Alan Sugar's speech today in the House of Lords:
My Lords,
I am grateful to the noble Lord Lawson in bringing this debate. He may recall when he was Chancellor under Baroness Thatcher that I was one of her blue-eyed boys – the young fellow from Hackney who had done well; a prime example of entrepreneurial spirit. She hauled me all over the place, displaying me as a model of what can be achieved. I was in and out of Downing Street more often than the window cleaners.
The thing is, my Lords, I and people like me are a dying breed. When I went to the bank as young man with my hand out, they thought I was part of the Morecambe and Wise team. “Do you have any collateral, a balance sheet, some history of profits?”
“No.” I replied. “Well then, clear off,” was the response.
I, like many others realised at an early age that if you want something, you have to get it yourself. My idea of government support was: you supply me hospitals, schools a police force, roads to drive on, and a good environment for me to do business in – that will do me fine – but don’t poke your nose into my business.
If we reflect back, say, 15 years, it was customary for a person – dressed in a pair of designer jeans, a nice blue blazer and a white open collar shirt, a bottle of Evian in one hand and wonderful Windows presentation in the other – to walk into a bank, mention the words “dot com” and walk out with £5m.
Well, those days are over. We know what went wrong there, and we also know what a mess the banks got into recently.
But the penny has not dropped with some people. We still have, in some cases, an expectancy culture where people still think there should be money freely available to finance lost causes or poorly run companies, or the whim of an idea.
When I was employed as an advisor to Her Majesty’s government last year, I had occasion to visit many small-to-medium-sized enterprises across the country, and I spoke to several thousand business people.
The most frequently asked question of me was, “What can the government do to help my business?”
And my reply, my Lords, was not one which was perceived as helpful. I told them, “Do not rely upon any government to assist you in running your business. You are people who have chosen to go into business – which is very enterprising, and I'm pleased about that – but do not expect to get any advice from government on what new products you should make, what ideas you should pursue, what services your business should provide, or how to market your products and generate income… because that’s what you’re supposed to do.
More recently I remind people: “Who is there in government to be able to dish out such advice? Just step back and look at them.”
Take, with the greatest of respect, the current Business Secretary. He's never been in business! He’s never run a business! He’s been an advisor or a politician all his life. He has never touched the coal face. I mean, frankly, what does he know?
It is this realism that brings me on to my next point.
The current government, in my opinion, is very good at window dressing the demise of the economy by blaming it all on the banks. It is very convenient to repeat continually the same old broken record: “It’s not our fault; it’s the banks’ fault; it’s the previous government’s fault.”
Well let’s look at this for a moment. True, the banks were irresponsible and they have been told in no uncertain terms to get their act together.
But having told the banks to get their house in order, the current government is constantly bleating that the banks aren’t being helpful in lending money to small businesses – whereas the message to the small business community should be one of realism: understanding that no-one is going to lend money to a lost cause. The traditional criteria of showing some assets, or having some historic record of profits, are things which banks are now looking at before they part with their money. They are definitely open for business; that is how they make some of their money
In my recent seminars I’ve received comments from some people along the lines of, “The bank has been outrageous; they’ve actually asked me to put up some collateral – my house for example!”
Well, I'm very sorry, but why not? Why should they take a risk on you if you're not prepared to take a risk on yourself?
In my capacity as a Business Advisor to the last government, I visited many Business Link Centres, which I understand are funded in some way through RDAs or maybe directly from government (I’m not at all clear). The cost of running these organisations was something in the region of £250m per year. To be perfectly frank, apart from meeting a nice bunch of people, there was no real business advice dished out other than simple stuff you could pick up and learn for yourself by going on the internet.
I would urge the government to redeploy money spent on these types of initiative in other directions. As an example, there are so many empty premises around the country– large factories and warehouses that can be converted and made into ‘incubator factories’. These could contain a core factory and silo workshops on the periphery. The core factory would be accessible to the individual businesses like satellites around a nucleus.
The government should come clean in their message to help small-to-medium-sized enterprises. You can not, on the one hand, tell the banks, “You’ve been naughty for being irresponsible,” and on the other hand say, “Go and be irresponsible again and help lost-cause businesses with no asset backing.”
Give SMEs the facts of life. By all means be bold, be adventurous, but be realistic. Don’t expect anybody in Whitehall to give you any hints and tips on how to do it, because basically that’s the blind leading the blind. You are the business people; you are the ones with the ideas, and you are the ones who are going to drive your businesses forward. But regrettably, like everything else in life, there are no free lunches.
All government can do is to provide a good business environment, assistance from HMRC, for example, Export Credit Guarantee if you are successful enough to find export customers; tax breaks for entrepreneurs who sell their businesses, and tax deductions for investment in R&D.
But here's the final point. In taking advantage of all these wonderful tax incentives announced in yesterday’s budget, might I just bring everybody down to earth again and say, “To benefit from them, you have to make a profit.”
And how to do that, my Lords, is something on which this government is not capable of advising.
