpin’ business key to a high street’s appeal for both traders to do business, and for shoppers to visit.

Can we really afford to see the high street eroded still further?

Project Merlin, the agreement between the Government and four of the major high street banks to promote business lending to the tune of £190 billion, concludes on Monday.

There will be plenty in the media over the coming days about whether or not the banks in question – Barclays, Lloyds, HSBC and RBS – have come good on their pledge, which was supposed to include £76 billion in loans specifically for SMEs.

We won’t have a clearer picture until 9.30am on Monday morning when the scheme’s full and final figures are made public, but already there’s speculation all but RBS will say they’ve achieved their aims, although RBS did set themselves the higher of two lending targets.  

Earlier results from previous quarters suggests the banks must have significantly increased lending for this to have happened – which has to be positive news. We know despite pledging to lend £19 billion in the first three months of the scheme, that the figure was actually £16.8 billion a good two billion short.

But anecdotal evidence suggests some small business owners may beg to differ with the banks’ position, and our members also routinely tell us that getting their bank manager to agree on finance remains a ‘challenge’ in many instances.

That said, bank lending will never be as free and easy as it is now notoriously remembered for – that party is long over, as is Merlin. It’s time for business, as well as the banks, to look to the future. The banks will continue to lend as they see fit, and we will continue to lobby for cheaper credit, more investment in regional branches, and the restoration of lending powers to local bank managers.

We have repeatedly said over the past number of years since the credit crunch that there has been a widening knowledge gap when it comes to lenders’ ability to gauge small business risk. We want to see banks invest in regional services and hand decision making powers back to local branch managers who are best placed to make key lending decisions based on realistic assessments of individual businesses. We must move away from the over-centralised, tick-box mentality we are seeing now.

The requirement for affordable funding is not going away either. We know from our own research that many small businesses resort to ‘borrowing’ by using credit cards and even loans from family members instead of visiting their bank as was once the case. This is far from ideal for most small businesses.

The question we perhaps need to ask now though is, do we want banks given new lending targets to make sure the flow of cash to small business continues?

Earlier this week the Government announced its intention to reduce the educational value of more than 3,000 vocational qualifications.

Headlines about fish husbandry courses worth the equivalent of 4 GCSEs, and schools pushing pupils to enrol on courses simply to boost league table results were abound.

But while the Government may be right to try and draw a distinction between the academic subjects – such as the sciences, languages and maths –  and those courses which are aimed at the less academic pupils, it would be profoundly wrong to conclude vocational courses are of less worth or are not as important.

For some pupils vocational training is the only sensible option. Why steer a pupil with absolutely no appetite, skill or chance of passing a language course towards taking GCSE French, for instance. Far better that pupil, who has an interest in say hair and beauty, to do a related course, and one which would make them far more appealing to a future employer. An E grade in GCSE French won’t teach anybody how to wield a pair of scissors.

Most employers would acknowledge that there is more than one route to a successful career than simply academia. And where would we be if the nation’s schools churned out a never ending stream of scientists, mathematicians, and poets. Hair will always need to be cut.

We say the schools’ curriculum needs to be broad, rounded, and based on industry’s needs and requirements – something often said by our members. That means more collaboration and better dialogue between education providers and industry – something that is currently lacking to the extent needed.  

The Government must also be careful not to over-egg its policy on vocational content in the National Curriculum in the sense of more is better. We only have to look to place such as Germany to see vocational courses are vital to industry.

The Teutonic model has seen a big emphasis on vocational courses for their school and college pupils, students of which then naturally feed into the country’s world famous apprenticeship programme. It’s no coincidence Germany arguably boasts the finest motor manufacturing industry on the planet.

So what’s it to be: a one size fits all policy, or a sensible spread of courses and options which takes into account the needs of both pupils and employers?

The Prime Minister was in Leeds on Monday to announce the Government’s latest scheme to give small firms and start-ups a helping hand.

We were at the event to see David Cameron launch the ‘Business in You’ campaign, unpinned with the announcement the Government is to to open up vacant or under-used workplaces to SMEs at discount prices.

Just days later came the news that the UK’s economy has shrunk by 0.2% in the three months to December 2011. There’s absolutely no question that whatever can be done to help must be done as the nation teeters on the brink of the much feared double dip recession – although that’s by no means a certainty.

As part of the Business in You scheme, the Government has outlined plans to offer more than 300 governmental buildings which are sitting idle and gathering dust to fledgling firms for one year at super-low rates.

