MPs are to scrutinise the lending market for SMEs and whether they have enough support in dealing with larger companies, with two new inquiries announced by select committees
The Treasury committee is to examine SME finance, and will look at the lessons to be learned from RBS’ Global Restructuring Group (GRG), which was found to have targeted SMEs in hardship, and more broadly at the state of the market.
Its inquiry will consider the extent of competition in the market, the various sources of funding available to small businesses, including crowdfunding and peer-to-peer lending, and whether the current regulatory framework provides appropriate protection to SMEs when they borrow money.
The Business, Energy & Industrial Strategy (BEIS) committee is launching a separate inquiry into government support for small businesses to boost productivity, and whether enough is being done to protect firms from unfair treatment by large companies.
This will examine whether small firms have sufficient access to good quality management training. It will also look at government measures, such as the establishment of the Small Business Commissioner, to help those small businesses affected by late payments from suppliers.
Nicky Morgan, chair of the Treasury committee, said: ‘The case of GRG has undermined the trust of small firms in banks, and highlighted the imbalanced and potentially exploitative relationship between banks and SMEs.
‘Little has changed since GRG to prevent similar mistreatment happening again, nor to guarantee victims access to fair and reasonable redress. Entrepreneurs and small business owners are frequently held up as the backbone of the economy, and as part of the solution to the UK’s productivity problem. They deserve to be treated fairly when they borrow from banks, and have access to justice when things go wrong.’
Rachel Reeves, chair of the BEIS committee said its inquiry would explore what the government could do to help boost productivity in the sector.
‘The collapse of Carillion has also thrown light on the treatment of small companies by large firms and the difficulties caused by late payments. Deliberate supply chain bullying can be devastating for business owners and contributes to thousands of business deaths each year. We want to hear if the government could be doing more to stop this,’ Reeves said.
Details of the Treasury committee SME Finance inquiry are here.
Details of the BEIS committee Small businesses and productivity inquiry are here.
Report by Pat Sweet
