Small Businesses

– in the House of Lords at 4:32 pm on 22nd October 2008.

Alert me about debates like this

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform 4:32 pm, 22nd October 2008

My Lords, with your Lordships' permission, I should like to make the following Statement.

This Government understand the real difficulties of many small firms as a result of the credit crunch and world-wide economic slowdown. These companies are critical to our long-term economic success. Over 99 per cent of UK businesses are small or medium-sized enterprises. They contribute as much as large businesses to UK output and nearly 60 per cent of private sector jobs. We have always made getting the business environment right for SMEs a priority, and since 1997 1 million more small businesses have been created. UK SMEs employ 1.5 million more people; they are more productive, more innovative and survive longer.

Most recently, our enterprise strategy set out our renewed vision to make the UK the world's most enterprising economy and the best place to grow and start a business. We increased the Small Firms Loan Guarantee lending allocations by 20 per cent for 2008, boosted enterprise programmes and committed to a new approach that avoids placing unnecessary regulatory burdens on small firms. These tough times have only made us more determined to help SMEs.

We need to be practical, we need to be innovative, and above all we need to ensure that what we do makes a real difference. We are meeting with business organisations and businesses across the country to discuss the problems they are facing such as cash flow, access to finance, higher bank charges and costs, and to ensure that their views are reflected in government action.

Our first priority has been restoring financial stability. Without a strong financial system, small businesses cannot access the credit they need, homeowners struggle with their mortgages, and trade in the high street slows down. But as the impact of the global financial squeeze hits small businesses further, the Government believe that it is not enough for us to focus only on financial stability. So, building on the measures we have already brought forward, yesterday the Government announced further action to help SMEs through these tougher times, with immediate effect.

For SMEs, cash dominates: cash in—that is, prompt payment—and cash out, to their workforce, payment for inputs and to the Revenue. Over the last year, the time organisations take to pay their bills to suppliers has increased, intensifying the cash flow pressures of many businesses. The Government are determined to do everything they can to help. Central government will aim to pay its suppliers as soon as possible, and within 10 days at the latest. This will bring forward billions of pounds worth of payments, on top of the majority of payments already made within 10 days. The regional development agencies, which spend around £750 million annually with suppliers, have also committed to this timetable. And yesterday, my right honourable friend the Secretary of State for Communities and Local Government wrote to the Local Government Association, and the chief executive of the NHS wrote to NHS Trusts, asking these public bodies to review their payment performance and follow central government's lead.

I recognise the essential role that Her Majesty's Revenue and Customs' approach to business tax compliance can play in managing an economic downturn. HMRC already has a policy of flexibility in dealing with struggling businesses, and I know the Treasury will continue to impress upon it the importance of implementing and publicising this policy in the current climate. We are also working with the Institute of Credit Management and all leading finance and business organisations to promote prompt payment and to ensure that businesses have the best advice and guidance on managing cash flow.

The Government's measures of financial support to the banking industry are designed to stabilise UK banks and support the long-term strength of the economy, which helps small businesses. As part of the recapitalisation package, RBS, HBOS and Lloyds-TSB committed to,

"maintain the availability and active marketing of competitively priced lending to SMEs at a level at least equivalent to that of 2007".

Small businesses must know that the banks are open for business. RBS, HBOS and Lloyds-TSB make up 50 per cent of small business lending; but given that they operate in a competitive environment, we can expect other banks to follow suit.

The Government will monitor how recapitalised banks are delivering their commitment on SME lending. We will ask the banks how they will achieve this, including the availability of capital and liquidity allocated for small businesses, their marketing plans, and their principles for SME lending, from head office to the branch level. We want to see banks taking appropriate risk assessments on SME lending, being responsible but not being unduly risk averse, and not passing on unreasonable costs. The Chancellor and I will be meeting all the banks and building societies tomorrow to discuss these issues and what small businesses can expect from them.

The Government have also been brokering contact between UK banks and the European Investment Bank. The four largest UK banks have now signalled their initial interest in negotiating loans totalling about £1 billion from the EIB to lend to UK SMEs. I hope we will be able to make rapid progress on this for small businesses.

