Toby Perkins was appointed Shadow Minister for Small Business in October 2011, replacing Chuka Umunna, who was promoted to Shadow Business Secretary. We caught up with him.
Real Business: If you were to go into government, what would your main priorities be?
Toby Perkins: “The Labour Party has laid out a specific five-point plan for how we would stimulate the economy immediately. The fundamental and biggest problem facing businesses at the moment is the lack of consumer confidence.
“In line with our plan (see above), I’d introduce an NI holiday for all small businesses looking to take on additional staff. For firms with less than ten staff, any new employees would not be subject to NI.
“We also need to get the construction industry working again. We would look to reduce VAT to five per cent on home improvements, as well as maintenance and repairs. We would also bring forward capital projects from this Parliament to support the construction industry. These would be the things we would look at immediately.”
RB: Why the focus on the construction industry specifically?
TP: “The construction industry has been particularly badly hit. But it’s also such an important industry in terms of how it feeds so many others. If you can stimulate growth in construction, it builds confidence across several other sectors.
“We want to rebalance the economy to make it more produce-based and to create a bigger role for British manufacturers and exporters.”
RB: Access to funding is a major issue for fast-growing businesses. What initiatives would you launch?
TP: “Businesses that need investment to grow, or firms with a strong track record but who are finding conditions difficult, desperately need to be given support and flexibility by lenders.
“The government’s Merlin project has been a failure. (Figures show that the size of outstanding credit facilities to non-financial firms has fallen by nearly four per cent year-on-year to £23.3bn, while net lending to SMEs is down 3.3 per cent.) The banks are going to miss their targets on Merlin, and we’re going to see net borrowing fall for the third quarter in a row.
“We need to make sure that alternative lending sources are more widely available and more widely promoted. There’s an important role to get other banks into the sector and create a much more diverse market.
“There also needs to be a drive to get more venture capital investment out into the economy. There’s a global problem with this but, particularly in the UK, there hasn’t been the amount of VC investment that there should be. We’re working closely with venture capitalists to learn how to make Britain the best possible environment for that sort of work, particularly at a time when we’re so desperate for growth.”
RB: What’s holding Britain back?
TP: “It’s important that we look at the transition that businesses face, from being a small business, to a medium-sized business, to a large business. British companies, in general, aren’t very good at making that transition, and then continuing to grow.
“Investment allowances and R&D tax credits are important for this. In the future, we want this country to be seen not just as a great place for research and science, but also as a great place to develop product ideas.
“Many of the things we’re doing revolve around supporting entrepreneurs, and education plays a big part. While they have their faults, programmes like The Apprentice and Dragons’ Den have been really significant in making business “sexy” again. When I go around schools in my constituency, children have a much more exciting view of business than they did just a few years ago.”
RB: With the eurozone in crisis, should UK firms keep looking towards Europe for growth?
TP: “It’s important that Britain has a positive approach towards Europe. We tend to look very negatively towards Europe, and then are surprised when we no longer get the same amount of trade from our European partners. The government has a real role to play there.
“Europe remains our major trading partner and, as someone who has recently both imported and exported within Europe, I know that it’s remarkably easy to do business there. But it can be daunting, and there needs to be support available for businesses who have never done it. The Department for Business is instrumental for this, but we could always do more.”
RB: What do you think of the Coalition government’s overhaul of business support?
TP: “The support provided by the Coalition – local enterprise partnerships, the failure of the regional growth fund, the very patchy regional development funding arrangements – has been a real abdication of the role of the government, at a time when business has a right to expect better.
“Local enterprise partnerships haven’t yet been able to provide anything like the contribution to business support that we need to grow our economy.
“The Coalition was right to try to improve Business Link – it was clear that the service provided by the regional Business Links was very uneven. But they should have improved, rather than abolished, the service. There is still real value in good-quality, face-to-face advice. Whether this should be coming more directly from government or from a successor organisation to Business Link is a question for the future.
“But I have grave concerns about the Mentors Me programme. While well-intentioned, it will never reach anywhere near the critical mass that it needs to actually be of any real use, or to contribute in any meaningful way. The jury is out.”
RB: What’s your opinion on Enterprise Zones?
TP: “Enterprise Zones are also a real patchwork-quilt approach, which means the investment isn’t getting to the areas where it’s so desperately needed.
“The principle of having extra support for certain areas – making it cheaper and more attractive for businesses to go into certain areas – is a good start. But the danger of doing it in this very haphazard way is that you encourage a lot of displacement activity, where businesses just uproot five or six miles up the road so that they qualify for the benefits in a particular zone. That doesn’t actually make any difference to the lives of the people living in those communities.
“If you were to do it on a far more regional basis, in areas which have very significant deprivation or where there have been a lot of public-sector job losses (such as the north-east, Yorkshire and the East Midlands, for example), the programme would be far more effective.
RB: Which company have you met recently that best represents British innovation?
TP: “Just a few weeks ago, I met a manufacturer in Chesterfield called Altech, which won the Queen’s Award for enterprise in export in 2011. They’ve devised a system that enables aluminium manufacturers to achieve really high yields of aluminium from dross (the waste product after aluminium has been recycled). Aluminium is a hugely important product in 21st century industry – it allows businesses to be more efficient, and it also means we recycle more and put less into landfill.
“There is plenty of innovation happening throughout Britain, and there are loads of great ideas and practices out there. But many businesses are still looking for just that little bit more from government. They’re not asking for a government that steps out of
the way, but a government that really takes an active approach to supporting British industry.”
What are your views on Toby Perkins’ plans? Would you support his plans? What would you like to see Labour offer? Comment below.
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