Oral Answers to Questions

Debate between Andrew Selous and Matt Hancock

Monday 6th January 2014 Commons Chamber

[Matthew Hancock]

I think much as I thought about five minutes ago when I last answered that question. This is a difficult decision, but the impact assessment—which, of course, I have studied—is very clear about taking difficult decisions to deal with the catastrophic mess left by the Labour Government. We are having to take decisions, and we will take them to put this country on the right track.

[Andrew Selous (South West Bedfordshire) (Con)]

What would be a realistically ambitious date by which to expect significant improvements in England’s programme for international student assessment scores?

Share Capital (Businesses)

Debate between Andrew Selous and Matt Hancock

Thursday 24th October 2013 Commons Chamber

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a great pleasure to respond to this debate, because I agree with the central thrust that motivated my hon. Friend the Member for South West Bedfordshire (Andrew Selous) to call it, namely the importance of equity finance, especially for small and medium-sized businesses, and the fact that it is not discussed as often as it should be in this House.

It is telling, as my hon. Friend has pointed out, that during Treasury and Business, Innovation and Skills questions we tend to get more questions on access to finance than on any other subject. There is some evidence that access to finance is improving, although it is still not in a strong position. Thanks to the tough choices we have made since 2010, I think it is widely recognised that the economy is, broadly speaking, on the mend. It has not fully recovered by any means, but it is on the way back. That is reflected in the number of businesses, not only in my hon. Friend’s constituency, where businesses are creating jobs, but across the country. Companies House records show that there were 480,000 new incorporations in 2012-13, which is the highest figure on record. If I may correct one of my hon. Friend’s figures—I do so as gently as possible—yesterday’s figures show that the number of SMEs in this country is now 4.8 million, not 4.5 million. I hope he is not too disappointed by that minor correction.

I accept my hon. Friend’s challenge to be, along with the BIS team, a champion of smaller businesses in their quest to access finance. Our programme is vital. The Breedon report made a series of recommendations, many of which have been acted on, including the introduction of the business bank, which my right hon. Friend the Business Secretary announced in September.

We know that it has been much harder for businesses to access finance since the crisis. One of the lessons of the crisis was that the economy had become too reliant on one source of finance, namely bank finance from the four big banks. The business bank will help to solve that problem, but it is by no means the only solution, because we need to increase the supply and diversity of finance available, which brings me to the subject of equity finance.

I will take on board all the points my hon. Friend has made and if I miss any out I will read Hansard and make sure they are acted on. I would stress that when talking about equity finance, we need to be cognisant of the importance of the wider availability of both private equity finance and public equity finance. Although it is difficult to measure with precision, in recent times, the amount of private equity finance, whether through angel investing, venture capital investing or bigger private equity financing, has been greater than the amount of public equity finance. Both are important. It is important to have diverse forms of finance, not only so that if one form struggles, others can take up the slack, but because different forms of finance are right for different companies.

It is true that we have extended tax relief, not only by cutting corporation tax, removing stamp duty on AIM shares and allowing individual savings accounts to invest in AIM shares, which is a tax relief in a sense, but through the extension of the enterprise investment scheme and the introduction of the seed enterprise investment scheme, both of which are extremely popular schemes for investing in small and fast-growing companies for those who pay UK income tax. The encouragement of equity finance, in whatever form, through tax relief is an important part of our programme to solve the problems that my hon. Friend highlighted.

Tax treatment plus regulatory costs, whether in the public or private sphere, make up the gap between the equity that an investor can put in and the investment that a small business receives. I hope that drilling down on both will bring more liquidity and finance where they are needed, which is in growing companies that can make good use of them.

I was struck by the figures that my hon. Friend set out. In the United States, 19% of this kind of finance comes from the banks, compared with 81% in Europe. The UK is one of the more friendly destinations in the EU for non-bank finance, but the figures are striking. When I was in the United States last week, I was struck by the powerful fact that more venture capital is available in the skyscraper in which the British consulate in Boston is housed than is available across the whole of Europe. That shows the difference between the two continents not only in the amount of finance that is available, but in the number of people who have started and grown a business and are now reinvesting. The United States, whether on the east coast or the west, is a generation ahead of us. Part of our job is to catch up as fast as we can. That challenge is real; the good news is that the opportunity that it presents is great.

