(2 years, 11 months ago)
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18:59 - The House divided: - Ayes: 219 / Noes: 0 - Question accordingly agreed to.
Mr Deputy Speaker (Mr Nigel Evans)
There is quite a bit of interest in this debate, so may we have some time restraint from the Front Benches in order to allow as many Back Benchers in as possible? I think anyone looking to contribute from the Back Benches should really limit their speaking time to three minutes.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I beg to move,
That this House recognises the strain that businesses are under following a difficult Christmas period and two years of disruption during the covid-19 outbreak; notes challenges are more severe in some sectors; regrets that businesses are struggling with increasing energy costs, high inflation, low growth and higher taxes as a result of the Government’s long-term failures and lack of adequate support; and therefore calls on the Government to reform business rates, to alleviate the debt burden by allowing businesses flexibility on Government loans and to implement a contingency fund to support businesses with high energy costs.
Our motion highlights the strain that British businesses have been under over a difficult Christmas period and acknowledges the further challenges that they will face this year. Most of all, I hope that it will facilitate a discussion about what this country needs to allow British businesses to grow and succeed, in order to ensure our and their future success.
I hope that we can take a moment at the beginning of the debate to recognise the toll that the recent challenging trading environment has taken on many people. When the shadow Chancellor and I met a wide range of businesses just before Christmas, I was struck by the impact of the pandemic on the mental health of many of the people present on the call. The uncertainty and the constant need to reinvent business plans and respond to changing consumer behaviour brought on by the pandemic have taken a toll on many people. The Government’s press conference just before Christmas, in which people were advised not to go out but no support package was offered alongside that advice, was genuinely very difficult for people. It was because of the testimonies we heard that day that we were so insistent that support had to be offered before Christmas. I am pleased that the Government changed course and recognised that additional need.
I am sure that we will hear from hon. Members in this debate the effect of that short-term pressure on businesses in the areas they represent.
Alex Cunningham (Stockton North) (Lab)
Energy-intensive industries, such as those on Teesside, are under the cosh when it comes to the cost of gas, and not just for energy but as a feedstock in the production of a wide range of goods. Does my hon. Friend agree that without action on the highest prices in Europe, on gas transportation costs and on carbon costs, many companies could fail, costing thousands of jobs?
Jonathan Reynolds
I absolutely agree with my hon. Friend, who has put his case as he always does. I will mention energy-intensive sectors later in my speech, but the broader point is that the medium and long-term pressures facing businesses do not look much better than the short-term pressures that they have just come through.
Jonathan Reynolds
I am conscious of your warning, Mr Deputy Speaker, but I will give way to a couple of hon. Friends.
Janet Daby
Rising energy prices have been described as an existential crisis for small businesses in the hospitality sector. Does my hon. Friend agree that the Government must offer support to businesses in paying their energy bills immediately?
Jonathan Reynolds
Very straightforwardly, yes. We will talk about some of the specific proposals that the Labour party has developed to help alleviate that pressure.
Catherine McKinnell
Like many colleagues, I visited many small businesses in my constituency just before Christmas on Small Business Saturday. Although they were really pleased with the support, they also described the immense challenges they face and have faced over the past couple of years. High energy bills and inflation are clearly having a big impact, but it is set to get even worse with the increase in national insurance we are expecting in a matter of months. Surely my hon. Friend agrees that the Government cannot expect businesses to keep shouldering extra burdens without putting more support in place.
Jonathan Reynolds
My hon. Friend is right. There is already a cost of living crisis gripping the country, and it has been brought on by the frightening increases in energy costs and inflation following a decade of poor Government decisions.
It is obvious that this requires a response from the Government. Surely they cannot be considering allowing the average energy bill to hit £2,000. Surely they cannot be willing to see industry halt production or to have inflation hit double-digit figures. Frankly, it has all gone a bit Ted Heath. Where are the Government?
In contrast, we have made it very clear how Labour would act. We would take VAT off fuel bills. We would take off the supplier of last resort costs, too, and we would increase both the amount and the eligibility for the warm homes discount. I regret that Conservative Members have said they cannot vote for that, because Labour’s plan would have saved the average household £200 and the worst-hit households £600. The Government have already rejected that plan today, so please let us hear the alternative. It feels like the Government are asleep at the wheel, or perhaps they are just too bogged down in constant crisis and scandal to get the grip our economy needs.
Mr Richard Holden (North West Durham) (Con)
The hon. Gentleman is setting out a case, but the crucial thing is that the Government have a plan and he has not set out an alternative. So far the alternative sounds to me like extra borrowing. If it is not extra borrowing, where will he get the money to do everything he proposes today?
Jonathan Reynolds
The hon. Gentleman is more astute than that. He will have seen the plan to take revenue from the Exchequer windfall and the VAT receipts the Government have already received. We will increase money coming from the North sea oilfield with a windfall tax. He will know the North sea is one of the world’s most profitable jurisdictions in which to extract oil and gas.
There is something else the hon. Gentleman is not telling the House. If the Government allow the national insurance rise to go ahead, that alone is estimated to put two additional percentage points on inflation. He knows that will trigger a range of further Government expenditure, as well as causing major pain to households. With respect, I do not think he has a case.
The businesses I have spoken to this week are understandably worried that a squeeze on households of this scale will adversely affect consumer spending. In addition, as we have heard, businesses are directly affected.
Matt Rodda
I will be brief, as I appreciate the pressure on my hon. Friend’s time. He is absolutely right to point out the link between household expenditure and businesses. In Reading and Woodley many businesses in the hospitality sector’s supply chain have been badly affected. We have a thriving microbrewery industry, and these hard-working brewers are badly affected by rising energy prices, and they have been badly affected by the difficulties that affect the whole hospitality sector, but they have received less support from the Government. Does he agree that the Government need to listen to businesses and to think about the whole business community, not just certain parts of it?
Jonathan Reynolds
I love it when Members bring testimony from their own constituencies about specific sectors that have been affected. In the urgent question we had before Christmas, a lot of people mentioned coach companies, for instance, which were not at the time getting the national coverage they deserved. I thoroughly agree with the point my hon. Friend has made that businesses are directly affected by energy costs too, because they are seeing their bills go up while revenue goes down. That is clearly the case for energy-intensive industries, for which out-of-control energy hikes are simply unaffordable.
I am absolutely adamant that great British industries such as ceramics, glass and steel must have a future, but I recognise that that will not happen without political commitment. Many of us here are from places that take real pride in our industrial strength and heritage, and there has to be a future for these industries not least because, although their domestic carbon footprint is high, if we compare them with foreign competitors they are usually among the most efficient in their class. We cannot attempt to hit net zero simply by letting industry, emissions and jobs go overseas. That is why we have proposed a £600 million contingency fund to support energy-intensive industries, and we have laid out a plan for green steel, promising to fund pilot projects using hydrogen instead of coal for production and to joint-fund new equipment so the sector can grow.
However, if we want to keep these jobs and firms, it will require the public and private sectors to work together, and that brings me to the long-term challenges facing businesses because in many ways that is the most concerning picture of all. Right now, every economic indicator we have is heading in the wrong direction. The forecast for long-term growth is poor, productivity growth is appalling, wages are stagnant, and inflation is high and rising.
Kevin Hollinrake (Thirsk and Malton) (Con)
Will the hon. Gentleman give way?
Jonathan Reynolds
I will proceed.
I know many Government Members are uncomfortable hearing it, but it is true to say that the Conservatives have become a high tax party because they are a low growth Government, and there is no plan that I can see to change that. In fact, most of the decisions the Government take tend to make things worse. Raising taxes, failing to deliver on transport promises and tearing up the existing industrial strategy are not the ways to increase productivity, growth and wages.
We used to talk about the danger of industrial strategy being the Government trying their hand at picking winners. This Government’s strategy is better described as kicking winners. Not a week goes by without some Government Minister trying to drag our world-class universities into their desperate culture wars, instead of recognising the pioneering research that, among other things, gave us the vaccine. There is the Brexit deal the Government negotiated that delivered none of the market access our financial services industry asked for, and which has put bureaucracy and red tape in the way of British exports.
If we are to meet the challenges of the future, it will take a lot more ambition than this Government have so far shown, and it will require a change of course in several areas. It will require reforms—significant reforms—such as the replacement of business rates that we have proposed, and policies that incentivise long-term growth and investment over slogans such as levelling up, or unproven flights of fancy such as freeports.
Mr Toby Perkins (Chesterfield) (Lab)
I am grateful to my hon. Friend for giving way and really pleased to come in when he is talking about business rates because for both the hospitality sector and the retail sector—two sectors that are crucial in my constituency and so many others—business rates are one of the biggest barriers to growth and to survival.
Jonathan Reynolds
I am particularly pleased I gave way to my hon. Friend because I drive through Chesterfield when I am going from Stalybridge to London, and I pay tribute to him and his local colleagues for the work they have done. He is absolutely right that our promise on business rates is to replace an outdated system that does not work with one that is fit for the future. That means rebalancing rates so that bricks-and-mortar businesses do not lose out to online firms and making sure we encourage, rather than disincentivise, investments in new plant and machinery.
Jonathan Reynolds
No, I am going to proceed. [Interruption.] Okay, go ahead—I give way.
Kevin Hollinrake
Just to make a point of detail about the context, the hon. Gentleman talks about runaway inflation in the UK, but does he accept that these are international problems? The inflation rate in Germany is actually higher than in the UK at 5.3%, and the inflation rate in the US is 6.8%, which again is much higher than in the UK. Shall we have some facts in this debate, rather than some of the rhetoric coming out from his speech?
Jonathan Reynolds
I always have time for the hon. Member, so I am not sad that I gave way to him. Yes, as we come out of the pandemic there are pressures on the global economy—we can see that in supply chains and in inflation. The question for the hon. Member is this: seeing that global picture, are the Government right not to take action, but to add further to the problem? We can see the impact on domestic energy prices, to which we are uniquely exposed because of his party’s Front Benchers. Is that the right course of action, or should we follow the route that the Opposition are putting forward, which I respectfully say is a much better proposition?
We are fortunate to live in a country where we have world-leading industries, but we agree that our productivity has stalled, that too much work is low-skilled and low-waged, and that prosperity is not shared in every community. With the right leadership from Government, I believe that many of our problems and challenges could be overcome.
The Opposition motion clearly sets out the action that the Government could take now: freezing and replacing business rates, saving the average shop or small factory £4,000 this year; alleviating the debt burden on firms, allowing them to pay back some Government loans when they are more profitable; not going ahead with the national insurance rise, which is a tax on jobs for employers at the worst possible time; and introducing a £600 million contingency fund for businesses, particularly in energy-intensive sectors, to address spiralling energy costs.
Where the Government have left the pitch, Labour will back businesses to keep British firms competitive. We need a Government who can match the vision and dynamism of British business, which we are ready to do. Labour is unashamedly a pro-business, pro-worker party. The leaders and entrepreneurs I speak to—[Interruption.] Quiet, Secretary of State! They do not want handouts from the Government; what they want is a level playing field and an environment they can do business in. They want the state to take the long view and provide the foundations that they need for success, and that is exactly what Labour will offer.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)
I am grateful for the opportunity to contribute to the debate.
