Small and Medium-sized Enterprises

Private Members' Business – in the Northern Ireland Assembly at 4:15 pm on 25th October 2016.

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Photo of Patsy McGlone Patsy McGlone Deputy Speaker 4:15 pm, 25th October 2016

The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer of the motion will have 10 minutes in which to propose and 10 minutes to make a winding-up speech. All other Members will have five minutes.

Photo of Mervyn Storey Mervyn Storey DUP

I beg to move

That this Assembly notes the importance of small and medium-sized enterprises to the economy of Northern Ireland; recognises their resilience in the face of many challenges; believes that many small and medium-sized enterprises are not realising their growth and development potential; and calls on the Minister for the Economy to ensure that the economic strategy supports small and medium-sized enterprises that want to grow.

There can be no doubt that small and medium-sized enterprises make an invaluable contribution to the economic prosperity of Northern Ireland. SMEs, as they have become known — I include the self-employed in their number — provide 75% of employment and 75% of turnover through the way in which they operate in Northern Ireland. They also contribute 81% of gross value added (GVA) in Northern Ireland's private sector. They employ more people than Northern Ireland's large companies and the public sector combined. What we are discussing here this evening is, therefore, a very significant sector of employment in Northern Ireland. "The Times' business supplement recently said that the importance of SME business to the UK economy could not be overstated. They account for over 99% of private sector business in the UK and employ over 15 million people.

The results and findings of research carried out by the Ulster University SME centre and the business school on behalf of the Federation of Small Businesses (FSB) make for interesting reading. Before I delve a little more into those figures, I want to place on record our appreciation and thanks for the work that the FSB carries out on our behalf and that of its members in Northern Ireland. We are pleased that representatives from the FSB have joined us in the Public Gallery today. For their work and representations on behalf of 6,000 local members — there are 170,000 across the UK — we owe them a debt of gratitude. We thank them for what they do, and we join them in their mission of supporting smaller businesses to achieve their ambitions, which is desirable.

I am glad that the House will not divide on the motion, which is welcome because it is important that we do not. We have often seen parties — we can be as guilty of it as any other party; we are not puerile about these things — take the opportunity to play politics. Today, however, we are talking about people's livelihoods, about businesses and about organisations that, day and daily, make a contribution to the society that we all value.

You might ask why the motion focuses specifically and exclusively on SMEs. The answer, in many ways, is simple yet challenging. Northern Ireland is a small-business economy, yet it is huge in its achievement and success. We have only to look at some of our successes as a small region of the United Kingdom. Earlier, the Minister was able to confirm a 9·5% growth in exports — the largest in the United Kingdom. That says something about the resilience, tenacity and expertise of our business community.

The research that I mentioned, carried out by Ulster University on behalf of FSB, indicates that over 120,000 businesses in the SME sector currently operate in Northern Ireland. As I have already stated, they account for 75% of the turnover and employment in our private sector. That is significantly more than is the case for the UK as a whole, where the turnover share is less than 50% and the employment share is in the region of 60%. It was also interesting to note from the research that SMEs buy more of their labour and materials from the local economy than larger firms. That is another example of the way in which they make an invaluable contribution to our communities. The SME sector provides 81% of the private sector non-financial GVA or nearly half of the total GVA of Northern Ireland.

Not only are SMEs economically important but it has been stated in some of the FSB documentation that, socially, they play an important role. They make a substantial contribution to the sociocultural fabric of our communities. As Members, we can all think of companies in our constituencies, and where would we be if we did not have those companies or the impact they have not only economically but socially through the employment of local staff and engaging with schools, engaging with colleges and engaging with community organisations?

Obviously, the economic climate that our SMEs operate in is important. There have been encouraging elements, such as the improvement in the labour market, with over 41,000 net additional jobs created since 2012. There are now almost 30,000 fewer people claiming unemployment benefit compared with the previous peak in February 2013. The latest Northern Ireland composite economic index, which was released a few days ago on 13 October, shows that economic activity increased by 1% over the quarter to June 2016 and by 1·6% over the year. The top three SME industries by numbers of businesses in Northern Ireland were construction at 21%, agriculture at 15% and wholesale and retail at 10%.

Before I deal with the challenges — there are challenges — I take the opportunity to mention two companies in my constituency, which, given that they started with very small enterprise, deserve to be mentioned. I am referring to, as I have done previously in the House, Christies Direct in Ballymoney, which is now a global player in the dog-grooming industry. A statistic that blew my mind when we visited the company a few weeks ago was that the company, which is based in Ballymoney, was started by Colin Christie and his wife and now employs some 50 people, has the second most visited website in the world for those products. It is second only to Walmart. For a company based in Ballymoney that started out of a grooming business that looked after cattle going to the Balmoral show, it is something to see that business operate today.

Of course, we have McAuley Engineering as well. It started with a loan to Jonathan McAuley from his father of £1,800. His late father, whom I knew well, Albert McAuley, a man of huge integrity, said to Jonathan, "Now, see what you can do with that". Last year, Jonathan's company recorded a turnover in excess of £10 million. That is within a very short time, somewhere in the region of seven or eight years. That is an indication of the calibre of what we have in Northern Ireland and what we can do despite all the challenges. I put it on record for those companies — there are many others — that they are valued and that we appreciate them.

While there has been much said about small businesses, we need to put it on record that help has been given. Sometimes we say we need more and more, and, yes, we could always do with more. However, help is being given to the sector by Invest NI, the Department, the new councils through the enterprise awareness that they are taking up, social entrepreneurship, Invest NI overseas events, the trade links the Minister for the Economy mentioned and the accelerator plan for trade and investment. All those things are important.

In the couple of minutes I have left, I want to say that there are also challenges. What are those challenges? Those challenges were clearly set out by the FSB when, over a period of time, it published a number of documents. Those documents gave us a concise view of the challenges, which include regulation, access to finance and planning. It is shameful that a large construction industry, a homebuilding organisation —

Photo of Patsy McGlone Patsy McGlone Deputy Speaker 4:30 pm, 25th October 2016

Will the Member draw his remarks to a close, please?

