§ 11. Mr. Kenneth Lewis
asked the Chancellor of the Exchequer what proposals he has for assisting in the provision of finance for small business.
§ Mr. Biffen
The Government have made a major contribution towards helping the small firms sector by cutting income tax and undertaking to tackle capital taxes. The Government have been considering what further steps they can take to encourage investment in small firms. My hon. Friend would not expect me to reveal any details in advance of the Budget.
§ Mr. Lewis
Will my right hon. Friend bear in mind, when he is giving further consideration to this matter, that small businesses in the service sector represent the greatest prospect for advance and increasing employment? Will he recognise that they do not have the same tax advantages that some manufacturing industries enjoy? Will my right hon. Friend ask his right hon. and hon. Friends in Government Departments, and those running nationalised industries, to pay their bills on normal credit terms to small businesses? They are notoriously bad payers.
§ Mr. Biffen
I shall ensure that the second part of my hon. Friend's question is drawn to the attention of those primarily responsible. I very much agree with him that the small business sector of the economy, especially in the service sector, provides great hope for providing future employment throughout the country. My hon. Friend will know that the balance of taxation between industry and services is an issue that is subject to constant reconsideration. I am sure that it will be borne in mind when the Finance Bill is being considered in Committee and thereafter.
§ Mr. John Garrett
Does the right hon. Gentleman agree that one result of a totemistic fixation on restricting the growth of the money supply is an inevitable increase in bankruptcies, especially among small firms?
§ Mr. Biffen
Any policy that seeks to reduce inflation will have as a consequence a period of extreme uncomfortable dislocation, one manifestation of which is bankruptcies. That will happen however we set about reducing inflation. I do not deny that. I do not repudiate that for one moment. I certainly do not rejoice in it. However, if we are genuine about fighting inflation and intend not to run way at the first uncomfortable moment, we must accept that there are uncomfortable consequences and live with them and through them.
The question of the existing minimum lending rate for small businesses was raised earlier, and answered by my hon. Friend the Financial Secretary to the Treasury. I cannot go further than that.
§ Mr. Douglas
As the right hon. Gentle-mar has considerable knowledge of business, will he indicate what rate of return a small business might expect on an investment that would cover soaring interest rates and an abnormal level of inflation?