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Volume 539: debated on Thursday 2 February 2012

The Government have already acted to make it easier to start and grow micro-businesses. Action has included cutting corporation tax rates, extending relief from business rates, and introducing a moratorium from regulation for all micro-businesses.

The Minister is conducting a review of disruptive business models as part of the red tape challenge. Has he considered introducing a new limited liability scheme for sole traders, similar to the limited liability partnership? I believe that such a scheme operates in France, and it would be fantastic to see one like it operating here.

I know that my hon. Friend is a real champion of micro-businesses. The Government have focused on practical measures that help the micro-businesses’ bottom line, but, as she knows, I am happy to consider the legal issues with her and her all-party parliamentary group.

On Friday I attended the opening of a micro-business in my constituency, Little Rembrandt’s Café in Ferryhill. That business opened despite the Government and despite the banks, which refused to lend. The owner had to put her own financial security on the line by remortgaging her house. That situation obviously cannot be right, because it is stifling growth in the economy.

I understand the hon. Lady’s point. Two thirds of small businesses are able to secure the money that they want, but that is no consolation to those who are not. Perhaps I could write to the hon. Lady about the community development finance institutions, which we have been funding and which are well placed to help the kind of micro-business to which she has referred.

When will the call for evidence on making it easier for micro-businesses to part company with their employees begin, and what will be the terms of reference?

The Minister was right to describe the hon. Member for Newton Abbot (Anne Marie Morris) as a great champion of micro-businesses. Last week she called for the Government to introduce a VAT cut to 5% on construction, which is part of our five-point plan.

The truth is that the Government are failing Britain’s small businesses. They have failed to live up to expectations on regulation, they have failed to persuade the banks to lend to small businesses, and they have failed to get growth into our economy. Why does the Minister keep pretending that small businesses think his policies are working when it is so clear that they are not?

There are substantially more small businesses now than there were when we came to office, and they have confidence in what we are doing. We need to support and encourage them, and we will do that. I do not accept the hon. Gentleman’s wholly negative analysis.