Photo of Mervyn Storey Mervyn Storey DUP

— in Northern Ireland, told us recently at an event in the House that it has 700 homes in the planning process, with some having been in that process for between seven and nine years. I think, Mr Deputy Speaker

Photo of Patsy McGlone Patsy McGlone Deputy Speaker

The Member's time is up.

Photo of Mervyn Storey Mervyn Storey DUP

— that has to come to an end. I commend the motion to the House, and I trust that Members will support small business.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

I welcome the opportunity to speak on the motion, which, of course, I am supporting. The contribution of SMEs to the economy of the North is well recognised. To underpin economic growth, we need to grow our private sector, and, with more than 99% of our private sector businesses being SMEs, enabling the growth and development of the SME sector will be vital. SMEs, as Mr Storey pointed out, account for some 75% of private sector turnover and 75% of employment and will be responsible for 89% of new job creation in the private sector up to 2018. All of that highlights the importance of the sector to our economy.

The SME sector, like every other, has faced difficulties over the past number of years. As well as an annual decline in the number of businesses registered here since 2009, there has been a marginal decline in the percentage of total turnover to the SME sector. Political and economic uncertainties, skills shortages and access to finance and marketing have been highlighted as barriers to growth for local companies. Mr Storey also outlined some other challenges. There is a direct correlation between innovation, exports and skills and productivity, growth and sustainable job creation. Many of those can be tackled with strategic measures aimed at the SME sector.

A couple of weeks ago, we discussed the importance of exports, but enabling businesses to grow also means investing in support for R&D and innovation. Improvements in protocols and new product development are important steps in enabling business development, and those can be addressed through financial support measures and access to expertise or consultants. There are programmes already in place in this regard. It is important, however, that those are continued and expanded on and that businesses and individuals are made aware of the opportunities available to them.

Skills cut across many sectors, from hospitality to retail and from engineering to trades such as construction. We need to ensure that the curriculum offered addresses the skills need and, more importantly, that our young people are encouraged to pursue the types of career pathways that will provide a skilled workforce into the future. That may mean an attitudinal change on behalf of parents and teachers alike to enlighten young people about the variety of opportunities available to them.

PwC client experience of small local companies indicates that businesses that have experienced growth are more likely and willing to engage in upscaling. Some 73% of businesses here are sole traders, so even taking on one employee is growing their business. Scaling up of businesses is something that we will need to focus on. Mr Storey said that we will need to help businesses realise their ambitions. It is important that businesses be empowered to be ambitious, that they have access to finance opportunities and that the policy framework for, for example, business rates is conducive to expansion. We need to encourage more businesses to want to grow. Encouraging an entrepreneurial spirit is one thing, but putting in place the practical measures and support to make it happen is key. It includes a need to have adequate infrastructure in place right across the North, with road networks, broadband, mobile phone networks and access to energy supply.

We are facing uncertain times as a result of the EU referendum, so it is even more important that SMEs and other businesses be offered reassurance in ways in which that can be offered. Obviously, global economic factors are outside our control, but we must do all that we can to ensure that our SMEs are as efficient and competitive as possible.

Prior to being elected, I was a research scientist working in horticultural research, specifically in applied mushroom research. I had the privilege of working with mushroom growers the length of the country. As you may know, the Irish mushroom industry is being decimated as a result of the plummet in the value of sterling. The Irish mushroom industry, North and South, had become very much streamlined over the past 20 years or so, and those who remained in it are hard-working, dedicated professionals who have embraced new technologies and innovation. They are the epitome of the type of entrepreneur that we need to be encouraging. However, they work in an industry of very tight margins, and it is an industry that is strongly interdependent, North and South. Businesses are under pressure right across the country. The current economic climate is such that it is making some of their businesses unviable, and that is deeply concerning. It serves as a reminder for us of the need to work towards political and economic stability where possible, and also of the need for us to ensure fairness throughout our supply chains. It also shows the challenges that we may face over the next months and years as the outworkings of the EU referendum unfold, and we will need to be champions of our businesses —

Photo of Patsy McGlone Patsy McGlone Deputy Speaker

I ask the Member to draw her remarks to a close.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

— and work to create a climate that embraces and supports economic development.

Photo of Steve Aiken Steve Aiken UUP 4:45 pm, 25th October 2016

I rise, as every Member of this Assembly should, to support this motion. Northern Ireland is, above all, an economy built on our small and medium-sized companies, farms, independent traders and the self-employed. The SME sector, as has already been pointed out, employs more people than all the large firms and the public sector combined. SMEs comprise over three quarters of all public-sector turnover. The sector, above all, is innovative, is ambitious and has vision. According to a recent Federation of Small Business survey, 80% of SMEs are looking to grow.

So how can we help them to grow further? There are three key areas that we can put forward to help this vital sector. First, taking a leaf out of the Economy Minister's Germany visit, let us listen to the sector, the unions, the key business groups and, indeed, the DUP's Conservative partners. Let us create an all-embracing manufacturing strategy that addresses the impediments to all businesses. Businesses that need a proper, cross-cutting government approach that cuts out red tape. Let us reduce the cost of doing business. Let us do things like protecting small business rates relief, and let us sort out, as Mr Storey said, once and for all, our sclerotic planning process. Our best should not be 54 weeks but, rather, the 11 to 12 weeks that the leading council areas in England have.

We also urgently need to investigate the cost of logistics in Northern Ireland; the cost of sea freight, which is some of the most expensive in Europe; the cost of air travel and the state of our roads. I, along with the FSB, chambers of commerce, NIIRTA, the CBI and virtually everybody else, with the exception of the Infrastructure Minister, would like to see some of that £77·5 million that the Finance Minister identified today going towards the York Street interchange.

