Industry (Government Support)

Debate between Lord Watson of Wyre Forest and Baroness Morgan of Cotes

Wednesday 16th June 2010 Commons Chamber

[Nicky Morgan]

I entirely agree with my hon. Friend. I noticed a certain amount of eye rolling when an earlier speaker mentioned that she had worked in the financial services industry. As my hon. Friend has pointed out, however, the financial services industry’s growth over the past 13 years was huge. We will not take lessons from Labour Members in that regard.

In referring to industry, I think that Labour Members have been talking about larger companies—perhaps I will be corrected—but most people in this country work for smaller businesses, and in some cases very small businesses. They are the backbone of our economy, and their growth will drive the economy out of the current situation.

I want to talk about three aspects of support for business, some of which have been referred to already. First, more bank lending to businesses is necessary. As chamber of commerce research shows, small businesses are being penalised with higher rates of interest. In my constituency, two gentlemen running a small industrial company who rightly took out a mortgage to buy premises in 2007—when lenders were falling over themselves to lend their company money, as it was a very sound bet and had never failed to make repayments—have suddenly been told by the building society in question that the property has fallen in value and that the ratios are therefore wrong, so they will have to renegotiate the mortgage and pay higher interest rates that are clearly beyond them. That is exactly what banks should not be doing at this critical time in the economic cycle when businesses need support.

[Mr Watson]

Will the hon. Lady suggest how Government might intervene to stop that?

[Nicky Morgan]

Obviously I am not running the Treasury, and I am not the Chancellor of the Exchequer. [Hon. Members: “Not yet.”] That is too kind.

I contacted the chief executive of the building society I mentioned and asked for an explanation, but I sometimes wonder whether decisions are made at a lower level of management and without any real thought or understanding. We heard a statement earlier about the directors of banks. I should like to know whether all directors are fully informed of the way in which their bank is running its business, and whether they realise that they are putting the squeeze on businesses which, although sound, cannot afford to make higher repayments at this stage of the economic cycle while they are also trying to stay afloat and keep people employed.

Much has already been said about the increase in regulation. According to the Federation of Small Businesses, small firms spend seven hours a week dealing with red tape. I welcome the Government’s decision to introduce a “one in, one out” system. I do not know whether other Members have been receiving surveys, but I received one recently asking what law I would like to introduce. Actually, I do not want to introduce any more laws. I should like to see fewer laws. I should like laws and regulations to be simplified, both for businesses and for individuals.

Members have mentioned the gold-plating of European Union legislation, which goes on all the time. I sincerely hope that following the change of Government, we shall see an instruction that regulations are no longer to be gold-plated.