(1 day, 7 hours ago)
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Madam Deputy Speaker (Caroline Nokes)
I call the Chair of the Business and Trade Committee.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
At the end of a long day, let me express my gratitude to the Backbench Business Committee for providing us with this time to debate the supplementary estimates and the priorities of the Department for Business and Trade.
I rise to open this debate and simply make three broad points. This is an important debate because, of all of the supplementary estimates that have been laid before the House this afternoon, the Department for Business and Trade has had by far and away the most significant increase. Day-to-day spending has been increased by some £360 million, which is a rise of almost 18%. Investment spending has risen by £626 million, which is a 41% rise. Those are significant sums, so I pose the following questions to the Ministers. First, are these increases justified? Secondly, is the Department spending its money on the right priorities, given what we have heard from the business community? Thirdly, I want to underline this question about why there is not more significant support for small business, which is suffering what our Committee has found to be pandemic-style pressures but without a pandemic-style support package in place.
Let me start with the significant increases in the Department’s supplementary estimates. Some £375 million has been provisioned extra to support British Steel. That takes the total support that this House has agreed under the Steel Industry (Special Measures) Act 2025 to about £710 million. That is a significant sum. I think it has broad cross-party support. Certainly, the House did not divide when we were recalled for that unusual hearing on a Saturday to agree to the passing of that Act. None the less, there is one significant question that we have to ask this afternoon: where is the steel strategy to go with the extra money that the House is being asked to agree?
When representatives from Tata Steel came before our Committee just a couple of weeks ago, they were very clear that there are now just eight weeks to save the steel industry in this country. Therefore, having passed that Steel Industry (Special Measures) Act, and having been asked to agree this extra money, the House now has to ask the Minister today where that steel strategy is. As we know, a wave of subsidised Chinese steel is about to land on our shores. The United States has put up significant defences. The European Union has put up significant defences. We had significant defences, but they are about to come down in June. Industry is sending a message loudly and clearly to the Government that, unless they act and unless new defences and a steel strategy are put in place, we are looking at the end of the steel industry in this country. Thousands of jobs will go, along with a sovereign capability, which as a country we simply cannot afford to happen.
I would be very grateful if the Minister could explain how, if the House is to agree the spending, we are actually going to make sure that that money is not wasted, because there will be further policy measures in place to ensure that we do not lose our steel industry in the weeks ahead.
That takes me to the Post Office. Post Office provisions for the Horizon scandal and the payouts have now risen to about £1.2 billion. Our Committee has consistently criticised Governments of all stripes for not paying out the money to those victims much faster. The Committee has now agreed a further report on measures, which we think Ministers should take in order to ensure that justice is genuinely delivered to all of the victims of this scandal. That report will be published in a few days’ time. The House is being asked to agree this increase in the provision to £1.2 billion, yet the question we have for Ministers is this: where is the provision that Fujitsu is supposed to be making? After all, the Fujitsu system was at least half the cause of this scandal.
We now think that the total cost of the Horizon scandal, when we add in the legal costs, will be something like £2 billion, yet when we asked the head of Fujitsu what provision he had made for contributing to that bill, the answer was zero. When we followed up with the auditors, they confirmed that the directors had acted within the law because the Government had not yet made any demands on Fujitsu for the money that should come back from that company in order to help fund it. Just to add insult to injury, this is a company that has taken a grand total of £362 million in new contracts over the past year alone. It promised us a moratorium on bidding for new contracts, but that moratorium turned out not to be real and was merely a press stunt.
Why are we not asking for more money from Fujitsu, so that we do not have to put up these provisions of £1.2 billion? I would be grateful if the Minister could answer that question.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
I have enjoyed an interesting few months on the Committee so far. Does my right hon. Friend agree that it is perplexing that we do not have any understanding as to why there is not more pressure being put on Fujitsu to come up with a figure? Fujitsu keeps saying that it is waiting for the outcome of the inquiry, but it has made a commitment and we would expect some kind of provision to be made to reflect that.
Liam Byrne
My hon. Friend is absolutely right. The chief executive of Fujitsu came before the Committee to say that Fujitsu did indeed have a moral obligation to make a contribution. That is why we were so surprised when earlier this year, when we asked for him to return, he said that no provision had yet been made. For a company that is making hundreds of millions of pounds out of British taxpayers, it is simply egregious that it has not offered to pay, but it is also wrong that Ministers have not demanded that it pays up, and pays up quickly.
I have touched on a couple of the significant increases in the estimates. There are two more points I want to make in the time available. The second broad point is the question of whether the money that the Department for Business and Trade is asking us to approve is in line with business priorities. As a Committee, we spend a lot of time listening to the business community, and we set out priorities based on what the businesses we talk to when we travel the country think we should be focused on. On our last national road trip we visited seven cities and did many roundtables on that tour. Last year we had 1,000 witnesses appear before the Committee—three quarters in private and a quarter in public—and we received 168 bits of evidence as we set out priorities for the future.
We heard very clearly that what business is looking for is far more certainty about the investment environment for the years ahead. Businesses want a better return on investment. For that, they need energy costs and business rates to come down, and they need the skills system to be far more flexible and available. Critically, they need much better access to finance so that we can mobilise capital on a different scale. Trade deals need to become a gateway to increasing exports. Finally, they are asking for a lot more coherence in regulation. Right now people are being smothered in red tape, often because one Department is not talking to another.
