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Small Businesses

Volume 481: debated on Thursday 23 October 2008

4. What steps his Department is taking to help small businesses in town centres and ensure that shop premises do not remain vacant. (229219)

The Government are committed to supporting small businesses, including shops, which play an important part in local communities. Yesterday, we announced a cross-Government package of support that focuses on the things businesses have identified as top priorities: cash flow, access to finance and training for staff. We will also continue to promote policies to support vibrant town centres.

There are about 500 empty businesses in my local authority area and that number is rising. It is customers with money in their pockets who keep shops open and the best way to that end is to have decently paid jobs and good inward investment, but the biggest barrier to investment in my area is transport links. The Government have said that they want to bring forward infrastructure projects. Will the Minister give his support to bringing forward the Kingskerswell bypass linking Torbay to the motorway and dual carriageway network? The absence of that link is the biggest barrier to investment that my constituents face.

I am sure that the hon. Gentleman will want to raise that transport issue at an appropriate point in Transport Question Time. His general point, however, is important, and it is about what we can do to help people and businesses during difficult economic times. The best thing that we can do is to continue to provide a package of support for small businesses that are going through difficult times. That is why we made the announcement that we did yesterday. In this difficult macro-economic climate, we need to take some fairly fundamental decisions about borrowing, too, and that is what the Government are doing.

In his answer, the Minister rightly pointed out that cash flow is a big issue for small businesses. However, although there may have been argument in favour of empty property taxes in the boom times, does he accept that they compound the problem in the down times? Will he reconsider the matter, to help small businesses and others to get through this difficult period?

As the hon. Lady will be aware, both the Barker and Lyons reviews suggested that we should end vacant property relief, and that is what happened in April. That relief was regarded as a £1.3 billion subsidy for owners of commercial property, and not for the small and medium-sized businesses that are the backbone of this country’s economy. We need to help small and medium-sized businesses, and that is the focus of the package that the Government announced this week. That package has been welcomed by the CBI, the Federation of Small Businesses and the British Chambers of Commerce. I hope that the Opposition will welcome it too.

Barker and Lyons reported before the recession. What we need from the Government is specific action now, not mere generalities and platitudes. One specific thing that is within the Government’s power is to suspend the rates on empty properties. Will the Minister do that, and do it now?

I can understand that the hon. Gentleman feels passionate about this issue. We are going through challenging economic circumstances: it looks as though we have tougher times ahead, and the best thing that I can say is that we need a Government who are on the side of hard-working people. We are providing help for small businesses with health checks, training support and business advice. In addition, the Government are a huge purchaser and we have said that we will ensure that we will pay our bills promptly. We are introducing all those measures at the moment, and a range of other measures is already available through the Business Link programme. The Government are committed to ensuring that support for business continues to be delivered effectively.

This may be the first occasion on which a Minister of Cabinet rank is not available to answer questions in this House. Many consider that to be a complete insult to the democratic process.

Small shops need rate relief and credit lines, but there is an enormous gap between the Government’s words about banks being prepared to lend to small businesses and the reality on the ground. Even now, banks are cancelling overdraft facilities left, right and centre, often at just two days’ notice. Does the Minister accept that that is already driving many businesses to the wall?

I am certainly very aware that there is anecdotal evidence of the practices that the hon. Gentleman describes. It is one of the reasons why the Chancellor and my noble Friend Lord Mandelson are meeting the banks today. It is clearly right at this time that banks should continue to make lending available to small businesses. One of the conditions of the bank recapitalisation fund that we announced two weeks ago is that banks must continue to make competitively priced loans available to small businesses. We are discussing that with the banks and will continue to do so, because we want to make sure that small businesses are helped through this difficult time. We do not want the banks to turn off the tap and cause good businesses to face huge financial problems.

The Government say that there should be more lending, but they then add—understandably, I suppose—that financial conditions will have to be met. In a recession, are not those conditions bound to stop the lending that is promised? Whatever propaganda we get from the Government about what they want to happen, there will in fact be a further serious contraction in lending by banks to business, and not much of the promised expansion in lending.

It is not the role of Government to make decisions on lending between individual banks and companies, and it is right and proper that that business be conducted in the normal way. However, the Government can talk to the banks about the principles that underpin their lending—the instructions that go from head office to branches and the managers who make decisions with companies on a day-to-day basis. It is right that the Government should show a strong interest in that, and right that when talking to banks about the bank recapitalisation package, we insist that they do all that they can to support small businesses and home owners with mortgages in these difficult economic times, and we are committed to doing just that. The hon. Gentleman should welcome that, not criticise it.