My hon. Friend spoke eloquently about the various small exchanges. I urge him to look also at peer-to-peer finance, whether equity or loan, because that is a small but growing part of the market that companies can look to when trying to access finance.

As well as bringing tax relief and bearing down on regulatory costs, the Government make direct interventions. In the business angel sector, the Angel CoFund makes equity investments of between £100,000 and £1 million in SMEs. It does that alongside syndicates of business angels. It encourages greater levels of angel investment and syndication, and provides companies with experience and expertise alongside the capital. I echo my hon. Friend’s remarks that when finance comes into a small business, it brings not only pure capital, but better governance and advice from people who have skin in the game and who therefore take care in the advice that they deliver.

In the Budget this year, we announced that another £50 million would go to the Angel CoFund, doubling its size. I hope that it will help to strengthen the whole business angels sector, because it invests only when appropriate due diligence has been undertaken and a deal is structured properly. The UK Business Angel Institute, founded by the UK Business Angels Association and AngelNews, is creating standards of professionalism in UK angel investing, which by its nature often involves investing early in quite high-risk companies. If we can have more quality in training courses for private investors, such as those that the UK Business Angels Association is delivering, that will strengthen investing skills in that important area of the market.

My hon. Friend made the point that equity is taxed four times whereas bank debt is tax-deductible. A number of non-tax factors have an impact on whether a business decides to use debt over equity financing, so tax is not the only issue. Different companies look to different forms of finance, and debt can be quicker to obtain and less complicated to use. Of course, there is the also the question of the amount of ownership that is given up in return for equity financing.

I turn to deductions for interest as a business expense. To protect the UK Exchequer, a number of rules limit how much interest a company can deduct from its tax liability. My hon. Friend made the point that dividends are paid out of a company’s tax profits. However, they are exempt from tax in the hands of the company receiving them. In the case of an individual shareholder in the income tax system, the combination of dividend tax credit and the lower rates of tax for dividends ensures that dividends are taxed at broadly the same level as other forms of income, even after corporation tax is taken into account. It is important to take into account not just the number of different taxes that apply to a piece of income but the rates of them, so that we can work out the relative rate on each form of finance. Having said that, it is clear that the Government are moving in the direction that he wants, for instance through abolishing stamp duty on AIM shares and other growth markets, making investments eligible for ISAs and so on.

I wish to mention one other area of tax, which is the entrepreneurs’ relief. That is a valuable incentive and reflects the fact that entrepreneurs take risks and are often the beating heart of growing businesses, which should be recognised in the tax system. We have increased the amount of relief that can be used and allowed it to be used in more situations, so that more businesses and entrepreneurs can benefit from the 10% capital gains tax rate rather than the normal 28% or 18% rates. Over a number of Budgets, there has also been an increase in the lifetime limit for entrepreneurs’ relief to £10 million, so shares acquired from the enterprise management incentive can qualify for a lower capital gains tax rate. There has been action on stamp duty, capital gains tax and corporation tax, three of the four taxes that my hon. Friend mentioned as part of the barrier. The direction of travel is clear, and his argument is strong.

The value of small businesses to our economy makes them absolutely vital, and helping small businesses create jobs and take people on has been one reason why we have had such strong growth in the number of people employed in the private sector in the past few years.

[Andrew Selous]

I am heartened by what the Minister has said and by the tone and general thrust of his reply. Will he reflect briefly on my points about the cost of regulation? Might he perhaps meet Martin Wheatley of the Financial Conduct Authority, who admitted to me yesterday morning that the costs of raising capital are high? With his business hat on, representing 4.8 million businesses, will he consider whether there is any way to lower the costs of raising capital through regulation, while keeping investors safe?

[Matthew Hancock]

My hon. Friend will be delighted to know that I am already arranging a meeting with Martin Wheatley to make the arguments that he has eloquently made today and broader arguments about ensuring that we can get good finance into our small and growing businesses.

Question put and agreed to.

Oral Answers to Questions

Debate between Andrew Selous and Matt Hancock

Monday 4th March 2013 Commons Chamber

[Andrew Selous (South West Bedfordshire) (Con)]

11. What steps he is taking to ensure that careers advice is available to pupils choosing AS levels.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

Schools have a legal responsibility to secure independent and impartial careers guidance in years 9 to 11, and in years 8 to 13 from this September. This requirement will be extended to those up to the age of 18 in colleges. This will help those taking AS-levels to make successful transitions.

