EXCLUSIVE: Following on from last week’s announcement that the government has awarded £2m to fund projects aiming to boost small business productivity and tackle late payments, Smallbusiness.co.uk grabbed 10 minutes with Small Business Minister Kelly Tolhurst.
Kelly Tolhurst has been Small Business Minister since July 2018, having been the MP for Rochester and Strood since 2015. Before that, Kelly Tolhurst ran her own marine survey business with her boat-builder father.
If you had a magic wand, what’s the one thing you would do to boost small business productivity?
Really, there’s no magic wand, there’s a whole range of things we need to tackle and work with the SME market to boost productivity. There are a whole number of reasons and a whole number of measures that decide whether a business is productive or not, so one of the things I’ve been focusing on is around late payments. We know that technology helps productivity. And we know that late payment we know are a big challenge to the small business sector. That’s why we’ve put out the £1m Business Basics Funding round to encourage business to come forward and around innovative ways to help small businesses with their invoicing, payments and credit management and we know that will have an impact on productivity.
Nearly two thirds of companies have said that a no-deal Brexit will damage their business. Have you shared with the Prime Minister the anxieties small businesses have over no-deal?
The Prime Minister has been very clear that we would be able to leave the EU on October 31. We’ve stepped up preparations across all sectors across the country. We’ve had our teams out there. As ministers, we’ve been engaging with businesses and business representative organisations and really listening to some of these concerns and making sure we understand all those challenges which are there. It’s a mixed picture. Really, the aim of what I have been doing with the SME market, I’ve been listening to concerns and making sure we’re addressing that within government.
As of last week, we had the £10.6m business readiness fund to enable business organisations to advise their members on how to get ready for Brexit. As of last week, we’d already allocated £6.3m of funding.
Also last week, we launched the Business Finance Council to help small businesses get access to finance and bolster their finances during Brexit. Part of the BFC is the SME Finance Charter, which basically reaffirms to small businesses that they’re ready to lend, that they will be treated fairly…
As opposed to what exactly? That banks won’t lend; they won’t treat you fairly? These are just empty platitudes, aren’t they?
No, I think it’s reaffirming the banks’ commitment. We’ve got £1.3bn that is available to support SME lenders through the guarantee scheme. It’s affirming and giving confidence to the SME market and overcoming the perception that they don’t want to lend. It’s reassurance to the SME market that lenders are there, and they’ve got the headroom. It’s something that I’ve had experience before becoming a member of Parliament.
Why won’t the government narrow the late-payment window contained within the Prompt Payment Code from 60 days to 30 days, as business associations have asked? After all, asking to be paid within a month is not unreasonable.
We’re trying to lead by example by enforcing our large business procurement companies to sign the Prompt Payment Code. The work that we’re doing at the moment and has been a key development over the past 12 months is where we’ve had the payment practice reporting, we’ve been able to analyse the data alongside signatories to the code, and we’re seeing a change in culture already. We’ve now go the data to challenge them on what they’ve signed up for. Some businesses have been removed from the Code, some are working with us to ensure they get their house in order and pay their suppliers properly. You can do it with legislation but you need to change the culture.
What would you say to Labour, who argue that the Government always favours large companies over small ones, cuts taxes for big firms while ignoring business rates reform, which is the number one issue facing independent retailers?
I don’t recognize that at all. Normally, I’m only speaking to large businesses, saying I’m unhappy about their payment practices! Before becoming a member of Parliament, I was a small business owner and I would challenge anyone to say to me as a minister that I only speak to large businesses. My daily work here is how can I be the voice of small business throughout Whitehall? When you look at what we’re doing around late payments, that’s a small business concern. I’m also the retail minister and we’ve made changes to business rates, such as making business rates relief permanent.
Small businesses are the lifeblood of our economy and they are groups of people who bring innovation and that is a sector we need to support.
However, we also need to challenge to SMEs to boost their productivity. The CBI has recognized if small businesses could upgrade their accounting software, or run customer relationship management programmes – staggeringly enough, some small businesses do not have those systems — it could effectively add another £100bn to the UK economy.
Technology is going to be one of the keys to solving small business productivity. I’ve seen how technology can transform how you do invoices and credit control. I know of one security business that was able to collapse their invoicing from one week’s work to a few days because they brought on new technology. That’s increasing productivity.
Further reading on productivity