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Mr Laurence Robertson (in the Chair)
Good morning. It is quite warm in here, so if Members wish to remove their jackets, they are free to do so. I remind Members that if they wish to speak they need to stand in order to catch my eye. I call John Stevenson to move the motion.
John Stevenson (Carlisle) (Con)
I beg to move,
That this House has considered the contribution of family businesses to local communities in the UK.
It is a pleasure to serve under your chairmanship, Mr Robertson. I am grateful to have the opportunity to debate the importance of family businesses and their contribution to our national economy, our local economy and our communities up and down the country. I appreciate that this might not be the best week for this debate, given that we are approaching Christmas, but this is a really important time of the year for many businesses, particularly in the hospitality industry, and an important time of the year for family businesses to succeed.
I want to put on the record my thanks to the Institute for Family Business for its support and the research that it has carried out into the success of family businesses and also the challenges that many of them face. The institute is the secretariat to the all-party parliamentary group for family business, which I chair, and it has been very supportive for all the time that I have been chairing that APPG.
I want to start the debate with a simple question: what exactly is a family business? There are many different definitions and people will have their own interpretations. The Institute for Family Business set out its own definition in its most recent report, but for me it is quite simply the involvement of family in a business. This can be a sole practitioner—an individual who has set up their own business and is effectively a one-man band. It could be a husband and wife team. The wider family and children could be involved. It could involve other members of the family such as cousins, and of course it could involve different generations. But it is also about the level of control.
When we look at a corporation, we look at the shareholding of that company—how many shares are owned by the family and how many are external. We look at who effectively controls that business. A family business might not always be run by members of the family. It might have independent management or a mixture of family members and outsiders. Each can be equally successful. They all have their own challenges, but that does not detract from the fact that they can be just as successful as a purely family-run business, or as a mixture or with outside control.
The real challenges come when there is third or fourth generation involvement in a family business. They all present different concerns. There are intergenerational matters, and shareholding or ownership of a business can be widely spread among many members of the same family.
What about the sector that the business is involved in? It is estimated that there are around 5 million businesses in the United Kingdom, all of varying sizes. Family businesses make up 85% of that 5 million, so effectively our economy is dominated by such businesses both at the national and local level. I will come specifically to the local level in due course.
The size of the businesses varies enormously. Most are microbusinesses—small one-man bands or small family units. Equally, there are some enormous businesses that have grown from small start-ups. Warburtons is a good example. Historically we could look at Mr Barclay or Sainsbury’s as examples of small businesses many years ago that became huge conglomerates and very large and successful businesses.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I thank the hon. Gentleman for securing this extremely important debate, because family businesses are the bedrock of our local economies. In my own constituency, Glencairn Crystal started as a local family business. It won the Queen’s Award and went on to develop the iconic Glencairn Crystal whisky glass, which is now internationally renowned. Does he agree that, with the correct package of support, financial innovation, contribution and development from Government, family businesses can become iconic and international successes?
John Stevenson
The hon. Lady is right. It is always lovely to hear Members promoting family businesses and demonstrating their success. She also highlights an issue that I will come to about how we can ensure they get the support that they need to be successful.
I have talked about family businesses being small or large, but we must also remember that there are some huge international businesses, including Mars and McCain. An interesting general observation is that many large, international family businesses are invariably owned from North America. That indicates that family businesses are not just part of our economy but part of international economies across the world.
Family businesses are involved in all sectors. The obvious one is transport, with large transport businesses up and down the country displaying their logos. They are also in retail and manufacturing. One particular area that features a lot of family businesses is the food and drink sector. That is a very popular sector in which to set up and grow a family business. That has a knock-on impact on the hospitality industry, which has a large number of small family businesses.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
Last week I went to the opening of a state-of-the-art factory by Equi’s Ice Cream in my constituency. That business has been around for a century, with its ice cream sold locally as well as in a number of supermarkets such as Morrisons, Co-op and Asda, and even as far away as Texas. Does the hon. Gentleman agree that such family-owned businesses not only contribute to our communities but are great ambassadors for them?
John Stevenson
Absolutely. It is always lovely to hear individual businesses being highlighted by Members of Parliament. That demonstrates that family businesses are not just in one constituency but spread across the whole country. We need to be behind them in our local communities as well as nationally.
From our perspective as Members of Parliament, the importance and contribution of family businesses should not be underestimated. They matter to our national economy. Family businesses employ nearly 14 million people; over 50% of all private sector employment is in family businesses, so the majority of people are employed by a family business. It is estimated that they account for 44% of our GDP. Just think of their contribution to the Treasury, which is vital for our public services.
Family businesses are clearly the backbone of local economies up and down the country as well as nationally. Think of a small family business and the contribution it makes to the Exchequer. If it employs five people, that means five families supported by that business. The contribution goes beyond that, with the payment of national insurance for those five employees, and of corporation tax. It will probably collect VAT for the Exchequer and pay business rates at the local level. It makes a vast contribution, not just to the local but to the national economy. That is replicated up and down the country.
Carlisle is a good example as the home of national and international businesses which employ a lot of people and make headlines locally because of the number they employ and their brand names, such as Nestlé and Pirelli. But drilling down, what matters in many respects is the local family businesses. Story Construction is a first-generation business now moving into the second generation, employing in the region of 500 people. It was set up in the last 30 to 40 years and makes a significant contribution to local construction and to the rail construction industry. Pioneer Foods, a food hospitality business, is into its third generation of making a contribution to Carlisle’s economy. Thomas Graham is in its fifth generation of local leadership.
We have those international brands and companies, but I have just highlighted three individual businesses at the heart of our local economy that employ a lot of people making a vital contribution. They are now into their second, third and fifth generations. The individuals who lead those businesses are also vital to our local communities. They provide leadership. They are often respected, and local people will look up to them and may aspire to be similar to them, and to set up their own businesses in due course.
Wendy Morton (Aldridge-Brownhills) (Con)
My hon. Friend mentions the contribution of small businesses to the local community. What I often see is something that is almost invisible. Does my hon. Friend agree that business owners often support community events, such as the recent Christmas tree festival in Aldridge?
John Stevenson
My right hon. Friend is getting ahead of me. She is absolutely right, and I will come to the contribution that such businesses make to local communities. There are, of course, similar factors for family businesses at the national and local level: the high employment levels in family businesses, the investment that we want to see, and the tax contribution that they make both locally and nationally, which I have already highlighted. I have set out what I think is a powerful demonstration of the importance of family businesses; however, some people would ask what the difference is between a family business and other corporations. Are they not in many respects just the same? I accept and recognise that they face many similar issues.
At present, energy costs are obviously affecting many businesses, both those that are family run and those that have other structures. It is a serious issue right now. On taxation rates, what corporation tax is set at matters to both family businesses and others, although dividend tax and capital gains tax can have a particular influence on family businesses, because of the way they structure themselves and the way the families take profits out of the business. Skills matter to any corporation, as does getting the right staff and ensuring that the right training is in place. That also matters to a family business, which needs to recruit in exactly the same way as any other. Regulation affects different sectors in different ways. I have already highlighted the importance of the food and drink sector, on which regulation clearly has a huge impact.
