Skip to main content

Business: Advice Services

Volume 767: debated on Tuesday 8 December 2015


Asked by

To ask Her Majesty’s Government what assessment they have made of the impact of the closure of the Business Growth Service, including the Manufacturing Advisory Service, on economic growth and access to advice for businesses.

My Lords, we do not expect closure of the Business Growth Service to have an impact on economic growth. The most important way we can help small businesses is to continue to secure a strong growing economy by cutting red tape, extending small business rate relief and dealing with late payment. In future, businesses will be able to go to their local growth hub, which will co-ordinate local, national, public and private sector support.

My Lords, the Business Growth Service has supported more than 28,000 businesses and since 2012 has added £4.8 billion GVA and 100,000 jobs. Manufacturing industry, which began a welcome rejuvenation under the last Government, is reeling from the sudden decision to close these services. Given how fundamental a part of the industrial strategy this service was, will the Minister tell the House how the Government intend to support the industrial strategy and companies’ ambitious to grow in the future?

My Lords, the Chancellor made it clear in his Autumn Statement that businesses need an active and sustained industrial strategy. We continue to work closely with different industry sectors—I do so with electronics and professional services. A whole series of announcements were made in relation to manufacturing to provide more support for aerospace, automotive, defence and transport.

My Lords, the noble Baroness mentioned SMEs. Is she aware of the concern that the central government procurement contracts are actually squeezing SMEs out from winning contracts? Is she prepared to look at government procurement policy again?

I am concerned to hear what the noble Lord says because we put a lot of work into improving the procurement process for small businesses. I will certainly write to him with the details, including on the payment periods, which have been severely reduced.

Will my noble friend tell us how the Government’s future plans intend to help small and medium-sized businesses increase their exports?

I am glad that my noble friend mentioned exports because a huge export drive is part of the BIS agenda. UKTI provides tailored help for small businesses on suitable markets, export opportunities and, of course, finance. Having been involved in export in a prior life, I know how very helpful that work is to business.

I am sure the noble Baroness will be aware that the SMEs mentioned by the two previous speakers use the Manufacturing Advisory Service extensively. Is she receiving any information about the effect that not having that facility is having on the way they conduct start-ups and advance their businesses?

My Lords, the Manufacturing Advisory Service is, indeed, part of the Business Growth Service. As I have explained, we are doing things differently. In future, businesses will be able to get their support from local growth hubs. We have a strong menu of support through the British Business Bank, start-up loans and in other ways, but the main way to secure success for small businesses is to have the right framework to progress profitable activities. Of course, that means growth, a lesser burden of red tape and of rates and so on.

My Lords, three years ago the noble Lord, Lord Heseltine, in his report No Stone Unturned in Pursuit of Growth, remarked on the inconsistency of support for small businesses through government policy. With this change, are the Government still on the side of inconsistency, and will they act on his other recommendation to strengthen, through extra resources, local chambers of commerce and LEPs to provide greater support and consistency to allow small businesses to grow?

I am delighted that the noble Lord mentioned LEPs because, of course, LEPs bring together chambers of commerce, business interests and local authorities. The growth hubs that I mentioned are indeed part of that LEP network, which already has 31 hubs and will have 39 by next April.

My Lords, does the Minister agree that the Government’s Enterprise Investment Scheme has been a tremendous help to small businesses in providing risk equity capital? Is she aware that the requirements forced on the UK by the EU Competition Commissioner, in order to meet the state aid requirements, are going to severely reduce the likely flows of risk equity money to SMEs under the EIS?

My Lords, I, too, am a huge fan of the EIS and of good tax support for small businesses. I am also a huge fan of competition so, although I am not entirely aware of the detail of what the Competition Commissioner said, it is important that we support competition right across the EU.

My Lords, the Minister will know that many small businesses were actually built on the back of invoice discounting and factoring. What are the Government doing to push that kind of funding?

The noble Lord makes a good point. One of the reasons that is necessary is because the bigger companies do not pay the smaller companies quickly enough. That is why, on a cross-party basis, we have been trying to do a lot of things about late payment, and there is a whole series of measures in the pipeline, which I believe are overdue.

My Lords, is the Minister aware of research conducted by Cardiff University’s Business School, which estimates that UK businesses are missing out on up to £48 billion every year in lost contracts because of a lack of language skills in the workforce, which prevents them being able to bid for contracts or even to understand the tender documents, which are by no means always written in English?

I was not aware of that report but it sounds a very valuable one. Having operated internationally, I am a huge fan of languages, both in the curriculum and being really useful when you are trying to export; getting my own children to speak foreign languages has been a problem.

My Lords, the Minister has raised the issue of late payment. There is a tremendous problem within the construction industry, as she may know, and a lot of people are getting together to put the facts forward. Will she address this issue in the new year? Retention of payments, payments after 120 days when they should be within 30 days—these are very live issues, which I and others will be addressing in the new year, and I hope she will start to address them now.

Indeed, retentions are an issue in the construction industry. That is why we have set up a review, partly as a result of discussion on the Enterprise Bill, to bring the question of late payment in construction into the piece, which is already tackling business generally and insurance.