Small Business, Enterprise and Employment Bill

Debate between Simon Danczuk and Toby Perkins

Wednesday 16th July 2014 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

It is a pleasure to follow the hon. Member for South East Cornwall (Sheryll Murray), who made some excellent points, particularly about the pub trade.

As many hon. Members will know, I am a small business owner myself, so I begin my speech by declaring an interest through Danczuk’s Deli in Rochdale. I extend an invitation to hon. Members to pay a visit whenever the opportunity arises. It is also important to say that today I was unanimously elected chairman of the all-party group on small shops—a position I am very pleased to be able to take up.

As a Member of Parliament and as a small business owner, I welcome this Bill. Before I discuss it in detail, I want to make a couple of brief but important points. First, we often talk about social mobility, but usually in relation to schools and university. It is my strong view that small business can be a very powerful tool for social mobility and vital in helping individuals to achieve their potential. That is worth remembering.

[Toby Perkins]

On social mobility and the roles of schools and small businesses, I am sure my hon. Friend will be pleased to know that the Labour party recently announced that we are going to make it easier for small business owners to get involved in being school governors so that they can make sure that schools are turning out people who are work-ready and that schools and business have closer links.

[Simon Danczuk]

I thank my hon. Friend. I am pleased to hear that, because the link between education and business and enterprise is very important.

Secondly, small business is important to communities. Small businesses have helped to keep Rochdale going during very tough times, and they have formed the building blocks on which the future success of the town will be based. For example, Hanson Springs in Rochdale has developed from being a very small business into a major employer providing secure jobs for local people, creating skilled occupations, and providing many exports for the country.

Let me turn to the Bill. I welcome the commitment to tackling issues such as late payment and procurement. Small businesses, especially new ones, often operate on very tight time scales with very small margins of error. When invoices are not paid on time, that can have a huge impact on a business. It is not simply a case of having to wait for money; it can hold back investment and cause small businesses to lose important contracts. Late payment also has a domino effect that flows along the supply chain, affecting many businesses and harming business relationships. It is shocking that 51% of invoices paid by large businesses are paid late. Something really needs to be done to tackle this. The problem does not relate only to large businesses. We know from research by the Federation of Small Businesses that central Government pay 29% of their invoices late. That is clearly unacceptable. I would hope that the Bill could do more to tackle the issue of Government and large businesses not paying on time.

I recently wrote an article for a new think-tank called The Entrepreneurs Network in which I suggested the idea of a small business kitemark for local government that would assess whether a local authority was fulfilling its obligations to small business and help to share best practice. There are many such ideas that could improve the relationship between Government and small business. I hope that that can be considered as part of the Bill.

That brings me to procurement. According to FSB figures, every £1 spent by local authorities with small local firms generates 63p of economic benefit for the local economy. Given that local authorities spend literally billions of pounds on procurement every year, there is a lot of potential benefit for local areas.

On the scope of the Bill, the section that deals with access to finance is mainly limited to late payments and does not deal with the more tricky issue of getting banks lending to businesses again. There are some great companies out there, such as Octopus Investments that are helping innovative new businesses get off the ground, but Government could still do much more. I would like to see—and this is a Labour proposal—more regional investment banks such as those in Germany that are investing in small and medium-sized enterprises and helping them to grow their businesses and to export.

I also want to address business rates, which are still the No. 1 issue among small businesses. The current business rate system is completely out of touch with reality and needs fundamental reform. The British Retail Consortium is looking at the issue and I think we should consider its interesting proposals.

In conclusion, this Bill is a step forward, but it is not a step change. It tinkers where it should transform. It does not show the ambition that our small businesses need and deserve. After this Bill, there will still be much more to do.