British banks, so far, have failed SMEs by not providing essential long-term finance. However, the relationship is two-way and SMEs’ behaviour is also worthy of examination. The discussion in this chapter seeks to establish whether factors emanating from the culture, perspective, and business behaviour of British SMEs may themselves make a significant contribution to explaining the lack of long-term investment funding. This chapter will attempt, therefore, to determine how far the culture of British SMEs may, in part, explain the alleged failure of British banking to provide long-term investment for SMEs in the UK over the past almost 90 years, since the Macmillan Committee Report.

It will be useful to compare the British SME sector with the German SME sector, and how the success of the Mittelstand in Germany appears to have been based on their ready access to, and involvement with, the German banking system. Although there are some similarities between the UK and the United States, such as both countries subscribe to a political economy which may be described as a form of liberal market economy with a strong emphasis on competitive markets, there, however, the similarity ends. The UK does not subscribe to what has been previously termed, in connection with the period of rapid industrialization in the US, the Schumpeterian notion of “creative destruction”, and the acceptance of potentially short-lived firm survival.

The British SME sector

Before proceeding it will be worth recalling, briefly, the cultural attitudes of UK SMEs to seeking finance in the early years of the industrial revolution. The entrepreneurs’ requirement then was for short-term risk capital. Their intentions were to test new technologies, processes as well as products, to see whether and how they would work, usually in a small workshop setting. For this activity they did not need long-lived, fixed capital, and could manage with working capital. The early entrepreneurs were able to source risk capital from personal and family sources or from friendly merchants and landowners, in an age that was becoming interested in science and technology. It is possible that this habit of not looking for outside bank financing became ingrained and transferred as a cultural norm into the subsequent era of “industrialization”, which required investment in fixed capital and a longer-term corporate perspective among owners and managers.

This chapter begins by indicating that in the UK the early industrial revolution was principally driven by entrepreneurs whose desire was for short-term risk capital to test their new technology, affecting industrial processes as well as products. Their need was for working capital, or as it was also known “circulating capital”. The entrepreneurs’ requirement appeared to be better served by relying on their own capital or on merchant capital rather than attempting to persuade existing banks to provide finance. Indeed, in some cases entrepreneurs founded their own banks, specializing in specific industries. The involvement of Quakers, both as entrepreneurs and as bankers, was notable – today's Barclays and Lloyds banks both originated in nineteenth-century Quaker families.

An analysis is presented of the comparable situations in Germany, France, and the United States. It will be shown that these industrial revolutions post-dated that of the UK, indicating the need for the banks in these countries – dealing with the more developed industrialization phase of the revolutions – to provide long-term capital to install and implement already tested technologies. This situation enabled a different structure of industrial banking to develop, with a willingness to adopt a risk profile suited to achieving long-term investment returns. The US developed initially by following the UK entrepreneurial funding model in the early 1800s, but its subsequent, if delayed, industrialization phase developed in a different manner, in relation to its banking system and structure. There is a need, therefore, to explore the reasons why, in the second industrialization phase in the UK, from 1830 to 1900, British banks did not participate in the same fashion as in say, Germany, or by following the alternative path taken in the US.

One significant factor that will be discussed, in these other European countries, is the existence of agricultural credit banks serving initially the farming communities and subsequently agricultural equipment manufacturers and merchants. In the US, the story was similar, and its wider geography led to a large variety of “unit” banks, initially serving the agricultural sector, although here there was a considerable turnover of these independent banks.

Notwithstanding the historical and cultural context which defined the British business banking functionality in the nineteenth century, an explanation is required as to the persistence of the poor record of British banks in providing sufficient investment loan capital to SMEs in the twentieth century, and to the present day. This chapter will seek explanations for the persistence of the apparent unwillingness of British banks to provide long-term loan finance to SMEs. Contrasting experiences will be described in relation to Germany and to the United States.

The contemporary structure of UK banking demonstrates the dominance of the sector by the five major, centralized banks, surrounded by a penumbra of “challenger” banks. It will be argued that even these new challenger banks, whatever their prospectuses may say, have, for a variety of reasons, failed to significantly alter the lack of provision of long-term investment finance to the British SME sector.