There are, however, a number of issues that in my view are unique to family businesses. The obvious one is succession. Passing the business on to the next generation, or indeed between families, can be a challenge. Who should inherit? Who takes over? Can the older generation let go and allow the next generation to take the reins of the business? If there are cousins, or two or three generations, involved, how is that dealt with? Those are some of the principal challenges for family businesses, and the Institute for Family Business spends quite a bit of time helping to support family businesses with them.
There are additional challenges with financing and growing family businesses. How do we ensure that a family business can grow in exactly the same way as other corporations? In my view, family businesses have a real strength, in that they can draw financial support from members of the family, which can help with that growth. It can also be a weakness, because they need to attract external finance to grow. Family businesses must be willing to accept outside help and allow external influences to support the business in its attempt to grow. Families have to accept the risk that they may be taken over, or that their influence in the business will be diluted by external investment from other parties.
Family businesses also have some key strengths, such as resilience. They often deal with recessions better than most other businesses. They are flexible and more adaptable in terms of hours of work. A person is more likely to want to work longer hours in their family business to ensure that it will cope with any bumps on the road. Family businesses also take the long view. It is not just about the next set of financial figures; it is about the next generation. That can lead to long-term investment, rather than a short-term view about making profits here and now. The stats suggest that often staff are loyal, and remain with such businesses for far longer than they would otherwise. Also, family businesses are invariably very loyal to their staff, who in many cases have worked for them for many years. That creates a real element of stability.
Kevin Foster (Torbay) (Con)
Does my hon. Friend agree that family businesses showed that loyalty to staff during the pandemic? For example, a number of tourism businesses in Torbay decided that the family would take no wages to ensure that staff could be paid, which we would not see in many other corporations.
John Stevenson
My hon. Friend makes a valid point. We saw that in the pandemic, and we often see it in recessions as well. Family businesses are more resilient and stay loyal to their staff, and that gets them through in a way that many other businesses would not necessarily tolerate. Another interesting aspect of the research from the Institute for Family Business is that there is more female involvement in family businesses than in general in business; we should research more why that is the case.
Family businesses are often the start of something. They start as very small businesses, then continue within the family, or at least owned or controlled by the family, but with external management; or they dilute and float on the market. I do not think that selling out is a negative, as the business—what the family have created—is successful and can continue to thrive but in a different environment and under a different structure. Life does move on.
I am a solicitor, and work in a practice that was set up in 1805. Until 1916, three generations of the family were involved. Since then, there has been no family involvement, but the business is still going strong today and it had that family involvement for those three generations.
Where I think family businesses provide an extra layer of benefit is in terms not of the economy but of the community. Family businesses are often embedded in their community. The children go to local schools. The business employs local people. The families want the local area to succeed because they live in it and socialise in it—they are part of it. They often get involved, as school governors and in charities and other community organisations. If they are brave, they may even get involved in local politics; they may get involved in other things, such as the local enterprise partnership or the chamber of commerce. They are invariably respected leaders in the community—people want to emulate them. That support to their local areas is a real strength of family businesses and the leaders within them; that element does not show up in national statistics, but it is vital to the success of our communities up and down the community.
I am very conscious of the lack of Government recognition for the importance of family businesses. I think everybody here would recognise that they are the backbone of our economy and a source of strength for our communities. Is there more that the Government could do, on the growing of these businesses, and in understanding their nature, the challenges they face and how we can ensure the investment and finance for them so that they will grow, expand and become the big corporations of tomorrow?
There is also the skills agenda. Training opportunities can be difficult, as many of these businesses are small or micro businesses that find it challenging to train staff and to get the skills they need. What can the Government do to support them?
There is also a need for general advice, for not just financial but succession planning. Quite often, family businesses feel they are operating in isolation. That is why organisations such as the Institute for Family Business are so important, because they help with that sort of advice, but many businesses do not get it. I wonder whether the Government could do more to help.
There is also the issue of profile. Leaders in the community, as I have already said, often come from family businesses. Some, though not many, have a national presence. Sadly, trust in business is at a low ebb right now, but family businesses often have a far better reputation. It may be that the Government should be seeking to exploit that in a positive way. We need businesses to succeed. We should celebrate their successes. I think people often feel more comfortable celebrating the success of a family business than the success of what they perceive as a faceless corporation. Maybe the Government need to associate business more with the family side of things, demonstrating the importance and the vital contribution family businesses make to our society, as well as to our economy.
In society, families really do matter. In business, family businesses are absolutely vital. Let us celebrate their success, but let us help them more than we do to ensure that they continue to be the backbone of our country and central to our communities.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
It is a pleasure to serve under your chairmanship, Mr Robertson.
As a Scot myself, let me say that it is a pleasure to hear a canny Scot—the hon. Member for Carlisle (John Stevenson)—taking us through this important subject; I always think a gentleman from Aberdeen would have a particularly good grasp on the vital need to make ends meet and run a tight ship.
I ran my family business for eight years, and my brother runs it now. It was a cheesemaking business that grew out of small dairy farm on the shores of the north Firth. For eight years, I had to juggle the profit and loss account and know how to do a VAT return—I had to do all that stuff, and it was invaluable experience. I will not go any further, because I cannot plug a family business too hard, but my brother continues in the same vein and I am very proud of him.
Let me expand on the points made by the hon. Member for Carlisle. The local contribution of family businesses is crucial. They tend to use the local bank: businesses in my constituency deposit large amounts of money in the local branch and help keep it open. They mostly use a local solicitor, and that equates to jobs in the local area. They use a local estate agent if the need arises, and local shops. They rely on their reputation, as the hon. Gentleman hinted at; local businesses do not want to make a mess of things locally, because it is on their own doorstep. Those are the key things they bring to their areas.
No local business will survive if it cannot balance the books and get it to work. That expertise, as the hon. Gentleman said, makes a huge local contribution, in terms of the chamber of commerce, local government and so on. As a passing aside—this is as much about my party as any other party in this place—we could do with more local businessmen in the House of Commons. If we go back 100 years, there was a time when many Members of the House of Commons had made their fortune and knew what they were talking about when it came to the big issues. That would be no bad thing. But that criticism is not directed at any one party; it includes mine.
John Stevenson
The hon. Gentleman makes a really interesting point about getting people with business experience here. Does he agree that, although traditionally important local businesspeople became members of the council, we do not see that today, and that is a big loss to us all?
Jamie Stone
That is a very apt point. I was elected to Ross and Cromarty District Council in 1986, which was a long time ago, and I have seen the sort of people who become members change dramatically in my lifetime. When it comes to local government finance, to have hard heads on the finance committee does not half help things.
Nurturing local businesses sits within a wider framework, which the hon. Gentleman touched on. He mentioned advice and access to finance as and when needed. Many of us feel that the day of the local bank manager has gone—the man or woman who could talk to the businessman and say, “Okay, that is a good idea. I’m willing to offer the following finance.”
