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Small Businesses

Volume 455: debated on Thursday 18 January 2007

The House is lucky this morning, as we are now hearing from another classic cockney.

On the latest available figures—those for 2005—there are 4.3 million small and medium-sized enterprises in the UK, a rise of 8.5 per cent. since 2003. They employ 13 million people and have a combined turnover of £1.2 billion. We estimate that government—national, local and the regional development agencies—spend £2.5 billion per year on about 3,000 schemes to support business in England, many aimed at SMEs. The Department of Trade and Industry is leading a pan-government programme to promote shared schemes and to rationalise them so that there are 100 by 2010, having also rationalised its own support.

I thank the Minister for that reply, but does he agree that the current system for small business support is incoherent, ineffective and hinders the development of the entrepreneurial economy? What assurances can he give that there will be genuine root-and-branch reform of Government business support schemes and quangos?

I do not agree at all. Yes, we need to rationalise, but let us be absolutely clear about what lies behind the hon. Gentleman’ question. At the last general election, his party wanted to cut £500 million from the core business support budget and to close down entirely the Small Business Service, whereas Labour is committed to investing in the small business sector and we will continue to do so. However, we also want to rationalise that to make it more effective; that is entirely different from the cut-and-run strategy that the hon. Gentleman supports.

As I put my house at risk in the dark days of high interest rates and mass unemployment to establish a small family business, I ask the Minister whether he agrees that the key thing that small businesses need in order to establish and prosper is a stable economy and low interest rates.

It was a beautiful house to put at risk; I have been in it on a number of occasions. My hon. Friend is right. We have had the longest period of a stable economy, and that is why under this Government small businesses are being created every day, whereas under the previous Government small businesses closed down in their hundreds every day.

Following on from the question of the hon. Member for Bassetlaw (John Mann), does the Minister accept that energy prices are one of the major costs for smaller businesses? Energy prices have risen dramatically in recent times, but the price at which the distributors and energy companies sell energy to smaller businesses does not drop in accordance with different market conditions. Will the Minister take an interest in that and ensure that those companies not only experience rapid rises in their profits and offer attractive packages to their executives, but offer competitive prices to small businesses?

That is a fair point. Wholesale prices will fall dramatically and that decrease should be passed on. We have taken action to build capacity in the North sea; my right hon. Friend the Secretary of State made an announcement on that some time ago, and we have also taken action in the European Commission. We very much agree that such savings should be directly passed on to small businesses.