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Small Business Assistance

Volume 486: debated on Wednesday 21 January 2009

I am grateful to Mr. Speaker for granting me this debate. It is perhaps on the most important subject for our country at this time. I wanted to call the debate “Help for small companies during the recession”, but in their wisdom the authorities rightly altered it into parliamentary terminology. Whatever its title, however, the message for the Minister is loud and clear. Small businesses are in real trouble. They form an important part of our national and local economies. The Government’s actions could make a lot of difference to whether they survive.

Every day on television and radio news programmes, Government announcements cite figures of billions, tens of billions and hundreds of billions of pounds. For many small businesses, however, the difference between success and failure, between life and death, can come down to £50 or £100 a week, or a bill for £1,000 not being paid on time. It is important that the Minister and his officials understand that. For many people, figures quoted in billions are almost meaningless when it comes to the front line of business survival at local level.

The Minister may be interested to hear that there are 26,000 jobs in the borough of Kettering. Of those, 10,000 are in small businesses. The borough has 3,377 businesses, of which 2,367 employ between one and four people. An additional 501 businesses employ between five and 10 people. It can be seen that 85 per cent. of businesses in my constituency employ fewer than 10 people. As for the sectors in which those businesses operate, 994 or almost 30 per cent. are in distribution, hotels and restaurants; 441 or 13 per cent. are in construction; and 298 or just under 9 per cent. are in manufacturing.

Putting it bluntly, if the small business sector in Kettering goes under, so will the local economy. Kettering represents the heart of middle England, both geographically and in the sense of being the average at many levels. Our experience in Kettering will be typical of many constituencies. I am grateful to have the chance to make these points today.

My job as a Back-Bench Member is to canvass and to gauge local opinion and to present it as best I can to those who make the decisions. Today, I want to make clear the experiences of a number of businesses in my constituency.

RB Travel, a small coach company, tells me that £5,000 is still owed to it by a far larger coach company. It has tried everything to get the bill settled. The payment terms were 90 days, which was difficult enough, but it still has not been paid. If it remains unpaid, 15 jobs will go. There are at least a dozen similar sized coach companies in and around my constituency, and the experience of RB Travel is not untypical, with difficult payment terms being used.

A local fish and chip shop owner, who has been in business for at least 17 years, contacted me to say that during the recession his weekly income has gone down by £40 a week. Even with 50 per cent. small business rate relief, he pays £45 a month in business rates. His plea is for the Government to offer more flexibility, perhaps providing a six or 12-month holiday. For him, the impact of the recession could be terminal—and for only £40 a week. That puts the Government’s £900 billion cumulative rescue package into perspective. That money would save an awful lot of fish and chip shops.

Brenda Briggs, from the Favours day nursery in Moulton, has contacted me. She says:

“As the owner of a small, family run business in a rural setting I have to say that one of the biggest drains on our resources is the Business Rate. We pay almost £9,000 per annum and for that large sum get very little in return. There is of course the infrastructure to be supported—police, fire, etc.—but we have no street lighting, the roads are always in a bad state of repair and we have to pay extra (approx £2,500) to have our rubbish removed. If the government really are serious in their wish to help us then a reduction in rates (or at least the inclusion of rubbish removal within the amount charged) would be a start!”

I congratulate my hon. Friend on securing this debate and on the manner in which he is introducing it. I apologise to the House, but I shall not be able to stay for the whole debate because of my Select Committee duties.

I draw to my hon. Friend’s attention the private Member’s Bill that I introduced only two hours ago, which would automatically make small business rate relief mandatory. Many small businesses—about half—do not know that such relief exists, and are not claiming it. As he says, that can make a life-or-death difference for many businesses.

I am most grateful to my hon. Friend for that extremely helpful intervention—especially as he has the status of Chairman of the Select Committee on Business and Regulatory Reform. I wish him well with his Bill—at least I think I do, as I would rather it did not need to succeed. I would like the Government to adopt his Bill and to take it through the House in Government time. It would be a marvellous response to the debate if the Minister were to make such an announcement today.

Another local businessman, Mr. Sege Rosella of SCM Construction, has written to me, and I have written to the Treasury about his case. Mr. Rosella tells me:

“I am a Director of a small development company based in Kettering…I have been a director of the company for several years and have specialised in developing small ‘starter’ apartments…aimed at the often disadvantaged first-time buyers. I have completed 5 developments during the last 5 years, creating 48 units and enjoyed the financial support of NatWest…Although our previous banking arrangements have been cordial, with all loans taken out by the company repaid in full and on time, recent events in the housing market, driven…by the near collapse of the UK banking sector and subsequent liquidity freeze, have changed the financial model of my current development. I am a small business with a good track record who provides employment for the local community and much needed house building workforce, creating housing that conforms to stated Government policy and meets the needs of young first time buyers and yet due to circumstances that are not of my making, but as a result of a cavalier approach by the major UK banks to credit and risk management, face potential financial ruin unless the RBS continue to provide financial support in accordance with their original commitment.”

Mr. Martin Lee, the managing director of Foden Ibex in Brixworth in my constituency, contacted me to say:

“The VAT reduction was a complete waste of time and money…where the Retailer was already responding to the lack of sales with significant promotions etc. The key issues to restore consumer confidence revolves around Petrol and Energy Pricing”.

Petrol prices, he said, are a feel-good factor, because if people can afford to get out and about they will buy more. He went on to say that mortgage protection for those who lose their jobs would help. He said:

“Diesel prices must be maintained below £1 litre and the tax take reduced accordingly to maintain stability.”

He also wrote to me on the subject of empty property rate relief:

“this is an iniquitous tax on something that is not earning. We have reduced our working area by 9,000 sq feet in a Modern factory and Office setting since the beginning of 2008 in response to what we saw coming. However, as sensible businessmen, we would give our right arm to let this area at a low rent and remove this overhead. In line with the economic situation no one has even shown the slightest interest yet we have to continue paying full rates for an empty property.”

On banks and cash flow, he says:

“We are now facing the same issues on facility renewals, as stated in the press, where the Bank instead of passing on the Interest Rate reductions to us on renewal wish to charge an extra 1.85% whilst the difference between the LIBOR Rate and Base Rate has only increased by 0.2%. This goes against everything that the Government is supposedly trying to do… Banks must be required to pass on the full effect of any base rate cut and maintain current agreements in place.”

My and the hon. Gentleman’s constituencies share an excellent Federation of Small Businesses branch covering Northamptonshire and Leicestershire. Its survey of members shows that the key problem has been access to finance. However, only a week ago, the enterprise finance guarantee for small businesses was announced. It is on a smallish scale—£1.3 billion—but will help. Perhaps his businesses will have access to that, which will prod the banks into action. That is where action is needed. Is that not correct?

