Supporting Small Business

Peter Grant Excerpts

Tuesday 19th October 2021 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

It is a pleasure to contribute to this debate. I commend the Labour Front-Bench team for bringing it to the House and the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), for her well-informed and often thought-provoking speech. As a lot of Back Benchers wish to contribute to the debate and much of the substance of the motion concerns devolved matters, I shall not detain the House for too long.

It is important that we recognise the fundamental part played by small businesses in our economy—the economy of the United Kingdom and all its constituent nations. I am reminded that many years ago my good friend Alasdair Morgan, who served with distinction in this place and in the national Parliament of Scotland, addressed a meeting about economic regeneration and pointed out that there were twice as many small businesses in his constituency as there were unemployed people. This was in the days when the unemployment figures were not fiddled, so the numbers were a lot higher than they are just now. Alasdair pointed out that if every small business could be helped to take on less than half a full-time employee, we could abolish unemployment. Instead of helping small businesses to increase their workforce, though, we are far too often faced with a Government who take steps that seem deliberately designed to make it harder for small businesses to take on additional employees.

Small businesses face structural problems that bigger businesses do not. Although we hear a lot of rhetoric from the Government about supporting small businesses, a lot of the specific difficulties that they face seem to get ignored. I confess that I never appreciated one such difficulty until several businesses in my constituency contacted me independently of each other. What they all had in common was that they had been taken to the cleaners by dodgy suppliers, because the suppliers knew that even a small business that is not much bigger than a single-person operation is regarded as a business and so has no consumer protection. Tech companies and telephone supplies companies—which tended to be the worst, by the way—understood that they could fleece small businesses and get away with it, whereas if they tried the same tactics with individuals, the consumer protection laws, although not ideal, would protect those individuals from being too badly damaged. A couple of long-established small businesses in my constituency were brought very close to closure purely for that reason. The Government might want to look into that.

Business-to-business enterprise and business-to-business commerce tends to operate on the basis that it is between two equal partners, but when a two-person or three-person operation deals with a multinational corporation with a turnover of billions, that is not an equal contest or an equal deal. Perhaps, in the same way as we need to protect individual citizens from being taken advantage of by bigger suppliers or businesses, we need to do more to give smaller businesses some kind of consumer protection.

Smaller businesses are much worse affected when there is a recruitment crisis, as there is just now. The Government blame covid, but everybody knows that Brexit is as much to blame as covid. If a company has a workforce of 100 and loses two or three people, it still has 97% of its operation; if a company has a workforce of three and loses a person, that can make the entire business unsustainable and unviable. The clear message that we get from small businesses and organisations such as the Federation of Small Businesses is that the labour shortages we see in key sectors of the economy just now have not yet been adequately addressed. I am not convinced that the Government have even adequately recognised them.

It is all very well to say, “Isn’t it great to have all these vacancies?” but if the people who are looking for work do not have the skills that are needed for those vacancies, or if there are reasons why they cannot take on the work in those jobs, it is quite possible to have very high vacancy levels. Businesses are struggling because they cannot fill those vacancies, and, at the same time, a lot of people are struggling because they cannot get a job that fits with their commitments or responsibilities outside the workplace.

Much of the debate so far has focused on the retail sector, partly because the traditional picture of the high street is one where there is a lot of retail activity, most of it generated by small independent retailers. That is a great thing to have in a town, but how many of us could walk down any high street in our constituency today and see more than half of the existing businesses independently owned and run, never mind locally owned and run?

There has been a huge shift in ownership in the retail sector, as there has been elsewhere. The sad thing is that, when times get tough, a big business, which has no soul in the community, is likely to clear out, whereas the smaller business, locally grown and locally based, is much more likely to dig in and to hang on in there for as long as it possibly can. That is why we will often find that, when things get difficult in the retail sector, the small locally owned shops will try to stay open for as long as they can, whereas the big chains will sacrifice 100, 200 or even 300 properties and the jobs that go with them at the stroke of a pen without a thought to the devastation that they are leaving behind.

I have a particular situation in Glenrothes. To the best of my knowledge, it is the only town in the United Kingdom where the high street is shut at night. A stroke of genius by the then Conservative Government in the 1990s when the development corporation was being wound up was that they sold what the Americans would call a shopping mall to private owners, and it has been struggling ever since. We do not have a night-time economy because the high street is shut. People cannot get in. If they are in and the doors are locked, they cannot get back out.

In spite of that, there are still some remarkable success stories in the Kingdom shopping centre in Glenrothes. I was delighted to pay a visit to Jessop Jewellers to congratulate the owner on their 50th anniversary in the one premises in the town. I can highly recommend their products as well by the way, although I may have made a mistake by telling the owner that I am now only a few years away from my ruby wedding, so I think she may be going to contact Mrs Grant about that in the not too distant future.

