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Small Business Support

Volume 489: debated on Wednesday 11 March 2009

Businesses in Wales are receiving a high level of support from Governments at both ends of the M4. Small and medium-sized businesses in particular are the lifeblood of the Welsh economy and they make up, as the hon. Gentleman knows, some 98 per cent. of Welsh companies.

With reference to one of those schemes, the enterprise finance guarantee scheme, does the Secretary of State share the concerns of many small businesses across Wales that many of the high street banks operating the scheme are demanding crippling personal guarantees of up to 100 per cent. against homes and assets, even though the Government are guaranteeing 75 per cent.? Whose guarantee is it—that of the banks or of the small businesses of Wales?

Obviously, the guarantees are to the banks in order to ensure that they make effective lending possible, but the hon. Gentleman is right that whether the policy is filtering down to the local level—to the bank managers that we used to have in the old days—is another story. It is important for small businesses that lending starts again. It is also important to understand that banks still have to make commercial decisions. One of the reasons for the mess that we are in at the moment is that banks made the wrong decisions about risk or there was a lack of acknowledgement of risk. There are businesses in Wales that are viable and good and that deserve help. It is up to our banks, together with the help that Government in London and Cardiff give, to make sure that that lending occurs.

Small businesses will be greatly helped if they can recruit people with the skills that they need. At Oakdale comprehensive school I saw for myself last week that young people are being prepared well for the workplace and given good IT skills. What initiatives exist to ensure that we have strong school-business links, so that when we come out of the economic downturn Welsh companies are certain that they will have a strong and skilled work force from whom to recruit?

That is the point, of course. We cannot forget about training and education for the future, for when we come out of the downturn. The initiative at Oakdale is a very good one. I will certainly commend it to the First Minister when I next meet him. It is important that we have a properly trained work force, and our colleges and schools in Wales play a hugely important role in that respect.

Does the Secretary of State not realise that there is a huge disconnect between the rhetoric and the words used at his Dispatch Box and at the business summit public relations exercises that are being conducted throughout Wales, and the reality on the ground, particularly in areas such as Pembrokeshire and west Wales, where small businesses are seeing precious little additional new assistance at this time of recession? Is the Secretary of State aware of the enormous disillusion in the small business community with the promises being made by Ministers and with how little is being delivered?

There is time for rhetoric and there is time for people to pull together to help those who are out of work in Wales. I have not the slightest doubt that the economic summits that we have held—there is one to be held in a few weeks in Swansea—have done a remarkably good job in bringing together from business, industry, the trade union movement and elsewhere all the expertise that we can gather in Wales. It is true to say that it will take time for some of those schemes to start working, but some have already started working. The figures that I have just given the House with regard to ProAct are a good example of that. At least we are trying. I fear that the hon. Gentleman’s party has no ideas at all about how to get us out of the recession. It is much better for small businesses, industry and commerce in Wales to know that both Governments are trying to help them, as opposed to his party, which has said absolutely nothing.

We have heard a lot today about the difficulties and economic challenges that face small businesses. However, the Secretary of State was kind enough to come to my constituency recently and he visited a very successful SME—Tomos Watkin’s at the Hurns Brewing Company. It has been bucking the trend. I am sure that the Secretary of State will join me in congratulating the company on its wonderful successes.

I certainly do. Swansea is a great example of a city with thriving small and medium-sized enterprises as the very backbone of its economy. I visited a number of them with my hon. Friend, and I can certainly commend the excellent beers that Tomos Watkin’s provides.

I do not recognise the problems of small businesses in Wales to which the hon. Member for Preseli Pembrokeshire (Mr. Crabb) referred. The Secretary of State has rightly referred to the £48 million ProAct scheme; there is also the £35 million ReAct scheme to retrain and assist people facing redundancy. Furthermore, there is the £20 million apprenticeship scheme for reskilling young people and the extra business rates relief, which now assists approximately 55,000 small businesses in Wales. Is it not heartening to hear of David Rosser of the CBI going out of his way to say well done to the Deputy First Minister and his team in reacting urgently and properly to assist small businesses in Wales?

I am happy to say well done to the Deputy First Minister and the First Minister in Wales for the work that the Assembly Government have done. The reality is that individual people and businesses have been helped by those schemes. For example, there is Her Majesty’s Revenue and Customs Time to Pay scheme, under which taxation is deferred. Some 2,600 firms in Wales benefit from that; £38 million has been deferred so that they can. There are other schemes as well. The point is that unless the Government act to help businesses, families and individuals, nobody else will.

Many small businesses in my constituency and throughout Wales rely on visitors and tourism. Does the Secretary of State agree that the product that is Wales needs extra support and help to promote its image at this difficult time? Furthermore, we should take advantage of the relatively low value of the pound sterling against the dollar and the euro. Will he raise those issues with Ministers? Next time he comes to Ynys Môn, will he meet tourist associations and operators to see first hand the problems that they face?

Of course I will. There is no finer part of the United Kingdom to visit than Wales, and my hon. Friend’s constituency is a great example. I am going there in a couple of weeks’ time, and I assure him that he and I will look at the advantages that Ynys Môn gives the world.

In these dire economic circumstances, the Welsh Assembly Government and the Westminster Government are increasing—I repeat, increasing—business rates by nearly 5 per cent. next year. What message does that send to small businesses that are struggling to survive in Wales, and what is the Secretary of State doing to stop this madness?

There are ways and means by which firms in Wales can go to the local authorities and the Welsh Assembly Government and receive direct help, under the scheme that the Assembly Government have put forward. In addition, there is help on empty properties. I understand, however, that small firms have difficulties with this issue; that is why I referred to the HMRC Time to Pay scheme, of which many firms have taken advantage.

The Secretary of State has revealed today that 10 businesses have been helped under the ProAct scheme and that help for 75 is under consideration. Frankly, that is just scratching the surface. The Secretary of State’s figures are wrong; the Treasury has said today that 3,590 businesses in Wales have agreed terms to defer payments, a further 120 have been turned down and 405 are still in negotiations. That means that more than 4,000 businesses are facing trouble. Given that sort of volume, does the Secretary of State really consider that the schemes put in place by the Welsh Assembly Government and his Government have the capacity to cope with the large number of firms that are in trouble, are closing or are laying off staff?

Yes, I think that the schemes collectively will do that. Does the hon. Lady realise that we are talking about hundreds of billions of pounds, which have been put into the banking system to prevent it from collapsing and to ensure that banks lend again? Those schemes will start at the beginning of the financial year. She should consider the importance of the schemes I have referred to, such as ProAct, ReAct and other schemes in Wales. They are meaningful schemes that are working. I agree that more work needs to be done to ensure that people are aware of them, but they are still better than the policies her party has put forward.

The Secretary of State is right to say that more work needs to be done, because the managing director of the leading business advice organisation in the country, Venture Wales, has said that since the Welsh Assembly Government took over the Welsh Development Agency, help for small firms has deteriorated. He says that decision making is “slow”, that morale is “low” and that millions of pounds are “being wasted”. If that is the view of an expert on the systems of help for businesses in Wales, what is the Secretary of State going to do about it?

That is not the message I am getting. The CBI in Wales, the Federation of Small Businesses and individual businesses in my constituency are giving me the message that real help has come from the Welsh Assembly Government to the business sector. To take one example, the finance Wales initiative—our own Wales bank to help small businesses—has invested £17 million this financial year. That is 25 per cent. more than last year, and it is real help going to real businesses in Wales.