Small Businesses

Lord Bishop of St Albans Excerpts

Tuesday 3rd February 2015 Lords Chamber

[The Lord Bishop of St Albans]

My Lords, there is no doubt that we need to create a culture in which entrepreneurial skill is encouraged and supported. Small businesses form a vital part of our national landscape and are integral to the flourishing of our society. The social capital that we all seek depends on strong partnerships: partnerships between manufacturing, finance and chambers of commerce; between new entrepreneurs and established businesses; and between local and national government and the universities, as well as the voluntary and faith sectors.

Last evening, I was at a social function and found myself talking to Peter Goodman, the president of the St Albans District Chamber of Commerce. It was too good an opportunity to miss so I asked him what he thought about small businesses. In particular, we ended up discussing start-ups. He identified three main problems that small business start-ups were facing in St Albans. First, he said, there was insufficient advice for small business in the early stages. I therefore ask the Minister whether Her Majesty’s Government can help with better signposting of the business advice that is already available, and whether additional specialist resources could make a significant contribution, especially in emerging areas such as the high-tech industry.

Secondly, Paul Goodman said that it is hard to recruit staff with the appropriate qualifications and, thirdly, that there is a dearth of appropriate premises for small businesses and a need for many more “easy in, easy out” licences. These are areas that I hope Her Majesty’s Government will review carefully as we want to support new business start-ups.

Allied to these challenges is the clear need to improve access to start-up capital for small businesses. With the diversification of financial services, social investment has the potential to provide an alternative way forward for many would-be entrepreneurs. Community development finance institutions are among the social finance options available. They provide loans and credit to, among other groups, businesses and entrepreneurs, especially in disadvantaged communities, which are unable to secure finance from mainstream commercial institutions such as banks. Community finance seeks to bring about a range of economic and social benefits and is not limited to a concern with profit margins.

While this is a fast-growing sector, current levels of community finance provision leave a huge gap in capacity, skills, expertise and availability of capital. The Community Development Finance Association’s recent report Mind the Finance Gap highlighted the extent of the disparity between demand and provision.

As well as the DCLG’s work in encouraging social impact investment, have the Government given any consideration to supporting the growth of the community finance sector? In particular, are there ways in which Her Majesty’s Government can further assist in bringing together the banking, public and independent sectors to work more closely with each other in providing funding for small businesses?