Liberate Isa cash to aim it at SMEs

 
Philip Salter
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SIGNING an e-petition is about as close as the British get to the direct democracy of ancient Athens. And although it’s easy to doubt the efficacy of adding your digital weight behind something that politicians can ultimately ignore, 100,000 signatures will at least mean the issue is considered for debate in the House of Commons.

David O’Hara, founder of Blackthorn Focus, has started an e-petition calling on the Treasury to end the ban on you holding Aim shares in your Individual Savings Account (Isa). He thinks the ban on Aim-listed shares being held within a self-select Isa deprives Britain’s small and medium enterprises (SMEs) of a substantial source of capital – the private investor. He is spot on.

“Private investors are a considerable source of capital and liquidity to the UK’s smaller listed companies”, notes O’Hara. “The Isa ban on Aim shares forces private investors to direct their money elsewhere at a time when the UK’s small and medium-sized companies have been identified as key players in the economic recovery.”

Politicians are missing this trick. They are too busy slamming Britain’s banks with higher reserve ratios, at the same time as lambasting them in the media for not lending to businesses. They have now come up with convoluted schemes to socialise the costs of business failure, loading the burden of risk onto the shoulders of Britain’s taxpayers.

I recently interviewed David Williams, whose satellite communications company, Avanti Communications, is listed on Aim. He was robust in his criticisms: “I strongly dislike the debate that Britain’s SMEs need the banks to lend them money. It’s poppycock. Banks have never loaned SMEs money. SMEs are very rarely bankable. What SMEs need is growth capital and growth capital has to come from the equity market. Don’t bully the banks and expect the them to lend start-ups money on ridiculous 200 basis point margins. That’s never happened in history and it shouldn’t happen now. That should come from the Aim market”.

O’Hara’s e-petition can be found at http://epetitions.direct.gov.uk/petitions/16111 – let’s take aim and end the ban.