A lot of the focus today has been on non-domestic rates. Clearly, because that is devolved, the specific way in which the rates system operates in England does not apply in Scotland. For a number of years, the Scottish Government have had the most generous and most supportive non-domestic rates scheme anywhere in the United Kingdom. We had small business support, whereby small businesses did not pay any rates at all for years, before it was introduced in other parts of the United Kingdom. We still have greater support for our small businesses than any other part of the United Kingdom.

My message to the Government, and indeed to the Opposition should they be in a position to move into government in the near future, is to continue to support small businesses in England, whether through supporting the domestic rates scheme or something else. That then generates additional funding through Barnett consequentials for the devolved Parliaments in Scotland, Wales and Northern Ireland and allows those Parliaments to support our small businesses at the same time.

We could quite easily have filled this Chamber with a debate that would have run for four or five days if we had invited every Member of Parliament to come in and describe the exact situation for businesses in their constituency. I know that there have been a number of contributions along those lines from Labour Back Benchers already today, but the simple fact is that the party that used to be the party of small business is not recognised as that any more, certainly not by small businesses themselves. I suspect that, in their heart of hearts, it is not recognised as a party of small business by its own members and its own voters. It has lost sight of the part that small businesses have played in creating the economy that we have just now. It has lost sight of the fact that, without small businesses, we cannot have a successful and sustainable economy. [Laughter.] I can hear the laughter from the Conservative Back Benchers—that sums up their attitude. It is the attitude that a lot of small businesses feel they have received from this Government over the past two or three years—[Interruption.]

[Kevin Hollinrake]

As my hon. Friend the Member for Bexhill and Battle (Huw Merriman) has just said, it was not laughter; it was astonishment. I have been in business for 30 years. Not every businessperson I meet votes Conservative, but the vast majority do, and I have not heard anybody say what the hon. Member for Glenrothes (Peter Grant) has just said—that the Conservative party is no longer the party of small business. Not only that, but there is huge support for what this Government have done over the last 18 months in supporting those businesses through the worst crisis to hit business in the last 100 years.

[Peter Grant]

If the hon. Member does not understand what the Federation of Small Businesses thinks about his Government tearing up their manifesto promise and increasing the burden of national insurance, if he does not understand what small businesses are saying about the impact that Brexit has had on them, if he does not understand that the energy crisis that the United Kingdom still faces, with massively increasing energy costs that then increase costs for every single business on these islands, and if Conservative Members do not understand that all those things are purely the result of their party’s policies, each and every one of which is devastating for the wellbeing of small business, then we have to wonder why on earth they are still in Government.

[Huw Merriman (Bexhill and Battle) (Con)]

Perhaps we could mention one example of this Government helping small business: the requirement for outsourcing agencies, such as National Highways and Network Rail, to put a third of all their contracts into the hands of small businesses. Indeed, Network Rail is up to that third already. Is that not a tangible example of this Government doing something to support small businesses?

[Peter Grant]

Well, it was not quite the way that things were done with all the personal protective equipment contracts and other covid contracts. Of course, there is a better way to do it than that. Rather than telling the health service that a fraction of all its privatised contracts have to go to small businesses, why not say to the health service, “Don’t privatise it. Do it yourself.”? The public would get a better, cheaper and more efficient service, which is exactly what we are seeing with the NHS in Scotland since the SNP banned the privatisation of our services all together.

If the Conservatives want to see an example of how to support small businesses, they do not need to look beyond these islands. They need to look beyond this Chamber, beyond this city and beyond this country to some of the other countries that are supposed to be equal partners in this Union. If they do, they will see examples of Governments—I commend also some of the Welsh Government initiatives mentioned earlier—who do not just talk the talk on supporting small business, but who walk the walk as well. That might be something to do with the fact that those Governments are not run by parties whose coffers are swollen to obscene degrees by people who have made their money running big businesses—very often, big businesses that ran small businesses into the ground.

The linkage between the impact of non-domestic rates and other taxes and Government policies on small businesses is clearly complex, so it is not possible to say that simply changing the non-domestic rates scheme on its own will fix the problem. I, for one, do not like the idea of using an imaginary property valuation as a significant feature in deciding somebody’s tax bill, whether it is an individual’s council tax or a business’s non-domestic rates burden. The tax base is far too narrow on far too many businesses. We are taxing things that might have been the right things to tax 500 years ago, but which are not the right things to tax now.

Most importantly, as was mentioned by the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), we have to move to a situation where the tax is due and is paid where the profits are made. We cannot have companies that make substantial profits on the hard work, diligence and expertise of people in the United Kingdom, but where all the profits are magicked away to some offshore tax haven so that no tax is ever paid. The Government have it in their hands to change that. They need to move a lot quicker to do that. Doing so would not only help to plug the gap in the public finances, but would give small businesses a chance to compete on fair and equal terms with the bigger competitors. I can say, for a lot of the small businesses in my constituency, let them compete on equal terms with the big boys; they will take them on and, as often as not, they will beat them, and they will make sure that profits from that success are reinvested in their local communities.