It is critical at this difficult time that businesses have access to support and advice that help them survive now and succeed in the future. Business Link advisers will provide a free health check for every small business, whatever its size, sector or location, and other advice on how to adapt to changing economic conditions and to be ready for the economic upturn.

My right honourable friend the Secretary of State for Innovation, Universities and Skills yesterday announced that small businesses are the focus of £350 million of government funds to help them get through the tougher economic climate by building the skills and enterprise of their workers. The Government are making improvements to Train to Gain that will deliver advice and funding for training, with the minimum of bureaucracy or delay.

For the first time, training at Level 2 will be free for all SME employees, regardless of whether they already have qualifications at that level, and there will be free bite-size courses in business-critical areas, including business improvement techniques and customer service, in order to raise productivity. Management and leadership training will also be opened up to the smallest employers so that it is now available to employers with between five and 250 employees.

Small businesses drive our economy forward. During this global economic downturn, the Government are determined to give the millions of people who run and work for SMEs the chance to maintain their livelihood and prepare for better times in the future. That is why we have brought forward these measures. We will continue to do all we can, through the National Economic Council, to look for and implement solutions that help SMEs.

My Lords, that concludes the Statement.

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Shadow Minister (Business, Innovation and Skills) 4:41 pm, 22nd October 2008

My Lords, first I declare the interests that are shown against my name in the register. I welcome the Minister to his first Statement. I shall go no further than that: apparently my previous remarks in welcoming him caused three well known journalists to be sick because I went a little too far. But I do welcome him, and thank him for the advance sight of his Statement. Perhaps such thanks are unnecessary in this respect, for I heard the Statement being made in another place by his junior Minister, Mr Ian Pearson, several hours ago. The Chief Whip kindly acknowledged this earlier, but we must find a better way to organise these things in this place. I am well aware that we have different sitting hours, but there must be a way through.

My main question is why this Statement was made today and not yesterday. The current edition of the ministerial code states clearly:

"When Parliament is in session ... the most important announcements of Government policy should be made, in the first instance, in Parliament".

This announcement saw the light of day first when I heard it on the "Today" programme early yesterday. It was then the subject of one of the Minister's departmental press releases. It then provided, I understand, the principal theme of a public appearance by the Minister, together with his new best friend the Prime Minister, recorded as it is on the No. 10 website. He also managed to ventilate these announcements before the Select Committee in another place. The willingness of the Prime Minister to find a slot in his diary, given his busy schedule, might be taken to indicate that this announcement was considered important. That being the case, why was the announcement not made in this House yesterday? If measures to help ensure the survival of small and medium-sized enterprises are not important, then what on earth is?

The Minister said in this House:

"I am very well aware that I am here to toil, not to spin ... I will take very seriously the accountability that I have to Parliament through this House ... At this Dispatch Box, I know where my duty lies".—[Hansard, 16 October 2008; col. 861.]

Does he remember saying that? This House is not a convenient place into which prospective Ministers can be parachuted, to give them a parliamentary platform that they can use when they deem it convenient. It is part of a bicameral system, and the rules are clear that a Statement by the responsible Minister must be made here.

I draw your Lordships' attention to paragraphs 5.04 and 5.31 of the Companion, designed to protect this House against the Executive. All I ask is that the Minister will now give the firmest possible undertaking that this apparent relegation of your Lordships' House to second-class status will not arise again on his watch.

Anyway, we are where we are: we are in some sort of time loop because many of the issues we are going to debate have already been debated in the other place. Fortunately, the internet has provided me with some much needed help and support. I am indebted to the whoniverse.org website for invaluable guidance. Apparently,

"a Time Loop is a distortion in the Fourth Dimension where time folds back on itself".

That sounds familiar.

Let us go through the measures already announced. There appears to be some confusion on a number of the points. We have heard of about £350 million for training. Will the Minister confirm that this is entirely new money? I am also interested in the commitment for the public sector to pay firms within 10 days. Is that an aspirational and notional target, or will it be enforceable? If so, by whom, and in what way?

