Small Businesses

Debate between Simon Danczuk and Huw Irranca-Davies

Thursday 28th November 2013 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

It is a pleasure to follow the hon. Member for Brentford and Isleworth (Mary Macleod). I share many of her concerns about business rates and agree with some of the solutions she proposes. I thank the hon. Member for Newton Abbot (Anne Marie Morris), who has done an excellent job in securing the debate. It is important that it is taking place before the autumn statement, so I thank the Backbench Business Committee for helping to make that happen. Before I begin my comments proper, let me declare an interest. On small business Saturday, my wife and I will be opening a small business of our own: Danczuk’s Delicatessen in Rochdale. I encourage all hon. Members to visit and spend their hard-earned money.

[Huw Irranca-Davies]

I am aware of the opening of this fantastic new deli. I am sure my hon. Friend will be stocking exotic produce, but will he be making an effort to stock local produce—the food that makes his area special?

[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.

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[Huw Irranca-Davies]

My hon. Friend makes a valid point. There has to be cross-party agreement to take this forward and to ensure that finance is available.

Let me mention one stark figure. Even though there are signs of optimism in some parts and some sectors of the Welsh economy, a recent survey of members of the Federation of Small Businesses in Wales showed 55% of them reporting that credit was unaffordable, while 65% said it was not only unaffordable but completely inaccessible. The idea that these businesses can grow by getting affordable and accessible lending is simply not happening, which is a tragedy.

[Simon Danczuk]

Is my hon. Friend aware that some small businesses are afraid of approaching their banks about credit or getting an extension of their overdraft because they fear that the banks will rein things in and make it even more difficult for them?

[Huw Irranca-Davies]

Yes, indeed. There is a big argument not only for more localisation of the traditional banks, but for the regional bank model that Labour Members support. When I made the point earlier that that model should not be bureaucratic and civil service-driven, I was speaking from experience based not only within this country but in other European countries. That model works best where it is very locally focused and entrepreneurial, with managers of the account streams fully understanding the businesses with which they deal. Access to finance is indeed a big issue.

I will not go over business rates again, as others have done so, but it is a real issue. I believe that the proposal from Opposition Front Benchers to freeze and then reduce them is a good one. As to Ministers saying we never did it, I simply say that the proposal is there on the table for them to support if they want to do so.

I turn my attention to one area about which I have particular knowledge and concerns. I refer to supporting small businesses where the potential for employment growth is the biggest—namely, through the application of green technologies, such as solar power or insulation for greater energy efficiency in homes, and so forth. I was intimately involved in the incubation phase of the Energy Bill that the Government brought forward, and I pointed out some of its potential pitfalls. If it had succeeded, however, particularly the green deal with the associated energy company obligation, it could have provided massive incentives for tens of thousands of small businesses. I am talking about all those people who have been installing loft insulation for years and those who have switched to installing solar panels with the feed-in tariffs. They could have had a new opportunity to take on apprentices, perhaps young people in my area who cannot find jobs. The green deal work could have produced a massive expansion of the sector.

We had to highlight the problems, however. We noted that the finances did not seem to work and that it might not be possible to sell the green deal to people. Consumers are pretty intelligent people who, as they look at it, will run a mile. We said, too, that there were rogues out there who would blacken the reputation of the green deal before it even took off and, with deep regret, I have to say that that has now come true. The Minister put forward an aspirational target of 10,000 installations linked to the green deal. That would have provided one of the biggest employment boosts in the small business sector right across the country and in every single community—rural, urban or whatever. Out of that 10,000, we now know that there have been just over 200 installations. It does not matter how many installations were in the plans; they have not taken place.

We are looking to find agreement on areas that require better support—through access to finance, for example. We might have different solutions—how best to enhance access to finance, to reform business rates and so forth—but a proposal that would make a material difference tomorrow, if we got it right, is dealing with cold homes and businesses that have runaway energy costs. That means getting energy-efficiency right and getting the energy installations right. We are failing—miserably—and companies are shutting their doors on the scheme. It is a tragedy. I am sure that the Government have all the best will in the world to turn this around, but we see no sign of them putting measures in place to achieve that.

There has been considerable agreement in today’s debate about the importance of small businesses. Some will choose to stay small, but many will grow and grow, and they will thrive. Tata Steel and Ford in south Wales have a huge impact on the local economy, but they are dwarfed by the impact of all the small and medium-sized businesses that need our support.