As with so many other things that we debate in this Chamber, I have indicated the successes that the Government of Scotland have had with the powers they have. Others have referred to some of the successful initiatives that the Government of Wales have introduced with the limited powers that they have. With increased powers for those devolved Parliaments will come increased success and increased wellbeing for the citizens of those nations. The only way that small businesses in Scotland will have a long-term, secure and profitable future is when the decisions that affect them are taken by a Government who are accountable to the people of Scotland and to no one else.

--- Later in debate ---

[Sarah Olney (Richmond Park) (LD)]

I am extremely glad that the shadow Chancellor moved the motion before the House, because the support of our small businesses has to be one of the principal priorities of the Government at this time. I know that enormous challenges are crowding in from every side as we continue to tackle the covid crisis while dealing with fuel price rises, supply chain shortages, NHS backlogs and the work to decarbonise our economy, but a thriving economy built on private enterprise will do more to help us to solve all those problems than anything else, so it is imperative that the Chancellor does all he can to support and promote small businesses over the next few months.

Given its well-publicised proximity to Heathrow airport, my constituency plays host to many companies in the travel sector. I am particularly concerned about the future of the sector. Despite announcements in recent weeks, there are still considerable restrictions on people’s ability to travel that continue to limit the opportunities for trading in the sector, not least with continued uncertainty about the sector’s prospects as covid cases continue to soar.

The travel sector underpins so many other aspects of the UK economy, both in attracting visitors to our cultural and hospitality sectors and in enabling us to seek out new markets elsewhere, so it must be a strategic priority for the Government to provide it with support. Travel industries will not thrive after the end of the pandemic if they do not receive assistance now.

I call on the Government to extend furlough to all the sectors that are still trying to operate under restrictions, but particularly to the travel sector. They also need to redesign the furlough scheme to enable companies to use it to part-pay their employees. When I spoke to travel companies at a surgery in my constituency recently, they highlighted that at the moment they have enough trade to pay their previously full-time employees to come in for two or three days a week to man the phones, take bookings and research options. They would love to have furlough to be able to pay them for the remainder of their time, just to keep going while there are still so many restrictions and so much uncertainty. Furlough was conceived as an all-or-nothing system, but it really needs to change in order to continue to support businesses that are still affected as we come out of the pandemic.

The retail and hospitality sectors were badly hit by the pandemic. Many are now struggling to reopen fully, thanks to supply chain and labour market issues. The Government need to look again at their immigration policies and think about how they can be better designed to support our key high street industries as we emerge from the pandemic. More than that, they need to complete their promised review of business rates and think again about how they are levied on town centre businesses.

There has been a lot of discussion this afternoon about what might take the place of business rates—I think that there was some freelancing from some hon. Gentlemen on the Tory Back Benches about what might replace them. They are no longer in their place, which is a shame; I was very interested to hear about their suggestions to increase VAT, although I think I am right in saying that the Conservatives committed in their 2019 manifesto to not doing so.

[Peter Grant]

I fear that I may have anticipated the hon. Lady’s next line, but how much faith can we place in a Conservative manifesto promise not to increase tax these days?

[Sarah Olney]

The hon. Gentleman has indeed anticipated exactly what I was about to say, which is that, given that in their 2019 manifesto the Conservatives committed themselves to not raising VAT, we can surely expect it to be raised at some point before the end of this Parliament. Nevertheless, if the Government are not sure how to proceed on business rates, I can give the hon. Gentleman a fully fleshed-out policy from the Liberal Democrats. We believe that a commercial landowner levy would be a much fairer way of raising local revenue, by taxing landowners rather than business owners. We urge the Government to consider that option.

Small businesses provide about three fifths of the employment in the private sector, and it is vital that those jobs are supported. The Government’s recent announcement of a rise in national insurance payments will deter small businesses from creating the new jobs that are so badly needed and limit the expansion of companies seeking to offer new products and services, including those that offer the innovation we need for the green economy. The Government should limit the impact of this rise on the small business sector by quadrupling the employment allowance from £4,000 to £16,000. That would enable a small business to employ five full-time workers on the median UK salary without paying any national insurance contributions, and would incentivise and support new businesses as we make the transition towards a net zero carbon economy.

The UK faces a troubling few months. Covid is not over yet, and a return to normal patterns of life seems likely to be substantially delayed. However, problems create opportunities, and we need to help our entrepreneurs to find solutions and bring them to the people who need them. Small businesses support communities, provide employment and deliver a good society, and the Government need to support them for everyone’s benefit.