Help to Grow: Digital

Chi Onwurah Excerpts

Monday 20th September 2021 General Committees

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a great pleasure to serve under your chairship, Sir George. I welcome the new Science Minister to his position; I hope he stays around long enough to ensure that we have a long-term plan for science, which has been sorely missing.

I thank the Minister for his opening remarks, in which he laid out some of the challenges and problems in productivity and supporting business growth. As he said, we are debating a motion to approve £296 million of compensation over three years to digital technology product vendors for some of the costs of providing technology to SMEs as part of the “Help to Grow: Digital” programme. The programme will provide advice on how technology can boost a business as well as discounts of up to £5,000 on approved software for boosting sales and for day-to-day management.

Support for SMEs is essential to rebuilding the economy after the pandemic. Britain has almost 6 million SMEs, and many need help to grow. They drive innovation, take risks and collectively employ 16 million people—nearly two thirds of the workforce. Growing SMEs means growing the economy, more jobs and more choice for consumers, so Labour believes strongly that small businesses should be at the heart of the recovery from covid.

We are worried by the drop in new start-ups, which are down 11% since 2016. In April, Labour promised £1 billion of funding to support the creation of 100,000 start-ups across the country in the first term of a Labour Administration. Unfortunately, the Government have used the pandemic to give away taxpayers’ money for little return, often without a proper tendering process and in some cases to people with direct connections to Ministers. For that reason, we should all be hyper-vigilant about how the Government are spending money.

The motion refers to one part of a two-part programme of support. “Help to Grow: Management” was approved in May. Will the Minister up the Committee on the scheme’s progress? How will “Help to Grow: Digital” work with the previous programme, or are they completely separate? Can companies take advantage of both? I hope that all SMEs will take advantage of the new programme, and it will come as no surprise to the Minister that Labour will not oppose the motion. We support funding to help SMEs be successful. We want the programme to be successful and to deliver on its aims of supporting productivity and growth while providing value for money for the taxpayer.

It is on the latter point that the Government have been reticent of late, so I have a number of questions for the Minister. First, I want to ask about the limits of the programme, and specifically whether it extends to charities, mutuals, co-operatives and other organisations that need to grow and have significant economic outputs and make a significant contribution to our economy. As this is taxpayers’ money, it seems reasonable for the scheme to cover all manner of organisations that taxpayers are engaged with. Charities in particular have taken a hard hit from the pandemic, with reduced fundraising and many taking on vital local government functions following years of funding cuts.

Secondly, what has been the take-up of the scheme? It has been open for registration since March. How many SMEs have registered, and how many do the Government expect to register in future? What measures are being applied to ensure that businesses that are under-represented by sector, female-led and ethnic minority-led businesses, or businesses led by disabled people, are accessing the programme? Furthermore, given the Government’s commitment to levelling up—we have a new Department with that in its title—what provisions are there to ensure that this funding makes its way across the country rather than focusing on growth in London and the south-east? What is the Minister doing to encourage regional take-up?

I was so impressed by the speed at which Grainger Market in my constituency responded to the lockdown, with many traders moving online within three weeks of lockdown to ensure that their businesses survived. It is not to be expected that, in those three weeks, they managed to obtain all the digital skills they needed. Yet, according to the online guidelines, many market traders can be excluded if they have fewer than five employees. The Government may want to go back to the past of imperial weights and measures, but the market traders in my constituency are looking to the future, and digital, and they will not be happy to find that the Government are not interested in helping them.

Thirdly, will the Minister inform us of the procurement process for the technology that the £296 million is for? He has spoken a little bit about the success of the vendor process so far, but how were the digital technology vendors selected and how were the particular technologies selected? Are the technologies purchased at the high street price or have discounts been achieved? I asked a written question last week about what the marketing budget for the programme was, but was told only the total budget in response. Can the Minister tell us what proportion of this budget is for the technology and what proportion is for other costs such as marketing? He mentioned the need to get to hard-to-reach businesses, and I have talked about the need to reach businesses across the country, so is there a marketing budget, and if so, what is it?

Fourthly, I would like to ask about sector-specific digital technologies. Does the programme make provision for digital technologies that specific businesses may need to grow? These include, for example, those in our wonderful creative industries, which were so successful at last night’s Emmys. I worry that there is something of a one-size-fits-all approach. While there are many things that are common to SMEs, such as basic accounting, others may need more tailored support. What is the Minister doing on digital inclusion for businesses? The Government seem very happy to leave it to Google and Facebook, and their programmes, which I support, but they do require businesses to use Google and Facebook products. What are the Government doing more generally on digital inclusion?

On the value-for-money point, can the Minister set out how the impact of this spending will be measured? Does the Minister have an estimate of the multiplier effect of the spending at this stage? How are the Government intending to measure the productivity impact of a programme? Over what timeframe would we expect to see a return on the spending? Will the Minister report to the House on the impacts of the programme?

Finally, there is a wider question on the conditions for success external to this programme. SMEs have had a difficult time during the pandemic, with many, such as those in hospitality, having to effectively go into hibernation during lockdowns. With cases of covid-19 still very high, there is always a chance of further impacts in the future too. Many SMEs are in debt having taken out Government loans and so on, or are facing rent arrears and even problems hiring staff because of the double impact of the pandemic and leaving the European Union. If businesses do not have support on these fundamental features of any business, my concern is that spending money on digital may prove fruitless or more likely that the programme will be taken up by businesses that are already doing well while others suffer.

What are the Government doing to ensure that there is a suitable business support environment enabling the Help to Grow scheme to have an appropriate impact? Will the Minister say a little bit about the scope of that impact? As I have said, there are 6 million SMEs in this country. The maximum number of SMEs that may be impacted by this programme will still be a relative drop in the ocean among the SMEs we have. How does he expect that to truly make a difference to our economic success and productivity?

I look forward to the Minister’s response. As I said, we will not oppose the motion.

--- Later in debate ---

[Chi Onwurah]

I thank the Minister for giving way. I did not express any pessimism about our fantastic businesses and economic opportunities. I was talking about some of the figures for business start-ups in the last few years, which I hope he recognises.

[George Freeman]

Having a run a few myself, as colleagues here have, I am all for them. I simply make the point that we are the fastest growing economy in the G7, so we must be doing something right. The hon. Lady is right to highlight, as this measure does, the importance of SMEs.

This is a targeted measure. We are not trying to boil the ocean; we are trying to target specific funding at businesses for which all the evidence shows that the uptake of digital technologies such as those I have described will have maximum impact in terms of productivity and competitiveness. A number of us have started companies. Very often in the first three, six, nine or 12 months we find that digital technology is not necessarily the biggest barrier to getting going. It is important, but we are doing here is focusing where all the evidence from the business community suggests that support for digital uptake will have the biggest.

I will take the questions in turn. First, this is designed specifically for businesses, so charities are not eligible, but I am delighted to say that all social enterprises—businesses that recycle their profits back into good causes—are eligible, which sends an important message.