Covid-19: Small Businesses - Question

– in the House of Lords at 12:19 pm on 29th October 2020.

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Photo of Lord Cotter Lord Cotter Liberal Democrat 12:19 pm, 29th October 2020

To ask Her Majesty’s Government what steps they are taking to support small businesses during the Covid-19 pandemic.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, the Government have introduced an unprecedented and comprehensive package of financial support, with a total fiscal response of close to £200 billion. The measures introduced, including government-backed loan guarantee schemes, grant funding and the Coronavirus Job Retention Scheme have been designed to be accessible to most businesses and sectors across the UK. We continue to keep this support under review, with further measures announced by the Chancellor that build on the significant support already available.

Photo of Lord Cotter Lord Cotter Liberal Democrat

Coming from a small business background as I do, I thank the Minister for the Answer. I shall quote my local paper’s warning from local stores:

“Use us or lose us”.

Business rates are a real burden these days, as before. May I urge the Minister to look at these issues with renewed emphasis?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I totally agree with the noble Lord’s sentiments. As he is probably aware, we have launched a fundamental review of business rates, which will build on the changes that we are making to the system, worth more than £23 billion to businesses over the next five years.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I welcome the job support schemes mentioned by the Minister but they are short-term solutions. They load many companies with debt, which limits their ability to invest in the skills, digitalisation, resilience and restructuring essential for our longer-term recovery. Will the Government set up a system that allows debt for equity, perhaps with progressive undertakings regarding corporate governance? Several schemes to do that have been put forward. Will the Government run with one?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord is right to say that these schemes are essentially short-term but we are doing an awful lot to kick-start the economy. The Prime Minister has referred to the need to build back better and we are investing substantial sums. However, we of course keep these matters under constant review.

Photo of Lord Flight Lord Flight Conservative

What support are the Government considering providing to businesses set to face lower demand during the winter because of Covid-19 restrictions?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Our winter economy plan builds on the significant support available, with the extension of the coronavirus loan guarantee scheme until 30 November, the introduction of the job support scheme from November and the extension of the self-employment income support scheme.

Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat

One-third of the self-employed, including sole directors of limited companies and the newly self-employed, are still completely excluded from the self-employed income support scheme. Why can the Government not devise help for them, especially the smallest, who are not in the tax-dodging territory of payment by dividends?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Baroness makes an important point, but we have paid out more than £11 billion to more than 900,000 small businesses, and some small businesses that are ineligible for the SEISS grant extension may still be eligible for other elements of the scheme.

Photo of Baroness Verma Baroness Verma Chair, EU Goods Sub-Committee, Chair, EU Goods Sub-Committee

My Lords, will my noble friend look at councils that rent their properties out to small businesses, so that those businesses do not receive demands to pay their rent at this very difficult time? Leicester has been in a second lockdown since June, and small businesses are struggling. Will my noble friend also look at not re-adding VAT to PPE? I refer noble Lords to my interests as set out in the register.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My noble friend makes an important point, and I hope that councils, in particular, being part of the public sector, will be sympathetic to the plight of many small businesses at this time. I am sure that my noble friend will understand, however, that I cannot predict what the Chancellor might have to say, on VAT or any other matters, in his future Budgets.

Photo of Lord Bird Lord Bird Crossbench

My Lords, I declare my interests as set out in the register. I am the recipient of a very generous bounce-back loan: thank you very much indeed. It is very useful for a social business in difficult times, and I would like to see more of that coming down the line. But what concerns me is that the only way to help small businessmen is to get control of Covid—and what alarms me, and a lot of people in the country, is that there does not seem to be unity in Parliament. Is it too early or too late—or too wrong—to call for some kind of national Government to bring us together, so that we can dismantle the biggest crisis we have ever faced in the history of our country?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I am pleased that the noble Lord has been able to take advantage of one of our loan schemes. He made an interesting suggestion about a national Government—but I hope he will accept that that is way above my pay grade.