I was also intrigued by what the Minister said about the banks. I hope that he will recognise that it sounded somewhat complacent, because Her Majesty's Government are now a major stakeholder in the banking sector—in effect, its owner of last resort. Does he agree that, on the basis of the recapitalisation agreement to which he referred, we should expect to see some of the larger institutions making greater efforts to ensure that an affordable supply of funds is available for the small and medium-sized enterprise sector? By the way, how anyone can judge whether they are genuinely seeking to do so at 2007 levels is beyond me, so perhaps the Minister could explain.

Furthermore, much of the concern about banking practices—so superbly exposed by my parliamentary colleagues, led by Alan Duncan in the other place; by the Daily Mail in its small business charter campaign; by the Daily Mirror, and by a number of other leading newspapers—is not about the availability of new funds but about the behaviour of banks towards smaller customers with regard to existing loans. In particular, what are the Government going to do, not about the Bank of England base rate, but about real-life borrowing costs to which the base rate appears to bear no relation whatever? Those real-life borrowing costs are now approaching something close to penal rates, so something has to be done.

The Government's assertion that they will do everything they can to help would be risible if the matter were not so serious. An economic typhoon is coming. To all but Ministers, our paltry defences appear inadequate. So say many outside observers, led by the Governor of the Bank of England. Like the Minister, I believe that our job is to maintain confidence at this critical time, but the current situation demands action, not spin. I list, for example, the prompt payment from central and local government; the deferral of VAT; a cut to national insurance; a reduction in corporation tax for small businesses; and a concerted promotion of the small business rate relief to which many are entitled but for which not all apply.

What about the £1 billion that the European Investment Bank is discussing with larger banks, which Mr Pearson said is not yet sorted out? When will it be sorted out? I believe that the Minister has just attended a meeting of the National Economic Council, where other solutions will have been considered. Will he share those solutions with the House?

This belated Statement serves to reassure no one, exposing the hollow pretensions of an Administration who increasingly appear bankrupt, intellectually as well as fiscally.

Noble Lords:

Oh!

Photo of Lord Hunt of Wirral Lord Hunt of Wirral Shadow Minister (Business, Innovation and Skills)

My Lords, of course I welcome any Statement that offers hope to the hard-pressed business community in the UK; but what we have heard today is too little and too late. In parliamentary terms, this Statement came a day later than it should, but, for our economy, it has come a decade too late.

Photo of Lord Cotter Lord Cotter Spokesperson in the Lords (Small Businesses), Department for Business, Enterprise and Regulatory Reform, Spokesperson in the Lords (Skills), Innovation, Universities and Skills, Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson 4:51 pm, 22nd October 2008

My Lords, I thank the Minister for his welcome Statement—although I agree that it would have been better if it had been presented yesterday—and I welcome him to his new role. We look forward with great expectation and anticipation to the Government's actions. We have had Statements on the financial crisis but it is important to have this Statement focusing on SMEs. I am not sure that I can claim any responsibility for the Government's springing to action, but I sent a letter to the Minister's department just last week in which I raised a number of the points alluded to today. However, I still ask for some clarification.

It is good that the Government have made this commitment on payment within 10 days. However, that still needs to be monitored. Will we receive a report, and receive it soon, on how this is being achieved in practice and whether all departments are taking part rather than just some? Does the commitment definitely extend to all government agencies and not only to the government departments themselves? Will it extend to local authorities? I appreciate that that is a little more difficult because local authorities have their own problems, some of which might be considered self-initiated. However, many small businesses do work for local authorities and the authorities' record on payment is variable.

Reference was made to health checks through the Business Link service. Surveys have shown that many SMEs—very often those which need assistance—do not even know about the Business Link service. There are also concerns about the Business Link service itself. It is very variable throughout the country: in some parts, it operates quite well; in others, not so well. Will extra money and resources be provided to the Business Link service to enable it to carry out the new work that it is expected to do?

