Small and Medium-Sized Enterprises: Funding

Baroness O'Cathain Excerpts

Tuesday 25th June 2013 Lords Chamber

[Lord Popat]

My Lords, my answer is no different from that to the previous question about awareness. Yes, we are doing everything possible through the Bank of England and the clearing banks to make their customers aware of the different schemes available to SMEs to borrow money through government incentives.

[Baroness O’Cathain]

My Lords, my noble friend Lord Sharkey is absolutely right: knowledge of the funding available does not seem to be percolating through. That is a real shame, because SMEs account for some 98% of all businesses in the UK and internal market. They also account for so much activity, and there could be a huge opportunity for growth and for employment, because if every SME in the UK, and where possible in the internal market, took on one extra employee, there would be no unemployment. The combination of getting the banks to let go of some funding for SMEs, plus trying to encourage more employment by the SMEs, could get us out of trouble very quickly.

[Lord Popat]

My Lords, since the banking crisis in 2008, the banks are a little risk averse. They do not want to have excessive lending. At the same time, the SMEs are risk averse too; 61% do not actually borrow money for their businesses, mainly because they have retained profits to run their business but quite often because they use their own capital. However, I agree with the noble Baroness that awareness is key. This is where we have partly failed, and we are taking steps to ensure awareness. Having said that, we launched the Funding for Lending scheme this time last year, and so far we have lent £16.5 billion through it. That is a pretty good record for the Government.