Small Business, Enterprise and Employment Bill
Debate between Viscount Younger of Leckie and Baroness Wheatcroft
Viscount Younger of Leckie (Con)
My Lords, I shall speak to Amendments 33M and 33W.
In Committee I supported my noble friend Lord Hodgson in proposing an exemption from an MRO for a tenant in return for an investment by a pub-owning company. It is necessary for the companies to have reassurances that investments—some of which are significant—made in their pubs are realised in both financial and non-financial returns. The latter would include good will and more intangible aspects such as reputation, quality of service and better atmosphere, which all serve to draw new customers in over a longer period of time. My noble friend the Minister was not minded to accept an exemption but I am pleased that she has been willing to engage with all after Committee and the word “deferral” seems to have replaced “exemption”.
Like my noble friend Lord Hodgson, I have some sympathy with many of the inserts proposed by the noble Lords, Lord Mendelsohn and Lord Stevenson, in their Amendment 33M, which, essentially, seeks to place considerable detail in primary legislation in the Bill by seeking clarification of the regulations, the Pubs Code and guidance. However, the noble Lords would place too much information in the Bill and the detail is more suited to secondary legislation and proper debate at this stage.
For example, subsection (2)(f) of the proposed new clause states that regulations and guidance shall include an investment agreement as a trigger for MRO. This is too vague and there is no substance in the timescales attached. Equally, in Amendment 33M subsection (3) of the proposed new clause states:
“Any investment agreement must recognise the different nature and size of pubs and relevant investment requirements”.
This is an aspiration but it is too short on detail. Finally on Amendment 33M, in subsection (2)(b) of the proposed new clause, the noble Lord, Lord Mendelsohn, cites that the maximum deferral period of an MRO in return for an investment should be five years. My noble friend Lord Hodgson alluded to this. That is too prescriptive and further work is required to determine the length of deferral time in relation to the amounts invested.
However, the overall tenor of Amendments 33M and 33W, tabled by my noble friend Lord Hodgson, I hope will go some way to persuade and encourage the Minister to commit to giving more thought to the details in a review—or is it called a consultation?—and to debate it thoroughly as secondary legislation.
There remain important unanswered questions, including what constitutes a major or minor investment, over what periods these investments might be considered to be reasonable to allow a decent rate of return and how one might describe “decent” and how it should be defined. Perhaps my noble friend can give the House further reassurances here on Report as to the process of how the details will be debated and presented.
Baroness Wheatcroft (Con)
My Lords, it is clear that pub companies need to be encouraged to invest in their estate: it is an obvious thing to do. The pubcos claim that they invested £200 million in their properties over the past two years and so, although there are complaints from tenants, there must be some happy ones out there.
Industrial Strategy: British Business Bank
Debate between Viscount Younger of Leckie and Baroness Wheatcroft(10 years, 4 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, I am extremely grateful to my noble friend Lady Wheatcroft for initiating this important debate. I pay tribute to her for her contribution to the business bank steering group.
Changes in international economies are creating new challenges and opportunities for business across Britain. Last week, in a debate in this House, I talked about what we are doing to support manufacturing in the UK, which was mentioned earlier. This debate allows me to go in to more detail on the Government’s industrial strategy and how the British Business Bank is providing access to finance for smaller businesses to help them grow and prosper. I fear that I will not be able fully to address the questions raised by the noble Lords, Lord Haskel and Lord Stevenson, because there were some particularly negative opinions given. As my noble friend Lord Stoneham said, I believe that the industrial strategy is clear and I seek to try to explain that today.
Your Lordships will be aware that the industrial strategy, launched by Vince Cable in 2012, has given impetus and focus to this Government’s long-term plan for growth. I am pleased to hear that there was much agreement today on that. It provides businesses, investors and the public with more clarity about the long-term direction of the economy, looking beyond this Parliament. The Government are working in partnership with industry to provide support across a wide range of sectors. They are broad sectors rather than picking winners, as my noble friend Lady Wheatcroft said.