In my part of the UK—my very far north constituency—a local business will do well and thrive if it has the support to which I alluded. We have an organisation called Highlands and Islands Enterprise, which was conceived by the Wilson Government in the 1960s, and did much good work over the years. I am sad to say that it is not what it was all those years ago. It is weaker, through no fault of its own; it is a small organisation and does not have the ability to offer advice and target finance as and when necessary. A lot of other infrastructure is required in our constituencies—in my own case, an airport, rail links and road links. A hardy perennial is the NHS, and I often raise the issue of maternity services. If any one of those vital key support networks is not up to standard, that sadly makes life harder for local businesses, particularly when it comes to recruitment or expansion.
I will close with an example. In Caithness we have an engineering firm called JGC Engineering, which is owned by the Campbell family. It is a third-generation firm that grew out of a blacksmith business, and it makes clever stainless steel stuff for the nuclear industry, Dounreay and others. As right hon. and hon. Members know, I have often talked about the potential of a space launch coming to my constituency—and I think it is just around the corner. A company such as JGC Engineering can use that but, if it does not have the infrastructure links, the back-up and so on, it will be harder for the company when the big day comes and it can go for those contracts. It is a basic point, and I make no apology for emphasising it again and again.
It remains only for me to wish all right hon. and hon. Members the compliments of the season, a very happy Christmas and a prosperous—in the business sense—new year.
Kevin Foster (Torbay) (Con)
It is a pleasure to serve under your chairmanship, Mr Robertson, and to follow my good friend, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and hear his experiences of business. I congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing the debate, which is a timely chance to highlight the role that family businesses play in Torbay’s economy.
As my hon. Friend the Member for Carlisle reflected, family businesses make a major contribution to the UK economy overall. Oxford Economics estimated that there were 4.8 million family businesses in the UK in 2020, making up 85.9% of all private sector businesses. Those businesses employed 13.9 million workers, or 51.5% of all private sector employment, and contributed £575 billion to the UK economy. These are big numbers overall, despite most family businesses actually being small firms—something like three quarters of all family businesses in 2020 were sole traders with no employees. A further 21% have between one and nine employees, although I understand that the estimates were based partly on data collected the previous year.
It is interesting to note that those numbers represented a decrease. The number of family businesses decreased in 2020 from 5.2 million in 2019, when they employed 14.2 million people and contributed £637 billion to the economy. If the Treasury was here, it would be interested in the fact that such businesses paid £205 billion in tax receipts. Some of that may reflect the impact of the pandemic, not least given that the typical family business many of us think of is a shop or a guest house, both of which were affected by that period.
Many family businesses are not just sources of economic activity, but mainstays of the local community. A 2021 survey of family businesses conducted by PwC found that the vast majority of UK family businesses also continue to engage in some form of social responsibility activity. Some 74% of family businesses surveyed contributed to their local community, and 47% participated in traditional philanthropy or grant-based giving as a company.
Dr Cameron
The hon. Gentleman is making excellent points. Given that family businesses are such a focal component of our communities, does he agree they have a key role in reducing the disability employment gap, and are often the businesses that promote disability inclusion in our communities?
Kevin Foster
I completely agree. The type of support a family can provide to someone with disabilities—even in their own family, for example, by extending the care and support offered to their loved one and supporting them in the workplace—can be vital. Many families have rightly shifted their expectations of what a family member with disabilities will be able to do. To be honest, past attitudes might have been, “Could this person work?” or “Perhaps they shouldn’t, perhaps they won’t ever work.” Thankfully, there has now been a big change in many businesses. The hon. Member is right that family businesses can help to lead that charge.
The economic and social impact of family businesses can be seen clearly in Torbay, and it is important to reflect on this positive aspect. I will start with Rew Hotels. The Rew Hotel Group was founded in 1970 by Mrs Sylvia Rew, and is still family managed. Positioned right on Torquay’s seafront are the two hotels it runs: Livermead House and Livermead Cliff. The family are not just quiet owners but part of the frontline delivery of services to customers. It is a good example of a family business where the family has been able to develop two distinct offers while making the business a family in itself, with several senior staff members having started waiting tables or behind the bar, and then been given opportunities to develop their career within the hotel and the business
Susan’s Flower Shop has been trading at the heart of Paignton, Devon for over 50 years; the business itself has become a family, given that it has been trading for such a lengthy period. Brian and Susan, who are the leading figures, are involved in many aspects of local community work and supporting the bay as a whole.
There is also Conroy Couch, which is one of the oldest established businesses in Torquay and one of the oldest jewellers in the UK. It was first opened in 1863 by Mr Conroy Couch, and such was the quality of its initial fitting that the shop front has altered very little since, with the height of the entry doors serving as a reminder of a time when men commonly wore top hats and would be wearing them when they attempted to come through the door. Towards the end of the last century, the shop was taken over by the Rowe family, who are well-known and respected jewellers in Torquay. Today, David and his daughter Michelle still hold the values that the original founder of the business held dear: it is an active part of supporting local Rotary appeals, and works to ensure that Torquay high street has an annual Christmas lights display.
A larger example of a family business is Beverley Holidays, which operates three holiday parks in Torbay. It has been a family-run business for over 60 years, and during that period its owners have seen some dramatic changes in Torbay’s tourism sector. A caravan holiday might conjure up images from the past of putting coins in meters and sleeping on a sofa, yet many caravans in those parks offer standards equivalent to executive hotel suites, meaning that as a family business Beverley Holidays can compete with the large national chains on both price and quality.
Family business is not just about retail and tourism—we have heard some examples today. In that context, one company that particularly jumps to my mind is Casting Support Systems, or CSS as it is commonly known. It is a family business that was established by Ted Head, and produces a range of products for the distribution, aerospace and automotive industries. Earlier this year, it won the Queen’s award for enterprise for its export achievements and relocated to a brand new, purpose-built factory in Paignton. To give the scale of the impact of that family business, between 2018 and 2021 its exports rose from £267,000 to £1.7 million.
Another sector that can be overlooked is one that is often seen in our local communities, and one to which family businesses are integral: travelling fairs. The name Anderton and Rowlands is synonymous with funfairs and bank holidays in Devon and Cornwall. That business started back in 1854, when Albert Haslam, a variety artist, set up on his own, giving magic exhibitions. His tutor was one Professor Anderson, and upon his death, Albert assumed the name of Anderton. In 1903, the show first travelled under the name of Anderton and Rowlands, the name that has been in existence since. Since the 1950s, the firm has continued to expand, and the name Anderton and Rowlands is now in its fifth generation. It is currently owned by the DeVey family. George DeVey—who was born in a showman’s wagon travelling to a maternity hospital back in 1937—Simon DeVey and Simon DeVey Jr are key parts of it, and it is now the biggest fairground operator travelling in Devon and Cornwall.
