Regional Growth Fund

Lord Harrison Excerpts

Tuesday 11th October 2011 Lords Chamber

Asked By

[Lord Harrison]

To ask Her Majesty’s Government what steps they are taking to encourage small businesses by revisiting the qualification threshold for the regional growth fund and by establishing a small business bank created with initial bonds funded by the Monetary Policy Committee.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, we see no need to revisit the qualification threshold for the regional growth fund. In round 1, a third of funding allocated—some £150 million—was targeted at SMEs. It is not the job of the Monetary Policy Committee to establish a small business bank; there are more efficient ways of supporting small businesses, such as the Merlin commitment and the enterprise finance guarantee scheme. My right honourable friend the Chancellor of the Exchequer has also announced that he is considering credit easing options and will make further announcements on this in November.

[Lord Harrison]

My Lords, the Government seem more interested in giving cheap phone access to Ministers for big businesses than getting cheap loans access to small businesses that are starved of funds. I ask the Minister again to look at the regional growth fund, the qualification for which is a £1 million claim by any small business. I ask her to look at some fresh ideas, like those of Professor David Blanchflower, for creating within the Bank of England, through the MPC, a bank which is capable of offering loans to small businesses at low rates of 2 per cent.

[Baroness Wilcox]

If the noble Lord will wait for the Chancellor of the Exchequer to explain what he is going to do about credit easing, the noble Lord might take comfort from that. In the mean time, there is no doubt that the fund is accessible to SMEs; it is available through specific bids from organisations with experience of the SME sector that will be able to help make small grants, below £1 million, available to projects that support the fund’s objectives.

I have a couple of examples which might help. The Plymouth University and Western Morning News growth fund was announced in the summer, which targets that money directly at SMEs in the south-west of England. That will work well. Contracts have recently been finalised on the majority of engineering projects in the RGF-supported SME energy cluster in the north-east, headed by Chirton Engineering Ltd. That will be delivering 140 jobs. Although £1 million sounds too high for a small organisation, it would have been impossible to look at every one of those small applications. If anyone wishes to phone the regional growth fund, they will be helped and guided as to how they can come together with other small businesses to take this money. As your Lordships can see, we have already made available some nice amounts of funding—almost a third—to the SMEs.