Thank you Mr Stringer, it’s a pleasure to serve under your chairmanship today, and I’d like to record my thanks to the powers to be for selecting my debate today.
I beg to move that the house has considered Small Business Saturday and I am delighted that we have the opportunity to discuss how vital Small Businesses are to the prosperity of the UK’s nations.
The importance of small business should be self-evident, indeed 99% of businesses in the UK have less than 49 employees, accounting for 48% of total employment and 33% of turnover.[i] This amounts to 15 million people in the UK being directly employed by small businesses with a turnover of £1.75 trillion.[ii] They are the drivers of economic growth, creating jobs and serving the requirements of our communities – whether that be local tradesmen, hairdressers or cafes.
The benefits of small business extend beyond the employees that they hire directly. Just under a fifth of all SMEs in the UK operate in the construction sector, while 15% operate in the professional, scientific and technical sectors. These particular businesses compliment the success of associated industries like manufacturing. We should therefore recognise that the influence of SMEs cannot easily be quantified by simply looking at their own output, as their influence extends into the wider economy.
My wish in bringing forward today’s debate is to help stimulate the discussion about how we can continue to support these small businesses and highlight the challenges that they face.
For the last three years, Small Business Saturday UK has given us the opportunity to focus the minds of consumers, business people and policy makers on the indispensable contribution of small businesses. Last year 16.5 million adults in the UK supported a small business on Small Business Saturday and I’m sure that this year’s campaign will be equally successful when it takes place on the 5th of December.
However, although it is important to raise awareness of the challenges facing small businesses on the first Saturday of every December, we must ensure that the campaign leaves a positive and lasting impact on small businesses all year round.
In my own constituency of Inverclyde, a number of constituents have contacted me regarding the decline of small businesses operating within our town centres. I know other honourable members will be able to relate to these concerns as the issue of shop closures and empty retail units is one that stretches right across the UK.
Like other constituencies, the situation within Inverclyde itself varies considerably. The largest town of my constituency, Greenock, is primarily served by an enclosed shopping centre populated by larger retail outlets. In recent years it has struggled with closures and failed to live up to the potential that the centre of Greenock has to offer. In other parts of my constituency, the smaller towns of Gourock and Kilmacolm have been comparatively successful in maintaining more vibrant town centres, which have been mainly populated by small, independent businesses.
There are no easy answers in regenerating our high streets but Inverclyde provides a valuable lesson – smaller, independent retailers are an integral part of creating thriving town centres.
One such business in my constituency that is contributing to that success is the Pirate and Bluebelle, a gallery operated by Heather McCulloch and Nick Summers. It is a small business in the very literal sense of the word – their shop is just 2m by 4m and is one of the smallest galleries in Scotland, if not the UK. Heather and Nick established the business in order to sell artistic photographic prints and by doing so they are now supporting a number of emerging local artists and crafters. Like many small business owners, Heather and Nick have been self-motivated, prepared to take risks and driven by a desire not only to benefit themselves, but also their local community. In the words of Heather herself, “we feel that the rewards far outweigh cash alone”.
I hope other members today will join me in commending the community spirit of Heather and Nick in creating a successful business. Their experiences in establishing a small business should also be noted by policy makers in this parliament and elsewhere.
For example, Heather and Nick are concerned that the business registration process was ‘difficult to understand’ and the guidance on what was expected of them in regards to tax and NI contributions could have been more clearly stated. Further, Heather and Nick feel that the personalised support from Business Gateway made a positive contribution to the establishment of their gallery. An advisor has been available to answer questions specific to their circumstances and this specialised knowledge has assisted in developing the business in its first year of operation.
The UK has an annual business death rate of 10% and the Pirate and Bluebelle is an example of why pre-planning is so important. Heather and Nick tested the market by attending local fairs and measuring the reception of their product with customers. They followed this up by securing premises on a shopping strip suitable for a small independent retailer and the type of products they wanted to sell. Many businesses fail within the first five years and it is vital that potential business owners undertake the necessary preparation before fully committing to the enterprise.[iii]
Despite the challenges, long hours and potential risks of running a small business, Heather is optimistic about her future of operating an independent business in Inverclyde. She said, and I quote,
“Setting up and running a small business has been one of the most challenging things we have ever done but also the most rewarding.”
