HC Deb 19 July 1988 vol 137 cc530-2W
Mr. David Shaw

To ask the Chancellor of the Duchy of Lancaster if he will make a statement on the achievements of his Department and his policies in helping small businesses over the last 12 months compared with the previous 12 months; and if he will publish the performance indicators by which his Department monitors those achievements and the statistical results of such monitoring.

Mr. Kenneth Clarke

The prime objectives of the DTI are to stimulate individual initiative and enterprise, and to help businesses to improve their efficiency by spreading knowledge of best practice and by cutting red tape. We aim to promote the development of all businesses, large and small, but we recognise that small firms need particular help if they are to achieve their full potential. This is reflected both in the organisation of the Department and in the range of services that we offer.

The White Paper "DTI—the Department for Enterprise" published in January announced changes in the structure of the Department designed to improve communications with business. Since then, the regional network has been strengthened and extended: 20 new satellite offices and three sub-offices have been opened and the number of staff employed in regional offices has been increased by about 20 per cent. The whole purpose of these changes is to make the Department more accessible to smaller firms and to develop closer communications with them.

In January, we also launched the enterprise initiative, the biggest and most comprehensive self-help package ever offered to British business. Much of the package is aimed specifically at small and medium size businesses. In particular, the consultancy initiatives are designed to encourage independent firms or groups with fewer than 500 employees to use consultancy services to improve their efficiency in key management areas—design, marketing, quality, manufacturing systems, business planning and financial and information systems.

There has been a very strong response to the enterprise initiative. Up to 1 July, we had received 96,472 inquiries for general information followed up by 60,233 inquiries about specific initiatives.

Inquiries about specific initiatives can be broken down as follows:

Consultancy 17,329
Exports 11,220
Regional Selective Assistance 9,668
Regional Enterprise Grant 5,113
Research and Technology 6,072
Small Firms Merit Award for Research and Technology 2,956
Business and Education 7,245

Rapid progress is being made in handling applications for the consultancy initiatives. A total of 7,993 applications have been received and 6,148 business reviews completed. A total of 4,815 have been referred to scheme contractors for consultancy to proceed and 158 projects have been completed. Over 80 per cent. of the applications approved for consultancy are from firms with fewer than 100 employees and about one third of the total have been from firms employing fewer than 10.

A range of financial support continues to be available to firms which meet the criteria for regional selective assistance (RSA). Over 20 per cent. by value of DTI offers of RSA in the last three years have been made to firms with fewer than 200 employees; this amounts to some £100 million in grant offered. Following the introduction in February 1987 of simplified arrangements for RSA offers of up to £25,000, grants of this size now account for nearly 10 per cent. of the value and 60 per cent. of the number of all new RSA offers, compared with 5 per cent. and 45 per cent. respectively before simplification.

A new scheme was introduced on 1 April 1988 in recognition of the particular problems that very small firms face in raising finance. The regional enterprise grant scheme provides fixed-rate grants to assist firms with fewer than 25 employees with investment and innovation projects in the development areas. The scheme has streamlined procedures and simple documentation to minimise the burden on small firms' managers.

The Department also provides a wide range of services to exporters through the medium of the British Overseas Trade Board. Although these services are not aimed exclusively at small businesses, they are designed with the needs of such firms very much in mind. Small firms account for over 70 per cent. of the board's contacts with industry.

We are currently looking to improve the overall quality of the services on offer so that they better reflect customers' needs. In particular, independent research commissioned by the Department has shown that there is a great deal of untapped export potential amongst small companies. Our aim is to encourage and help them to develop that potential.

The small firms merit award for research and technology. (SMART) competition was relaunched in the spring as a regional initiative. It now offers 100 awards worth up to £37,500 each, with 20 of these reserved for individuals and small firms working in urban programme areas. When the competition closed for entries on 30 June, over 900 applications had been received; at first sight, the overall standard seems very promising.

The enterprise and deregulation unit, which has been based in the DTI since July 1987, continues to co-ordinate and develop the Government's policy of reducing burdens on business both domestically and in the EC. The aim is to simplify those regulations which are necessary and get rid of those which are not. That helps all firms but is particularly important for small businesses which lack both resources and expertise in handling bureaucracy; requirements which impose negligible costs on large firms can be a real burden on smaller firms. A White Paper later this year will report on the further progress of the deregulation initiative both within DTI and across Whitehall.