I agree with the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) that this has been an extremely difficult time. He is right to highlight the impact on businesses across the country: it is difficult to overstate the stresses and strains that businesses face, and this has been one of the toughest periods for business and industry since the second world war. From restrictions to rising energy costs, from supply chain shortages to rising inflation, businesses have had to weather an especially turbulent storm. They have had to cope with the logistical and financial disruption brought about by the coronavirus, while keeping staff and customers safe against a disease that we did not initially know much about and that has frequently required rapid changes. We remain extremely grateful for their fortitude and resilience.
Throughout the pandemic, the Government have tried to do what we can, in the most extraordinary period of our lifetime, to support businesses through the tough times. The interventions that we have made are unprecedented, even for a politician like me who does not like talking about policy solely in terms of input. We have mobilised, necessarily, hundreds of billions of pounds in support from the taxpayer to provide one of the world’s most comprehensive and generous economic responses to the pandemic. Our plan backed business, because we know that only by supporting business can we enable it to create jobs, strengthen communities and support the whole economy. It came on top of other pro-business measures that have always been at the heart of how we, as a Conservative Government, run a strong economy.
In the Chancellor’s 2020 Budget, he announced a series of substantial interventions through a business rates relief package. The majority of businesses in the hospitality and leisure sectors will see a 75% reduction in their rates bill across this financial year and 50% capped business rates relief next year. We recognise that the hospitality and leisure sectors have been hit particularly hard, so there is a reduced 12.5% VAT rate to support cash flow and viability until the end of March, which has helped to keep 150,000 business afloat and has supported nearly 2.5 million jobs. On top of that, we had the £1.5 billion covid-19 additional relief fund for those who had not previously had business rates support.
Dr Matthew Offord (Hendon) (Con)
As the Minister will know, the threshold turnover for small businesses to register for VAT is £85,000. A constituent emailed me today to say that as a result of the pandemic, inflation has increased and he has had to increase his prices. Does the Minister agree with him that the Government could raise the VAT threshold to ensure that businesses can grow and the money can be used for investment?
Lee Rowley
My hon. Friend tempts me to get into policy, which is not the purpose of Opposition day debates—as much as the Opposition would like it to be—nor something that I have control over. He has made his point, however, for which I thank him.
We had all that support, and then when omicron came along, the Chancellor announced a further £1 billion of support for the most affected businesses, in particular, again, hospitality and leisure businesses, which had seen a steep drop in consumer demand. Taken together, that shows the Government acting in extraordinary times. I am pleased that the IMF praised our support measures as,
“one of the best examples of coordinated action globally”.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the Minister for courteously taking my intervention. As the House knows, I represent the furthest away constituency of mainland UK. Does he agree that in such a constituency, where distance is a huge issue, businesses face special challenges owing to remoteness and the cost of transportation and every other service?
Lee Rowley
The hon. Gentleman makes an important point that demonstrates the different challenges for different businesses in different parts of the country, and why the half-baked plans that the Labour party has put forward today—almost—demonstrate that it does not have a coherent plan to face the challenges.
All those measures came on top of more than £79 billion of Government loan schemes, which have directly supported over 1.5 million businesses. On the specific point in the Labour motion about repayments, which the hon. Member for Stalybridge and Hyde did not discuss to any great extent in his opening speech, we have already changed the way that they work to provide greater flexibility for individual circumstances through things such as “Pay as you grow”.
At every twist and turn of the virus, the Government have acted decisively to protect businesses and livelihoods. I refute in the strongest possible terms the charge made by the motion that we have failed to support UK businesses through the pandemic.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Does the Minister recognise the anger and upset of excluded businesses that have been unable to get any support, such as those in the coach industry and many others, especially when they see the amount of fraud involved in some of the online loan schemes that the Government have introduced? Further to that, I raised the issue of fraud involved in loans coming from the Government in the Treasury Committee, but I did not feel that there was a fervour or desperation to deal with and tackle the issue. Will the Minister talk about how the Government will recoup some of the money that has been wasted on fraud and how they will ensure that excluded people get the support that they need to get through the pandemic too?
Lee Rowley
The hon. Lady makes an important intervention. When policy is made at speed, it is a huge challenge, as the House knows, to ensure that we understand where the lines are drawn correctly. All the way through this difficult time, with the changes that have been required, the Government have tried to target the interventions and the support in the best way to cover the most people who need it.
The hon. Lady’s point about fraud is hugely important. As we hopefully move from a direct intervention model to one of recovery, there will be a huge focus on fraud. The permanent secretary of my Department was before the Public Accounts Committee yesterday with some hon. Members present to talk about that subject, which demonstrates its importance in the future.
Let me turn now to another substantive part of the motion, business rates, which are a favourite topic for Labour party Opposition day motions. There are constant suggestions for changes. On some days the suggestion is to cut business rates, on others it is to reform them. Occasionally, when the Opposition are feeling very bold, they say that we should scrap business rates.
Lee Rowley
I will not give way now, but perhaps in a moment.
Months after those bold statements began to be made during last year’s Labour conference, we are still yet to hear the detail of how Labour will meaningfully reform business rates.
Lee Rowley
I am happy to give way; perhaps the hon. Gentleman can explain it.
Mr Perkins
I have a better memory than the Minister, because I remember when George Osborne stood at that Dispatch Box in 2015 and said almost exactly the same thing, so we have been waiting six or seven years for business rates reform under the Government. We will wait another two years until my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) is on the Government Front Bench to actually get the change that our businesses need.
Lee Rowley
I hate to break it to my neighbour, but we came out last year with a reform of business rates, which is intended not just to save a substantial amount of money for businesses in his constituency and mine, but to ensure reform and recognition of the changes necessary. Labour ignores those kinds of changes, and what the Opposition did just a moment ago is a perfect example. The Chancellor’s 2021 Budget delivered a huge tax cut to business, freezing the multiplier for 2022-23, worth nearly £5 billion over the next five years, introducing a new temporary 50% relief for the retail, hospitality and leisure sectors, and moving to a yearly revaluation cycle from 2023.
Kevin Hollinrake
The only detail that we seem to know about in Labour’s plans to reform business rates is a sixfold increase in the digital services tax. One thing we know about the digital services tax is that Amazon, for example, passes it straight on to consumers, which is exactly what it did. The other thing we know is that it does not apply to Amazon’s direct sales, so those plans will hit small businesses and consumers. Is that not the wrong emphasis for reforming business rates?
Lee Rowley
I am grateful for my hon. Friend’s intervention, and that is exactly the level of detail that demonstrates why, when the Opposition come to this House and put forward half-baked schemes, they immediately fall apart when they come under scrutiny, away from the warm words.
We have just gone through a business rates review, which we have talked about, although it might have been useful, consistent or, indeed, even slightly coherent for those on the Labour Front Bench to actually say what they were going to do over and above that. Of course we acknowledge the burden that rates impose. That is why many of us on the Government Benches are here in the first place: because we recognise over the long term that a lower tax burden is the way to make society and communities healthier, happier and wealthier. I can tell the hon. Member for Stalybridge and Hyde how that is going, given that he sat on the Opposition Front Bench under the right hon. Member for Islington North (Jeremy Corbyn), who was going to raises taxes until the pips squeaked. As Conservatives, we know that a successful, dynamic, thriving private sector is the only way we get a strong economy in the long run. This is a Government that support business. We backed business robustly during this unprecedented crisis period, and we will continue to do so as we rebuild the economy following the pandemic.
This economic plan is working. The vaccine roll-out continues to play a key role in enabling us to lift restrictions, allowing sectors to remain open and businesses to recover. The UK was one of the fastest-growing G7 countries in 2021, and the same is likely in 2022. There are over 400,000 more people in employment than before the pandemic, and redundancies are below pre-pandemic levels. As we recover and move from the most unprecedented health situation of our lifetimes, we are moving towards the most unprecedented economics, whereby many economies are experiencing high inflation, primarily due to pressures from rising energy prices and disruptions to the global supply chain. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) highlighted the equivalence of inflation elsewhere in the world. Those global pressures are the main drivers of higher inflation in the UK. Global production and supply chains are in the process of adapting and adjusting to that disruption, and the Chancellor is working with his G7 partners to monitor global supply chain pressures and build a strong and resilient recovery.
Before I conclude, I want to spend a short time on the third part of the motion, energy. On recent high energy prices, I want to acknowledge the concerns of industry and business and make it clear that the Government are committed to them both now and in the longer term, as we work through these immediate challenges and volatile times, and then look to opportunities and challenges over the long term. The Government are constantly engaging with stakeholders, including large energy users, businesses and energy retailers, to consider what action may be necessary. The recent rise in energy prices over the autumn and winter has been driven by the increase in the price of wholesale gas, the demand for which has grown, as we and other nations have recovered from the covid-19 pandemic. Consequently, higher wholesale gas prices have been observed in Europe and Asia in the last half of 2021.
However, it is vital to note that this has not impacted our energy security. The Government continue to work closely with Ofgem, National Grid Gas and other key industry organisations to monitor supply and demand. At the same time, the Government are determined to secure a competitive future for all businesses, including those that are energy-intensive.
Lee Rowley
I apologise to hon. Gentleman; I need to make progress so that others can come in.
Many large energy users have already taken the sensible and responsible step of adopting hedging strategies to shield them from some of the exposure to gas and electricity prices. In recent years, although the Opposition never acknowledge it, we have provided extensive support, worth more than £2 billion since 2013, to help with the costs of electricity and to protect jobs.
Yet again, just as with business rates and just as with loan flexibility, we are left asking, “What would Labour actually do?” What is the detail behind the warm words? What are the changes that Labour will be proposing when the headline writers have moved on? How will the contingency fund work? Who will have access to it, and for how long? How will the moral hazard of those who have hedged be dealt with? What will be the definition of “energy-intensive”? How will the windfall tax work? How will Labour avoid reducing investor confidence or capital investment, ensuring that we have enough domestic energy to supply a transition to a greener future?
There are no answers, no detail, no nothing. This is Labour’s debate in Labour’s time with Labour’s choice of subject, but yet again we find ourselves without the detail, without the information, without the alternative—and why? Because Labour’s plan is no such thing. It seeks headlines rather than solutions, it offers soothing words rather than actual detail, and it plays politics when sober analysis and close working with industry are required.
I will end my speech by stating once again the Government’s belief in this country as a great place to do business. We have the lowest corporate tax rates in the G20, a regulatory framework that puts us in the global top 10 for ease of doing business, and a highly skilled workforce. It is easy to see why the UK is consistently home to one of the largest and most resilient economies in the world. That is why we are seeing so much excitement in the rest of the world about investing in the UK, not least when investors queued up to spend at the global investment summit last year. In the last 10 months, we have already seen a flurry of spending in the UK: a gigafactory in Sunderland, Ford and Stellantis churning out electric vehicles in the north-west, GE Renewable Energy and others creating an offshore wind hub in Teesside. That is a huge vote of confidence in the UK as a place to do business as we recover from the pandemic.
We will take no half-baked plans, no headline-grabbing stunts and no lessons from the Labour party. The Conservative party is the party for business, and we will continue to work with business and industry through difficult times to build the free-market, competitive and dynamic future that will make our country healthier, wealthier, greener and happier.