Secondly, we need to encourage our banks to pass on the quantitative easing that they have received and make bank lending affordable and accessible again to our SMEs. The Government must have a role in encouraging improved access to responsible borrowing, but they should also ensure that the SME sector is not penalised and disincentivised by some of the many predatory debt-recovery actions that are state subsidised and that largely state-owned banks have in the past followed.

Finally, it should be a matter of great regret for us to say this, but we should also take the lead in making sure that we encourage prompt payment to all our small and medium-sized businesses. It should be a matter of shame that some of the worst payers are our own Departments and councils. Indeed, whilst many companies have to build in 90-day payment receipts to large multinationals, it is ridiculous that we, including, I dare say, many of the Executive Departments, are taking more than 90 days to pay. I call on the Minister to publish all the payment guidelines for all our Departments and shame those that pay beyond the 30-day mark, and he should let us know how many of our companies are still waiting on payment 30, 60 and 90 days beyond.

I believe that, if we, in supporting this motion, were to follow the above three key points, we would be able to offer practical support for all our SMEs.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

As the economy spokesperson for the SDLP, I, like others, am pleased to support this motion. Like the mover of the motion, I pay tribute to the FSB, which has been very helpful, not just in presenting information to us but in Committee. It certainly has its finger on the pulse when it comes to small and medium-sized enterprises in Northern Ireland.

Rather than regurgitate the points that have been well made about how significant SMEs are in Northern Ireland, and in the interest of moving the debate on, I will look at the barriers to growth that have been expressed to us and that I have heard about through my work when speaking with businesses — views that have been reinforced by the presentations from the FSB. Some of those are, as we have already outlined, planning, the rating system, access to finance, access to broadband, corporation tax, VAT, labour, bureaucracy and red tape etc. It goes on.

Another statistic that jumped out at me was that smaller businesses with fewer than 10 employees are not really offered the level of support that is given to larger businesses, and that is because they are not considered to be high-growth firms.

In many of those small businesses, the owner is the senior management team, the HR team, the finance department, the IT department, and they answer the phone before sweeping the floor on their way out. Those businesses also need our support. There is an opportunity here for us to really reach out to them and accommodate and recognise the difficulty that they have with their time. So, it is about looking at growth but making a very real package that will deliver and resonate with such small businesses. If any strategy is serious about encouraging growth, it would reach out and be cognisant of that fact.

We have to then look at the wider context. I will visit my constituency in South Down, as other Members have done in their constituencies. When we look at the potential for growth we see that there is a very obvious need as the tourism sector in South Down has yet to be fully tapped into. We need to encourage the Executive to come out of silos because it takes that economic ambition and vision to recognise where the potential growth is in particular areas. It would be difficult then to brush aside such significant projects as the Narrow Water bridge, which, no doubt, would bring tourism opportunities to South Down. In the construction of the bridge, we would be looking at the building sector as well. So, we must commit and we must show that the breadth of our vision goes wider than simply looking at a document that does not resonate and does not reflect what is happening on the ground.

The SDLP had put forward an amendment to the motion, and I think that it was simply to frame it in the context of the possibility of Brexit. We must consider that for any growth. We will very quickly look at the topic of sending our goods elsewhere and at exporting our goods, and, difficult as it may be for some, we must embrace the fact that Brexit has its problems. There are potential problems not just for growth; businesses at this moment in time may be considering exporting but may put that decision on hold. Many have told us that they are reluctant to make decisions because there are so many question marks and so many unanswered questions. Based on this, it is difficult, particularly for small and medium-sized enterprises, to make the decision to go ahead and embrace the export market. It is something that we should all encourage them to do and try to set out that pathway in a way that they can embrace it fully and confidently consider the way forward. That said, I welcome the motion as it is presented, but I think that we missed an opportunity to widen it.

In summary, the Executive expressed their concerns earlier today that the Opposition tended to fret a little. I can assure the Minister that as a member of the Opposition, I never believed that he would bring forward an economic strategy —

Photo of Patsy McGlone Patsy McGlone Deputy Speaker

I ask the Member to draw her remarks to a close.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

— that did not support small businesses and medium-sized enterprises. So, perhaps, he could reassure his own party colleagues not to fret.

Photo of Trevor Lunn Trevor Lunn Alliance

As somebody who ran a small business for over 25 years, I am very pleased to contribute to the debate. I agree with Mervyn Storey and others straight away that the contribution of small businesses and the FSB in this country has been enormous and always will be, because Northern Ireland is an entrepreneurial place where people like to set up a business. That is why we have so many small businesses.

The motion refers to the economic strategy and the necessity for that strategy to support SMEs that want to grow. I do not know any that want to shrink, frankly, or stay the same size, but if they do, they will not last long, because growth is everything these days. The FSB reckons that 80% of its members are committed to growth, which is the way that it should be.

The current economic strategy dates from 2012. It was published by Arlene Foster as Enterprise Minister. It has a vision that effectively encourages private sector companies to compete in global markets. It is very export orientated, which, frankly, brings in Brexit again because the situation around exporting may or may not become more difficult in years to come. The strategy notes the key drivers of innovation; research and development; skills; growth; exports; and infrastructure. It also notes the key sectors: business services; financial services; creative industries; tourism; social economy; and rural economy. I cannot help but smile when it notes that reform of the common agricultural policy will generate further opportunities for the agri-food sector — oh dear, oh dear. All those sectors offer opportunities for SMEs to prosper, and many have done so. Indeed, as Mr Storey pointed out, some of our best businesses started off as one-man bands, including Almac, Norbrook, Wrightbus, which I am surprised that he did not mention, and FG Wilson. I cannot really mention Norbrook without a shudder because we turned down insurance business from it when it was a one-man band; I cannot believe it. McAleer and Rushe is another one. I will move on.