As we look at those priorities and at the estimates in front of us, we see that certainty has improved. The spring statement was a step forward, and the Chancellor has increased her headroom significantly. That definitely takes risk out of the investment environment. But there is nothing in these supplementary estimates about driving down energy costs. There is nothing about driving down business rates. There is nothing about making the skills system better financed and more available, in particular to small business.
Where there is progress is in the extra £200 million for the British Business Bank and the £50 million for the growth guarantee scheme. That is significant, but it is probably not quite enough. Indeed, the evidence we have received suggests that the market for loan guarantees is probably about £2 billion bigger than the Government have provided for. If we want small and big business to have access to scale-up finance in particular, we need to make sure that the British Business Bank has a much bigger loan guarantee scheme available.
Finally, there was nothing in the estimates to roll back the very deep cuts to export support. At a time when we have basically finished signing the free trade agreements that are available to us as a country, it is surprising to the Committee that export support staff are being cut so aggressively. If we want to make the most of these new opportunities and new free trade deals, we would have thought that increasing export support would be a Government priority.
My final point is about the emergency facing small business. Right now, as I said in my introductory remarks, small business tells us that it is facing pandemic levels of pressure without a pandemic-style support package. Labour costs have gone up. As we know, the national minimum wage has gone up, which in my view is a good thing, and the Employment Rights Act 2025, which will improve rights, is coming through. That is also a good thing. But when we add on the national insurance contributions, we must accept that labour costs will rise. That means that labour has got to become more productive, and that the skills system has got to become better available to small businesses. But when we add to that rising energy costs—so much higher; perhaps 50% bigger than before the covid crisis—the lack of regulation in third-party intermediaries, the increases in business rates, the costs from crime, the organised crime takeover of the high street, late payments and a lack of access to procurement, we see the crisis that small business now confronts.
Those are the priorities where we would have liked to have seen more action in the supplementary estimate. They will certainly be a focus of the Committee’s scrutiny work over the course of the next year.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
There will be an immediate four-minute time limit.
Wendy Chamberlain (North East Fife) (LD)
I will make some brief remarks. I note that the Department’s estimates memorandum made specific reference to spending supporting the objectives to make the UK the best place in the world to do business, the best place to do business from, and to deliver great services to businesses. I will talk about a roundtable I held for hospitality businesses in my constituency last week. The organisations that attended varied hugely in size, turnover and business model—North East Fife is a place that generally people want to visit, and it caters for a number of visitors accordingly—but none of them thought that the Department for Business and Trade was making this the best place in the world to be operating.
Part of the reason for the debate was because the Department has increased its budgets for the British Business Bank and the growth guarantee scheme, which the Chair of the Business and Trade Committee mentioned. There are other sectors in North East Fife—we have seen losses in manufacturing, largely due to our departure from the EU, and we have the University of St Andrews doing groundbreaking work and research—but we are largely a rural economy, with farmers across the constituency.
Turning to hospitality, one of the issues raised at my business roundtable was the difficulty in accessing finance. Given that has already been raised by the Chair of the Committee, I hope that the Minister will address that point in particular. As has been already touched on, the feeling is that hospitality is being hammered from every direction at the moment—the question asked was: how much more can businesses take?
Across the board, businesses understood the reasons behind the changes to national insurance contributions, and they were supportive of the national living wage. Part of that is because most leaders in hospitality have worked their way up within the sector, and they know that the hard work of the service industry deserves proper pay. But as business owners they are also acutely aware that their wage bills are going up unsustainably.
A significant amount of hospitality businesses’ costs relate to staffing—some of them quoted 30% to 40%, or even higher. With the lower threshold for contributions dropping to £5,000, employees now pay national insurance on more of their employees’ earnings, which means that many part-time roles have been impacted and part-time recruitment is no longer happening. More full-time roles are being recruited, which stops young people, for example, from finding that first rung on the hospitality ladder.
Business rates are also going up. As a Scottish MP, I appreciate that that problem lies squarely at the feet of the SNP Government in Scotland, who could pause this year’s re-evaluations but are refusing to do so. I am grateful to my colleagues in the Scottish Parliament, who have secured hospitality reliefs in our budget negotiations with them. Food inflation—especially with the impact of tariffs—is a real concern, and the only real lever to control soaring costs is to cut back on training, hours and staff: those things that the Chair of the Business and Trade Committee said are so critical to delivering some of the change that the Government want to see.
The biggest ask that came from hospitality was to cut VAT from 20% to 15%, which is a move that the Liberal Democrats have been calling for for some time. I know that that is not in the gift of the Minister, but I urge him to make representations to the Treasury if we want this to be the best place in the world to do business. It is also a measure that would support hospitality across the UK, and I say that as a Scottish MP.
Hospitality is important for so many reasons. Last September, there were 2.6 million jobs in the hospitality industry and it is estimated to be worth £70 billion to our economy. It is also part of our community. That came across very strongly in the roundtable. On the day that my son was born, our local pub was across the road from our house and I went there to wet his head, because why should I miss out on all the fun? Since then, it is the place he has worked in and the place where he had his 18th birthday. We need to support these hospitality industries.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I congratulate the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) on securing this debate. I want to touch on three areas of Department for Business and Trade activity where the estimates and the funding it receives could be put to best use. One relates to the industrial energy problems that we face in this country, which I know the Select Committee has looked at. As the Minister is acutely aware, this has a direct impact on communities such as Stoke-on-Trent because of the foundation manufacturing industries that we still have that are energy intensive.