Stephen Flynn (Aberdeen South) (SNP)
It is a pleasure to take part in this important debate, and, of course, to see so many Members on the Government Front Bench. That contrasts starkly with what we saw earlier today, when the Conservatives were seeking to defend their Prime Minister—or not, as it so happens.
Given that this is such an important debate, I for one am a bit surprised by its content so far. We heard from the Minister that the Government had done everything that they possibly could to assist businesses throughout the pandemic, but what the Minister did not say—and what the shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), did not seem to reflect on either—was that at the height of the pandemic, what the UK Government chose to do was leave the world’s biggest single market.
What we have not heard about at any point during the debate so far is the impact of Brexit on businesses in Scotland and, indeed, throughout the United Kingdom. It is the proverbial elephant in this Chamber. All of us, every single one of us, will have businesses in our constituencies that are facing challenges, and the vast bulk of those challenges emanate from Brexit. We all know that the headline will be our figures relating to the 4% hit to the UK’s economy. We all know about the trade deficits that we have seen, the impact on exports and imports, the problems caused by labour shortages. The right hon. Member for Epsom and Ewell (Chris Grayling) shakes his head, but that is the reality of the situation.
Chris Grayling
May I ask the hon. Gentleman to point out to the House that this country’s trade deficit in the last few months has narrowed, not widened, as he has just suggested?
Stephen Flynn
I hoped that the right hon. Member was going to rise to defend Brexit, but unfortunately he chose not to do so, because the fact is that it cannot be defended. It cannot be fixed, as the Labour party seems to think it possibly can.
I talk to businesses in my constituency regularly, and hear about the challenges that they face. Goods that took a couple of days to ship to the continent now take a couple of weeks, if not a couple of months. The order book is not there. The impact is huge. Those businesses’ ability to grow has been constrained and, in exchange for that, the Government tell them they can perhaps have a trade deal with Australia instead, which will do a fraction of good in comparison to the damage being done by leaving the EU. And that is of course before we get on to the labour shortages I mentioned earlier, which are enormous. Businesses seeking to function and to grow simply cannot get the employees they were able to get before. We see some puzzled expressions on the faces of Conservative Members; perhaps that is because they have not been engaging with the hospitality sector. Would the hon. Member for Stourbridge (Suzanne Webb) like to clarify whether she is disagreeing with the fact that businesses have difficulties in terms of labour shortages? I will happily give way to her. No? Of course not, because the reality is that labour shortages are damaging businesses exponentially. She continues to shake her head, but that is the reality on the ground in hospitality, food processing, agriculture, right across the board, and that is before we get to the public sector challenges, including in recruiting staff to our care homes and hospitals.
So Brexit should be at the forefront of our debate and, frankly, I am a little disappointed that the Labour party seems to be trying to walk away from that. Notwithstanding that, a lot in the Labour motion is somewhat difficult to disagree with. It seeks to raise various topics, including businesses. I think all of us across the Chamber realise there are challenges in relation to business rates; it does not take a genius to figure that out. However, I have some concerns with Labour’s proposals, albeit not necessarily with the motion. What comes next? What does Labour want to replace this with? Coming from a local authority background, I know the huge role business rates play in funding local authorities. Unless you can say, “This is what we are going to replace it with” it is inevitable that the public will say “Where is the detail?” Without seeking to do the Conservative party’s job for it, that is a fair question to ask and Labour is going to have to answer it in due course. We in Scotland have done things slightly differently from the UK Government because in Scotland there is currently 100% rate relief for retail and hospitality, which does not exist in England at present. That is a phenomenal benefit to businesses—[Interruption.]—irrespective of what the chuntering Member, the hon. Member for Peterborough (Paul Bristow), is saying.
Beyond business rates, important though that is, the energy situation is of great concern to businesses throughout this United Kingdom and the Government are offering no solutions to that. The easier choice today would of course have been to back the earlier motion in relation VAT, but as I see it the Government have not offered any support for businesses with their energy costs. That is a wrong that needs to be righted as soon as possible, otherwise businesses, not just households, are going to face an unenviable position.
Jamie Stone
I can think of examples of families I know personally where the budgeting is so tight that just a pound or two either way gets them into a bad situation. If the fuel bill, or the diesel bill for the car, goes up, they spend less money shopping, and that in turn hits wee businesses in Aberdeen South, in the highlands or wherever. It is a vicious spiral in the wrong direction.
Stephen Flynn
Absolutely. My hon. Friend makes an excellent point illustrating the knock-on impact the economy will face as a result of the crisis before us. Before finishing, I want to reflect on two further points.
Stephen Flynn
As always, I am happy to give way to the hon. Member.
Kevin Hollinrake
If I were running a business in Scotland, I would want to know what the hon. Member is going to do in the future, because annual economic growth in Scotland between 2013 and 2019—pre-pandemic —was 1.2%, versus the rest of the UK’s 2%. That is bad for business. What is he going to do in Scotland to grow the economy more rapidly, even to the rate of the rest of the United Kingdom?
Stephen Flynn
Join the single market.
I shall move on to the two biggest outstanding issues that I have not touched on. The pandemic is an enormous challenge that is still with us and we need to be cognisant of that as we move forward, but we cannot reflect on the challenge posed by the pandemic without reflecting on the fact that there are still businesses up and down this land that have not had support from the Government throughout the pandemic—those among the excluded. I spoke to one earlier today—Puls8 in Aberdeen, an innovative company that is trying to do remarkable things, working alongside some of the biggest players in the North sea oil and gas sector, but which has not had the support that it needed from the UK Government. That is deeply regrettable. We should not have a discussion about businesses without remembering that important fact.
That leads me on nicely to my final point, on perhaps one of the biggest sectors in Scotland that needs support from the UK Government—our renewables sector. Scotland has 25% of Europe’s offshore wind capacity. Scotland can be a world leader in renewable technologies, but as I said—and I am sure the Minister heard—Scotland still faces the highest level of grid charging in the entirety of Europe. We have a natural resource on our shores—and off our shores—that we should be exploiting, and this UK Government are erecting barriers to business in terms of capitalising on that.
To conclude, it is important to reflect on the fact that much of what I have spoken about is a reflection upon the failures of this UK Government. When we look at it from a Scottish perspective, certainly when I look at it from my perspective, I see the shortcomings of this UK Government and I see what more Scotland could do if it had the powers of an independent nation.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
I am afraid that I now have to put a three-minute time limit on.
Chris Grayling (Epsom and Ewell) (Con)
I refer the House to my entry in the Register.
I have great respect for the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). He deserves to sit in the front rank of his party, but I have to differ from him when he says that this Government have provided inadequate support to the business sector. I take him back to 2010. Both parties have faced a crisis; Labour had the financial crisis, we have had the pandemic. Both parties have had to spend hundreds of billions of pounds to prop up the economy. But back in 2010, when I became Employment Minister, unemployment was 2.7 million and the pressures were all upwards. Today, in the wake of the pandemic, having just before the pandemic managed to get unemployment back to the levels of the 1970s, and having feared that the pandemic would take us back to where we had begun, actually we have ended up, as we are, I hope, coming to the end of the pandemic, with unemployment heading down towards 4% and hopefully below, and significant numbers of vacancies in our economy. That has happened because Ministers took the right decisions at the right time and targeted their support in the best possible way. It is not possible to do everything for everyone—
Jonathan Reynolds
I share the mutual respect that the right hon. Gentleman kindly outlined at the beginning, but he will accept, because this is his background, that there are 1 million fewer people in the labour market than pre the pandemic. Yes, unemployment has gone down, but of course the participation rate has gone down; it is not because those people have simply transferred across. The huge worry right now, and what is leading those shortages, is that participation has fallen. That is the true picture, surely, is it not?
Chris Grayling
The hon. Gentleman knows from experience, when this country has been through bad times, how devastating unemployment can be for communities, when people are looking for jobs and cannot find them. Today, if people are looking for jobs in our workforce, the opportunities are a whole lot better than they were back in 2010, even after the impact of a pandemic, and we should be pleased about that. Of course it is not a reason for complacency; of course we still face many economic challenges, but it is a major step forward for this country that we are not in the place that I thought we would end up in after a devastating pandemic, going back to those days of 2.5 million and 3 million unemployed. We do not have that right now, and that, I think, is because Ministers took the right decisions at the right time. I am proud that they did that.
So what do we do now? The first thing I would do is exactly the opposite of what the Labour party wanted us to do before Christmas: I want to lift the restrictions on our economy now. I did not think that we should have them, even to the degree that we have them now. I did not support them, but I think the bold decisions that the Government took before Christmas have been proved right. Many businesses are closed and unable to function in Scotland—a country that saw a lot of its population come to England for new year’s eve to enjoy Hogmanay here, because the Scottish Government put in place restrictions that I do not think were necessary. Now we are in a position in which the right decisions were taken and we have an opportunity to lift restrictions further, so that those businesses in our city centres that are suffering because of people working from home can get back into better shape again. So I say to the Labour party, which has argued for tighter restrictions and against what this Government have done, that now is the moment for the party—and the whole House—to support the removal of our restrictions.
The last point that I want to make is about the energy issue. We have heard a lot today about energy as it affects households. The impact of what is happening globally at the moment will be devastating for households across Europe. However, we also need a smart strategy for energy to support businesses well, and we will not get there if we step away from the resources that we have.
I support the move to net zero and the expansion of renewables, but I also support the continued exploitation of the gas reserves we have in the North sea. Simply to step away now and say, “Because we are talking net zero in 2050, in 2022 we should exploit none of them”, is nonsense, in my view. We need that gas, we need the resources for the United Kingdom and we need a smarter strategy than that of those who are simply arguing that we should stop all fossil fuel exploration right now. That is the wrong thing to do and it must not happen.
Nia Griffith (Llanelli) (Lab)
We in the Labour party recognise just how important business and industry are to our country, generating wealth and creating good jobs. We also recognise that Government have a vital role to play in providing the best possible conditions for our business and industry to flourish. It is about constructive partnership with business, with Government listening carefully to business, seeking to resolve the obstacles facing it and creating the best sorts of conditions for it to flourish, whether that is developing and updating a proper industrial strategy, training and education, work-force supply, modern infrastructure and connectivity, or developing cheap and reliable energy supplies.
It is not just households that face massive energy costs—industry does too, and in particular energy-intensive industries such as steel. Sadly, that is nothing new. Even before the current energy-cost crisis, UK steel manufacturers were facing a much higher energy cost than their continental competitors. In spite of the UK Government being told time and again about the comparative cost of energy and the devastating impact of those costs on UK steel production, they have done absolutely nothing to alleviate them.
As my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) explained, Labour has a plan for a windfall tax on North sea oil and gas production. Labour would use £600 million of that as a contingency fund to support struggling firms, including energy-intensive industries. But there is much more to do.
The question is, why are we facing a worse energy price rise than other countries? It is simply because the Government have failed to produce the renewable energy that we should be generating by now. They have not got on with it fast enough. Basically, the Government have been caught napping. The gas price hike should be a wake-up call to make up for lost time and to accelerate the development of renewables.