The hope is that entrepreneurs will be able to use the cheap office space as a launch pad to get their business off the ground, with a full 12 months to gain momentum and establish themselves.

This subsidised perk will only be offered to small firms, and will be managed by specialist business ‘incubation organisations’ which will allocate space.

This has been made possible because of Government spending cuts in the public sector, meaning many buildings are either empty or are only partly occupied. The rent paid will help boost treasury coffers – so it’s a win-win situation.

The goal now is for the Government to get the message out there to the people who really matter. To help them do this the ‘Business in You’ drive will see workshops being held around the country offering free advice on how to go about signing up, as well as information on other more common issues faced by those entrepreneurs with a savvy business idea, but little idea on how to take it forward.

The workshops will be advertised in radio, newspaper and billboard adverts throughout the year. 

Start up businesses need all the help they can muster in order to grow and flourish, particularly in the current climate. So it’s excellent to see the Government rolling its sleeves up and getting stuck in to the issue. 

 We all know that for the UK economy to move forward and lift the country out of the doldrums there needs to be serious growth in the private sector.

This is essential for the economy to rebalance itself with an emphasis on SMEs leading the charge forward. Britain has a rich history of entrepreneurship and we need to encourage more of that for that charge to see positive results.

Imagine the outcry if the Government increased fuel duty by 50 per cent. 

Now imagine instead of fuel the ‘commodity’ is postage stamps – two rather different entities, granted – but both essential items which most small businesses have no alternative but to use.

This is exactly what could happen if Royal Mail gets its way with the industry regulator, Ofcom. Last month the company submitted plans to have decision making powers on pricing transferred from the regulator to Royal Mail executives. 

It would allow the company to go ahead with radical price hikes which could see the price of a second class stamp rocket by as much as 50 per cent. That’s potentially a second class stamp costing 55p as opposed to 36p now  – a huge increase by anyone’s standards.

Other proposals being considered are no-limit increases for the price of first class stamps until as far ahead as 2018, which again would not require Ofcom approval.

Royal Mail is in trouble – it’s no secret – their letter business last year making a loss of £120 million. It says the extra cash from pushing prices up – again – will help it make the major reforms required of it.

And what kind of improvements in service can we expect to see if postal charges go north? Will the Royal Mail be reintroducing second post – a concept few under the age of 30 will be familiar?  Will they begin treating first class post posted on weekends as genuine first class items and not just second as is currently the case? Or will they be lauding first class post as next day delivery?

Answer for all three – very unlikely.

Royal Mail wants to increase costs purely to balance their budget, with no outlined idea on how the level of service for its customers would be improved.

We know business is the core client area of the Royal Mail today, so it’s therefore quite clear where any substantial price increase in the cost of sending letters or packages will be felt the sharpest. That’s why we’ve told Ofcom that agreeing to Royal Mail’s demands would simply create another cost barrier for small firms who can ill afford more price hikes. 

While we understand Royal Mail is currently a loss-making organisation and action needs to be taken to address this, we don’t believe constant price rises are the way to tackle the issue.

Constantly increasing prices is no way to reform a service, and could actually reduce the number of customers using the postal service. Royal Mail needs to improve its efficiency, but not by crude price hikes.

The future of the UK economy, indeed the world, is going to be digital. Of that there’s no question.

So earlier this week the Forum welcomed the announcement by the Education Secretary Michael Gove, that the teaching of IT in schools across the country would be given a radical makeover to make it fit for purpose.

Mr Gove described current teaching of the subject as “dull”, “uninspiring”, and “harmful”.

We welcome this on more than one level though. Our own member research shows employers are keen for education providers to teach youngsters more of the skills required in the workplace – something they say all too often is not happening. Mr Gove’s announcement this week then is exactly the kind of changes to the education curriculum we need to see more of – a targeted approach to how and what school pupils learn in the classroom with a specific eye on the needs of industry.

After all, children learn in order to work. But research in the Forum’s quarterly Referendum ballot last summer did identify dissatisfaction among employers with training and skills. Just 4% of small firms rated the skills of their local workforce as ‘good’, 56% average, and 41% as poor.

In all 65% of respondents felt that a greater focus on employment skills would make it more likely that they would take on young people.

It’s quite an indictment of the faith business leaders have in the ability of schools, colleges, and other education providers to properly prepare our young adults for the challenges of working life.

If Britain is going to move towards a knowledge-based, high-tech economy as the Government has suggested previously, we need to see more ‘tailoring’ of the education system for the needs of industry.

So while this week’s announcement is a step in the right direction from government, there’s more work to be done if the private sector is to drive and grow the economy in to the future.