Finally, I should mention Bygones in Torquay. Back in the 1980s, Ken Cuming’s obsession with railwayana was starting to outgrow his house; I understand that the final straw for his wife Patricia came in 1986, when he purchased a 27-tonne steam railway engine from Falmouth docks. As fortune would have it, the couple spotted that an old cinema had become available in St Marychurch, and bravely took the plunge of turning their hobby into a family business. Over the next year or so, with the help of an excellent mason and carpenter, and many friends, the family recreated a Victorian street scene, and on 23 May 1987 Bygones was opened to the public by the then mayor of Torbay. Sadly, Ken Cuming passed away in June 2017, but his wife Patricia, son Richard and daughter Amanda are still working daily in Bygones, which is a popular attraction that also supports veterans.
I could be here all day listing great family businesses in Torbay, and it has been good to recognise some of them in my speech. I am sure that many Members will be thinking of businesses in their own constituencies; we have already heard about some. However, family businesses are not immune to changes in our economy, especially on the high street. Sadly, it has been a long time since Rossiters department store in Paignton was bustling in the week before Christmas. Rossiters was part of Paignton for 150 years. Father Christmas often arrived there in dramatic style—one year on a turntable ladder, and once in the late 1980s even by parachute jump on to Paignton Green—but changing shopping trends and competition from online and out-of-town retail sadly led to it closing its doors in 2009. Even yesterday, we read that the future of a 106-year-old family business, Shaws the Drapers, which has stores across Devon, including one in Torquay, is under threat. Managers of the family-run company have admitted that it must change to survive, and, sadly, signs outside its shops state that all remaining stock is now on sale.
There are many positives to a strong family business sector, but what might inhibit its future growth? Family businesses are often based in and synonymous with one area. That means that the decisions of local councils can either boost or severely dent their prospects. Take, for example, the recent decisions of the coalition of Lib Dem and independent councillors that runs Torbay Council. Earlier this year, the coalition decided to close Torbay Road in Paignton to traffic as part of a pedestrianisation pilot. Torbay Road is a busy shopping street, and many businesses along that stretch of road and nearby are family owned. They have reported that trade has fallen off dramatically over the last three months. At a meeting last week, Conservative councillors requested that the coalition review the impact, but a review was decided not to be urgent enough. Similarly, the coalition’s decision to sign off a request from a developer to close Brixham Road for three months is unlikely to help many family businesses across our bay.
We must return to a familiar subject to me: business rates. Take Susan’s Flower Shop, which, as I mentioned earlier, is a family business that has been trading for just over 50 years. There is not a strong incentive to expand or maintain premises where business rates are concerned. Its shops are below the £12,000 rateable value, so no rates would be payable if it traded out of only one shop. As soon as a small family business has a second shop, rates become payable on both. That is a disincentive for family-run small businesses such as those in the floristry trade. Many shop owners would like to open a second shop for a family member to run when they are old enough. There is a reason why we see businesses called “Jacksons” or “Fredericksons” in our areas; that is a nod not just to a past surname, but to a time when a father might have set his son up in business after having taught him—Jack’s son—the trade. I am sure that many more empty shops would be filled by family businesses if that tax disincentive were removed.
I hope that the Minister will set out his thoughts on the following. First, how will the Government ensure that local councils pay attention to the needs of local family businesses when making decisions? Secondly, what consideration will be given to the position of family-run businesses in the long-awaited business rates review? Thirdly, not all members of a family have the skillsets required to grow a business, so they may need to recruit from outside the family for the first time; how are the Government supporting them to do so? Finally, what is the vision for family-owned businesses, from the Minister’s perspective? How does he see them being encouraged and nurtured by this Government? Knowing his own background and passion in the area, I expect that he will be particularly keen on that.
Family businesses are not just part of the economic output of our country, but an integral part of the social fabric. Without them, we would all be poorer, not only in the sense of the jobs and economic activity they create, but in the sense of the social responsibility that many show simply by wanting their businesses to be positive parts of the communities they are proud to call home.
Jim Shannon (Strangford) (DUP)
It is a real pleasure to speak in the debate because I obviously have a particular interest. I commend the hon. Member for Carlisle (John Stevenson) for leading the debate so knowledgeably and for setting the scene so well. What a pleasure it is to follow my friend and colleague, the hon. Member for Torbay (Kevin Foster). The tag team is back together—I follow him or he follows me—and I thank the hon. Gentleman for his contribution. Unashamedly, I will tell hon. Members about some of the small businesses in my area—not all of them, because that would take me an hour and a half and, Mr Robertson, you would say, “Sit down.” I will pick out some of the smaller ones that I have known over the years. There are many.
As we approach Christmas, it is important to recognise the important role that local businesses play in our economy, including the family-run businesses that have served our local towns and villages—in some cases, for decades. I do not intend to wax lyrical about how great a place Strangford is—everybody already knows that—but I am more than happy to encourage everyone to make a journey to Strangford at some time in the future, as many in this House have done, including Ministers and other hon. Members, who have enjoyed it. At this time of year, we must take time to reflect and acknowledge that businesses are the backbone of our constituencies—they certainly are for mine. Some 99% of businesses in my constituency are small and medium-sized enterprises, and the pattern is similar across the whole of Northern Ireland.
There are many benefits that come along with family-run businesses and ultimately contribute to their long line of success, and there are so many success stories that I want to mention. The right hon. Member for Aldridge-Brownhills (Wendy Morton), who will follow this speech, and I have been working together, and she and I were just saying how we will unashamedly tell everyone in this House about our small businesses. I look forward to what she is going to tell us in a few minutes as she namechecks every one of those businesses, and I will probably do the same.
Strong commitment and common values are some of the successes of small businesses. When an enterprise is built on familial lines, people are more likely to put in extra hours and go the extra mile to ensure success, and the stability of the family structure has been pivotal for long-term family professions. One that always sticks in my mind is N.G. Bell & Son. I am probably the only person present who knows about N.G. Bell & Son, but I will share its success story. It is a family-run business specialising in timber, building, electrical and plumbing supplies, and it has become one of Northern Ireland’s leading building merchants. Norman and Elsie Bell came to Ballywalter from west Ulster in 1950 and bought an existing grocery and hardware business. On the untimely death of Norman Bell in 1973, his son Graham took over the running of the business at the early age of 19. He and the family have built the business, making it a complete success, and their business park in Greyabbey Road is at the centre of that.
The story of N.G. Bell & Son in Ballywalter resonates with me, because my own parents ran a shop in the same village from ’59 to ’79, and many of the relationships I built through the shop as a child remain strong to this day. I am minded that Margaret Thatcher, who was the daughter of a shopkeeper, said we were a nation of shopkeepers. I am pleased to be the son of a shopkeeper, and I am also proud of my roots. I understand at first hand how central the local shop can be to community life. My mum and dad owned a shop in Clady, south of Strabane. They also owned one in Ardstraw, and then they moved to Ballywalter in 1959. They owned the first V G Store, which was part of a chain of shops that are now run by the SPAR group and owned by the Henderson Group in Northern Ireland. It is an example of how a local business has grown—again, it is good news.
