§ Mr. David Shawasked the Chancellor of the Duchy of Lancaster if he will make a statement on the achievements of his Department in helping small businesses over the last three years; and if he will publish the performance indicators by which his Department monitors those achievements and the statistical results of such monitoring.
§ Mr. Kenneth ClarkeMy Department operates a wide range of measures, designed to improve the performance and competitiveness of businesses, large and small. Over the past three years, the measures taken by the Government to reduce burdens on business, some of which have particular application to small firms, have been set out in the White Paper "Building Businesses … Not650W Barriers" (Cmnd. 9794) published in May 1986, and in the progress report "Encouraging Enterprise" published in May this year.
As these documents show, work is continuing in the company law field. In particular, the procedures introduced by the companies registration offices (CROs) for reminding companies of their filing obligations have proved of real value to small business men. Since the introduction of the reminder procedure for filing annual returns and accounts at the CRO, compliance rates have risen from around 60 per cent. to approximately 80 per cent.
Consultative documents have been issued inviting views on accounting and audit requirements for small companies, procedures for filing annual accounts and returns at the CROs and abolition of the ultra vires rule with a view to action in the next Companies Bill. That Bill is also likely to include further measures designed to simplify company law requirements and, where possible, remove them altogether, especially where small business men are concerned. In addition, we currently await comments on the consultative document published jointly with the Inland Revenue earlier this month on possible changes in tax and company law aimed at making it easier for small companies to disincorporate.
The new regional development grant scheme for development areas introduced in November 1984 was designed to be particularly favourable to firms with up to 200 employees. The main indicator of success in meeting this objective is that 83 per cent. of all grants made by the Department since the beginning of the scheme has gone to firms of this size. This represents an amount of grant of £78 million, which has been paid towards projects involving the creation of some 27,000 jobs. Comparable figures for the proportion of grants under the old regional development grant scheme going to small firms are not available but there is no doubt that the proportion was much lower.
On 17 February 1987 the Minister of State announced simplified arrangements for regional selective assistance offers of up to £25,000. Some indication of the impact of these new arrangements will be given by the trends in the number and value of offers of this size but it is too early to draw any conclusions from the information available so far. Twenty 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 over £80 million in grant offered.
The business improvement services scheme (BIS), a package of measures specifically tailored to the needs of small firms, was introduced in November 1984 in areas of England which have suffered a decline in the steel, shipbuilding and textiles industries. The scheme was extended in March 1986 to certain similarly affected fisheries areas and again in July 1986 to west Cornwall to provide support for small firms in that area, following the closure of the Geevor tin mine. At 3 May 1987 almost 6,000 offers had been made with a value of £45 million. It is too early to make an assessment of the performance of BIS but it has been a popular scheme. Initial reactions by the business community have been favourable.
The exchange risk guarantee scheme (ERGS) has operated since 1978; following its most recent review in July 1985, it was decided that the resources available should be concentrated on small firms. The scheme enables firms to take advantage of low-interest foreign 651W currency loans from the European Coal and Steel Community. These loans can also attract a subsidy linked to the number of jobs created.
The period of loan for which ERGS cover is provided is, typically, seven to 10 years. The fluctuation in exchange rates over the period of time will ultimately determine the cost of providing such cover and, therefore, the precise cost will not be known until the expiry of the loan period. In these circumstances specific performance indicators are not considered appropriate. However, the operation of the scheme is kept under regular review.
Under the support for innovation scheme there is a minimum of £100,000 eligible costs below which applications are only considered from small firms. Such applications are subject to a simplified appraisal process and the criteria are applied less stringently. Since April 1985, 352 small firms have been offered assistance involving expenditure of £6 million on total project costs of £24 million. Projects from small firms with costs in excess of £100,000 are not given favourable treatment.
Over the last three years about 15,000 firms with up to 500 employees have received subsidised consultancy through the various elements of the business and technical advisory services (BTAS) aimed at improving marketing, design and management. About 90 per cent. of those assisted had fewer than 200 employees; more than half had fewer than 50 employees. Individual BTAS projects are monitored in the short term to ensure that firms get value for money and benefit from the experience. In the longer term, the Department, as part of its overall evaluation of expenditure, regularly carries out assessments of the benefits of funding support for business. A report on the SFI scheme, covering SFI support for all sizes of business, will be published this autumn.
The British Overseas Trade Board provides a wide range of services to exporters. Although not available exclusively for small businesses, these are designed with the needs of such firms particularly in mind. Small firms account for over 70 per cent. of the board's contact with industry, and continued attention will be given to encouraging and enabling these firms to develop their potential for breaking successfully into overseas markets.
The board attempts as rigorous an assessment as possible of the value of its expenditure on the services it provides. These assessments can never be wholly accurate but indicate that the BOTB services examined are linked to around £2 billion of exports which would not otherwise have been won. This produces a ratio of exports to expenditure of about 50:1.