Rural Businesses

Michael Fallon Excerpts

Friday 18th October 2013 Commons Chamber

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I congratulate my hon. Friend the Member for High Peak (Andrew Bingham) on securing this debate on such an important subject and on the leadership he has shown, both in his High Peak constituency and in Westminster, on small-business issues.

Let me begin by assuring my hon. Friend that stimulating economic growth is the top priority for Government. We want to see rural areas contributing to and benefitting from that growth across the country. We have introduced a wide range of national policies to promote business and deliver growth in both urban and rural areas, delivering new infrastructure, raising skills levels and supporting business, particularly small and medium-sized enterprises, which make up a significant element of the rural economy. For example, we are investing £150 million to improve mobile coverage for up to 60,000 rural premises across the country that currently cannot receive any signal. We are also taking a number of other actions to support the rural economy, including improving competitiveness and skills, investing in rural tourism and supporting micro-enterprises.

As my hon. Friend said, we have established five pilot rural growth networks aimed at tackling the barriers to economic growth in rural areas, such as a shortage of work premises, slow internet connectivity and fragmented business networks. These pilots expect to create up to 3,000 new jobs and support up to 700 new businesses, offering a local approach to local problems. We will share the lessons that they learn with other local enterprise partnerships and local authorities, to help them promote growth in other rural areas.

The rural development programme has invested more than £400 million to date in projects to help grow the rural economy. Completed projects have created more than 8,500 new jobs and safeguarded a further 9,700. The next seven-year rural development programme, beginning next year, is a major opportunity to continue to invest in rural growth and the environment. We are working together with interested groups to design a programme that will make a measurable contribution to improving the environment and economic growth and that will give real value for money.

My hon. Friend referred to a couple of our programmes that provide grants at a higher level, and he rightly identified the issue of getting that financial support to businesses that may require only a much smaller but important amount. In his constituency, the D2N2 local enterprise partnership—the Derby, Derbyshire, Nottingham and Nottinghamshire LEP—has recently awarded local crane manufacturer Street Crane a £152,000 grant towards the £1.5 million cost of building and equipping a new factory to support export growth. This is good news in terms of creating new jobs and developing skills, helping Street Crane to expand to new markets and providing a boost for British manufacturing.

Some of the challenges that are faced by rural businesses are the same as those that are faced in towns and cities. SMEs need to be able to access effective business support and the finance they need to start and to grow. There must be less red tape and better access to public procurement. Although the location of a business is not always the key factor, I recognise that rural areas may be affected disproportionately by the issues that are faced by all SMEs in accessing business support. It is important to ensure that the support for all businesses is simpler, more joined up and easier to access.

A wide range of advice and information for people who want to start and grow a business is available on gov.uk and the Great Business website. The £200 million GrowthAccelerator programme is available for up to 26,000 SMEs with high growth potential that want to take things to the next level. It provides them with the necessary expertise and networks to achieve sustainable growth.

We recognise the importance of being able to access finance. We have therefore put in place a package of credit-easing measures to improve the supply of affordable credit to SMEs. The funding for lending scheme, which is by far the largest intervention, allows banks and building societies to borrow at cheaper rates from the Bank of England for periods of up to four years. That will significantly reduce the cost of providing credit. The StartUp loans scheme is providing a £117 million funding boost to enterprise. We have removed the upper age cap and the scheme is now available to people of all ages over 18. My hon. Friend might like to know that there have been 15 loans to his constituency so far, with a total value of £97,000. The enterprise finance guarantee scheme continues to be an important source of finance. Since May 2010, it has facilitated additional lending of £1.3 billion to more than 12,700 businesses. Twenty EFG loans have been offered in the High Peak constituency, to the value of £1.26 million. We know that we can do more, which is why we are capitalising the business bank with £1 billion of new money.

My hon. Friend raised some specific issues that affect rural communities. I recognise that broadband connectivity is essential to the ability of rural businesses to compete and contribute to our economic prosperity. I am aware that there are concerns in the rural community about the speed of connections. We are a world leader in the online economy and are in the top three EU member states for broadband coverage, take-up, usage and choice. However, more needs to be done to connect rural businesses so that they can participate fully in the online economy.

The Government, local authorities and the devolved Administrations are investing more than £1 billion to extend the benefits of broadband to rural areas of our country. Our projection is that we will reach our original goal of 90% superfast coverage by early 2016. We recently announced an additional £250 million of investment to extend superfast coverage to 95% of premises by 2017. Together with the industry, we are exploring how to expand coverage further, using more innovative fixed wireless and mobile broadband solutions to reach at least 99% of premises by 2018.

Mobile connectivity is increasingly important in providing rural broadband connectivity and choice. Earlier this year, we saw the successful conclusion of the 4G spectrum auction and nationwide 4G services are now being rolled out. EE, O₂ and Vodafone are all committed to rolling out 4G services to 98% of the population by 2014. Through the mobile infrastructure project, the Government are providing £150 million to provide masts covering so-called not spots. The first mast went live last month. We have also streamlined the planning laws, which should speed up the deployment of fixed and mobile infrastructure.

Transport is also central to local economic development. We have announced our intention to devolve funding for local major transport schemes in a way that aligns with local enterprise partnerships. There should be a smooth transition to the inclusion of that funding in the local growth fund, which will provide £1.1 billion of funding to support investments in local transport projects. The D2N2 local enterprise partnership has a local transport board, which is now looking at the delivery of major schemes across its area. We want to see a greater local influence over the delivery of such projects and, while funding will come to the D2N2 area from 2015, the LTB has been set up now in order to agree a programme of schemes and oversee their development and implementation. The D2N2 area has been notionally awarded £46.8 million.

On the work force, it is vital to develop high calibre vocational skills if we are not to be left behind in the global race, and to address the unacceptable position of skills shortages existing alongside high youth unemployment. Businesses in all areas need access to those skills. Local enterprise partnerships have the lead role in developing local skills strategies that reflect local priorities, and I understand that the D2N2 LEP is developing its skills plan to identify priorities and supporting actions to address them.

Since 2010, as my hon. Friend knows, we have given colleges freedom and flexibility to respond to employer and learner needs. We have supported a massive expansion in apprenticeships, with the number of starts increasing by 86% between 2009-10 and 2011-12. We have also given employers the opportunity to shape skills provision through the £340 million employer ownership pilot.

I assure my hon. Friend and the House that the Government are fully committed to supporting businesses across the country, especially those in rural areas, and making sure that we realise our ambition of making this country the best place in the world to start and grow a business.

Question put and agreed to.