Enterprise and Regulatory Reform Bill

Debate between Lord Mitchell and Lord Marland

Tuesday 18th December 2012 Grand Committee

[Lord Mitchell]

My Lords, I have listened with great interest to the words of the noble Lord, Lord Hunt of Wirral, and the noble Viscount, Lord Eccles. We, too, are always looking for reasonable ways to ensure that SMEs—or SEs, small companies, in this respect—are not subject to too much regulation.

Perhaps I am confused on this, but currently in the 2002 Act there are two criteria as to whether competition authorities should take an interest in a merger. The first, which we have spoken about today, is whether the turnover of the business is in excess of £70 million. This is a considerably higher level than what is being proposed today, so it is unlikely that any company with a turnover of £5 million being taken over would be investigated.

The second criterion, though, the one that we are paying most attention to today, stipulates that where two merging businesses have an effective market share of over 25%, that becomes a relevant merger situation for the competition bodies to consider. That 25% is an important threshold as to whether some form of monopoly is taking place and therefore, as the noble Viscount said, the value to the consumer is affected prejudicially.

At present, it appears that the only effect of Amendment 25 is to exclude the possibility of the CMA looking into a merger if the turnover of the business being taken over was above the £5 million threshold, even if the combined market share were to be more than 25%. Those are scenarios in which we might not wish to tie the CMA’s hands in this fashion. A tech company, for example, could have a low turnover but a high market share, particularly in a locality, and as a result the CMA might want to take a look at a merger between it and a dominant company in that market, or there could be some form of geographical dominance.

I find myself sympathetic with the thinking behind this because, as far as I am concerned, the more competition the better at all times, and I am also sympathetic with keeping red tape away from small businesses. However, it appears that when it comes to mergers, such protections are already offered, and this amendment could damage something even more important to SMEs—a strong competition environment. We definitely want to think about what has been said today; some important points have been raised. We will wait for the next round at Report.

[Lord Marland]

My Lords, the amendment is interesting; on the one hand, the noble Lord, Lord Berkeley, has made a compelling point, as indeed, on the other hand, did my noble friend Lord Hunt. Both points, although they differ, are things that we all want to safeguard against. The other point that was not made is that the amendment would not safeguard against the big company buying the small company, which we also want to safeguard against. I think that we are all talking the same language and, on that basis, if my noble friend Lord Hunt of Wirral, will allow us, I think we ought to take this issue away, roll our sleeves up a little more with some hot towels—or cold, if he prefers; some days I prefer cold, I must say—and look at it a bit further. If he is happy on that basis, I ask him to withdraw his amendment.

Enterprise and Regulatory Reform Bill

Debate between Lord Mitchell and Lord Marland

Monday 3rd December 2012 Grand Committee

[Lord Marland]

My Lords, of course the Government are very committed to SMEs, and I know that the noble Lord, Lord Mitchell, who I can say lots of nice things about, is a committed and good advocate for their cause. The noble Lord, Lord Bates, put his finger on the pulse—it is about definition. However, I do not want to get too deep into definition, thereby tying the hands of the bank too early on in its endeavours.

It is clear that the great challenge for any Government at the moment is to get the SMEs going. I know this first hand, given that I am not only the Prime Minister’s trade envoy but chairman of UKTI’s Business Ambassadors Group. This is our challenge—the beating heart of Britain—getting the SMEs going. Therefore, in the context of SMEs, we have to look at what the Government are doing as a wider initiative, rather than be tied down. That is why we have established the Funding for Lending scheme, Capital for Enterprise, the Business Growth Fund, the Regional Growth Fund, and the Enterprise Finance Guarantee fund, which has already helped 18,000 SMEs. To a certain extent, it is working, because we have had the highest amount of new businesses established since records began. Some 460,000 start-up businesses have registered at Companies House in the past 12 months.

However, I completely agree that this issue is an enormous challenge. In fact, my noble friend is committed to this cause, as he is on late payments—an issue that is fundamental to SMEs. He tells me that his maiden speech was about late payments and commercial debt. He has a record of support for that case.

The noble Lord, Lord Cotter, has raised this subject a number of times in the Chamber. Therefore, do not get me wrong. The Government are completely committed to helping SMEs. That is why, for example, in procurement—one of the issues that I am involved with in government—we have insisted that 25% of government contracts should go to SMEs. An awful lot of work is going on. I do not want to be too prescriptive in this area of the Green Investment Bank, but it is totally focused on this issue and looks at each opportunity on its merits. Already, the bank’s smaller-scale funds for waste and non-domestic energy efficiency are already delivering investment for SMEs, such as the £8 million announced last week alongside a Teeside-based SME. Work is already going on to support SMEs.