The analysis will uncover the historical pattern of apparently risk-averse British banks failing to accept the risks of business lending to SMEs over a 120-year period. One aim will be to attempt to understand how far the attitudes of both the major banks and SMEs, as modern economic conditions emerged in the twentieth century, may have been conditioned by the historical relationships built up during the late-eighteenth and nineteenth centuries. On the other hand, it may also be the case that other more recent factors have compounded these earlier attitudes.

The discussion will proceed chronologically and can be usefully divided into four periods: (1) from the start of the century to the end of the Second World War; (2) the postwar period until 1970; (3) 1970 to the mid-1990s; and (4) the period since 1995.

1900 to 1945

By 1920, a long process of consolidation in the preceding century of small private country banks into larger banks had produced an oligopolistic structure with a handful of dominant banks. Size clearly mattered in terms of the stability of the larger banks and their ability to recruit deposits and to make well-performing loans to individual and to business clients, at least to large companies. In 1920, the government concerned at this concentration, introduced legislation preventing further takeovers without Treasury approval. In the period between 1900 and 1945, five large banks – Lloyds, Barclays, Midland, National Provincial and Westminster – dominated the banking sector

In August 2018 the BBC published research showing that 11 clubs in the Premier League could have made a profit without charging fans for tickets, so why is it that ticket prices are so high?

1966 and all that

When England hosted the FIFA World Cup in 1966, it was possible to see seven games (three group games, a quarter final, a semi-final, the third/fourth place playoff and the final) for a total sum of £2.62. This was to watch the game standing on the terraces, which many fans find more enjoyable. If you wanted to sit in the best seats, the same package would have cost £15.10. Taking into consideration inflation between 1966 and 2018 in the UK, these two packages would cost £46.64 to watch standing on the terraces and £268.78 for the most expensive seats. Yet, for the 2018 FIFA World Cup in Russia, it would have cost you £985 for the cheapest route to the final, and £2,282 for the most expensive. Admittedly in 2018, you would have seen one extra game, as the number of teams participating in the competition has increased from 16 to 32 and so an additional knock out round is required. You are also allocated a seat at the match, compared to standing on a terrace.

Prices have therefore outstripped inflation (in sterling terms) by over 2,000 per cent for the cheapest tickets, and a mere 750 per cent for the most expensive. It is the same for domestic matches. Immediately after the 1966 World Cup it was possible to watch Manchester United, featuring superstar players George Best, Bobby Charlton and Dennis Law, for between 20– 63 pence. To watch a match at Old Trafford in 2019/20 cost between £36– £58, and Manchester United are one of the cheaper teams to watch in the Premier League.

So why have ticket prices risen so rapidly? Once again, we return to supply and demand. In theory prices are determined where supply (clubs selling tickets) meets demand (fans wanting to buy tickets). If you increase prices then demand falls, and if prices are cut then demand increases. This approach applies to football ticket prices too.

I have described what Karl Polanyi called the formalist approach to economy, effectively neoclassical economics: a concern with people allocating their limited resources between alternative ends. Economists call those ends “preferences”, take them as given and do not investigate them, or even really care about them. This is most obvious in their approach to markets. There, a mass of people with a variety of preferences and a range of resources are treated as an undifferentiated mass called something such as “market demand”. All that seems to be important is the transaction of money for objects. In the preceding chapter I showed the way that something else concerns many economic anthropologists: the ways that the circulation of objects reflects and affects social identities and relationships. For Marcel Mauss, and for anthropologists generally, objects that circulate in this way are called gifts, while objects that circulate in an impersonal market are called commodities.

This anthropological use of the term “commodity” is different from the Marxian use. There, as I noted previously, what is important about a commodity is not the sort of transactions in which it circulates but, instead, that it is produced with the intention of selling it, such as the cloths described in Chapter 2 (see Carrier 2018a). Further, in the market such commodities commonly are fetishized. This means that they are presented, and seen, as bearers of use and exchange value that are stripped of the processes and relations by means of which they are produced and brought to our consideration. On a supermarket shelf the bottle of soft drink tells us that it is cool and refreshing and its price is displayed. Nothing, however, tells us about the people who thought it up and made it, the drivers who brought it to the store or the assistants who put it on the shelf.

