Small Businesses (Hansard, 21 July 1994)

§ Mr. Heseltine

The Government recognise the crucial role played by small firms in the United Kingdom economy. Government help small firms by keeping inflation and interest rates low and by reducing legislation and adminstrative burdens. They also provide direct assistance where appropriate and are currently establishing a network of business links to provide high-quality, business support across the country. The Department regularly reviews and monitors its policies in relation to small firms. Ministers and officials are in constant contact with small firms' representative organisations, professional bodies and other Government Departments, to ensure that policies reflect the need of the small business sector.

The report "Small Firms in Britain 1994" was published by this Department on 7 July. This report surveys developments in the sector, including key statistical indicators and sets out details of Government policy in relation to small firms. Although aimed at all sectors, the measures announced in the recently published White Paper on competitiveness have clear implications for small firms. The initiatives announced will encourage the growth of the small firms sector through well targeted tax relief, further deregulation, help with finance, help with 520W information and advice, help with consultancy and management best practice, and help with business and skills training.

Specific measures operated by my Department to assist small businesses include: Business Link. The development of a network of Business Link outlets is a key element in the strategy to assist small firms. Each Business Link will provide advice, counselling, diagnostic work and information through Personal Business Advisers. They will provide a single point of access to a wide range of high quality business services. There are 34 Business Link outlets open and a total of 110 Business Link proposals have been approved through the quarterly Assessment Panel. By the end of 1994, there will be at least 50 Business Links operating. By the end of 1995 it is envisaged that every company within England will have access to a Business Link outlet. Local Business Support Services. DTI funds Training and Enterprise Councils (TECs) to encourage the growth and competitiveness of local businesses through high quality, accessible and coherent services. TECs contracts with local partners, especially Chambers of Commerce, Local Enterprise Agencies and Local Authorities, to meet local needs by delivering information and advice services; business counselling for new and existing businesses, business diagnostic services and business skills training—including skills seminars, masterclass, action learning groups and open learning programmes, particularly for managers and owner managers of small firms. Late Payment. The Consultation Paper, "Late Payment of Commercial Debt", was issued on 1 November 1993 to seek the views of the business community on possible options to address late payment. The outcome of the consultation was announced in the White Paper on Competitiveness. A range of practical measures is to be introduced to improve court procedures, ensure government departments and their agencies pay promptly, improve the visibility of the payment policies of public companies, improve credit management and debt collection skills and develop proposals for a British Standard for prompt payment. There are continuing indications that payment times in the United Kingdom are reducing and are below the European average. The new measures will build upon this improvement. Loan Guarantee Scheme. The Loan Guarantee Scheme facilitates access to finance for small firms. The enhancements announced in the Chancellor of the Exchequer's Spring Budget Statement were implemented on 1 July 1993. These changes have led to a sharp increase in Scheme usage and the highest levels of lending since 1984. In the 12 months to June 1993, 4,752 loans were guaranteed to a value of £200.613 million. We are introducing a pilot scheme in September to offer support and counselling to small firms using the Loan Guarantee Scheme. This will help small firms identify their strengths and weaknesses, and offer advice. The service will be delivered through Training and Enterprise Councils, Business Links and Enterprise Agencies and will cover approximately 10–5 per cent. of Scheme applications. The pilot will run for three years. Innovation. This Department continues to be active in assisting small firms to improve their access to technology and to exploit new ideas. Initiatives include: Small Firms Merit Award for Research and Technology (SMART). Last year 180 new projects were supported with grants and I expect the same number to be successful in this year's competition. Support for Products Under Research (SPUR). In the 12 months to March 1994 grants totalling almost £12 million were awarded to 139 projects. There will be a similar level of support this year. EUREKA. Last year the United Kingdom participated in 49 announced EUREKA projects, involving 76 organisations, including 28 small to medium sized enterprises. This year the United Kingdom participated in 36 announced projects, involving 62 organisations, 23 of which were smaller companies. Teaching Company Scheme (TCS). This facilitates techno-logy transfer and provides industry-based training for high quality graduates through partnerships between academia and business. A target of TCS programmes supported by DTI is that 80 per cent. should involve small and medium-sized enterprises. 521W Senior Academics in Industry Scheme (SAIS) enables senior and experienced academic staff to work in companies for up to six months on strategic transfer projects. Preference is given to smaller firms and costs are shared by the companies and DTI. Shell Technology Enterprise Programme (STEP). This is a national placement scheme for undergraduates. STEP aims to encourage small and medium-sized enterprises to consider employing graduates and to provide undergraduates with experience in industry. DTI support of STEP since 1992 has enabled expansion of the scheme so that there is now a target of 1,000 placements in the summer of 1994. Export Promotion. This Department together with the Foreign and Commonwealth Office provide, through the Overseas Trade Services, advice, information, and financial support to help UK exporters win overseas business. This work is particularly aimed at smaller and less experienced exporters. 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 their take up are set out in the "British Overseas Trade Board's Annual Report 1993–4 and Forward Plan", as are details of the Overseas Trade Services priorities and main activities for the year to come. A copy is in the Library of the House. Enterprise Initiative Consultancy Scheme. In the year ending March 1994, 17,995 applications for the Scheme were received and 10,423 were completed. This brought the total number of applications to 135,700 with 65,300 completions. The Consultancy Scheme did not end as scheduled in March 1994; the President of the Board of Trade announced on 9 December 1993 that the scheme will stay open until a further 10,000 applications have been received. Beyond that, a new package of support will be introduced, including a Diagnostic and Consultancy Service which will be available exclusively through Business Links from the summer; a new Consultancy Brokerage Service which is currently undergoing trials with Business Links and TECs will be launched nationally by the end of the year, and technology-related advice in a number of forms, including innovation and technology counsellors who are being funded on a pilot basis in the first Business Links. Deregulation. Under the Deregulation Initiative over 870 regulations have now been identified for repeal or amendment. Many of these reforms will be of particular benefit to small firms. Following the recommendation of the original business task forces that, when formulating new regulations the interests of small firms should be the first consideration, a small firms litmus test was introduced on 19 January 1994, as part of the compliance cost assessment for the new regulatory proposals. The new Deregulation Task force, chaired by Francis Maude, which was announced on 6 July will be looking particularly at the burden of regulation on small firms.