Chuka Umunna MP

Chuka Umunna MP, Shadow Minister for Small Business and Enterprise, has written to Lloyds Banking Group Chief Executive António Horta-Osório to seek assurances on the banks service and lending to SMEs on the eve of the bank’s announcement of its three-month strategy review on Thursday.

According to research by the Federation of Small Businesses, the four biggest players – Barclays, HSBC, Lloyds and RBS combined have an 83 per cent share of the SME banking market.

Concerns have been raised about the service provided by banks to their SME customers. In May 2011, Forum of Private Business Chief Executive Phil Orford said: “We want to see banks invest in regional services and hand decision making powers back to local branch managers who are best placed to make key lending decisions based on realistic assessments of individual businesses. We must move away from the over-centralised, tick-box mentality we are seeing now”.

Lloyds Banking Group chief executive Antonio Horta-Osario is due to outline Lloyds’ three-month strategy on Thursday. Analysts have predicted that this may lead to up to 15,000 job losses.

According to evidence given to the Business, Innovation and Skills Select Committee by Business Secretary Vince Cable earlier this month, Lloyds’ is on track to hit the lending targets it was set under Project Merlin.
Together, the banks covered by the Project Merlin agreement missed its target on SME lending in the first quarter of 2011 by £2.2bn.

Shadow Business Minister Chuka Umunna MP has written to Mr Horta-Osario to seek assurances that changes and efficiencies will not be made at the expense of lending, services and support for SMEs.

Commenting, Chuka Umunna MP said:

“As the government imposes cuts that go too fast and too deep, it expects the private sector to step in and fill the gap – SMEs are responsible for six out of ten private sector jobs and almost 50% of private sector turnover so they are crucial.

“I have written to Lloyds Banking Group’s chief executive António Horta-Osório to seek assurances that efficiencies the bank seeks to implement in the coming months will not jeopardise its ability to meet its lending obligations under Project Merlin and to appropriately support its SME customers.”

Chuka is hosting a Coffee Afternoon for local residents this week at Corpus Christi RC Church, Trent Road, SW2 5BJ

It is taking place this Thursday June 30th between 2.00pm and 4.00pm – please feel free to pop by at some point during the afternoon and to invite anyone else you think might be interested from the local area –perhaps you’d like to raise a personal casework issue, a national policy issue or would just like to have a chat with Chuka.

Today, Trade Minister Lord Green admitted in an interview with the Financial Times that the banks are “behind the curve” on delivering their commitments under Project Merlin.

Chuka Umunna MP, Labour’s Shadow Minister for Small Business and Enterprise, following Lord Green’s comments, said:

“Lord Green’s comments today highlight the Tory-led Government’s failure to get banks lending to small and medium sized businesses. The Project Merlin deal lacks teeth and the Government failed to check with the banks how CEO pay would be linked to bank lending targets.

“The agreement gave banks a get out clause by allowing them to blame insufficient demand from SMEs, when it is clear this does not reflect the situation on the ground. Rather than empty words, businesses need assurances that ministers will take the firm action needed to ensure that banks lend.”

Urban Art 2011, London’s largest free annual open air Contemporary Arts Fair will be taking place for its tenth year on Josephine Avenue, London SW2 on Saturday 16th July and Sunday 17th July from 10.00am to 6.00pm.

Last year the event attracted over 7,500 visitors and this July even more are expected. The event will exhibit new and established artists work as well as help fundraising for local causes: Trinity Hospice and The Crown Lane Primary School will receive 10% commission from the sales made on Sunday.

Around 2,000 pieces of work will be on display from 150 artists, printmakers, street painters and photographers, ranging from the novice to the established making this is an event for all art lovers. Prices range from under a tenner to over £1,000, examples of which can be found here.

Additional attractions for Urban Art 2011 include the Saturday Sound Stage showcasing an eclectic mix of music and a wide selection of food stalls.

Urban Art was created by Josephine Avenue resident and portrait artist Timothy Sutton. Commenting, he said “I knew that local artists were desperate to find places to show their work and this seemed an obvious solution. The local community work really hard but it’s always a fun weekend so makes it all worth while; it’s kind of the Big Society in action. We’re also delighted that Trinity Hospice and Crown Lane Primary School will benefit this year, two local services who need the money.”

Brixton resident and artist, Martin Grover, who has been exhibiting at Urban Art since its inception, added: “This will be my tenth time exhibiting at Urban Art. It’s always a chilled atmosphere and great place to talk to other artists and visitors about my work. Can’t wait.”

Last month, Chuka hosted Celebrating Streatham, a free event for the local community celebrating its vibrancy, talent and diversity.

Below are some pictures from the day:

The day on which quarterly rent payments are due falls today, putting pressure on cash flow for businesses at a time when credit conditions are tight.

