Everyone who is anyone in British motorsport was at the recent opening of the Silverstone Wing, the state-of-the-art racing pit, paddock, and conference centre at Silverstone in Northamptonshire, home of the British Grand Prix.
Damon Hill, president of the British Racing Drivers' Club (BRDC), which owns Silverstone, didn't over-dramatise the importance of the £40m investment when he told drivers and guests that the new site had saved Britain's multimillion pound racing industry. But what Hill didn't say was that the Wing only saw the light of day because of a £10m loan from Northamptonshire County Council: the BRDC couldn't find enough money from banks to lend to the project.
There are two points to make about this. First, it's great news that there are alternative sources of funding to banks, willing to lend to such a project. You can see why it was a no-brainer for the council. The new 100-seat stadium and exhibition space has already provided hundreds of jobs – not just in racing, but in related technology – and it will continue to do so. There'll be other sources of revenue as the space – the biggest between London and Birmingham – has been designed to be used for conferences as well.
But the second, more important, point to make is that Silverstone's inability to find bank finance for such a fascinating opportunity is yet another example of how the UK's banks appear unwilling to lend to small business. As we saw last week, the big high-street banks are only just meeting the lending targets to small and medium enterprises (SMEs) set by Project Merlin, even though there are many small and medium businesses who claim that they are being either turned down or are being offered extraordinarily high rates and tough conditions.
As Andrea Leadsom, MP for South Northamptonshire – which covers the Silverstone circuit – says, banks always put up the umbrella when the rain stops. That's why we need much more competition in the SME sector, with new sources of funding such as credit unions. It's worth looking back at how lending institutions came about to see how we should be shaping the future. Crédit Agricole, the French bank and one of the world's biggest, started out in the 19th century because a group of dairy farmers got together to raise credit to buy more cows. Needs must.
There are new banks being formed and it's good news that Virgin Money is keen to buy branches from Lloyds Bank. But this won't bring enough competition for small business. Leadsom reckons the Government should do more with two of the new banks being set up – the Big Society Bank (BSB) and the Green Investment Bank (GIB). Both are intended to help rebalance the economy, through more social enterprise, in the case of the BSB, and to support clean technology with the GIB. What Leadsom suggests is that the Government should list them on the London Stock Exchange – let the Treasury keep a 10 per cent stake, but also invite the high-street banks in as shareholders and maybe even place some of the shares with the taxpayer through a subscription scheme. This would would allow them to retain a triple-A rating, raise new capital and expand.
If the coalition is serious about growth, it's got to take finding new sources of finance far more seriously and use more imagination. Otherwise we'll get stuck in the slow lane.
Shine on, Burberry Ahrendts sets her sights on London
Angela Ahrendts has earned every penny of her £3.2m pay packet (and the £25,000 a year clothing allowance) for her work in turning around Burberry; with the shares rising five-fold in two years. With staggering success, the American boss has flipped a flagging, chavvy brand into one of the most sought-after in the world, particularly in emerging countries. She is now turning her sharp eye to London, investing in the Knightsbridge flagship store and relocating the one in Regent Street. Rich foreigners are flocking to the capital in ever greater numbers and she wants to "shine here" too. Is this a gamble too far? The move will hit profits, short term, and shares have already lost some sheen. But, on past form, I wouldn't bet against her success.
Tata's success with Jaguar Land Rover shows what a good takeover can achieve
The story of Tata's takeover of Jaguar Land Rover is a sensational one in so many ways. It shows that foreign takeovers can work, that great design and workmanship sells, and a determined management with vision always pays off.
We should all be saluting Ratan Tata, Tata's chairman, for the astonishing job he has done since he rescued the business only two years ago from Ford. In the process, he also saved 17,000 jobs in the UK.
Tata's own reward came when JLR reported after-tax profits of £1bn last week for the last full year to March, profits fuelled by soaring sales to China and India. In China, now the world's biggest market for cars after overtaking the US, sales of JLR rose by 33 per cent while in India sales rose by 61 per cent.
Perhaps even more interesting was the big hike in sales to European markets – up 49 per cent in Germany and 70 per cent in Russia – which rather demonstrates that JLR's products are still as sought after by the middle classes of the older economies as they are by those in the new, aspiring ones.
How has Tata done it?
There are many reasons. Some date back to Ford's ownership as it was the designers under Ford who were responsible for the latest two models, Land Rover's Evoque and Jaguar's XJ.
Appointing the very best experts was essential. Tata brought in Carl-Peter Forster from General Motors to run overall motors division and then ex-BMW Ralf Speth was hired to run JLR. In other words, Tata put together a clever cocktail of German Vorsprung Durch Technik ("advancement through technology"), US sales skills and, let's be generous, UK spirit.
Then look at Tata's own background. The company was started by Jamsetji Nusserwanji Tata in 1868. After training in the UK, he returned to India to build the Taj Mahal Palace and Tower hotel in 1903. Today his descendant is planning a new engine plant in the UK, another 1,000 jobs and £1bn of new investment over the next five years. Who says global markets are new.