§ 4.45 p.m.
§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)
My Lords, with the leave of the House I wish to repeat a Statement made by my right honourable friend the President of the Board of Trade in another place about a major new strategy to establish One Stop Shops for the delivery of business advisory services.
"I have been reviewing government support services for business, in conjunction with a steering group consisting of my right honourable friend, the Secretary of State for Employment, my noble friend Baroness Denton the small firms Minister and representatives of chambers of commerce, training and enterprise councils, the Confederation of British Industry, local authorities, the National Training Task Force and Business in the Community. We have looked particularly at the needs of established small and medium sized firms. We all wish to ensure that these firms have access to world class support in the areas of information, advice, counselling, development of business skills, exporting, technology transfer, innovation, design and other services.
"There are already numerous schemes to help business provided by Government, and the other organisations. These schemes are run by a wide variety of bodies. Some are excellent; others less good. But they all suffer from three main weaknesses. First, the profusion of advice of varying quality makes it difficult for business to know what is available and where. Second, many schemes are narrowly defined and more supplier 1478 than customer driven. Third, many businesses which could benefit from the help available are not even aware of its existence.
"We need to tackle all these problems.
"That is why I have decided to establish a number of pilot One Stop Shops for business. I have today published a prospectus seeking competitive bids to establish up to 15 such shops in England. I have arranged for a copy to be sent to all Members of the House. Copies will also be available in the Vote Office.
"A key aim of the One Stop Shops is to simplify the present confusing array of support services. To win, a bid must demonstrate a real and effective partnership to which all the main local providers of business support services are committed. I am asking the training and enterprise councils to draw together bids but it is a requirement that other key providers such as the Chamber of Commerce, enterprise agencies and the local authority where it is active in support activities, should be fully involved. I am confident that private sector companies will wish to demonstrate support.
"Each bid for a One Stop Shop must show how it will provide a wide range of high quality services, both those available locally and, using modern technology, those provided in other parts of the country or even outside this country.
"My department is committed to playing its full part in the One Stop Shops. The shops will be the main local point of access to and promotion of all DTI services. I am ready to consider imaginative ideas about how this might be achieved including proposals for co-location and, subject to any legal constraints, sub-contracting of services.
"I cannot anticipate the nature of the bids I shall receive or the scale of the resources that local organisations will offer to put behind them. I can however indicate that I have made provision within my own budget for an initial sum of up to £3½ million to fund the winning bids in the first year. I look to local contributions to augment this figure. I hope to see a move to a position of self-sufficiency as rapidly as possible.
"My department will also be working with the pilot One Stop Shops to develop a new diagnostic service as promised in our manifesto. This will help businesses to analyse in depth their strengths and weaknesses and the options open to them and to identify the help they need. This will be a new and important service to be provided by One Stop Shops.
"Bids must be submitted by 29th January. Winners will be announced in mid-March and the pilots will get under way as soon as possible thereafter.
"If the pilots are as successful as I expect, it is my intention to develop a national network of One Stop Shops across England.
"Madam Speaker, the publication of the One Stop Shop prospectus marks an important further step in our long term strategy to improve the support we provide to business in this country.
1479 "We must have a single point of access to services which must be of the highest calibre. One Stop Shops will achieve this and pave the way for a radical overhaul of business support arrange-ments in each area of the country. This will improve the competitiveness of our companies and provide a springboard for the development of our local and national economies."
My Lords, that is the Statement.
§ 4.52 p.m.
§ Lord Clinton-Davis
My Lords, the House will be grateful to the noble Baroness for repeating the Statement that has been made in another place. I note with pleasure her active involvement in the project, which means that some rare common sense has at last emanated from the Government.
I welcome the Statement particularly because the concept of One Stop Shops has featured in the Labour Party policy since 1991 and was repeated in our election manifesto. It was conspicuous by its absence in the Conservative Party election manifesto.
We are pleased that the Government have at long last adopted this perfectly sensible and constructive idea. Is the Minister aware that we share the Government's view that the present system is overdue for reform? It is an irrational and ludicrous state of affairs that there are five departments which offer 34 assistance schemes in relation to small enterprises, many of which, as is now conceded by the Minister, are defective. Why have the Government taken so long to work out an alternative policy?