Lastly, I turn to procurement. During the pandemic, when supplies were hard to come by, as the whole world tried to stock up, firms across the UK stepped up to the mark and changed production lines to meet our needs. UK companies were encouraged to think that they would get ongoing business if they helped out during the personal protective equipment shortages. Many companies committed in good faith and invested in UK production to future-proof British PPE supply resilience.
For example, a local SME in my constituency switched from producing a camping gas fuel to producing hand sanitiser. It invested more than £700,000 to automate its hand sanitiser production, but now most Departments have gone back to their original foreign suppliers. What happened to “build back better”? The Government need to do much more to buy British, whether steel or PPE. That would be good for security of supply, good for jobs and good for the planet—as our production is often greener than cheap imports. It is high time that the Government decided to back British, not just wave the flag.
Suzanne Webb (Stourbridge) (Con)
Time and again, I and other Members on the Conservative Benches have risen to oppose motions such as this from an Opposition who believe £407 billion in support throughout the pandemic has not been enough. At every turn, they have sought to undermine the measures that the Government have put in place to support businesses, and they have had the temerity to do so with no costed plan of their own. Instead, we must all wait for the Leader of the Opposition’s costed manifesto at the next general election.
Of course, it would not be the Labour party if there were not already a few uncosted measures thrown around here and there. One example was scrapping business rates, which was announced jubilantly by the shadow Chancellor at the Labour conference, only to be watered down later, probably because Labour eventually worked out that it did not know how it would pay for that. Perhaps it would do so by raising corporation tax, income tax or stamp duty or by more borrowing. It would give with one tightly pinched palm now but take with heaped handfuls later.
I am of course happy that these motions give me the chance to outline how Stourbridge’s businesses and employees have benefited from a Conservative Government managing this pandemic. As Conservatives, we believe that private sector innovation is the key to a strong economy. We do not just believe in it, however; we deliver it. Since 2010, over 1 million more businesses in the private sector have been created across the UK thanks to this Government’s policies. In the west midlands alone, over 50,000 more businesses have been established since 2010, thanks to this Government.
The Opposition’s motion today makes the astonishing claim that businesses have been affected by low growth. That is simply not true. The UK is the fastest-growing economy in the G7, with almost 6% growth in the first three quarters in 2021. The Conservative Government’s management of the pandemic, coupled with our exceptional economic growth in private sector innovation, has benefited working people too. Nobody would deny that businesses have experienced one of the toughest environments in a generation, but billions of pounds of loans and grants have kept the economy moving. Economic growth has not been disrupted as expected, and the labour market came back strong. It is a labour market that has seen 61,000 new jobs created since March 2021 in the west midlands alone.
Our economic plan is working: employment is up, growth is up and businesses are starting to make a recovery. It was this Government who promised my constituents that we would do whatever was needed to provide security and stability, and that applied to the businesses too. This is a Government who encourage business investment, innovation and productivity, and who are giving every business the opportunity to grow and innovate. It is a Government who are bold and committed to building back better.
Holly Lynch (Halifax) (Lab)
Businesses in my home town of Halifax have acutely felt the culmination of factors that has created such a tough operating environment in recent months. Halifax had a lot to boast about going into the pandemic, and while the prevalence of independent businesses in Halifax, alongside our financial and manufacturing sectors, gives us a strong offer as a town, it also brings with it a certain vulnerability when faced with the challenges we have endured. We know that business rates have become a weight around the neck of businesses, choking off growth. I hear that time and time again.
Harveys is an independent department store that first opened its doors in 1950. It is an institution in Halifax, but like others, it was forced to close during the pandemic for eight months in total. Naturally, this has had a significant impact on its finances and resilience. Harveys has contacted me with concerns that putting business rates back to pre-pandemic levels before footfall and takings are anywhere near back to pre-pandemic levels could be the difference between survival and failure for it and so many other businesses. We have been clear that we would immediately reduce business rates before scrapping them entirely within the first term of a Labour Government.
There is not time in today’s debate to cover every business sector in need of further consideration and support, but alongside travel and the night-time economy, I will single out children’s soft play as being among those hardest hit. I have several soft play centres in my constituency, and they are required to adhere to the strictest of measures, given the nature of their business as well as the tiered system that affected West Yorkshire for prolonged periods of time. One such business is Play Palace in central Halifax. It was able to benefit from a bounce back loan but sadly it has not bounced back as a business, given the variant and the inevitable time required to rebuild consumer confidence in the activities that it offers. Like other businesses that took up the loans on offer to get them through, it is now carrying debts that only add to the pressures it is facing here and now.
Beyond the pandemic, it comes as a surprise to precisely no one that Brexit was not the bonfire of barriers to trading promised by some. I have heard from 4x4 Overlander Ltd in my constituency just this week. Its costs have already gone up by 10%, and it is seeing rising shipping costs, custom clearances and a whole host of fees and tariffs. The company worries that it will have no option but to pass those costs on to the customer. I have also written to the Government on behalf of the Leo Group and others in my constituency about the skills shortages that are crippling their sector. The rush to end free movement had no accompanying skills plan whatsoever, and those businesses really are feeling it. There are a number of other issues. Crime is affecting businesses in my constituency, and the criminal justice system is collapsing on this Government’s watch. We on this side of the House are listening to businesses. I hope the Government are doing the same.
Gareth Davies (Grantham and Stamford) (Con)
It is a great pleasure to speak in this debate and I am grateful for the opportunity, once again in an Opposition Day debate, to highlight the tremendous support that this Government have provided up and down the country, whether that is the £154 billion in specific support for businesses nationally or the £407 billion in total. In Grantham and Stamford, we have seen £144 million in loan support and more than 20,000 workers supported through the furlough scheme. I want to take this opportunity to thank those in our local authorities, whether in South Kesteven District Council or Lincolnshire County Council; Martin Hill and John Hyde have done a tremendous job throughout this crisis.
I have a great deal of respect for the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), who opened the debate, but it would have been nice if he had mentioned the £60 million of loans for businesses in his constituency or the £100 million of grants and rates relief. The point is that we need to support our businesses and the Government have done that.
It is great to hear the Labour party talking about debt. I am surprised to hear Labour Members bring up company debt when they showed so little regard for national debt when they were in office, spending more in debt interest than they did in defence spending. But here we are: it is a new world.
It is also surprising to hear Labour Members talk about growth. The OECD has predicted that the UK will be one of the fastest-growing countries in the G7—that is a fact. Deloitte has also come out with a business survey this week stating that businesses expect growth and productivity to grow exponentially in the United Kingdom. That is thanks to the support, to such things as the furlough scheme and to the fact that the Government are taking very hard decisions in a very difficult crisis to support businesses and employees up and down the country, whether that is in Stalybridge and Hyde or Grantham and Stamford.
Ms Marie Rimmer (St Helens South and Whiston) (Lab)
St Helens has been at the heart of the global glass industry for over 200 years and is, in fact, known as the world leader in glass. Glass is part of the past, present and future of our town. In fact, that security glass up there in the Chamber was produced in St Helens and erected by men—as it was at the time—from St Helens.
Pilkington glass, or Pilks to us locals, is a business that is part of our furniture. Pilks is a business that is close to my heart, as I spent a lot of years working there. Energy bills for Pilks and other energy-intensive businesses have skyrocketed. There are numbers and variances that the business can cope with—the Minister referred to that as a hedging strategy.
In April 2020, during the first lockdown, Pilks’ energy bills were £540,000 a month—just over half a million pounds. The average before the energy surge was around £1 million a month. These are acceptable business variances—a hedging strategy—yet in autumn last year, the price surged to £3.6 million a month. At that point, the industry asked for help from the Government and met the Department for Business, Energy and Industrial Strategy. No support was given and there was no response. In December, the price surged to £5.4 million. The industry again asked for support. Once again, there was no support and no response. This is about not just Pilkington, but heavy industry.
As if the prices were not bad enough, Pilkington’s energy bills have now hit £8.2 million a month from an average of £600,000 a month. That is more than eight times higher than what they are used to paying. That is an unsustainable situation for Pilkington and its supply chain and for other heavy industry, not just gas production.
The Government need to support British glass and heavy industry. Glass customers are now looking to Europe for their glass—one of Pilkington’s largest customers is looking to Europe. It cannot compete. Why? Yes, energy prices are surging there, but the Governments there are working in partnership to share the burden with glass and other heavy industries. They are helping them when they need it—it is called partnership working. That is what partnership is about—not just gloating when things are going right but being there to help at times of heavy demand like this. Last year St Helens Council in the Liverpool city region awarded funding to pursue the Glass Futures project, which would provide research and development to revolutionise the global glass industry. Yes, this Government were involved in that. Glass is one of the most—
Ms Rimmer
I am sorry, Madam Deputy Speaker. We need help and we need help now.
Julie Marson (Hertford and Stortford) (Con)
It is a pleasure to speak in this debate. I would like to start by speaking directly to people who run businesses and work in businesses in my constituency, because there is absolutely no doubt that they have struggled hugely over the past two years. They have had an incredibly difficult time and they have shown the most incredible creativity and resilience in that process. I thank them. When I am out and about in the constituency, I know that they know that this Government have been there to support them, because they thank me and ask me to pass on their thanks to this Government. That is incredibly important, because I listen to them and I know what they are saying to me as well. The support has been unprecedented and unparalleled. The figures are eye-watering—£407 billion, with £1 billion just for hospitality before Christmas—but every penny means saved jobs. Every penny has meant that businesses continue to employ people to produce services and goods that they would not have been able to had it not been for this Government’s support. So even to suggest that this Government are not supporting business does not stack up: I will not have it, and I do not think many businesses in my constituency will have it either.
The role of Government—I have used this analogy before and I probably will again—is to be the groundsman. The economy is the pitch and our job is to create the conditions on which our batsmen and bowlers can play to their best strengths so that we can win the match, and that is what this Government are doing. Looking at skills, or initiatives to increase investment such as the super-deduction, it is all with that aim in mind. I could go on to the G7 growth league—the jobs market is booming—and what we are doing in the venture capital sector and the life skills sector, which is also important. We see what Labour does when it is in power. In Wales, as has been said, people are coming over the border to do things because of restrictions. Frankly, Labour likes lockdown so much that it is not even pro-parkrun, let alone pro-business.
Naz Shah (Bradford West) (Lab)
Throughout the pandemic, a mixture of lockdowns, local restrictions and Brexit have put businesses under increased pressure. According to the CBI, the UK’s GDP went from +1.4% in 2019 to -9.8% in 2020. This has meant that businesses and families have to deal with a financial crisis worse than that of 2009.
During the height of the pandemic, while the rest of the country emerged out of the second national lockdown, Bradford, among other northern cities, was placed in the highest tier of restrictions. This meant that businesses in northern cities such as Bradford were in restrictions and localised lockdowns longer than those in other parts of the country. The impact of this continues to hinder business recovery and livelihoods as we start to emerge out of the pandemic. A survey conducted by Bradford Council to measure the economic impact on businesses found that 94% of businesses in the retail, hospitality and leisure sectors bore the brunt in the early months of the pandemic. Inflation is also a considerable concern for many businesses in my constituency. According to the Federation of Small Businesses, 78% of small businesses face costs arising from it. It is therefore clear that the Government cannot go back to their pre-pandemic business plan. I have said this before and I will say it again: supporting local businesses means supporting the workers, families and people in our communities. Local businesses are not just the backbone of our economy but a lifeline. The Government must acknowledge the disproportionate impact that the further localised restrictions had on local businesses and economies.
