Matthew Hancock speaks to the Confederation of British Industry (CBI) at the inaugural Medium-Sized Business Conference at St Paul's, London.
Ladies and gentleman. Here we are in the shadow of St Paul’s built by Sir Christopher Wren 3 centuries ago. No doubt if Sir Christopher were alive today he would be among this audience. An architect at the cutting edge of his practice running a medium sized business. Now. People talk about small businesses being the lifeblood of the economy. I say that they are. And if they are then medium sized businesses are its beating heart.
I come from a business background. I understand that it is often a difficult and sometimes a lonely journey. I understand that access to finance is more than just a policy issue in my department. It’s more than just an abstract in the pages of the business section it’s:
- about bread and butter
- about the next order
- about growth
So I know how important your business is to you. And I know how important you are to us. There are around 10,000 medium sized businesses. A small proportion of the overall business population. But you are responsible for a fifth of total employment in the private sector. You are crucially important to our future prosperity. John Cridland calls medium-sized businesses the forgotten army of the economy. But you have not been forgotten by this government. We are supporting you like never before. We are taking action to address late payment and are kick-starting the capital markets through the British Business Bank. We are streamlining public procurement to make sure that all businesses - whatever their size - get a fair share of this £230 billion market. We have already cut the main rate of corporation tax by 7% age points since 2010. Next year we will cut it again to 20%, making it the joint lowest in the G20.
UK Trade and Investment and UK Export Finance are working in partnership to unlock new opportunities for you abroad. Now. Much is made of the British penchant for caravans. Thanks to this government we are sharing our enthusiasm for them with the world. UKTI are helping the Swift Group export caravans to Europe, the US, China and Australia from Europe’s biggest caravan manufacturing facility in East Yorkshire. Businesses behind some of our biggest regional names and behind some of our biggest successes. Near my constituency in Suffolk, Adnams have been brewing beer for over a century. They are a medium-sized business.
From Cadbury’s to Caffe Nero where many of you may have had coffee this morning. Some of you send satellites into space; others sell Yorkshire puddings to Tesco. You are Grace Foods who make Caribbean hot sauce in Corwen and sell it to the Russians. I think that it’s safe to say you are a diverse bunch. And you are as important as you are diverse. You are helping build the northern powerhouse in places like Leeds and Manchester. You are a crucially important part of this government’s long term plan to create strong, sustainable and balanced growth.
Now, some of you may have been to Guildford. It has a long association with space. Indeed, it is where Ford Prefect in The Hitchhikers Guide to the Galaxy claims to come from. And even today, it is still a part of our £11.3 billion space industry. Guildford is home to Surrey Satellite Technology Limited (SSTL), a long established medium sized firm at the cutting edge of some of the most advanced technology anywhere in the world. They have built and launched 41 satellites for 16 countries. With the help of UKTI they are breaking into new markets across the world in:
They have even worked with NASA. When Hurricane Katrina devastated New Orleans in 2005, the only satellite available to take pictures of the damage was made by SSTL. They will be a big part of our commitment to capture 10% of the global market for space and technology by 2030. This will mean 100,000 new jobs for the UK. You are a vital part of our long term economic plan. Whether we like it or not, government affects the business environment. Let us not pretend otherwise. We impact business of different sizes and in different sectors in different ways:
- we are a customer
- we make decisions on tax
- on infrastructure, on regulation, on skills
- on a whole range of different things but which are all crucial to your success
That’s why it’s so important that we work with you to get these decisions right. Working in partnership to make Britain the best place in the world to grow a business so that we can all prosper as a nation in an increasingly competitive world. To do this, it is vital we hear from you. What changes are needed to make it easier for you to grow, create jobs and prosperity. Let’s take regulation. The Red Tape Challenge invited you to identify those regulations which are a burden on your business. Thanks to you, we are reforming or removing over 3000 regulations. We’re tackling overzealous enforcement. This is saving businesses like yours over a billion pounds a year. This approach is because businesses are best placed to understand how to help business. This is a step change in the culture of Whitehall and Westminster. But it is not just about less tax and less regulation. It’s also about more skills, more innovation, more infrastructure, better access to finance and more support for exports.
UKTI’s International Trade Advisers have a wealth of experience and access to an extensive overseas network. UKTI has a renewed focus on the 10,000 MSBs and we have written to each and every one and are trebling the number of Trade Advisers dedicated to and focussed on your needs. They can help navigate legal systems, introduce contacts, design your entry model and find interpreters. They will help you access UKTI’s huge network of sector experts both in the UK and overseas - across 160 locations in over 100 countries. You are key partners in our drive to increase total annual UK exports to £1 trillion by 2020. We will continue our efforts to help you fly the flag overseas. And let me turn to the issue most often raised with me by MSBs, access to the right finance on the right terms at the right time.
Under this government, UK Export Finance has massively expanded its range and reach so that it is more relevant to the needs of mid-sized firms. And we will continue to work hard to ensure that you get the finance you need when you need it – unlocking investment, diversifying finance and raising aware of alternatives to bank lending. It is common place now to say the UK is good at start up finance and great at liquid finance at the largest end. But historically we have been weak in the middle. I have no doubt there is more to do. But be in no doubt the building blocks are being put in place to solve this:
first and foremost returning the big banks to strength and refocusing them on the bread and butter of supporting growth business as Lloyds and others are now doing - the business growth fund is starting to work at scale
second the British Business Bank - this government finance is supporting the capital of alternative venture capitals, peer to peer and crowd finance, and the growing challenger banks
third the AIM market and retail bond markets are growing and open
We are working to strengthen private placements and alternatives to traditional bank finance. None alone will solve this gap but together, in time, we will tackle this historic weakness and support our MSBs. All these things together have one goal. We want Britain to be the best place in the world to start and grow a business. We cannot do that without you. There is much work to do. Yes, things have improved. Yes, we are moving in the right direction. But we are not done yet, not by any margin. So help us to help you. We must not abandon the plan, and go back on the changes we are making. We must not go back to the past. But instead we need you to work with us, and in so doing we will help you to build the jobs, prosperity and optimistic future we all want to see.