Skills and training are most important. It is therefore welcome that the Government are putting emphasis on apprenticeships. But even before this crisis small firms were going to find it extremely difficult to provide apprenticeship places; now they will find it more difficult than ever. Will the Minister consider what can be done to help the small business sector, which is so important to apprenticeships and skills, to be able financially to take on those who need skills and whom we need to be skilled?

I understand that Ministers will meet the banks tomorrow. Will they agree a memorandum of understanding to ensure availability of finance, competitive interest rates and no increase in fees? I look forward to the Minister's response.

One of the many problems that all businesses have to deal with is bureaucracy and over-burdensome regulation. It is easy to make general statements about this sort of thing but I hope that the Government have it very much in mind. As I learnt in a seminar just last weekend, there is a curve showing that without some sort of regulation, there is chaos; with minor regulation, the chaos is reduced or disappears; but with excessive regulation, the chaos returns. Regulation is very important.

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform 4:55 pm, 22nd October 2008

My Lords, first I say to the noble Lord, Lord Hunt, that I would not have wanted to cause any offence to him or to this House by making the Statement when I have. As I have a particular interest in the survival of small and medium-sized Secretaries of State, I do not want to fall foul of your Lordships so early on in my career. I realise that the importance of the issue concerns the whole House and it is important that I should report personally to your Lordships. I am doing so as soon as the Business of the House allows. However, he was right to point out that it is not always easy to synchronise the timetables of business in this House and in the other House. He is right, too, in pointing out that yesterday was a day of government activity concerning small and medium-sized enterprises. I plead guilty to all the charges except the one regarding the "Today" programme. Out of respect to the Select Committee before which I was appearing I skipped that so that I could toil instead of spin.

On the noble Lord's individual questions, I think that the £350 million that we have announced for training indicates that SMEs have risen up the Government's priority list and agenda and of our training agencies. They are now the top priority. He asked specifically about the availability of lending to SMEs. We need to be clear: availability is not a requirement to lend at 2007 volume levels. We cannot and should not, first of all, pre-empt the banks' judgment. We cannot anticipate what demand there will be. All we are saying is that, as a condition for our stake in the recapitalisation, we are asking the banks to make available the resources at 2007 levels and to offer a wide range of products at competitive rates to be made available to the customers they judge to be creditworthy. We are not pre-empting or second-guessing the banks but asking them to maintain the availability of funds for lending to SMEs and to publicise this availability to SMEs.

I am grateful for what I think was the noble Lord's support for the Government's action on prompt payment. I refer to the remarks of the noble Lord, Lord Cotter, on this as well. We were very quick to give a lead. I hope that it is not only the rest of the public sector that follows the lead of central government departments in adopting a 10-day payment period. Obviously we have to be mindful of our responsibility to taxpayers—invoices have to be properly prepared; we are not skipping stages—but we think that it is very important that, as far as possible, this 10-day payment period is respected not only by central government departments but across the public sector. On the noble Lord's questions on tax changes, I think that any answer by me concerning VAT, national insurance or corporation tax would be a career-shortening move; so I shall leave any matters to do with taxation to my right honourable friend the Chancellor of the Exchequer.

In response to the noble Lord's question on the EIB, we have now received an indication that the EIB is prepared to commit to that additional funding. I look forward to further discussions taking place in the coming weeks so that that can be nailed down.

I have two last points to make, in response to the remarks of the noble Lord, Lord Cotter. Business Link, and the services that it provides, is very important. It is well resourced by central government—and I shall satisfy myself that it is receiving all the resources that it needs in the coming economic climate to discharge its functions.

On apprenticeships and skills, when I was on my away-day yesterday, in Sittingbourne in Kent, with the Prime Minister, I was very struck by the SME employers and managers who said that they wanted flexibility in training modules. They did not want the whole works; they wanted bite-sized chunks of training that relate specifically to their needs in the businesses in which they are active. Our job is to ensure that we have sufficient flexibility and responsiveness to make those bite-sized chunks available to those who want to take them up.

