Small Businesses

Lord Cavendish of Furness Excerpts

Tuesday 3rd February 2015 Lords Chamber

[Lord Cavendish of Furness (Con)]

My Lords, the House is indebted to my noble friend Lord Risby for introducing this short debate. As he said, the contribution that small business makes to our national life is now, finally, well understood and appreciated. As the Federation of Small Businesses points out, 99% of our nearly 5 million businesses are small or micro—another point my noble friend made.

In contributing briefly this evening I declare an interest. I recently relinquished the chairmanship of a group of small businesses based in south Cumbria, details of which can be found in the register. Perhaps more importantly, I will not disguise from your Lordships the fact that these family ventures will be seeking strenuously to participate in the very considerable investment that is being directed towards the Furness peninsula, where I live. It is anticipated that over the next decade some £40 billion will be spent in the area, including civil nuclear, biopharmaceuticals and energy projects, and providing national security in the shape of the next generation of attack and deterrent submarines.

The question is: will small—or indeed medium-sized—businesses benefit from those large investments? That is not an idle question; in the past, very little indeed has trickled down, and there has been a pitifully small number of consequential start-ups. Part of the problem is cultural: big corporate businesses feel naturally more comfortable dealing with organisations of comparable size and structure. We must all seek to change that. There is also an ugly element, which can be found especially, in my experience, among what I might term the large private monopolies. They dread small, agile competitors muscling in on their territory, and resort to sometimes quite ruthless measures to see them off.

Local participation is reliant on the agencies set up for the purpose of promoting growth in the local economy being in good shape. South Cumbria has had the benefit of such grants. Most recently, I thank my noble friend Lord Popat for his role in supporting Furness Enterprise’s bid for money from the Coastal Communities Fund. That has been crucial in allowing that simply excellent organisation to continue with the work it does for small businesses.

In one area especially, it is my contention that there is scope for government to influence procurement policy and help the local economy. BAE Systems in Barrow has made some encouraging statements in respect of local involvement and has been extremely approachable. However, once the tendering process gets under way and outside contractors become involved, my fear is that the interests of the local economy become diluted. In the case of the expanding and modernising of the shipbuilding facility, I understand that the Ministry of Defence has a substantial direct investment. Therefore, will my noble friend ask his colleagues in the Ministry of Defence to ensure that their own guidelines in respect of local procurement are followed?

The benefits of these policies were described very well by my noble friend Lord Shipley, who I see is in his place, in a compelling contribution that he made on 23 October last year, when he pointed out that,

“profits accrue locally, training is provided locally and local labour is recruited—there is a local legacy”.

He went on to ask,

“whether the Government are content with the current operation of framework agreements”.—[Official Report, 23/10/14; col. 784.]

I hope that I have not pre-empted too much but I think that that very important point bears repetition and I hope that my noble friend will press the point.

Good practice in the matter of procurement really can deliver enduring benefits to an area and provide strength and resilience against the ebbs and flows of global economic conditions.