I very much welcomed serving on the delegated legislation Committee that passed the statutory instrument to extend the reduction in electricity costs by up to 90% for the supercharger. I know that some of the estimates, if approved today, will go towards funding that. As always, I want to press the Minister on whether, as well as increasing the amount that the discount can be applied to, he would consider extending the scope of that discount to sectors that are currently outside it—namely, of course, the UK ceramic sector. It is not currently covered by the supercharger scheme, but a small amount of help would go a long way in securing the jobs in the communities that most need it.
I also want to talk about the fact that Stoke-on-Trent is a foundational area of ceramics that is gas-intensive. The Government have previously discussed the fact that gas is an international commodity, the price of which is traded on the world market. With the events that are taking place in the middle east, we are all expecting to see an increase in world gas prices. That could result in a hugely damaging economic hit to sectors that are not eligible for any other form of relief. If any part of what is being approved today in the Department could be used as a cushion for those sectors that are unable to bring down those costs in any other way, it would bring relief to parts of my community.
Some of the money that is being granted to the Department should be used to promote better buying British and building British procurement. The right hon. Member for Birmingham Hodge Hill and Solihull North has championed this, both in his role in this place and when he was running to be the West Midlands Mayor. He pulled together a wonderful strategy that I think we could learn from. Small and medium-sized businesses in Stoke-on-Trent tell me that they would love to do more business with the Government, public sector and commissioning bodies that have public money, but such contracts are often big and unwieldy and a challenge to access, as the businesses can meet only part of the contract rather than all of it. Anything we can do to break down those barriers to opportunities in procurement, and to focus on companies that make, build and employ people in this country, would bring an economic benefit to support communities up and down this country. Without costing the taxpayer any more, it would just be a better use of the money that we are spending.
Finally, I want to touch on how we do trade protection. I am not a protectionist. I do not believe that we should be putting arbitrary tariffs on things to prevent imports, but I do worry about the ever-creeping non-market economy. Countries such as China and increasingly, sadly, Türkiye, are using manufacturing in their own bases to import into this country to undermine domestic production with the intention that once our own country’s ability to produce has gone down, they will raise their prices. That could involve tyres or ceramics, which would affect Stoke-on-Trent, or it could be other products that we become dependent on in this country. If we are not putting in the correct trade remedies to secure domestic production, or at least to make domestic production as competitive as imports, we run the risk of becoming dependent on countries on which we cannot rely for the things that we want to make and build in this country. That would be very damaging for our own national sovereign capabilities.
John Cooper (Dumfries and Galloway) (Con)
It is a pleasure to take part in this debate, and I congratulate the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), who chairs the Business and Trade Committee on which I serve. As Chair of such a Committee, he is that rarest of things: capable of independent thought.
We know that growth is predicted to be sclerotic, and that is before global conflicts whip up the waters around us such that Labour’s Britain is but a cork in storm-tossed seas. If growth truly were the mission, then the shock troops ought to be the Department for Business and Trade. Yet the Department’s plans to cut 1,500 jobs have been branded “irrational and arbitrary” by the civil service’s biggest union, the Public and Commercial Services Union. That is despite the 17.8% increase in day-to-day funding, plus extra capital compared with the main estimates that we have heard about today. The Minister for Trade, the hon. Member for Rhondda and Ogmore (Chris Bryant), has said that
“we’re going to have to achieve more with fewer people”
—fine words and congratulations to the spads who crafted them, but the reality on the ground is we will inevitably get less done by fewer people.
What a disaster, just as free trade agreements—the fruits of Brexit from seeds planted by previous Conservative Governments—come piling in. We should be maximising these deals given that global economic power is shifting towards a Pacific rim with a burgeoning middle class. Our far too few DBT experts will have their ranks thinned, making it tougher for British firms to tap into lucrative markets abroad.
What does it say about this Government’s ambition? They would rather rush back to the skirts of nanny Europe—familiar old Europe with its feeble growth—when we could be the trading nation that Adam Smith envisaged 250 years ago with his book, “The Wealth of Nations”. We could and should be maximising the comprehensive and progressive agreement for trans-Pacific partnership, or CPTPP, giving us access to a market of 12 countries worth some £12 trillion and with 500 million potential customers. Even the EU, which never saw a trade deal it liked, is interested in joining.
The great prize in the much-vaunted but barely discernible “reset” with the EU is, we are told, a sanitary and phytosanitary deal supposed to smooth the way for agricultural goods, seafood and livestock into and out of Europe. It should not have taken the renegotiation of the entire deal to get—French, especially—customs to stop being le squad awkward. Worse, so-called dynamic alignment on SPS is a cage without a key, meaning that Britain will once again revert to being rule takers and not rule makers.
Turning to steel, I recall being in this place on that extraordinary Saturday listening to the self-congratulatory backslapping of Labour MPs hailing the saving of the industry in what was nationalisation in all but name. It seems to me that taxpayers are keeping blast furnaces alight with bundles of £20 notes, for the supplementary estimates earmarked £300 million for steel plants with no sign of the comprehensive steel strategy.
