Monday, July 04, 2011

Government happy with Enterprise Finance Guarantee; nobody else is

There's a large pot of money - the enterprise finance guarantee scheme - which is available to reassure lenders that if they loan to a small business, they'll not lose out if it all goes wrong.

(The sharp-eyed amongst you might spot that this is yet another way in which taxpayers take on the risk that is meant to be the part of the banking industry for which they get their rewards, but let's park that for now.)

Supposedly, the scheme applies to musicians.

Back in February, Feargal Sharkey appeared before a Commons Select Committee on behalf of UK Music saying it wasn't working:

Mr Sharkey confirmed that UK Music had undergone detailed research into EFG-funding and found only one example of where an application had been successful "out of a £5 billion a year industry". He believed that the Government needed to work with both the industry and the banks to develop a set of standards and a set of appraisals and that it should report on a quarterly basis, on the flow of funding going into the industry. Of equal importance was guidance on the valuing of Intellectual Property which he argued was a significant problem in valuing companies in his sector.

The Enterprise Finance Guarantee Scheme should be available to all sectors of the economy. It is therefore unacceptable that the creative industries sector—which generates around £4 billion a year in the United Kingdom and is one of the six sectors designated by the Government as growth sectors— is effectively being excluded from this avenue of funding. We recommend that the Government, as a matter of urgency, ensure that the criteria for receiving EFG funding is sufficiently flexible to accommodate the creative industries. We expect the Government, in its Response to this Report, to set out clearly how it will achieve this aim.
Despite this, the government issued a report saying all was going well:
the music industry is incensed at a government report published in May which implied that promoters, managers and others wanting to finance music ventures do not face any problems accessing the fund. Industry insiders pointed out that no one relevant was questioned for the report. The document itself notes that "most of those interviewed under the music and visual arts were dance studios or theatrical companies". There is also an admission that a "music business or record company could not be interviewed for this research".
The industry part of the music world is pretty hacked off by this:
"It was hugely disappointing that recently published government research on creative financing would openly acknowledge that it has no relevance to the British music industry," said Feargal Sharkey, chief executive of UK Music. "Access to finance remains a fundamental challenge for this country's music entrepreneurs."
This seems like a better use of UK Music time and money - still not very clear where that money is coming from, by the way - than pointless railing about piracy.

But the government has a plan:
The government is taking steps to address this issue with the first formal meeting on Wednesday of the Creative Industries Council – announced as part of the coalition's "plan for growth" in March. It is understood that top of the agenda at the meeting, which will be chaired by the culture secretary, Jeremy Hunt, and the business secretary, Vince Cable, will be access to finance. A "wide spectrum of the creative and digital industries" is said to be attending.
Hang about, though... isn't that a quango? Aren't the coalition meant to be getting rid of them?