Bernard Ginns: EU envy that is piling the pressure on financial services

It comes from Garry Wilson, the managing partner of turnaround investor Endless, who was speaking at the 2013 launch event for Yorkshire Vision, our quarterly business magazine for promoting Yorkshire’s best assets in the most positive way.

He told the audience: “I was in Germany at one of our investors’ annual meetings recently and I was surrounded by some very proud German industrialists.

“They took great delight in saying to me ‘what do you make in the UK anymore? You don’t make anything’.

“I said ‘I’ll tell you what we make in the UK – we make money’. One thing they are very envious of in Germany is our financial services sector. If you look at what is high on the EU priority list it is attacking the financial services sector.

“That is where Britain is strong, that is where Britain is a world leader.

“It is where Yorkshire is strong as well and we have got to defend that.

“There are new regulations, new pressures and Endless, which is seven years old, is coming under huge pressure on regulations and to save lots of our money for regulatory capital, rather than invest it in businesses in our region.

“Let’s defend our rights – that is EU envy.”

Mr Wilson cited BDO’s Yorkshire Report of the region’s top 150 companies.

He said: “The effective tax rate that those businesses in Yorkshire paid in 2012 was 31.9 per cent.

“Yorkshire pays its way.

“These are not companies that have Dublin headquarters because the corporation tax is 10 per cent.

“Not for these companies is a Liechtenstein headquarters where you can set up a loan and pay zero per cent tax.

“We are not the Lance Armstrong of our industry, we are the Bradley Wiggins and we should be proud of it.

“When there are grants and Government funding and reduced taxes we want our fair share, but what I would rather have is a just a very fair tax system.”

Mr Wilson described the people running businesses around Yorkshire as the ‘foot soldiers’ that are helping to strengthen the UK economy.

“We all work hard, we all want to work hard. It’s us, not the Government, that drive the economy.

“The average director pay in the top 150 companies in Yorkshire was £185,000. That’s down from £198,000 in 2009.

“These people are paying 50 per cent tax. They are lucky if their take-home is a six-figure number and we have the Minister for Business who talks about businessmen as fat cats, media barons and headbangers.

“These are people working 70, 80 hours a week and they are not very well paid. They are not earning the multi-millions that are reported in the Press. So support us.”

A strong and persuasive argument from the adopted Yorkshireman. You would never hear a politician making such a compelling case for business. I wonder why.

The newest member the Bank of England’s Monetary Policy Committee has revealed that he is considering an innovative new approach of getting credit to small and medium-sized businesses.

Ian McCafferty, formerly chief economic adviser to the CBI, said that the bank should be open to new policy tools if needed.

Pressed on what new tools he would look at, he said help for credit for small businesses and their access to capital through the corporate bond market.

James Lambert, executive chairman of North Yorkshire’s R&R Ice Cream, is supportive of the idea.

He pressed the case for a junior bond market with the Business Secretary Vince Cable during the reception at the Yorkshire Post Excellence in Business Awards.

His company, which is now Europe’s largest own-label ice cream manufacturer, issued a bond in 2010 which raised 350m euros.

Previously, R&R’s debt had been held by a consortium of 41 banks, which made it difficult when the management wanted to borrow to carry on growing the business.

Mr Lambert said a junior bond market, with the Government as the long stop, would get money from the insurance industry directly into the real economy with the effect of job creation.

“It means you don’t have to pester the banks so much,” he said. “The best thing for competition is to open up another source of finance.

“In my experience, it’s as important having an equity market.”

Given that growth is not coming and that stimulus seems to be the only game in town, I hope that Mr McCafferty’s fellow MPC members support his idea and can develop a realistic proposal.