The anthropological use of “commodity” differs as well from common use, which shares that fetishism. In that use the term refers to an object that is mass-produced and with few or no distinguishing features, such as table salt or plain white T-shirts. Firms do not want to make or sell such things, but commonly seek to distinguish their wares in some way.

I described in the previous chapter how one of the explanations for the widescale defaulting on sub-prime mortgage contracts (the event that triggered the Great Financial Crisis of 2007– 8) was the lack of financial knowledge among those groups that had previously been excluded from this market. Unsophisticated in matters of interest rates, budgeting and risk, vulnerable consumers were held to have signed up to expensive contracts they could not afford.

This chapter explores the capability to access and use financial services as a specific dimension of financial inclusion. While the forms of financial inclusion discussed in the previous chapters focused upon mitigating the exclusion of households and communities through a combination of geography and historical oppression, this chapter addresses attempts to overcome deficiencies of financial knowledge and skills among excluded groups. As I set out in Chapter 2, if microcredit and reverse redlining concerned the expansion of opportunities to underserved groups, this chapter addresses situations where these opportunities are presumed to be already available for consumers; their exclusion arises from their lack of knowledge about how to access, choose between and best utilize them.

The chapter explores these questions through the specific context of the UK under the New Labour (1997– 2010) and Coalition (2010– 15) governments, describing how it is that enhancing financial capability became a central policy objective and sphere of intervention. As noted in Chapter 2, it was in the UK that the concept of financial exclusion was first elaborated within economic geography, a period of academic interest that presaged a concerted policy programme of financial inclusion during the New Labour governments of the late 1990s and 2000s. The broad body of work done in the UK in this period formed a blueprint for financial inclusion research and policies implemented elsewhere in Northern Europe (Carbó et al. 2005: 99), Australia and New Zealand (Chant Link & Associates 2004).

The chapter begins by describing the work of Leyshon, Thrift and others on financial exclusion, moving on to address the specific development of financial inclusion as a key policy objective under the successive New Labour administrations and how this related to previous and ongoing academic research.

The countries that I know best have societies of mass consumption, and at its simplest this means that its members have a lot of stuff. They have so much that, as I noted previously, some people make a living telling them that they ought to have less, that they ought to declutter their lives and that they ought to give and value experiences rather than things. Seeing consumption as stuff accords with the economistic view of people in the market, which says that (a) people have desires, (b) if they have the money to do so they buy things that will satisfy those desires and (c) that is pretty much the end of the story.

Economic anthropologists interested in consumption view things differently, and for them the story does not end when people buy things. The buying is important, but they approach it in terms of the origin and nature of the desires and of the social and cultural context of what happens after our consumer brings the stuff home. Mary Douglas and Baron Isherwood (1978: 66– 7) say that ignoring those desires and that context means that we would find it hard to distinguish the gourmet's meal from “solitary feeding, where the person wolfs or bolts his food, probably standing by his refrigerator in his overcoat”.

“What happens after our consumer brings the stuff home” covers a vast range of activity. Indeed, some have complained that the term covers so much that it is effectively meaningless; for a long time my working definition of “consumption” was “not production”. This means that what I say of work on consumption by economic anthropologists has to be very selective. One could invoke Douglas and Isherwood's (1978: 57) definition: “[A] use of material possessions that is beyond commerce and free within the law.” That has the authority of Douglas's stature in anthropology, but it is remarkably vague and its use of “material” and “possessions” is more restrictive than many would like. After all, a person at a concert can reasonably be said to be consuming music, even though the music is neither material nor the listener's possession.

