Small and Medium-sized Enterprises: Great Yarmouth
(Limited Text - Ministerial Extracts only)
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The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)
I am sorry that I cannot emulate my right hon. Friend the Member for Great Yarmouth (Brandon Lewis) by speaking without notes, but I will do my best to ad lib a little. I thank him for securing this important debate. I love his words that SMEs drive the whole economy. It brought back the words of Winston Churchill about the private sector; he said that some people see private enterprise as a predatory tiger that needs to be shot. Some people see it as a cow that needs to be milked. Few people see it for what it really is: the strong horse that pulls the whole cart. That is exactly right. Everything we see in the public sector and in this House is paid for by the private sector, the taxes it raises and the jobs it creates.
I totally agree with my right hon. Friend on the title and the primary content of this debate—SMEs are the most important part of the sector. As he said, I started a very small business and grew it over time, but the pressure we were always under as our business grew was from smaller businesses starting up and putting pressure on our market share. I listened carefully to his points about his father’s business and the legacy effect it has had on Great Yarmouth. That is my experience. Many people go into business for the potential financial reward, but also for the legacy: the jobs they can create and the business that they leave behind. That has a long-lasting effect on towns such as Great Yarmouth.
The Department for Business and Trade is seeking to make the UK the best place to do business in the world. We want to make it easier to do business every single day. My ministerial colleagues and I, as well as many others including my right hon. Friend, the Chancellor and the Prime Minister, are for business because we are from business. We understand how this works.
My right hon. Friend made the point about smaller businesses that start up and grow to become larger businesses. That is the fundamental basis of our strategy to scale up Britain. We want the start-ups to become scale-ups. That is one of our areas for development. We are No. 1 in the OECD for start-ups per capita, but in a survey of 14 OECD nations, we were 13th for scale-ups—businesses that have 10 employees or more after three years. That is our focus, and there are three key focus areas underneath that: access to finance, support and advice, and removing barriers and red tape. Those are critical issues for the SMEs I speak to.
When we speak about business, it is important to speak about the entire world of businesses in all sectors. Hospitality is very important in Great Yarmouth, where 23% of all jobs are in the tourism industry. In his intervention, my hon. Friend the Member for Aberconwy (Robin Millar) rightly said that the hospitality business feels that cold wind first, but also sees the benefit of the improvement in the economy first, too. It is truly the canary in the coalmine, as he put it.
In Great Yarmouth there are some fantastic opportunities for the future, not least in green energy. My right hon. Friend pointed out the businesses that are benefiting from that. I am aware of ASCO, which employs more than 100 people, providing services to the North sea opportunity that is green energy—30 wind turbines on the Scroby sandbank. There are many more opportunities in that sector.
In the Lowestoft and Great Yarmouth enterprise zone in his constituency, South Denes energy park and Beacon Park are boosting innovation and growth in the region. More recently, investment through the Great Yarmouth town deal and the future high street funds, building on previous support from the local growth fund, is helping the local area by supporting jobs and growth in that region.
I will go into some specifics about the three areas of focus I referred to earlier. First, access to finance is one of the primary concerns for small businesses as they open their doors and grow. We work closely with the British Business Bank to improve access to finance. I am pleased that as of March 2022, the British Business Bank programme has supported over 96,000 small and medium-sized businesses nationally with over £12.2 billion of finance. The programme is designed to bring benefits to start-up businesses, businesses with high-growth potential looking to scale up and businesses looking to stay ahead in the market.
I know my right hon. Friend the Member for Great Yarmouth has supported many initiatives in his time in this place, such as the important start-up loan scheme, which has delivered around £1 billion of finance to 100,000 companies. Those unsecured loans are vital to many people who cannot access finance to start a business. In his constituency, 95 loans have been provided, to a value of almost £800,000.
Inclusion is a priority of this Government, so I am pleased that in terms of all the start-up loans issued up until April 2023, 40% went to women, 20% went to people from a black, Asian or minority background and 32% went to people who were previously unemployed. Those are all disproportionately high numbers, which we should welcome.
Within the space of access to finance, we are also undertaking the payment and cash flow review. We know that is an issue for SMEs and we want to make it easier for them to be paid, as that is another source of finance. We have improved our equity finance offering through schemes such as the regional angels programme, supported by the British Business Bank, and the enterprise investment scheme, the remit of which has been extended.
We are looking at potential new opportunities on the back of open banking. Open banking was a huge success in this country and has been emulated around the world. There are now 7 billion API calls every month for open banking, connecting one banking app with another, and there are other fintech solutions. Open finance provides the opportunity to completely liberate opportunities for SMEs to access finance. Rather than going to their own bank and asking for a loan, they can ask many different providers for that finance, which will increase choice and opportunity.
Robin Millar
The Minister is following the speech given by my right hon. Friend the Member for Great Yarmouth (Brandon Lewis) with another very interesting and helpful speech about what SMEs need. He is describing the Government’s role in creating an environment in which SMEs can flourish. Will he comment on the importance of the regulation to which he referred, not just to say that there should be as little of it as possible but to set out what regulation is effective? Will he comment on whether it is right for the Government to intervene when the market is failing?
