Small Businesses

Oral Answers to Questions — Trade and Industry – in the House of Commons at 2:22 pm on 12th July 1995.

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Photo of Charles Hendry Charles Hendry Vice-Chair, Conservative Party 2:22 pm, 12th July 1995

To ask the President of the Board of Trade what support is given by the Department to encourage small businesses; and if he will make a statement. [32118]

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

The Government recognise the crucial role played by small firms by keeping inflation and interest rates low and by reducing legislative, administration and taxation burdens. They also provide direct assistance where appropriate. This includes finance, specialist advice and support in a variety of areas including innovation and technology, exporting and design.

The new business link network is revolutionising the delivery of business support services. From April 1996 it will be the normal delivery route for all DTI services.

Photo of Charles Hendry Charles Hendry Vice-Chair, Conservative Party

Does my hon. Friend agree that one of the most important ways in which the Department can help small firms is by helping them to finance their growth and development? Does he further agree that the loan guarantee scheme has played an important part in that process? As a number of firms cannot take advantage of the scheme, will my hon. Friend undertake to keep it under review, so that it may benefit as many firms as possible?

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

I am grateful to my hon. Friend for his kind words about the loan guarantee scheme. As he has been so generous, I shall reveal that, along with my hon. Friends the Members for Surrey, North-West (Sir M. Grylls), for Hampshire, North-West (Sir D. Mitchell) and for Mid-Kent (Mr. Rowe), I was responsible for pushing for the introduction of such a scheme at the beginning of the 1980s. Applications for the scheme are at a record level, which is indicative of the confidence that is building throughout the UK economy. A review of the scheme is taking place so that we can focus our efforts to try to help British small businesses even more.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Trade and Industry)

The Minister will recall that, in the Budget two years ago, the Chancellor of the Exchequer announced that it was the Government's intention to bring forward measures to address the problem of the late payment of commercial debt. Given that the previous President of the Board of Trade—he has now gone to greater offices, both literally and metaphorically—always seemed to be implacably opposed to any such measures, can we anticipate that the Government will now bring forward measures to give effect to the promise made two years ago?

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

If statutory instruments were the magic bullet to solve the problem of late payment, I would sign up along with everyone else. I am afraid that life is more complex than that. Surveys have suggested that the majority of late payments are due to disputes about the terms of a contract and about whether goods have been supplied. Surveys by Grant Thornton have shown that payment periods in the United Kingdom are coming down, that we are improving against the rest of the European Union and that we are doing better than most countries which have a statutory right to late payment.

We are encouraging support for the Confederation of British Industry's code of conduct regarding practices of payment. As the Minister for Small Business—from, I believe, 11.30 this morning—I can say that the Department is working towards a British standard regarding prompt payment. I can also recommend the Department of Trade and Industry's free leaflet on making cash flow to help late payment.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

In his list of measures to encourage small business, my hon. Friend rightly included the reduction of taxation. Between now and the Budget, will his Department make representations to the Chancellor of the Exchequer suggesting that small incorporated companies be exempt from corporation tax below a certain threshold, just as individuals are below a certain threshold for income tax, as small businesses are usually under-capitalised and must expand on the basis of the profits that they can retain?

Photo of Mr Richard Page Mr Richard Page , South West Hertfordshire

I note what my hon. Friend says. He will understand if I do not give a direct answer, but I understand the reasoning behind his question. Since 1979, the Government have reduced corporation tax for smaller businesses from 42 per cent. to 25 per cent. in order to help small businesses.