Department for Business, Innovation and Skills (Performance)

Anne Marie Morris Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Mr Weir]

I hope that is correct—but action is needed, not just talk. The situation has been going on for a long time, and many small businesses in my constituency and rural constituencies throughout the country are in serious difficulties and struggling to keep their heads above water. They need help now, and the Government have to move on that.

The motion mainly concerns growth in the economy, which I understand, and I wish to talk about some of the things that small businesses need in order to grow. Many of the points in the motion are specific to England, but I wish to mention two matters that cover all small businesses, including in Scotland.

The Minister may know that, just today, the First Ministers of all the devolved Administrations have issued a joint declaration calling for action to protect the economy. The second point made in it is about addressing access to finance, and it states:

“It is clear that securing affordable finance remains a considerable challenge for many of our companies. This is particularly true for many small and medium sized firms—the bedrock of the Scottish, Welsh and Northern Irish economies.

It is unacceptable that many businesses are being prevented from expanding or are faced with significant increases in lending charges and we need to ensure there is in place transparency and accountability in the flow of finance for SMEs. We must also ensure that the planned £1.5 bn Business Growth Fund is implemented now to support lending to viable companies.”

That is the vital point. Many companies in my constituency are finding it very difficult to access finance, and even when they can, it is at a high cost. At a time when the Bank rate of interest is 0.5%, probably the lowest in recorded history, it is ludicrous that small businesses are having to pay ever-higher charges to banks to get finance, if they can get it at all. It is worrying to small business people to read daily in the papers that the Monetary Policy Committee is being pressed to raise the interest rate to deal with fears of inflation, because that would hit small businesses seriously.

For all the talk of making banks pay more to small businesses, there is no sign of that actually happening. The mood music from the Davos summit, which the Prime Minister and the Chancellor attended, appeared to be that the banks are not interested in that any more. They seem to think that they have got through it all and can get on with business as usual, which is totally unacceptable. The issue has to be tackled now. My constituents do not understand why so much taxpayers’ money bailed out the banks yet they are unable to get finance and help local employment. The banks have a duty to help the people who helped them when they were in trouble.

[Anne Marie Morris (Newton Abbot) (Con)]

Perhaps I could draw to the hon. Gentleman’s attention the fact that I had a meeting yesterday with the business finance taskforce of the British Bankers Association, whose chief executive told me that its 17 initiatives to support lending are on track. Indeed, mentors are beginning to be recruited and the lending code is almost in place. The business growth fund is pretty much ready and just requires some changes in FSA regulation. I hope that that provides some comfort.

[Mr Weir]

Again, we hear, “It is almost there, it is coming”, but it is not here. Help is needed now. The Merlin process seems to have stalled—we were told that there would be announcements, but they have not come. If they do not come soon, it will be too late for many businesses.

I turn to the second point that I wish to discuss. I agree with the Secretary of State that it is ridiculous that there is no mention of the Post Office in the motion. I tabled an amendment to that effect, but Mr Speaker did not select it. I suppose that, to be honest, it is unlikely that the Secretary of State would have supported it even if it had been selected.

If we are talking about growth, we have to remember that a postal service is an engine of growth for many small companies. Many of them are very worried about it. This morning I chaired a session of the Westminster eForum at which we talked about Royal Mail’s universal service obligation. It was interesting to hear the Federation of Small Businesses say that when the Government initially talked to it about privatisation, it was given assurances that small businesses would be okay and that their interests would be looked after. However, it is becoming increasingly worried about what is happening. It points out that in April, first-class mail will go up by 12%, large letters by 13%, a 2 kg parcel by 8% and a special delivery by 8%. Worse still—I find this utterly ludicrous—a business that currently goes to a sorting centre to collect its own mail will apparently be charged £210 for the privilege of doing so. Where is the logic in that? What on earth is going on?

I urge Members to read, if they have not done so, Postcomm’s research paper “Business customer needs from a sustainable universal postal service in the UK”, which was published towards the end of last year. It makes very interesting reading about how small businesses see the postal service.

--- Later in debate ---

[Jack Dromey]

I agree with my hon. Friend. Representatives of the construction industry who have come to see me have said with one voice that the danger in what is now happening is that capacity is going and vitally needed skills are being dispersed and, in the event of recovery, they would no longer be available.

My second example comes from local government, which has had 27% cuts, frontloaded by the Secretary of State. The impact will be enormous, and it is already clear from the Local Government Association that 140,000 jobs will go in local government. But as PricewaterhouseCoopers has said, for every job that goes in local government, a job will go in the private sector. Local government’s procurement budget is £38 billion. Some £20 billion goes to SMEs, so the impact of these savage, deep and frontloaded cuts will be catastrophic for SMEs that depend on local government throughout Britain.

[Anne Marie Morris]

Is the hon. Gentleman aware that the Reed job index went up nine points in January, and that the growth is in engineering and construction?

[Jack Dromey]

With the greatest respect, I am not sure what planet the hon. Lady lives on. The figures on the economy are clear: the Government inherited a growing economy, but it has now stalled and gone into reverse.

My third example relates to the abolition of the regional development agencies. Thirty years ago, the midlands used to be one of the two strongest economies in the country, but it is now one of the two weakest. We had the most successful RDA, Advantage West Midlands, of anywhere in Britain. For every £1 of public money invested, £8.14 was produced in wealth in the private sector. Crucially and in addition, Advantage West Midlands managed shocks to the motor industry, such as the closure of Rover, and promoted the motor manufacturing cluster in the midlands. The cluster is 150,000 strong, from the prime companies through the components companies, the machine tool companies and the logistics companies, all the way down to the games companies with which Jaguar Land Rover is working right now on the next generation of in-car entertainment systems. That cluster, galvanised by Advantage West Midlands, was one of the key reasons why Jaguar Land Rover last year decided to commit to Britain as its global hub and to invest £5 billion over 10 years, creating thousands of jobs and bringing wealth to our economy.