Business and the Economy

Anne Marie Morris Excerpts

Monday 14th May 2012 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I join colleagues in welcoming the Queen’s Speech, much of which sets a good legislative reform agenda to help businesses, particularly small ones.

I shall focus on the enterprise and regulatory reform Bill and the banking reform Bill, because they are probably the proposals that will make the most difference. If we speak to any business, particularly a small business, the key points we hear are that they are over-regulated—that includes employment regulation—and that they struggle to access finance. When considering regulation, the Government need to understand what is meant by “enterprise”. That term encompasses not just large enterprises—Sainsbury’s, Tesco and the like—but the very smallest. Businesses with fewer than five employees represent 90% of businesses in this country, so when considering how to make the regulatory burden lighter, it is critical to bear in mind the size of the business trying to cope with this problem. On finance, I am delighted that we are considering a banking reform Bill and dividing retail and investment banking, but in time I would like the Government also to address access to non-banking finance, because inevitably there will always be a limit to what the banks can do.

To focus on regulation, the Government have specified—or rather the Queen did, in her speech—that the review of employment legislation will look at when things go wrong. It will also consider how to ease dispute resolution, no-fault compensation and how to ease the tribunal process. For that complex and adversarial process to be delayed for two years would be a good thing. However, I urge the Government also to review the damages that can be awarded by a tribunal. At the moment, tribunals are not constrained by the ability of the defaulting employer to pay, and in some cases the damages awarded take the business out. I also urge the Government to consider the complexity of the legislation on taking on, paying and training employees, because that is additionally burdensome. They could also look into the problems of the self-employed, many of whom do not benefit from schemes of the sort that are available to help those in employment.

In their initiatives to deal with unnecessary legislation and the red tape challenge, the Government have done a good job. They have identified 600 rules and regulations that they will remove or reform, and are looking at 11 sectors and six themes. I welcome that. If there was one thing they could do better, however, it would be to make it easier for small businesses to contribute to the process. If someone goes on to the website to make a contribution to the red tape challenge, they have to identify the regulation causing the problem, but many small businesses do not know the name of the legislation or regulation; they just know what its consequence is. If we can reform how the Government collect such information, it might make more contributions more successful.

The Government have done good work, but I advise them to add another theme to their red tape challenge: the challenges facing small businesses from cradle to grave—from set-up through taking on that first employer to importing and exporting. There is currently no prospect of that dimension being reviewed. There is a review of company regulation, but, importantly, not all businesses incorporate.

There has been mention of the very smallest—the micro—businesses. I welcome what the Government have done to exclude micros from new regulation, but we really need a root-and-branch review of regulation already impacting on the micros. In future, I urge the Government to consider not simply delaying the introduction of the application of new regulation, but exempting the micros. The argument is that if we start to exempt the micros, we will have two classes of business, but I do not agree. There is always a way to bridge the gap and incentivise businesses to grow. I urge the Government to look at that.

In sum, this is a good Queen’s Speech. It offers a lot for business, but the Government must be mindful of the very smallest of businesses in assessing the impact of what they are doing.