Small Business, Enterprise and Employment Bill

Bill Esterson Excerpts

Wednesday 16th July 2014 Commons Chamber

[Bill Esterson (Sefton Central) (Lab)]

Many people in my constituency do not see a recovery in the economy and they are yet to experience the benefits of the recovery talked about by the Government. We have more than 15,000 people in work who earn less than a living wage. Many people in work up and down the country are using food banks and many others rely on extortionate payday loans just to survive and get through the month. For my constituents and many others, the reality is falling living standards and rising costs. The Bill contains some welcome measures, which could help address some of the reasons that many people, such as those on zero-hours contract and the minimum wage, are struggling to make ends meet, but I wonder whether they will go far enough.

Others Members have mentioned the care sector. I met the wonderful carers who looked after my mum at weekends before she died earlier this year, and they were paid for 10 hours out of the 25 they worked in a weekend shift. They were not paid for transport or given money for travel costs, but were paid just for the 15 minutes for which they were expected to be with somebody like my mum, who desperately needed their care. That is the scandal of low pay and it is a combination of zero-hours contracts and the minimum wage not being properly enforced. The effective pay rate is way below the minimum wage, let alone the living wage. We need to deal with that scandal in our society if we are to see rising prosperity for many people, not just in the care sector but elsewhere. We all benefit: it is good for the economy, good for businesses, which benefit from prosperity as people spend their money, and good for the taxpayer because there is less need to subsidise low pay from employers.

Like the hon. Member for City of Chester (Stephen Mosley), I used to run a small business and I enthusiastically encourage people to shop locally to support the businesses in my constituency. The hon. Gentleman claimed that it is easy to start up a business, but the rules that the DWP enforce make it difficult at times. The requirements on monthly reporting go way beyond what any established business has to do and create difficulties for new businesses. It is about time that BIS worked more closely with DWP to make it a lot easier for people to start and to grow their small businesses.

As my hon. Friend the Member for Alyn and Deeside (Mark Tami) said, it is getting harder, not easier, for people starting or running a small business to borrow money. That is the case not just for start-ups, but for existing businesses that want to buy equipment or expand. That is where the growth comes from that creates the jobs that the hon. Member for City of Chester rightly said will come from the small business sector—4.7 million businesses employ fewer than 10 people. There is significant upside in the opportunity for jobs to come from small businesses.

Late payment is the No. 1 issue cited by the Federation of Small Businesses from a survey of its members, as we have heard. The unequal relationship between large and small business needs attention as we debate the Bill further. Small businesses should not be afraid to take on their large business partners for fear of loss of future business, but that situation is all too common at present.

On borrowing, we need better signposting so that small businesses know where to go if the banks will not lend. I hope the measures on credit scoring that we heard about earlier will help, as few small businesses are aware of the alternatives. On Merseyside we have the Merseyside special investment fund and in the north-west we have the Cumberland building society, which offers a full range of banking services. Those are two examples that I have come across which show that there are good lenders out there, and there is hope. We can learn a lot from them, which is why I hope Labour’s proposals for a proper system of regional banks will come to fruition when we get into government next year. We will then be in a position to support small businesses and make sure that they can borrow the money they need to develop their business, ensure growth and create the jobs that we have been talking about.