The Business, Energy & Industrial Strategy (BEIS) Committee is also 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.
The Treasury Committee's 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 BEIS Committee's inquiry 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.
Commenting on the launch of the Treasury Committee’s inquiry, Chair Rt Hon. Nicky Morgan MP, 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.
The Committee will consider the regulation of SME lending, including whether banks should be bound by a broader set of duties when dealing with small businesses, and whether the protections afforded to SMEs, and their avenues for dispute settlement and redress, are appropriate.
The inquiry will also look more widely at the state of SME finance, and whether capital markets are functioning effectively to provide entrepreneurs and small businesses with the finance they need to grow and thrive."
BEIS Committee's Chair Comment
Commenting on the launch of the BEIS Committee's inquiry, Chair Rachel Reeves MP said:
"With smaller enterprises making up more than 99% of private businesses and accounting for more than half of turnover and employment, small businesses are the lifeblood of the UK economy.
But often our small businesses lag behind their overseas competitors in terms of innovation and productivity and we want to explore what more the Government could be doing to help boost this and enable them to access support such as management training. Small businesses, whether they are aware of it or not, have a vital role in helping to tackle the UK’s wider productivity problem.
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."