Small Businesses (Hansard, 27 July 1993)

§ Mr. McLoughlin

The Government continue to help small businesses, through improvements to the business climate, through deregulation and through specific programmes and initiatives of suport and assistance.

Measures operated by my Department to assist small businesses include:

Business Link. The development of a national network of one-stop shops—to be known as business links—is a key component of the Government's strategy for small firms. Good progress is being made by the original six pilots, and they have now been joined by two more areas—Leicestershire and Shropshire. The first business links are expected to open in September. An assessment panel will meet quarterly, starting in October, to consider further proposals to set up business links. Eventually there should be a network of about 200 business links throughout the country, each one providing a single point of access to a wide range of high quality business information and advice and removing the confusion that is too often experienced by small firms seeking help.

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Deregulation measures. The seven business task forces, created following the Prime Minister's seminar on deregulation on 2 February, are giving priority to the concerns of small businesses. Each task force has at least one representative from, or looking after the interests of, small firms. In addition, a sub-group has been set up, with membership drawn from all the task forces, to consider and make recommendations on issues which have a particular small business dimension.

The task forces have recommended that, when formulating new regulation, the interests of small firms should be the first consideration. Following the Prime Minister's deregulation progress meeting on 20 July it has been decided that this recommendation will be implemented by the introduction of a small firms 'litmus test' as part of the compliance cost assessment.

The Enterprise Initiative Consultancy Scheme. In the year ended March 1993, 23,082 applications were received and 14,375 were approved.

The consultancy scheme will continue until 31 March 1994 as scheduled. Beyond that, a new package of support, including a new diagnostic service, a consultancy brokerage scheme, new consultancy services and technology advice will be phased in alongside the consultancy scheme from 1994–95 onwards to ensure a smooth transition to the new arrangements. This comprehensive range of local services, contracted through TECs and delivered by TECs and business links will provide high quality support for business, be suited to business needs and make cost-effective use of public funds.

The Small Firms Merit Award for Research and Technology (SMART) scheme. Last year, 180 grants, the maximum number on offer, were made.

Support for Products Under Research (SPUR) which helps small firms develop new products and processes. In the 12 months to March 1993, 138 grants were offered, worth over £12 million.

EUREKA. Last year, the United Kingdom participated in 43 announced EUREKA projects, involving 107 organisations, including 33 small to medium sized enterprises. This year, the United Kingdom participated in 49 announced projects, involving 76 organisations, 28 of which were smaller companies.

The Loan Guarantee Scheme facilitates smaller firms' access to finance. In the 12 months to May 1993, 2,407 loans were guaranteed to a value of £51 million.

The terms of the scheme were enhanced in the Chancellor of the Exchequer's Budget statement. The changes, which were implemented in 1 July, are: the premium in the inner city task force and city challenge areas was reduced from 1 to 0.5 per cent. At the same time, premiums were reduced on all other loans, from 2.5 per cent. of the guaranteed portion of the loan to 1.5 per cent. for variable rate lending and 0.5 per cent for fixed rate lending on the whole loan; the maximum loan available for established businesses increased to £250,000; the guarantee level increased to 85 per cent. for these businesses.

Informal investment demonstration projects. Five of these projects were established by TECs in partnership with other local organisations in January 1992 with Departmental pump-priming. They help together potential investors and small businesses seeking investment. An interim review of progress was carried out in early 1993 with favourable results.

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Late Payment. The Department continues to address the difficult problem of late payment of commercial debt. Three trade association pilot initiatives have been established with financial support from the Department; we are monitoring the payment performance of Government Departments and my noble Friend Baroness Denton, Minister for Consumer Affairs and Small Firms, continues to follow up individual cases of late payment to small firms by large companies and public bodies. The Department has also endorsed the CBI's prompt payer's code.

The Department also issued a consultation paper on the 1992 Budget proposal to require large companies to state in their reports and accounts how quickly they pay. The responses to the consultation exercises are presently under consideration.

It is extremely difficult to measure the extent of late payment or the impact of any one measure and it is too soon to evaluate the results of the trade association initiatives. However, there are indications, most recently from the Association of British Factors and Discounters, that payment times in the United Kingdom are improving.

Export Promotion. My Department and the Foreign and Commonwealth Office provide, through Overseas Trade Services, a wide range of help, advice and support to United Kingdom exporters at each stage of the export process, from researching opportunities through to contacting and visiting markets. The services we offer are particularly geared to meet the needs of smaller firms. An independent monthly survey of the delivery of the services shows a consistently high level of customer satisfaction, and some 90 per cent. of respondents regularly say that they will use the services again. Details of the services and of their take-up are featured in the "British Overseas Trade Board Annual Report 1992–93 and Forward Plan"—a copy of which is in the Library.