Amendment of the Law

Bob Stewart Excerpts

Thursday 22nd March 2012 Commons Chamber

[David Simpson (Upper Bann) (DUP)]

I agree with a lot of what my hon. Friend the Member for Foyle (Mark Durkan) said about welfare cuts, regional pay and the £25 billion that the Government will provide to allow some banks—five at the moment, I believe—to help businesses. I trust that banks at home will take up that offer as well, because it would make a lot of difference to companies there.

I know that this was a very difficult Budget for the Chancellor, but I believe that some better decisions could have been made than the ones that we heard yesterday. First, I would like to deal with the corporation tax cuts to 24% and then to 22% by 2014. The Northern Ireland perspective, of course, is that we are in direct competition with the Irish Republic for investment. A former chief executive of the Republic’s Industrial Development Agency once remarked:

“In the battle to attract overseas investment to Ireland, no financial weapon has been more important than tax in convincing new industry to locate here. It remains the IDA’s unique selling point, giving Ireland a critical advantage in winning new investment.”

The measure in the Budget, therefore, is certainly welcome from Northern Ireland’s perspective.

Of course, not every business in Northern Ireland is liable for corporation tax and in a position to benefit—only 3% of businesses pay it. Some 99% of our businesses in Northern Ireland are small businesses. The measure is welcome news for those who will benefit, but it will have no impact on the overwhelming number of our businesses in our business community. That is why I welcome measures such as the proposal to allow the smallest businesses to move to a cash-based tax calculation. That simplification of the process could help up to 126,000 small businesses in Northern Ireland.

In the local press in Northern Ireland, the Federation of Small Businesses welcomed the Budget, but expressed disappointment that there were no plans to set up at the heart of government a small business administration to champion small businesses. Perhaps we will see that later.

I also welcome the devolution of air passenger duty, which will be included in the Finance (No. 4) Bill. That measure will allow the Northern Ireland Executive to set their own rate for long-haul direct flights—we have competed against the Republic of Ireland on that, so the measure will also help our investment strategy. The proposal for loans for young people to start their own businesses is another welcome part of the Budget.

Fuel duty, however, is one of the biggest problems that we have in Northern Ireland, especially for road hauliers. Because we rely so much on road transport to deliver our goods, fuel duty is causing a major problem. It is bitterly disappointing to people across the whole United Kingdom that the Government have decided to go ahead with the 3p duty increase, which will happen in August. I understand that in doing so, the Government will bring into their coffers somewhere in the region of £800 million from the motorist. Although the Government will get a lot of money from the measure, it will cause a lot of difficulty for those working people who must travel by car or another vehicle to their place of work. It is causing major difficulties.

[Bob Stewart (Beckenham) (Con)]

I support what the hon. Gentleman says about fuel duty in Northern Ireland. In my many times there, the one thing that always struck me was the scarcity of railways. There just is no railway system, and therefore everything must go by road. It is very sad, but the duty has an impact on Northern Ireland.

[David Simpson]

I thank the hon. Gentleman for his comments. That is one difficulty we have in Northern Ireland because for 40 years of the troubles, the infrastructure investment was not there. We are only now playing catch-up. Perhaps some day when he comes across to the Province, we will have a new railway link from Belfast International to the centre of Belfast, which will be beneficial. It could be some way off, but perhaps we will achieve it.

Many people will welcome the tax credit measure to be introduced for the video games, animation and high-end TV industries. The Northern Ireland Executive have tried to promote that sector for some considerable time. Of course, Northern Ireland has seen significant investment in the sector, especially in film production. I hope there will be added benefits to be derived from this announcement. Recently, it was announced in the press that the series “The Game of Thrones”, which was made in Belfast, is to return shortly to film a new series.

In a passing comment, the Chancellor mentioned an enterprise zone for Northern Ireland. I would welcome that, if we could just find out from someone what is meant by an enterprise zone in Northern Ireland. The Secretary of State tells us that it is an enterprise zone for the whole of Northern Ireland. When we tease it out, some will say that it is going back to the 1980s, when there were different enterprise zones across Northern Ireland. We are yet to have any beef on the bones, and we need that if we are to determine exactly what is meant.

