Oral Answers to Questions

Vince Cable Excerpts

Thursday 6th March 2014 Commons Chamber

[Robert Flello (Stoke-on-Trent South) (Lab)]

2. What recent assessment he has made of the availability of finance and the level of lending by banks to small businesses.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Gross lending to small businesses for the 12 months to January was 14% higher than in the same period a year ago, although net lending continues to contract. The Bank of England’s credit conditions survey reported, however, that:

“The overall availability of credit to the corporate sector increased significantly”

in the final quarter of 2013.

[Robert Flello]

I am really surprised by the answer that the Secretary of State has given, because small businesses in my constituency tell me that they are finding it almost impossible and often totally impossible to access the finance that they need. Lending to business is down after the failure of the Government’s Project Merlin, credit easing and funding for lending schemes. It now emerges that the business bank is just a rebadging of existing schemes. Why has the Secretary of State failed to learn from the Department’s mistakes and failures?

[Vince Cable]

Of course, there is a continuing credit problem for many small companies. That is very clear. There is a very different pattern among the significant banks. Lloyds is greatly expanding its lending, as is Santander. Some of the new banks, such as Shawbrook and Aldermore, are beginning to make an impression. That has been cancelled out by RBS, although its new management have indicated that they wish to expand its net lending considerably. The business bank is beginning to make a significant impact. It is not a rebadging. It is already out in the market, supporting new forms of non-conventional business finance.

[Andrew Bridgen (North West Leicestershire) (Con)]

Business intentions rely on confidence, and with business confidence at a 22-year high, figures from the Office for National Statistics show that business investment is up 8.5% on the previous year. Does that not show that business is not only confident about the economy, but about the policies of this Government?

[Vince Cable]

Yes, there is a high level of confidence, and it is reinforced by fact. Indeed, the output and spending figures are reinforcing the trend that the hon. Gentleman describes. There is, however, a continuing problem regarding credit to the small and medium-sized business sector. We are not complacent about that, and the interventions we are making will help.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Many businesses in my constituency tell me that their biggest problem is the withdrawal of overdrafts, and they are sometimes offered big and unwanted loans instead. Is the Secretary of State monitoring that trend, to ensure that banks are not fiddling the system to benefit themselves, and to attack small businesses that have cash-flow issues but do not need big loans?

[Vince Cable]

One positive thing is that we are now getting a growth of specialist institutions that provide small businesses with a type of finance—Aldermore provides asset-based financing or new kinds of invoice financing to deal with cash flow or investment as required. However, the hon. Lady is right to say that there is a particular problem in that area of the market.

[Lorely Burt (Solihull) (LD)]

I recently had the privilege of opening the first bank in my constituency to be approved under the new Government fast-track system—Paragon bank—and it was full of praise for the help it received from my right hon. Friend’s Department. Does he share my aspiration that that will herald the beginning of much greater diversity and choice in the banking sector, and particularly help for small businesses?

[Vince Cable]

My hon. Friend is right and I thank her for her kind words. Ultimately, what will change the problem is breaking the traditional monopoly of the big four banks. Many new banks are now coming into existence, and the more flexible licensing regime operated by the regulators is playing a significant part. I believe that 20 new banks have recently been licensed and, within a few years, I think we will see real competition and diversity.

[Toby Perkins (Chesterfield) (Lab)]

The Secretary of State says that he is not complacent, and he has good cause not to be. Net business lending was down in eight of the past 12 months, and businesses will hear that in the past year, lending is down by £11.6 billion on the year before. How does he think those businesses will respond to the news that in the past year, Barclays and Lloyds made 508 people millionaires due to the bonuses they paid, at the same time as many small businesses are struggling to get access to finance? Is there a discrepancy between the Government’s performance on small business lending and the bonuses that continue to be paid by those banks?

[Vince Cable]

There are often bonus levels that are extreme, but it is important to recall that at the peak of the financial crisis when the Labour party was in charge, there was a bonus pool of well over £12 billion. That has now shrunk to a tiny fraction of that, and at least one bank to which the hon. Gentleman referred—Lloyds—is making a significant improvement in the supply of small business lending.

[Bob Blackman (Harrow East) (Con)]

3. What steps he is taking to reduce the amount of EU regulation which affects businesses.

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[Karl Turner (Kingston upon Hull East) (Lab)]

4. How many firms have been prosecuted for non-payment of the national minimum wage since May 2010.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Since 2010-11, Her Majesty’s Revenue and Customs has identified £11.3 million in arrears of wages for 66,000 workers through civil powers, which are sufficient in the majority of cases. However, for the minority that are persistently non-compliant, criminal investigation is appropriate. Two employers have been prosecuted since 2010, with nine prosecutions in total since 2007.