SMEs can grow in various ways, whether through finding a good product, securing good contracts or innovation. More often than not, they prosper as part of the supply chain for bigger companies. Therefore, the more major contracts that come out of Departments or elsewhere, the better for SMEs. There are Executive delays such as with water infrastructure, Desertcreat, the Maze, John Lewis and, looming now, the York Street interchange. Let us see what happens with that. There are planning difficulties; Mr Storey mentioned one. We in Lisburn council have just completed a planning application for a golf course and a luxury hotel. It is a £60 million investment into that area, and it has taken 14 years — 14 years — to get it through the planning process. It is not quite there yet because the Planning Appeals Commission may yet have something to say about it.

I hope that I do not sound too much like a Brexiteer, but bureaucracy and regulation also eat up time and resources. It is a problem that, to my mind, is far more onerous on small businesses than on bigger ones, which have the capacity to deal with European and UK regulations. Somebody said that Invest NI currently seems to have a focus on high-growth companies with more than 10 employees. That excludes 95% of all Northern Ireland businesses, which is the percentage with fewer than 10 employees. I appreciate that there have been set-up schemes and encouragement schemes such as Go For It, Horizon 2020 and all the rest of it. If the new economic strategy is to improve on the old one, a greater emphasis on the needs of the vast majority of companies in Northern Ireland, which are small and medium-sized enterprises, would be appreciated. We need to change the focus slightly to an emphasis on supporting smaller firms that show promise and give them every encouragement because it is the best sector that we have. We will support the motion.

Photo of Gordon Dunne Gordon Dunne DUP

I welcome the opportunity to speak in support of the motion. There is no doubt that small and medium-sized businesses are the backbone of our economy: 98% of all firms here are seen as SMEs. Our SMEs have the ability to create the employment and wealth that is required to transform and rebalance the Northern Ireland economy. As I think has been said, it is estimated that 95% of firms here have fewer than nine employees, so it is crucial that we do what we can to encourage and support growth. Small business owners are at the centre of our communities, where they live, work and invest funding and their time. Exports provide a real opportunity for small businesses to grow and be more competitive, and that reinforces the need for businesses to be ambitious and work in partnership with bodies like Invest NI in order to grow their export base and potential new markets. There is evidence that small businesses that export are more likely to survive, grow, prosper and innovate.

(Madam Principal Deputy Speaker [Ms Ruane] in the Chair)

Great opportunities exist for our SMEs through online sales, which gives them a platform to compete globally. One of our local SMEs is Chain Reaction, a cycle supplier. In fact, I used to buy parts for my son's mountain bike from that company. It has now expanded its business and been very successful throughout the world selling cycles and cycle parts.

Banks also need to play a role in supporting our businesses by having in place the right conditions for loans and business support programmes for ambitious businesses seeking to grow and expand. Challenges exist in growing and developing our local businesses. One of the major challenges is rates, and I am sure that every MLA is aware of it. We really need to address the issue of business rates, which continue to restrict business growth and cause real challenges for businesses across Northern Ireland, including those in our town centres. I look forward to hearing more from the Finance Minister about the ongoing review of the non-domestic rating system. I welcome his recent positive comments in the Chamber that he is listening to small business owners and will take into account the need for realistic rating valuations on SMEs.

On the previous Enterprise Committee and through the life of the current Economy Committee, we have regularly visited SMEs across Northern Ireland. Time and time again, they talk about how energy costs are one of the biggest challenges for them. I know that the Minister will continue to work with suppliers, the Utility Regulator and other key players to ensure that we do all that we can to reduce energy costs for our businesses. Red tape and over-regulation are also regularly cited as challenges for our SMEs. Invest NI must support our SMEs by reducing and not adding to the complex regulations that exist.

It is worth pointing out that 70% of our manufacturing is carried out outside Belfast, much of it by our SMEs. That shows that a regional spread exists. It also highlights the need for the right infrastructure of good road networks, rail links, ports and telecommunications. It is crucial that our economic strategy supports our SMEs and encourages innovation and research and development to increase the confidence and skills of entrepreneurs and business start-ups. Our 11 councils, with their increased economic development role, must continue to boost business as they work with Invest NI to develop strategic plans. The Signal Centre, based in Ards and North Down, deserves recognition for the work that it has done over many years in supporting our local businesses. There is also a key role for our schools, colleges and universities in encouraging STEM subjects and developing sustainable apprenticeship programmes for our young people. That can benefit not only our businesses but, most importantly, our valuable young people.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker 5:00 pm, 25th October 2016

There is a mobile phone going off in the Chamber, so I ask Members to check their mobiles.

Photo of Alex Maskey Alex Maskey Sinn Féin

I support the motion. The tenor of the debate has been almost a love-in, especially compared with previous Assembly debates. I almost feel the need to throw in a discordant note to bring us back on track, but, thankfully, I will not have to. It is a very important message for the local business community, particularly small and medium-sized enterprises, that there will be no Division in the House today. That shows that all the parties and Members are very much at one not only in recognising local small and medium-sized businesses but in understanding the need to give them whatever support we can, especially in times of uncertainty. It is important that we speak with one voice in the House today, and the local business community will very much welcome that.

As Gordon Dunne referred to, small businesses are often the heartbeat of our communities. They usually offer not only a very important service but a smiling face. Some are even the local font of all knowledge as they seem to be able to pass a lot of information back and forth within the community and their customer base. They are a very important aspect of our communities and are at the heart of many.

Mervyn Storey, when moving the motion, outlined the various statistics, which we must all take on board when developing our strategies, and Sinéad mentioned that in relation to the economic development strategy. It is important that we recognise the importance of the statistics and that they tell us that local small and medium-sized businesses are the mainstay of our economy and, as such, need our support.

My colleague Caoimhe Archibald and others referred to some of the challenges and difficulties that our businesses suffer. We all know the challenges that many of our local businesses face, including rates, digital connectivity costs, staff costs, pension contributions and, more recently, training costs and all the other overheads in running a business in uncertain times. It is fair to say that there are supports that we can give other than money, as we all know from our constituencies.

