Small Businesses

David Simpson Excerpts

Tuesday 7th September 2010 Westminster Hall

[Jeremy Lefroy]

My hon. Friend makes a powerful point that I will address in a moment. I entirely agree with her point about access to finance for new businesses. I conclude that in general, new businesses do not consider approaching a bank because they believe that it will be a waste of time or that they have only a small chance of success.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on securing this important debate. Does he agree that one thing that would help small businesses is the removal of bureaucracy and red tape? Small businesses are hands-on businesses and do not have the time to deal with paperwork. I believe that such a move would assist the small business sector.

All hon. Members present in the Chamber will have received letters from different constituents and companies. It is one thing for banks to be prudent in lending, but they are being draconian and that makes it impossible for small businesses to start up. We live in the real world, but the banks do not seem to, and I do not believe that the Government have any influence over them.

[Jeremy Lefroy]

The hon. Gentleman makes two powerful points. The second point is true; as someone involved in small business for many years, I have been on the receiving end of that kind of draconian attitude many times—although not every time, I hasten to add. I am sure that the Minister will want to say something about red tape. I, too, have spent many late hours going through the red tape for my business, after having spent the rest of the day trying to make some money. Whatever the truth—it probably lies somewhere in between all the figures provided—it is clear that a substantial number of SMEs approach banks but do not obtain the funding that they need to maintain or expand their business.

In my constituency, I have seen the difficulty that farmers are finding in business diversification. Money is pouring in to help farmers buy land or get involved in agricultural activities, but they receive a limited response from the banks for the laudable process of rural diversification, which will create more jobs in that area.

It is likely that there are some people not yet in business who wish to start up on their own. However, as my hon. Friend the Member for Newton Abbot (Anne Marie Morris) mentioned, they might find it even harder to obtain that funding, perhaps because they have been made redundant. There might be good reasons for banks to refuse applications, and they must be confident that they will receive their money back. However, anecdotal evidence from my constituents—as, I am sure, from those of all hon. Members in the Chamber—suggests that banks are unwilling to take even the smallest risk if they find it difficult to assess viability, which is often the case with new and young businesses.