As the hon. Gentleman said, we share a Federation of Small Businesses area and both have a lot of time for Maxine Aldred, the local co-ordinator. As often as I can, I attend the monthly breakfast meetings of the FSB in east Northampton. The message coming across is very much as he states. Let us hope that the Government’s proposals will feed through to these very small businesses. However, it has been a long time coming. An extra week or fortnight can make the world of difference between life and death for many small businesses. I hope very much that his optimism is justified.

I was contacted by John S Ward and Co. in Kettering. It wrote:

“We are a firm of chartered certified accountants who have a client in the building trade. Their tax affairs are up to date. In a difficult economy with loss relief available to extinguish the liability they have no tax to pay. This is because they have no profit! Under the construction industry scheme to receive gross payments from their customers HMRC do not take this into account but still insist that large tax payments on account of tax have to be made and then refunded. Effectively an enforced loan to the Government under threat of legislative action. Even with no tax actually payable this loan can take over a year to be repaid by HMRC. The penalty for not doing so is for a small self employed business to lose its gross payment status and attempt to survive after a 20% deduction is made on its sales and paid to the Government reducing their current cash flow - unlike in any other trade. Senior tax inspectors are involved in pursuing this with incredible enthusiasm and diligence. No consideration is allowed for the firm and its work force during a recession.”

As a result,

“a business and the incomes of 40 staff and sub contractors are put at risk.”

The message is that HMRC needs to be more flexible when dealing with businesses in such delicate situations.

My hon. Friend is making a very good case. On the construction industry scheme, for which I appreciate that the Minister is not directly responsible, I had a similar case in my constituency. Clearly, there is a conflict between the Government’s policies on the better payments scheme, which is meant to allow the deferral of taxes, and the CIS, which is now automated. There is a growing number of cases concerning this problem, about which I have written to the noble Lord Mandelson. It is a very important matter. Does my hon. Friend agree that this conflict of policy is in danger of leaving the construction industry even worse off against its competitors than we feared?

As always, my hon. Friend is spot on. The extra difficulty with the construction industry is that we need to pump-prime the rest of the economy. If houses and offices are being built, they will need to be furnished and more money will need to be spent on them. That acts as a prompter for the rest of the economy. If we undercut the construction industry, everything else will topple down on top, so it is a very serious situation.

I have received the details of another case, on the same issue, from Mr. Stephen Mucth, who runs SA Mucth, a carpentry contractor employing 10 people. He has been treated similarly unfairly by HMRC, which wants to take away his gross payment card, because of a former late payment—it was only late by two or three weeks and mistakes were made by HMRC as well. It has apologised, but is still threatening to take away his gross payment card. As his MP, I asked him what would happen if he lost his gross payment card. He replied, “Well, all 10 jobs will have to go.” He told me that last year, across the country, 227,000 small businesses had to go to tax commissioners to appeal their gross payment card status. In 195,000 of those cases, the gross payment card was restored. Huge anxiety is being put on construction and construction-related firms over their tax affairs. In the end, it might be sorted out, but the process of being sorted out is putting thousands of jobs at risk.

Mr. Richard Edwards, from the Abington Park veterinary group, contacted me to say:

“Simply the main problem in my business is cash flow. We perform a referral service to local veterinary practices carrying out complex surgical and medical procedures. We have to agree in most cases to do ‘direct’ claims for those clients sent to us by their own practices and who have their animals insured. This then presents enormous cash flow problems when the modern generation of pet insurance companies ie the big supermarkets and insurance groups take up to 10 weeks to settle the claim and thus us waiting ten weeks for cash settlement. I have to pay my suppliers within 30 days. I am sure that I am not by myself in asking that the government does something about the large companies that have a stranglehold on credit terms.”

He adds that a significant improvement would be for such companies to be legally forced to pay small business suppliers within 30 days of goods or services being supplied.

I was also contacted by Cooney Marine, which is a 40-year-old marine-sector business based in Kettering, and is one of the UK’s leading manufacturers of stainless steel yacht equipment and deck fittings. The firm employs a highly specialised work force capable of operating complicated machinery and skilled in the use of three-dimensional design. It recognises the importance of its work force and operates a successful apprenticeship scheme. Along with many other local firms, it has felt the impact of the current recession. There has been a 30 per cent. drop in orders; it has problems with the timely collection of payments from customers, and business running costs are extremely high. As a business, it needs help with debt recovery and insurance, especially regarding larger companies. That would help to ensure more certainty of income and help to safeguard jobs in the future.

The hon. Gentleman is talking about a problem that is a continuing difficulty for small firms. Prior to entering this place, I had a number of small-firm clients. Before his time here, the Government enacted delayed payments legislation, which gave greater powers to small firms further down the feeding chain to speed up payments. The problem is, of course, that they do not want to press clients, or utilise those powers too frequently, because they will damage their relationship often with major customers. The problem is not legislation, but the difficulty in taking a prime customer to court.

That is absolutely right. However, before my time in this place, we were not facing the worst recession that this country has seen since the 1930s. There has been a paradigm shift in the way in which we need to tackle these issues. It is a national emergency, especially at the level of small businesses. The Government need to think up new initiatives to sort it out, before we have almost complete economic collapse.

Mr. Neil Griffin, from the Kettering chamber of trade and commerce, contacted me highlighting the problem of business rates. He also said that self-employed people should be able to pay at the end of each year, as was previously the case, rather than have to guess what they will make the following year. That would help people to get the money in and to balance the books, before paying tax to HMRC.

Mr. Allsop contacted me about the 800,000 empty properties across the country. He sensibly says that they could be upgraded to help provide low-cost affordable housing and states that something must be done about VAT on the repair of existing buildings. That would be a low-carbon footprint solution to getting the construction industry moving again.

The Federation of Master Builders contacted me about a similar matter. It said that according to Oxford university, there is a new market in reviving existing housing stock that has fallen into disrepair, which could be worth between £3.5 billion and £6.5 billion. The federation recommends

“reducing VAT from 17.5 per cent to 5 per cent. for all building repair and maintenance work”

to get empty properties back into home ownership.

Global Surveys, a commercial surveying firm in Moulton, was formed in 1978 and has achieved national recognition with numerous local authority and Government agencies, as well as with the private sector. It said:

“Due to the present recession, 40 per cent. of staff have been made redundant, two members of staff are on a shorter working week and others are using annual holidays when there is a shortfall of work.”

The company said that its staff

“would certainly benefit from financial support for the shorter working week and reduced holidays.”

It went on to say:

“Staged payments of VAT and taxes without interest charges would help, as would a reduction in taxes…Income tax bills are a huge concern as Global Surveys is due to pay a large tax bill for the previous profitable year in the current ‘break even’ period.”

Paul Smith from Blandford Electricals in Kettering has e-mailed me with a number of points, including the withdrawal of credit insurance cover. He said:

“We suffered a large bad debt in the year 2000 and drew up a company policy of insuring our debt for companies for whom we work to a value of over £5,000.”