[Andrew Selous]

My very excellent Friend the Member for Mid Worcestershire (Peter Luff) has quite properly highlighted the scandal that this country produces only 19,000 graduate engineers a year when we need 41,000 graduate engineers. Unless children take maths and ideally physics at AS-level we are not going to bridge that gap, so will the Minister make it clear to schools that when children make these vital choices, they are told that graduate engineers are being snapped up, the country needs them, and a graduate engineer creates 12 extra jobs in the economy?

[Matthew Hancock]

I can think of few better people to make that argument than my hon. Friend or my hon. Friend the Member for Mid Worcestershire (Peter Luff), with whom I am meeting Professor Perkins, the chief scientific adviser, later today. This is a huge and important area. The lack of engineering skills in this economy is a serious problem, the product in part of 13 years of failure to address the problem. We are working four-square towards that, and we will not rest until it is sorted out.

Oral Answers to Questions

Debate between Andrew Selous and Matt Hancock

Thursday 20th December 2012 Commons Chamber

[Matthew Hancock]

For far too long the skills system and employment system have not interacted well and have not spoken to each other. I probably spend more time with the employment Minister, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), than with any other Minister outside my Department. I had two meetings with him on Tuesday and will have three meetings with him today, so we are working extremely hard to try to bring to an end the inconsistencies that the hon. Lady rightly highlights and that have been there for far too long.

[Andrew Selous (South West Bedfordshire) (Con)]

Central Bedfordshire college also lost out in all its attempts to get capital funding under the previous Government. Does the Minister have any words of encouragement for the college? Its buildings are old and need to be renewed.

[Matthew Hancock]

My hon. Friend is a passionate advocate for Central Bedfordshire college. I am glad to say that the increased funding provided in the autumn statement means that those bids that narrowly missed out, such as that of Central Bedfordshire college, have a very good chance of proceeding at the next stage, not least because that college’s bid was very good value for money, though it fell down on some technical aspects. We are looking very closely at how we can proceed with the new funds available.

Central Bedfordshire College

Debate between Andrew Selous and Matt Hancock

Thursday 29th November 2012 Commons Chamber

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

I congratulate my hon. Friend the Member for South West Bedfordshire (Andrew Selous) on securing this debate, which is so important for Central Bedfordshire college—for everybody who works at it and, most importantly, everybody who studies at it. I know that he raised this issue with my predecessor, and he has also raised it with me a number of times. He is a powerful advocate of the need for improvements.

I also congratulate the college on its success in opening the new university technical college. UTCs are a crucial part of ensuring we have the skills we need in the years and decades ahead. I also commend the college on the work it is doing with local businesses to provide the skills employers need, and to ensure we make good any skills shortages. Colleges across the country are increasingly working with local employers and businesses to ensure we provide the skills they need. The driving mission behind the work we are doing and behind my job is to ensure that local people have the skills they need for the jobs that are available, such as in the construction industry, as my hon. Friend mentioned.

For decades, colleges were starved of the funding for capital renewal that both schools and universities enjoyed. I know that from personal experience because I studied at a further education college—West Cheshire college—in the mid-1990s. Therefore, when the Learning and Skills Council offered significant capital grants, the colleges jumped at the opportunity. My hon. Friend set out the history of what happened. Bids were encouraged, and were encouraged to grow, and then promises were made without the funding to match them. Hugely expensive projects with poor cost control delivered very poor value for money in some of the projects that were completed. They ran out of money, and building projects were stopped, sometimes after huge expense on plans and with diggers in the ground. In that context, and in the context of the wider catastrophe that was the public finances, we are now trying to rebuild. I say that to give the background before getting on to the specifics of the case.

We have been working hard to ensure that lessons are learned from that period. One of those lessons, inevitably, is that we should have a firm and unbending eye on value for money, the physical infrastructure needs of colleges and the benefits to students that capital spending can bring. The approach is coupled with the urgency for affordability. That is the background to how the criteria for making decisions are structured.

