Small Businesses

Debate between Mark Pawsey and Simon Danczuk

Thursday 28th November 2013 Commons Chamber

[Simon Danczuk]

We will stock a variety of local produce. There will be some continental produce, but there will be traditional Lancashire produce too. It will be well worth a visit and opens a week on Saturday.

The first thing to say in a debate about small businesses is what a great contribution they make not just to our economy, but to our culture, our communities and the way we live our lives. As the hon. Member for Newton Abbot said, we need to spend more time celebrating the work of smaller businesses and the people who run them. It is these business people who are the backbone of our economy. They create the vast majority of jobs, and export their goods and products across the world. They are at the heart of innovation, which is often copied by larger businesses, and drive growth throughout the United Kingdom. They also carry the burden of worry and stress of managing risk every day of the week. We need to do more to celebrate what they do.

Small businesses are vital to our economy, but they are also vital to our society: they are one of the most powerful forces for social mobility. Academics and politicians often talk about the importance of education with regard to social mobility. That is important, but by starting and growing businesses people can thrive and prosper. They are vital in encouraging and establishing social mobility.

[Mark Pawsey]

Was the hon. Gentleman as struck as I was by the assertion at a recent breakfast meeting that the top entrepreneurs were those people who had not been to university, did not have degrees and had had to work from the bottom up?

[Simon Danczuk]

I thank the hon. Gentleman for that comment, because that is exactly the point I am making about social mobility and supporting entrepreneurialism and the growth of small businesses.

Let me tell hon. Members about one of my constituents. Ian lives on the Falinge estate in Rochdale, which has achieved notoriety for having the highest number of benefit claimants in the country. Like others there, Ian was unemployed. He was determined to get out of that situation, so he decided to start his own business. He cashed in his pension and set up his own fish and chip shop. He learned the ropes by working for free in another nearby chippy and then set up his own shop in the town centre. I used to pop in and have a chat with him every now and again. He was making a good fist of it and there were always plenty of customers coming through the door. In his first year, he won an award at the town’s annual business awards. Despite all that success, Ian was forced recently to close his shop simply— I do not exaggerate—because of business rates. He was paying double in business rates what he was paying in rent, and that was not sustainable.

Ian’s case is a tragedy for him and for social mobility. It demonstrates that unrealistic business rates are damaging our economy and our society. The Government need to do more on business rates and should have gone ahead with the revaluation. Hon. Members will not be surprised to hear that I support the Labour leader’s proposals to freeze and then reduce business rates for smaller businesses in particular. Business rates are not the only issue, however. Let me provide another example: banking.

Hanson Springs, a very successful family business in my constituency, was in 2009 dragged by RBS into what we now know to be the Global Restructuring Group scandal. Let me briefly explain. RBS in my opinion deliberately undervalued a property it had a loan against and used that as an opportunity to push Hanson Springs into its Global Restructuring Group. At the first meeting with GRG, Hanson Springs was introduced to a solicitor who had been brought along to discuss taking an equity stake in this family business. GRG then forced a business review with Zolfo Cooper on to it at a cost of £20,000. Its GRG manager had previously worked for Zolfo Cooper—I am sure that was a coincidence. Hanson Springs was then given three options, none of which was acceptable. As the family pointed out to me, if the business had not been cash-flow rich and if they had not had the personal resolve, the company would have been forced to close.

Hanson Springs is now 50 years old—we have moved on four years. It turns over £20 million each year, employs 180 people, exports 85% of what it produces, and since the problems with RBS, has paid in excess of £l million in corporation tax. If RBS had had its way, we would have lost hundreds of jobs and the money from taxation, and we would have had people claiming benefits and yet more manufacturing moving abroad. Hanson Springs is a perfect example of business at its best. It is a great example of a family pulling together to create something great and is probably a perfect example of social mobility, but look how it nearly all went badly wrong because of RBS’s behaviour. Ultimately, it is down to us politicians to intervene and set up the right regulatory process to ensure that banks treat our businesses better.

Smaller businesses are exceptionally fragile entities. It is our responsibility not to take them for granted and our duty to remember that these businesses are the lifeblood of our country.

High Streets

Debate between Mark Pawsey and Simon Danczuk

Wednesday 16th October 2013 Commons Chamber

[Simon Danczuk]

My hon. Friend is correct. That is an extremely important point. That cut will help significantly. I have seen the damage this is doing in my constituency. For examples, my local fish and chip shop recently closed and the premises are being advertised with a rent of £6,000 per annum, but the business rates are £18,722 per annum.

[Mark Pawsey]

Given what the hon. Gentleman says, is he disappointed that the motion makes no mention of reforming the business rates system?

[Simon Danczuk]

Business rates are clearly mentioned in the motion, and Labour Front Benchers have made it clear that there will be a review of business rates under a Labour Government.

Postponing the revaluation of business rates does nothing to help small businesses. Because of this postponement, retailers in Rochdale are subsidising retailers on Regent street in London. That is unacceptable. The Government often say that rate relief can be a subsidy, but it does not even apply to the vast majority of retailers right across this country. According to the Office for National Statistics, in the period between this Government coming to power and 2015, businesses will pay an extra £6.5 billion in business rates on top of what they were already paying.

The Government and the Minister need to listen to what is being said. Let me give some examples. The hon. Member for Witham (Priti Patel) has spoken about this and, I understand, has written to the Chancellor asking him to speed up the revaluation of business rates. This week the hon. Member for South Suffolk (Mr Yeo) has written in his local newspaper that he is going to speak to the Communities and Local Government Secretary about the problem with business rates. The hon. Member for Altrincham and Sale West (Mr Brady) has said that business rates are causing real problems and need urgent reform. The hon. Member for Watford (Richard Harrington) has said that business rates should be linked to the consumer prices index rather than the retail prices index. The hon. Member for Nuneaton (Mr Jones) has said:

“Friends in the Treasury should consider freezing business rates…and give a fighting chance to small businesses.”

The fact will not be missed that all those hon. Members are Conservatives. It is not only Opposition Members who think that business rates should be radically reformed, revised and changed to help small businesses; Government Members think so too.

Let me conclude by echoing the good point made by my hon. Friend the Member for Bolton South East (Yasmin Qureshi). When the Labour leader recently announced that a future Labour Government would first reduce business rates and then freeze them, Bill Grimsey, a well-known local retailer, said that Labour was the first party to demonstrate that it gets it. When will the Government get it and cut business rates?