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Small and Medium-sized Businesses

Volume 499: debated on Thursday 12 November 2009

9. What progress he has made on ensuring increased access to finance for small and medium-sized businesses. (299498)

A number of targeted interventions are working to ensure access to finance for small and medium-sized businesses. They include the enterprise finance guarantee, whereby 6,240 businesses have been offered loans totalling £630 million to date, and the capital for enterprise fund, whereby £60 million has been offered to 40 businesses.

Picking up the point that my hon. Friend the Member for Havant (Mr. Willetts) made, I wonder whether the Minister agrees with her new noble Friend Lord Sugar, the Prime Minister’s enterprise tsar, who said that those small businesses that are trying to seek credit are merely moaners and living in Disneyland.

That is not my understanding of what Lord Sugar said. However, there has been very good progress in terms of the enterprise finance guarantee, and, as I said, about £630 million has been offered to small and medium-sized enterprises. The hon. Gentleman needs to understand that his party totally opposed those facilities, and that, working with regional development agencies and local authorities, we have not only got real help out there to businesses during these difficult economic times, but set out a very clear plan for the recovery regionally, locally and nationally.

Will my right hon. Friend look at access to finance for research and development in manufacturing and, in particular, the position in Coventry, where Ericsson is sacking 700 skilled workers because it cannot access R and D money owing to its status as a cost centre, and not a profit centre? That seems a big restriction.

I will certainly take up with the regional development agency the issues that my hon. Friend raises, because finance is available to undertake research and development. Obviously, we regret Ericsson’s announcement. It will remain a large investor, so it is not leaving the UK entirely, but I understand the feeling that it will be a great loss to the west midlands.

Access to, and the cost of, bank credit remains a critical issue for many small and medium-sized businesses. However, the financial crisis has equally shown the need for better access to equity finance. In that regard, does the Minister agree that to address the equity gap we need to put in place mechanisms, including local enterprise funds and even regional stock exchanges, such as the very successful Investbx? How are the Government going to achieve that?

Certainly, the recently launched innovation funds will be extremely helpful in that regard. The hon. Gentleman may also be aware of a number of regional development agencies that are considering using European regional development fund money in order to look at venture capital funds and ensure that there is capital for the future.