We consult the sector on the criteria for deciding allocations. We then provide colleges with advice on the criteria, assess and moderate—and fund when an application is successful. We are happy to work with the college to develop a fundable case. I will certainly look at my hon. Friend’s point about due diligence and moderation executed on successful projects to see whether those can be applied in this case.

Since May 2010, total Government investment across the country in new colleges amounts to more than £330 million. That has enabled more than £1 billion-worth of projects. Across the whole programme, £2 of private cash have been put in for every £1 of Government cash. My hon. Friend said that that was the case with Central Bedfordshire college’s bids, too.

Let me go through some of the specifics of what has happened in the three rounds of renewal grant that have been set out so far. The first is that we have had 117 bids for college funding, which would have cost in excess of £200 million if all had been approved. I entirely understand my hon. Friend’s argument about the quality of the buildings at the college—60% of its buildings are in poor or inoperable condition. I am sad to report to him that, of the 240 general further education colleges across the country, 59 are in a worse state on this measure than Central Bedfordshire college. Although the college has a high level of need, such need, unfortunately, is replicated in some colleges across the country.

The first criterion relates to the condition of the existing estate; Central Bedfordshire college has a case, but there are other colleges with a worse rating. The second criterion is value for money, and my hon. Friend reported the concerns raised about that issue. I entirely understand his point that, having done work to ensure good value for money in respect of running costs, the college feels penalised. He will understand that value for money has to be a critical part of our assessment. I give my hon. Friend this commitment: we will work with the college to see what can be done to improve the value for money in the bid. The third criterion is the benefits that would flow from the work as planned. In that area, as he stated, Central Bedfordshire college did relatively well.

On my hon. Friend’s specific questions, 10 colleges got funds without match funding, but they offered much stronger value for money and benefits in the rest of their bids. Of course, the amount of match funding is a critical part of the question, but it is not the only element of value for money. Only one college in the third round of the enhanced renewal grant had received serious amounts of money since 2001. A very strong emphasis was placed in these bids on those colleges that have received less than £5 million since 2001, and in the third round only one college, Barnsley college, had received more than that since then. By contrast, Central Bedfordshire college had received £450,000 since 2010, including £225,000 in the first round, £100,000 in the second round and £120,000 to help work up the bid for the third round. We are going to have to work with the college in future to see what further we can do to try to get it over the line.

My hon. Friend asked about written feedback, which will, of course, be provided. Earlier this month, the college, including the principal, met civil servants for oral feedback, but we will also provide written feedback.

On my hon. Friend’s point about rebuild, I am tempted not to recommend that we again go down the route of suggesting yet more expensive propositions for the college, but we should keep all options on the table. On the point about the education case being the best in the east of England, I am glad to say that these things are no longer done on a regional basis and are instead done on a national basis. The college scored well in that area.

As my hon. Friend said, the college scored 21 out of a possible 39 points in the process and was just one point short of the score deemed necessary to secure funding. There is broad agreement that the process was carried out on a fair, open and competitive basis; the process was agreed in consultation with the sector. Even so, an appeals process is available for colleges that feel they have been hard done by. I entirely understand his disappointment and I commend the pressure he is applying.

[Andrew Selous]

The Minister may not be able to do this now, but will he respond, perhaps in writing later, on the issue of the car park? It seems that the bid was marked down severely on that basis, and I want to check that he has understood the point I was making about the car park being essential for the release of a significant sum of the college’s own money in order to match-fund.

[Matthew Hancock]

I understand the point about the car park, and I will look into it and get back to my hon. Friend on the specifics. I am sorry to say that I cannot give him a clear and specific answer today, but of course I will be happy to work with him to see what we can do in the months ahead. As and when details of any future capital funding are made available, we will work with the college. I understand, not least as a result of his lobbying, the important role the college plays in the community, what it is doing to support young people and the needs that it has. We will look carefully at, and work with him on, future propositions. I hope he will accept that and that we can move forward.

Question put and agreed to.

Oral Answers to Questions

Debate between Andrew Selous and Matt Hancock

Monday 12th September 2011 Commons Chamber

[Andrew Selous (South West Bedfordshire) (Con)]

10. What progress the Government has made in reducing the level of immigration.

[Matthew Hancock (West Suffolk) (Con)]

15. What steps she is taking to reduce the level of immigration.

[The Minister for Immigration (Damian Green)]

With permission, Mr Speaker, I will answer question 10 together with what I profoundly hope is question 15 on the Order Paper.

