In total, 450,000 new businesses were registered last year compared with 360,000 in 2009-10. We have cut corporation tax rates to an all-time low, we continue to cut red tape, we are incentivising bank lending, and we have a range of other schemes to support high-growth businesses in particular.
I welcome my hon. Friend to his post and I welcome his answer. One of the concerns that SMEs in my constituency have is that, whereas previously they had access to overdraft extensions, which represent cheap credit, banks now insist on collateralised loans, which are repayable over a term at a rate over base, which represents more expensive credit. Will the Government’s innovative reforms result in not just an extension of credit, but a reduction in its price?
I am grateful to my hon. Friend. He is exactly right: cheaper credit is the key for many small companies. The whole aim of the funding for lending scheme is to ensure that banks pass on the reduction in the cost of the money that they themselves are accessing. The Bank of England will monitor that, but my Department will check that each bank continues to do it.
I welcome the Minister to his post. Undoubtedly, many small firms are getting a raw deal from the banks, with increased charges and limited credit. The board of Wimborne business improvement district is exploring the possibility of setting up a “bank” of Wimborne in conjunction with a local credit union, the idea being to go back to old-style banking with strong local relationships. What comment would the Minister make about that?
I know that my right hon. Friend the Secretary of State has already met my hon. Friend’s constituents to discuss the issue, and I believe that he has already met the founder of the Bank of Dave as well. One of the recommendations of the Independent Commission on Banking was that the Financial Services Authority should look again at the requirements for a banking licence, to see whether they are too onerous and disproportionate for the providers of very small credit. We expect the FSA to publish its recommendations shortly and I would be very happy to discuss them with my hon. Friend.
Many small businesses in my constituency run a post office as part of their business, and they are very worried about the chipping away of business and, particularly, the threat of losing the DVLA contract. What is the Minister’s Department doing to encourage the DVLA to stick with the Post Office?
Late payments affect the confidence of SMEs to make purchases and to pay bills and even staff salaries. In this time of a double-dip recession, does the Minister agree that implementing the European Union directive on late payments would be a great help to SMEs?
It is extremely important, particularly for small companies, that their bills are paid promptly. In Government, we have taken steps to encourage Government Departments and public agencies to pay their suppliers promptly. It is also important that we look very carefully at any specific target that may encourage people to pay on the final day set in the target, rather than earlier as they would otherwise have done. I will certainly have a look at what the hon. Lady has suggested.