Small Businesses

Oral Answers to Questions — Industry – in the House of Commons at 12:00 am on 23 July 1979.

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Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex 12:00, 23 July 1979

asked the Secretary of State for Industry what action he proposes to take with regard to the various recommendations to assist small businesses made in the interim report of the Wilson committee.

Photo of Mr Graham Bright Mr Graham Bright , Luton East

asked the Secretary of State for Industry what plans he has to encourage start-ups of small businesses.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We are consulting about the interim report of the Wilson committee, and meanwhile have begun to make risk-taking more worthwhile and to remove obstacles to growth.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex

Does not my right hon. Friend agree that, in order to encourage small businesses, it is really unnecessary to create any more new institutions for the purpose, but that it is necessary to encourage private investors—managers, employees, partners, members of the family—to provide risk capital for small new businesses? If my right hon. Friend agrees, how does he propose to cause this to happen?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The answer is "Yes" to both parts of my hon. Friend's supplementary question. The Budget was the first step towards achievement of that objective.

Photo of Mr Graham Bright Mr Graham Bright , Luton East

Is my right hon. Friend aware that very successful loan guarantee schemes are operated in the United States and Canada? Will the Department study them with a view perhaps to introducing a similar scheme in this country?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

My Department keeps in touch with processes and activities such as those mentioned by my hon. Friend and we can consider any one of them that seems suitable.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

Is not the increase in the minimum lending rate and the high interest rates most damaging to small businesses? Does the right hon. Gentleman accept that the sudden and dramatic ending of the small firms employment subsidy has also caused cash flow problems for many small firms? Does he not also agree that, if he is considering a small firms loan guarantee system, he should perhaps intervene in the market?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I said that we could consider any method that we discovered abroad. I did not say that the Government had decided to initiate any such process. The rise in the MLR is damaging to all businesses, but it is one of the results of the inheritance we received from the Labour Government.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Industry)

Does not the Secretary of State recognise that increasing the burden of value added tax, increasing the limits on borrowing and reducing the assistance to small firms under his regional assistance statement last week will all make it more and not less difficult for small firms to develop and prosper? How does that situation square with the much-vaunted commitment in the Tory manifesto actively to improve conditions for small businesses? The Wilson committee made some recommendations which were widely welcomed in the City. Are they not worthy of greater consideration than the right hon. Gentleman has apparently given them?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The Labour Government left excessive public spending, excessive borrowing and excessive direct taxation. The cure of all three problems is essential to the vitality of the economy.