I’m aware that there is already a range of support available to small businesses like the Pirate and Bluebelle. Assisting SMEs must be a collaborative effort across different tiers of government and various other organisations. In Inverclyde, small businesses have access to a range of support, including from Inverclyde Council, the Scottish Government, Riverside Inverclyde, Skills Development Scotland, Business Gateway and Scottish Enterprise.
At local authority level, businesses in my constituency have access to grants that assist with capital expenditure, staff training and structural improvements to business premises. Inverclyde Council provides a Small Business Loan Scheme to improve the small business start-up rate. A West of Scotland Loan Fund is also available, providing loans of up to £100,000 for established businesses operating for more than 2 years, while newer businesses can borrow up to £30,000 through the same fund. These schemes have emerged in response to concerns from small businesses that they are finding it increasingly difficult to secure credit.
Another local organisation, Riverside Inverclyde has complimented the work of Inverclyde Council to tailor solutions specific to my constituency. They have promoted the establishment of small businesses by providing quality office space, which is an important task as Greenock, a former town of heavy industry, has not had enough office space suitable for a modern, digitally-connected business. In establishing or refurbishing six offices and business centres, Riverside Inverclyde has helped to secure more than 850 jobs, approximately half of which are with small and medium sized businesses.
At national level, small businesses have been eligible for the Scottish Government’s Small Business Bonus Scheme since 2008. Almost 100,000 businesses are now benefiting from having their business rates reduced or completely removed – a record amount since the introduction of the scheme.[iv] The Small Business Bonus Scheme provided indispensable assistance to businesses throughout extended periods of difficult economic circumstances. Since it was introduced in 2008, the amount of money being saved by businesses across Scotland has more than doubled and because of this competitive advantage, businesses in Scotland can save up to £3,200 more under the scheme this year than equivalent businesses in England. I welcome the First Minister’s commitment that the scheme will continue throughout the next parliament should the Scottish Government be re-elected.
Cross border collaboration is also benefiting small businesses, particularly on important infrastructure projects like improving access to superfast broadband. Research from the Federation of Small Businesses found that 99% of small firms rate the internet as “highly important” to their business, and I note that the Scottish Government is ahead of schedule in meeting its target of 95% of premises covered by superfast broadband by 2017.
So we can see in practical terms how collaboration between levels of government and other organisations is critical to giving small businesses the support they need to thrive.
If I may be allowed to indulge Mr Stringer, I cannot end my speech before mentioning that Inverclyde has many advantageous as a place to do business. It is within commuting distance of Glasgow, is a short distance from Glasgow airport and enjoys excellent rail connections. Anyone wishing to start a business in the area can expect excellent tailored support from Inverclyde Council and Riverside Inverclyde in addition to the wider benefits that the Scottish Government provides. The cost business units and office space is cheaper than that of a major city, making the area ideal for anyone wishing to set up a small business – especially given that Inverclyde has some of the fastest overall broadband speeds of any constituency in the UK.[v]
In closing my speech I would like to record my appreciation of the role that small, independent retailers play in our constituencies. They’ve historically been central to our sense of community and offer personalised service that no big business could ever hope to emulate. Small business owners work hard, pay their taxes, cater to niche markets and provide irreplaceable benefits to our local economies.
So in the lead-up to this year’s Small Business Saturday my message is clear – let’s create more local jobs, vibrant town centres and invest in the future of our communities by backing our small independent retailers.
[i] http://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf p3 (accessed 25/11/2015)
[ii] http://www.fsb.org.uk/stats (accessed 26/11/2015)
[iii] http://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf p9 (accessed 27/11/2015)
[iv] http://www.govopps.co.uk/small-businesses-boost-in-scotland/ (accessed 27/11/2015)
[v] http://researchbriefings.intranet.parliament.uk/ResearchBriefing/Summary/CDP-2015-0017 (accessed 27/11/2015)