Perhaps nothing sums up more the meltdown of the sector under DBT’s yoke than the reported news that the Dalzell plate mill in Scotland lacked the cash to buy slab steel from British Steel, risking the raw material that Navantia needs for the fleet solid support ships at their Harland & Wolff yard in Belfast. Not so much for the want of a horseshoe nail the kingdom was lost, but for the lack of a cohesive DBT strategy, the steel industry and billons in cash may be lost.
For the wider economy, pivotal to each and every one of our constituents, the Department for Business and Trade looks like the linchpin which holds the wheels to the axle. The question is whether that pin is too small and too brittle.
Antonia Bance (Tipton and Wednesbury) (Lab)
I congratulate the Chair of the Select Committee, my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), on securing this important debate. I wish to align myself with the remarks he made about the need for a steel strategy to be published soon for clarity on how we will continue to support the steel industry of this country, given the difficult news coming out of the European Union and the difficult circumstances that the industry faces. As a proud metals MP from the Black Country, it could not be more important that we have a thriving British steel industry. I know the steel strategy will take this forward, and I look forward to hearing when it will be published.
As a manufacturing MP and manufacturing champion from the heart of the industrial revolution—indeed, where it started—I stand here to champion our industrial strategy, and particularly the work that the Department has done, as evidenced in these estimates, to support our automotive industry: the £2.5 billion to support DRIVE35 and the transition fund, the consumer subsidies for electric vehicles, and the investment in our charging infrastructure. Most importantly, as a west midlands MP from the heart of the automotive industry, the trade deal with the United States keeps our exports flowing and keeps 200,000 jobs live and thriving in the west midlands.
We must continue paying attention to the automotive industry more broadly. The Department needs to take a lead and ensure that the volume crisis that we are experiencing—production is down from nearly 1 million vehicles in 2016 to just under 800,000 last year—does not become an existential crisis for our automotive industry. In the past couple of weeks, Adient has announced that it will lay off 100 workers in my constituency. We are getting to the point where the UK supply chain will no longer exist for the parts of the automotive industry that we need.
I urge my friends in the Department for Business and Trade to consider—in conversation with colleagues in the Treasury and the Department for Transport—what more we can do to guarantee the future of the automotive industry. I urge the Government to bring forward the review of the zero emission vehicle mandate from 2027 to 2026, and to consider whether we ought to do something similar to the European Union, which has offered itself the flexibility to ensure that its automotive industries can thrive in the face of global headwinds. That may or may not be an issue for the Department of Business and Trade, but I know that the Minister is a champion for the industry and will continue to make the case for vehicle and automotive manufacturing.
On that point, I align myself with the points made by my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) about energy costs. It is wonderful to go out to my local businesses, to put the consultation on the British industrial competitiveness scheme in front of them, and to show them the standard industrial classification codes and that help is coming. The estimates must set out how that is funded, because we are not yet sure, and it must come sooner if at all possible.
The crisis is now. My businesses and manufacturing industry cannot wait much longer for the help they so desperately need with industrial energy costs. That help is coming; let us get it to those industries and manufacturing businesses, to ensure that manufacturing in this country continues to thrive. I know that is the expectation and the hope of this Government.
Amanda Martin (Portsmouth North) (Lab)
I will speak up for the small businesses and hard-working tradespeople in Portsmouth North and across the country —the backbone of our economy—and set out what the Government have already achieved and what more they must do.
Let me start with what this Labour Government have delivered. We passed the Employment Rights Act 2025, which is an historic alliance between workers and businesses, and gives 18 million employees the right to work that they deserve—I am proud of that. Strong workers’ rights and a strong economy are not in conflict; they go hand in hand, because businesses that treat their workers well are businesses that thrive.
We have enacted our modern industrial strategy, which has already driven £70 billion worth of investment across Britain and can lead into the world. We have signed trade deals with India, South Korea and the EU, opening up markets for British businesses to export into, raising productivity and creating decent jobs. Griffon Marine, a Portsmouth-based business that makes hovercraft, is a prime example of a local company that has been able to grow thanks to our trading relationship with Japan. That is what trade deals mean in practice, not for multinationals but for proud and ambitious small businesses on the south coast.
We have made a start on backing our pubs and high streets, but, frankly, there is much more to do. We have introduced a new licensing policy framework to slash outdated red tape, which has held back our venues for far too long. We have protected pavement pints, fast-tracked permissions for al fresco dining, and given more permission for street parties and licensing hours. Developers will now be required to sound-proof new buildings near existing pubs and venues, protecting those much loved community spaces from noise complaints.
The Pride in Place impact fund programme by the Ministry of Housing, Communities and Local Government has given 340 communities, including Paulsgrove in Portsmouth, the money and powers to restore rundown pubs, push back on unwanted betting shops and vape stores, and bring life back to our high streets by spending on things that make people feel proud about where they live. My hon. Friend the Member for Portsmouth South (Stephen Morgan) and I are determined to use some of the Pride in Place impact funding to give our local businesses opportunities to scale up. That is about trust and pride in our neighbourhoods and local businesses, and I welcome it.