[Karl Turner]

Does the Secretary of State agree that paying Portuguese seafarers working on P&O Ferries in and out of Hull £3.96 an hour risks the employment of British seafarers? Will he make sure that the national minimum wage enforcement team investigates the maritime sector?

[Vince Cable]

The maritime sector is subject to the national minimum wage if it is operating within the UK jurisdiction. I will happily take up the case that the hon. Gentleman mentions and, indeed, I was aware of accusations of abuse in this sector.

[Ian Murray (Edinburgh South) (Lab)]

We know that the Government do not want to admit that the country is engulfed by a cost of living crisis, but that denial is made worse when the Chancellor is exposed as giving a hollow and empty promise to raise the national minimum wage to £7 an hour. Indeed, only a few days after he made that promise, the Conservative party issued a memo, under the heading “Common Sense Guide”, advising on how to avoid paying the national minimum wage. Rather than false promises for the lowest paid in our country, would it not be helpful to utilise the Secretary of State’s naming and shaming policy to expose the national minimum wage deniers in his Government and back Labour’s plans for a living wage?

[Vince Cable]

I thought that the Labour party was still committed to supporting the national minimum wage. This is an interesting new evolution of policy, which seems to have been made on the stump. The naming and shaming policy has now come into effect and the first five companies were named at the end of last week.

[Alex Cunningham (Stockton North) (Lab)]

5. What recent representations he has received from small businesses on their consumer rights.

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[John Mann (Bassetlaw) (Lab)]

10. On what date he plans to visit Bassetlaw to inspect and meet local businesses.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I have provisionally booked a ministerial visit to Bassetlaw and to neighbouring areas in Nottinghamshire for early June.

[John Mann]

I will parlay with the devil to get jobs and investment into my constituency, and I can guarantee the Secretary of State my personal protection from my constituents and their anger with the coalition. Perhaps we shall be able to have, for the day, a healthier coalition promoting jobs and investment in Bassetlaw.

[Vince Cable]

I am not sure I shall need much protection because the firms in the hon. Gentleman’s constituency are already beating their way to my door. I believe 14 companies have availed themselves of the enterprise finance guarantee scheme, there have been five start-up loans and 17 other companies are using the growth accelerator, all in his patch.

[Andrew Selous (South West Bedfordshire) (Con)]

11. What his policy is on the future level of the national minimum wage.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Our aim is to maximise the wages of the low-paid without it costing jobs and ensure the benefits of the recovery are shared by everyone. We fully support an independent Low Pay Commission and are currently considering this year’s recommendation to increase the national minimum wage by 3% to £6.50. This would represent the first real increase since the financial crisis. In addition, we are considering the Low Pay Commission’s response to how we can restore the real value of the national minimum wage, which has not kept pace with inflation since 2008.

[Andrew Selous]

I am looking forward to many of my constituents seeing a pay rise shortly as the minimum wage rises, but what is the Secretary of State doing to address the worrying productivity gap so that future wage rises are based on increases in productivity and earned output?

[Vince Cable]

My hon. Friend is right that if we are to sustain real increases in wages whether at the minimum level or above, there have to be productivity increases and many of the problems in the low-paid sectors like catering and care are to do with the fact that productivity levels are very low. I gather, for example, that in some of the lowest paid sectors the minimum wage is already 90% of the median. That reflects the low productivity in those industries.

[Nic Dakin (Scunthorpe) (Lab)]

21. With families £1,600 a year worse off, has the Secretary of State got any plans to follow Labour’s lead and incentivise employers to pay the living wage?

[Vince Cable]

We have already made it clear that we would encourage companies to pay the living wage if they could afford it, but we need to be very clear that this is not a mandated system. Indeed, the Low Pay Commission has expressed considerable care in its recommendations to be sure that in promoting a higher level of wages at the bottom, which we want to see, we do not force large numbers of workers out of work.

[Mark Garnier (Wyre Forest) (Con)]

12. What steps he is taking to support businesses affected by recent floods.

--- Later in debate ---

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

My Department plays a key role in supporting the rebalancing of the economy through business to deliver growth while increasing skills and learning.

[Mr Cunningham]

Will the Secretary of State say what the latest position is regarding Hibu, as he met a small delegation of MPs some months ago to discuss the situation? He will know that many of the shareholders have lost a lot of money, especially those in Coventry.

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[Mr Chuka Umunna (Streatham) (Lab)]

In the last annual report and accounts of his Department, the Secretary of State said that the Department remained

“on track to deliver against our spending review settlement.”

