Small Businesses

Lord Sharma Excerpts

Thursday 28th November 2013 Commons Chamber

[Alok Sharma (Reading West) (Con)]

I, too, congratulate my hon. Friend the Member for Newton Abbot (Anne Marie Morris) on securing this debate. She is a huge champion of small and micro-businesses, and more power to her elbow.

Before the last election many of us were going around meeting small businesses in our constituencies, and businesses in Reading were telling me three things. The first was that they were drowning in red tape and regulation. The second was that they had to deal with an excessive burden of taxation. The third was that they faced issues relating to access to finance. Many Government Members have already pointed out areas where the Government have made a real effort to address all three issues: the red tape challenge; the one-in, two-out policy; cutting back on the regulations that micro-businesses have to deal with; the upcoming deregulation Bill—perhaps the Minister will give us an update on that; the reduction in the headline corporation tax rate; extended small business rate relief; the funding for lending scheme; the enterprise finance guarantee scheme; and a plethora of schemes to get debt and equity provision for start-ups and growing businesses, which are on the Department for Business, Innovation and Skills website and are now starting to be delivered through the British Business Bank. Of course the one scheme that the Government have not been responsible for, which perhaps the shadow Minister could tell us about, is the Co-op bank soft loans scheme, which has been available to only a restricted number of people.

A friend of mine who works in business and is not particularly partisan politically has acknowledged that the Government have made a huge effort in cutting red tape. However, as he says, perhaps the time has come not just to take an axe to red tape, but to take a chainsaw to unnecessary red tape and regulation. I am pleased that we have gone from one-in, one-out to one-in, two-out, but why not one-in, three-out or none-in, four-out? One reason for not doing that is that the Government are constrained by EU regulation. I welcome what the Prime Minister said following the proposals made by his business taskforce on cutting back EU regulation. I understand that yesterday the Leader of the Opposition referred to a tweet containing “#greencrap”. I have just started tweeting, and am thinking about tweeting after this debate with #EUredtapecrap, because of the enormous amount of EU regulation that is holding back our businesses. The issue of increasing competitiveness is felt not just in the UK but by Governments in Berlin, Stockholm, Amsterdam and perhaps even Paris.

If Opposition Members really care about business, they should back the European Union (Referendum) Bill. I hope they will turn up tomorrow to support it, because that is the best way of delivering change in the EU and ensuring that we get rid of some of this regulation.

In the remaining two minutes, I have two quick points. One relates to simplifying the tax system overall through the merger or the simplification of income tax and national insurance, and the second is about closing the equity funding gap.

In the 2011 Budget, the Chancellor talked about merging national insurance and income tax. A consultation was held, and the decision was made not to take the idea forward. None the less, the idea is totemic. I know that it is difficult and that there are anomalies, but we should consider merging those two taxes. The reality is that national insurance is just another tax. People should understand that the tax they are paying is not 20% as a basic rate taxpayer but 32%. If they saw that on their pay slips and in their annual tax statements, they would realise that we are all paying a bit too much tax. They would end up preferring parties that propose cutting taxes rather than raising them. Perhaps we will hear something on that from the Minister.

My final point is to do with equity finance. The start-up loan scheme is brilliant. It is a flagship scheme that has worked really well; it is simple and is able to get lending out very quickly. It would be great to see a British equity funding scheme, which would also help to deploy capital quickly across many areas of business.

I am running out of time, so I shall stop at that point. I acknowledge that the Government do a huge amount, but there is still some way for them to go. I am sure that the Minister will tell us of his plans.