21 July 2016 | By Andrew Connors Community

MSBs and the productivity puzzle

How becoming more productive is perhaps the greatest challenge being faced by the UK’s MSBs

Mid-sized businesses (MSBs) are a fundamental part of the UK economy, and a cornerstone of local business communities across the country.

Yet compared with the global corporates and dynamic young SMEs that seem to garner many more column inches, their role has been comparatively unsung.

As Britain faces the challenge of improving its productivity, with levels trailing behind those of international competitors, there is an opportunity for MSBs – with the right support – to lead the way by boosting productivity in their own organisations.

As a bank, our Helping Britain Prosper Plan sets out the ways we aim to address a range of key economic – as well as social – issues. And one of the ways we have sought to tackle productivity has been to focus on the three key drivers of productivity: upskilling, infrastructure investment and access to finance.

Rule of three

Education and training are clearly fundamental, so we’ve pioneered schemes including Lloyds Scholars, which for the last six years has supported young people from low-income households in attending university.

The bank has made a £5m, five-year commitment to support The Lloyds Bank Advanced Manufacturing Training Centre in Coventry and the training of more than 500 trainee engineers and technicians that the manufacturing sector needs so desperately. And we have launched a construction apprenticeship programme with £1m committed to funding new apprentices in London.

Meanwhile, every year we also take on 1,000 apprentices of our own, who we believe have the potential to be the future of the banking sector.

When it comes to our support for the Government’s National Infrastructure Plan, Lloyds Bank will make available £10bn of funding to projects in 2016, as part of a £30bn, three-year commitment to the end of 2017.

We have committed to make available £30bn of funding to infrastructure projects to the end of 2017, and £30m a year, up to 2020, to the Housing Growth Partnership.

Regarding access to finance, in the last five years our SME lending has outperformed the market each year, and in 2016 we have committed a further £2bn of net lending to small and medium-sized businesses.

As part of our commitment to supporting manufacturing firms with a desire to grow, Lloyds Bank has committed in its Prosper Plan to lend £1bn a year to manufacturing companies. We have achieved this target in 2014 and 2015 and are on track to do again in 2016.

Home and abroad

Growth comes in many forms, of course, but supporting British businesses to export is crucial to productive growth. That is why we have committed to help 5,000 businesses to export for the first time in 2016 and 25,000 of the next five years as our contribution to the government’s target of creating 100,000 new exporters by 2020.

This access to funding is vital in creating a growing and sustainable economy.

However, funding is only one element of the integrated support that MSBs, and businesses on their way to becoming MSBs, need.

We are constantly working to better understand our clients’ needs and help them succeed in the reality of today’s economic environment.

They told us that working capital management was at the top of their agenda, so we launched an innovative tool that we use with clients to help them better understand the impact that the key working capital levers can have on their liquidity and, with this understanding, support them to make fundamental working capital improvements.

On the right track

So we have made some very real commitments to UK plc, and we are delivering on those commitments.

And we are delighted, therefore, to have collaborated with the CBI on their productivity report, Lifting the Trophy. I am struck by how its conclusions chime with our existing strategy.

I have already mentioned the work we are doing to tackle skills shortages; providing external advice and supporting customers’ investment in new technology are also already priorities for us.

But the report also contains valuable insight into the importance of employee engagement, leadership skills and market disruption, which MSBs should look to apply where they can.

Becoming more productive is perhaps the greatest challenge being faced by the UK’s MSBs.

I believe that it is only by working together – businesses, banks, government and stakeholders – that we can find all the pieces needed to solve the productivity puzzle.