He went on to say that recently the company has suffered from a number of small bad debts, and that from mid-2008

“we have been having the cover withdrawn from many of our companies who were covered by this insurance”.

The explanation was

“the current challenging conditions prevailing in the UK economy”,

and he stated:

“We have questioned this and the justification for these withdrawals, many of them being for companies for whom we are in the middle of large contract works. This is now causing us much concern and reducing our ability to trade. We would urge the Government to take urgent action on this matter as soon as possible.”

Paul Smith also highlights the issue of slow payments from public and private enterprises, and makes this very good point:

“The Government has made a big thing of encouraging Public bodies to pay within 10 days of invoice receipt. This works where companies can work directly”

for the local authority,

“for example local schools”.

However, many of these contracts are managed by third parties, which are still offering extended payment terms of 60 to 90 days. Therefore, many of its invoices are not being settled on time.

Is it not the case that, wherever possible, we should encourage Government procurement officers to procure directly from small businesses? Where it is not possible, they should pass any advantage on payment dates down the supply chain. That should be a condition of alterations of payment terms by the Government.

That seems a most sensible suggestion. I do not understand why the Government cannot get on with that straight away.

Paul Smith also highlights the benefits of a local working initiative. He says:

“We would like the Government to pro-actively promote local working in every sector, using local companies for works in their own towns and cities. This would build the wealth back into the towns and be sound ecological practice. We feel the Government should put guideline distance restrictions on local authorities and public bodies to encourage this.”

My hon. Friend mentions a number of companies that are having specific problems and concerns. I suspect that all of us in the coming months will be meeting constituents in the same position. I am very conscious that the Minister is the only uncluttered Minister in the Department for Business, Enterprise and Regulatory Reform in the Palace, and as he has no Under-Secretary of State, we will have to keep on dragging him into Westminster Hall for Adjournment debates, which will be difficult for him. Just as the Home Office has surgeries to which we can take our immigration cases, would it not be sensible for him to organise officials from the small businesses department to have surgeries from time to time to which Members of Parliament can take individual constituency cases—

I am most grateful for that very helpful intervention and bright idea from my hon. Friend. I can recall Lord Rooker from the Department for Environment, Food and Rural Affairs offering a similar facility in recent agricultural crises. I hope that my hon. Friend’s initiative is taken up by the Minister, because it would be extremely helpful for many Members of Parliament.

Baroness Vadera is responsible for small businesses, so that would help with the accountability issue, which is of concern to the Select Committee on Business and Enterprise as well. I had a letter this morning from DBERR, dated 14 January, in the name of the previous Secretary of State, now the Secretary of State for Defence, acknowledging receipt of a letter from me, dated 28 October, concerning a small business in my constituency. His letter says that on consideration, the letter was not for that Department, but for the Treasury. It took nearly three months to get a letter from the wrong Minister referring me on to the Treasury. There is a need for urgency when dealing with the problems of small businesses.

Order. Interesting though that was, I do not think that it had too much relevance to the issue that is before us. If every hon. Member is to be able to speak, we need to be more courteous to each other in interventions.

I am most grateful for the idea of Baroness Vadera attending such surgeries because she could help each of us to spot the green shoots of recovery in our constituencies.

The Northamptonshire chamber of commerce kindly came back to me with views from its businesses across the country and with many excellent ideas. It said:

“A good number of our Members said that they would like to see tax relief/concessions for firms at this difficult time. Interestingly, a quarter of our respondents said that the lowering of VAT had been of no help to their business whatsoever, indeed had caused more work for some.”

Another sensible suggestion was:

“Tax concessions for businesses providing pension schemes. Increase or reinstatement of Capital Allowances—a couple of businesses mentioned this one, so that they might have the flexibility to sanction investment decisions.”

It also mentioned corporation tax holidays and reductions. As one member said:

“What is the incentive for companies to develop additional business, sales and profits when as it appears now all we will be achieving is to pay an ever-increasing amount of tax.”

Many members want to extend time scales for the payment of VAT and pay-as-you-earn. There is also a big call for a temporary reduction in business rates.

There is an overwhelming call for a reduction in red tape and bureaucracy, and complaints about

“slow and unresponsive government bodies”.

The chamber said that it has heard of a great deal of frustration

“at the ineffectiveness of the Valuation Office Agency who deal with Appeals against the Rateable Values of business premises. The Agency has a new system of programming which they instituted to deal with Appeals more efficiently, which is in a state of disarray with many Appeals not even entered into the programme.”

The chamber wants

“more flexibility in taking on casual labour—at a time when businesses need to be flexible in where and when work is coming in”,

and for the Government offices to stop erroneous red tape requests. It said:

“One Member cited an example of a survey they received from the Office of National Statistics Annual PRODCOM Survey, Products of the European Community, which seemed certainly superfluous to their business commitments…but they have been warned they might be liable to a fine if they do not complete it.”

Again, the collapse of the credit insurance market was mentioned. The chamber said:

“A number of Members highlighted the huge problem of the ready availability and cost of credit insurance, particularly for firms in the construction sector. Apparently, the insurance industry has withdrawn £10bn of cover from the market.”

There were concerns about the bank lending crisis, and a great deal of scepticism that the efforts of the Government’s latest banking rescue packages would feed down to member firms.

Local authorities can also do things to help their local businesses. I am pleased to report that Kettering borough council has one of the best records in the country for paying local invoices on time. There is also an opportunity for local councils to be innovative in getting money back into the local economy. Despite huge scepticism about the VAT cut, Kettering borough council used the opportunity to introduce what it calls a pop-and-shop parking scheme for shoppers in Kettering town centre. The council was set to save £16,000 from the reduction in VAT on revenue it raises from the parking charges in its car parks, but it has decided to plough the money back by providing a number of pop-and-shop parking spaces in the town centre, in which local car owners can park for an hour at only 10p a go. The idea is to encourage more shoppers to come to the town centre to spend their money in the small shops on the high street.

The county council is prioritising capital schemes such as £22 million for Kingswood school in Corby, £31 million for the Isham bypass, and £29 million for schemes in the local transport plan, to inject capital into the local construction industry.

My hon. Friend is making a fine speech on behalf of his constituents, people in Northamptonshire and the whole country, as always. However, should not another public body—the NHS in Northamptonshire—be encouraging capital growth? Does he agree that it should be building a new out-patient facility in my constituency? The NHS has the land, and the facility is needed, but it seems unable to commit to building it.

My hon. Friend is leading a very successful campaign to highlight the wishes of people regarding where that facility should be built, and he makes an extremely sensible suggestion that I hope the local NHS trust considers carefully. One good piece of news from the local NHS trust is that it has also decided to pay its invoices as quickly as possible, especially to local businesses.