In October, I asked the Government to put a freeze on business rates, which would benefit sectors such as retail and hospitality. They must increase the small business rate relief to help them offset the rise and the cost of inflation. The Government cannot be serious about business if they fail to level up business opportunity and sustainability in the northern cities, such as Bradford.
If the Government are serious about economic growth and have a plan for levelling up, they cannot abandon Northern Powerhouse Rail. A through line and one stop alone would boost Bradford’s economy by £30 billion over a decade. It is clear that nothing short of an industrial strategy will give businesses the trust and confidence to invest in the long term. We cannot fulfil our ambitions for Britain without the plan for business succeeding. Bradford is the litmus test.
I say this time and again, but we cannot have an economic strategy without having Bradford at the heart of the Government’s levelling-up programme, certainly across the north. The Government need to row back on their decision on NPR. I know that Bradford is bidding to be the city of culture for 2025, and that we have put in an application for a hospital. Bradford cannot be left the way that it has been. I would welcome a meeting with the Minister to discuss in further detail my constituents and the city of Bradford.
Kevin Hollinrake (Thirsk and Malton) (Con)
As the hon. Member for Bradford West (Naz Shah) knows, I entirely agree with her about the need for an independent Northern Powerhouse Rail that goes through Bradford from Leeds to Manchester. However, I do not agree at all with the shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). In his motion, he talks about
“increasing energy costs, high inflation, low growth and higher taxes as a result of the Government’s long-term failures.”
I have a great deal of time for him, but he is absolutely wrong on all counts. On energy costs, the wholesale price of gas has increased tenfold in little over a year, but that is an international issue, not domestic policy. I agree that we need to do something about it, but the tenfold increase is principally because of Russia and China, for different reasons.
Inflation is an international issue, too. As I have pointed out previously, the inflation rate in Germany is higher than that in the UK—it is 5.3% compared with the UK’s 5.1%. There is a slightly different calculation for the US, but the rate is 6.8% versus the UK’s 5.1%, so the hon. Gentleman is absolutely wrong again. He is also absolutely wrong about low growth. As my hon. Friend the Member for Grantham and Stamford (Gareth Davies) points out, the OECD says that the UK had the fastest growth in the G7 in 2021, and that it will have the fastest growth in 2022.
Jonathan Reynolds
I know that I am pushing my luck by intervening, but I am sure that the hon. Gentleman will not mind.
This is interesting, because when we had a global financial crisis, I do not remember Conservative Members highlighting global factors as a cause. On that point, he will know that we had the biggest hit in the pandemic; we fell the furthest. When we say that we have a projected high growth rate next year, it is because we are bouncing back. The long-term growth rate for this country is under 2%, and under the historical norm for each of the years that we have forecast for once we have recovered from the immediate hit of the pandemic. That is the point. That will not succeed in sustaining the living standards of this country, and the hon. Gentleman knows that.
Kevin Hollinrake
I agree with the hon. Gentleman on long-term productivity, but that is not what his motion says. It says “low growth”, which is absolutely inaccurate. Let us have some facts in this debate.
The hon. Gentleman is absolutely right on energy costs, and I think that we need to intervene. The Government are not doing nothing. They are consulting now on the right kind of measures—whether it is VAT for consumers, the warm home discount, or direct intervention in the business. It is absolutely right that we consult on those things and look at them properly. There are other issues as well, including labour costs, supply chains and other such things, the vast majority of which are international issues. Yes, of course, there are some Brexit issues, too, there is no doubt about it. [Interruption.] Anybody who voted for Brexit and thought that they were voting for the status quo was not reading the facts properly. The reality is that those things have to be dealt with, but they are short-term issues that will be resolved.
I say to the shadow Minister that it is the easiest job in the world to stand on the sidelines and criticise, which is what he is doing. [Interruption.] He is criticising higher taxes. How on earth would he pay for the huge amount of money that has to go into the NHS over the next few years to deal with the backlog? Would he simply borrow more money? That is what that money is for. There is also the fact that businesses are not even paying the higher taxes yet; they do not kick in until April. Again, the motion is entirely wrong.
Let me turn to what we should do. The motion mentions the reform of business rates; the solution of the hon. Member for Stalybridge and Hyde is absolutely deluded. A sixfold increase in the digital services tax would be passed straight to consumers and would not hit Amazon and others. It is absolutely wrong. He has no long-term detail on how he would reform business rates. In my view, we should scrap the business rates system completely. It is outdated—it is the wrong system for today—and business rates hit not just retail but lots of other channels and sectors. I would scrap business rates completely and find the £30 billion by adding that to VAT, because that would immediately create a fair and level playing field for all businesses that trade through whatever channel.
While the Minister is present, I press him to look at regional mutual banks, which I mentioned at Business, Energy and Industrial Strategy questions this morning. They can have a massive impact in lending to the productive economy to get the growth rate growing to the level we need it to be to pay off our debt.
Sarah Olney (Richmond Park) (LD)
This pandemic is not yet over. The costs and risk of the continuing high rate of infections are being borne by the individuals forced into self-isolation, by the businesses that saw revenues fall off a cliff over the crucial Christmas period and by the frontline workers who are scrambling to deliver high-quality healthcare and education in the face of record infection rates. The Government have abdicated all responsibility for bearing those costs and risks and have gone missing when they should have provided leadership, as the Prime Minister demonstrated again earlier—although I am sure the hospitality industry, and particularly those in the business of supplying cheese and wine, appreciated his continued generous support during the lockdown.
Thanks to our vaccination programme, we are in a position to make plans again. The difference that makes is that entrepreneurs and investors can start to identify opportunities, employees and young people can invest in training and skills, and consumers can save up or borrow for new purchases. But the Government seem intent on putting barriers in the way of new opportunities. I think most particularly of the new customs checks that were implemented on our borders over the new year, which will make it more difficult and more expensive to import goods from the EU. They will increase prices in the short term while making a greater number of trades unviable in the medium term, thereby decreasing the choice and quality of goods available and denying opportunities to future entrepreneurs. The Office for Budget Responsibility estimates that the impact of Brexit will be a 4% hit to GDP in the long term, but our only new trade deal to date—with Australia—is projected to add only 0.02% to our GDP. That will not come near to addressing the gap. The Government’s deliberate policy is to pursue barriers to trade and a decline in GDP.
In the past few months, it has been striking how every employer I have spoken to in every sector has talked about a shortage of staff being their barrier to growth. That has been exacerbated by high levels of infection in every part of the country—and that is before businesses have had to absorb the increased energy costs that were debated at length in the preceding debate and the Government’s plans to increase national insurance contributions. The NI increases will not only reduce the amount of money people have available in their pockets to spend in the economy but increase the cost of employment for businesses, thereby reducing the number of new staff they can afford to take on. That will limit growth and opportunities for businesses and their employees alike.
It is clear that the Government must get a grip on their support for businesses as we emerge from the pandemic. We cannot deliver economic growth when we are reducing opportunities for trade, increasing costs and limiting employment. We must support the retail and hospitality sectors to recover from the pandemic. We should maintain the current 12.5% VAT level for the hospitality sector and continue the 100% business rates relief so that important town-centre businesses have the chance to re-establish themselves.
We must urgently focus on the needs of young people and deliver a strategy to get them into work. We owe our growing generation that much for the sacrifices they made to keep the older generation safe. We need a relaunched kickstart scheme and new apprenticeships.
Were the Government ambitious, they would set out a long-term strategy for the transition to a green economy and to ensure that opportunities for economic growth were being nurtured in every part of the country. Were they competent, they would put in place clear plans for how to achieve such a strategy, thereby enhancing investor confidence and encouraging training in the new skills we need.
Shaun Bailey (West Bromwich West) (Con)
I am probably going to be quite parochial in my comments, but I have the pleasure of representing the beating heart of the Black Country and its industrial base.
I cannot deny the unprecedented support—which we have heard about from Conservative Members—that the Government have provided to businesses, and particularly to businesses in my constituency. We have heard about the £407 billion of support provided overall and about the £1 billion for hospitality. We have also heard about the importance of integrated investment. My hon. Friend the Member for Hertford and Stortford (Julie Marson) made a really good point when she talked about the integrated nature of investment when it comes to things such as our town centres. Wednesbury in my constituency has benefited from £3.6 million for its heritage action zone, which will mean businesses are invested in for the future.
Our problem in Sandwell—keeping things parochial—was not Government support getting to Sandwell but Labour-led Sandwell Council not paying businesses. I hope there are members of the Labour national executive committee on the Opposition Benches, because I have to say to them: get a grip on Sandwell Labour. It is not to my political advantage to ask the Labour party to get a grip on Sandwell Labour, but I plead with it to do so. When I challenged the council on the payment of business grants, the deputy leader said, “That’s not nice, Shaun.” What is not nice is that the businesses crying out for this support are not being paid, and it is not because of the Government. If my hon. Friend the Minister had not ensured the money got through to the frontline, I would have been straight there to make sure it was paid to the local authority. Local authorities are delivering it, and it is the leadership of the Labour party in my local area that caused those issues.
We need to think further, too. I agree with the hon. Member for Llanelli (Nia Griffith) on buying British. She is absolutely right that procurement has to be about ensuring we make the best of the goods we produce domestically. [Interruption.] The hon. Member for Aberavon (Stephen Kinnock) asks why we did not push it. Well, we are. I am saying it right now, and I am agreeing with the hon. Member for Llanelli, too. We have to have a procurement policy that makes the most of those goods.
Just like the hon. Member for Aberavon, I represent an area with a strong industrial base and well-established industrial SMEs that really need this support. As we build the funding and support structures, one thing I have noticed at times is that we miss out established SMEs. I have SMEs such as Pattern Fasteners in Oldbury that are investing in the area. As we build these structures, we need to make sure such businesses do not miss out because the thresholds are too high or because the structures are targeted at much larger companies and organisations.
This Government have supported business. I do not deny that there is more to do, but I thank them for the support they have given to my communities.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Many hon. Members have said that SMEs are at the heart of their constituency, and I want to mention a fish and chip shop called Goldenfry, which is highly recommended. If Members are ever in the city centre of Hull, they should pop in and get a portion of fish and chips. The business has really struggled because of the covid pandemic and the lack of footfall into the city centre, and it has had difficulty getting back on its feet, but the business has not just complained; it has set up a scheme so that people can go in and buy an extra portion of fish and chips to donate to a person or family without the food they need.
That shows the kind of community we have in the city of Hull and in our SMEs. We look after our own and we look after each other. Excuse the pun but, when the chips are down, we are still there and we still help each other. A local businessman told me this important lesson, “Emma, if you ever want to get support from business, look at those businesses that have people born and bred in the city of Hull, because they will always go the extra mile and do so much more.” Unlike the hon. Member for West Bromwich West (Shaun Bailey), I pay tribute to my Labour-led Hull City Council for being one of the fastest councils in the country in giving out the Government grants.