I urge all the Departments and the statutory bodies to consider the local business community in particular when they carry out public works. Again and again, we see works being carried out that cause disruption. Obviously, for the most part, when that disruption is finished, there is a much better product left for the local community to benefit from. However, while the works are going on, if they are not coordinated between the various bodies, people can suffer unnecessarily. We see that time and again. I use this afternoon's debate as an opportunity to ask the various government bodies to continue looking at their work schedules so that they can coordinate them with each other to minimise the disruption in communities.

In my constituency, on the greater Andersonstown Road, we have all seen in the last couple of days that the project for Casement Park has been relaunched. Hopefully, that will take a successful course in the time ahead. In that locality, you have the works planned for Casement Park, the new leisure centre to be built by the City Council next door and the public works associated with the rapid transit initiative. That adds up to over £100 million of public money being spent in that area, so it is important that the work is coordinated in a way that minimises the disruption to the local business community and the wider local community and allows the business community in particular to pick up the benefit of all of that work when it is completed. It is a massive amount of public investment, and it needs to have a wider and greater benefit in the long run.

There are also important opportunities for local businesses, and I refer to the business improvement districts (BIDS) legislation, which was passed in the last mandate. It is interesting that people in a lot of local businesses I have spoken to recently have not even heard of that legislation. Just for the record, it is legislation that allows a local business community to come together to plan for new initiatives to draw more people to local businesses. That includes everything from clean-ups to traffic management to shopfront uplifts and all the rest. Again, I appeal to the business community to examine the BIDS legislation as an opportunity.

I want to make my last comments on the social enterprise sector, which is a very important and growing sector that provides a public service, job opportunities and social benefits.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

Will the Member bring his remarks to a close?

Photo of Alex Maskey Alex Maskey Sinn Féin

I urge the local business community and the local community and voluntary sector, for example, to look at the social enterprise sector, a sector that I look forward to working with in the coming mandate to develop business opportunities.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

The Member's time is up.

Photo of Thomas Buchanan Thomas Buchanan DUP

I am grateful for the opportunity to speak in the debate. Having, for many years, been in the construction industry and run my own small business, I find that it lies close to my heart. It is important that the Assembly takes the time today to recognise the value of SMEs to our economy.

It is a well-established fact that the Northern Ireland economy relies heavily on the small business sector; indeed, it has been mentioned that it is the bedrock of our economy. I think that we all agree with that. In rural constituencies, they are better known as "home-grown businesses". In my constituency of West Tyrone, that sector has been the lifeblood of the rural communities. We have seen, especially in the engineering and construction industries, that such businesses have been responsible for the employment of many people in rural areas from the time they leave school until retirement age. We have seen family businesses and how they have sprung up. That seed has flourished, and many of those businesses have grown into substantial enterprises.

As we come to this debate, we do well to look at the important role that SMEs play in the growth of our economy. I know that this has been mentioned before, but a wee bit of repetition on the issue will do no harm.

Northern Ireland, although a small region, has the highest number of SMEs of all the regions throughout the UK. Although 98% of those employ fewer than 20 people, they nevertheless provide essential employment in our communities. It is worth noting that our SMEs provide 75% of all the private sector jobs and employ more people than the large businesses and the entire public sector combined. The SMEs have proven, without a shadow of a doubt, that they have the ability to create the employment and wealth required to transform and rebalance the Northern Ireland economy.

However, there are also challenges faced by the small business sector. I will mention some of them, because, sometimes, these are the issues that we do not want to face up to: the challenges that are facing businesses. If we want to help small businesses to grow, we need to do what we can in our power to break down the barriers that are a hindrance to their growth. Owing to the circumstances of the past few years, although SMEs were resilient to the many challenges that they faced, a number of them went to the wall, unfortunately. Those that were able to sail on through or hold on, now that we are out the other side, are beginning to rebuild. We must endeavour to remove, where possible, any barriers that are a hindrance to our SMEs going forward.

The business school of the University of Ulster, in a recent study, identified a number of barriers to the growth of our SMEs, including bureaucracy and the regulatory burden. The impact assessments for SMEs tend to be inconsistent, and regulation is not properly targeted, with the result that it is an added cost to and financial burden on our small businesses.

Again, as my colleague mentioned, business rates is another issue. When we go to meetings with small businesses, business rates is one of the issues at the top of their agenda. My colleague Sammy Wilson introduced the small business rate relief scheme when he was Finance Minister. That has been of benefit to many small businesses throughout the sector over the years. That is perhaps something that needs to be looked at, in order to see whether something more can be done.

Another barrier to the growth of small businesses is the cash-flow problems that they face. A lot of that is down to public bodies not releasing payments within the 30-day period. Again, that might be something that we can look at and do something about.

Another issue that was mentioned is planning.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

I ask the Member to bring his remarks to a close.

Photo of Thomas Buchanan Thomas Buchanan DUP

Planning is a serious issue that is holding back the growth of our SMEs, and it is something that we need to look at. I support the motion.

Photo of Alan Chambers Alan Chambers UUP

I am one of the few Members to speak on the motion who has earned a living from running a small business that has, for over 40 years, provided gainful employment for many others. It is opportune for me to confirm my already-declared interest.

My business has grown over the years owing to personal and family investments and sacrifices that have improved business capacity, with staff enjoying the benefits and job security that that growth has created. That type of personal investment and commitment is replicated every day right across the SME sector by operators remortgaging their home or using retirement savings or borrowings to improve or sustain their operation. The growth of our SMEs has been achieved despite the ever-increasing bureaucratic demands from statutory agencies that take more and more time and resources to deal with. Those demands can be a distraction from using innovation and business experience to grow sales, profit and, more importantly, employment opportunities. Oppressive red tape and a lack of official support for SMEs in surmounting the obstacles sometimes presented, for instance, by complicated planning regulations, which have already been referred to, can prove demotivating for new and existing entrepreneurs.

Some years ago, I was part of a local government fact-finding visit to Prince William County in the state of Virginia in the USA. Indeed, Dr Farry was part of that same visit. We called at a business park, under the auspices of their economic development team. It informed us that it could deliver all permissions, including planning authority, within 28 days of a formal approach by a new business. Business investors in Northern Ireland would drool at that prospect. Why can we not be as slick?