The Government have set out the small business strategy, a serious and comprehensive plan to end the scourge of late payments that crippled cash flow, and to provide small businesses with the skilled workers that they need. I was glad to see that the very first page of the strategy acknowledges the issue of tool theft, on which I have been campaigning since my election. I know the devastating impact that such theft has on self-employed tradespeople. A tool is stolen every 12 minutes in the United Kingdom. Last year alone, tool theft cost self-employed tradespeople £193 million. When we factor in loss of work, reputational damage, damage to vans and the high suicide rates in that profession, the true cost is far higher. I am glad that the small business strategy recognises that, and I hope the Minister will work with me on future plans to campaign to support our tradies.
I welcome the extra £4 billion that we have invested through the British Business Bank. It does important work, but I want to ask the Minister specifically about what we can do to help our defence colleagues. Access to finance in the defence sector is difficult, and in an ever-changing world, the need for agility extends opportunities for our small businesses. Will the Minister look seriously at joining the defence, security and resilience bank, because we could raise capital on global markets, guarantee loans, crowd in private finance, and provide the kind of multi-year, low-cost funding that protects production lines and supply chains? It is desperately needed. I ask the Government to look seriously at the proposal because it would give our small and medium-sized businesses the financial firepower to take on defence contracts and apprenticeships, and to scale up and deliver.
There are many positive points, but I agree with my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) who introduced the debate. Small businesses told me that we must look at energy costs, at business rates, at crime from theft to fraud, and at the workforce now and in the future. I am extremely proud of businesses in Portsmouth, from Portsmouth Aviation, which is helping Ukraine, to Bubble CiTea, a global company with a CEO who is a Pompey lad and has chosen to keep it there.
Chris Vince (Harlow) (Lab/Co-op)
I thank the Chair of the Business and Trade Committee, my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), for securing this debate with the Backbench Business Committee—I declare an interest because I sit on that Committee—and for his important and constructive opening speech.
I recently hosted a reception in Parliament for the Essex chamber of commerce, and skills were the No.1 issue raised with me. What has the Minister done, working alongside his counterparts in the Departments for Education and for Work and Pensions, to ensure that our young people have the skills they need for the workplace? Businesses in Harlow are screaming out for young people with transferable skills. I recently met Daniel Chandler, CEO of the Young Professionals Guild, which is a new organisation with a mission to support young people into the hospitality industry. He spoke about the gap between what young people come out of school with, and the skills that industry is asking for. He has worked in collaboration with the fantastic Harlow College in its mission to decrease the number of young people who are not in education, employment or training —it has been very successful.
I welcome the recent education White Paper. What was important was not just the stuff on special educational needs and disabilities, although that got the headlines, but also the need to have a well-balanced and broad curriculum. Will the Minister ensure that this Government truly work cross-Department to ensure that the industrial strategy works alongside that curriculum? That is important, and once again I pay huge tribute to Harlow College.
The other issue that comes up when I speak to businesses in Harlow is energy costs. I will not try to make another ill-fated “reef” joke, but the Minister will be aware that Harlow has a coral farm, which is an example of a niche but energy-intensive business. I welcome that the Department for Business and Trade is focused on cutting energy costs and network charges for energy intensive industries by 90% as part of the British industrial competitiveness scheme, ensuring that UK business electric costs are in line with those across Europe. That is hugely important, particularly when we talk about trade.
Dr Allison Gardner (Stoke-on-Trent South) (Lab)
My hon. Friend mentioned the cost of electricity, but ceramics is a gas-intensive industry, so I again make a plea that when considering support for businesses, we remember gas-intensive industries, which includes steel, and that we have a strategy.
Chris Vince
My hon. Friend is absolutely right, and I am sure the Minister will reflect on that when he responds to the debate.
In conclusion, I welcome much of what the Government are doing, much of which has been discussed already, such as the modern industrial strategy and £70 billion of investment, trade deals with India, South Korea and the EU, the small business strategy, and working to get energy costs down, although I emphasise that there is much more to do. I congratulate my hon. Friend the Member for Portsmouth North (Amanda Martin) on her work ensuring that we tackle tool theft, which is potentially a big issue for business owners in my constituency. We also have action to protect British Steel, and I echo comments about the need for a steel strategy. I ask the Minister to reflect on how we can continue to bring down energy costs for businesses, both electric and gas, and work with other Departments to focus on the skills that employers need.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Mr Joshua Reynolds (Maidenhead) (LD)
Britain is in the middle of a cost-of-doing-business crisis. I see it on my high street and I hear about it from local employers, and colleagues from across the House will hear exactly the same in their constituencies. From the Government’s national insurance hikes to sky-high energy bills and uncertainty over what the Employment Rights Act 2025 will mean in practice, British businesses are being pulled in one direction and then another. The Government say that they want to grow the economy, but significantly adding to the tax burden of the very organisations that are trying to do that does not help.
The increase in employers NICs is an unfair jobs tax, and its impact is being felt across the country. UKHospitality estimates that the combined impact of the autumn Budget has landed £3.4 billion in additional costs on the hospitality sector. Jobs are being lost, hours are being reduced and venues are closing. A Government who think that relaxed licensing laws will help hospitality when businesses are already reducing hours do not understand the sector. The Liberal Democrats voted against the NI jobs tax changes at every opportunity because we could see this coming. The Government now need to face the consequences of their own choices and scrap this jobs tax before the damage becomes irreversible.
In 2019, the Conservative Government promised a fundamental review of business rates, but they never delivered it. Now this Government have promised to revamp the system, yet we are still waiting for proper rebalancing. UKHospitality estimates that the average tax increase for hospitality would be 76% over the next three years, compared with warehouses at 16%, offices at 7% and large supermarkets at 4%. The businesses at the heart of our high streets are being asked to carry an unfair share of this burden, and the adjustments do not come close to fixing that.