With that in mind, I hope that the noble Lord will agree to withdraw his amendment.

[Lord Mitchell]

I thank the noble Lord for his statement and, indeed, I thank all noble Lords for their contributions to this debate. I take it as being broadly supportive of what we are trying to do. That will come out in further stages of the Bill, but I take great heart from what is being said.

I want to make two quick points. First, I cannot emphasise enough the importance of certainty, not just for SMEs but in the whole business environment. Certainty must be there. People are making decisions and, in the green area, these decisions are for longer periods than normal, particularly as regards the payback period and the intensity of those decisions. We must be clear on this, and I will address that issue later when I talk about borrowing powers for the bank. Secondly, of course we cannot tie the Government’s hands too much, but a definitive statement in the Bill on the need to invest in SMEs is important. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Marland]

I apologise. It is good that my noble friend understands it, because then he will not disagree with it. That is the way that the Government have set out their stall. We have inherited a very substantial national debt, but not in the same way in which the Germans have inherited the same problems. We have inherited a grave financial situation and, quite rightly, the Treasury decided that it will not enhance that by further borrowing against our balance sheet. The evidence produced by the noble Lord, Lord Smith of Kelvin, would suggest that he does not feel under any pressure in terms of funds at this point. Of course, we must set out our stall, as I have said. We intend to seek European Commission approval for borrowing and we intend to follow that process as soon as possible. I think that is a very good sign and I am delighted that there is some agreement in the room that we are doing that. I invite the noble Lord to withdraw his amendment.

[Lord Mitchell]

Does the Minister have any thoughts about when this borrowing will come to pass?

[Lord Marland]

We have made it very clear that it will not come to pass before the end of this Parliament. That is what prudent people do. They say, “I am going to buy something and I am going to spend this amount of money”. We have said that we will spend only that amount of money, but we have said that we will spend $3 billion on this project, which three years ago did not exist.

Small and Medium-Sized Enterprises

Debate between Lord Mitchell and Lord Marland

Thursday 22nd November 2012 Lords Chamber

[Lord Marland]

There are elements of give and take in that particular area. The EIS scheme is extremely beneficial. We have raised the limits of tax relief for that scheme—which is the “give”. The “take” is that the Government are concerned that it does not attract unsophisticated investors. It is important that investors are clear about the risk that EIS-registered companies have. After all, most are start-up and new businesses, which have an element of risk. So there is an element of give and take.

[Lord Mitchell]

My Lords, after two and a half years and half a Parliament, it is about time that this Government started taking responsibility for their actions and stop blaming others for the consequences of their own shambles. However, when will this Government understand that announcing convoluted schemes every few weeks is not the primary way to help SMEs to recover? What will help businesses recover is creating an atmosphere of confidence. That will be created by increasing demand, and demand will be increased by moving from a policy of ever-tightening austerity into one of strategic economic growth.

[Lord Marland]

If I may say so, that is a rather disappointing question from someone with so much expertise in business. We all know that the heart of the problem is the banking crisis. That was not caused on our watch, so we are perfectly entitled to look in the rear view mirror and say that it was not our fault. I do not think there is any lack of entitlement there. We have to get finance into the market, but what is much more important is that we have to be outward looking and developing trade. That is what the Government are doing and, my goodness, I have been to some countries over the past few years that have not had a labour trade Minister for years. That is why the Government are committed to expanding exports, helping SMEs and helping big companies to act as mothers to smaller companies in an export drive that is going to be fundamental to our growth.

Businesses: Start-ups

Debate between Lord Mitchell and Lord Marland

Monday 8th October 2012 Lords Chamber

[Lord Marland]

Obviously I shall discuss that with my friends in local government. It is not something for me to deal with, but it is something that the Government will look at as part of the Portas review. I take on board what my noble friend has said.

[Lord Mitchell]

My Lords, last week the Government announced a new partnership to help SMEs. It is hard to credit it, but their partner of choice is Barclays Bank, the number one casino bank. The Minister listed a whole load of programmes which the Government have announced, and indeed they have, but the fact is that very little of it is getting through to the SMEs themselves. When are this Government going to make sure that these programmes are much more effective?

[Lord Marland]

First, I welcome the noble Lord to the Front Bench. It is a pleasure to see him. I was looking up his great achievements earlier and, in addition to business and technology, I noticed that one of the things that interested him was alcohol abuse. Following what I did last night, I am thinking of putting that down as one of my interests. He raised a greater point—what the Government are doing. We are trying to make the weather and to create activity. That activity is working, which is why I was able to say that 450,000 new businesses have started in the past 12 months, the most since records were kept.