I am sure that I have mentioned before the importance of family businesses to our high streets. Newtownards is one of the main towns in the Strangford constituency and has many great businesses, most notably Wardens of Newtownards, which has been a presence in the town’s high street since 1910. In 2002, Wardens celebrated its 125th anniversary. As part of the celebrations, the store ran a competition to find the oldest receipt from the shop. A local farmer came forward with a receipt dating back to 1890s—not the 1690s, Mr Robertson, but the 1890s—which is just astonishing. There are still family members who work there today, and hopefully they will do so for many generations to come. For anyone who is curious—many are—Wardens has also had videos go viral on TikTok. I am told that the store has an account—I do not know how to use one—that has gained over 180,000 followers and millions of views. Again, it gives an indication of what a small, family-run store in Newtownards can do when it comes to promoting itself.
H & J Carnduff butchers in the square in Newtownards employs 55 people and is a local business that has done extremely well. It farms its butchery business out to other shops across the whole district.
Margaret Ferrier
Cafés are important businesses for local communities. To name a few in my constituency, we have the Tea Bay, Stacks, Niu Cafe, Vin 18 and Café Gelato, and they provide a place for people to meet, chat and come in out of the cold. Does the hon. Member agree that small, family-run cafés are often the highlight of local towns in providing that atmosphere?
Jim Shannon
I certainly do. Again, the hon. Lady says many things in her interventions that I absolutely subscribe to, and I thank her for that. The Regency is such an example of where people come together. I have a fry there every Saturday morning—it is my wee treat for the week as a diabetic as I try to be careful about my eating. Corries meats in Newtownards town is a family business that has grown to own a chain of half a dozen shops, and Knotts Bakery is another family business in the town.
The people of Strangford love a bargain—who doesn’t? My mother is a 91-year-old who loves going shopping and always wants to tell me about the bargains she has got. One place where bargains are guaranteed is Cotters, which is a family-run business that has been in the town for 20 years. My two youngest staff members have what they call their monthly “Cotters haul” where they get new cleaning supplies, bits and bobs for the office and, most importantly for two young girls, crisps because they are always a special price in Cotters—that is probably the attraction.
Loyalty and stability are two qualities of successful family businesses. That success allows for “beanstalk” family businesses where often four generations of a family have been involved. The hon. Member for Torbay referred to such a company in his constituency. The director of SME business at Ulster University has indicated that 74% of Northern Ireland companies are classed as family-run, which is amazing in being unique and serving the Northern Ireland economy in a different way.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) referred to bank managers. I have a story about a bank manager, although I am not sure I have the time to tell it as I am conscious that the right hon. Member for Aldridge-Brownhills (Wendy Morton) is following me. When I visited my bank manager for a loan when I was much younger, the discussion we had was not the same that people would have with their bank manager today. I told him I would pay the loan back as quickly as I could, and I paid it back in one year. That probably meant a lot of scrimping and saving, but I did it. Those were things that would not be done with a bank manager today because of the rules.
When I think of Warren Patton of Patton’s Bakery in Newtownards, which is a family-run business that I have known for nearly all its days, his sense of community spirit is so evident in his charitable donations and discounts for fundraising community events, and that deserves recognition. He employs some 76 people in his business. It is often much easier to get a donation for the local fair from the local bakery than the large supermarkets, and that is another reason why local businesses are a vital cog in the community machine. Warren Patton is fully immersed in everything in Newtownards. He is community-minded. He is the chair of the Ards football club. We are all keen to see them get their new ground, which is at an advanced stage. The land has been identified, the agreement has been done and now we are pushing for some grants to make it all happen. He is also in the Loyal Orders—the Orange Order and the Royal Black Preceptory, which I am in in Newtownards. Those organisations are part of the culture and history of our town. I say that because Warren Patton is one of those local success stories. That business started from nothing and he has it today.
The support provided by the public to keep these enterprises open is incredibly important, and we do our best to help and support all the businesses that make our economy what it is today. The former Minister—the hon. Member for Rochester and Strood (Kelly Tolhurst)—came to visit the high street in Newtownards. She enjoyed her time there, but more importantly she was able to engage with local businesses in a constructive and helpful way. Newtownards has won the best town centre in the whole of Northern Ireland in the past and was featured heavily last time as well. I say this without fear of being quoted wrong: Newtownards truly is the best trading town for businesses, opportunity, variety and family-owned businesses. Looking at the special nature of family-run businesses and their contributions to my constituency, I can only say to people: if you have any time before Christmas, come shopping in Newtownards in Strangford.
Wendy Morton (Aldridge-Brownhills) (Con)
I thank my hon. Friend the Member for Carlisle (John Stevenson) for bringing forward this debate. As he recognised in his opening speech, this debate is very timely. It is not often that we have debates on family business, and to do so at this time of year is a reminder of just how critical this time is for so many of those businesses.
I start by referring to my entry on the Register of Members’ Financial Interests. As many in this room will know, I have a background in family business. Prior to coming into this place—too many years ago to remember—my husband and I started a business with the enterprise allowance, when that was around, at £40 a week. Two things were critical in starting that business: one was the allowance, which, although it did not seem like a lot of money, meant a lot because we felt the Government were prepared to back us and the idea my husband had; the other, touching on the point made by the hon. Member for Strangford (Jim Shannon), was the importance of our relationship with the local bank. The relationship we had with our bank manager was absolutely 100%. If she had not been there, there were some days we would probably have struggled. She helped us to get through and see the light at the end of the tunnel. Although we often discuss banking and the role of banks in the community in this place, it is a reminder that the role of banks to businesses and the presence of a high-street branch and a named person that can be contacted really does make a difference.
Being back on the Back Benches, as the hon. Member for Strangford alluded to, I see an opportunity to make several points, but also to highlight some of the amazing family businesses across my constituency. Don’t worry, Mr Robertson; I am keeping an eye on the clock, and I will not take all of the time and will leave plenty of time for Front-Bench speakers. I want to mention some of those businesses because I want to further demonstrate the variety of small, family businesses not only in my constituency, but right across the country, and the way that they form the backbone of so many local economies. They make a massive contribution to the Exchequer, but also to our local communities.
Six years ago, I visited a business called Jennifer Ashe Funeral Directors that had just opened on Brownhills High Street. When I went back there this summer for a visit and tour, it was incredible to see how that business had grown over those six years. It is no longer just in Brownhills, but has many other locations. We talk about generations, and the next generation of the family is now involved as well.
We also talk a lot about high streets in this place. We talk about Small Business Saturday at the beginning of December, which is an opportunity for many of us to go out on to the high street and highlight local businesses and how important they are. I am reminded of another occasion, which is called Family Business Week; I see the Minister is nodding. Perhaps that is something we need to make more of and highlight in the same way to embrace what we have in our communities.