However, the head of the National Audit Office said in the same report that there are significant uncertainties relating to billions of pounds’ worth of the Department’s assets, which will affect its financial position. Can the Secretary of State explain the discrepancy?

[Vince Cable]

I think the hon. Gentleman is referring to the significant assets that were left with the dissolution of the regional development agencies. In fact, the job of managing that complex process has been extraordinarily successful.

[Mr Umunna]

No, I refer to the student loans worth billions of pounds. Subsequent to the publication of those accounts, the NAO published a report that revealed that because Ministers have dramatically overestimated the number of graduates who will be able to repay the loans to pay for the Secretary of State’s higher tuition fees, he has, in effect, blown a hole in the Department’s budget. In fact, the Library estimates that from 2015-16 an extra £600 million a year will have to be found. Will the Secretary of State now explain how he will fix the problem without putting under threat the country’s scientists, students, universities and colleges?

[Vince Cable]

This is an absurd misunderstanding of what is called the resource accounting and budgeting—RAB—charge system, which depends on long-term predictions of earnings growth. I assure the hon. Gentleman that if the recovery of the economy continues as it is, the RAB charge estimates will be substantially revised down and the imaginary black hole will very soon disappear.

[Mark Menzies (Fylde) (Con)]

T4. What steps is the Department taking to support small and medium-sized businesses in Lancashire that are keen to export their goods and services?

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[John Cryer (Leyton and Wanstead) (Lab)]

Bogus self-employment continues to spread through the construction industry, in part because the number of HMRC employer compliance inspections has halved in four years. Does the Secretary of State regret that?

[Vince Cable]

Of course we want to see maximum compliance. We realise that there are abuses in the construction industry and I can assure the hon. Gentleman that we are committing to stepping up enforcement action.

[Mr Robin Walker (Worcester) (Con)]

I am very pleased with the Government’s rapid response in providing support for businesses that were directly affected by the floods, but evidence is emerging in Worcester of substantial indirect effects from transport disruptions, particularly to small businesses. I understand that Worcester received around £57,000 of funding in the first tranche of the floods fund. Can the Minister confirm that as more evidence emerges, there may be more money to support local SMEs?

--- Later in debate ---

[Gordon Birtwistle (Burnley) (LD)]

I thank my right hon. Friend for visiting Burnley last week to open a new industrial estate and visit a number of rapidly expanding companies that are embracing the Government’s economic policy. Does he agree that if the success being achieved in Burnley was replicated across the country, our economic position would be growing much better?

[Vince Cable]

Yes, I had a very rewarding visit to my hon. Friend’s constituency and I think there were broader lessons. Much of the gloom about the economy that is being spread by the Opposition is not reflected in many manufacturing towns such as Burnley, which has an unemployment rate well below the national average and highly successful manufacturing companies, particularly in aerospace and the car supply chain. Many other towns and cities across the UK are now sharing that experience.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

The Secretary of State will be aware that business growth in the UK is dependent not just on exports but on investors. Recently I went on a visit to India and I discussed with businesses, including a Confederation of Indian Industry round table here, issues concerning UKTI. How successful does he believe UKTI is at creating investment opportunities for medium-sized businesses from abroad, particularly in our regions, so that we can see growth and investment partnerships?

[Vince Cable]

UKTI is now regarded as an excellent service for business. It has a dedicated unit devoted to high-value opportunities and big inward investment in the UK. I visited India recently and met a substantial number of Indian companies, both in the service sector, such as call centres, and in manufacturing, such as aerospace, that are targeting the UK to re-shore production here from India.

[Mr Philip Hollobone (Kettering) (Con)]

Tomorrow in Kettering, with local employers, Tresham institute will launch Experience Kettering, a workplace experience scheme for hard-to-place young people aged 18 to 24. Would the Skills Minister congratulate Tresham institute on this initiative and send some words of encouragement?

[Barry Gardiner (Brent North) (Lab)]

What impact and what offence does the Secretary of State believe have been caused to Jewish and Muslim businesses by the statement from the chief veterinary officer today, threatening to ban the practice of shechita and halal?

[Vince Cable]

I confess that I have not yet absorbed the significance of that statement. We will certainly consider it.

[Greg Mulholland (Leeds North West) (LD)]

The House is awaiting the response to the BIS consultation on pub companies, but now that the London Economics research has been exposed as fundamentally flawed and does not follow the brief given to it by BIS, and the firm has charged £26,000 for fieldwork that did not take place, will my right hon. Friend ignore this bunkum and listen to the Federation of Small Businesses’ research, which shows that the market rent-only option would benefit the UK economy by £78 million?