Small Businesses

Oral Answers to Questions — Oral Answers to Questions – in the House of Commons at 12:00 am on 12th November 1979.

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Photo of Mr Graham Bright Mr Graham Bright , Luton East 12:00 am, 12th November 1979

asked the Secretary of State for Industry whether he is considering a loan guarantee system, involving the support of the clearing banks, to encourage and aid the creation and expansion of small businesses.

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

The Government are studying possibilities.

Photo of Mr Graham Bright Mr Graham Bright , Luton East

Does my right hon. Friend agree that small businesses have a vital role to play in our economic recovery, and that the successful loan guarantee scheme which is operated by both the Government and clearing banks in the United States shows how this can be achieved?

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

An unsubsidised loan guarantee scheme would be for the banks themselves to organise.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

Does the Secretary of State accept that one of the key ways in which to assist small businesses would be to lower interest rates and restore public expenditure cuts, including those in manufacturing industry? Does he not accept that when the Government cut back on expenditure to organisations such as British Leyland that affects thousands of small firms, which then face bankruptcy?

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

Of course it would be desirable, for all sorts of reasons, to have lower interest rates and a more flourishing manufacturing sector. However, we cannot achieve that quickly in the light of the momentum towards excess spending left by the previous Government.

Photo of Mr William Clark Mr William Clark , Croydon South

Does my right hon. Friend agree that if public expenditure increases the public sector borrowing requirement automatically increases, with the result that interest rates must rise?

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

That may be entirely so, but the hon. Member for Keighley (Mr. Cryer) does not seem to understand that these matters are interrelated. Public spending, if it gets excessive, as it did under the previous Government, has desperate consequences and destroys as many jobs as it seeks to create.

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

Will the Secretary of State say how he expects the widespread forecast of an increase in MLR to assist small businesses?

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

What matters is that the Government should succeed in abating the level of inflation, and that matters more for small businesses than the temporary level of interest rate, even at its present level.