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Businesses: Start-ups

Volume 739: debated on Monday 8 October 2012


Asked By

To ask Her Majesty’s Government what assessment they have made of the number of new business enterprises being created in the United Kingdom; and what measures they are taking to encourage more new business start-ups.

My Lords, in 2011-12, Companies House reported 450,000 newly registered companies in Great Britain, the highest number since records began. We are helping SMEs in many different ways, including providing an extensive package of advice and financial support. This includes the new start-up loan scheme and supporting high-growth potential SMEs, with over 1,000 businesses signed up to our GrowthAccelerator scheme.

I thank my noble friend for that encouraging Answer, and I welcome him to his new role, to which he brings great experience. In doing so, I pay tribute to his predecessor, my noble friend Lady Wilcox, who also made a significant contribution in that role.

Is my noble friend aware that, while it is encouraging to see the number of SMEs increasing, only one in five SMEs actually exports overseas, and of that one in five only one in 10 exports to the fastest-growing parts of the global economy, in Asia, Africa and the Middle East? What steps will my noble friend take to encourage more businesses to take opportunities in those key markets for us?

I am very grateful for my noble friend’s encouraging remarks and I am delighted to be managing this brief; my noble friend Lady Wilcox is a hard act to follow.

My noble friend puts his finger right on the pulse; my statistics say that one in six SMEs are exporting, not one in five. We have a huge amount to do to change the attitude and incentivise people to export. That is why my noble friend Lord Green has visited 42 countries in the past 18 months. I, in my own small way, have visited 25 countries—

No, listen, please. I have visited 25 countries in the past 12 months, the Prime Minister continually takes delegations of small and medium-sized businesses with him, ambassadors are being encouraged to be outward facing, and UK Trade and Investment has had £35 million of new investment, appointing representatives throughout the world. We have done this with cross-party support. I am very grateful, for example, to the noble Baroness, Lady Symons, for the work that she does; to the noble Baroness, Lady Nicholson; to the noble Lord, Lord Risby, and to other noble Lords, across the parties, for helping to promote UK plc at this very difficult time.

My Lords, last month I attended a conference on entrepreneurship in Sheffield called MADE, attended by 2,500 entrepreneurs and budding entrepreneurs, which is now known as the Davos—the Glastonbury—of entrepreneurship. Of course, a major topic there was the challenges of raising finance for SMEs—the Secretary of State for Business himself spoke about this. Will the Minister tell us what the levels of financing are now compared to before, with all the government schemes that are coming in? I hear from SMEs that they are still finding it difficult to raise finance. We talk about moral hazard in bailing out the banks. Surely there is a moral hazard here, when the banks are not lending to the SMEs that can generate the growth and employment that this country desperately needs.

There is no doubt that the banks are not lending to the extent to which the Government would want, and this is something that we are looking at very closely. However, we cannot castigate banks and make sure that they increase their capital and at the same time ask them to increase their lending, so I understand the problem that the banks have. I could list loads of initiatives: we are spending £1 billion in the new business bank, and we have the new enterprise allowances, which are worth £80 million. We have Smart loan schemes up to £75 million, and we are mentoring people through Mentorsme. We have the growth accelerator to which I referred earlier and the enterprise finance guarantee, through which £800 million has been awarded so far. I am actually quite grateful for this question, as noble Lords can tell, and I hope that my answer satisfies the noble Lord.

My Lords, my noble friend has given the House some very good news indeed, but would he not agree that it is just as important to keep new businesses open as to open them, and to do so in many cases without the more onerous regulations under the Equality Act?

There is no doubt that the two great threats to business are regulation and, of course, taxation. We are committed to reducing the level of regulation through our Red Tape Challenge. Of course, the most marvellous thing that the Lord Chancellor has done is to show a very clear pathway for the reduction in corporation tax—it is headlined down to 22% in two years’ time—which will make it the lowest in the G20. That is a really significant boost to business. For SMEs it is 20%, which is a very encouraging target.

Would the Minister accept that because of the byzantine entry forms for the regional growth fund most funding went to big businesses not small ones, to the south-east and not to the other regions, and nothing much was helped to grow except the occasional passing wilting weed?

It is unlike the noble Lord to be unfair, but I think he is in this case. In the north-east alone, 329 new businesses have been supported by government initiatives, and 95 have been involved in the passport to export, which is the educational programme on how to export. So it is not just the south-east and the south-west that are involved. Clearly checks and balances have to be carried out in applying for any scheme, but that is not new to this Government—it has been the case for all Governments.

Will my noble friend look at the recommendation from the Mary Portas review, which is so vital to small businesses up and down the country? In particular, will he look at the recommendations, which I think are there, about car parking for consumers and the importance of that? Reports are now coming in of local authorities hiking up car parking charges. Indeed, some of them are closing car parks.

Obviously I shall discuss that with my friends in local government. It is not something for me to deal with, but it is something that the Government will look at as part of the Portas review. I take on board what my noble friend has said.

My Lords, last week the Government announced a new partnership to help SMEs. It is hard to credit it, but their partner of choice is Barclays Bank, the number one casino bank. The Minister listed a whole load of programmes which the Government have announced, and indeed they have, but the fact is that very little of it is getting through to the SMEs themselves. When are this Government going to make sure that these programmes are much more effective?

First, I welcome the noble Lord to the Front Bench. It is a pleasure to see him. I was looking up his great achievements earlier and, in addition to business and technology, I noticed that one of the things that interested him was alcohol abuse. Following what I did last night, I am thinking of putting that down as one of my interests. He raised a greater point—what the Government are doing. We are trying to make the weather and to create activity. That activity is working, which is why I was able to say that 450,000 new businesses have started in the past 12 months, the most since records were kept.