Our high streets have faced a difficult and challenging time, which started before covid. High-street businesses were hit throughout the pandemic as well, but many of them are now finding their feet again. In Aldridge, we have a fantastic florist—another family business—called Herbarium, which is run by Mike and Sue Soles. I walked past and popped my head round the door just last week. Christmas is a busy time for them, and it really matters that we go out and support our local businesses. I was equally pleased to see a florist called the Bloom Room open just a couple of weeks ago on Pelsall High Street. It is also run by a local lady who wants to invest in the local community and sees that the time is right to do that. I wish her all the best in her endeavours
The hospitality industry is another key part of this. As we heard from my hon. Friend the Member for Torbay (Kevin Foster), seaside resorts have lots of hospitality. However, hospitality is a sector with many examples of family-run businesses. The Fairlawns hotel, run by the Pette family—now on their second generation—was actually rated one of the top 25 family-run hotels in the country. I am also told that it was one of only six outside of London to make the Tripadvisor list. Again, that is another example of a fantastic family-run business.
As my hon. Friend the Member for Torbay started talking about fairgrounds, I thought it would be rather remiss of me not to almost go into competition with him by highlighting the breadth of family businesses across my constituency. Pat Collins Funfairs is a fascinating story because Pat Collins was a Liberal Member of Parliament and mayor of Walsall, but he is actually recognised and remembered more for Pat Collins Funfairs, which was founded in 1899.
The family business was established remarkably quickly and, within a decade, Pat Collins was a leading showman in the midlands, owning several steam-driven fairground rides. He also went on to be one of a group of showmen who met in Manchester to create the Showmen’s Guild of Great Britain. To this day, the business is still owned within the same family; it is owned by Anthony Harris and his family. Anthony is a Conservative local councillor on Walsall Council, and his father married one of Pat Collins’ granddaughters.
We can see how family businesses go down the generations. One reason for that is probably the way in which such businesses can focus on flexibility and resilience. They often do not need much support from Government or local councils, but they do need the space and the flexibility to grow and invest, and the right economic landscape for that.
I know from my own experience that someone with a small family business often does go that extra mile—not just them but their staff as well. People go that extra mile and put in that extra hour, because it is not just about thriving but sometimes just surviving to get through the difficult times and challenges and finding the opportunities and keeping on looking and moving forward.
My final namecheck for this morning must go to a local family-run business in High Heath. Harjit and Jodie Singh, known locally as H & Jodie, run what many would call a corner store, but it is much more than that. It is the Nisa Local, but they have set up a community hub there and have community days. Many of us will remember that this last summer was incredibly hot. It does not feel like it now—although perhaps it is in Westminster Hall—but if someone needed anything, the best place to go was often H & Jodie’s. If you could not find an electric fan anywhere in the locality, Mr Robertson, you could go to H & Jodie’s, where they would be stacked on the shelves. I give that example because it shows the flexibility and dynamism of small family businesses and how they really do go that extra mile by just getting on with the job.
I am a firm believer that a strong family-business base can really strengthen our communities. That builds up the local economy and then feeds into the national economy. Let us invest more in them. We talk a lot in this place about research and development, and about innovation. I completely get that. I also get the importance of Silicon Valley. We have manufacturers across Aldridge-Brownhills, including apprentice-supporting companies such as In-Comm, which invest in apprenticeships and developing skills for the future. However, we also need the small businesses. Not everybody will be a scientist or a researcher. We need manufacturers and family businesses. Let us recognise their importance, because as my hon. Friend the Member for Carlisle set out, there are 14 million people employed across the sector, and it produces 44% of GDP. We do not talk about it enough; we do not give it 44% of the airtime when we are talking about businesses.
I would like to see us talk up our family businesses, because they really can play a key part in growing the economy. If we grow the economy, we can invest in our public services; if we grow our family businesses, they can invest in their business and their skills base, and that is what creates the jobs of the future.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Robertson. I start by congratulating the hon. Member for Carlisle (John Stevenson) on securing this debate, which is a really excellent one to have on the last day before we break for Christmas. It is clear from the contributions that everybody has a story to tell about family businesses—either their own family business, or those in their constituency. Very strong feelings have come through about the contribution that family businesses make to our local economies and our national economy.
So many points were raised, which I will draw on, but I also support and thank, as other hon. Members have, the Institute for Family Business, which has made such an important contribution to raising awareness of family businesses over the last couple of years, particularly through Family Business Week.
The hon. Member for Carlisle was also right to highlight hospitality businesses, so many of which are family-run and family-owned, and so many of which play that very important role of being a home from home—a local place that people can pop out to in order to be with friends and neighbours, and indeed their own family. Family businesses give that “home from home” feeling that really touches our communities in special ways.
The right hon. Member for Aldridge-Brownhills (Wendy Morton) mentioned showmen, and I was going to mention showmen from my constituency. Feltham has a long tradition of showmen living in the area, and I have continued to support their place in the community and their role in a unique industry that gives a tremendous amount of pleasure, and even joy, to families across the country. I will also mention a couple of businesses in my constituency. Flowers by Eva’s is one. It has been in Hanworth since 1955, and has given the joy of great flowers and bouquets for weddings, as well as providing flowers for funerals and other special occasions. It gives that extra personal touch, because when we go to such businesses, we get to know the people in them.
I will also highlight businesses run by members from immigrant communities, for whom it has sometimes been hard to find a conventional way into employment. They have started businesses that have allowed them to make a big contribution to the community, and that have grown. One example is the Sanger family, which owns Heston Hyde hotel, Bentley hotel, Washington hotel and now the Courthouse hotel. The business is still run by the family—indeed, multiple generations of the family. That family started with nothing in this country, but they now contribute so much to our prosperity.
I again pay tribute to the Institute for Family Business for the way that it conducted, ran and brought to Westminster, Family Business Week, which was supported by NatWest Group. I was delighted to speak at the reception in November, having made a virtual contribution to Family Business Week last year. Family Business Week celebrates local family businesses, encouraging them through social media. The family business in my area that I popped into at the weekend was Priyas Tandoori in Cranford, a very homely place to get a takeaway or to eat in with family members.
I, too, grew up in a family business, above our small shop in Osterley, so I know about the contribution that family businesses make, and about the attitude that my parents had. They saw what they did as almost a public service. We sold school uniforms, jewellery imported from India, clothes—all sorts of useful items that people never knew they needed until they popped into Ramson of Osterley. I find it fascinating that people who went to the shop in the late ’70s and ’80s still remember it. They remember what my parents did and even remember me aged five, six and seven learning how to serve customers and the fun that we had with that.
Research from the Institute for Family Business has revealed that family businesses are key drivers of regional growth and prosperity, spreading economic prosperity to all corners of the UK. We have heard in the debate what defines a family business, and about some of the more technical points around voting rights, control and ownership, and levels of involvement in administration. We have also heard how family business issues reflect the issues that other businesses face, such as the rising cost of doing business, energy costs and so on.
I want to emphasise the point that was made about the part that women play in family businesses. It is a subtle point, but although we have heard about one-man bands, there are quite a few one-woman bands. It is important to make sure that we use language that reflects the work of women such as Anita Roddick, who set up the Body Shop, and so many other women entrepreneurs who run a family business.
