Enterprise Bill [HL]

Baroness Wheatcroft Excerpts

Monday 12th October 2015 Lords Chamber

[Baroness Wheatcroft (Con)]

My Lords, I applaud the aims of the Bill. In introducing it, my noble friend said that it was about making life easier for small businesses, and who would not want to do that? It will encourage smaller firms, deregulate and champion apprenticeships—all worthy aims. At this stage, I should declare my interests as listed in the register, including directorships of regulated companies.

We have a relatively successful economy, but not a perfect one by any means, and complacency would be misplaced. The persistent trade deficit—now a whopping 5.5% of GDP—is a real cause for concern. To deal with that, we need not just to support small business but to actively encourage those businesses that can grow into world-beaters. Britain is good at starting businesses. As we have heard, we have more than 5 million of them. The problem is that too few of them become big businesses. BIS published a survey in 2013 which found that 1.5 million businesses were not growing but, even more depressing, did not want to; 2.7 million were not growing but—slightly more encouraging—they wanted to, they just could not.

Trying to get to grips with this issue, last year, a serial entrepreneur, Sherry Coutu, produced the Scale-up Report for the Government. Her thesis was that competitive advantage for nations comes from focusing not on starting up but on scaling up businesses. Not every business is capable of scaling up—probably only about 6% of start-ups will ever get to national, let alone international scale—but, if it can be done, the rewards are huge. Deloitte’s has undertaken research that shows that if we succeeded in scaling up our businesses, by 2034 there could be an extra £225 billion added to our gross value.

Companies struggle to grow both domestically and internationally. The inventiveness, which is there to get them started, seems to fade at the problems of growing. What obstacles do they encounter? Finance is there, but it is nowhere near the top of the list. Obviously, late payments cause cash flow problems and cash flow is all-important; what the Bill proposes to deal with late payments will be very welcome, but that is not the main thing that is holding back our growth companies.

Top of the list is skills, so I welcome the move in the Bill to increase the number of apprenticeships. There is already a huge increase in that field but more to be done. This afternoon, we heard from my noble friend Lord Baker about the success of his technical colleges. We need people to go into such vocational education rather than getting just another university degree. We need to continue to improve literacy and numeracy—as we are—but getting those skills into the workplace where they are needed takes time.

If our growth companies are really going to get the motor that they need, some of them need to bring in those skills from overseas. One proposal that Sherry Coutu makes is that there should be a special scale-up visa that would allow growth companies to bring in the talent they need. I know that my noble friend the Minister is fearless; I wonder whether she would dare to broach that with the Home Secretary.

The other thing that holds back our potential growth companies and comes very high on their list of issues is leadership. They just do not have leadership skills, and struggle to break into new markets. Supportive relationships with big companies would really help in that area. There could be a symbiotic relationship between big and small companies; we have already heard reference to that this afternoon. My noble friend Lady Brady talked about the ecosystem which the Bill should be nourishing, improving relationships between big and small companies. We are not doing enough yet to improve the relationships along the supply chain and to foster the smaller companies that could benefit so much from the mentoring that big companies could give them, from the introductions to new markets that big companies could provide and from access to the infrastructure that many established companies have, which could open the door to those potential growth companies to really get going.

For the time being, our Small Business Commissioner will be very limited in what he does: just talking about late payments. I concur with my noble friend Lord Cope of Berkeley that, in the short term, that may well be the right thing to do—late payments are a big issue—but in the longer term, like him, I should like the Small Business Commissioner to take a much more proactive role in encouraging relations between small companies and big ones. In the mean time, the Department for Business has many different initiatives—some might say, still too many—to help small firms.

Elsewhere in the Bill, I welcome Parts 2 and 3, which are bringing about a sensible approach to regulation. Extending the duty of other regulators to take account of the need for growth is a positive step. Extending the primary authority scheme may not get the general public dancing in the streets, but it will bring sighs of relief from many smaller firms. To enable a business to have to deal only with the rules of one authority rather than many must make sense. As the Secretary of State himself put it:

“Thanks to Primary Authority, cheese makers don’t have to display their cheddar on wooden boards in one place and on steel platters in another”.

That must be a step in the right direction.