Small Businesses

Mark Lazarowicz Excerpts

Thursday 28th November 2013 Commons Chamber

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I am pleased to have an opportunity to speak. I congratulate the hon. Member for Newton Abbot (Anne Marie Morris) and her colleagues on persuading the Backbench Business Committee to grant the debate.

Small businesses play a major role in all our constituencies —mine is certainly no exception. They are important to the economy not just in their own right, but because they provide vital underpinning for many larger businesses in other economic sectors. They also play a vital role in maintaining healthy local communities through, for instance, their presence in shopping centres.

It is understandable that Members want to be positive in such a debate. Most of what I say will certainly be positive, and Government Members will obviously want to highlight what they see as the Government’s achievements. However, we should not forget the mixed experience that many small businesses have had over the past few years. Many have survived, and are surviving now, only with great difficulty. According to the Forum of Private Business—we will all have received its briefing yesterday—94% of small businesses are reporting increases in cost pressures, and many small business proprietors have managed to survive only by cutting their own wages and those of their staff. Small businesses are not in any way exempt from the cost of living crisis that is affecting so many of our communities and constituents.

As I have said, however, I want to be positive and to focus on what can be done to strengthen and support small businesses, which I have discussed with representatives of various small businesses in my area. Several hon. Members have talked about the need for more sympathetic treatment by the banks. I do not have time to repeat the horror stories that we have all heard, but some of my constituents have reported awful experiences with RBS’s global restructuring group. I hope that the Minister will be able to update the House on what his Department is doing in response to the allegations about that organisation. Even if we leave aside some of the more dramatic examples, it is clear that businesses need more sympathetic treatment by banks. The banks should recognise the difficulties that have been caused by branch closures, and, of course, there needs to be more competition and choice in banking. Labour has made some important proposals in that context.

Other organisations, and indeed areas of government, can also provide funds and other support for small business, and Edinburgh city council has taken a number of important steps in that regard. It has provided the Creative Exchange, an incubator space that opened recently in Leith to provide affordable work space for up to 80 staff. A further example is the council’s procurement policy, which covers a £20 million information technology tender. The council wants at least 25% of the work to go to small businesses; the present contract is held by a single large company.

Small business lending is also important. I was pleased to learn about discussions between the council and Capital Credit Union about the possibility of the union contributing an extra £1.3 million to the East of Scotland Investment Fund, which could provide loans for small businesses. The credit union is able to do that because of changes to corporate lending rules that allow community-based mutuals to offer loans to businesses. As someone who has a very small investment in Capital Credit Union, I am glad that it is at the forefront of that project. It is important to point out that the European regional development fund is also providing support, given the rather negative comments about Europe that we hear from certain Members in the House.

[Mr Bain]

In Edinburgh, as in Glasgow, there are many small exporting companies. Does my hon. Friend agree that the Government should be doing much more to establish a more proactive relationship with such companies through UK Trade & Investment? I had to draw the attention of a company I visited recently to the services provided by UKTI. Would not such action by the Government benefit small exporters in Edinburgh as well as those in my constituency?

[Mark Lazarowicz]

It would obviously benefit businesses in constituencies throughout the United Kingdom.

Another initiative undertaken by the city council is the Edinburgh guarantee, which brings together local government, businesses, colleges, the voluntary sector and national programmes at Scottish, UK and European levels to create opportunities for our young people. Since its establishment just over two years ago, it has generated more than 1,000 job, apprenticeship and internship opportunities for school leavers. Many small businesses have been closely involved in the project, and I congratulate the council on what it has achieved.

However, if councils are to provide all the support for small businesses that they ought to be able to provide, they need to have the powers that would enable them to do that to the full. Local government powers in Scotland are obviously the responsibility of the Scottish rather than the United Kingdom Government, but the fact remains that local authorities can perform an important task in supporting small business. Those that are already doing a good job should be congratulated, while those that are not should learn from them.

Although I want to be positive, I should add that we must not ignore the real pressures on small businesses. Cost pressure is an important factor that needs to be addressed. During Energy and Climate Change questions, the Government once again refused to accept the merits of Labour’s proposal for an energy price freeze, which would be of real benefit to small businesses as well as householders. It is disappointing that the Government still refuse to accept the strength of our argument, but in a world of Government U-turns, who knows what their policy may be next week?