The noble Lord, Lord Haskel, asked what the purpose of the industrial strategy is. The industrial strategy is providing a spectrum of support for a range of sectors and this partnership with industry is giving both government and industry confidence in the future direction of the economy and confidence to set policy to address the needs of business, and for business to invest in long-term growth. But it is more than that. The industrial strategy is about economic growth and providing benefit for us all.
The noble Lord, Lord Stevenson, asked about the creative industries not being one of the industrial strategy sectors. The Government are providing a spectrum of support for a wide number of sectors, over and above the 11 listed in the industrial strategy, and BIS is working closely with DCMS on the creative industries strategy. Nicola Mendelsohn, the industry chair of the creative sector, sits on the industrial strategy council, which is a sign of the breadth of engagement outside the 11 sectors.
The UK also has great strengths in the life sciences field—a sector I want to focus on—where, among other successes, and as evidenced in the news today, we are world leaders in ground-breaking dementia research. Last week, we launched “Create UK” in support of the creative industries, which are worth £71.4 billion to the UK economy, a sector that I know well in my role as the Minister for Intellectual Property.
My noble friend Lady Wheatcroft asked how we would address regional imbalances in terms of investments and funding. Only yesterday we launched the growth deals for the 39 local enterprise partnerships further to support local growth throughout the country through £6 billion of funding for transport, housing, business support and skills projects in the regions. These growth deals are the latest part of the Government’s long-term plan to boost growth around the country, following, among other projects, the multi-billion pound regional growth fund, and the city deals signed with 26 urban areas across the country.
My noble friend Lady Wheatcroft raised the issue of ensuring that the impact of the industrial sector is felt across the UK. As the House will be only too well aware, my noble friend Lord Young of Graffham is working hard with the sectors to increase their help for small and medium-sized enterprises, and in the professional and business services sector, which I co-chair, we run regular regional workshops for SMEs. Members of the council, including my co-chair, attend these and offer advice.
I will be focusing primarily on access to finance but there are some cross-cutting themes that underpin our support for all sectors. As I mentioned last week, we have invested £600 million in the “eight great technologies”. These are the technologies where we have the research expertise and business capabilities to be a world leader. They are supported by the Technology Strategy Board and include robotics, big data and energy storage. We are helping to bridge the gap between research and development and the market through £74 million of investment in nine catapult centres, which are complementary to our industrial strategy.
On the important subject of skills, which was raised by my noble friends Lady Wheatcroft and Lord Stoneham, we need to address the current and future shortages. We need to strengthen our science, technology, engineering and maths skills base by building a skills pipeline at all levels from technicians through to postgraduates. To do this, we are, first, investing £185 million in the teaching of STEM subjects; secondly, offering traineeships to young people; thirdly, we are building and delivering a network of new national colleges to provide specialist vocational training; and finally, as the House will know, we have set up university technical colleges.
As my noble friend Lord Stoneham highlighted, we are unlocking procurement opportunities, advising businesses in advance what the Government are planning to purchase so that they can invest in the right skills and equipment to make the most of these opportunities. Through UKTI we are helping our companies to export. In April 2014, UK organisations won four new contracts worth £1 billion to establish 12 technical and vocational training colleges in Saudi Arabia. Key events such as the International Festival for Business in Liverpool, which I attended two weeks ago, help us to showcase our companies and technologies on the world stage. The festival is creating new business-to-business relationships, and unlocking commercial openings for small, medium and large companies, both at home and overseas.
I now turn to the important point of access to finance. Well-functioning markets for finance are crucial for ensuring that firms can invest and operate when they need to, producing new and improved goods and services, and in turn boosting the UK’s productivity and competitiveness. We do understand that there are some well-documented long-standing supply and demand issues, which mean that smaller firms cannot always access the finance that they require. My noble friend Lady Wheatcroft alluded to this. We have been addressing these issues, and hence the reason that this Government have established the British Business Bank.