Another initiative that we witnessed in the USA was in Virginia Beach, which was twinned with North Down Borough Council through Sister Cities International. It had its own version of Invest Northern Ireland, working with huge success in attracting large international investors. However, it also concentrated on what it called economic gardening, whereby it successfully encouraged and nurtured the growth of its existing small and medium-sized businesses. Volunteers with a deep sense of civic obligation and skills in accountancy, product development and other varied management areas were recruited. Small companies with issues or which might be in short-term difficulty or which lacked the know-how to grow were allocated a suitable mentor. This process actually worked and is an idea that our colleagues in local government here might explore or develop.

My party will support the motion, as we fully recognise and appreciate the range and number of jobs created by SMEs across many sectors of our economy. They generate export income, contribute taxes and collect PAYE on behalf of Her Majesty's Revenue and Customs. In the retail sector, they act as tax collectors of VAT, which is an additional unpaid burden. We must also acknowledge the contribution of the hospitality trade and the many arms of our tourism industry. The commitment of the farming community, with all the physical risks involved in its industry, is something that needs to be placed on record.

However, I am slightly disappointed with the rather weak wording of the DUP motion. It talks about the challenges, with little in the way of practical encouragement or solutions for struggling small businesses. It does not mention the biggest challenge faced by our SMEs in recent years that Brexit is presenting to us.

Photo of Mervyn Storey Mervyn Storey DUP

We tried to avoid the situation where this became a debate about Brexit. Does the Member not also recognise that, if we want to dismantle the regulatory burden on our businesses, this is a once-in-a-lifetime opportunity to do it in a way that would benefit them? One of the biggest problems we have had has been the imposition of European red tape?

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

The Member will have an extra minute.

Photo of Alan Chambers Alan Chambers UUP

I await the outcome of all that with interest, but it is a fact that Brexit is, and is going to be, a challenge.

In calling for the Minister to ensure that the economic strategy supports SMEs that want to grow, I would expect, as Ms Bradley said, that he is already doing so. In conclusion, I would have liked the motion to have put a bit more meat on the bones, but I have no difficulty in supporting it.

Photo of Simon Hamilton Simon Hamilton DUP

I welcome this debate and the opportunity to respond to the motion. Before I begin, I want to put on record once again how immensely proud I am of so many of our local businesses here in Northern Ireland. Across Northern Ireland, we have almost 125,000 businesses, the vast majority of which employ fewer than 250 employees. In fact, 70% of our private sector workforce is employed in small and medium-sized businesses, and 99·9% of Northern Ireland’s business base is SMEs. As clichéd as it perhaps sounds, it is fair to say that SMEs form the backbone of our economy.

As part of my plan to make Northern Ireland more competitive, I am determined that we should continue to place a strong emphasis on encouraging local firms to grow. I am encouraged by statistics that show one in five businesses in Northern Ireland having experienced high growth in the period between 2012 and 2015. This is great news but no real surprise. In Northern Ireland, we have numerous examples of small local companies that have grown to become world leaders — companies such as Randox, Almac and Kainos.

Randox, formed back in 1982 by its current managing director, Dr Peter FitzGerald, is exactly the sort of success story that we should hold up as an example to SMEs across Northern Ireland. Beginning with a team of six employees, the company started out in a henhouse, before relocating to larger premises in an apple store, which has since been converted to house the business’s international headquarters. Now, Randox is a global leader in healthcare diagnostics, employing more than 1,400 employees across 145 countries and producing one in 10 of all cholesterol tests used worldwide.

I want to see more businesses follow the excellent example of Randox.

Part of my role involves travelling to other regions of the world in an attempt to attract inward investment as well as tourists. Northern Ireland needs to be outward looking and not afraid to learn from what others are doing well, understanding why they succeed and learning lessons for Northern Ireland.

As Mr Aiken mentioned, I recently visited the North Rhine-Westphalia region of Germany to look at their Mittelstand. The Mittelstand is the name given to the large group of small and medium-sized enterprises that drive the success of the German economy and are characterised by innovation, exports and growth. Our impression of the German economy is, perhaps, dominated by big-brand names like BMW, Mercedes-Benz and Bosch, but recent analysis by the German Savings Banks Association shows that it is the SMEs of the Mittelstand that are outperforming the country's largest companies in profitability. Mid-sized manufacturing firms like those that I visited make a huge, almost disproportionate contribution to the German economy. They account for an estimated 52% of Germany's economic output, employ 60% of all employees, and generate approximately €3 trillion in turnover annually. The Mittelstand is also incredibly innovative and plays a central role in the education and training system. Its success is something that we should seek to emulate here in Northern Ireland.

Although it is clear that the German economy is very different to ours in many ways, I firmly believe that there are similarities between our SMEs and the Mittelstand that we can learn from. One that stands out is that 95% of German businesses are family owned, with many Mittelstand companies under their fourth, fifth or six generation of family ownership and control. There is clear evidence from Germany that businesses can remain in family hands — a common characteristic in Northern Ireland — and still grow and make a greater contribution to the local economy.

We can learn much from the German model. SMEs have always played an important role in our economy and we should be proud that more small firms in Northern Ireland generate £1 million in revenues within their first three years in business than anywhere else in the UK. That is why I want to encourage even more businesses to start up in the years ahead, and why the Executive are investing in the skills and infrastructure that enable small and medium-sized enterprises to prosper.

A key challenge for SMEs is ensuring that they can reach their full potential. Large firms matter in small, advanced economies like ours. They provide critical mass, scale and specialisation that might be difficult to generate otherwise. Growing our businesses is, therefore, a priority. The profile of businesses in Northern Ireland shows that the vast majority, 89·2%, have fewer than nine employees, and only 2% have more than 50. Encouraging more companies in Northern Ireland to scale up and achieve high growth is, therefore, a key element in creating more employment opportunities.