We need more well educated innovators and entrepreneurs to do that, and the classroom is where those seeds will be sown.

For many, this week will have been the first back after the Christmas break, during which many small business owners will no doubt have pondered what the New Year has in store.

Few will have spent too much time mourning 2011’s passing but, realistically, many know 2012 is very likely to pose similar challenges and difficulties for small business.

There’s no doubt entrepreneurs will have to continue to show courage and creativity in the face of economic adversity. Of course, they will also need enterprise policies that free them to grow and create jobs.

The continuing scarcity of affordable credit, rising late payments, mounting business costs and turmoil in the eurozone – all headline features of last year – will certainly continue to be a barrier to business, sapping both cash flow and confidence. The perennial problems of tax and red tape almost need no mention.

Clearly 2012 could be just as challenging as its predecessor, and if a ‘double dip’ recession materialises like some forecaster are predicting, there’s the chance it could even be worse. That’s why it’s vital there must be the correct conditions in place to fuel small business growth, whether the UK returns to recession or not.

But while media reports, by and large talk down the economy and suggest confidence is low, recent research of our members highlights optimism continuing to bubble away among small business owners despite the doom and gloom. Before Christmas we asked businesses who joined our Get Britain Trading campaign for their thoughts and hopes for 2012 and, perhaps surprisingly, 55% of respondents said they were expecting to see growth in the coming year.

Further, 95% said they were looking to develop their business, with 17% saying they would be looking to new customers overseas to enable growth – suggesting the eurozone crisis has not served to put firms off exporting.

Some businesses even reported stronger orders and turnover compared to this time last year. Just five per cent of businesses do not anticipate doing anything to develop their business in 2012 – sharp contrast from a year ago when 10% said this. So it’s clear, there has been movement in the right direction, in attitudes if nothing else.

So while 2012 will be tough for most, trading continues apace, and we must all remember that there is a future beyond the ‘age of austerity’.

As the New Year starts, the Forum is preparing to re-energise our popular Get Britain Trading campaign for 2012, and there will be a special event in Westminster this spring to announce all of our plans for GBT.

Anyone who wants to join and support our campaign can do so by visiting www.getbritaintrading.co.uk

The Government must do more to tackle the issue of late payment in the New Year if it wants to see real economic growth.

That was our message in a letter to Mark Prisk – the Government Business Minister – this week. Several other leading organisations also put their name to it – Lloyds TSB, the NFU, and the Institute of Credit management among them.

And the message was clear: unless the Government forms a plan of action to tackle what our members tell us is a growing problem for SMEs, the viability of businesses to grow in 2012, will, at best be stifled, or, at worst, spell the end for many.

We want the Government to provide a detailed plan addressing this issue. If it doesn’t, it seems likely that the Government’s small business friendly policies, however well meaning, will have a limited impact and small firms will continue to struggle to control cash flow, create jobs and drive economic growth.

In the simplest of terms, late payment forces firms out of business, and the scale of the problem is evidenced anecdotally by small business owners who regularly report it as a major drain on their finances.

Equally of concern is the reluctance of many of these business owners to come forward and publicly identify the companies that routinely fail to pay them on time and in full, or who change payment terms and conditions retrospectively with little or no consultation with their suppliers.

We urge firms to come forward and tell us so we can name them in our ‘late payers’ hall of shame. New additions would have fine company, joining the likes of Dell, Carlsberg, United Biscuits – the company behind the McVities brand – Argos, construction company Rok, and various other household names.

Often, the reason for this reluctance to challenge is fear – fear of losing business with a large company. It is the same reason many suppliers do not pursue late payers in the courts.

The Forum has pointed to various pieces of research which shows later payment continues to be experienced by many small firms, and remains a widespread issue that is if anything a growing threat to SMEs rather than a diminishing one. So it’s not even as if the problem is going away.

New data from commercial credit reference agency, Graydon UK – who were happy to put their name to the Forum’s letter to Mark Prisk – showed 51% of businesses surveyed were in agreement that late payment has become worse during the past year. A further 45% said it may threaten their ability to invest in their businesses, while of more concern though, a fifth said it could prevent them from trading.

It is time to tackle the problem once and for all. SMEs should not have to be bullied by larger multi-nationals. Prompt payment should be the norm, no excuses, no exceptions.

We would urge anyone subjected to this kind of treatment to tell us about it – we’re not afraid to take these companies on.