The business bank is providing funding and guarantees through private sector finance providers, allowing them to offer more targeted and appropriate finance products for smaller firms so that they can prosper and grow. My noble friend Lady Wheatcroft raised issues about using securitisation techniques as part of the modus operandi of the business bank. I agree with my noble friend that the business bank should operate for the good of the economy. It will not operate for its own benefit. It is already staffed by skilled professionals who know how the markets work. But it will operate within the rules set by BIS and the Treasury, and with a sensible risk appetite.
Over the next five years, the bank aims to unlock up to £10 billion of financing for commercially viable smaller businesses. A range of British Business Bank programmes is already making a real and significant difference, catering for the diverse needs of smaller firms, such as start-up loans, which support entrepreneurs looking to start a business with a repayable loan of up to £25,000, and give access to a business mentor. I am delighted to report that more than 18,500 of those loans have now been offered to entrepreneurs, with more than £92 million approved to finance start-up businesses.
The British Business Bank also provides guarantees through the enterprise finance guarantee scheme to support loans to firms that would otherwise be declined funding due to a lack of collateral for working capital purposes. This programme has proved a considerable success, providing nearly 15,500 loans since the election and resulting in more than £1.6 billion of additional lending to smaller businesses.
The bank also provides a suite of venture capital interventions, including enterprise capital funds, which support and promote a diverse and vibrant market to help early-stage and high-growth firms. The enterprise capital fund programme currently has 16 separate funds, nine of which are investing in early-stage opportunities, with a combined capacity of more than £530 million.
As my noble friend Lord Leigh mentioned, a £300 million investment programme has been developed to provide support for a range of finance providers, including debt funds and peer-to-peer finance platforms. To date, £198 million of awards have been recommended by the investment panel, which will support more than £800 million of lending capacity.
The British Business Bank will also provide information and advice to smaller businesses about how to successfully go about getting the right type of finance. One example of this is the recently published Business Finance Guide, produced in association with the Institute of Chartered Accountants in England and Wales.
We believe that the investments made by British Business Bank programmes are already delivering significant results. In total, British Business Bank programmes facilitated £782 million of new lending and investment in the last financial year. Over 60% of this funding was provided through new, emerging or smaller finance providers.
My noble friend Lord Wrigglesworth mentioned the need to balance good regulation in banking with promoting sensible risk-taking. Banking regulation has tightened greatly. This Government have led global efforts to increase capital and liquidity requirements but we are also aware of the need to promote competition. This is why rules for small and new entrants are not as strict and the process for new banking licences has been streamlined. We see the results in new banks coming into the market.
My noble friend Lord Stoneham asked about success measures for the British Business Bank. Last week we published our success measures in the bank’s strategic plan, which are: increasing the amount of finance for small firms; increasing choice; increasing small firms’ confidence in finance markets; and finally, doing all this while managing taxpayers’ resources efficiently. These will be turned into detailed KPIs over the next few months and this will be monitored by the British Business Bank’s board, which itself will report to BIS Ministers.
My noble friend Lord Leigh asked to see greater transparency on the British Business Bank’s results. I assure my noble friend that all results will be published and fully transparent.
The noble Lord, Lord Haskel, if I read him correctly, asked how much of the British Business Bank’s activity is effected on its own account. All the bank’s lending and investment is exercised alongside private sector providers. So, of the £782 million of lending and investment last year, around one-quarter is public sector money and the rest is new money from the private sector.
To conclude, the British Business Bank is integral to the UK’s long-term industrial strategy and is playing a vital role in removing the barriers to businesses accessing finance. This Government’s commitment to a long-term industrial strategy has already proven a success in supporting growth and turning our economy around, and its impact will continue to be felt long after this Parliament. It is essential that we continue to work in partnership with industry to address barriers to growth, both to unlock the potential of British business and to deliver strong and sustainable growth.
