Business Secretary, Vince Cable has launched a consultation into raising finance for private sector investment.

The new paper, entitled ‘Financing a private sector recovery’, looks at a range of issues surrounding access to capital.  In particular, it raises concerns that small businesses are unable to access funds as investors look higher up the economic ladder. 

ACE recommended to the Government in March this year that they explore re-establishing regional stock exchanges. 

The proposal was highlighted several times throughout the consultation.  

The paper seeks views on whether regional stock exchanges could boost investment and help to overcome regional economic disparities.  It also ponders whether there are barriers to listing with exchange-regulated markets that particularly hinder small companies. 

There are a range of other proposals highlighted in the consultation.  

ACE welcomes this paper and the fact that regional stock exchanges are now firmly in the Government’s sights. 

We look forward to engaging with this and helping to find solutions that work.

 ACE welcomes the appointment of Lord Heseltine to chair the £1 billion Regional Growth Fund.

Lord Heseltine will chair a panel to approve funding for private sector projects over the coming two years. Projects will be assessed for the boost they give to sustainable economic growth in areas particularly reliant on public sector employment. Sir Ian Wrigglesworth will be deputy chair.

Business Secretary Vince Cable commented: “I’m delighted that Lord Heseltine and Sir Ian Wrigglesworth have agreed to lead the approval panel for this important initiative. The Regional Growth Fund demonstrates that England is open for business. It will support enterprise and incentivise the growth of private sector-led local economies; mobilizing private sector investment across the country and creating sustainable private sector jobs.”

ACE is pleased to see support for private sector investment in the regions and hopes that the new panel recognises the high level of economic return that comes from infrastructure investment.

ACE welcomes BIS Secretary of State, Vince Cable, call for a balance between cutting the deficit and promoting sustainable economic growth in the years ahead.

The Business Secretary issued a new paper entitled ‘A Strategy for Sustainable Growth’ that sets out the need to secure a sustainable economic future while cutting the budget deficit now.

The report highlights the need to secure the recovery for the long-term by building on the UK’s traditional strengths in science and technology.

The plan emphasizes the need to promote free and open markets, strengthen business and individual innovation and encourage smarter public and private investment in the economy.

Dr Cable commented: “My department, which I have argued should be seen as the ‘department for growth’, has a key role to play in creating the conditions for businesses, the drivers of our economy, to start out, invest, grow and be profitable which is critical for the recovery.” 

Clancy Consulting has announced its acquisition of Scotland based Hodgins Smith Partnership this week.

Clancy, based in Manchester, approached Hodgins Smith Partnership with the aim of growing its business and offering its clients north of the border greater access to locally based staff.

The combined firm will be one of the UK’s strongest medium-sized, and privately owned, engineering consultants working across disciplines.

Clancy Consulting chief executive Alan Bramwell believes that there is excellent synergy in bringing the companies together. He explained that they share several similarities including strong reputations built over many years and a talented and loyal workforce.

Hodgins Smith Partnership was formed 22 years ago by Reg Hodgins and Ron Smith. They were later joined by John Mitchell and Neil Orrock. All four will continue in senior roles with Clancy Consulting. Reg Hodgins becomes a company director with Clancy.

One of the biggest barriers to putting up a building or growing a business is the up-front costs.  In this sense, the financial services sector plays a pivotal role in leveraging the capital required to get started.

Interest rates are at an all-time low, with little sign of an increase any time soon.  Yet some engineering businesses and their clients are still struggling to find loans that are affordable.  Without access to viable sources of credit, it is difficult for businesses to grow and projects to be developed without taking unreasonable levels of financial risk.

Lack of affordable lending also impacts on the housing market.  The inability to gain sensibly-judged, affordable mortgages reduces the incentive to build more homes and increases pressure on the private rental market.

It is clear that the implosion of the sub-prime market has led to a rethink of how financial risks are assessed.  However, reverting to a risk-averse approach to lending is not sustainable in the long term; certainly not if the reports that the UK needs another two million private sector jobs are to be believed.

The Government is intending to publish a green paper in the summer setting out proposals to get the financial system lending again.  Along with the recent proposals to establish a Green Investment Bank, this is to be welcomed as a step forward in the debate.

Yet any proposals that are put forward must be carefully thought out.  Poorly developed regulation could be difficult to implement.  At worst, it might result in more expensive credit – and business will be the worse for it.

Industry will be looking for sensible approaches that encourage responsible business growth and sustainable development.

The Association for Consultancy and Engineering (ACE) gave a cautious welcome to the Chancellor’s emergency Budget. Today’s announcements included year-on-year reductions in corporation tax rates, an increase in the national insurance threshold for employers, a pledge not to cut overall capital investment levels any further than already planned and specific support for a number of transport projects.

A new regional capital investment fund was also announced, along with measures to exempt start-up businesses outside of London and the south east from national insurance for the first ten employees. There was also a commitment to establish a national green investment bank, similar to a topic that ACE has previously explored.

These measures were tempered by a rise in VAT to 20 per cent from 4 January 2011, along with commitments to reduce overall government spending every year of this parliament.

ACE welcomes the intent to address the Budget deficit and try to ensure that the most vulnerable in society and business are not disproportionately targeted. We also welcome the specific support for transport programmes and the commitment not to cut the overall level of capital investment this year. More than anything, business needs a degree of visibility about investment intentions in order to prepare for the future.

