Small Businesses (Banking Services)

Oral Answers to Questions — Trade and Industry – in the House of Commons at 11:30 am on 11th December 2003.

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Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

The Government have accepted in full the findings and recommendations of the Competition Commission, following its investigation into the supply of banking services to small and medium-sized enterprises.

Photo of Mr David Chidgey Mr David Chidgey Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Foreign and Commonwealth Affairs)

Have not the Government abandoned their promise to establish an independent payments regulator in the banking industry? It is now more than three years since the Cruickshank report revealed that the banks were making excessive profits out of small business. When will the Government keep their word and crack down on the length of time that it takes banks to clear cheques and electronic payments while they line their pockets at the expense of our small businesses?

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

That is a serious matter and the Government have indeed cracked down following the identification of 10 practices that were restrictive or against proper competition. We have ensured that SMEs are entitled to interest on their current accounts or free money transfers, and that money transfers are made more speedily. We now ensure that SMEs have clear advance information on all possible charges, and from 31 December we will make it much easier for SMEs to switch between banks.

Photo of Mr George Stevenson Mr George Stevenson Labour, Stoke-on-Trent South

My hon. Friend will no doubt accept that banking facilities for small and medium-sized enterprises are important, but are one element of the wider package of support that we give small businesses. Is he satisfied with the package of support that the Department is giving to small businesses, particularly such projects as the Mustard programme in areas like north Staffordshire, where the start-up of small businesses is way below the national average? Will my hon. Friend look into the situation to see what improvements can be made?

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

As my hon. Friend knows, I have personally examined and investigated with my officials the provision of support for small businesses in his area, and I found that that contract was awarded quite legitimately. On the lack of start-ups in any part of the country, including his constituency, by comparison with the national average, the Small Business Service is determined to ensure that more people do start businesses. Yes, I am satisfied that steps have been taken by the Small Business Service and others—the regional development agencies—to ensure that we have an enterprise culture where people are able to start and grow their businesses, and where there are more businesses growing for the prosperity of communities in every part of the country.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Does the Minister accept that more and more smaller businesses are being forced to look to banks and other professional bodies for support in dealing with the routine management of their payroll, entirely as a result of the Government's ill-judged imposition of regulation and changes to the tax credit system that make it impossible for a small business man or woman to manage the payroll themselves? Is that not madness, and does it not impose unwanted and unnecessary extra cost upon them?

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

If the banks are cheating small businesses, as suggested by that Liberal, Mr. Chidgey, and others, is there not an easier way of putting a stop to that in a decent world—that is, to call upon all Members of Parliament on the Tory Benches who are directors of banks and other companies to stop the cheating?

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

My hon. Friend has mellowed in his time in the House. I was anticipating another more drastic remedy, which I did not think the banks would approve of, but as he did not mention public ownership, I warmly endorse his comments. I know that all Members, on behalf of their constituents, will raise with the heads of the banks any grievance they have about the treatment of small business or constituents, and I am sure those matters will be attended to.