HC Deb 20 July 1981 vol 9 cc11-2
10. Mr. David Hunt

asked the Secretary of State for Industry if he is satisfied with the small firms counselling service.

Mr. MacGregor

Yes. I have authorised an increase in the number of counsellors because of the substantially rising demand for their services. An independent evaluation has also confirmed recently that counselling is a highly cost-effective and practical way of providing a business managemet advisory service for small firms.

Mr. Hunt

May I thank my hon. Friend for that answer? In view of the success of the start-up scheme and the improvements to that scheme and the loan guarantee scheme, does he feel that the small firms counselling service should be extended to ensure that the necessary management skills are present for small businesses to take advantage of all the new initiatives?

Mr. MacGregor

I am grateful to my hon. Friend. He is right in saying that small firms counsellors, as well as small firms' managers, can assist in propagating the advantages of the various schemes to small businesses. However, as I have recently announced an expansion, and have extra facilities available this year to carry it out, we must wait to see whether that expansion of the service is sufficient.

My hon. Friend may wish to know that in his region the number of appointments made by counsellors in the first six months of this year was substantially up on the first six months of last year. That demonstrates some of the burgeoning small business activity that is taking place.

Mr. Ioan Evans

Are we getting a feedback, through the counselling service, from small firms? Many have gone into bankruptcy or closed and those who remain are having extreme difficulty with their order books and getting business. They put the problem down to the Government's industrial policies.

Mr. MacGregor

We have been getting a feedback through the counselling service. There are difficulties with order books because of the world recession and the general level of economic activity, but much of the feedback coming through is of enthusiasm in the small business sector. A large number of people are starting out on operations. That is where small firms counsellors can assist in guiding them.

Sir Bernard Braine

How does my hon. Friend define a small business, as opposed to a large or medium-size business? In considering ways of helping small businesses, has my hon. Friend any evidence that aspects of the Employment Protection Act 1975 are preventing small businesses from employing additional labour even when some face the prospect of expansion?

Mr. MacGregor

The question of definition is always difficult and different measures apply to different types of small firms. Broadly speaking, a small firm is one that employs fewer than 200 people. My hon. Friend may like to know that the small firms counsellors tend to counsel firms employing fewer than 25 people, but one aspect of the scheme which, through a pilot project, I am looking at this year is whether we can go further up the range beyond 25 employees. The evidence is that the Employment Protection Act is a good deal less of a bar to small firms that it was previously, because of the changes that the Government have made to the Act. The task is to let small firms know that those changes have taken place.