Baroness Wheatcroft
My Lords, I thank the Minister for his comprehensive response, and I take comfort from the fact that he reassured us that the business bank will work within strict limits as to the risk it takes. I take rather less comfort from his reassurance—
United Kingdom: Exports
Debate between Viscount Younger of Leckie and Baroness Wheatcroft
Viscount Younger of Leckie
I acknowledge what the noble Lord says. As he will be aware, the UK’s position is that Scotland is stronger in the UK and the UK is stronger with Scotland in it. As part of the UK, Scotland has a stronger place in the world and is a major player on the international stage. As the noble Lord alluded to, the rest of the UK is the primary destination for Scottish exports, accounting for around 70% of Scottish exports, worth around £48 billion in goods and services. Scotland as an export destination accounts for approximately 10% of exports from the rest of the UK.
Baroness Wheatcroft (Con)
My Lords, the creative industry is thriving as never before. Could my noble friend say a bit about how the advertising and design consultancies in this country are exporting their services all around the world?
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Wheatcroft
Baroness Wheatcroft
My Lords, this compromise is to be welcomed, and I suspect that the majority of newspaper groups will take the differing interpretations being offered to enable them to sign up to it. It makes no difference whether it is underpinned by statute or by a royal charter protected by statute. Whether it is a dab or a little bit of statute, a workable compromise is being offered, and I welcome it. As somebody who spent a long career in newspapers, I have been appalled to learn—and it has been a process of learning—just what terrible things went on. We should remember that many of the worst things that newspaper groups got up to were criminal. What was wrong was not just their behaviour, but the failure of the police to deal with those crimes. What is going on now is far too late. It was the very close relationships between newspapers and some sections of the police which allowed things to fester for far too long.
It may well be that the climate has now changed, but it is not Leveson that will deal with that. Leveson—or the royal charter and the regulatory bodies that will come about as a result of that—will deal with a much greater wariness on the part of the press as to what and what not to write. That is not a bad thing; a degree of care beyond that which has been exercised in the past would be welcome. Although the damages may well be exemplary in some situations, believe me, what will frighten the press more than anything is the prospect of being directed to publish an apology or a correction with exactly the same prominence as they gave the original story. That will really make people think very hard. My question regards the internet, because what goes on in the media now, as Lord McAlpine would vouch, is far more online than it was even 10 years ago, and the trend is moving very fast. Can we expect anything to put online publishers in the same category as paper publishers?
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, this is a defining moment in the future of press self-regulation and the response to Lord Justice Leveson’s admirable report. I am most grateful to Members on all sides of this House for their positive and encouraging comments on the conclusion of the cross-party talks. The Prime Minister committed at the outset to a cross-party approach as the best way to identify a strong and durable solution to the question of future press regulation. After many hours of probing and thorough discussion we have reached the conclusion we always hoped for: a tough, new, self-regulatory model that has the support of the Prime Minister, the Deputy Prime Minister and the leader of the Opposition.
A number of noble Lords have expressed concern about the impact of these changes on the freedom of the press, but we have been clear throughout this process that any solution we implement must protect press freedom, a vital pillar of our democratic society. This clause is an additional safeguard against government interference. Its purpose is to ensure that parliamentary approval will be required before a recognition body set up by royal charter may be amended or changed. Of course, Parliament is sovereign and no Government can bind their successors, but this is an additional step. We believe that it is a constructive and workable solution, which protects press freedom.
The charter lock clause applies only to charters that are established after 1 March 2013. Therefore, it will not apply to charters that were established before that date, even if they are amended in the future. It remains the Government’s position that a royal charter is the right vehicle for the BBC, which for many good reasons was established at arm’s length from politicians. As for the origins of the royal charter, a point raised by my noble friend Lord Fowler, I suppose I am equally happy if it came from a Times letter or a man on the Budleigh Salterton omnibus. The main issue is that we are there with it. Further, it is worth noting that there was extensive parliamentary engagement on the development of the present BBC charter.
I should like to pick up on a number of points made by noble Lords, and I shall commence with those of the noble Lord, Lord Foulkes. He asked whether this applies to the whole of the United Kingdom. He may well have said it, but I would hazard a guess that he had Scotland in mind. The Government are currently discussing these issues with the devolved Administrations and we will bring forward provisions to ensure that the territorial extent of this measure is clear.