Photo of Lord Barnett Lord Barnett Labour

My Lords, I declare an interest, which is on the register, as an investor and a chairman of an SME AIM-listed company. My noble friend is absolutely right to talk about cash flow and payments by all kinds of people that are due to SMEs. He talked, too, of the flexibility that will be used by organisations such as HMRC, and I was very glad to hear it. Is he saying, for example, that on the large VAT payments that are frequently due by SMEs, HMRC would not be too offended if those payments were delayed somewhat?

My noble friend also spoke of the 10-day effective rule. I do not know how far that goes down the line, but can he confirm that it will go well down the line to other government-controlled organisations? Very often, I can tell him, it does not apply.

Can my noble friend give us some clarification on the banking situation in relation to loans in 2007, as it is still not totally clear? If the banks are to be as commercial as the Chancellor has suggested, whether part-owned by the public or not, and if banks are to continue with their normal method of business—although I am bound to say that they are not always marvellous at that—I take it that we are not asking banks to continue lending at 2007 levels to SMEs that clearly should not be lent any more money, even though it might mean them going into administration. That is right—and they should.

May I also ask the Minister

Noble Lords:

Two minutes!

Photo of Lord Barnett Lord Barnett Labour

My Lords, on one small matter, most SMEs are concerned about having to find replacement staff when senior key staff in a small organisation go on maternity or paternity leave. Have the Government considered what action they might take on that?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I cannot speak on behalf of HMRC in indicating that large back payments could be delayed, let alone waived. However, I made the statement that I did about the sensitivity that the Revenue is displaying towards businesses. Obviously, there will be all the greater need for that sensitivity in the economic climate that we are moving into.

On the noble Lord's second question—if I may, I shall come back to him subsequently on his last question concerning replacement staff, because I do not have the information—as part of the recapitalisation, RBS, HBOS and Lloyds TSB committed to,

"maintain the availability and active marketing of competitively priced lending to SMEs at a level at least equivalent to that of 2007".

That is not to say that the volume of lending will be the same because, as I said, that depends as much on the quality and quantity of demand as it does on the supply of lending. We expect that banks accessing the scheme will need to review their business strategies in order to take account of the recapitalisations and the commitments that they have made. We look forward to the outcomes of this work.

Photo of Lord Bilimoria Lord Bilimoria Crossbench

My Lords, I welcome the Minister's Statement, in that the Government are seen to be trying to do something to help small business, but I do not accept his statement that taxation is the Chancellor's responsibility—because I think that he can speak up for small business. How can small businesses accept that corporation tax for large companies has been reduced while it has been increased for them? It just does not sound fair.

I started a business from scratch at the beginning of the last recession and, having been both a small business and a medium business, I know that the most important thing for small business is the ability to raise finance. What extension to the Small Firms Loan Guarantee scheme is being given? How much do the Government lend under the scheme? Let us put that into the context of the United States Government's Small Business Administration, which has lent more than $50 billion supporting millions of American businesses. Why do we not learn from them and really support our small businesses? The Government have been bold in supporting banks, to the tune of £500 billion. If they put even £50 billion into supporting SMEs, they would get real results. The Prime Minister said that we are better when we are bold. May I request that the Government be bold in relation to small businesses?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I think that the Prime Minister is being bold. He is certainly quick off the mark in making help to SMEs, as well as to home owners, a major priority for the Government. I do not think that he has been backward in coming forward.

On the noble Lord's specific question on the Small Firms Loan Guarantee, earlier this year the Government strengthened the scheme by increasing the amount of lending available by 20 per cent, up to £60 million. That means that a £360 million pot is available for small firms to access. We have also extended the scheme so that businesses that are more than five years old can apply for funding. I believe that that reform is very welcome among small businesses. We have signed a joint statement with six major banks committing them to promote the Small Firms Loan Guarantee to their customers. My department will be looking closely at the use of the scheme. It has met with all six lenders to review how the scheme is working. I have heard that there is some criticism among some about the administration of the Small Firms Loan Guarantee; I heard that only yesterday from small firm representatives and I intend to look into it. However, I can confirm that up to £800 million is currently out on loan to small and medium-sized businesses under this scheme. We have guaranteed more than 100,000 loans valued at £5 billion since its inception in 1981. I think that that is a very good record.

