Financing a Private Sector Recovery
DATE: September 2011
EXECUTIVE SUMMARY
Context:
“Difficulties in raising finance are affecting the ability of the music business to grow and prosper. Particularly worrying is the evidence……of a growing trend in recent years, of a lack of confidence in accessing external finance.”
1. So said “Banking on a Hit,” published by the Department for Culture, Media and Sport in 2001. Words which resonate just as loudly today as they did almost ten years ago.
2. In the intervening years it would appear that the inability of music industry SMEs to access finance has now become an established and increasingly entrenched obstacle and one which has intensified over recent months as the global financial markets have attempted to re-stabilise.
3. For many music industry SMEs, access to finance might now be described as a systemic and worsening problem, the consequences of which will not only be detrimental to the music industry overall but to the
4. UK Music welcomes the Government’s review into access to finance for business. In particular, we are pleased that Government recognises that an extension of the Enterprise Finance Guarantee or a more permanent successor scheme is likely to be required. Government are asking for views on a successor scheme to the EFG and other finance options to ensure that businesses have access to a more diverse range of sources of finance that suits their needs. We focus our submission on these specific areas.
Conclusions.
5. The music industry has a significant contribution to make in the
6. If Government’s ambition is to stimulate economic growth and development through support for SMEs it will be imperative to ensure open and completive access to sources of finance for all industrial sectors, especially those within the creative industries. A dual approach of debt financing for small and micro music industry enterprises and targeted growth based support will be vital.
7. Within the current environment it is clear that music industry SMEs who are ambitious for growth are not reaching their potential, while those for whom sustainability is key are now also being put at risk.
Recommendations.
8. We would urge an immediate and robust investigation into access to finance for music industry and other sector SMEs who may trade upon IP assets. It is our belief that the evidence base required for such a task would need to include aggregated lending statistics from the high street banks, provided on a sectoral basis.
9. The shortcomings of the Enterprise Finance Guarantee must be addressed in any extension of the EFG or a more permanent successor scheme.
10. Government should analyse the system of tax reliefs designed to stimulate investment in innovation and R&D, and assess their impact on the music sector and the wider creative industries. The
11. Government should consider establishing a new source of funding aimed at stimulating investment in new talent and supporting enterprise in the music marketplace.
12. Finally, we would strongly caution Government against pursuing an industrial strategy which focuses intervention solely on high-growth companies. Long term sustainability, rather than rapid growth, is the objective for many small music SMEs. We would ask Government to remain sensitive to this objective when formulating any industrial strategy.
Click on the document below to read the response in full:
UK Music response to HM Treasury and BIS on Financing a Private Sector Recovery September 2010.pdf
