SMEs (South of England)

Andrew Turner Excerpts

Wednesday 15th June 2011 Westminster Hall

[Mr Andrew Turner (Isle of Wight) (Con)]

I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing the debate. We all know that small and medium-sized businesses are absolutely vital to the recovery of the British economy. They create wealth in a community and provide local jobs. Micro-businesses are incredibly important to our local economy on the Isle of Wight. The majority of businesses on the island have only one or two employees, and many have none. There are 6,000 businesses in total on the island, 87% of which have fewer than 10 employees. That is a figure of 5,220. I will come back to those points in a moment.

Potential investors and business owners need to understand that living and working on the island is fundamentally different from the mainland. There are a few drawbacks, but there are many more positive aspects. We have a more relaxed pace of life and a better quality of life. We can use that to attract business people who want a good work-life balance. We also have a rather captive audience because the cost of leaving the island can be extraordinarily high. People tend to buy their food and many of their other goods and services on the island, and they bank on the island. Islanders are more community focused than people in many other parts of the country. That is probably because so many people are born on the island, educated on the island, work on the island, have families on the island, and grow old on the island, so even more than in some other areas, it is in the interests of islanders and their families to build a strong local economy.

I am also interested in the move towards more economic development through the focus of local enterprise partnerships on stimulating regional growth. Unfortunately, I understand that the Solent area LEP, which covers the Isle of Wight, has excluded representation on its board from small businesses, including the Federation of Small Businesses. That seems rather short-sighted. I am worried that the voices of small and micro-businesses will not be heard. I hope that the Solent area LEP will find a remedy for that omission soon.

More can be done to support micro-businesses. Many local businesses have disappeared into franchises controlled and dictated to by large brewers. Small butchers and greengrocers have to compete with supermarkets that have free parking and mass buying power. Even though many small food shops on the island are better value for money than the larger supermarkets and offer a better quality of food and produce, they suffer losing shoppers to loss-leading offers and discounted petrol schemes. Perhaps the Government’s commitment to support local communities means that something more can be done to encourage shoppers to use local shops that sell local products.

As I said earlier, most businesses on the island have one or two employees and many have none. Only 13% of businesses on the island have more than 10 employees. Small and micro-businesses are vital to the island’s economy and they have enough on their plate trying to run a successful business, without having to devote hours and hours to trying to ensure that they comply with unnecessary red tape. The Government’s decision to exempt new start-ups from all new domestic legislation for three years is welcome; it is a good start. That, coupled with a review of the 22,000 regulations currently on the statute book, will reduce the bureaucratic burden that so often puts off good small business owners. However, I regret that the island was not included in the decision to give a national insurance holiday to small, start-up businesses. Just because the previous Government put the island in the south-east region does not mean that it shares the affluence of some of our mainland neighbours. I hope that the Chancellor will look closely at differences within regions—I recognise that that point has been made—when announcing such policies in the future.

I recently met with Neil Whitmarsh, the senior business manager of Lloyds bank on the island. He told me that business lending on the island is well ahead of target, and I welcome that news. Island businesses will also benefit from the improved access to finance promised by the Government. I welcome the announcement from the major banks that they will make £76 billion available in new lending for small businesses across the country in 2011. All in all, I think that the Government understand and appreciate the massive contribution that small businesses and micro-businesses make to our national and local economies. The work that has been done is an excellent start, but we need to keep micro-businesses afloat, otherwise our economy will once more suffer.