May I make a plea to the Minister on the so-called growth areas? Kettering council has applied, with other authorities, for growth-area funding, and it has been given £22 million over a number of years. Easily, £45 million could be spent on schemes that are already designed and ready to go, which would really help the local economy, especially small businesses. Will the Minister get together with people from the Department for Communities and Local Government to look at ways in which local pump-priming initiatives can be got up and running as quickly as possible?

Finally, on the front line, with our local small businesses, the difference between success and failure is often a few pounds a week. If the Government can get down to the nitty-gritty of business survival and get away from the idea that all they have to do is throw £10 billion at this and £100 billion at that, and look instead at targeted, practical help, many thousands more local businesses will survive the recession than would otherwise be the case.

Order. It is my intention to begin the wind-ups at around 3.30 pm to give adequate time to the Front-Bench spokespersons and the Minister. If we are courteous to each other, and if we look at the clock from time to time, everybody will get in. Five Members wish to speak. Mr. Smith has already apologised to me, and through me to you, Mr. Hollobone, for coming late. He was, I think, detained at a sitting of a statutory instrument Committee.

Let me repeat that apology and say that I was detained—mercifully—for only a short while in the Committee.

I congratulate the hon. Member for Kettering (Mr. Hollobone) on raising this important debate, especially at this critical time. In the bits I heard—I am sorry about the part I missed—he made his points well, notably on the important contra-cyclical contribution of small suppliers and sub-contractors in the construction industry. That is critical as an engine of recovery, and I agree with him about VAT on repairs. At this time of environmental challenges, climate change and economic recession, we must be mindful of the contribution that energy conservation measures can make, both to job generation and to combating climate change. I am pleased with Government initiatives on that, but as the hon. Gentleman said, we must be absolutely sure that the smallest businesses and contractors can benefit.

This debate is an opportunity to place on record my appreciation of the work of small businesses and co-ops in my constituency, and their representative bodies such as the chamber of commerce and the Federation of Small Businesses. I owe a debt of thanks to members of those organisations for their comments, and they will inform my remarks.

We are all mindful that as and when recovery comes, and as we look for job generation on the necessary scale, small businesses, as ever, will make the lion’s share of the contribution. Not only that, but they do the lion’s share when it comes to saving jobs in the face of the present challenges. Those things must be uppermost in our minds.

I know that time is short and that other hon. Members wish to speak, so I shall concentrate on four main points. First, as the hon. Gentleman said, the availability of credit is critical to small businesses. It is galling for small businesses that are under the cosh to see the headlines that tell of hundreds of millions and billions going to the banks, especially because they are under the cosh from the banks that are in receipt of that money. Will the Minister continue to do everything that he can to put pressure on the banks to ensure that credit is available?

With 2012 on the horizon, tourism and hospitality is an important sector that is dominated by small businesses. They need support, especially given the attraction to overseas tourists of the weaker pound against the euro and the dollar, yet I have been advised that at least one major bank has made a blanket decision not to invest in hospitality projects, even when the local bank manager thinks that the project and the business is worth investing in. I am still checking which bank that is, and I will let the Minister know. Clearly, the Government need to ensure through their shareholdings in, and influence over, the banks that such ludicrous blanket policies are not applied and that sympathetic and proper consideration is given to every small business project proposal on its merits.

Secondly, I should like to stress the importance of self-employment. In our area, something like 18 per cent. of the private sector work force is self-employed, which puts a premium on the Government, local authorities and agencies being as user-friendly as possible to the self-employed. There are a number of questions to be asked about that. Highly valued apprenticeship schemes, other training and funding are available to small businesses, but is it as accessible as possible to the self-employed? Could more specific training and assistance be developed to ensure that the self-employed can make the most of their business opportunities? Can action be taken on ensuring that schemes are available for unemployed people to get back into work through self-employment when that is a realistic prospect? People are attracted to the idea of self-employment and explore the idea when they get over the immediate shock of redundancy, and many have good ideas, but they need support to make the most of them.

Thirdly, as more small businesses now operate from home—let us remember that there are environmental benefits from that, such as reducing congestion and so on—will we encourage local authorities and other agencies to be as supportive as possible? There is a balance to be struck, and there could be a nuisance to neighbours, but with imagination and sympathy, some things should be considered. Could we allow small quantities of office waste from home-based offices in the domestic recycling rather than over-policing it? Could more grants be made available for the installation of business lines and broadband for home-based businesses? Could more support be made available for local, community-based business networks, so that small businesses are in a position to help each other with advice and marketing opportunities?

My fourth point was mentioned by the hon. Member for Solihull (Lorely Burt). It is crucial that we tackle small business access to public sector procurement, a long-running frustration for many small businesses. I know that the Government and the Department have made efforts in that direction, but more needs to be done, especially now that the Government are planning, quite rightly, to spend £10 billion on contra-cyclical public works projects to provide economic stimulus and drive job creation.

As I said, those jobs will come disproportionately from small businesses. They need a fair slice of the action when it comes to getting contracts. To offer the maximum return for input, procurement contracts must be packaged so that they can be small-scale and short-term where appropriate; they must be easy to access; and they must be marketed to small businesses at the local level. More could be done to avoid protracted procurement schemes, planning issues and gestation periods, which are often a barrier to small businesses’ access to procurement opportunities.

I endorse the idea proposed by my good constituency colleague from Oxfordshire, the hon. Member for Banbury (Tony Baldry), of advice surgeries for Members and small businesses in their constituency. It is a good suggestion that would enjoy all parties’ support, and I hope for a favourable response.

These are unprecedented times; we all know that. The challenge is huge. The Government are doing a great deal, but they need to do still more to ensure that small businesses can survive, keep providing invaluable jobs and play a full part in recovery. I urge the Minister and his colleagues to take a checklist through the Department’s policies and related areas and ensure as much as possible that they are targeted, appropriate and user-friendly for small businesses.

I congratulate my hon. Friend the Member for Kettering (Mr. Hollobone) on securing this important debate. I have great admiration for the men and women in my constituency who have set up their own small firms. I never had the guts to go into business and set up my own company, because I was always worried about paying people at the end of the month, generating enough money to pay for it all and having enough for my mortgage. I always worked for big business, which provided the safety net of knowing that I would always get paid at the end of the month and that I could look after my family. I admire the men and women with the guts and determination to set up their own businesses.

My favourite expression in politics is that business is the workhorse that pulls the social welfare cart. I use that phrase over and over again when talking to my constituents. If we overload that horse and make life too difficult for him, like the horse in “Animal Farm”, he will collapse under the weight of red tape, taxation and everything else. That is why it is imperative for the Government to do everything possible to ensure that the environment for those businesses is healthy and that they can get through these difficult circumstances.

I am disappointed by the lack of attendance at this important debate. Apart from the Minister and his parliamentary assistant, there is only one Labour Member here. That is disconcerting when we know how much our businesses are struggling. In fact, there are more civil servants here than Labour MPs. If the title of the debate were “Support for Trade Unions”, we would not be able to get into the room, because it would be filled with Labour MPs. I worry about the lack of care and interest in small businesses shown by the Labour Government. Very few Ministers have run businesses or have been involved in them.

