Small Businesses

Lord Stunell Excerpts

Thursday 28th November 2013 Commons Chamber

[Sir Andrew Stunell (Hazel Grove) (LD)]

Thank you, Madam Deputy Speaker, for finding time to fit me in. I congratulate the hon. Member for Newton Abbot (Anne Marie Morris) on securing the debate. We have heard some very good contributions indeed. In the short time available, I want to focus on the part of the motion that refers to encouraging the Government to improve access to finance. The Government have certainly done some very good things in the past three years. They have worked nationally and locally, and I refer in particular to the work UK Trade & Investment has done in my constituency, the work of GrowthAccelerator and the success of the apprenticeship scheme.

I will focus briefly on access to finance from banks for my local businesses. Twelve months ago I secured an Adjournment debate on that topic, bringing to the House the cases of four businesses in my constituency and the difficulty they have had in gaining access to finance from four different banks. As a consequence, I took a deputation of local businesses to see the banking Minister. We met the British Bankers Association and had a representative of the Federation of Small Businesses with us. That discussion produced an assurance from the BBA that it would increase its publicity on access to the appeals system, because if a business is refused a loan there is an appeals system.

The BBA announced with some pride that in the first two years of the appeals process run by the banks, a satisfactory lending agreement was found in 40% of cases where the decline of a loan to a business was appealed against. This was said to be a cause for congratulations. Let me point out that in any appeals system, an approval rating of 40% suggests that there is a problem with that system. Will Treasury Ministers inform me of the distribution of that 40% appeal rate between different banks? Which banks succeeded in getting it right and which failed to do so? Will the Chancellor of the Exchequer consider requiring banks to notify in writing all small businesses whose loan application is declined that they have a right of appeal, because this was not known to many of the businesses in my constituency that had had such a refusal?

I have to say to the Minister that the answer I received on 30 October was rather bland and unhelpful. It was, in essence, a reprint of the BBA’s press release, and it added no further information. I want to see whether he can improve on that, either in what he says today or by reference to his Treasury colleagues as to what they might supply to the House subsequently. The answer did not explain or offer any view on whether a 40% overturning rate for the appeals system was a sign of success or failure. It was also entirely silent about whether there was to be any requirement on banks to follow through refusals of loans with better information for companies on how to appeal.

In the past three years, we have done excellent work that has paid real dividends, but local businesses in my constituency still have a fundamental problem in getting the access to finance to which they are entitled. One of the ironies is that one of those companies, which was refused a loan of £12,000 for business development, was subsequently offered—by the same bank—an unsecured loan of £16,000 to purchase a car. That emphasises the problems that the system still faces.