HC Deb 11 May 2000 vol 349 cc1003-4
9. Mr. Kerry Pollard (St. Albans)

What measures he is considering to encourage responsible risk-taking in business start-ups. [120513]

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)

The Small Business Service will encourage people who are starting or growing a business to seek support from Business Links. There is good research evidence to show that those who do receive support and advice can significantly reduce the risks that they take and are more likely to stay in business.

Mr. Pollard

What measures are the Government taking to ensure that those who have incurred bankruptcy because of reckless or fraudulent practice are treated differently from those who have simply made honest mistakes?

Ms Hewitt

My hon. Friend raises a very important issue. We are reforming bankruptcy law to distinguish between the vast majority who are honest and responsible risk takers, and the minority who have engaged in fraudulent practice. Our measures will ensure that those responsible risk takers will be discharged earlier from bankruptcy and, indeed, when appropriate, given help to set up again in business. At the same time, however, we shall protect creditors and impose tougher penalties on the reckless and dishonest minority.

Mrs. Angela Browning (Tiverton and Honiton)

Today, when the Secretary of State and the Prime Minister encourage young entrepreneurs to go into business, will they also advise them about the business risks? Will they, for example, warn them not to go into information technology and become specialists so that they do not get clobbered by IR35? Will they warn them not to forget to build into their cashflow forecasts the costs of administering the Government's ill-thought-through schemes, such as the working families tax credit, which will cost business £340 million in administrative costs alone?

Will the Prime Minister and the Secretary of State also, however, encourage those young entrepreneurs to develop thick skins—so that, when they eventually become world-class businesses and discover that yesterday's entrepreneurs have become today's fat cats, they will understand that there is nothing personal in it, just new Labour looking for a soundbite?

Ms Hewitt

Well, that was a very snappy question. I am sorry that the hon. Lady did not feel able to welcome this morning's launch by the Prime Minister and business organisations of Enterprise Insight, which will indeed encourage more people of all ages to take the plunge into setting up a business. As for business burdens, perhaps I can remind her of her own words when, as a Minister in the previous Government, she said that she would be the first to say that they did not do very well on regulation. [Interruption.] We are reducing the administrative costs to business. Indeed, the new chief executive of the Small Business Service sits on the regulatory reform panel, which will help to ensure that we improve the regulatory environment for small and large businesses.

Mr. Harry Barnes (North-East Derbyshire)

When it comes to risk taking, is there not a distinction between caution and inaction? Many firms that are at the cutting edge of developments in sectors such as the biosciences are finding it extremely difficult to obtain necessary capital from banks and other financial institutions. Does that not undermine the work of the small firms loan guarantee scheme?

Ms Hewitt

My hon. Friend makes a very important point. The issue that is most often raised with us by small businesses is the need to obtain proper finance, and finance on the terms that they require. That is why we have created the enterprise fund, which will ensure not only continuation of the very successful small firms loan guarantee scheme, but the creation of regional venture capital funds to help close the equity gap in funding for small and growing businesses.