If you support the work we are doing to tackle the problem of late payment, join the Get Britain Trading campaign. Get Britain Trading aims to make running a business simpler and more profitable and one of the key areas is late payment. Show your support by joining the campaign at www.getbritaintrading.co.uk

Generations coming together in a family business can create problems and have a negative impact on the continuity of the firm’s operations. 

It is recognised that siblings often have a different view from each other, but this can be nothing compared to the differing viewpoints of parents and their children. 

As advisors we are often faced with the problem of the younger generation not being able to communicate with the elder generation, and vice-versa. 

However, this is not necessarily the problem of generational difference but of how the family members involved in the business have been developed and their talent managed. Family members will often arrive at the door of the business with little or no training and commence their career. 

For Family run businesses succession planning is even more important if the ‘reins of power’ are to be successfully transferred generation-to-generation, and, crucially, for the business to continue trading profitably. 

Recent research suggests that only 30% of companies are considering their succession and managing the talent of the next generation. Growth potential, and the ability take on bigger roles, is not being identified or developed. 

In order to facilitate good family-based succession, we have to manage out future talent. This is not something that is planned five years prior to a requirement for succession, but is a planning environment that has a generational aspect. Think long term. 

First you have to have a vision for the continuity of your business on a generational basis. This means creating an environment that welcomes innovation and change. An environment that your family will want to contribute to and share, and an environment that generates opportunity. 

A focus on the family is important – almost a family-first attitude. This does not mean ability is discounted and nepotism prevails, but it does mean that a strong family unit is developed. 

This usually means spending time and money on family development, both educationally and emotionally – once again highlighting the need for planning ahead as this applies from school age right through university into professional development. 

Doing so ensures family members are able to maximise their skills in life, benefiting themselves and ultimately the family enterprise – the proverbial two birds, one stone. 

Creating an environment for opportunities both within the business and outside it will also mean family members have a wide range of choices and are not just facing a future inside a business, industry or role that does not match their skill sets. 

* Tim Isherwood works at strategic planning consultants Steuer Gregsson working with family owned businesses to secure trans-generational success, and advises on company performance, talent management and future direction.

The news is full of the latest youth unemployment figures which are at a record high, with unemployment among under-25s now over a million.These are the highest figures since records began in 1992, so what has been the Government’s solution to this growing problem?

In a recent breakfast summit at Downing Street, David Cameron sought to identify barriers that prevent companies, especially small and medium-sized ones, from hiring more young people as apprentices, whether it’s red tape, minimum pay rates, or the training available from colleges.

As a result a raft of new initiatives has been announced over the last few weeks to combat the growing concerns about this issue.

There’s the Youth Contract, which will create at least 410,000 work places for 18 to 24-year-olds from next April at a cost of £1 billion; wage subsidies worth £2,275 will be handed to employers to take on 160,000 18 to 24-year-olds; and there will be extra funding for apprenticeships. There’s also £50 million for a programme to help 16 and 17-year-old NEETs (those not in education, employment or training).

However, a report by the Institute for Public Policy Research think tank says that government apprenticeship schemes have not helped enough young people in the past – just 37,000 of the 126,000 apprenticeships created last year went to 16 to 24 year-olds.

The work placement scheme currently operating through job centres offers work experience to young people on benefits. A proportion of these young people do manage to secure employment following the placement but there have also been criticisms that suggest it does nothing to break the cycle of unemployment and poverty, but is actually verging on exploitation.

Do these kinds of placements, often low-skilled work, really help young people gain valuable skills and experience for the future? Are they of any value to businesses particularly if there is no-one available to train and supervise them – surely a growing feature of companies already on stretched staffing ratios?

When the placements are properly structured, with support from an appointed member of staff, they do provide the type of work experience that is going to benefit young people and help them gain future employment.

But what many young unemployed people need more than anything is a responsible and knowledgeable adult who can provide them with one to one guidance and advice about their career, and their life in some cases, to inspire and motivate them.

Many young people lack confidence in themselves and in the future, so are handicapped before they even begin to think about a job. These are the kind of services that have been cut and are unlikely to be provided because they are expensive and time-consuming.

Companies who are able to provide both work opportunities and staff who can mentor or coach young people will reap the rewards both for their company and in providing a skilled and focused workforce for the whole business community in the future.

Without this investment in young people now, what hope is there in the future of competing with other economies across the world? Do we want a whole generation of disaffected, unskilled young people moving into adulthood with all the problems that brings to our communities and society as a whole?

Watch a video of Peter Chambers, a partner at PricewaterhouseCoopers, sharing his thoughts on why supporting young people should be a priority for all businesses.