However, the detail of how public spending efficiencies will be achieved is crucial. October’s spending review will highlight where capital spending will be targeted in particular. The recent announcement to put regional transport spending decisions on hold has generated significant uncertainty in the construction industry, which will be looking for clear signals from the Government from this point forward.

The Budget and the spending review present opportunities for the UK to redefine what “best value” means. It would be unwise to abandon projects unnecessarily without a clear focus on the UK’s long term growth prospects, as noted in a recent paper by ACE. ACE has also devised a set of principles as to how best value for the public purse could be assessed.

Some notable announcements are summarised below.

Tax

• Corporation tax headline rate to fall by 1 per cent per year up to 2014.
• National insurance threshold for employers to increase by £21 per week, above indexation.
• The capital gains tax higher rate will rise to 28 per cent immediately, with the entrepreneurs’ 10 per cent rate extended to the first £5 million of lifetime gains.
• Income tax personal allowance to rise by £1,000 from April 2011, except for higher rate tax payers.

Small businesses

• Enterprise Finance Guarantee to be extended.
• Small companies’ corporation tax rate to fall to 20 per cent in 2011.

Regional measures

• A new regional capital fund to be created.
• Start-up businesses outside of London, the south east and eastern England will be exempt from national insurance payments on their first ten employees.
• A white paper on encouraging regional enterprises will be published.

Infrastructure

• No overall cut in capital spending this year.
• Specific support for the following transport enhancement projects:
  - Tyne and Wear Metro
  - Manchester Metrolink
  - Birmingham New Street redevelopment
  - Sheffield area rail improvements
  - Liverpool – Leeds rail improvements
• Fixed telephone line levy to be cancelled.
• Support for private investment in broadband, partly paid for by TV licence under-spend.
• A per-plane duty will be explored.

Other measures

• A bank balance sheet levy will be introduced from January 2011.
• A financial activities tax is being explored.

The Association for Consultancy and Engineering (ACE) notes the Secretary of State for Transport’s announcement on the future of major local and regional transport schemes.

ACE understands that this is a difficult climate for public sector investment, and agrees that any spending decisions should be made only after careful consideration.

ACE has made the case for investment in transport as part of its Budget submissions, which were published today.

The Comprehensive Spending Review will take place in October 2010. This will provide more clarity on the likely shape of public sector spending.

However, we would be concerned if schemes already committed were to be abandoned unnecessarily ahead of the spending review. The impact of cancelling such programmes could potentially be damaging to consultancy and engineering businesses.

ACE will continue to make the case for responsible investment in transport infrastructure where this is affordable, supports economic growth, helps to meet environmental objectives and widens social opportunity.

ACE chief executive Nelson Ogunshakin and ACE international business manager Naomi Bari visited ACE member firms in the United Arab Emirates (UAE) while attending the Arabian World Construction summit in Abu Dhabi last month.

The ACE team also attended the ACE Middle East Group (MEG) meeting which was held in Abu Dhabi. The group discussed the current state of the industry and gave an update on the recent developments in regards to the non payment issues. The regional grouping welcomed new members including a member of the Spanish ACE sister organisation, and also set up a core steering group which will be driving forward the overall group agenda including the next ACE GCC Conference to be held in Abu Dhabi this October 17-18 at the Sheraton Corniche Hotel.

The visiting ACE team, ACE MEG chair, Ian Clarke and ACE MEG secretary, Simon Harden had the opportunity to meet with influential key clients and stake holders at government and industry level during the visit to the UAE. The meetings were very productive and gave an excellent platform for ACE to discuss the best way forward to improve current UK consultancy and engineering business relations across UAE.

Nelson, Ian and Naomi also met with HM UK Ambassador to Abu Dhabi, Dominic Jermey, who will be opening the next ACE GCC conference this October. The Ambassador was updated on the actives of ACE in the Middle East and will continue to liaise with the ACE Regional Group to support the UK companies within the industry in the UAE.

Nelson also visited Riyadh in Saudi Arabia and engaged with ACE members involved in the huge scale of activities in Saudi Arabia. The country is still booming with numerous construction work and an impressive number of ACE members involved in the delivery of iconic structures such as the new Riyadh financial centre commissioned to Buro Happold and Scott Wilson’s involvement in the rail project. ACE has been in continuous dialogue with the Saudi Council of Engineers to establish a platform for ACE to further engage with key local clients and government officials.

In a timely piece in yesterday’s Telegraph, James Dyson has called for the celebration of the “great human story of our British geniuses in schools” to encourage “hunger and ambition in young people”.

As the new Conservative-led coalition government settles into Whitehall there will be many issues in ministerial inboxes.

Michael Gove, Secretary of State for Education, has made it clear that his priority is to oversee the establishment of more academy schools and the development of Swedish-style free schools.

ACE has been thinking a lot about this recently.

We whole-heartedly agree with James Dyson.  So much so, that before his article appeared we put together a list of great engineers that should be studied as part of the history curriculum.

You can take a look at the list here.

Michael Gove is more than welcome to borrow the idea!

Michelle McDowell, ACE chair and chair of civil and structural engineering at BDP, has been shortlisted in the property category of the First Women Awards.

The awards celebrate trailblazing and pioneering women who are genuine ‘glass ceiling breakers’ in business.

ACE congratulates Michelle and wishes her the best of luck.