On the support provided to businesses, as the hon. Member for Aberdeen South (Stephen Flynn) said, we cannot ignore those that have been excluded or gone without any support whatsoever. As I mentioned in my intervention, businesses are angered when they see money wasted by the Government through fraud and through the track and trace schemes that did not work—when they see money, to quote the Prime Minister, “spaffed up the wall” by the Government when they have gone without. There is a real sense of injustice and unfairness, which I hope the Minister recognises as a serious point, especially when we look at sectors such as the coach industry.
On energy costs for businesses, I hope the Minister will look again at Labour’s plan for the contingency fund. There is a local business called Rhythm & Dreams, which is a wonderful dance club where young children can practise their dancing. It won my small business award just before Christmas, and it is a great organisation. The woman who owns the company contacted me to say how rising energy costs are affecting her business, because of course she wants to keep her dance studio warm. She has lots of people coming and going. She has seen huge rises in her costs, but she is not seeing the same increase in income as people are still hesitant about returning to mixing with others. We need to consider targeted and specific support for businesses that are struggling with energy costs.
Although I recognise the support the Government have provided, they could have targeted their money much more successfully. I hope they will not continue to exclude those who have been missing out on support for so long.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
I will try not to cut the time limit, but I may have to at some point, so I encourage people to stick to their three minutes and, if they take interventions, to still stick to three minutes.
Mrs Flick Drummond (Meon Valley) (Con)
It is a pleasure to speak in the debate and to support our businesses during this difficult time. I am full of admiration for businesses across Meon Valley, which have overcome challenges during covid for the most part with ingenuity, commitment and, of course, the support of Government and their customers.
I have heard from businesses, especially in manufacturing, that they have carried on with minimal disruption during covid, except for covid-related staffing issues. That is because of the underlying strength of the economy when we entered the pandemic. Those businesses have been able to trade fairly normally. The biggest challenge they face is the enormous disruption to the global supply chains. Those pressures are beginning to ease around the world, although there are still particular bottlenecks in some specialist sectors, such as semiconductors.
We should also recognise when we talk about inflationary pressures that they generally have global origins. We live in a world with pressures that are outside the control of any Government. Having said that, consumer prices in the UK have increased more slowly than in many economies, including several in the eurozone. Current UK unemployment is considerably lower than in the eurozone—4.2% as opposed to 7.3%—and among the lowest in the developed world.
We have created record numbers of jobs. We have more than 1 million vacancies across the economy. The economic picture is very different from that of stagnation that the Opposition motion paints. The final figures for economic growth in 2021 will look healthy and stand comparison with any other major economy.
Our plan for jobs will continue to help people find high-value work and ensure that businesses can continue to grow. There are two reasons why the fundamentals of our economy are positive. First, the basic economy was strong when we approached the pandemic, thanks to the past 10 years of a Conservative Government, which rebuilt our finances. Secondly, the Government supported businesses through the difficult times. The package of support for the economy has passed the £400 billion mark. That has defended families, jobs and businesses against uncertainty and the inevitable slowing down in some sectors during the pandemic.
The coronavirus job retention scheme supported 12 million workers when they could not be expected to work safely. However, funnily enough, the Opposition said that the scheme was a waste of money. Then there were predictions of mass unemployment as furlough began to end and business resumed activity. Those gloomy predictions did not turn out to be accurate and I do not think that the motion will be accurate. Businesses have been able to use loans and discretionary grants effectively, especially in the hospitality sector, which—I think we all agree—has faced the most challenges.
I wish every business in Meon Valley a successful 2022. As our economy continues to grow, I am confident that we are emerging from the pandemic in a relatively strong position and that our Conservative Government’s policies will continue to be good friends to business and consumers alike.
Joanna Cherry (Edinburgh South West) (SNP)
It is a pleasure to follow the hon. Member for Meon Valley (Mrs Drummond), although, unlike her, I rise to support the motion, which makes some good points and suggests some policy initiatives that I am happy to support.
However, when I first read the wording, I was reminded of Sherlock Holmes and
“the curious incident of the dog in the night-time.”
Fans of Conan Doyle—or of Mark Haddon’s eponymous novel—will recall that what was curious about the dog was that it failed to bark in the night while a major incident was taking place. There is a major incident taking place in the British economy that is having a significant impact on business across the UK, yet the official Opposition have omitted to mention it in the motion, which sets out to describe the reasons for the strain business is currently under. Of course, I am speaking about Brexit, which, as my hon. Friend the Member for Aberdeen South (Stephen Flynn) reminded us, is forecast by the Office for Budget Responsibility to do twice as much damage to the UK economy as covid-19.
As we heard from another speaker, a maze of new customs bureaucracy has been imposed on business as of 1 January. Goods imported from the EU now need import declarations immediately, not six months down the line as before. Food and plant products need to be notified in advance and the tariff-free trade that the Prime Minister promised happens only if importers and exporters can prove that the goods were made substantially in the UK or the EU.
British exporters to the EU had to face all that bureaucracy last year and it has drastically damaged the seafood industry in Scotland. It has also damaged high-tech, high-value companies such as Coda Octopus in my Edinburgh South West constituency. Despite my strenuous attempts to lobby the Government, it has been forced to move its substantial business operations to the EU because of the UK Government’s post-Brexit red tape.
Problems with supply chains into the United Kingdom at the moment are not just covid-related; they are also the result of Brexit. They are affecting all sorts of businesses, from car manufacturers to supermarkets. It is often SMEs that are hit the hardest, as we have heard from the Federation of Small Businesses and other business representatives. Businesses need Brexit support now, because otherwise they will have to abandon trade or pass costs on to already hard-pressed customers.
Ultimately, only realignment with the European Union’s single market and customs union will undo the worst impacts of Brexit. However, rather than seeking solutions, the UK Government are basically agitating over the Northern Ireland protocol. Yet Labour will not talk about it. Labour does not have a plan for what to do about Brexit. It is an abdication of its responsibility as the official Opposition not to seek to tackle the problem of Brexit in this motion on business today.
Simon Baynes (Clwyd South) (Con)
As a Welsh MP representing Clwyd South in north Wales, on the border with England, I see very clearly the considerable difficulties for local businesses arising from the Welsh Government’s covid restrictions, compared with the more enlightened and balanced approach being taken by the UK Government across the border. Sadly, the Welsh approach is not working, and we can see that in the way it is curbing covid cases, which in recent weeks have risen two to three times faster in Wales than in England.
The crucial point that I want to make this evening is about how we approach the debate. The overall structure and conditions for business are of critical importance in reducing costs for businesses and creating a pro-business environment in which companies and enterprises can flourish and plan for the future. I commend the UK Government for creating that environment. We have heard much talk today about the £400 billion of support, which has gathered compliments from both sides of the House. This obviously has defended and supported jobs and livelihoods, and the package is more generous than that of any other country in the world.
I would like to highlight one or two other aspects of the support package provided by the Government. First, I am very pleased that they have extended the recovery loan scheme to June 2022, providing a guarantee to lenders on finance up to £10 million. This too has had a wider impact for companies, because it has brought them closer to some of their lenders and improved their financial position for the longer term.
Secondly, I would like to highlight the provision of £100 million of new discretionary funding for local authorities to support other impacted businesses, which has been crucial. I am delighted that Wrexham and Denbighshire councils have been so adept at passing on that support to companies across my constituency.
Finally, I wish to highlight the cutting of business rates by at least 50% next year for 90% of retail, hospitality and leisure businesses. My goodness, that is needed in Wales at the moment. I make regular visits to companies in Clwyd South that frequently express their approval of the UK Government’s measures, which have made a huge and very positive difference to the health of their business. That in turn has made a significant contribution to the UK having the fastest growing economy in the G7.
In conclusion, I applaud the Government’s strong support for businesses, both the measures that they have taken and the favourable environment that they have created for businesses in the UK.
Stephen Kinnock (Aberavon) (Lab)
As the party of growth and enterprise, Labour will help British business to weather this crisis and bounce back stronger than ever. As a passionately pro-business and pro-worker party, we recognise that private enterprise is the lifeblood of the British economy, which is why we would help to create 100,000 new businesses over five years and boost the start-up loans scheme. In our commitment to boosting productivity and growing the economy, we recognise the critical role of British manufacturing and the foundational industries that underpin it, such as steel. That is why Labour’s plan to make, buy and sell more in Britain will not only get our economy firing on all cylinders, but build our sovereign capability and help to achieve our net zero targets.
We need a more resilient Britain that can stand more firmly on its own two feet, because we have had 11 years of offshoring our good jobs and selling off our strategic national assets. Over the past decade, we have become over-reliant on countries that do not have our best interests at heart. That includes our reliance on China for personal protective equipment, lateral flow tests and even our nuclear power stations.
A Labour Government would do things very differently. Through our fully costed plan, we would create a £600 million contingency fund to support struggling firms, including in energy-intensive industries. We would pay for it with a one-off windfall tax on North sea oil and gas producers, which have profited hugely from recent price rises. Ours is a fully costed, focused economic plan that can support businesses throughout this crisis and, in so doing, protect workers and their families. That is what the Opposition is all about—what a contrast with the complacency and inaction that we see on the Government Benches!
The Labour party recognises that long-term, sustainable businesses can provide those good jobs that not only provide a pay cheque at the end of the month, but offer dignity, meaning and purpose for working people—a sense of being part of something bigger. We rightly cheered and applauded key workers on our doorsteps throughout the pandemic; let us never forget that many of them work in the private sector. I think of the factory workers and steelworkers in my Aberavon constituency who kept the show on the road, and of the pride that they feel in powering our country forward. The Labour party will always stand up for those values: dignity and respect for workers, opportunity for business to grow and flourish, and a commitment to building a higher growth, more resilient Britain that can stand more firmly on its own two feet.
The British people are tiring of low-growth Tory Chancellors. Labour has a plan to get Britain firing on all cylinders. Labour is truly back in business.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. To get everybody in, I am afraid that I will have to reduce the limit to two minutes after the next speaker.
Mike Wood (Dudley South) (Con)
The covid pandemic has presented unprecedented challenges for businesses in every part of the country and in virtually every sector of the economy, but the Government have met them with unprecedented levels of support. While the last Labour Government bailed out the banks while dole queues doubled, this Government have provided support—whether through the furlough, grants, loans or business rates support—on a scale that I think few could have anticipated from any Government of any political colour before the pandemic. Of course, things have still been extremely difficult—many businesses have struggled from one week to the next, and sadly some have not been able to survive this long—but for many, many businesses, the support provided has made the difference between survival and going to the wall.
Every part of the economy has been affected and many businesses have suffered, but some have been hit harder than others, particularly the hospitality sector and the businesses that rely on its success. It was a brutal December for the sector; December usually accounts for about a quarter of hospitality’s trade for the year, but we have now had two Decembers in a row that were well below normal trading levels. The support announced before Christmas has allowed most hospitality businesses that qualified to get through the Christmas period into the new year and stand a chance of surviving, but we also have to look at the supply chains.