The noble Lord's second question was on corporation tax and the small company rate. I must insist that this is a matter for the Treasury and my right honourable friend the Chancellor. However, I would say that we see a number of potential issues—not least the unintended consequence of businesses incorporating solely for tax reasons—were we to reduce further the small companies rate. That would make the tax system unfair for those not incorporating for tax reasons. One always has to look round the corner when making these changes to see whether there are unintended consequences which it would be better to avoid. However, I am not about to anticipate the conclusions reached by my right honourable friend the Chancellor.

Photo of Lord Cope of Berkeley Lord Cope of Berkeley Conservative

My Lords, will Her Majesty's Government support at ECOFIN in a few days' time the proposal of the European Commission—which, for all I know, the Minister may have initiated in his previous existence—to reduce VAT on repairs to buildings, particularly homes and listed properties? That would be an immense advantage to small businesses. If it is duly passed at ECOFIN, will the Minister encourage his right honourable friend the Chancellor of the Exchequer to implement it?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I shall ensure that the noble Lord's views and sentiments are communicated to the Chancellor, for him to take them into account when he forms a judgment about the matter.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

My Lords, I take my noble friend back to the intervention of the noble Lord, Lord Hunt, who referred to "real-life costs of credit", which is an extremely important issue. My noble friend referred to "competitively priced" credit as part of this agreement. What happens if the banks simply do not deliver? Do we have some influence over what will happen in this area, given that it is so important to small businesses?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, this issue is not simply the availability but the pricing of the lending available, as well as the additional costs that banks introduce to the lending facility and any rearrangement of a previous lending facility. I met 25 or 30 SME organisation representatives last Thursday. The point they made to me again and again was that banks are calling in loans, reorganising and rearranging lending facilities, imposing outcomes which are more expensive, and then adding administrative charges into the bargain for the privilege of having your lending facility reorganised on your behalf.

I shall raise this issue with my right honourable friend the Chancellor when we meet the banks' chief executives tomorrow. They must understand that while we welcome the sensitive and generous statements that are made oftentimes at board level, or from CEOs, when you get down to branch level there is rather a different pattern of behaviour emerging on SMEs. We want to capture the behaviour at branch level and put it more in line with the sentiments expressed at board level.

Photo of Baroness Miller of Hendon Baroness Miller of Hendon Conservative

My Lords, I remind the Minister of the first question that my noble friend asked him. It has obviously slipped his mind, so I know that he will be pleased for me to do so. Is the £350 million he was talking about for training new money? Where is it coming from? What is the position? I am sorry to have to press him, but he did forget to answer.

Noble Lords:

Oh!

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

Well, a reasonable but disappointing answer, my Lords. The Government's commitment demonstrates that SMEs are rising up the priorities. Train to Gain, as noble Lords will know, is a service for employers, giving them better access to a wider range of opportunities for improving the skills of their employees. Noble Lords will therefore be interested to know that funding for Train to Gain will rise to over £1 billion by 2010-11 which, by any measure, is new money.

Photo of Lord Borrie Lord Borrie Labour

My Lords, I hope that I may come back to prompt payment. We have heard warm words. I have no doubt that the Government, and those public bodies which can most easily be influenced by the Government, will do as suggested and pay up by 10 days at the latest. But what about all the other organisations? Some private organisations pride themselves on the dilatoriness with which they pay their debts to suppliers. My noble friend may well recall, as I do, that in 1997-98, right at the beginning of the Labour Government's term, legislation was introduced into this House to impose statutory interest on late payments. That went through this House but got caught up in some difficulties that I do not fully remember in the other place. I wonder whether that sort of thing, although not necessarily the same type of legislation, might have some useful legs in ensuring prompt payment, which is a matter of such concern to small businesses.

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, my noble friend has put forward an interesting idea, which it would be appropriate for us to examine further. However, we should recognise that the Government are not underperforming in this area, even though they and the public sector as a whole could perform better and deliver more. Of the 10 government departments we investigated, 88 per cent of payments, totalling £58 billion, are now made within 10 days. I think that is a good record and a good performance. However, we want to do better because we recognise how important cash flow is to business survival. We want this performance to be reflected not only right across the public sector but among large firms as well, many of which have supply chains consisting of thousands of small firms, all of whose payments are dependent on the hub, the main company at the lead of that supply chain.