Photo of Baroness Wheatcroft Baroness Wheatcroft Non-affiliated

My Lords, in the time of Covid, small businesses are having to rely increasingly on internet platforms such as Amazon and Google to market their products. The digital services tax, which was supposed to ensure that these platforms pay their fair share, is being passed on to those small businesses, which cannot afford to pay the extra 2% they are being asked for. So will the Minister revisit the digital services tax, which is clearly not working as it was supposed to?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

Again, the noble Baroness is tempting me to enter the territory of the Chancellor. We have been clear that the digital services tax is temporary, and businesses are liable to it only when they have worldwide revenues of more than £500 million, and more than £25 million of those revenues is derived from UK users. So it applies only to the very largest businesses.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade)

My Lords, the AAT reports that during the pandemic more than 50% of businesses have seen an increase in late payments, and nearly one-third admit to delaying payments that are contractually due. The Government have taken emergency powers, so this is a matter for BEIS, and these powers do help businesses. The FSB says that sorting the scourge of late payments would be a huge boost in these difficult times, and would aid the recovery when it comes. Will the Government act?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

I totally accept the noble Lord’s point; he raises an important issue. But accepted payment terms vary from sector to sector, and a one-size-fits-all approach is not, in our view, the best way to deliver a culture change. Government would be restricting businesses’ ability to negotiate terms, which could have a negative effect on the UK economy by making business more difficult to do.

Photo of Lord Roberts of Llandudno Lord Roberts of Llandudno Liberal Democrat

Many of the small businesses in my area of course are linked with the holiday trade: Llandudno and the Conwy valley are well known for that. After the pandemic eases, people will not be able to travel very far into the European continent, so home holidays will become more attractive, but the holiday industry—cafés, hotels and venues—need help to tide them over the interim period. Can the Government think of any way—say, with tax, or helping with other things such as rents and rates—to make it easier for those who are desperately struggling to survive in the tourist industry to come through this epidemic?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord highlights an important issue. Of course we want to encourage as many people as possible to take advantage of our excellent local tourist industry—an important industry, including in Wales, to which the noble Lord referred. There have been a number of schemes to help small businesses: we have introduced business rate holidays, plus all the various grant schemes to try to keep those businesses afloat.

Photo of Baroness Blackwood of North Oxford Baroness Blackwood of North Oxford Conservative

My Lords, UK life sciences is not only one of our most innovative and productive sectors, it also benefits the whole country, with two-thirds of its jobs outside the south-east. Its thriving is crucial not only to our exit from Covid but to our economic recovery. However, life sciences SMEs say that they struggle to access data responsibly, that clinical research remains too slow, and that scale-up investment can be a challenge. In the upcoming CSR, will the Minister not only deliver on the £200 million life sciences investment programme but also invest in health data infrastructure and accelerating clinical research set-up?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Baroness is a powerful advocate for the life sciences sector, so of course we will look at many of the suggestions that she has put forward.

Photo of Lord Browne of Ladyton Lord Browne of Ladyton Labour

My Lords, since lockdown I have raised with Ministers the issue of the market failure of pandemic risk insurance five times. Each time I have been told that in due course the Government strategy on it will be revealed. For many businesses, the unavailability of business interruption insurance for pandemic risk is an issue for now, and it soon could be decisive in whether a large number of businesses will be able to trade. This is an issue of transparency and accountability. What, precisely, is the Government’s plan for this market failure?

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

The noble Lord highlights an important problem. This is a difficult issue, but insurance contracts are a matter of commercial negotiations in the market, and it is hard for the Government to interfere in what is, essentially, a commercial decision between the person issuing the insurance and the person taking it out. But we are certainly aware of the problem, and we are looking to see whether there is anything we can do in this field.

Photo of Lord Fowler Lord Fowler Chair, House of Lords Commission, Lord Speaker, Chair, House of Lords Commission

My Lords, all supplementary questions have been asked. We now move to the next Question.