Will the Minister recognise that however successful pilot schemes are—and we wish them well—they have to be seen in the context of the utterly disastrous situation afflicting small and medium-size enterprises by reason of the recession and the failure of government policies? Is she aware that colossal numbers of collapses have taken place? The figures have increased by almost one-third in one year, with horrendous consequences for individuals and families. Is she aware that the failures are currently running at a rate of well over 1,000 per week and that many more failures can be anticipated? There are additional problems that daily confront small businesses. The problems with banks have been highlighted in the past few days and there is also a problem of late payment on the part of larger enterprises.
Is it not right that helpful though the announce-ment is, it is but the mildest of prophylactics in the context of the deadly recession that afflicts us all and most notably small businesses?
Does the Minister appreciate that it is the economic policy or failure of it on the part of the Government that represents the fundamental cause of the problems that confront small businesses? When a major industry closes down—for example British Aerospace in Hatfield, with thousands of jobs lost; Cammell Laird in Merseyside yesterday; British Rail when it announced 5,000 redundancies; or the Post Office, when it announced 16,000—the consequences are dire 1480 for those who are made directly unemployed and for the small firms and corner shops which supply those local families.
We on these Benches await with greater interest a Statement on industrial policy that will deal with Britain's manufacturing future, if the Government are capable of offering one.
§ Lord Donaldson of Kingsbridge
My Lords, I support almost every word that the noble Lord, Lord Clinton-Davis, has said. I agree with the noble Lord's comparison of the minute approach of detailed experimental help to the more serious situation which we all face. We are all aware of the dire situation with which businesses and small businesses in particular are confronted.
In view of our fears, we can thank the Government for doing something, however small and however ill-defined, which we have all requested for so long. It is true that such a proposal was mentioned in the Labour Party manifesto. It was also mentioned in the Liberal Party manifesto. Doubtless, noble Lords have read that and know well what was stated, and therefore I will not quote it.
A short time ago noble Lords heard an interesting debate concerning advice centres and law centres. This measure endeavours to provide something of the same kind to small businesses. It is not necessary that they be small businesses but most large businesses have their own arrangements and the small businesses need help. They need help for the reasons that are very clearly stated. There are far too many schemes in too many directions. There is a wide variety of bodies, some of which are excellent and some of which are less good. The profusion of advice of varying quality makes the situation difficult and many businesses do not know what to do.
If One Stop Shops are to be effective they could be very useful and therefore we unreservedly welcome the effort to do something along those lines.
The Statement suggests that the experiment will consist of 15 One Stop Shops with an expenditure of £3.5 million. The mathematics (which I have done without a computer) suggest that £230,000 will be available per centre. I do not know whether that amount will be enough; it has to last for a year and other contributions may be made; but it does not seem to be very much. If an advice centre is to be effective, four or five skilled people at least should give advice. I wonder whether this scheme will be like others that we have seen week after week from the Government, which have been very good ideas that have been entirely spoilt by not having enough money.
The Statement says, "my department is commit-ted". I hope that the One Stop Shops will be able to give advice from all departments. There are many matters apart from DTI business which concern most businesses, and co-ordinated and unconflicting advice ought to be available. One of the difficulties is that one has to go to many different departments in order to obtain information. If this scheme is worked out well, it will be a very good one. If it is not, it will be window dressing and we shall then chase the noble Baroness for something more. I hope that it will be very successful.
§ Baroness Denton of Wakefield
My Lords, I thank the noble Lords, Lord Clinton-Davis and Lord Donaldson, for the welcome that they have given to the scheme. Everyone in your Lordships' House probably recognises the important role that small and medium-sized firms will have to play in the economy in the coming years. This is a way of harnessing them. I note that ownership of the scheme was claimed from both Benches. We are delighted to say that this is a scheme which will be customer-driven. It is in its pilot stage, because we want it to identify the needs of businesses. We do not want the centre to decide what they are. The pilot schemes will be worked upwards not downwards. We are listening to and working with local businesses.
I suspect that it is inevitable that the noble Lord, Lord Clinton-Davis, will meet the business under-takers. Although unfortunately small firms are going into liquidation—we recognise the difficulties that that causes to people—I must point out that there are midwives about. In the first nine months of this year, 320,000 new firms were started. There is obviously still a great spirit of enterprise and ambition in the country, which bodes well for the future of our economy.
The noble Lord also mentioned late payment. I am well aware that that causes great concern to small businesses. They are at the end of the spiral. Much was done towards solving that problem in this year's Budget. We continue to consider the matter. I have already put £90,000 into trade associations, whose members include large and small firms, to look at possible solutions and methods of good practice. I am not convinced that legislation is the answer, nor is the small firm's lobby. It is difficult to bring one's customer back to the order book after one has taken him to court.
