PARLIAMENTARY DEBATE
Small and Medium-sized Businesses - 12 December 2024 (Commons/Commons Chamber)

Small businesses are the beating heart of our high streets and communities, and are essential to our economic success. That is why, on Small Business Saturday, I announced the business growth service, which will ensure that businesses across the UK get quicker and easier support and advice from Government. Further announcements include the disability finance code for entrepreneurship to improve access to capital and tackle inequality for disabled entrepreneurs. A new fair payment code was launched by the Office of the Small Business Commissioner to help address late payments. Next year, as my hon. Friend has said, the small business strategy will be published to create thriving high streets, easier access to finance, open overseas and domestic markets and enhanced business capability.

Small and medium-sized businesses come in many forms, from microbusinesses to community interest companies and co-operatives. Often, co-operative and mutual business models are overlooked. Norwich has a proud history of co-operatives. Will the Secretary of State reassure me that co-operative and mutual business models will be properly included in this Government’s much-needed push to support small and medium-sized businesses?

I very much welcome my hon. Friend’s question. My area on the eastern side of Greater Manchester has, like hers, a huge history of co-operatives and mutuals. The diversity in business models that they bring is a huge strength; they bring different things to the market and different ways of doing business. The resilience in co-operative models is particularly attractive. I can assure her that they form part of the Government’s wider strategy. Our ambition is to double mutuals’ size in the economy. The Under-Secretary of State for Business and Trade, my hon. Friend the Member for Harrow West (Gareth Thomas), the small business Minister, is leading on that work, and I would love my hon. Friend and businesses from her area to be involved in it.

Last week, I had the pleasure of visiting the winners of my first Small Business Saturday awards in Southampton Itchen. They were Riann Care, The Bunker, Miss Ellie’s Café and Julie’s Dance Studio. Will the Secretary of State join me in congratulating them on their role in ensuring a thriving local economy? What assurances he can offer them that this Government have the back of small businesses?

I am extremely grateful to my hon. Friend for his question. I certainly join him in congratulating those local businesses on their work and, indeed, all Members of Parliament on the work that they do on their constituency days to champion and support local businesses. The Government’s agenda includes long-term reform of business rates to create permanently low business rates for retail, hospitality and leisure. The launch of high-street rental auctions, getting rid of derelict property in town centres, is also hugely exciting. The business growth service is predominantly about recognising that although the Government do a lot, businesses can often find it hard to access exactly what they need. I have looked around the world—to the US and its Small Business Administration, and to Singapore and its Enterprise Singapore, for example—to discover the best models. That is what we will take forward in 2025, and I find it a hugely exciting agenda.

Last Saturday was indeed Small Business Saturday. It was an opportunity for us to celebrate and support the many small businesses in our constituencies. However, too many of them are really worried about the increase in national insurance contributions—the £25 billion jobs tax—and there is simply no easy answer for them. They cannot just put up their prices, so they are looking at staffing levels. Why are the Government so against aspiration, and how do they think they will improve productivity and deliver growth in the economy?

Conservative Members know what they left behind, and I have not heard any of them offer an alternative. The specific answer to the right hon. Member’s question is that employment allowance was doubled in the Budget and the threshold was taken off. That is why 1 million, mainly smaller, businesses are paying less or the same in national insurance contributions as they were before the Budget. She should tell the House how the Conservative party would pay for the infected blood scandal—the victims of which we are all committed to compensating—Post Office compensation, support for the steel industry, and the advanced manufacturing plan that we inherited, because none of that was in our departmental budget. We are fixing the foundations with long-term public investment and an agenda based on higher business investment and better, stronger economic growth in every part of the UK.

The Government have raised national insurance charges on employers and introduced a family farm and a family business tax. The Employment Rights Bill will raise business costs by £5 billion, predominantly for small businesses. As a result of those changes, does the Secretary of State believe that SMEs will employer more or fewer people?

I have absolutely no doubt that the Government’s agenda is one for employment, business investment and growth. Some of the things that this country needs the most could only have been delivered by a change of Government. I simply do not believe that the Conservative party is capable of reforming the planning system or having a long-term industrial strategy, fixing our relationship with the European Union, and all the rest of it. Yes, there have been challenges, but the Conservatives know what they left behind. They knew what they were doing. There is a reason the Conservative party had no spending plans for the next financial year. We have had to confront that reality, but we cannot have the kind of success that this country needs unless we are willing to fix the foundations and focus on the long term. The Chancellor did that in the Budget, and the agenda of the Department for Business and Trade is extremely attractive for the future.

Some of the most successful small and medium-sized businesses, which truly think long term, are owned by families, so why does the Secretary of State think that it will help his long-term growth mission for the Government to start taxing those businesses when they get passed on to the next generation?

With respect, I hear a lot of calls from the Conservatives to cut taxes and increase spending, but still no account of how they would do that. I appreciate that sometimes the initial transfer into opposition can feel exhilarating, but there is a responsibility that comes with it. I would like to see an account from the Conservatives of how they would pay for it.

For all tax changes across the board, we can still say with real confidence that the UK has a competitive tax system—benchmark our corporation tax, and the allowances on it, our capital gains taxes and, in this case, our inheritance taxes. The mistake that the Conservatives make is that they forget that the adjustments to specific reliefs for businesses and agricultural property are on top of the existing inheritance tax thresholds. Frankly, a little less scaremongering from the Opposition and a bit of focus on what is really at stake would be welcome.

Small businesses are at the heart of our local communities. Firms such as Carbon ThreeSixty in my constituency are cutting-edge manufacturers of carbon fibre products. However, its growth as a small business is seriously affected by its ability to attract and retain quality staff, predominantly because of the poor public transport and completely non-existent cycle routes. These issues cut right across Departments. I would therefore be grateful if the Secretary of State could confirm what discussions he has had with ministerial colleagues in other Departments about how rural transport infrastructure would greatly support small and medium-sized businesses.

I welcome the hon. Member’s question. She is right that some of the issues that most affect businesses in our constituencies often sit in other Departments. The role of my Department is to focus on and champion those issues across all of Government, whether they sit neatly in the Department or not. She correctly highlights the incredible and important role that rural businesses play, and their social as well as economic benefits. Her points about transport were well made. One of the big changes in the Budget was the ability to focus on long-term investments, which was recognised by the Office for Budget Responsibility in its assessment that the productive potential of the UK will grow significantly over the next decade because of that increased focus—investment, investment, investment. Transport is a great element of that, whether in my constituency or in hers. I assure her that the needs that she articulates are considered at the highest levels of Government.