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Small Businesses

My Lords, I think that the Prime Minister is being bold. He is certainly quick off the mark in making help to SMEs, as well as to home owners, a major priority for the Government. I do not think that he has been backward in coming forward. On the noble Lord’s specific question on the Small Firms Loan Guarantee, earlier this year the Government strengthened the scheme by increasing the amount of lending available by 20 per cent, up to £60 million. That means that a £360 million pot is available for small firms to access. We have also extended the scheme so that businesses that are more than five years old can apply for funding. I believe that that reform is very welcome among small businesses. We have signed a joint statement with six major banks committing them to promote the Small Firms Loan Guarantee to their customers. My department will be looking closely at the use of the scheme. It has met with all six lenders to review how the scheme is working. I have heard that there is some criticism among some about the administration of the Small Firms Loan Guarantee; I heard that only yesterday from small firm representatives and I intend to look into it. However, I can confirm that up to £800 million is currently out on loan to small and medium-sized businesses under this scheme. We have guaranteed more than 100,000 loans valued at £5 billion since its inception in 1981. I think that that is a very good record. The noble Lord’s second question was on corporation tax and the small company rate. I must insist that this is a matter for the Treasury and my right honourable friend the Chancellor. However, I would say that we see a number of potential issues—not least the unintended consequence of businesses incorporating solely for tax reasons—were we to reduce further the small companies rate. That would make the tax system unfair for those not incorporating for tax reasons. One always has to look round the corner when making these changes to see whether there are unintended consequences which it would be better to avoid. However, I am not about to anticipate the conclusions reached by my right honourable friend the Chancellor.