I can point to a business in Maidenhead, in my constituency. Laura set up Piccolo Land less than a year ago. It is a children’s role-playing village, and the kind of place that gives young families in Maidenhead a reason to come to town to spend time and to spend their money. When she started the business, her business rates valuation for a 2,500 square foot unit was £71,000—significantly more than her annual rent. She challenged that figure with the Valuation Office Agency and it was reduced to £42,000, but from April 2026 that bill will rise to £55,000. Laura has done everything right, but she cannot make this work. How do the Government expect businesses like this, which is barely a year old, serving young families and employing young people, to absorb that kind of increase? Maybe the Minister will be able to write to Laura to let her know which part of the Government’s growth plan she is meant to be benefiting from, because we cannot find it.
Pubs, live-music venues, hotels, restaurants, cafés, and visitor and tourist attractions are all facing the same rising bills, collapsing margins and impossible choices between cutting staff, putting up prices or closing their doors. To add insult to injury, the Government’s business rates U-turn is not going to fix the issue they have created, just make the pain less bad. The Government need to reduce VAT on hospitality, accommodation and attractions. This is not untested—the previous Government did that during the pandemic and it worked.
When asked about VAT cuts in December last year, the Government did not even attempt to justify their position. They simply pointed to business rates reform and moved on. Our high streets and town centres cannot wait for a Government who will not engage with that topic.
Every time we visit shops in our constituencies we will hear the same thing about shoplifting having effectively been decriminalised. Thieves do not fear consequences because there are none, and shoplifting has risen by 48% in England and Wales over the past five years. Shop owners tell me time and again that when they contact the police, they are told it is not an effective use of resources to follow up on minor thefts. However, these are not minor thefts to the people running those businesses, and they are not minor to the staff, often young people, who are being put in harm’s way simply for doing their jobs. With over 800 offences going unpunished every day, businesses are haemorrhaging money, driving up costs for consumers and pushing businesses to close their doors for good.
So here is a concrete proposal that the Government should adopt: a small shop needs about £6,500 for adequate modern CCTV, so the Government can make available grants for half that cost to every independent convenience store, and they can work with high street lenders to provide affordable loans to cover the rest. This is not just our idea: it is supported by the Federation of Independent Retailers.
I could go on about youth unemployment, shoplifting, business energy costs, Brexit or general trade barriers, but we do not have the time. What the Government have delivered is a jobs tax, broken business rates, unaffordable energy bills and a shoplifting epidemic that they refuse to take seriously. Businesses right across the country are resilient, but resilience has limits, and this Government have tested those limits to breaking point. The Government have the tools to act, but they needs to use them to bring down the cost of doing business, because we are in a complete crisis.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Gareth Davies (Grantham and Bourne) (Con)
Thank you very much, Madam Deputy Speaker, not least for the promotion that you just gave me—I hope the Whips are listening. It is a genuine pleasure, even before the promotion, to respond to the debate on behalf of the official Opposition. I am grateful to all colleagues from across the House for what I think were pretty good speeches that supported local businesses and dealt with the issues at hand.
I also congratulate the Chair of the Business and Trade Committee, the right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), on what I thought was an incredibly thoughtful, detailed and typical speech for him. As he will hear, it did not inspire my speech, which was pre-written, but I will echo a number of the points that he made so eloquently just a few minutes ago.
The theme of today is that, up and down the country, businesses, entrepreneurs and those they employ are the engine of our economy and the basis for our future prosperity. In so many sectors, it is British business that leads the way. Whether it is life sciences, defence, across professional services or in many other areas, businesses employ millions of people, undertake critical research and attract investment both here and overseas.
In the same sense, everyone who has contributed today, as will be the case for all MPs, will know of some SME in their constituency that seeks to grow, create jobs in their community and provide the bedrock of their local economy. The Opposition know that backing British businesses, both big and small, to grow, trade and invest means reducing the tax and regulatory burdens that they face. Over the past year, covered by the estimate before us today, the Government have indicated that they disagree with that. Just this week, as a result, we have seen business confidence fall yet again, according to the Institute of Directors.
More than ever, I am afraid that Ministers across this Government, including in the Department for Business and Trade, are failing to drive economic growth. Indeed, do not take my word for it, but listen to the Labour Health Secretary and rival to the Prime Minister, who said that the Chancellor has no economic growth strategy at all in a text message to the disgraced Labour peer, Lord Mandelson. Some may question why the Labour Health Secretary is commenting on the economy, but then again he is used to dealing with things in critical condition. Put simply: British businesses need the Government to create a far better environment for firms big and small to trade and, critically, to hire people.
Let me turn specifically, and properly, to the detail of the estimate before us, and I wish to ask a few questions of the Minister. First, to build on the opening remarks of the Chair of the Business and Trade Committee, the supplementary estimate shows an increase to the Department’s total managed expenditure of £1.5 billion, which is an uplift of 31%. For context, that is much higher than any other Department. In fact, the average in-year uplift for a Department under this Labour Government has been 4.6%—that is 31% versus 4.6%. In fact, last year also saw a large in-year uplift, when the departmental budget increased by some £1.8 billion, which was an uplift of 44.8%.