The noble Lord, Lord Donaldson, asked about the size of the DTI's funding. I agree that it is not sufficient to cover the whole of the pilot scheme. We believe that the partners will also bring resources to it. The DTI's contribution is made to ensure that the scheme takes place. We are convinced that the private sector will become involved in the scheme which will become the major conduit for conversations with small and medium-sized firms. The aim will be to produce full co-ordination between central and local government regulation of business which it has not always been easy for businesses to reach.
The noble Lord asked about the climate in which the companies would grow and use the advice. I point out that interest rates are down by eight points, inflation is under control, and the future will lie with small firms. Large firms will continue to chase productivity if they are to be globally competitive. That is why we are focusing upon the growth area of small and medium-sized firms. The one-stop shops will aim to have their skilled advisers alongside the companies with growth intentions.
In the past month I have seen too many small firms try to re-invent the wheel. It is expensive and slow. There are few hurdles that small firms come up against that someone has not already been over 100 times. It is important to have an advice system which allows 1482 minimum hesitation at the hurdle and tells people how to get over it and on to the next stage. This initiative is not a short-term one. It is a major strategy to develop advice and support to a key part of our economy.
§ 5.4 p.m.
§ Lord Boyd-Carpenter
My Lords, will my noble friend say a word or two about recruiting? High-grade staff will obviously be needed for the centres. In particular, will she say a word or two on the delicate question of what will be the approach to salary levels? I suggest that we want comparatively few people of the highest calibre and so a fairly generous approach to possible salary levels is important. Secondly, it was not clear from her Statement whether the advice that the centres will give will include legal advice. Thirdly, perhaps I may say how nice it was to find myself in agreement with the noble Lord, Lord Clinton-Davis, over the fact that my noble friend is to have a major say in the operation of the scheme. That is the most reassuring thing about it.
§ Baroness Denton of Wakefield
My Lords, I thank my noble friend and the noble Lord, Lord Clinton-Davis, for their kind comments. I have the advantage in that I have probably made some of the mistakes we are trying to prevent small firms making. I agree with my noble friend Lord Boyd-Carpenter, and perhaps I may reassure him, that the excellence of the advice and the advisers is the key to the success of the project. We see the professional advisers in the one-stop shops as undertaking the role of key account managers in a sales team. They have a complete relationship with and understanding of their customers and help them through all stages of growth. Recruiting and rewarding the advisers will be part of the pilot schemes and the prospectus. Pilot schemes will be using the infrastructure of advice that already exists. The scheme is not one which throws out the baby and starts again. It is designed to bring together the many excellent areas of advice that already exist, to use the best of them, and to build them up where there are gaps. Whenever a business has a need the solution, or access to the solution, should be provided quickly.
On legal matters, when I said "private sector", I should perhaps also have said professional areas. The ability to access the small firms and for small firms to access advisers will be an important part of the scheme. We believe that the legal and accountancy professions will in due course be working through the one-stop shops. With the explosion of small businesses in the 1980s, we saw a new generation of small business owners who do not live in the same street as a lawyer, bank manager or accountant. There is a great need to help them in the areas in which their skills are not finely honed, in contrast to the skills with which they set up their businesses. The one-stop shops will aim to do that.
§ Lord Clinton-Davis
My Lords, perhaps I may intervene again. I note that the pilot scheme is limited to England.
§ Lord Clinton-Davis
My Lords, are Scotland and Wales not to be part and parcel of the scheme? If not, why not? I do not believe the Minister answered the point about legal advice—I may have missed her answer—and how solicitors and barristers will be recruited. Will they be part and parcel of the consortium that will be put together or will they be recruited independently? If there is a consortium, will there not be a problem about payment, because the payment to lawyers is not inconsiderable?
§ Baroness Denton of Wakefield
My Lords, I hesitate to become involved in a debate about lawyers' rewards. I did reply to my noble friend by saying that the one-stop shops would be an obvious source of advice. It will be a matter for the partners setting up the shops. They will talk with their customers and with lawyers as to the best way to identify and provide for the needs. Some may come up with one idea and others with another.
On the question of Scotland and Wales, of course they are not left out in a derogatory sense. The amount of work on the subject being done in Scotland is an example to all of us. They have made great strides. Both Wales and Scotland will look at the issues separately. This is initially a pilot scheme in England. Perhaps the lessons from it will be used in those areas, and it is probably relevant to say at the same time that there will be an input for Northern Ireland from the lessons that we learn.