What will the Minister do to help councils streamline the tendering process? I get frustrated with Shropshire county council’s tendering process. I recently went to see the head teacher of a primary school, who told me that, if the school wants to get a small wall built, it cannot just get quotes from three reputable companies in Shrewsbury but must go through a hugely long-winded tendering process. It can employ the services only of companies on the special preferred list, many of which are not even from Shropshire but from Birmingham, Manchester or Leeds. More should be done to help local companies in Shropshire get through this terrible crisis.

I went recently to Radbrook primary school, where I saw the state of the young children’s toilets, which were totally inappropriate. I would love to help Radbrook primary school employ the services of a reputable local builder to build that vital extension, but I was told that that was simply not possible, because the school must go through an extremely long-winded process. I recently had a meeting with Shropshire county council’s director of finance, Laura Rowley, who promised me a conference at which local businesses could meet the county council’s procurement officers in order to start more effective dialogue, but it is imperative for the Government to do more.

Shrewsbury is the county town of Shropshire. We depend on people coming into our town to shop, but so many shops and small businesses have “To Let” or “For Sale” signs. Too many of our high street businesses have those signs, which have a lot to do with the high rates that businesses pay. Again, Shropshire receives only a fraction of the funding received by other parts of the country—particularly inner-city Labour constituencies—so the council is grappling with a huge deficit. That is one of the reasons why rates are so desperately high. I have talked to Councillor Judith Williams, one of Shrewsbury’s best councillors, about her shop in the centre of town that sells carpets and furniture. She told me how stressful it is to grapple with the rates and overheads at the end of every month, which is one of the reasons why she has closed it.

It is imperative to support small local shops. In my village of Shawbury, I always make a point of going to Citadel Farms, which is run by a local farmer, Chris Williamson, and his wife. Their farm shop sells only locally produced food and meat. When supermarkets such as Tesco, Sainsbury’s and others are making huge profits, it is important that we all play our part in supporting our small local shops, rather than always going to supermarkets.

Our farming community is facing epidemic problems. While preparing for this debate, I spoke with many farmers who said that they are struggling with huge amounts of red tape. What with the Rural Payments Agency and the Department for Business, Enterprise and Regulatory Reform, they have reams of paperwork to fill out.

The BBC website has an article today entitled “Small firms fighting the economy blues”, which includes 10 or 12 case studies. I often criticise the BBC—I refer to it as the liberal elite—for being in another world. The case studies show how small firms are persevering and doing extremely well in this economy. The BBC is so detached from reality that it does not comprehend the appalling situation faced by our small businesses, which is, as my hon. Friends have said, unprecedented. I look forward to hearing from the Minister about what direct steps the Government will take to help small businesses.

Three Members want to speak. Will hon. Members promise to look at the clock in order to give everyone a chance to have at least three or four minutes? Can we be that generous to each other?

Thank you, Mr. Hancock, and I will do my best to be very brief.

Support for small businesses is absolutely vital, as everyone here today has said. Before I came into Parliament, I ran two separate small businesses, but I cannot believe that there is one Member in any party in the House who has not been contacted by a business that needs some help at this time.

Recent events should have brought the banks, businesses small and large, finance companies and leasing companies together. However, what has happened has bewildered many people, as banks have received billions of pounds of public funding while at the same time tightening the screws on small businesses. The banks have not been supportive or passed on interest rate cuts. Instead, they have done the opposite by raising charges, withdrawing services and removing facilities.

Many years ago, when I was in the States, the motto of the Fleet Bank of America was that a bank should be more than a source for money; it should be a force for positive good. However, we are seeing the complete opposite of that today. In my constituency, Royal Bank of Scotland and Halifax Bank of Scotland are two of the largest employers, yet, at the same time, I am constantly contacted by businesses that use those two banks saying that their bank is not only failing to support their business but being an absolute hindrance by changing the terms of their loans and pulling back on facilities.

Ironically, the owners of a business based in the Chancellor of the Exchequer’s constituency—Edinburgh, South-West—live in my constituency, and that business has been affected. I have contacted the Chancellor and will be delighted to provide the Minister with the full details today, because what is unfolding in the Chancellor’s constituency is an absolute outrage. The banks are receiving billions of pounds of our money, which includes the employees of that certain company, but unless the banks do something that business is in serious danger.

We have seen public money going into the banks to keep them in business, but those benefits have not been passed on. We cannot continue to pump money into the banking system without an assurance that the banks will take immediate action to support small businesses. Time is of the essence.

Today, record levels of unemployment have been announced, and I fear that many companies north and south of the border and across the width of the country are close to the edge. We have an opportunity to keep a lot of small businesses in business, if the Government get together with the leading lights in the banks to ensure that the money works its way into businesses. Those businesses are not asking for charity; they are asking for a level playing field, so that they can provide work and services, employ their employees and pay their taxes, including their company taxes.

Many of these small businesses are running at a profit, but they face severe cash-flow problems. I would be grateful if the Minister, when he is winding up today, were to assure me that the Government will do everything that they can do to ensure that the banks support these businesses. We are not asking the banks to loan money to businesses that are not good investments. Unfortunately, however, unless things change, very good businesses will not be able to trade, because of the banking system’s lack of co-operation.

In the past, owners of small businesses and self-employed people, as mentioned by the right hon. Member for Oxford, East (Mr. Smith), went to the banks and raised money on the collateral of the equity in their homes. That is clearly not happening; the value of homes is going down and the banks have just not been lending. As has been said throughout this debate, what is actually needed is credit. The Government have come forward with a scheme—the enterprise finance guarantee scheme—but that scheme still requires the banks to guarantee 25 per cent. of the loans involved; the Government will guarantee 75 per cent., but the banks will have to guarantee 25 per cent.

This afternoon’s debate is not the opportunity or the occasion for a general beat-up on Ministers. Over the next few months, as the unemployment figures creep up, we will all encounter individual constituency cases where people have problems. I have the hotline numbers for Jobcentre Plus and Her Majesty’s Revenue and Customs, but what I want to know from the Minister is who, given his Department’s responsibilities, will give me authoritative answers to questions relating to small businesses and small business programmes? In other words, if the owner of a small business in my constituency comes to me and says, “I have been to the bank for the enterprise finance guarantee scheme and it has turned me down,” I do not want to spend two months writing to the Minister, getting a letter back from his private office and so on and so forth. I want someone locally. Is that person in the South East England Development Agency, or are they in Business Link? Who has the authority of the Minister and his Department to talk to Members of Parliament and get such matters sorted, because we are in the business of problem solving?