It feels like the Department is developing a pattern of asking Parliament to approve a budget in the main estimate, only to return months later asking for 30% or 40% more. This is far from supplementary; it is a Department that systematically underestimates its budget in the main estimate, and then returns to ask us for even more. As such, can I ask the Minister please to comment on why DBT is such an outlier compared with other Departments, and can I suggest that when its Ministers next come to Parliament with main estimates, they come with a better estimate of how much taxpayers’ money they wish to spend?
One item that particularly jumped out to me in the 10 February 2026 estimates was the cost of the intervention in British Steel, which the right hon. Member for Birmingham Hodge Hill and Solihull North also alluded to. In a written answer to the shadow Secretary of State for Business and Trade, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), on 15 December 2025, the Minister indicated that the total cost to the Exchequer of keeping operations running at British Steel came to £274 million. However, pages 12 and 13 of the supplementary estimates that we are reviewing and discussing today seem to indicate a total cost of more than £830 million across resource departmental expenditure limit and capital departmental expenditure limit business group funding.
That is obviously a significant difference in cost, so when the Minister stands up, I would appreciate it if he could set out the detail of what this is all about. Whatever answer the Minister provides, given that we are still awaiting a steel strategy, as many Members have alluded to, is it not the case that the Government are asking Parliament to approve hundreds of millions of pounds in retrospective spending on an industry they do not really know how to support, and on a company whose future remains undecided and whose costs seem to be open-ended? I would really appreciate it if he could give a detailed answer.
Finally, I turn to the British Business Bank—an organisation that I admire, that I like, and that I had the pleasure of overseeing from within the Treasury. When I looked at the supplementary estimate, I noted that the additional capital DEL that is being provided to DBT for the growth guarantee scheme, which supports business lending, is to the tune of £50 million. Meanwhile, the British Business Bank’s financial capacity has increased to £25.6 billion, and it also has a new industrial strategy growth capital initiative.
The growth guarantee scheme is a perfectly legitimate use of Government funds—it creates Government-backed business lending and performs an important role in the economy. However, according to page 7 of the supplementary estimate, an additional £50 million has been provided to DBT this year, so it is natural that I want to ask a few more questions about the scheme. First, can the Minister tell us what the default rates are for the loans provided by this scheme, and how does he square that with the additional £50 million of capital? Secondly, it is critical to know whether those loans and that amount of money are complementing private lending, or are actually displacing it. What analysis has the Department done to provide this House with an adequate answer that will get us comfortable with approving that £50 million?
From increased taxes to additional red tape, the Government have soured business confidence, and it is working people who are paying the price for their higher unemployment and higher prices. No matter how many billions are spent by the Department and then increased at supplementary estimates, that fact will sadly always remain.
The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)
I thank everyone who has participated in today’s debate. I particularly thank my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) for opening the debate, as well as for his work as Chair of the Business and Trade Committee, and the members of that Committee who have spoken in today and produced a number of reports in this Parliament. I have very much enjoyed reading those reports, and they have been drawn on extensively during this debate. Members have made some incredibly important and pertinent speeches, and in the time available, I will try to trot through some of the answers at pace. Forgive me in advance if I do not manage to respond to everyone: I am happy to write and fill in any detail that might be missing afterwards.
I will start with the overarching strategy of the Department and why it has produced these estimates. The Department has reset our programme of spend around our growth mission and our industrial strategy. Our major investments in key sectors, combined with efforts to attract private capital, will ensure that taxpayers’ money is used effectively. At the same time, we are ensuring that the right resources are going into delivering our small business plan, creating the right conditions for small businesses to grow. I will say more on that shortly, as I know that many Members are concerned about small businesses.
I also need to explain, as it was mentioned by several Members, the rationale behind the in-year budget increase. It is primarily for three activities—British Steel, the Post Office and the British Business Bank. There has been a £1.351 billion increase in the annual managed expenditure budget, recognising that additional provisions are needed for postmaster compensation. That covers funding for the capture redress scheme, and for redress to family members of postmasters impacted by Horizon. There is a £626 million increase in capital department expenditure limits, largely for two reserve claims. The first is £375 million of funding for the Department’s support for British Steel, and the second is £200 million for growth sector businesses via the British Business Bank, to help more firms to scale up and become home-grown success stories. The reserve claim will ensure that we do not unnecessarily restrict the bank.
The shadow Minister queried why the Department is coming back with estimates, as it also did last year. Fundamentally, that is partly built into the structure of the British Business Bank. In order to provide the bank with the level of in-year flexibility that it needs to work with fund managers and draw down investment in businesses, it is important that the bank is not restricted at the outset and that we do not overcompensate or undercompensate the bank. That is one of the primary reasons why the Department is an outlier among the estimates. It is actually a sign of a well-functioning Department and a very well-functioning element of the British Business Bank.
I turn to some of the specific items. Given the scale of the support for the steel industry, I shall start there. It was raised by the Chair of the Select Committee and many other Members. Our steel industry is of course strategically important as part of British heavy industry, supporting the UK’s industrial base, our construction sector and our national and economic security, as we heard in the earlier estimates debate on the Ministry of Defence. Transforming the steel sector is essential for securing a competitive, modern and sustainable industrial base, ensuring the UK can meet its long-term net zero commitments while maintaining critical domestic capability.