Critical Power Systems Ltd is a wonderful illustration of exactly this. This Newry-based business recently announced that it was to invest £2 million and create 47 jobs with £345,000 worth of support from Invest Northern Ireland. It is a great example of an ambitious start-up company taking advantage of the manufacturing and engineering skills available locally to support its growth. Another great example is local firm Dunbia. With Dunbia, the Dobson brothers have grown their business from a small butcher's shop near Dungannon in 1979 to one of the biggest meat processors in the United Kingdom, exporting to over 30 markets and employing around 4,000 people.

In order to help more firms to grow, Invest NI is working on an ambitious new business growth initiative to help to support the scaling up of high-growth-potential Northern Ireland businesses. In the weeks ahead, I intend to outline how we hope to scale up more of our small and medium-sized enterprises in their turnover, employment levels and exports. Invest NI's growth and scaling division already focuses on providing intensive and bespoke support for SMEs with the greatest growth potential. A key characteristic of such businesses is the high ambition of the entrepreneur and a long-term commitment to invest and resource the business to drive growth. Invest NI support for scaling and pre-scaling businesses involves assistance with innovation, skills and trade development, and is tailored to address specific barriers to growth faced by each business. It is this type of intensive, wraparound support for our highest-growth-potential businesses that I want to see us amplify and accelerate in our new business growth initiative.

The ability to access finance, an issue raised by many Members during the debate, remains an important issue for business. Accessing appropriate and timely finance can be critical to business growth. In recognition of this, my Department, in conjunction with Invest NI, continues to take forward a number of initiatives to address this issue for businesses. This includes making available £170 million across a suite of funds to help to support businesses. In addition, we have engaged with the British Business Bank to ensure that its range of funding instruments are operating effectively and being promoted widely in Northern Ireland.

Transforming Northern Ireland into a globally competitive economy will require considerable effort on many fronts. My Department is working hard at refreshing and renewing our economic strategy. In essence, it will be the road map that will, I hope, lead us to a time when Northern Ireland is once again punching above its weight on the international economic stage. It is my intention that the new economic strategy will be bold and ambitious, and outline a vision of how our economy will look in 2030 and beyond. We have come through the downturn and made significant strides forward in rebalancing our economy, so we now have the opportunity to push ahead and put in place a plan that will transform our economy for the better.

I want to ensure that we have the best possible business environment for start-up companies. I want more women starting up on their own. I want to ensure that we provide the appropriate help, support and advice to allow small companies to expand their businesses. This is a priority for me, my Department, Invest NI and the Executive. Indeed, in the last five years, up to 2015-16, Invest NI offered support of over £260 million to local small and medium-sized enterprises. That support helped to promote approximately 21,500 new jobs and resulted in total investment of approximately £1·25 billion.

I want an economy where an increasing number of businesses realise their high growth potential and scale up from small to medium-sized businesses, employing more people in the process; an economy where entrepreneurship and enterprise is endemic and reflected in a growing status as a start-up nation; an economy where innovation is embedded in the DNA of every company, irrespective of its size; an economy where our people possess the skills that they need to improve their lives; an economy where more of our companies have an international outlook and export goods, products and services outside our region; an economy where government works tirelessly to put in place the financial, infrastructural and policy support to ensure that our economy thrives; an economy where we build industries on the back of where we are genuinely world-class in academic research; and, above all, an economy that works for everyone.

I believe that a real opportunity now exists to transform our economy. We have come through one of the worst recessions on record and are now on the path of constant improvement, growing in size and rebalancing from public-sector-led growth to private sector-led growth. Some, perhaps, have the impression that my Department is focused more on attracting inward investment than on growing our indigenous businesses. That is not the case, and it never was. Both are incredibly important to the future growth of our economy. That is why our new economic strategy will focus strongly on making Northern Ireland the top United Kingdom region for attracting foreign direct investment, and it will also include a suite of supports, policies and interventions aimed at helping our SMEs and, most importantly, aiding them to fulfil their potential.

I have found today's debate to be useful and informative, and I have no hesitation at all in supporting the motion.

Photo of Gordon Lyons Gordon Lyons DUP

For some people, 2016 has been a very strange year with a lot of strange things happening. Here we have it yet again. The House is united and, not only that, it is because of Mervyn Storey. It is probably the first time that that has happened in a long time.

I welcome the very positive tone of the debate, and I thank Members for their contributions. We have brought this debate and others to the Floor because we want to have a positive debate and a positive influence on the economic strategy. First, we had a general debate on the economic strategy, and we have since had a debate on exports. We specifically wanted to bring this debate to the Floor so that we could impress on the Minister the importance of growing our small companies and expanding our small and medium-sized enterprises into larger ones. We also want to identify the challenges and make sure that we are making the most of the opportunities. This has been an important debate, and it is important that we contribute to it.

I want to put it on the record that there have been a lot of complaints from the smaller parties in the House about their speaking time and how they are not able to contribute to debates. The TUV, the Green Party and the socialists are not here. We probably have room for four or five more Back-Bench contributions, but they have not turned up. It is important to put it on the record that those who ask for more speaking time should turn up when they have the opportunity to do so. I do not know whether they do not care or simply do not work after 5.00 pm. We will leave that to them to answer. This is an important debate, and I do not want to repeat —

Photo of Gordon Lyons Gordon Lyons DUP

I am happy to give way to the Member.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

If the Member now supports the principle that smaller parties should have the opportunity to contribute, even if they do not take it up, will his party at the next meeting of the Business Committee therefore support a proposal from the SDLP, Alliance and Ulster Unionists to build into the structures of debates more opportunity for smaller parties to participate?

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

Before I call the Member, I ask you to come back to the debate in question. The debate is about small and medium-sized enterprises.

Photo of Gordon Lyons Gordon Lyons DUP

Absolutely. What I will say is that they should take up the speaking time available to them now rather than asking for more. However, I will come straight back to the debate before I incur the wrath of the Principal Deputy Speaker.

