Economic recoveries can only be sustained off the back of thriving small businesses. These firms create jobs in local communities that they have a vested interest in. They are the ones that endure the difficult times in the hope of a brighter future.

Small businesses are often at the vanguard of innovation. Bringing new ideas to market as they look to take advantage of a gap in the market.

However, the report out today from the Treasury Committee shows just how difficult a landscape it has become for small businesses.

Many are being put off from innovating and growing by damaging financial regulations and inadequate support from banks.

Chancellor Jeremy Hunt appearing before the Treasury Committee in the House of Commons, London. PIC: House of Commons/UK Parliament/PA Wire

The Tories promised to cut red tape to aid businesses. The party has been in Government for 14 years. Yet it is clear that the Government has failed to deliver for small businesses.

MPs on the Committee condemned the unfair debanking of legitimate businesses and substandard processes for resolving disputes between small firms and banks.

The report also calls on the Prudential Regulation Authority not to go ahead with plans to scrap the small business supporting factor in the new Basel 3.1 standards because it could lead to British small businesses falling behind their European and American competitors. It is a mechanism that lowers capital requirements on lending to small businesses.

Clearly there is a danger that small British firms will be further disadvantaged.

Any future government that is serious about turning the economy around would put small businesses at the heart of the recovery plan. Central to this would be access to capital.

Small firms need to be supported in order to grow the economy

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