Small Firms (Hansard, 8 February 1995)

§ 4. Mr. Rathbone
To ask the President of the Board of Trade what proportion of new businesses started up in 1994 were small firms employing 20 people or fewer.

§ The Parliamentary Under-Secretary of State for Trade and Technology (Mr. Ian Taylor)
Almost all the 450,000 businesses started up in 1994 had fewer than 20 employees.

§ Mr. Rathbone
My hon. Friend's answer illustrates the Government's success in helping small businesses to start up. Can he give an indication of the numbers employed in those firms and what benefit those firms had in establishing themselves from our membership of the European Union?

§ Mr. Taylor
Last year was the first for about four years in which there was a net increase in the number of firms, with a rise of about 24,000. That suggests that we have a strengthening economy, which is one of the best factors for encouraging small businesses to perform. Membership of the EU is also important in terms of widening the home market. The Department of Trade and Industry continues to give considerable attention and support to small companies, particularly those involved in high technology. We have launched and adapted the Smart and Spur schemes, which are targeted at smaller companies bringing forward new ideas and technology.

§ Mr. Bell
The Minister could have said more about small firms, but he did not have the opportunity. We lost 330 55,000 small firms in 1993, and one in three small firms goes to the wall every three years. Is there not still a finance gap which means that small firms are not getting long-term finance, a skills gap which means they are not getting the core skills, and a government gap because there is no proper statutory definition of a small firm? Will the Minister promise the House and the small business community that we shall have that definition?

§ Mr. Taylor
I am not sure that small firms are particularly interested in statutory definitions—they are interested in success. The hon. Gentleman's own definition shows that two out of three firms do survive, and it is important to remember that starting up a business is a risk. The Government must get the economic climate right, and that is what we are doing. We must also target innovative schemes, providing support through business links and special loan facilities where the normal banking arrangements perhaps cannot function, and we must encourage companies to tackle the new high-tech challenges with entrepreneurial spirit. I think that the Government have a good record, and the hon. Gentleman might reconsider the tone of his question.

§ Mr. Harris
The economy of west Cornwall is absolutely dependent on small firms. While I welcome and agree with what my hon. Friend said, does he recognise that many small firms are coming under increased pressure as a result of the current revaluation? Will he have discussions with the Department of the Environment and with the Inland Revenue, which carried out the revaluations, and look at the basis of them? I can assure my hon. Friend that they are imposing a tremendous burden on small firms, despite the transitional relief that the Government have introduced.

§ Mr. Taylor
My hon. Friend knows that my right hon. Friend the Secretary of State for the Environment has taken that into account. The Government realise that revaluations can be difficult, and therefore transitional arrangements were brought in. I can assure my hon. Friend that the Government office for the south-west is alive to the difficulties faced by companies in that region and has targeted particular help to them. Some of that help has been targeted through European Union structural funds. I believe that those schemes are now bearing fruit. Any company in the south-west that is concerned about the schemes should contact the Government director, who will provide further information.