Our commitment to the sector is evident in the intervention we made in April last year at Scunthorpe to ensure uninterrupted steel production and avoid the permanent and disorderly closure of the UK’s last operating blast furnaces, the Queen Anne and the Queen Bess in Scunthorpe. Government officials are continuing to provide on-site support in Scunthorpe, ensuring uninterrupted domestic steel production and carefully monitoring the use of taxpayer funds.
Several hon. Members mentioned the steel strategy, including my hon. Friend the Member for Tipton and Wednesbury (Antonia Bance). We have a commitment to publish the strategy early in 2026. We had hoped to publish it before Christmas but we thought it best to publish it alongside the trade measures following changes in trade arrangements. We have worked carefully with the industry, UK Steel and the trade unions, and I hope that we will bring the proposals on trade and on the steel strategy to the House in a very short time.
I commend the management, the trade unions and the workforce at Scunthorpe on their diligence in this period. In difficult circumstances, they have achieved an excellent health and safety performance in stabilising operations. I also commend the commercial team at Scunthorpe for their high-speed rail order from Turkey. I think we can all take great pleasure in steel exports from the UK to Turkey. The shadow Minister was concerned that the Government did not have the know-how to support the industry. I can tell him that, having worked for 29 years in the industry myself, I am exercising very careful oversight of the production and operational activities of British Steel.
Several Members queried the numbers. To date, the Government have spent approximately £370 million on support for British Steel, covering items such as raw materials, salaries and unpaid bills. I understand the concern, but I note that that is still less than half the amount that the previous Government spent last time British Steel was in great difficulties. They simply flipped the business out to Greybull, a company that could not even run Rileys snooker halls without Rileys going into administration. This Government are developing a steel strategy, and planning to ensure that we maintain our ironmaking capacity at Scunthorpe as well.
More broadly, the Government are committed to providing up to £2.5 billon to support the UK steel industry. Funding and financing for steel companies is being delivered via the National Wealth Fund and direct support, including an additional £500 million grant for Tata Steel at Port Talbot and support for the official receiver’s sale process for Speciality Steel’s UK sites in Rotherham and Stocksbridge. Separately, the Government have committed an additional £420 million to new investment in Sheffield Forgemasters to expand capacity further as a direct result of the AUKUS submarine deal, bringing our total investment in Forgemasters to over £1.3 billion.
That was the first item; the second is the Post Office. I should begin by acknowledging the sub-postmasters who were impacted by the Horizon scandal, and, again, thanking my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North and the members of his Committee for their support and their challenges on these issues. The Government welcome that scrutiny. My right hon. Friend said that the Committee would publish a new report in the coming days, and we stand ready to review and respond to it.
I can confirm that we have now paid redress to more than 11,300 postmasters and made redress payments of £1.2 billion. My hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders) and the Chair of the Committee were concerned about Fujitsu, as am I. Fujitsu has accepted that it bears a moral responsibility for what has happened, and has expressed its willingness to contribute financially. Let me make it clear that Fujitsu will have to pay. As for the amount that it will have to pay, it is important for the inquiry to complete its work and publish all the volumes of its report so that we can establish the level of compensation.
In respect of small business support, a number of issues were raised in connection with energy efficiency and energy costs. My hon. Friend the Member for Tipton and Wednesbury mentioned the British industrial competitiveness scheme. There are a number of other kinds of support for energy efficiency in small businesses, but I have already committed myself, at the Dispatch Box, to looking further at what can be done in that regard. The hon. Member for Maidenhead (Mr Reynolds) asked what we could do for Laura. I would direct Laura towards our plan for small businesses, which includes legislation on late payments, a business growth service and tailored support for high streets, which, hopefully, she will find helpful.
Catherine Atkinson (Derby North) (Lab)
We are seeing fantastic and significant investment and regeneration in our city centre in Derby, but it still bears the scars of 14 years of austerity and neglect. Will the Minister tell us a bit more about how the Government are helping businesses to grow?
Chris McDonald
Look out for our plan for high streets, which will be published shortly.
My hon. Friends the Members for Stoke-on-Trent Central (Gareth Snell) and for Stoke-on-Trent South (Dr Gardner) mentioned the gas-intensive nature of ceramics businesses. I am aware of that, and am looking at it very carefully.
I hope that I have been able to trot through some of the main issues. I now want to leave some time for the Chair of the Committee to make some concluding remarks.
Liam Byrne
This is the most extraordinary country on earth. It is the home of the industrial revolution, and the home of the scientific revolution. It is a country with an abundance of ideas, and also a place that is blessed with trillions of pounds of long-term investment capital. If we in this House cannot put together a shared agenda for ensuring that our rate of growth is faster and living standards rise, we do not deserve to be here.
This has been an excellent debate, and I have really appreciated the way in which the voice of business, large and small, has been heard loud and clear. I think the Minister will go away from today’s debate with real clarity from this House that we expect to see the steel strategy on the table pronto. We expect much more aggressive action to drive down energy costs, we want to ensure that our manufacturing base is better supported and, crucially, we want to support the tradespeople whom my hon. Friend the Member for Portsmouth North (Amanda Martin) talked about, and the small businesses and high street businesses that my hon. Friend the Member for Harlow (Chris Vince) talked about. These are the people whom we are here to represent, and they deserve to have a policy that has their backs.
Question deferred (Standing Order No. 54).