The Government introduced reforms to economic migration, including a limit, from April this year, and we have begun to implement significant changes to the student visa system. We are also consulting on changes to family migration, to break the link between work and settlement, and on overseas domestic workers. Taken together, those measures present a comprehensive package to tackle abuse and reduce net migration.

General matters

Debate between Andrew Selous and Matt Hancock

Tuesday 21st December 2010 Commons Chamber

[Andrew Selous]

We can learn a lot from countries such as Australia, which has a much more shared parenting approach, uses much more mediation and is generally more successful.

Another of my constituents is a young father who has a valid contact order in place. He previously had full custody of his little girl. He is not in any way dangerous—indeed, he is a devoted dad. He last saw his daughter in July. She cries out when she sees him and her grandmother in the local shopping centre, longing to be with him. He has tried since July to get a court date to see her before Christmas, but that has not been possible. He left my surgery in tears after I had updated him on what the family court service had said about his case.

Another constituent also had a valid contact order and on 21 June, the Monday after fathers’ day, he received a text to say that the mother of his child had disappeared, leaving no address. Even after a court seek-and-find procedure, no address was provided. A first court date was set in a court a long way away from where my constituent lives, but it was adjourned. When the case did get into court on 4 October, the proceedings were shambolic, the judge was not well briefed and the appropriate file was not there. The case was adjourned again until 30 November and, on 28 November, the mother succeeded in getting that hearing adjourned, as—allegedly—a medical report on the child was not ready. When my extremely persistent constituent finally got the case into court earlier this month, he found that the medical report was dated 18 November and had been available for the earlier court hearing, but of course there was no sanction on the mother. The courts allow difficult parents to deprive their children of a relationship with their father.

I am proud to be an MP for a Government who are radical and reforming in many ways, and I put it to the House that we need radical reform of the family justice system. We need a system that is much less winner takes all, less confrontational and less expensive; and we need a system that provides proper enforcement of court-sanctioned contact orders.

[Matthew Hancock]

Has my hon. Friend seen the Public Accounts Committee and National Audit Office reports into CAFCASS, showing that the extremely moving examples that he has highlighted today are not isolated cases but part of a wider problem in the family court system?

[Andrew Selous]

I am grateful to my hon. Friend for raising that issue. He is right. The problem affects every single one of us in the Chamber and is an issue on which we need urgent progress. The input of mothers and fathers, where safe—that is the vast majority of cases—is hugely beneficial to children.

The language we use in these cases is extremely unhelpful. I really dislike the terms “non-resident parent”, which suggests some sort of absentee parent forced to leave their own home, and “parent with care”—why should one parent have to do all the caring? Is that not unfair to mothers, to whom it often applies? The term “contact” is a cold and unfeeling term for what is the strongest of all human bonds. Would “daddy time” or “mummy time” not be more appropriate?

On the point made by my hon. Friend the Member for Birmingham, Yardley (John Hemming), Australia takes a much better approach. Its approach, which was introduced hand-in-hand with reforms to the child maintenance system, is to regard a separated couple as two single parents, with the emphasis, wherever possible, on as much shared parenting as possible, not on one “parent with care” and a distant “non-resident parent”. That matters greatly, because there are very positive results for children when separated parents are involved in their children’s lives. Earlier this year, one of the most recent academic studies on this subject, by Fabricius et al, showed that when separated parents are involved to a greater degree with their children, it produces better school results, fewer suspensions and lower drop-out rates. There are clearly positive results to be had, so we need a real change of emphasis in this area. We need people in the public sector, such as general practitioners and teachers, to take the rights of non-resident parents seriously where the latter want to be involved in their children’s lives.

I would commend Australia again. In Perth in western Australia, it was found that one of the reasons parents with care were giving for not allowing contact time with children was their concern that the fathers would not be able to look after the children properly. As a result, courses in child health were set up for fathers to facilitate greater shared care—a very practical suggestion. I put it to the Minister, therefore, that on this issue we have made too little progress for far too long, causing far too much heartache to too many of our constituents. As I wish you, Mr Deputy Speaker, and all Members and staff of the House a very happy Christmas, I ask everyone to reflect briefly on those good parents who long to be with their children this Christmas but who will be denied that opportunity.