Vince Cable in Sheffield to back lending and growth

UK Business Secretary Vince Cable
UK Business Secretary Vince Cable
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Business Secretary Vince Cable visited a Sheffield micro-business specialising in cutting energy consumption now flourishing thanks to a loan supported by the British Business Bank.

On a whistle-stop tour of the city, which included a visit to a major development in Stocksbridge and the University of Sheffield’s Advanced Manufacturing Research Centre, Dr Cable spoke to the bosses of GW Energy at their premises in Darnall.

The firm borrowed £50,000 in October from peer-to-peer lender Funding Circle, which is supported by a £40 million investment by the British Business Bank, headquartered in Sheffield.

Said Dr Cable: “Sheffield is doing pretty well in recovery terms. There’s growth - it’s happening. Companies like Forgemasters are a great model.

“But in order for us to achieve a perfect balance of recovery across the country, companies have got to have access to money.

“The British Business Bank is doing that. In its first year it got out there £740 million. Half of that was through traditional schemes guaranteed by the big four banks and loans to start-ups, but the rest was through funding circles. That’s what’s new; money would not be flowing without it and we expect it to grow very rapidly. Peer-to-peer lenders will make loans of £1bn this year and help to counteract the negative effects of the big banks’ control of lending.”

EW Energy, set up by two former British Steel Stocksbridge apprentices Wayne Cramer and Ged Hebdige 20 years ago, designs and manufactures energy optimisation devices for both blue-chip customers and households wanting to save money on energy bills.

M.D. Wayne Cramer described his long-running battle to borrow the money he needed to expand: “I had made numerous applications in the past but it seems to me big banks only want to lend money to companies when they don’t need it.

“When I got an email flyer about Funding Circle I was sceptical; it sounded too good to be true. When I found out it was government-backed, I put in an application for £50,000.

“Lenders immediately started bidding; within three hours I had all the money at seven per cent. I was shell-shocked. I could not believe how quick and easy it was.”

The unsecured loan enabled EW Energy to expand their product range and take on three new staff. A move to new premises, and two more employees, are planned in the next year and Wayne Cramer then hopes to become a peer-to-peer lender with the British Business Bank: “It helped us get the foot on the ladder,” he said. “We want to do that for other firms.”

Interest rate rise warning from Cable

Vince Cable also warned that a much speculated rise in interest rates could hit a recovery in manufacturing and exports in the North of England.

He said he shared concerns voiced by the Confederation of British Industry that a rise would damage the competitiveness of UK manufacturers.

He added: “The key priority is getting a recovery that is balanced and led by manufacturing and exports, and not being distracted by the housing bubble in the south of England.

Mr Cable said: “The risk is that this runaway boom in house prices in the South East and particularly London tempts the Bank of England to put up interest rates sooner than they otherwise would do and that in turn pushes up the exchange rate and ​that makes it difficult for people to export. The boil has got to be lanced.”