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Small Business Administration

Volume 542: debated on Tuesday 27 March 2012

Motion for leave to bring in a Bill (Standing Order No. 23)

I beg to move,

That leave be given to bring in a Bill to establish a Small Business Administration with the remit of acting as an ombudsman and advocate within government for small businesses, promoting a regulatory environment appropriate for small businesses, providing advice to those wishing to set up small businesses, improving access to finance for small businesses, developing and monitoring small business-friendly procurement policies and working with small firms to assist their export potential; and for connected purposes.

Before I start, I had better declare an interest: I run a farm in my constituency, so I am a small business owner and I understand the challenges involved in establishing and growing a small business.

Let us start with some statistics. There are 4.5 million small businesses in the UK. In Wales alone, we have 210,000 businesses, of which 45,000 are incorporated and 165,000 are non-incorporated. Small and medium-sized enterprises employ an estimated 13.8 million people and have an estimated combined annual turnover of £1,500 billion. As we can see from those numbers, small businesses are the lifeblood of our economy, and they will drive our economic growth.

I commend the Government for their work in this area. The Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Twickenham (Vince Cable) and the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), have already done sterling work for small and medium-sized enterprises. Just last week, the Business Secretary announced a £125 million advanced manufacturing supply chain initiative, which will open for applications from 29 March, and a new Focus on Enforcement campaign to identify any inappropriate or excessive enforcement of regulation that is holding companies back. The Government have also helped business by lowering corporation tax again, but we must not forget the many non-incorporated businesses that will not benefit from that measure. We need to bring forward measures to help those businesses as well.

Despite such measures, the Federation of Small Businesses argues that successive Government Administrations have failed to appreciate the particular needs of the UK’s small businesses, and it has proposed the creation of a small business administration—a department to champion small firms at the heart of Government. That proposal is based on a United States model that has proved incredibly successful in reducing burdens on small business through its role as an advocate and ombudsman. In 2011, it stripped out $11.7 billion of costs that would have been incurred by businesses in their first year of existence, and created ongoing savings of $10.7 billion annually by reducing the burden of regulation. Through its many programmes, small businesses have grown to become household names: Nike, Staples, Apple, FedEx, Ben and Jerry’s, Outback Steakhouse and Hewlett Packard, to name but a few.

The UK small business administration would help to reduce Government burdens on small businesses by having two roles. First, it would be an advocate in Government for small businesses’ needs. It would act as an ombudsman when problems arose with other Government Departments. As with the US model, the UK small business administration would operate in five core areas, all of which are already Government priorities. In the first instance, it would help with access to finance. Small firms in the UK are still struggling to get the finance that they need to grow. The small business administration would be able to give assistance to small businesses by offering a facility of loans and venture capital.

Credit easing is a welcome step that will make credit less expensive for many businesses, but above all we need to improve access. Alongside measures to support competition within the banking sector, support for non-bank models such as community development finance initiatives, peer-to-peer lending, asset finance and an SME bond market, the small business administration would be better placed to look beyond the big banks and to provide finance in a way that would make it accessible to small companies.

Secondly, the administration would give advice on business start-ups. During my time in Parliament, many constituents have told me that they have great business ideas but do not know how to go about turning them into reality. Obtaining the right advice at the start of a business is crucial to its survival. The administration would provide mentoring and training through a network of partners.

Thirdly, the administration would encourage exports. While I commend the Government for their work in supporting UK exports—for instance, we are a net exporter of red meat for the first time in many years, and exports are rising in many sectors—we can and must do more. The administration would be devoted to promoting exports and supporting the interests of small businesses in trade negotiations.

Fourthly, the administration would promote access to Government procurement contracts. The coalition Government have set a target for small and medium-sized businesses to gain 25% of Government contracts. I welcome that, but we have more to do if that is to be achieved. The administration would help businesses to reach the target, and could also help to ensure that small business-friendly policies were embedded throughout the public procurement process.

Finally, the administration would have a crucial role in the distribution of funds to small businesses at times of special need such as natural disasters. That would be invaluable during flooding or severe weather, and would have been useful in rebuilding business communities after the terrible riots that we saw last summer.

An excellent report by Tim Breedon on access to finance for small businesses, published just before the Budget, recommends

“A single brand and delivery agency to increase awareness and enhance delivery of the government’s range of SME finance”.

The small business administration would do that and more by combining all aspects of government that affect our small businesses.

The last time I presented a ten-minute rule Bill, I did so from the Opposition Benches. Six months later the Government had implemented my idea, and I hope to achieve a similar success from the Government Benches. There is nothing ground-breaking or radical in this Bill, which brings together many strands of Government that already do some of the work involved, and provides common-sense measures to give small businesses the best possible chance of flourishing—for if they flourish, so will our economy.

I commend the Bill to the House.

Question put and agreed to.

Ordered,

That Roger Williams, Loreley Burt, Anne Marie Morris, Gordon Banks, Mr Mark Williams, Stephen Lloyd, Mark Durkan, Brandon Lewis, Stephen Williams, Annette Brooke, Caroline Lucas and Julian Smith present the Bill.

Roger Williams accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 27 April, and to be printed (Bill 326).