Friday 24 June is one of four annual ‘quarter days’, when businesses are due to pay their quarterly rents. There are fears that this could cause a spike in the number of businesses going into administration: consumer chains such as Whittard’s and Zavvi have gone into administration following quarter days in the past.

A fall in retail sales last month, alongside the difficulty which many businesses are facing in accessing finance, has prompted concern over cash flow pressure as rent payment day approaches.

A Bank of England paper published this week noted that while large firms “reported that they were typically able to borrow if needed”, many “small firms were reluctant to approach banks” for finance, particularly owing to concerns that doing so could lead to “an increase in the cost of existing borrowings or reductions in overdraft limits” .

Bank of England figures for lending to small and medium sized businesses under Project Merlin in the first quarter of 2011, published in May, show the banks are collectively missing the lending targets by £2.2 billion – coming in at £16.8 billion for the first quarter, below the £19 billion needed to be on track.

In government, Labour introduced the Time to Pay scheme, allowing businesses to defer PAYE, VAT and National Insurance payments. It was designed to provide businesses a period of time to accommodate cash flow pressures.

Commenting, Shadow Minister for Small Business and Enterprise Chuka Umunna MP said:

“Quarter day throws into sharper focus the challenges which small and medium sized businesses are facing. With restraints on access to finance, rising rents can create cash flow problems for businesses. For this reason, flexibility is crucial – having empty units isn’t in the interests of landlords, businesses or customers.”

“In government, we introduced the Time to Pay scheme to help businesses alleviate cash flow pressures in difficult economic circumstances. The government needs to make sure it is doing everything it can to help SMEs prosper, as we are primarily looking to them to produce the jobs and growth we need.”

A Bank of England report published today says small and medium sized businesses are being put off from approaching banks to access finance, contradicting banks’ statements on demand for lending among small businesses and highlighting flaws in the government’s Project Merlin agreement.

The Bank of England’s monthly Agents’ Summary of Business Conditions report for June notes that while large firms “reported that they were typically able to borrow if needed”, many “small firms were reluctant to approach banks” for finance.

Banks have continually cited a lack of demand for finance among SMEs as the reason for sluggish lending. Following the publication of the first set of lending figures under Project Merlin, which showed that the banks covered by the agreement were missing their lending target to SMEs by £2.2 billion, a spokesman for the Project Merlin banks said: “Demand in some sectors, particularly among SMEs, remains muted.”

However, today’s report reveals that this picture does not match the situation which SMEs face on the ground, with small businesses citing concerns that approaching banks for finance could lead to “an increase in the cost of existing borrowings or reductions in overdraft limits” .

Under the government’s Project Merlin agreement, which was unveiled in February, its lending targets were only applicable “should sufficient demand materialise”.

Commenting, Shadow Minister for Small Business & Enterprise Chuka Umunna MP said:

“Today’s Bank of England report shows the huge disconnect there is between what the banks are saying and what small businesses are experiencing on the ground. It is clear that there is demand for finance, but SMEs are being put off from applying. This is something which banks need to address urgently.

“The Project Merlin agreement, which was meant to increase lending to businesses, gave the banks a get out clause – its targets were contingent on whether the banks determined that sufficient demand had materialised. The government failed to check the banks’ promises on CEO pay, did not put in place adequate monitoring of its targets or give the agreement any teeth.”

A Populus poll, published in The Times today, ranked Britain behind its competitors across a range of measures as a place to start a business.

Commenting, Shadow Minister for Small Business & Enterprise Chuka Umunna MP said:

“In his Budget statement a year ago, George Osborne said he wanted a ‘sign to go up over the British economy that says open for business’.

“Ministers have made big promises but this poll shows that after a year in office they are failing to deliver. There is a distinct lack of vision and instead the government has offered a rag bag of measures which are small in scale and limited in impact. We need Britain to be a country where people feel confident in setting up and growing the businesses of the future.”

Streatham MP Chuka Umunna has joined students at Fenstanton Primary School in Tulse Hill, opening the school’s new community recycling area at its launch event which took place last week.

The launch of the facility took place alongside the school’s Big Tidy Up event to clean up the school environment.

Mr Umunna cut the ribbon alongside students who had worked on creating the community recycling area. Students of Fenstanton and other nearby schools have been involved, including art students from nearby secondary school St Martin-in-the-Fields who have assisted.

Primarily, Fenstanton’s year six contributed to the project which is their gift to the school before they leave to secondary school.

Commenting, Mr Umunna said: “The community recycling area will provide an excellent facility and I was pleased to be able to meet with the students whose hard work created it.”

Chuka is a patron of the Lambeth College London Programme and presented graduation awards its official launch event in April – where this video was made.

The programme gives young people opportunities to develop their skills and increase their employability working with a number of partner firms. Students take part in challenges to help them translate college based learning into performance, and all students attending the College’s Sixth Form Centre are eligible to take part.