One of the issues that has continually acted as a brake on business is the endless red tape and planning laws, and I welcome the announcement in the Budget that we will perhaps see a quicker response to businesses when they apply to expand their premises. Of course, it is a devolved matter for the Executive, but I am sure that the Minister in Northern Ireland will see fit to fall into line in order to create an environment that is helpful for businesses in Northern Ireland. We also have the dreaded dead hand of EU regulation. I urge the coalition to have a firm hand when it comes to all the directives and regulation that the EU imposes on businesses. That needs to be addressed and, frankly speaking, the coalition needs to tell the EU where to get off. This is the United Kingdom, and we make our own decisions for our businesses and companies.

Although there are some plusses in the Budget, there are of course some negatives, but I wish the Government well with it. I hope that the Government can turn around the fortunes of the United Kingdom, and that we can see the people of this United Kingdom having a better standard of living.

--- Later in debate ---

[Stephen Metcalfe]

Obviously, any rise in cost base will have an impact, but we are working hard to reduce that to the absolute minimum, and we are putting in place a framework around which businesses can grow that will mitigate the 5.6% rise.

We all welcome the investment in infrastructure, which will be a driver for growth, although I add the caveat that I and my constituents remain wholly unconvinced that an airport in the Thames estuary is the right solution to maintaining our hub status. I would therefore encourage the Government to listen to my hon. Friend the Member for Solihull (Lorely Burt), who made a very good bid for that increased capacity in Birmingham.

I also want to put in a plea for small and medium-sized enterprises. In 2009, they accounted for 49% of private sector turnover. SMEs are vital to the economy. Cutting corporation tax, abolishing Labour’s job tax and offering support through the national loan guarantee scheme are all welcome, I am sure. However, if SMEs are to operate at their full potential, regulation, red tape and bureaucracy must be cut. They have been strangling the economy for too long. I am therefore encouraged to see measures that will allow greater freedoms for businesses in this area. My right hon. Friend the Chancellor’s announcement yesterday that he plans to reduce the number of UK SMEs required to undertake an audit and to reduce the burden of financial accounting for UK businesses has to be welcome. I hope that the consultation on a new cash basis for calculating tax, which the Federation of Small Businesses has welcomed, will benefit many small and micro-businesses, allowing them to concentrate on growing their businesses, rather than spending time, money and effort fulfilling requirements that were designed for much larger businesses.

[Bob Stewart]

As an expert, my hon. Friend will be able to confirm this, but I have heard that about 10% of what small businesses do is taken up with bureaucracy—filling in forms, and so on. Does he agree that we need to avoid that?

[Stephen Metcalfe]

My hon. Friend makes a good point. It varies from sector to sector, but that is not an unrealistic figure.

Finally, in the short time I have left, I want to talk about jobs. Businesses are vital for growth, but they are equally vital for tackling unemployment. I am delighted to see that unemployment is beginning to stabilise. Dealing with unemployment, through the building business and enterprise loans, will allow jobseekers to start their own businesses and unleash a new generation of entrepreneurs. However, we should not forget that our existing small and medium-sized enterprises have the potential to deliver sustained employment. We should redouble our efforts to create confidence for businesses to take on staff. I therefore reiterate my call to make it easier for firms to hire staff in the knowledge that employment regulation will support them if things do not work out.

As we emerge from the deepest recession in living memory, I applaud the Government’s commitment to addressing an over-leveraged economy, an unsustainable budget deficit and a broken model of growth, inherited from the previous Administration. Our plan of fiscal responsibility has allowed the UK to surge ahead of the curve. We have become a safe haven in the sovereign debt storm. As a result, we have been able to deliver record low interest rates for families, businesses and taxpayers, yet still remove millions of people from paying any tax at all, by increasing the tax threshold. Although we are not immune from events taking place on our own doorstep, we can—as this Government are demonstrating—steer this country out of a financial quagmire and deliver growth, employment and a future brighter than any alternative the Opposition may offer.