There are businesses that may not be immediately within the hospitality sector, but that rely on it. Brewers, catering, event management and, for that matter, hair and beauty rely on large events. We need to make sure that local authorities are prioritising businesses like those with the discretionary support that is available, and I would encourage Ministers to make it clear in guidance for discretionary support that those businesses are precisely the kind of businesses that that support is aimed at.
But of course what businesses need more than anything is to be able to do what they do best—provide the goods and the services that consumers or other businesses want to buy—to get back to some kind of normal. The last thing we need would be to have taken the advice of some of the Labour Members before Christmas, and had further restrictions sooner and for longer, or endless furloughs.
Mr Toby Perkins (Chesterfield) (Lab)
As someone who spent 20 years in business, including running two businesses, prior to coming into this place, there is a great deal I would like to say today, but the restrictions we have on time mean that I am going to restrict my remarks really to the hospitality sector. There are many different sectors that have had a really difficult time during the pandemic. I am concerned about the self-employed, particularly those who find that they have become a bad credit risk in the eyes of the bank because they availed themselves of one of the Government support schemes. I am very concerned about the high street. Anyone who takes a trip to almost any high street in the land will see that the pandemic has increased the pace of shop closures.
However, I do want to touch particularly on the hospitality sector, as the hon. Member for Dudley South (Mike Wood) did just a moment ago. This crucial sector employs almost 3 million people, it delivers £66 billion of revenue and pays tens of billions of pounds in taxes. I do not want anyone to think that, because the Government decided not to close the hospitality sector in the run-up to Christmas, English publicans, restaurant owners or hoteliers were therefore the lucky ones. The truth is that many organisations in this sector had a massive reduction in their business over Christmas—they saw cancellations of Christmas parties—and while the sector may not have been forcibly closed, their takings were well down, and many providers told me they had taken on staff on the basis that it would be the busiest time of the year, only to find it much quieter than normal.
Business rates is a crucial issue. Everyone listening to this debate today will have heard a very clear message: the Labour party is the party of reform of business rates, and the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for North East Derbyshire (Lee Rowley) made it absolutely clear that the Tory party is the party of a temporary discount and stick to the same old system. This system penalises pubs, it penalises the hospitality sector, it penalises manufacturing and the high street, and it protects the internet businesses that do not on the whole put as much into the economy as those sectors. I support what we are proposing here today.
Paul Howell (Sedgefield) (Con)
I of course recognise the hardship that businesses are facing through the pandemic, but if the Government had followed the Opposition’s advice, we would have been in a lot worse state—back to circuit breakers and stage 4 in July last year. The Government paid out £70 billion—I repeat that: £70 billion—in the job retention scheme. The hon. Member for Wigan (Lisa Nandy) described that as “money wasted”. This feels very much like the Leader of the Opposition’s comments when he described moving the Treasury to Darlington as “not levelling up”, but “giving up”. It shows a shocking lack of appreciation for the number of jobs and businesses that were protected and saved through this scheme.
Like my hon. Friend the Member for Hertford and Stortford (Julie Marson), I have met multiple businesses in my Sedgefield constituency that have outlined how grateful they are for the Government support they received over the course of the covid-19 pandemic, and how it has meant they have been able to keep their businesses open and employees in work. This has extended from both small local shops such as Aycliffe Framers to international suppliers such as Gestamp, which employs over 1,500 people in my constituency.
Having spent my life prior to coming to this place as director of a manufacturing business, I, like everyone who owns a business, know what matters is profit—sales less cost—but also clarity, and Ministers coming to the constituency to meet businesses helps them to understand what is happening. I have been delighted that so many of the Business team and the International Trade team have been to NETPark—North East Technology Park—in Sedgefield to understand what those businesses really need and how we can help them best.
That contrasts massively with when I spend my time on the Business, Energy and Industrial Strategy Committee. With the exception of the hon. Member for Bristol North West (Darren Jones), who is the Chair and has to come, Labour Members’ attendance has been woeful. How they can say that they are interested in business, when they do not even come to a Select Committee I do not know. Members of the shadow Cabinet have described business owners as “the enemy”. How can a party with views like that be trusted with British business?
Mary Kelly Foy (City of Durham) (Lab)
I am immensely proud to represent Durham, and part of what makes it so special are the wonderful independent businesses that are the pride of our high streets. We have fantastic pubs, such as the Fram Ferment, the Dun Cow Inn and the Browney. We have lovely shops that are unique to Durham, such as Wing and a Prayer, Elvet & Bailey and Discovering Durham. La Chocolatrice makes incredible chocolates; Circle Vintage and Pears Boutique sell quality clothing; and I will not even get started on how much I love our indoor and outdoor markets.
I reference those places because Durham’s high streets are home to a higher-than-average number of independent shops, which we cannot afford to lose. The decline of the high street is undeniable. As the Durham Business Improvement District points out, nowhere represents that better than Silver Street. It was once the artery that ran to the beating heart of our city, but it is now littered with empty shops and serves as a sad reminder of the struggle that many bricks and mortar shops face.
Although the pandemic has accelerated the decline, it started long before 2020. It will come as no surprise to my constituents that the north-east has the highest vacancy rate in England. There are many reasons for the high street’s struggle, but chief among them are sky high business rates. What I am hearing from businesses in Durham is that the priority must be levelling the playing field between high street businesses and online and out-of-town retail.
That is why I am glad that the Opposition are calling for business rates to be cut immediately in ’22-’23, funded by a one-off rise in the digital services tax. When we are in Government, we will scrap the outdated business rates system entirely and replace it with the fundamentally reformed business rates property tax. Independent businesses in Durham are ready to bounce back. The only question is: will the Government let them?
Jack Brereton (Stoke-on-Trent South) (Con)
The support for businesses in the last two years to help them cope with the pandemic has been unprecedented. Stoke-on-Trent alone has had about £1 million in grants for businesses to cope with the challenges, not to mention all the support received through the furlough scheme, CBILS and self-employment income support scheme. Given that we now have record numbers of people in work—far more than before the pandemic—those measures have clearly worked to preserve jobs and livelihoods.
Many of the challenges are not new, however, and we must continue to support businesses to overcome the challenges they face. A part of the economy that has been particularly affected by the heightened energy costs is energy intensive industries such as ceramics and steel, which were the subject of my recent Westminster Hall debate. Hundreds of thousands of important skilled jobs are dependent on those sectors.
Unlike the significant decline in manufacturing jobs that we saw under the last Labour Government, in the last decade an increasing number of people have been employed in manufacturing roles. It is vital to further support those sectors to reduce energy costs; become more efficient; and develop new, more reliable forms of power to continue the successes that we have seen in recent years.
In the ceramics sector alone, there has been a doubling of GVA in real terms since 2010. I was particularly pleased that the Midlands Industrial Ceramics Group recently secured £18.27 million in Government funding through the UK Research and Innovation’s strength in places fund. The Government are doubling UK research and development investment and it is vital that more of that goes to industries such as ceramics and to energy intensive industries to support the transition and the levelling-up of our economy across the country.
Matt Western (Warwick and Leamington) (Lab)
Let me start with energy costs, which are significant. Energy prices in the UK are 87% higher than our EU competitors, which is a massive cost disadvantage against them. They are a massive factor for small businesses too, irrespective of the sector that they are in, as the Federation of Small Businesses has highlighted. Some 78% of small businesses say that they expect energy costs to increase significantly in the next three months.
Business rates, as we have heard, are not fit for purpose in their current guise. Almost 50 shops a day disappeared from our high streets in the first six months of last year. They are also a massive cost burden for our major businesses. Some of our big automotive plants and other manufacturing sector sites have a 50% higher tax burden from business rates compared with sites in Europe. By freezing business rates this year, which would save a small shop or factory £4,000, and by seeking to abolish business rates altogether in favour of a fairer system, the viability of our high street could be guaranteed only under a Labour Government.
On Brexit, briefly, businesses in my constituency are really concerned. They have told me time and again about the painful and expensive exercise of navigating customs, including the complexity of navigating 27 VAT regimes in Europe. Then there is the shortage of staff—HGV drivers, warehouse staff and skilled workers—that is also having an impact and costing our businesses. The Prime Minister infamously said “F*** business”, and I am afraid that he has. The lack of an industrial strategy has underlined that. The simple truth, I am afraid to say, is that the Conservatives are no longer the party of business, but the party of burden.
To conclude my two minutes, the Labour party is unashamedly pro-business. With every day that passes, our pro-business policies gain more and more traction with the business community and the electorate. With that in mind, I unreservedly support the motion.
Paul Bristow (Peterborough) (Con)
I am pleased to speak in this debate, because it gives me the opportunity to thank the businesses in my constituency in Peterborough for showing such patience and resilience and also for employing record numbers of people in my city. It also gives me the opportunity to thank the Government for the support they have given to businesses in Peterborough, because it undoubtedly has been tough.
I understand that businesses have had to face challenges, but when Opposition Members claim they are the party of business, I would say that they are the party of doom and gloom. I do not see that doom and gloom. Rather, I see 2022 as the year that the Peterborough economy cranks back up and we have record growth in our city, because ambition for businesses in Peterborough is high. Pre pandemic, Peterborough was among the top 15 cities with the highest number of business start-ups in the UK and the 13th best out of 100 cities in which to start a business. This is post pandemic, and the previous stat was pre pandemic. We also have our university coming, which will specialise in manufacturing, engineering and technology, and we are going to make the decisions that will guarantee our future health, wealth and happiness in those STEM industries.
That is what this party and this Government are delivering—£75 million to help us through the pandemic in my constituency, with £1.2 million just before Christmas, and a brand-new university that will open in the centre of our city, and that is not to mention the huge of vote of confidence that Peterborough’s economy has been given through £59 million-worth of Government investment in city centre regeneration and our university. Peterborough’s time is now, so I urge Opposition Members to forget the doom and gloom. Forget the opportunism; let us get behind British business and be positive and optimistic for our future in 2022.
Owen Thompson (Midlothian) (SNP)
We have heard from Members already this afternoon about many of the issues raised in the motion. I particularly welcome the fact that it talks about flexibility in repaying some of the Government’s loan schemes. Many businesses have already begun to repay debt accrued in the covid loan schemes, such as the coronavirus business interruption loan scheme, but while interest might be covered by the Government loans for the first year, repaying the capital is already presenting many businesses with a challenge, on top of those that we have heard about from Brexit and the pandemic. As early as June 2020, reports were warning of the tens of billions of pounds of toxic debt that the Government loan schemes could generate.
Clearly we will all be living with the consequences of the economic fallout of the pandemic for many years to come, so surely the Government can recognise that their decision to roll out loans instead of grants was a bit naive. Businesses already being hit hard had to take out loans, but they were never going to be in a position to bounce back straight into profit while having to repay them. Government loans have had an even tougher impact on those already hit hard, particularly the excluded, as others have mentioned, who have not had any support so far. Some were only able to get loans. By their very nature, those who borrowed were often the least likely to be able to repay.
