Wednesday 14th January 2009, 14:05It’s Liquidity – but not as we know it!One of the most important issues we have needed to tackle to minimize the impact of the recession and support those organizations that can create jobs and grow during a recession, is liquidity for business. There have been some scary deals done prior to the credit crunch and over-gearing which has led to businesses being in difficulty. Some will be poorly run. The majority however are businesses which are fine, dealing with a challenging economic environment and need sensible working capital in place to sustain and create jobs.
My job takes me into the financial community and my role on a number of Boards – not least a Regional Development Agency – brings me into contact with many businesses as well. I have seen a significant mixture of responses by the financial community to their relationships with businesses and so the announcements this week from government are important. Clearly, the lack of confidence in banks lending to one another – as well as their ability to do so – is the biggest issue affecting liquidity for business.
So, support for medium and small businesses, specific support to equity investment in high growth businesses, is very welcome. We can argue about how much this package should be. My view is that getting banks back into a more regular lending cycle (which is what the under-pining funding is doing) is the most important aspect of this package. We cannot continue to invest indefinite amounts of public money into this. Instead, we need catalytic and pump-prime approaches which allow lending institutions to do what they do – get credit flows back into the market.
The same challenge applies to this policy as with many since the recession started to bite the economy harder - quick execution and implementation. This is critical. It is more important to get the process moving and then refine the parameters. We need to account for public money – always and rightly so. But businesses need to trade and this will create and sustain employment and that has to be the priority.
Across our business, we are working as quickly as possible to get initiatives to market – to the consumers of public services that need it. We are looking at new ways of innovating to respond to customer challenges. So, we have secured agreement to support some of our most vulnerable clients with their mortgage situation. We are promoting the mortgage interest support that recently unemployed people can now access.
We are also looking at how our employment and skills programmes can be delivered differently to create more jobs for our clients. This includes looking at wage subsidy models to ease cash and working capital requirements for growing businesses needing to take on and train new staff. With some large employers, we are working with them to secure commitments to employing a percentage of their annual, normal staff turnover from our hardest hit clients impacted by the recession. Our job is to provide the clients with the skills and support to compete effectively in a more demanding labour market. We are listening to business and the individuals we work with to ensure our services tackle their challenges and help minimize recessionary impact in the economies where we work.
So, if you know businesses that are wrestling with these issues, ask them to get in touch and help us design the services they need most. And where you know people affected by the recession who have lost their job or out of work and finding thing more difficult, ask them to get in touch too so we can support them.
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