In response to last month’s feature on the National Loan
Guarantee Scheme in which Peter Collins voiced his
criticism of the government programme, Chris Stamper, chief
executive of ING Lease UK, wrote the following letter to the
editor:
I agree with the
comments made by Peter Collins of MAN, not only are captives
excluded from the scheme but it appears that anything other than a
UK bank or a direct subsidiary of a UK bank is excluded from the
scheme.
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I would suggest
that this probably excludes something like 60% of the UK asset
finance market from the NLGS and is without doubt
anti-competitive.
I fail to
understand the comments made by Julian Rose [of the FLA] that this
is not designed to increase the volume of business written but
rather is designed to reduce the cost. Presumably you would only
reduce the cost of borrowing if you thought that as a result more
people would borrow and hence increase the volumes.
Making the scheme
available only to the UK banks and their subsidiaries, many of whom
already offer the lowest rates in the market, would therefore
presumably have much less of a benefit than making the scheme
available to a wider market and therefore have more
impact.
Peter Collins is
correct in saying what the government needs to do is to incentivise
SME’s to purchase assets and link the grants directly to the asset
purchase regardless of the fact the asset is financed or
not.
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By GlobalDataMany years ago the
government had Regional Developments Grants and these were directly
related to asset purchase and were very simple for businesses to
obtain.
At the time they
were also available to leasing companies who acquired assets and
reflected the tax-free grant in the rentals but I guess in today’s
political environment this may not be too popular.
The Regional
Development Grant was a very effective scheme and lasted a number
of years and certainly encouraged asset acquisition, albeit at the
time it was only available in certain geographical areas and
certain asset types.
Something similar
(the Regional Growth Fund is totally different) would be very
beneficial today.
As an alternative the return of 100% capital allowances
for a short period would encourage businesses to acquire assets
with the added benefit of those successful businesses having the
greatest incentive to spend.