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

I ask Gordon Lyons to come back to the debate. You have an extra minute because you took an intervention.

Photo of Gordon Lyons Gordon Lyons DUP

Thank you very much. A number of issues have been raised, and I do not want to repeat them. I thank the FSB for the work that it has done. I do not run a small business, but I am sure that those who do will be able to say how important the FSB is to them. Certainly, it has been helpful to us as elected representatives — I think that others will agree — in bringing the issues to our attention and helping us with briefings. We thank the FSB for the contribution that it has made.

The same issues come up time and time again, and I do not want to rehash them. However, as the Minister knows, I have raised the broadband issue with him frequently. Broadband is essential to growing our smaller enterprises. There are some real challenges with broadband, and it is important that we address them. That is especially true for smaller businesses in rural areas that are even more dependent on the Internet for communication, placing orders and all the other things that are necessary if a business is not only to be sustainable but to grow. We impress on the Minister the need for improved broadband, and we know that he is dealing with that. Other infrastructure issues need to be highlighted, such as energy and problems with the grid. I know that the Minister is taking action to address them.

There is one other thing that has not been mentioned during the debate that I very much want to welcome, and that is the Government's decision today to proceed with a third runway at Heathrow. That is critical not just for London and the south-east but for all parts of the UK. In Northern Ireland, in particular, we need to make sure that we are properly connected, and that connectivity can help all our businesses and our economy as a whole.

We discussed exports more fully in a previous debate, and it is important that we help businesses to export.

The whole business of rates has been touched on. It is important to note the success — Members will know of this — of the small business rate relief scheme. We all know of many individual companies and businesses in our constituencies that have been saved by that relief and have been able to keep going only because of the relief that is available. We want to make sure that it continues to be there for them.

The issue of planning was raised frequently. It is important that we have a planning system that is responsive to the needs of the local economy. I hope that other Members will join me in impressing on councils the importance of speeding up the planning process. On that point, I give way to Mr Storey.

Photo of Mervyn Storey Mervyn Storey DUP

I thank the Member for giving way. I would like to add that there are issues with procurement. The current Minister, who is, like me, a former Finance Minister, will recognise the challenges in the procurement process, which has become very bureaucratic and burdensome to small business in particular. There are serious issues with the procurement process, and it needs considerable work to make it fit for purpose.

Photo of Gordon Lyons Gordon Lyons DUP

I agree with the Member and not only in terms of Departments but in terms of councils. In fact, just this past weekend, someone from the Causeway Coast and Glens Borough Council part of my constituency came to me wanting to know what the procedure was in that council because they were looking to tender for work and did not have the opportunity to do that. It is important that local companies know the policies that are in place and how they can avail themselves of them.

Photo of Gordon Lyons Gordon Lyons DUP

I will give way to Mr Attwood.

Photo of Alex Attwood Alex Attwood Social Democratic and Labour Party

Just to interrogate that last point a bit further, is it not curious to criticise the procurement provisions in Northern Ireland — I agree with the criticism — when actually, for the last 10 years, the Finance brief was held by the DUP, which was responsible for CPD? Do not take the prompt from the Minister; answer yourself.


Photo of Gordon Lyons Gordon Lyons DUP

I can answer it. First of all, I am not in charge of the Causeway Coast and Glens Borough Council, which was the one that I was referring to, but, as the Minister has pointed out, a lot of the procurement and regulation issues have come from the European Union. I know that the Members in that corner of the House do not like any criticism of Europe, so I will move on.

I will say just a few things about other Members' comments. I thank Mervyn Storey for being the great uniter of the House this afternoon. He mentioned some of the good news stories in his constituency, dog grooming in particular. We are glad to hear about that. Caoimhe Archibald mentioned the need to be ambitious. That is a very important point. We are ambitious in Northern Ireland, and we realise the potential that we have. Steve Aiken mentioned our Conservative partners. That was an attempt to forget the past. We will work with this Government and any Government: it does not mean that we will be in an electoral pact with the Conservative Party. He did make important points on planning and prompt payments.

Sinead Bradley was able to wait three minutes and 16 seconds into her speech before she mentioned Brexit. I congratulate her for the self-restraint that she showed on that. I am also glad that she has such confidence in the Minister for the Economy, as she said that she knew that he would be doing absolutely all that he could to help small businesses. Trevor Lunn mentioned some of the poor decisions that he has made when he has been involved in business in the past. I agree with what he said on planning. I do not know all the ins and outs of the planning application that he mentioned, but it is important that things are not left in the system for years and years on end. Gordon Dunne mentioned the importance of exports and, of course, mentioned local companies. It is important that we help small businesses to export in that way because exporting helps them to grow.

Alex Maskey talked about a love-in. I do not think that that is the word that I would use about the debate. He mentioned the important opportunities that can come, especially from the BIDs legislation. That is something that we want everyone to be aware of. Tom Buchanan mentioned the need for us to face the challenges that come, the importance of helping business and, in particular, cash flow. Alan Chambers told us a little of his biography and, indeed, of some of the junkets that he was on while he was on North Down council. I am sure —


A junket is any trip that I am not on. It is important to build relationships with other people.

I know that my time is running out. Finally, I want to commend the Minister on what he said about the need to target specific —

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

Can the Member bring his remarks to a close?

Photo of Gordon Lyons Gordon Lyons DUP

— companies and areas of growth. It is important that we do that. We should not have a scattergun approach. Let us help SMEs to grow so that we can build a stronger —

Photo of Caitriona Ruane Caitriona Ruane Deputy Speaker

The Member's time is up.

Photo of Gordon Lyons Gordon Lyons DUP

— economy for all.

Question put and agreed to. Resolved:

That this Assembly notes the importance of small and medium-sized enterprises to the economy of Northern Ireland; recognises their resilience in the face of many challenges; believes that many small and medium-sized enterprises are not realising their growth and development potential; and calls on the Minister for the Economy to ensure that the economic strategy supports small and medium-sized enterprises that want to grow.