Small Business: EU Exports

Asked by

To ask Her Majesty’s Government what steps they are taking to support small businesses affected by increased costs in exporting to the European Union.

My Lords, small businesses can access trade support from UK Export Finance and the Department for International Trade, including export insurance and free local export champions. Business of all sizes in the UK can also access support services, including those by our free business support helpline, our growth hubs in England, which are expanding, and the British Business Bank. We will continue to review this support to ensure that UK businesses can keep trading successfully with the EU.

My Lords, many exporters are facing new and huge problems in exporting to the European Union, including increased costs, VAT charges and extra red tape. All of this has serious consequences for our economy, which is already hit by Covid. Did the Government realise that their deal with the EU was going to cause these problems? What are they going to do to ensure that our exporters can overcome them quickly?

The noble Baroness highlights a very important point. The Government are not just providing advice, important though that is. Through the British Business Bank, the Government have helped improve and diversify the supply of finance to small businesses. Its start-up loans company provides loans of up to £25,000 and advice. HMRC provides grants for recruitment and training of specialist staff and the Government have a £20 million fund specifically to help SMEs adapt, including grants of up to £5,000. The short answer is that the Government recognise the issues small businesses are facing and are doing their best to alleviate some of them through various means.

My Lords, I am interested in the Answer that the Minister has given to my noble friend Baroness Quin. This has plainly not been a frictionless experience for companies; the arrangements are more complex, there is masses more red tape and there are higher transition charges. Does the Minister share the advice given by some officials—that SMEs should set up inside the EU if they want to conduct business normally, even if the UK staff of those businesses would be dismissed and replaced by EU citizens in the EU? If she would be unwilling to give the same advice that her officials are giving, will she support a compensation scheme to make good on the promise that businesses will not suffer any detriment and thereby also help them save jobs in the United Kingdom?

I do not recognise the advice the noble Lord refers to. These are early days and we are still in the first month after the end of the transition period. Decisions on whether to offshore business operations will be commercial decisions for those companies, which we would not welcome. We are committed to ensuring that businesses have access to a range of support to help them navigate these complicated new trading arrangements with the EU through support services, including those provided by the Department for International Trade. We will continue to engage with businesses about the issues they face to refine our support further.

My Lords, the Minister says that the Government are not only offering affected businesses advice on dealing with red tape, they are also offering them loans. This is all very well but recognises the extra costs. Government officials seem to be making suggestions which involve more costs, such as moving operations to the EU or appointing customs specialists. What prospect can the Government offer them of discussions with the EU resulting in streamlining of the bureaucratic burdens and associated costs? That, of course, requires an atmosphere of good will, which is not helped by some of the disputes going on at the moment.

The noble Baroness makes a number of very important points. The Government have provided the £20 million fund to help SMEs adapt and this includes grants, not just loans, of up to £5,000 to help them through this. In answer to the question on the Trade and Co-operation Agreement, it establishes a standard set of committees and contact points to oversee its operation and run the trade partnership, as well as providing for technical discussion across all other areas. A series of grace periods are agreed in the TCA, including on rules of origin, with evidence of third-party suppliers not required until 2022.

Does my noble friend agree that we need to work with SMEs and other businesses to tackle the lower propensity of British businesses to export? We need to seize export opportunities to the EU and those countries outside the EU. Can she therefore update us on what initiatives exist to encourage exports to countries outside the EU?

I am grateful to my noble friend for asking a positive question looking at export markets outside the EU. We are committed to enabling SMEs to benefit from these new markets. They have access to a full range of tailored support from the Department of International Trade, through the Exporting is GREAT digital hub, the “business as usual” scheme for exporters’ working capital and the provision of export credit insurance policies where many commercial providers have scaled back. Further, the general export facility announced in the other place on 7 December provides a government guarantee to the five main banks to provide working capital support for SMEs.

My Lords, as the Minister said, these are early days. However, there are reports—some in the papers today—about small businesses that export to the EU having difficulties and incurring extra costs. This can impact on consumers, particularly if companies are using the uncertainty created by the end of the transition period to load these costs on to consumers. Does the Minister believe that the Government have the powers they need to stamp out such abuses?

While I am not aware of the abuses the noble Lord refers to, I will make sure I am fully informed of them. It is vital that traders set up transparent contracts with their consumers, which clearly explain any costs applied, and our consumer rights regulations enable consumers to take legal action to enforce their rights and recover their money if they think that these fees are excessive. If the noble Lord can share specific examples of this activity, I will be able to consider it further and write to him with more details.

I am sure the noble Baroness will understand that you cannot export what you cannot manufacture. I chair a manufacturing business in renewable heat, and we have critical parts that need to come from Slovakia. The perfect storm of coronavirus, Brexit red tape and order issues, means that hauliers in Slovakia will simply not bring goods to the UK at present. Manufacturing lines will soon halt, even though product and parts were stocked up in anticipation of Brexit issues. What are the Government doing to try and unlock the position for SME companies that are manufacturing in the UK, cannot access parts and do not have leverage to get priority from their European suppliers, as big companies may do?

I understand the point the noble Lord makes. I know that we managed to secure a much better deal for UK hauliers. They can continue to operate through and within the EU throughout the end of the transition period. As we know, that is important to allow the flow of goods, food and medicine into the country and to ensure that we can export our goods in a cost-efficient way to the EU and beyond. On his specific question about goods coming into the UK, I had better take that back to the department and write to him with further details of what we might be able to do to help.

My Lords, while it may be less than one month since the transition period ended, for small businesses the situation is urgent and cannot be allowed to continue for many months. Does the Minister agree that the processes and paperwork from 1 January have turned out to be far more onerous than businesses were led to believe, and much more than the publicity in newspapers, online and on television suggested? That publicity told people to prepare for 1 January when they did not know for what they were actually preparing. I consider the matter urgent and some help is urgently required.

I thank the noble Lord for his question. The Government’s campaign to inform businesses and citizens of the need to change started in July. We published the first draft of the border operating model in July 2020. The campaign encourages businesses to visit GOV.UK/transition and to use the checker tool to tailor the guidance for their individual circumstances. Customs declarations would still have been necessary even if we had had no deal. While I am very sympathetic about the additional administration burden for small businesses, we are doing all we can to help them catch up with what is required.

My Lords, the time allocated for this Question has ended, and indeed Question Time itself has come to an end.