It would be helpful if the Minister were to take up my idea of having occasional surgeries for small businesses. I appreciate that his Department is pretty stretched at the moment in terms of Ministers, because the Secretary of State is in the House of Lords, one Under-Secretary of State is in the Commons and two other Ministers are shared with other Departments. I understand that quite a heavy work load has fallen on his shoulders. However, rather than feeling that the only way in which Members can get heard is to secure Adjournment debates, if we were to have regular surgeries to bring generic problems to him, it would help us, and I suspect that it would help him and his officials.

It is a great pleasure to serve under your chairmanship, Mr. Hancock. I particularly want to thank the hon. Members for Banbury (Tony Baldry) and for Edinburgh, West (John Barrett) for their courtesy in providing me with the time to speak in the last few minutes before comments from the Front-Bench spokesmen and the Minister.

Debates such as this provide an opportunity to give constructive feedback to Ministers about how their initiatives to provide support for both small businesses and the economy as a whole are having an effect or otherwise. I think that the Government are determined to move as quickly as possible in fast-moving markets to provide effective support. However, it also needs to be borne in mind that the uncertainty that is created for small businesses, which are perhaps awaiting yet further radical action by the Government, often means that such businesses wait before making decisions, which in itself leads to a reduction in economic activity.

It is clear from the feedback that I have received from smaller businesses in Croydon that there is a real welcome for the announcement by the Government on the delay of corporate taxation payments. That announcement is going down very well, and it is certainly helping to oil the wheels of business. However, I have received another important piece of feedback from businesses about the Government’s new loan guarantee scheme. The immediate impression is that the maximum amount of turnover to qualify as a small business under the scheme, which is £25 million, means that many banks are putting an emphasis on those companies that have turnovers between £20 million and £25 million, which means that businesses with lower turnovers are not necessarily seeing the benefit of that important Government initiative. Perhaps further consideration needs to be given to the fine tuning of the operation of the scheme when, in effect, the very generous approach that the Government have taken in providing money is not necessarily delivering the improvement that they would like to see.

For small businesses dealing with financial exigencies in the coming months, because they will no longer have the assets to call upon to provide support for their businesses, it is likely that there will be more company voluntary arrangements, or CVAS, whether those are personal arrangements or some kind of compromise in terms of the business. That is a very real problem.

I am very grateful for the input that I have received from Croydon Business and from other businesses within Croydon. In many ways, Croydon is an useful example to consider in order to gain an immediate view of how the Government’s initiatives are getting on. We have a large public sector and some very large businesses, such as Nestlé, but south London is typified by a huge range of very small businesses and even micro-businesses. It is interesting to see the way in which Government policy is having a positive or negative effect on the performance of all those businesses. I am particularly grateful for the work that is being done by a gentleman called Jeremy Frost, whose business is much busier than many others because it deals with the challenges of potential insolvency, which is unfortunately a growth business in Croydon.

It was suggested earlier that the effect of the VAT cut has been very small, and I think that that is the case in terms of the efficacy of the approach. However, that does not necessarily mean that that approach to helping retailers is a bad policy; it is just a matter of scale. The Government need to remember that a £20 billion stimulus to the economy is in fact very small, when one considers that the effect of the decision to crash Lehmans into an emergency default, rather than a managed default, is estimated to have cost about £70 billion in unexpected losses.

Often, it is a matter of degree. Perhaps Government policy on helping small businesses and the economy as a whole is developing with the realisation that it has to be about scale. However, I do not understand and would be interested to know why the Government did not feel able to pursue the bad bank solution in dealing with this week’s crisis in the financial markets.

I congratulate the hon. Member for Kettering (Mr. Hollobone) on securing this important debate. He has presented a moving and clear picture of the plight of small businesses, as have other hon. Members, so I shall not prolong the agony by describing small businesses in my constituency. Instead, I shall comment on the solutions that hon. Members have suggested and shall give a couple of my own.

The hon. Member for Mid-Worcestershire (Peter Luff) talked about the small business rate relief being paid automatically to small businesses. That was a valuable suggestion, and I should like the Minister to comment on why that would not be possible, because it seems an obvious thing to do. The smallest businesses are often those with the least access to information about the help available to them, so it is incumbent on the Government to help them as much as possible, as they need help the most and are the least likely to know about it.

Empty property rate relief has been mentioned, and I have tabled an early-day motion on that today. The rate relief for rateable values of up to £15,000 is extremely welcome, but one does not get much, in terms of rateable value, for £15,000. If one is in a town centre, or is lucky enough to be in the beautiful constituency of Solihull, that £15,000 really does not cut it. Today, I have asked hon. Members to sign my early-day motion, which says that we should consider extending that upper limit of £15,000. Perfectly good properties are being demolished and other properties are being offered for peppercorn rents by property owners who are unable to afford the rates on properties that are not generating any revenue. A gentleman in my constituency is offering warehouse space at 50p a square foot. That is unbelievable, and we must do something, otherwise there will be no empty properties available, come the upturn, to facilitate all the things that we need.

We have heard some tragic stories about the banks. I shall not single out the particularly guilty ones, but their insensitive and inflexible treatment of some small businesses beggars belief. They are not doing what they have been asked to do and are reducing overdrafts even when they are not being used. They are reducing credit terms and increasing costs. They are withdrawing credit and loans altogether, without even letting people know and without considering what effect those actions will have on jobs and on people’s lives.

The hon. Member for Kettering mentioned cash flow and the lengthening of payment dates. Small businesses are being squeezed in both directions—by the banks and by the companies that they supply, which are increasing how long they take to pay—so they are stuck between a rock and a hard place.

On solutions, the Government have done a number of brave things to try to help business, and we should acknowledge all that they are trying to do. For small businesses, in particular, we have had the enterprise finance guarantee scheme, which will be okay as long as the money flows through. I am worried about how long it often takes for Government-initiative money to reach the individuals who desperately need it. If someone has been in a road accident and is bleeding to death, one would not make them fill in a long questionnaire before applying the tourniquet. It is important to make sure that that money reaches those small businesses as quickly as possible.

The Government’s initiatives support small and medium-sized business, but not large business. I mention large business because every large business has a supply chain of small businesses, and those supply chains are suffering at the moment—none more so than the motor industry. For every job with a car manufacturer, there are about five in the supply chain, so it is of great concern that the Government have not made any announcements about the car industry. That is a particular concern in my constituency, where Land Rover has already laid people off, and we have heard about Honda postponing further production for another two months. The situation could not be more urgent for all employees in the UK.

The Government have said that they will spend £10 million on development, but only 16 per cent. of contracts with Government bodies go to small business. The Federation of Small Businesses has suggested that organisations that spend our taxpayers’ money could make tender contracts smaller. As I said to the hon. Member for Kettering earlier, if the Government intend to pay on time, that must be conditional on a faster payment passing down the supply chain, so that the big fish do not get fatter at the expense of the small individuals who, if I may mix my metaphors, are trying to get the crumbs from the table. Will the Minister tell us how many shovel-ready contracts the Government are in the process of giving the green light to?