The hon. Member for Torbay (Kevin Foster) and others mentioned the 13.9 million people in such businesses, and the proportion of private sector employment that comes from family business employers. We know from the research and the debate that there are many ways that family businesses contribute to their local community. They often have a long-term relationship with a place. It can be where the owners’ kids go to school, as was the case in my family. There can be loyalty, local staff, and the creation of local services. The hon. Member for Strangford (Jim Shannon) was absolutely right to talk about local services—the lawyers, banks and insurance companies. All of those make a difference to a community’s fabric. When we think about support for family businesses, those are important things to emphasise and encourage; we should think about how we actively nurture the family business leaders of tomorrow.
We have heard many examples of household names, but I might add Cadbury. My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) is a member of the Cadbury family. We can see the social contribution made by family businesses that recognise the needs of their workforce and the community around them.
Although family businesses had a higher decrease in turnover than other businesses during the pandemic, they were less likely to see a decrease in staff. That speaks to the story and the contribution of family businesses, the loyalty of staff to the organisation and its culture, and the loyalty of the owners to their staff. However, family businesses are absolutely up against it. They have raised concerns about business rates, supply chain costs, access to schools, and the need for a stable tax environment.
A good Government should create an environment for business success. It is a concern to me that this Government and previous Conservative Governments have failed to do that. We have a supply chain crisis, petrol crisis, heavy goods vehicles crisis, CO2 crisis, energy crisis, cost of living crisis, cost of doing business crisis, and an industrial disputes crisis.
Jamie Stone
The hon. Member mentions the covid pandemic. It is interesting: during the pandemic, some businesses were really inventive and innovative. For instance, many food outlets offered a delivery service. I am sure my experience was exactly the same as that of many other hon. Members. It might be profitable for civil servants one day to take a look at some of those examples, and have a case study portfolio. We would be foolish to think that British inventiveness is dead.
Seema Malhotra
The hon. Member makes a powerful point. Indeed, what he says comes through in the data about how family businesses got through the pandemic. However, a recent survey has suggested that 80% of members of the Institute for Family Business were less confident going into this winter than they were last year, during the pandemic. Rising inflation is a threat, and there are concerns about the cost of living and consumer confidence. Clearly much, more support for businesses is needed. I am concerned that last week the Government slipped out in a written ministerial statement that they will be closing the “Help to Grow: Digital” programme, which was to give businesses support in adopting new technologies. They had all the warnings about the design and the roll-out, but they failed to listen to those important voices. That has cost businesses a year, and the possibility of moving forward in digital.
What needs to happen if we are to support family businesses at this time? First, we need to deliver macroeconomic stability, and respect our institutions, such as the Office for Budget Responsibility and the Bank of England. A key reason for the failure and devastating impact of the mini-Budget was the sidelining of our economic institutions. We need to make sure that we work with businesses to tackle the crises facing our country. Small Business Saturday has been mentioned; we all celebrated its 10th year this year, and I celebrate it every year.
We need to make importing and exporting easier; Brexit is not working as the Government promised. We need to address the inheritance challenges for family businesses, which have been mentioned—for instance, there should be clarity around rules, and support when there might be difficulties with succession planning. We should also have a proper industrial strategy, backed by ambitious investment, that makes decisions for the long term. It should be secured by an industrial strategy council that has a statutory footing.
Family businesses are not just our local small businesses; they are also key in manufacturing and other big sectors across the country. We need a proper plan for skills, which is an area where our growth and skills levy will bring the flexibility that is needed. We also need a plan for reform of business rates, because so many businesses are concerned about the unfairness of business rates. They should be reformed and changed, to level the playing field between bricks and mortar and online businesses.
This has been a fantastic debate. Labour has a long-term plan for growth, which would bring stability for businesses across the country and give our incredible family businesses the support that they need to grow and prosper. I look forward to the Minster’s response to this important debate, and to his saying how we can work together, across this House, to support our family businesses and the employment and prosperity that they bring.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
It is a pleasure to see you in the Chair, Mr Robertson. I thank my hon. Friend the Member for Carlisle (John Stevenson) for bringing forward this important and beautifully timed debate. If Christmas is about anything, it is family. Moreover, business is important in this place; it is absolutely right to have a debate on family businesses on our last day of term. I thank hon. Members for sharing their fine examples of businesses in their constituencies; we are all very proud of those businesses. It is hugely important that we support them.
There were many fantastic points made in this debate. Most of all, hon. Members stressed the importance of family businesses to their communities. Their contribution is fundamental. It is not just about employing local people; they can contribute to local charities, sponsor local football teams, or indeed sit on councils. My hon. Friend the Member for Carlisle made that important point. Easingwold is still part of my constituency, though it will not be after the boundary changes, which is quite annoying. There used to be the old Easingwold Rural District Council. Around the walls of the council chamber were black-and-white photographs of all the former council leaders. They were all local business people that I knew really well. They were important, and so proud of the town and their contribution to it. Now that our model for local authorities has changed, maybe that connection between businesses and their communities is not as strong as it was; that was a point made by my hon. Friend.
My right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) said that local businesses’ contribution to their communities cannot be overestimated. I am very proud to be somebody who might be described as having a family business. We started our business back in 1992; I was in partnership not with a family member, but with a very good friend, John Waterhouse, but over the years, we gathered family into our business. It did not start off as a family business, but it became one. The point about the proportion of women contributing to family businesses being greater than the proportion of women in business in general is interesting; my sister took over as chief executive of our business in 2015, just before we listed it, and I have to say that she did a far better job of running it than I did. It very much became a family business.
I am very proud to have this role. I am from business and for business, and am proud to have an opportunity to play an important part shaping how we look after all businesses in future, not least family businesses. My hon. Friend the Member for Torbay (Kevin Foster) made a point about support for staff. In the pandemic crisis, lots of business people cut their wages to make sure that they did not have to cut staff from their businesses. We did the same. I always used to say to people when they were starting a business, “You work twice the hours for half the money, if you run a business. That is what you have to be prepared for. You do that for a lot of years.” The commitment cannot be overestimated.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made another point that really resonated with me, about local reputation, which is fundamental. A family business operates and does the right thing because its reputation is on the line every single day, whether that is through the service provided to the customers or the way employees are treated. Those elements are vital to local reputation and are hugely important.
Of course, the family business community is very disparate, and its representation here is really important. I also commend the Institute for Family Business—I think we have some representation in the Public Gallery today—for its work. It is so important to highlight the benefits of family businesses and their contribution. I was proud to speak at the Family Business Week event, as did the shadow Minister. It was a fantastic event. There were so many people there, and a huge range of businesses, from construction to hospitality. It highlighted that 88% of UK businesses are family businesses, which employ 14 million people; and that 50% of mid-size businesses are family businesses, which shows both their contribution and the opportunity ahead.