In previous chapters I explored various ways in which financial inclusion has been promoted and facilitated by states, NGOs and financial institutions. Each chapter worked through the programmes and interventions that composed financial inclusion strategies in specific domains, noting in each case how these were directed and shaped at some distance from users’ needs and practices. In contrast to these top-down images, this chapter explores the case of mobile money, often presented not only as the clearest success story of financial inclusion in the 2010s, but also of how transformations in financial practices can be driven by the creativity and innovation of hard-to-reach communities and individuals themselves.

Mobile money thus presents a distinct strand of financial inclusion. It provides, perhaps, the clearest and most striking story of communities who had no previous access to banking services being drawn into the formal financial sector. Yet these considerable achievements are inextricable from broader changes in how these communities related to and used money. The story of mobile money can be characterized as one of uncontrolled financial inclusion, where change is driven by communities’ reinterpreting and repurposing technologies to meet their existing financial needs.

Mobile money: overview

Mobile money has been widely celebrated as a tool of financial inclusion for a number of reasons (see, variously, Smith et al. 2011; Riley & Kalathunga 2019; Ndung’u 2017). It enables inexpensive, prompt and smooth payments and transfers across broad geographic distances (Hughes & Lonie 2007; Gosavi 2017), specifically in rural communities where the reach of the formal sector is poor (Duncombe 2009). It brings users into contact with a broader array of financial services and financial education programmes – opportunities that continue to broaden as mobile money practices switch to smartphone-based systems. More broadly, mobile banking has been held to promise a complete reorientation of banking and payment systems in the Global South; free of the heavy infrastructures of retail banking, it is better able to support the small-scale, low-value transactions that suit rural communities (Kendall et al. 2012: 62; CGAP 2009: 11– 24). Indeed, as an entirely new payments system, it promises an entire reorientation of the world economy (Kendall et al. 2012).

The cash flow statement summarises the cash in and out of a club over a period of time, which matches the period covered in the profit or loss account. It explains how the cash figure has changed from one balance sheet date to the next. Cash flow statements are no different to a bank statement for an individual. They highlight the sources from which the club generates cash, and the choices management made when spending it over the year.

The rules on how to present a cash flow statement vary from country to country. Under the most common rules cash flows are split into three main categories: operating, investing and financing.

Table 4.1 higlights how Borussia Dortmund had €49.3 million at 1 July 2017 and how this increased to €55.9 million in the two years to 30 June 2019. The cash flow statement is a very good “why” document that explains to the reader the reasons behind the overall increase or decrease in cash over the period.

Cash from operations

This represents the cash generated by the club in terms of its day to day activities, which include selling tickets and merchandise, paying wages and suppliers. In a normal business one would expect this to be a positive number, but for football clubs this is not always the case, especially if the club has a big wage bill compared to the income it generates. The cash from operations figure is calculated by adjusting the club's profit for the year for:

1. • Non-cash expenses such as depreciation, player amortisation and gains on player sales;

2. • Converting sales and purchases in the profit or loss account to cash received from customers and paid to suppliers.

Table 4.2 provides some extra detail on the operating cash outflow total of £13.8 million for Leicester City in 2019. It starts with the net loss of £17.3 million. Included in that total are some non-cash expenses such as depreciation, gains on player sales and amortisation.

These are accounting adjustments rather than cash amounts and so are adjusted for by reversing their treatment from the profit or loss account.

Financial Fair Play (FFP) was a phrase initially associated with former UEFA president Michel Platini. Its stated aim was to prevent clubs from spending more than they earned in the pursuit of success and in doing so getting into financial problems. A more cynical view might be that the established European superclubs were concerned about the rise of newly monied rivals, in the form of Manchester City and PSG, creating a threat to the effective cartel in terms of how football riches and trophies were spread amongst the elite. Distributions from UEFA for the European Champions League at the final stages had traditionally been shared between a small number of clubs, giving the recipients a further financial advantage over their less wealthy competitors. This effectively acted as a glass ceiling, which prevented smaller clubs from challenging the elite unless they had owners who were prepared to underwrite large losses in recruiting and paying for some of the best players.