On procurement, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) talked about the barriers to becoming an approved supplier. There is something called the small business concordat, which has been signed up to by a small number of local authorities. In a recent White Paper, the Government expressed the aspiration that 30 per cent. of their procurement should go to small local businesses. Will the Minister report on how they are doing on that target and how that is being measured? They are spending our money, so will the Government consider improving the procurement requirement that often closes the door in the face of small business?

Trade credit insurance has been mentioned, and it is terribly, disproportionately damaging to small businesses that cannot ensure their credit sources. The Government have promised to look at improving the situation, so will the Minister tell us what progress is being made?

On apprenticeships, there is another Government initiative to create more. Some 69 per cent. of all apprenticeships are with small business, but the FSB has found that only 5 per cent. of its members are aware of potential wage contributions toward apprenticeships. We have talked about automatic payments. Could not whatever a business is entitled to when it takes on an apprentice be levied automatically?

On flexible working, it is much easier for a small business to agree flexible, part-time working than to lose people altogether. By doing so, they can keep skilled workers on stream and at least keep people in some work if not in full-time work. The FSB has asked for tax exemptions for people working for up to 15 hours. Will the Minister ask for suggestions for tax relief, especially for small businesses, so that flexible working can easily be facilitated? As we know, administration is five times more time-consuming for a small business than for a larger business.

In conclusion, nothing is going to affect this economy until the banks start lending again. The British taxpayer is now in hock for unspecified millions of pounds, and the Government have written a blank cheque. We already own 70 per cent. of the Royal Bank of Scotland. If we nationalise the weaker banks, it could release the stranglehold on lending that we have in this country. The Government can do lots more, and hon. Members have provided many good suggestions. I will sit down now to allow the final speaker to contribute and the Minister to give, I hope, constructive suggestions in his response.

I also congratulate my hon. Friend the Member for Kettering (Mr. Hollobone) on securing this timely debate. As all of us know, he is an assiduous Member who works comprehensively for his constituents; they are fortunate to have such an effective representative.

A number of contributions have described how many constituents’ small businesses are facing a harsh economic winter and how falling demand and shrinking credit means many fear for their survival. The contributions of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and, obviously, my hon. Friend the Member for Kettering brought out the human cost of what a recession really means. No wonder, therefore, that ministerial talk of green shoots was met with such derision last week. The problem is that such comments say to the public that the Government are now detached from their world.

As someone who started my own firm at the bottom of the last recession, I understand the stress and strain that many of the small firms that we have talked about today are facing. That is why last October, my Conservative colleagues and I called for action to help cash flow and action on working capital. That is why last November, we called for a national loan guarantee scheme of £50 billion to underpin bank lending to business. The scheme was simple and open to all businesses in all sectors. Its aim was to support good firms through tough times. My hon. Friend the Member for Banbury (Tony Baldry) rightly highlighted the importance of that issue.

Last week, the Government finally offered us a pale imitation of that scheme. I am pleased that they have finally realised the need for it, but why has it taken so long? The Federation of Small Businesses has told us that 10 businesses go bust every day. Why has it taken Ministers two months to draw the scheme together, and why limit the scheme to cover for £20 billion, not £50 billion? Also, why limit its remit to selected firms, as the hon. Member for Solihull (Lorely Burt) pointed out? Martin Weale of the National Institute of Economic and Social Research has said:

“My guess is that it won’t be enough. After a few months it will look like another of the government’s half measures.”

So, it is clear that more needs to be done, and the right hon. Member for Oxford, East (Mr. Smith) was right to say that. May I say that I strongly support the mention of co-operatives? In this particular instance, they have an important role to play and he was right to touch on that. He was also right to mention home-based businesses.

Action needs to be taken, which is why in October and November we started to set out some practical ideas that could help small business. First, small and medium-sized enterprises need to be able to defer their VAT bills for up to six months. I recently met a logistics firm that is not dissimilar to the one already mentioned. It told me that the ability to defer VAT would be fantastic—after all, its quarterly VAT bill is about £90,000—and would provide immediate flexibility in relation to its bank balance.

Secondly, the smallest of employers—those with up to five employees—should be able to cut their payroll by 1 per cent. for at least six months. A typical firm with, for example, four employees would save about £600 over that period. That is not a huge amount, but as my hon. Friend the Member for Kettering said, for many businesses it is the difference between being in business or not being in business next month.

Thirdly, I have personally helped thousands of eligible small businesses claim the rates relief to which they are entitled. As we have heard, less than half of eligible small businesses claim that relief, yet it is worth up to £1,100 per annum. To help them, I have put on the web a simple online checker that even a technophobe such as myself can handle. It is very easy: someone puts in their details and their postcode, and they can see immediately whether they are eligible. They then print off the form and send it to their council. I am pleased to say that hundreds of firms have already used that service, which can be found at The point has been made that business rate relief should be automatic. As has been mentioned by a number of hon. Members, I hope that the Minister will respond to that directly. It is automatic in Wales, but what about England?

The actions I have talked about contrast sharply with what the Government have been doing. They have been talking a lot—there have been lots of announcements and press releases—but not doing much. For example, on funds from the European Investment Bank, which I think has been mentioned, the Prime Minister promised us in a press release of 10 September that he would get EIB funds flowing “as soon as possible”. In October, he said that again at the EU summit and repeated the pledge in November. Our competitors in France, for example, had already given €300 million to their businesses by the end of October. By December, the Italians, the Spanish and, indeed, the Czech Republic had handed more than €550m to their small firms. Yet when I asked the Minister in December how many millions of pounds our businesses had received, he was unable to give any examples. So, four months after that first press release, can the Minister tell me how many businesses have received the money and what proportion of the £1 billion due has been paid to British firms?

I have mentioned how Government dithering has failed to assist small firms, but unfortunately they have also put policies into practice that are actually hurting small firms in our constituencies. Let me offer three simple examples. First, the Government have changed the rules on capital gains tax, which will cost owner-managed businesses £250 million in this tax year alone. Secondly, as mentioned, they have levied business rates on empty properties, which will cost £700 million this year alone. Thirdly, as we have heard, we have, of course, also had the temporary cut in VAT announced in the pre-Budget report. We were told soundly by the Chancellor and, indeed, by the Prime Minister that that would kick-start retail sales and save the high street. Well, the British Retail Consortium has reported that December 2008 sales were the worst since records began—that was after the cut in VAT. Sir Stuart Rose at Marks and Spencer said it made “no material difference”. The cut in VAT not only failed to kick-start the high street, but cost business £300 million to implement. Those three policies—the change in VAT, the change in CGT, the rise and application of business rates to empty properties—mean a £1.25 billion increase in tax bills, just when businesses are facing one of the toughest economic climates that they can possibly imagine. I hope that the Minister will tell us how those policies have helped small firms.

