Could online lending platforms help Britain succeed post-Brexit?
Round-table debates organised by Prospect and Funding Circle at the recent Labour and Conservative party conferences suggested that there are still some issues where cross-party cooperation may be possible
A strange thing happened halfway through the debate at Conservative party conference about funding for small and medium-sized businesses—the Conservative politicians around the table started highlighting the same problems and proposing the same solutions as the Labour politicians had at their event on the same topic a week earlier.
In an age of increasingly polarised political opinions, when it seems that there is nothing that our two major parties can agree upon, the round-table debates, organised by Prospect and Funding Circle at the recent Labour and Conservative party conferences, suggested that there are still some issues where cross-party cooperation may be possible.
The two debates covered the funding challenges faced by small businesses, as well as the needs of the UK’s FinTech sector which those businesses are increasingly turning to for support. A decade on from the financial crisis, small businesses often struggle to secure the funding they need—on terms that they can reasonably afford—from the big banks.
Online lending platforms have begun to fill the gap and the UK has become one the world’s leading hubs for FinTech. Indeed, a politician at each discussion had recently met with a company in their constituency where Funding Circle had provided a loan.
But as the country prepares to exit the European Union in March 2019, there is a risk that many of the advantages the sector currently has, will begin to be eroded. The debates at Labour and Conservative party conferences aimed to explore those issues that the sector is likely to face in the coming months, from the possibility of an economic slowdown to the specific challenges that Brexit itself will present.
The conversations were held under Chatham House rules—meaning that while the participants can be named, none of them can be directly quoted. In Liverpool, we were joined by two senior members of the shadow Treasury team, Jonathan Reynolds, the shadow economic secretary to the treasury and Peter Dowd, the shadow chief secretary to the treasury. Meanwhile in Manchester the politicians were Lee Rowley, the MP for North East Derbyshire and Anthony Samuels, the new chairman of Surrey County Council. Other experts from the worlds of banking and economics were also present, as well as representatives from Funding Circle, including James Meekings, the company’s co-founder.
At both events, there was a broad discussion about skills and migration. One of the reasons why the UK, particularly London, has become a global hub for FinTech is the ability to attract some of the best and brightest from around the world. Depending on the migration system introduced following Britain’s exit from the European Union, this flow of talent may be threatened. If the UK FinTech sector is to thrive post-Brexit, companies will need to be able to employ the staff they need.
Regardless of the migration system that is eventually agreed—and there was much talk about the damage caused by the present uncertainty surrounding post-Brexit immigration policy—the government will need to place even greater emphasis on closing the skills gap. Suggestions from around the table including initiatives such as investing in coding in schools to allowing companies to partner with local further education colleges to ensure that students were graduating with the right skills needed to fill the right jobs. There was also agreement at both events that the apprenticeship levy, while good in principle, had some serious flaws that were holding back the FinTech sector’s attempts to invest in training and development.
The financial crisis and its aftermath proved disastrous for many small and medium-sized businesses. Loans from the big banks dried up. Innovative online lending platforms have moved to fill the gap, but as all those present at these debates agreed, they will need the right level of support from government if they are to thrive as Britain prepares for the great unknown of Brexit.
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