FFP is an umbrella term which covers a variety of ways of gauging the finances of football clubs. The rules are set by UEFA for those clubs that qualify for European competitions and by national football associations for their domestic competitions. FFP rules are split into two broad camps, one of which is profit related, and puts a limit on the maximum losses that a club can make, and the other is linked to wage control. Both controls have some merits, but these approaches ignore a fundamental commercial rule. Businesses suffer financial difficulties because of an inability to pay their debts as they fall due, which is a cash flow issue and is not always connected to profit, which is an abstract accounting concept that can be manipulated.

In earlier chapters we established that profit and cash are not the same and so it seems baffling to have profit control methods if the sole aim is to minimize the chances of clubs entering formal insolvency/bankruptcy arrangements. The nature of these controls reinforces the view that some of them exist for reasons other than simply preventing clubs from going out of business.

Ratio analysis involves linking two or more figures from the accounts where they have a logical business relationship. The ratios are then used in comparative analysis on either an historic or peer group basis. When looking at ratios, one need not be concerned about the numbers themselves, they are merely tools and flags to help identify issues about the club's financial position. Instead, we need to ask:

• • What does the ratio mean?

• • What does a change in the ratio mean?

• • What are the causes of the change in the ratio?

• • And what are the consequences of the change in the ratio?

An analyst will focus on the “why” and the “so what” elements of a change in a ratio and identify the reasons behind the movement in the figures and their implications for the future, such as the ability to sign players, renew manager contracts, meet wage demands, and so on.

Performance ratios

Performance here means financial performance, not performance on the pitch, but some of the calculations can in fact be linked to on-field performance too. To measure how much profit is generated from each £1 of income we use the following:

There are other measures of profit too, all used by analysts to get an overall feel for the club's performance. We can have:

• • Gross profit margin (not really appropriate for a football club, but if looking at a business linked to the club, such as a sportswear manufacturer, this would be valid);

• • Operating profit margin;

• • EBIT margin;

• • EBITDA margin;

• • Profit before tax margin;

• • Net profit margin (and any other the analyst chooses to calculate).

When looking at profit margins it makes sense to distinguish between “dirty” profit measures such as operating and net profit ones, which include non-recurring items and “clean” measures such as EBIT and EBITDA where non-recurring items are removed. Table 10.1 shows the data an analyst might extract from the accounts and put into a spreadsheet, which is typically how an analyst would crunch the numbers.

The EBITDA margin for 2019 is calculated as EBITDA profit (£186 million) divided by total income (£627 million) and multiplied by 100 to arrive at a figure of 29.6 per cent. What does this mean?

I have shown how consumption reflects and makes meaning. Whether we intend it or not, whether we are conscious of it or not, what we know or are told of who consumes what serves to divide the people and things around us into different groups, which often carry evaluations and even moral loads. These groupings, meanings and associated evaluations are public, in the sense that they are what we see in movies and on television and what we read in the newspapers and on the web. They are, in a way, what everybody knows.

Of course, there is more to consumption than the expression and reproduction of public meanings. When we consume things, personal meanings and relationships also are important. They arise from our dealings with and use of different things in different contexts with different people. Economic anthropologists are some of those who have described these things and how they can be important for understanding consumption.

Consuming for social relations

Consumption routinely occurs in social relations, and it should be no surprise that it can affect and reflect those relations. This is the point that Mary Douglas and Baron Isherwood pursue in The World of Goods. There they do battle with economists about why people consume the things that they do. Is it price? If so, why does the demand for some goods go down when the price goes up, while for others the demand does not change much and for yet a few others the demand goes up? Alternatively, is it the utility of things: how their properties mesh with people's wants and needs? Perhaps – but which wants and needs? Douglas and Isherwood have an answer. For them (1978: 111), “there is only one type of physical property of consumption goods that need be considered: the capacity of goods to increase personal availability”.

By that they mean that goods are valued to the degree that they allow people to interact with others. Those others can be members of the household, friends or casual acquaintances. They even can be strangers, to whom one wants to appear a proper or even desirable fellow being, a suitable candidate for interaction. The importance of this interaction intrudes on us regularly.