This has been a timely debate and I know that hon. Members are keen to hear the ministerial reply. We have had some excellent contributions, which have highlighted the human aspect of what a recession is all about. I genuinely hope that the Government consider the outstanding suggestion of my hon. Friend the Member for Banbury that they should have a hotline and that Ministers, possibly including the noble Baroness Vadera, should have surgeries. That is important and I hope that the Minister responds to it positively. It might help ministerial work load as well as small firms, so I look forward to his positive reply.

The bitter truth is that Labour’s schemes for small firms are not working. Recapitalisation failed to get credit flowing; the £1 billion that we were promised from the EIB has failed to materialise; and the VAT cut that was meant to help the high street has failed to do its job. Conservatives understand small businesses—often from our own practical experience—and we believe that they deserve better. They need practical help, their costs cut and Government off their back. Given the chance, we, as Conservatives, will help small businesses through the tough times and onward, once again, to prosper and get Britain working.

Thank you for your chairmanship this afternoon, Mr. Hancock. I, too, thank the hon. Member for Kettering (Mr. Hollobone) for successfully applying for this debate. He is absolutely correct to say that this is an issue of huge importance to our constituents and, indeed, to the whole country. He went through a number of examples of problems that individual small firms in his constituency face. If I gaze into my crystal ball, I can see some copies of Hansard being posted to various constituents and small businesses in the Kettering area, and, as Minister with responsibility for postal services, I look forward to that small increase in revenue for a very important national business. I also thank all parliamentary colleagues who have spoken today, raised various issues on behalf of constituents or small businesses and made suggestions. I shall try, in the limited time available to me, to set out the Government’s approach and to answer some of those points.

I must pick up on the onslaught about the number of Members in this debate. There have been, at different points in the debate, four Members on the Government Benches, and I can count four Conservative Members, two Liberal Democrat Members and one Member who sits as an independent. Small businesses are worried not so much about how many Members are sitting in the Chamber, but about their own fate. The hon. Member for Hertford and Stortford (Mr. Prisk) said that the Opposition understood small businesses. Well, that is a claim about which people will make their own judgment. All I can say is that many more small businesses exist now than when the Opposition were in power and that those businesses employ more people and contribute a huge amount to our national income. Some 13.5 million people—up by 1.3 million—are employed in small businesses, and they contribute about one half of our national output.

We heard in the debate that small businesses face significant problems due to the global credit crunch. First, we must remind ourselves of its extent and scope: the international banking system has been shaken to its very foundations in the past year; 1 million jobs have been lost in the United States in the past two months; Chinese exports are down; and the International Monetary Fund predicts that world output will fall this year—for the first time since the end of the second world war. The global economy has not experienced such shocks in modern times, and they are unprecedented in their scope, scale and confluence, which is why Governments throughout the world are having to act to support banking systems, credit and their economies.

I turn to some of the measures that we have taken. In October 2008, we recapitalised the banks. There is an important point to make, because the hon. Member for Kettering talked about the large sums involved. It can be confusing to our constituents to hear sums that involve tens or hundreds of billions of pounds. First, however, it is not all direct Government expenditure but money that has been injected into the system in return for assets, charged at commercial rates, or taken the form of temporary loans. We should not give the public the impression that the huge sums announced represent normal Government expenditure that is spent once and never returned either to the Government or to the taxpayer.

Secondly, the recapitalisation was about intervening to save the banks not just for banks’ sake, but for the whole economy’s sake, because banks serve as the foundation of an efficient market economy and as the oil that allows the wheels to move. Without a stable banking system, I dread to think what the consequences would be for the small businesses about which the hon. Gentleman is quite rightly concerned.

The Ernst and Young ITEM Club’s chief economist noted recently:

“It is easy to criticise…the Government’s policies… However, we must not lose sight of the fact that they have prevented the collapse of the monetary system as we know it”.

That is the action that we took in October. We announced further measures in the pre-Budget report. I shall not go through them again here, but colleagues will know what they are: introducing empty property relief for properties with rateable values up to £15,000; and allowing businesses to apply for flexibility when paying tax bills. So far, more than 20,000 businesses that contacted the business payment support line have been given agreements to delay payment of tax, amounting to more than £350 million of tax. I thank the hon. Member for Croydon, Central (Mr. Pelling) for reflecting the positive impact that that has had on some businesses. As the Chancellor said at the time, it is important that Her Majesty’s Revenue and Customs shows some flexibility towards hard-pressed small businesses, and those figures show that that is happening and that there is some understanding of their difficulties.

I turn to the package that my noble Friend the Secretary of State for Business, Enterprise and Regulatory Reform announced last week.

I am grateful to the Minister, who is being generous with his time. He touched on rates, but will he respond to the question that several Members have asked—namely, are the Government minded to make business rate relief for small businesses automatic in England as it is in Wales?

I am always interested when the hon. Gentleman raises the issue of small business rate relief. I gently remind the House that the Opposition voted against the introduction of that relief, and that, when the vote took place, the hon. Gentleman was present in the Lobby trying to stop its introduction. I am interested in his conversion, which is always welcome, and, of course, we will consider representations on all those matters. I am sure that my colleagues at the Treasury and at the Department for Communities and Local Government will consider representations on the issue, but now, I shall return to the package that we announced last week.

We announced three measures, but I shall mention just two. First, there is the working capital scheme, which is about sharing risk between the Government and banks to free up lending. It is not a scheme to which individual companies apply, but it allows banks to put together portfolios of lending in which the Government can share the risk, freeing up lending to companies with turnovers of up to £500 million. Secondly, there is the enterprise finance guarantee, which will support up to £1.3 billion worth of bank loans to companies with a turnover of up to £25 million. That is a scheme to which companies can apply directly. Through all that, we are trying to free up lending to small businesses without replacing the proper banking function of judging who is entitled to a loan and who is not. We introduced those measures precisely because we understand the difficulties that small businesses face.

Turning to the issue of information and help for ordinary businesses and for hon. Members, I am quite happy to discuss with my colleague, Baroness Vadera—a Minister in the Department that covers small businesses— the suggestion that the hon. Member for Banbury (Tony Baldry) made. I agree that Members should be able to approach the Department, and I hope that it is clear that I am always available to Members of whatever political stripe if they wish to approach me about a constituency issue. That has always been the case, and we will do what we can on that front. Businesses should go to Business Link to check for information on the schemes. There is a website,, and a helpline, 0845 600 9006.

I have been able to respond only to some points, as is always the case with these debates, but, suffice it to say that we understand the importance of small businesses; we have taken action to support and to help them; and we will continue to do so in these difficult economic times.

Thank you very much, indeed, Minister. I thank all Members who took part in the debate for their courtesy to the Chair and to each other, which allowed everyone to get in. That co-operation is very helpful.

Sitting suspended for a Division in the House.