I want to touch on what we are doing to support all businesses through a difficult period—there is no doubt that we will go through a difficult period—and I will come to some things we can do better in the future, to improve the prospects for family businesses. Clearly, it has been a difficult time for business generally, with the EU transition, the covid pandemic and now a supply-chain crisis and an energy crisis. It is important to recognise that these are global issues that we are trying to mitigate—they are not principally domestic—but they are clearly leading to recession, due to the need to put up interest rates to try to control inflation. It is therefore absolutely right that the Government should step in to try to mitigate some of the pressures, with measures such as the energy bill relief scheme, which is hugely important for businesses and is saving them a significant amount of money. That is a very expensive package; about £25 billion of taxpayers’ money is going into the scheme to try to mitigate the effects of the extra cost of energy for businesses.
The EBRS 2—the extension to that scheme—will be announced shortly. We are keen to make sure that we get all these good, viable businesses through this tricky time, until energy prices become more moderate. The one positive thing I can say about the difficult time ahead is that our business went through three recessions, and we came out stronger on the other side each time. Good businesses get through it and come out stronger, and the best years come after difficult years. Hopefully there is some optimism for the future, as well as a recognition of the challenges we face.
The Government announced a cut to fuel duty, and employment allowance has increased, reducing national insurance by up to £5,000 for small and medium-sized enterprises. There is also the £13.6 billion of business rate relief for businesses. I do not want to argue with the shadow Minister, as it is nearly Christmas, but I keep hearing that the Opposition are going to scrap or reform business rates—I am not sure which it is. To talk about getting rid of £22 billion without talking about what they will replace it with is not right and will create more uncertainty for businesses. It would be better to set out exactly how that money will be replaced. Perhaps we can deal with that issue in the new term next year.
The Government obviously reversed the decision to increase national insurance, which was helpful for most businesses and saved them about £4,200 a year. Importantly, at the Budget we announced the incentives to invest—the annual investment allowance. That is £1 million annually of full expensing against a business’s profitability. That is an important investment concession, and the Government are absolutely right to give that long-term certainty to businesses. That is an important new step, and that £1 million is permanent. That gives businesses the confidence that they can invest, knowing that it will be tax efficient.
My hon. Friend the Member for Carlisle and the shadow Minister talked about succession—passing on businesses to the next generation. Business property relief is a really important part of that. Not everybody understands exactly what it does, but it is an important tax concession that means that families can pass on their business to the next generation without paying inheritance tax. That hugely important tax incentive keeps family businesses together, and it is being done for exactly the right reasons.
The Government have exempted more businesses from regulations. Various business regulations have increased from a threshold of 50 or 250 employees to 500, which should lower regulations on many family businesses. We are trying to help family businesses, as well as many other businesses, transition to net zero. We have zero-rated energy on energy-saving products, which is really important. The Help to Grow: Management scheme improves management skills for SMEs. The Government are subsidising 90% of the cost of that scheme, which is hugely important in improving our management skills. Of course, the £4.8 billion levelling up fund and the £2.6 billion shared prosperity fund try to improve the communities that family businesses make such a huge contribution towards.
To improve the prospects of family businesses, and all small and medium-sized businesses, the most import thing that we can do is support them by spending our hard-earned money there and use them rather than their larger competitors. Like others, I was delighted to attend small business Saturday. From early morning to late evening, I visited fantastic small businesses across my constituency. I just want to name-check Taylor’s of Pickering. Pickering is a small town in a beautiful part of North Yorkshire, and Les and Joan Taylor started the business in 1969. It is a greengrocer and fishmonger, and it is in its third generation now. Peter Taylor, who now runs it, gets up at 2 o’clock every morning to deliver his groceries—he is a wholesaler too—and smoke his fish. It is a fantastic business. Those kinds of business are the backbone of our communities. As the hon. Member for Strangford (Jim Shannon) said, we are a nation of shopkeepers, and it is important that we go and shop in those businesses. I know that he does that on his high streets in Strangford.
We are doing a lot on finance, which a number of Members talked about. The hon. Member for Caithness, Sutherland and Easter Ross and my right hon. Friend the Member for Aldridge-Brownhills talked about the demise of the local bank manager. In my community, Ron Taylor was our local bank manager and a very well-known figure. I think that has disappeared.
We are doing things to improve access to finance for SMEs and family businesses. The British Business Bank has given £12.2 billion through various different mechanisms to 96,000 businesses, and when it comes to new family businesses, over £1 billion is now being lent in start-up loans to about 100,000 businesses. However, there is an argument that we need to once again put in place patient capital for intergenerational businesses—some other countries do that better than we do. Certainly, in lots of the G7 nations, particularly Germany, regional mutual banks provide long-term finance for family businesses; that, I think, is why we see many more big intergenerational businesses in places such as Germany. That is something we need to look at and learn from, and in my role I am keen to explore the potential of that.
The UK has a very good story to tell in terms of business. We are first in the OECD for the numbers of start-ups per capita, but we are 13th in terms of scale-up, so we do not get as many businesses growing quickly in those early years. Again, that is something I very much want to focus on in my role. It is a huge opportunity, because we know that if we can solve that particular equation—that first and 13th equation—we can solve the productivity puzzle.
We are looking at many other things, including through our review of payment and cash flow, which is another source of finance. We are very keen to scrutinise current practices and develop best practice in that area, to make sure we have good advice and mentoring services. There are 38 growth hubs around the country. We are keen to improve people’s growth hubs, and to hear stories from hon. Members across the House about the quality of their local growth hubs, to make sure that they are as good as they can be. We invest heavily in them. They are there to provide advice on access to finance and mentoring, and we want to make sure that they are delivering good outcomes for our local SMEs. We also want to improve procurement by bringing more SMEs and family businesses into public sector procurement. The Procurement Bill is going through Parliament at the moment, but there are lots of other lessons we can learn.
I will conclude now, to give my hon. Friend the Member for Carlisle a couple of minutes in which to sum up. As I say, it is a great privilege for me to be able to speak in this debate. All hon. Members across the House come to this place to make a difference, and this debate has been a great opportunity for me to be able to give something back to my community—the business community that has been transformational for my life. Thank you for that opportunity, Mr Robertson, and I conclude by wishing all hon. Members a very merry Christmas and a happy new year.
John Stevenson
I thank the Minister for his contribution. He is a very unusual Minister in Government terms, in that he is a round peg in a round hole.
I also thank all colleagues for their contributions. It has been very interesting to hear about the significant contribution that family businesses make not only to local economies but—and this is equally important—to local communities up and down the country. Some 85% of all businesses are family businesses, and if I were to give one challenge to the Government on growing the economy, it would be to recognise that it is absolutely vital that those family businesses grow, expand and become much bigger, such that they contribute not just locally but nationally. That is how we will grow our economy. There needs to be greater recognition of the importance of family businesses, and we need to ensure that they grow, expand and receive support.
Finally, I follow the Minister in wishing everybody a merry Christmas and a happy new year. I hope that 2023 will not be as exciting as 2022.
Mr Laurence Robertson (in the Chair)
I also wish everyone a happy Christmas and a very peaceful new year.
Question put and agreed to.
Resolved,
That this House has considered the contribution of family businesses to local communities in the UK.