Memorandum submitted by Roger Williams MP and Mark Williams MP


1. Introduction


1.1 Ceredigion and Powys have the highest proportion of employment by micro-businesses (9 employees or less), 54.2% and 53.3%[1], the highest two figures in Wales, and around two-thirds of all employment in Ceredigion and Powys is in businesses with 49 employees or less.


1.2 In rural communities, small businesses are extremely important to the local economy, and the failure of a relatively small number of businesses in a localised area can make that area unviable, increasing the sense of rural isolation that is felt by many.


1.3 We have been in discussion with small businesses locally, both through surgeries, and through visiting businesses in our constituencies, and there are several areas they have asked us to raise for your consideration.


2. Business Rates


2.1 We have met with several businesses who have expressed concern at the effect paying business rates at this time are having on their business. One suggestion that has been made by a business in Powys would be only to charge rates once a business is making a profit, as with corporation tax, though this may cause practical difficulties in terms of collection. However as the Government have allowed for VAT payments to be deferred, it may be useful for business rates to be deferred as well where possible.


2.2 The link between Local Authorities and business rates could be looked at. Currently Local Authorities collect business rates, pay them to the Government (Welsh Assembly Government in Wales) and then receive money back through a formula. While the Government are planning to introduce a Bill to allow for LAs to increase charges to pay for large projects, which we are concerned about, it could be beneficial to allow LAs to set and collect rates, perhaps with a cap as per council tax, to allow them to reduce rates at times when there is a need to encourage the survival of business. We appreciate that this inquiry is looking at short-term assistance that can help businesses now, but we hope that long-term measures will not be discounted as part of the Committee's recommendations.


3. Bank Lending


3.1 Concern has been expressed both nationally and locally about the lack of lending that is getting through to small businesses. We believe that the Government should look very carefully at either forcing banks to lend as part of the terms of the bank bail-out, or through Government lending, if this situation continues. We hope that the new Banking Bill will contain measures that allow us to respond to this continuing concern.

3.2 There has also been concern about banks changing their lending terms to SMES, including increasing overdraft interest rates and bank charges. This is a serious matter. We believe that as the Government have provided the banks with large amounts of capital, they should direct banks to respect the agreements they have previously entered into with businesses, and not change their rates and charges at the first opportunity.


4. Energy Bills


4.1 There is considerable concern surrounding the payment for energy bills. This is a widespread concern among individuals and businesses, but some businesses rely particularly on affordable energy, and are being severely affected by the increases.


4.2 We believe that action on energy bills needs to be approached from an individual as well as business level. Our view is that the Government must put pressure on the energy companies to reduce their prices immediately, and if this is not forthcoming they must very seriously consider using legislation or other means to force the companies to reduce their bills.


4.3 The price of oil is falling and we would expect some reductions in energy prices in the New Year. It is vital that pressure is put on the companies to ensure that their price reductions are in line with the significant reduction in the price of wholesale energy.


5. Public Procurement


5.1 Concern has been expressed to us that Public Procurement policies are often not as transparent as they should be, and can work to exclude new and small businesses. We believe that action is needed to open up procedures as soon as possible. Again, we recognise that this is more of a long-term issue, but we hope that this will be included after the excellent working the Committee has already done on this issue.


December 2008


[1] Size Analysis of Welsh Businesses, 2006