Small Businesses (Hansard, 5 April 1984)

§ 4. Mr. Bellingham
asked the Chancellor of the Exchequer what representations he has received from industry about the effect of his Budget proposals on small businesses.

§ The Financial Secretary to the Treasury (Mr. John Moore)
Most organisations representing industry have welcomed the Budget proposals, particularly the effect on small business of the abolition of the national insurance surcharge and the immediate reduction in the small companies corporation tax rate to 30 per cent.

§ Mr. Bellingham
I thank my hon. Friend for that reply. I am also grateful to my right hon. Friend the Chancellor for the many measures in the Budget, which are of considerable help to the small business sector. I should like to ask about one measure which was not mentioned in the Budget—the loan guarantee scheme. May I urge him, when it comes up for consideration, to do everything possible to keep that excellent scheme, which is supported by many people in the small business sector?

§ Mr. Moore
I thank my hon. Friend for his commendation of the Budget measures relating to small business. I am sure he will have read the press today and seen that the Department of Trade and Industry published the Robson Rhodes report yesterday. The matter is therefore under review and I cannot anticipate the outcome. Decisions on the future of the scheme will be announced in due course by my right hon. Friend the Secretary of State for Trade and Industry.

§ Mr. Freeson
Does the Financial Secretary agree that many small building firms do most of their work for housing associations and local authorities in housing refurbishment? Does he further agree that when the budgets of housing associations and local authorities are cash limited, the imposition of VAT on refurbishment work will result in a considerable reduction in the amount of such work done by small builders?

§ Mr. Moore
I am sure that the right hon. Gentleman will want to draw the attention of small firms to the enormous advantages that they will receive from other parts of the Budget, especially the abolition of the NIS and the reduction of corporation tax to 30 per cent. for small companies, up to £100,000. Those are significant improvements for small businesses, including construction companies. Moreover, 75 per cent. of the business in the construction industry is new construction.

§ Mr. Rowe
I understand that my hon. Friend cannot comment yet on the results of his review of the loan guarantee scheme, but will he bear in mind that the failure rate among new businesses, irrespective of whether they are supported by a loan guarantee, is high and will inevitably be higher with the loan guarantee scheme in its present form, as banks tend to put more than they should of their less good risks into that scheme?

§ Mr. Moore
I hear what my hon. Friend says. I remind him that it is my right hon. Friend the Secretary of State for Trade and Industry's review, and I shall draw his attention to what my hon. Friend has said.

§ Mr. Maxton
As none of the measures that the Government have so far taken has stopped the ever-accelerating number of small businesses going bankrupt, is there anything in the Budget that will stop that tide?

§ Mr. Nicholas Winterton
Yes, Sir.

§ Mr. Moore
The reaction of my hon. Friend the Member for Macclesfield (Mr. Winterton) from a sedentary position and of people outside the House who represent small businesses seem to me to be a much clearer sign of the potential. I draw the hon. Gentleman's attention to what the chairman of the CBI smaller firms council said. He talked about my right hon. Friend the Chancellor producing a "small business Budget". It is more important to remember those words than those of the hon. Gentleman.

§ Mr. Rooker
Does the Financial Secretary agree with the National Federation of Self-Employed and Small Businesses Ltd. that this is a Budget for big business, not for small business? That being so, does he think that the Kentucky Fried Chicken organisation is a big or a small business, in view of its decision to freeze the opening this year of 350 new outlets because of the Chancellor's policies?

§ Mr. Moore
With regard to the first part of the hon. Gentleman's question, no, I do not agree with such comments. I agree with the observations from the outside world that this is an opportunity budget. I hope that companies, including the one which the hon. Gentleman mentioned, will, on further consideration, understand the opportunities presented by the Budget to small and big businesses.