Photo of Lord Wade of Chorlton Lord Wade of Chorlton Conservative

My Lords, I declare an interest as chairman of a venture capital fund, Rising Stars Growth Fund Ltd, which was started specifically for early-stage technology companies. Does the noble Lord agree with me that venture capital fund companies generally throughout the country are a very good source for getting money into companies, particularly early stage and follow-on funding? I was surprised that the Statement did not include any reference to the role of venture capital companies. Will the noble Lord look into how more use might be made of venture capital companies throughout the country to get money into the right companies at the right stage?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I accept that suggestion; it is a good idea. Indeed, one aspect of access to EIB funding was whether the EIB would be able to extend funding not just to the main lenders, the main banks, but to smaller financial institutions, in which I include venture capital companies. Obviously, I cannot commit them; it is not my job to do that, but I think we can have a discussion with them because I am aware from time back of the important role of venture capital companies. If they can be used as vehicles for lending more extensively to SMEs, we should certainly look at that.

Photo of Lord O'Neill of Clackmannan Lord O'Neill of Clackmannan Labour

My Lords, I congratulate my noble friend on the Statement. I declare an interest as president of the Specialist Engineering Contractors Group, which represents the high-tech, high-quality end of the construction industry. We welcome what has been said about prompt payment, but I think there is another aspect of it which the Government should look at, and that is the policy of retentions whereby major contractors hold on to a proportion of the funds until the whole of a job is completed, regardless of the relevance of a sub-contractor's role. As a major customer of the construction industry, the Government could do a lot to help that industry if they ended the policy of retentions, certainly for public sector contracts, and put it on the same footing as the prompt-payment promise of 10 days. That would facilitate the construction industry's supply-chain cash flow in a way that few other things could at this time.

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, my noble friend has made a very important point, which I will seek to amplify at every opportunity.

Photo of Lord Elton Lord Elton Conservative

My Lords, I declare an interest as a Deputy Speaker. Does the noble Lord accept that the sensitivity of this House about the timing of Statements relates not to the dignity of this House but to the role of Parliament? As long as statements of government policy are made for the first time outside Parliament, that is where the reporters will be and that is where the news will come from, and the public will know nothing about what is going on in Parliament. If a Government were always to make their Statements in Parliament, the country would very soon become aware of what Parliament was about and what its views were, which would be very welcome indeed.

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I appreciate the sentiment expressed by the noble Lord, but in this case no statement was made outside Parliament. By my choice, the Statement was not made on the "Today" programme, as some others have been. It was made in the other House, not outside Parliament, and that is the point that I was making.

Photo of Lord Foulkes of Cumnock Lord Foulkes of Cumnock Labour

My Lords, I reassure my noble friend that many on this side warmly welcome the Statement and all the measures in it and the prompt action by the Government to help small and medium-sized enterprises. I ask him to ignore the churlishness from Members opposite. In relation to prompt payment, will my noble friend ensure that the devolved Executives in Scotland, Wales and Northern Ireland follow suit? What action will he take to make sure that they, particularly the First Minister of Scotland, who is pretty long on rhetoric and short on action, take action in the way that the UK Government are doing?

Photo of Lord Mandelson Lord Mandelson Secretary of State, Department for Business, Enterprise & Regulatory Reform, Secretary of State for Business, Enterprise and Regulatory Reform

My Lords, I can only join my noble friend in hoping that the lead that we have given down here is followed up there, and I will be communicating that.

It is not a question of ignoring anyone's churlishness. If I went through my political life ignoring people's churlishness, I would be left with very little to say. I shall end on a constructive and friendly note. I say to the House, the noble Lord, Lord Hunt, and the noble Baroness that they will be pleased to learn that the £350 million for training is additional training money for small businesses. It is existing money, but it was not previously available to small companies. In that spirit, I acknowledge that we were both right.