Small Businesses: Productivity

Department for Business, Innovation and Skills written question – answered on 17th February 2015.

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Photo of Lord Harrison Lord Harrison Chair, EU Sub Committee A - Economic and Financial Affairs

To ask Her Majesty’s Government what steps they are taking to improve the productivity of small businesses.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Government policy focuses on delivering growth which in turn depends on productivity in the longer term.

We have already set out our four key growth ambitions: creating the most competitive tax system in the G20, making the UK the best place in Europe to start, finance and grow a business, encouraging investment and exports, and creating a more educated workforce. And through our industrial strategy, the whole of government is taking a long-term strategic approach to working in partnership with businesses to increase global competitiveness, support innovation and maximise export potential.

The right tax environment is vital to help businesses flourish so we have cut the main rate of Corporation Tax from 28% to 21% and announced further cuts to 20% by 2015 – the joint lowest rate in the G20 major economies. We have helped businesses with the cost of hiring staff by introducing a new Employer Allowance which cuts £2,000 from the National Insurance bills of small firms. To support small businesses in local communities, the ‘high street discount’ for around 300,000 shops, pubs, cafes and restaurants will go up from £1,000 to £1,500, from April 2015 to March 2016. This is in addition to doubling Small Business Rate Relief for a further year which means 380,000 of the smallest businesses will pay no rates at all.

R&D Tax Credits are the single largest Government support for business investment in R&D. They are designed to encourage greater R&D spend by business leading, in turn, to greater investment in innovation and improved products and processes. The rate of relief under the SME scheme is one of the most competitive rates in the world and, at Autumn Statement 2014, was increased from 225% to 230% of qualifying R&D expenditure from April 2015. Innovate UK is the Government’s prime channel for supporting business-led technology innovation. It delivers a range of programmes in support of businesses undertaking R&D including Collaborative R&D, Smart and Knowledge Transfer Partnerships. Innovate UK also provides opportunities for innovative businesses through the growing network of Catapult centres. Under the Coalition Government, Innovate UK, with partner and business contributions, has invested around £3.5 billion in innovation projects across the UK.

More businesses are getting access to the finance they need to start up and grow with Start-Up Loans offered to over 25,000 businesses; so far lending over £129 million. The British Business Bank has facilitated £890m of new lending and investment to over 21,000 small businesses in the year to the end of September 2014. And we have facilitated over £1.67 billion of lending to over 16,000 small businesses since May 2010, through our Enterprise Finance Guarantee scheme. We have brought together all Government advice and support in one place at, where the ‘My Business Support Tool’ helps businesses find the support they need quickly, and businesses can speak to or webchat with a helpline adviser direct using the Business Support helpline. Businesses can also access our new Business Growth Service on the website, which brings together expert advice to improve and grow in one place, including Growth Accelerator, the Manufacturing Advisory Service, and export advice and finance.

Small businesses have less regulation to follow with a £10 billion cumulative net saving to businesses as a result of our deregulation work. Through the Red Tape Challenge, we have reviewed over 5,600 regulations and identified 3,000 to scrap or improve. We are on track to surpass our target of saving business £850 million per year.

And around 48,000 businesses have been helped by our UKTI support – of which 90% were small businesses. This support helped generate additional sales of over £49 billion and created or safeguarded over 220,000 jobs over the last year.

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