SMEs and the Net Zero Target

Published date : 17 November, 2020
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate and commend him for the work that he does through the all-party parliamentary group.

The hon. Gentleman made a number of points about the importance of innovation in the role of banking. In the aftermath of the 2008 banking crash, a number of banks looked to rebalance their balance sheets off the back of their SME clients, and we must make absolutely sure that does not happen in the aftermath of this crisis.

The pressures on SMEs and the difficulties in ensuring they play a full part in the pursuit of the goal of net zero are well understood. The goal of many SMEs will understandably be to ensure their survival, often week to week and month to month, rather than to focus on the wider goal of net zero.

There are two roles for the Government, the first of which is to help to ensure that the businesses are still there and to help them to transform through the legislative environment, as well as facilitating change and innovation through grants and investment. On ensuring that businesses are still there, it is unfortunate that, even with the extension of the furlough, the owners of so many SMEs find themselves on the list of the excluded—those remunerated through dividends. That sends out a poor message that we are not helping them to do what they do best and grow their businesses and position them for recovery. The Minister needs to hear that, and although I am sure he has heard it many times, I make no apology for repeating it. I wish him strength in making that argument where it needs to be made.

The other role for the Government is in helping businesses to transform. It will help if there are no cliff-edges and no surprises. The Government have intervened through the bounce back loan scheme and the coronavirus business interruption loan scheme. The hon. Member for Thirsk and Malton spoke of the difficulties that businesses in his constituency faced, particularly if they operate through non-traditional lenders, in accessing CBILS and BBLS. A number of businesses in my constituency face the same difficulties and needless obstruction to what was intended by the schemes.

Croydon Council was mentioned, not necessarily in dispatches, but let me speak up for the role of local authorities. As a former council co-leader, one of the things of which I was proudest was being the first authority in the UK to introduce a carbon budget, which stood alongside the revenue budget and the capital budget so that decisions could be taken on an equal footing. What became very apparent very quickly was the difficulty, once the low-hanging fruit had gone, with some of the decisions that had to be taken to make progress and operate within the resource envelope. That was in the context of an annual revenue budget of £500 million and a capital budget of £100 million, so the difficulties for SMEs are well understood.

We have heard points made about the shared prosperity fund. I could have a debate all to myself about the bumpiness and uncertainty around devolved funding at the moment. I will not go down that particular rabbit hole at this point, except to say that it helps if there is clarity on investments and no cliff edges from the Government. That will enable the making of strategic, tailored decisions to get us to our goal.

To draw my remarks to a close, the Scottish Government have their own programme for Government, which has strategic, targeted aims to embed generational equality and regional prosperity. A part of that is about investing £100 million in a new green jobs fund over the next five years to support businesses to provide sustainable and/or low carbon products, and a £60 million youth guarantee to provide increased opportunities for green apprenticeships. That is on top of the investment that needs to go into broadband. The £600 million R100 programme will bring broadband to all parts of Scotland, which will be of particular benefit in helping SMEs in rural areas to survive and thrive, and there is also the investment of £62 million in the energy sector. Many companies, big and small, in the oil and gas sector have an enormous role to play in the big strategic transition that we need to meet, and that is important.

To wrap up, it is imperative that the Government prioritise the SME sector. We need sector-specific roadmaps with clear goals and deadlines. We need to extend the mandate for British business banks’ support for SMEs making the transition, and make specific provision for SMEs in the shared prosperity fund. We need a more expansionary fiscal policy to support SMEs, and we need to encourage the diversity of supplies to SMEs.

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