I am sure that many on the Government Benches will claim that that is simply the effect of the free market, but these are businesses that were healthy before covid. When the pandemic hit, it was beyond their control. Leaving many at the whim of the market simply is not an option. That is why we needed to look to different options, and certainly I have called on the Government to look at these loans in a different way, perhaps with a pay-as-you-earn style of repayment, so that as businesses start to rebuild their incomes, we could taper or tier the repayments in a way that made them far more affordable, better supported those businesses and got the Government’s money back.
Sarah Champion (Rotherham) (Lab)
Today, Rotherham businesses are facing an economic crisis. Prices across the board are skyrocketing. Last year saw the fastest ever rise in production costs. Staff retention and recruitment is harder than ever. Inflation is at a 10-year high, and taxes on people and businesses have reached a 70-year high. It is no wonder that consumer confidence is down and that, according to Make UK, two thirds of UK manufacturers are worried about further cost increases in the coming year. Why is this happening? Because the Government have lost control and because they have not got a plan. Ministers seem more interested in protecting the Prime Minister than in protecting British businesses, and more interested in saving their own jobs than in saving those of our constituents.
The warning signs were clear. Even before the pandemic, costs for businesses were at record levels, thanks in no small part to the Government’s failure to deliver a working Brexit, and nowhere was that clearer than in the energy-intensive industries. For nine years, I have been sounding the alarm on energy prices, but time and again the Government have failed, despite pledges of support. Warm words will not forge steel, but action to bring down production costs might. Our steelmakers pay 61% more for electricity than competitors in Germany and 51% more than those in France. Similarly, glass producers such as Beatson Clark in Rotherham face unsustainable energy costs thanks to a 400% increase in wholesale gas prices. Costs of that kind cannot be sustained.
Where this Government step back, however, Labour steps up. We propose a contingency fund to support firms through hard times, including energy-intensive industries such as steel and glass. Labour would freeze business rates and replace them with a system fit for purpose that would ensure a level playing field between the online giants and physical shops, and Labour proposes a patriotic commitment to buy British.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
I have raised the case of a certain business in my constituency before. It is a well-known family-run company that is about to reach its centenary. When the time came for the business to renew its energy tariff last year, it was increased by £30,000—almost 500% more than in the previous year. That was an astronomical cost, which has caused considerable stress to the owner at a time when he should be celebrating the achievement of the business reaching its 100th birthday. I wrote to the Department for Business, Energy and Industrial Strategy at the end of October seeking advice and support, but it has not yet responded.
Like many local business owners, the owner of this business employs local staff, and like many of his peers, he feels a great deal of responsibility to keep them in their jobs. When businesses suffer, however, there is a domino effect on everyone involved—employees, contractors, investors and suppliers. That, in turn, has an impact on both the local and the national economy. Not to provide this essential support now is incredibly short-sighted.
In recent months, I have been contacted by a number of constituents who are feeling the impact of that domino effect, such as those working in the hospitality sector whose hours were cut in the run-up to Christmas because their employer could not afford to pay them for their regular hours. Yes, restrictions in my constituency were imposed by the Scottish Government, and yes, the Treasury did announce a package of support, but not until the eleventh hour, when many of those decisions had already been made.
I urge the Government to commit themselves to giving businesses much more comprehensive support. That is vital to the prosperity of the UK. We cannot continue to rely on rushed, last-minute solutions to very clear and long-standing issues.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister and the Prime Minister claim that there are 400,000 more people in work, but the Office for National Statistics says that there are 506,000 fewer. Why is that? Because the Government do not include the self-employed. What a laugh. They have said that there are 1.1 million vacancies, but that is because 1.4 million people have stayed in the EU. These are empty jobs. There are fewer jobs and fewer people working.
The Government talk about tax. Last year, the Chancellor imposed £40 billion worth of tax, 2.7% of GDP. That was virtually unprecedented: these were 1950s tax levels, and, according to the Institute for Fiscal Studies, they were almost entirely unrelated to the pandemic.
The reason for this is, of course, low growth. We should be, on trend, at a 40% higher level of earnings, for people’s pockets and for the economy as a whole. Let us compare that with Labour’s record. Labour produced a 40% increase in the size of the economy in the 10 years to 2008, and invested in doubling the size of the education and health systems. The choice for the electorate is clear: high growth and investment in public services, or low growth, high tax and cuts, which is what we are seeing now.
What business wants—my background is in business—is market access, a skilled workforce and cost-controlled stability, but that is being ruined by a botched Brexit. What we want is more engagement with the nearest biggest market, which is the European market. We want customs co-ordination with the EU so that we can get the tariffs off. Of course, if we were in the customs union, we would not have tariffs from the United States, but now we do. Why do we not work together, instead of blowing raspberries? We want support for the high street. I support what my Front-Bench team are putting forward. I also support the idea that local authorities should be empowered to have their own virtual hubs, or virtual marketplaces to compete directly with Amazon, with profits going to subsidise local services.
Let us have a strong economy to pay for a fair society, not a weak and divided economy and a divided society. Labour is backing business. Ultimately, we need a strong economy and Labour will deliver that, as we have in Wales.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
One thing that stands out from this debate is that British business is calling for a Government who are on its side. We have just seen the third consecutive quarter with more than 100,000 business deaths reported. From across the House, we have heard stories about struggling businesses, jobs at risk, businesses facing hardship and closure, and sectors of our economy left to fend for themselves as crises are worsened by Government inaction. I thank colleagues for speaking in this debate, including my hon. Friends the Members for Llanelli (Nia Griffith), for Halifax (Holly Lynch), for St Helens South and Whiston (Ms Rimmer), for Bradford West (Naz Shah) and for City of Durham (Mary Kelly Foy), the hon. Members for Thirsk and Malton (Kevin Hollinrake) and for Richmond Park (Sarah Olney), the hon. and learned Member for Edinburgh South West (Joanna Cherry), and many others.
The reality is that business support from this Government has been haphazard or, for some, non-existent. One thing that business needs above all else is stability and the ability to plan ahead with confidence. That has been as absent as the Chancellor was before Christmas, with his trip abroad delaying much needed action for businesses in that period. The Government were also absent during last summer’s HGV crisis, the steel crisis, the supply chain crisis, the CO2 crisis and the fuel crisis that saw forecourts close across the country, with small businesses reliant on their vehicle for trade unable to visit their customers. This Government had one test—were they making life easier for businesses to get through the covid crisis, or were they making life harder? In many respects, they failed that test.
On top of that, the Conservatives are bringing in a new jobs tax, just as support measures come to an end. That is not a plan. It is evidence of a lack of one. Clearly, the Conservative party has become the high-tax party because it is the low-growth party. All the indications are of future years of low growth, on top of the low growth going into the pandemic.
When it comes to the economy, Labour puts the national interest first. We called for furlough-style employment support in early 2020 and it was right to have such support. We called for and supported help for the self-employed, business loans and urgent support on commercial rent debt. However, so much came so late, with businesses paying the price. Many are still excluded from the support that they need.
Covid is not over, however, and businesses need clarity on how to plan for the future. We believe in a strong private sector where investors and entrepreneurs are rewarded fairly. We believe in an economy where companies are good corporate citizens, sharing wealth, engaging communities, paying their fair share of tax and treating their employees with dignity and respect; in a national economy that is anchored in every part of the UK, every region and nation, with no locations left behind; in prosperity that is shared evenly, bringing security, dignity and respect to families across our country; and, most of all, in an economy that moves smoothly towards a low-carbon economy, with a plan for how businesses move to net zero and, as part of that journey, our businesses doing well as they do good.
To achieve those goals, we need a proper industrial strategy, with a plan for how we buy, make and sell more in Britain, a strategy with leadership and direction that guides serious investment, not an incoherent plan with slogans and soundbites. The more I hear the phrase “levelling up”, the less faith I have that the Conservative party has a clue about what it is doing.
Today’s Labour party is the party of business. We will freeze business rates until the next revaluation. We will increase the threshold for small business rates relief, ahead of more fundamental reform—[Interruption.] Government Members may chuckle, but that is because they know that we are right. We will support businesses now with their energy bills, extend the VAT discount for hospitality, and invest in skills and training to tackle skills shortages to help businesses to build those new capabilities.
Every economic indicator, every commentator and every ounce of common sense tells us that we have the perfect storm of rising costs, rising skills shortages and rising taxation. This is catastrophic for businesses. So Ministers have a choice. What will they do to support businesses, large and small, with the next set of challenges that faces them? Businesses across the country are watching and waiting for a plan. They cannot keep shouldering the burden. Today is the Minister’s opportunity to tell businesses what the Government will do now. It is now the Labour party that is the party of business and the Conservatives that have led to life for British businesses being harder than it is for businesses abroad.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
I have run many, many businesses over the last 25 years, and in welcoming the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) to his place, one thing I particularly agree with him on is mental health. I know what it is like to run a business in normal times. It is stressful enough for entrepreneurs who risk their homes and their own livelihoods to pay other people in normal times. In these particular times, it is right that we stepped up to support entrepreneurs to protect jobs, to protect livelihoods and to protect those businesses. Insolvencies were at a 40-year low at the height of the pandemic, and putting that £408 billion of support out there gives us 408 billion reasons to get this next bit right, to make sure that we can shape the recovery.
We have just heard the extraordinary claim that the Labour party has suddenly become the party of business. But we also heard from my hon. Friend the Member for Sedgefield (Paul Howell) about Labour Members’ woeful attendance at the Business, Energy and Industrial Strategy Committee, where they cannot be bothered to scrutinise the Department. Also, at oral questions in this place, the employers, the entrepreneurs and the people who are giving jobs are portrayed as the bad guys time and again by those people across the way. We also heard that Labour is apparently the party of the workers, yet in Wales, it is fining people for going to work.
We heard from my hon. Friend the Member for Stourbridge (Suzanne Webb) about the 50,000 more companies that have been formed since 2010. These are the fundamental roots that allow us to be able to pivot to a good solid recovery, because the fundamentals behind the UK economy remain strong as we look to power through our growth.
My hon. Friend the Member for Grantham and Stamford (Gareth Davies) was right to pay tribute to local authorities. We have heard other examples where things have not worked so well, but we have worked in partnership with local government to make sure that we can get the support to businesses, and we will continue to do so with the discretionary grants and the grants to hospitality and leisure. We need to be able to work collaboratively with local authorities.
My hon. Friend the Member for Hertford and Stortford (Julie Marson) was also listening to businesses. She talked about unprecedented events. I think the word “unprecedented” has been used an unprecedented amount of times in the last two years. I loved her analogy about the Government being the groundsman who sets the pitch for the game ahead. Unfortunately, the Labour party would set a pitch that would just take spin, because there is no plan behind what it is saying. The wicket that we would prefer would allow entrepreneurs to make a good start, to build a solid innings and to hit boundaries so that they could scale up quickly with the support that we need to be able to give them.
My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) talked about energy issues and supply issues. Yes, we are feeling them here and we must tackle them, but they are indeed a global issue. I am pleased that he again raised the issue of regional mutual banks, because that diversification of funding will have a longer-term view beyond the initial response that the Government are giving for businesses.
I was pleased that my hon. Friend the Member for Clwyd South (Simon Baynes) contrasted Wales with the UK Government. We can see the direct comparison. This is not just talk; we can see the direct comparison between what is happening in England and Wales, where that business support has dissolved.
Sir Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.