This chapter examines the different approaches ‒ part art, part science ‒ used to value a club when it is sold. There's no “correct” price when buying a football club, just as there is no “correct” price for a football player, a house or a piece of art. This is due to the nature of what is being traded. There are some guidelines that help to narrow down prices to a realistic range and then it comes down to the negotiating skills of both parties, the extent of the need to sell and the ability of the buyer to finance the deal. Often buyers and sellers will use professional advisors to estimate a price for the club. Whilst a lot of time and effort can go into determining these values, they are potentially flawed for many clubs because of the elephant in the room that is the impact of relegation or promotion on a club's finances, especially in relation to the Premier League. Cynics might also suggest that some of the methods used by “professional” advisors are there to justify their exorbitant advisory fees, rather than to give an accurate measure of the true worth of a club.

Our case study will be Newcastle United, which, according to media reports, is up for sale, with owner Mike Ashley allegedly looking for a price of £300– 350 million.

Balance sheet value

The simplest way to value a club is to look at the net assets total in the balance sheet and use this as the figure. Newcastle's accounts at 30 June 2019 (see Table 11.1) show the club had net assets (assets less liabilities) of just over £43 million. The footnotes to the accounts also show that the club owed their owner Mike Ashley £111 million in loans on top of this sum, so a buyer would presumably have to repay him these loans too, which would take the net total to £154 million.

A balance sheet valuation method is a poor one to use. We’ve already established that the balance sheet tends to vastly undervalue players. This is because some players are not shown as assets in the accounts due to being recruited via the club academy system at a zero cost, or Bosman transfers with no purchase fee but a potential sale value if the player has joined and signed a long-term contract, or increasing in value due to market inflation.

Defining financial inclusion

Considering the diversity of actors and interventions that draw upon the term, as well as the range of spaces and contexts in which it is applied, it is not surprising that there are ongoing tensions over what financial inclusion actually means. The task of defining financial inclusion has been the subject of an ongoing project led by the Centre for Financial Inclusion (discussed further below), recognizing the agreement among key actors for a strategic need for an effective definition, in particular given the bold claims made in the Maya Declaration and elsewhere for its transformative effects.

With this in mind, it is useful to start with two canonical definitions.

There are clear resonances and similarities between these definitions. Both highlight access rather than use, foregrounding the importance of consumer choice; both are keen to make clear that financial inclusion includes a range of services and not simply the provision of credit. Yet there are subtle differences between them that highlight key questions for further exploration. The first concerns who the subject of financial inclusion is: is it individuals and businesses, or the unbanked? The former suggests that strengthening the private sector is a key aspect of financial inclusion: enabling people to invest and trade rather than simply manage their money.

A profit or loss account (also called an income statement, or statement of profit or losses, or statement of comprehensive income) summarizes the trading transactions of a business over a period of time. The profit or loss account deals with two main elements: income and costs. If total income exceeds total costs the difference is called a profit. If total income is less than total costs the difference is a loss. Most football clubs produce a profit or loss account covering a 12-month period, sometimes it might be slightly shorter or longer if they have altered their balance sheet date.

The profit or loss account in Table 3.1 covers the greatest year, to date, in the history of Leicester City Football Club. In 2015/16 Leicester won the English Premier League, despite having a fraction of the income of more established clubs. Whilst the fans of Leicester had perhaps some of the greatest days of their lives watching their team lift the Premier League trophy, the club also made a profit of over £20 million. This seems a lot of money, but the following year, when Leicester finished only twelfth in the Premier League, the club made a profit of over £80 million. This was mainly due to the club's participation in the UEFA Champions’ League. The club accountants, stoics that they are, may have been happier with the club's performance in 2016/17 and the record income and profits generated that year. Leicester's lower profits in 2015/16, despite the club's on-field success, suggests than an understanding of the profit or loss account, its components and how it is calculated, is a useful tool for anyone wanting to understand football finance.

It is important to be aware that clubs who have their shares listed on a stock exchange (like Manchester United, mentioned earlier), may have to produce more regular financial information to satisfy local legislation and stock exchange rules. These are called interim accounts and may cover a period of three, six or nine months.