Kevin Hollinrake
My hon. Friend raises an important point, which I will come to shortly. He is right to say that we should intervene only where there is an exceptional circumstance, such as covid or a cost of living crisis, or where there is market failure, which is where we want to focus. For example, with SMEs working in the hospitality and house building industries, which he and my right hon. Friend the Member for Great Yarmouth both referred to, we know there is market failure and a need for them to access finance. We need to focus on those areas and ensure those sectors are provided with finance, when they cannot get it elsewhere.
The Government provide extensive business support, which is another key focus area, including through the business support helpline, the Help To Grow management scheme and a network of 38 growth hubs across the UK. The Help To Grow management scheme was launched in June 2021, to help close the productivity gap and lay the foundations for growth by providing SMEs with key skills in financial management, marketing and innovation. Our evaluation showed that approximately 90% of SME leaders surveyed reported that the scheme helped and Help To Grow management contributed to improved leadership and management of their business. I encourage my right hon. Friend, and all Members of the House, to share information about the scheme with local SMEs that could benefit from the opportunities it offers.
We know that businesses have emerged from the covid-19 pandemic, only to be faced with rising costs and dampened demand. In the autumn statement, we announced £13.6 billion of support for businesses over the next five years, including through reducing the burden of business rates for SMEs by freezing the business rates multiplier for yet another year, to protect businesses from rising inflation.
Over the winter, the Government intervened in the energy crisis by providing unprecedented support, in the form of the energy bill relief scheme and, more recently, the energy ill discount scheme.
The Government are freezing fuel duty, maintaining the 5p cut for a further year, and reversing the national insurance rise, which will save small businesses an average of approximately £4,200. That is in addition to the support previously announced in the form of an increase in the employment allowance to £5,000, the introduction of a zero rate of VAT on energy-saving materials, and the exemption of small businesses and microbusinesses from regulations where possible. That was raised by my right hon. Friend in his speech. These interventions show that the Government are on the side of small businesses, and understand the unprecedented difficulties that many have faced.
The last key focus is on removing barriers and cutting red tape. We are doing that through many mechanisms, such as improving the processes for public procurement, trade deals with Australia and New Zealand, and the comprehensive and progressive agreement for trans-Pacific partnership. The working time directive recording requirements will potentially save businesses more than £1 billion a year. Landmark legislation in the form of the Digital Markets, Competition and Consumers Bill will make it easier for SMEs to access digital marketplaces.
The Government acknowledge that one of the significant barriers faced by SMEs across the country is late payments. We are determined to see those reduced to ensure that SMEs are given the best chance of succeeding and growing. That is why we are conducting a review of business-to-business payment policy, the prompt payment and cash flow review, which is scrutinising existing payment practices and measures. We need a stronger culture of responsibility in large businesses to support the smaller suppliers on which they rely. The Small Business Commissioner addresses small businesses’ complaints about payments and the payment practices reporting duty creates transparency by requiring large companies to report on their payment times, while the prompt payment code sets standards and best practice in payment culture.
We are making substantial investments in Great Yarmouth to help the area to thrive and succeed. The borough secured a £20.1 million towns deal in 2021 to help level up the town. One of the fantastic projects supported by this intervention is the operations and maintenance campus for the energy sector. The town has also secured £13.8 million of future high street funding to help revive the town centre as a vibrant economic, cultural and community hub. That will help the town centre to develop sustainably into the future, supporting footfall, further regeneration and investment.
Great Yarmouth bid successfully in the second round of the levelling-up fund, and the Great Yarmouth riverside gateway project received £20 million to regenerate the railway station and the North Quay area of the town. We recently agreed a landmark devolution deal with Norfolk County Council, which will bring a wide range of benefits to residents and businesses in Great Yarmouth. It includes a £600 million investment for a further 30 years, equating to £20 million per annum, and Norfolk County Council can borrow against that further funding. The Norfolk broadband programme was awarded £5 million through the local growth fund to extend superfast broadband in the county, and it is estimated that that will lead to a £2 billion growth in the local economy and the creation of 1,500 jobs within 15 years.
The Government recognise that this is a challenging time for all businesses and we have provided unprecedented levels of support to help businesses and workers through these difficult times. However, data for Great Yarmouth show a 4% positive difference between the birth and death rates of businesses in Great Yarmouth in 2021, an encouraging sign that businesses are flourishing in the local area and that the local Member of Parliament is being highly effective. Furthermore, 667 Great Yarmouth businesses have been supported by their local growth hub and other partners, and there are 3,585 SMEs in Great Yarmouth in total. Over the last six months, there has been a sharp rise in job postings—vacancies, in other words—in Great Yarmouth, from 1,004 job postings in November 2022 to 2,229 in May 2023. That is a 122% rise. These are the highest vacancy volumes since October 2012 and they illustrate the health of the Great Yarmouth economy and the excellent work and representation by its local Member of Parliament.
Question put and agreed to.