Minister sets out small business help

The government has set out plans to help small businesses through the economic downturn.

In a Commons statement on Wednesday, business and Treasury minister Ian Pearson outlined to MPs a series of announcements that had been made by his and other departments in recent days.

The minister said these actions would include central government paying its suppliers "as soon as possible, within 10 days at the latest".

"This will bring forward billions of pounds-worth of payments," Pearson promised, adding that regional development agencies are also committed to the pledge, and that the local government secretary and the NHS chief executive have also asked councils and health trusts to honour it.

On small- and medium-sized enterprises' (SMEs) tax liabilities, he added that HM Revenue and Customs already has a policy of "flexibility in dealing with struggling businesses".

"The Treasury will continue to impress on them the importance of implementing and publicising this policy in the current climate," he said.

He also confirmed that as part of the government's recapitalisation package for several banks RBS, HBOS and Lloyds TSB are committed to "maintain the availability and active marketing of competitively priced lending to SMEs at a level at least equivalent to that of 2007".

Pearson told MPs that the three banks provide 50 per cent of small business lending and that he expects other banks to follow suit.

He called for "appropriate risk assessments on SME lending" that is "responsible but not risk averse".

And he said that thanks to government interventions, the European Investment Bank is providing loans "totalling around £1bn to UK SMEs".

Support

The minister also argued that it is "critical that businesses have access to support and advice".

He reported that business link advisers would provide free "healthchecks and other advice on how to adapt to changing conditions".

And he said that that skills secretary John Denham had announced £350m for developing the "skills and enterprise of workers".

This will include free courses for SME employees in basic skills, as well as management training.

Pearson concluded that ministers will "continue to do all we can" to help firms.

"We are meeting with business organisations and businesses across the country to discuss the problems they are facing, such as cashflow, access to finance, higher bank charges and costs, and to ensure their views are reflected in government action," he said.

"Our first priority has been restoring financial stability. Without a strong financial system, small businesses can't 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 believes 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."

However shadow business secretary Alan Duncan said that the government had been "slow to cotton on to the fact" that economic turmoil is "causing the deepest pain" to SMEs.

He called for "immediate practical assistance" including the, deferral of VAT payments, cuts to national insurance and corporation tax, and "a greater promotion of the small businesses rate relief to which many are entitled but not all apply".

The Conservative spokesman added that the £350m was a "reheat of old money" for already-announced schemes.