Department for Business, Innovation and Skills (Performance)

Brian Binley Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

We should begin the debate by considering, as the motion asks us to do, the role of the Department for Business, Innovation and Skills. It has in recent years become a major spending Department, with the stewardship of universities and further education colleges. It is different from other Departments in that, uniquely, it stands on the boundary of the public and private sectors. Its job is to sell Britain abroad as a great location for doing business, and to help UK businesses to penetrate foreign markets. It is also, of course, the key location for business and employees to come to Government with business-related issues. It is, as the Secretary of State has described, the Department for growth—or it should be.

How Government achieve that growth—the role of Government in helping to foster growth—is what divides the House. There are those on the Government Benches, including the Secretary of State, who is no longer in his place, who previously called for the Department to be abolished, and who thought that there was no role for Government to play in fostering growth, apart from getting out of the way. That is not our view; we believe that there is an important and active role in fostering growth.

I take issue with one of the arguments that the Secretary of State has deployed time after time since the election—that the actions taken by the present Government would have been taken by Labour because we were committed to the same level of cuts. It is not true. The Government have launched a programme of cuts which is tens of billions of pounds more than anything that was being planned by the Labour Government, and he cannot continue to rest on that argument.

[Mr Brian Binley (Northampton South) (Con)]

I am grateful to the right hon. Gentleman for giving way. He is always very kind in these matters. If he knew the plans of the previous Government, having been a member of the previous Government, will he explain them to us in order that we can understand how the deficit would have been met?

[Mr McFadden]

If the hon. Gentleman casts his mind back a little more than a year to the pre-Budget report, he will find that cuts in spending were set out by the Department while I was a Minister there. He simply needs to read the pre-Budget report.

I admit that over time during the Labour Government our view on the Department’s role shifted. In the early days we were, perhaps, too reluctant to intervene in markets, but we got to the point where we were playing a much more active role and co-ordinating activity across Whitehall on key industrial and employment opportunities.

For example, with the Department of Energy and Climate Change, we produced the low carbon industrial strategy to achieve the most for UK industry out of the shift to low carbon power generation. On transport, we worked with the Department for Transport on an ultra-low-carbon vehicle strategy. In other words, the Department for Business, Innovation and Skills played a leading and co-ordinating role to take advantage of the industrial and employment opportunities of the future. That is what we were doing to try to foster growth and employment.

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[Angela Smith]

I entirely agree with the hon. Gentleman. The Government’s current, very rushed, consultation on energy market reform could add significant extra burdens to the intensive energy-use industries that predominate in my constituency and could make them incredibly uncompetitive internationally.

Given the latest growth figures—or should I say shrinkage figures?—we need more than ever a plan for growth that invests in industry and helps to rebalance the economy away from the financial services and property speculation model that was built not by the previous Labour Government but by the Thatcher Government of the 1980s, with big bang and all the rest of it. I hear nothing about that planning from those on the Government Benches. All I hear is mixed messages and talk that is all about pleasing elements within the coalition rather than what is good for UK plc.

I know that it has been mentioned many times in this Chamber, but the story of the loan to Sheffield Forgemasters typifies all that is going wrong with the Department for Business, Innovation and Skills.

[Mr Binley]

Is the hon. Lady aware that the Secretary of State has said that he is more than happy to receive a further application from Forgemasters?

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[Mr Brian Binley (Northampton South) (Con)]

Today has been a revelation to me. I understood that denial was a medically treatable condition, but I did not know that it was a collective condition. Today has opened my eyes in that respect. The denial is best illustrated by the shadow Chancellor’s recent statement:

“I don’t think we had a structural deficit at all”.

By golly, we have had a deficit every year since 2002. Indeed, it rose massively to the point when, in 2010, we were borrowing £1 of every £4 we spent. If that is not a structural deficit in anybody’s book, I do not know what is.

This matter is best understood by recognising the growth in public sector employment of 20%. More than 1 million new people now work in the public sector. That productivity barely rose in some areas and went down in others shows how successful that was. That is an unbelievable fact that any businessman would say is the road to bankruptcy. That is exactly what the previous Government did to this country. Thank God we had an election and a change of Government.

I will move on to other areas in which the previous Government let down British industry. First, let us consider employment tribunals. When I was in business, I stood in four tribunals and won each of them. On each occasion, I was told by colleagues, “Pay ’em.” The previous Government created an aura of commercial blackmail that is totally unacceptable. Thank God the present Government are doing something about that.

[Mel Stride]

Does my hon. Friend agree that it is essential that we do something about claims to employment tribunals, which increased by 57% in 2010? They are feeding lawyers and depriving businesses of investment.

[Mr Binley]

My hon. Friend is right. There were 236,000 cases last year—a record figure. That suggests that something needs to be done. This Government are doing something about it and I am grateful.

The cost burden of regulation on business increased by £10 billion a year under the previous Government. That money could have been used for investment, but instead it had to be spent on complying with regulation after regulation, which the previous Government had gold-plated.

[Nadhim Zahawi]

My hon. Friend has a long and respected record in business. Does he agree that there is a lack of recognition that regulation is one of the major factors that holds back small business, along with access to finance? The lack of the word “regulation” in the motion demonstrates the lack of understanding among those on the Opposition Benches of the pain of small business.

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[Mr Binley]

I am grateful to my hon. Friend. I am delighted that he is a member of the Select Committee on Business, Innovation and Skills, because he brings such knowledge to it. Perhaps with his help, we can get the changes we need to ensure that small businesses thrive in this country again. They have found it very difficult over recent years.

The working time directive was introduced in 1999 and has cost businesses £1.8 billion a year. The vehicle excise duty regulations introduced in 2000 cost businesses £1.2 billion. I could go on. I refer Opposition Members to the words of David Frost, the director general of the British Chambers of Commerce:

“Businesses are facing the toughest economic environment for a generation. Company cash flow is being squeezed and unemployment is growing as a result”

of regulation.

Let us lay that at the door of Opposition Members and let them deny it.

Let us consider the plethora of schemes that the previous Government introduced with a shotgun effect. They were all good headline-catching schemes, but they forgot one thing. Often, it is not what one decides to do that matters within a given set of parameters, but the way that it is managed. Of course, the previous Government did not know anything about management, because most of them had not turned a penny in the real world in their lives. That experience is vital in understanding small and medium-sized businesses, as I can tell them and as the British Chambers of Commerce has told them. The number of companies helped by the enterprise investment scheme fell from 2,379 in 2001 to 1,073 in 2008. It ceased to be effective to a considerable degree year by year. That underlines the fact that it needed to be managed properly.

I could talk about many other areas in which the previous Government failed the people of my constituency sizeably, but I want to make one particular claim, which is supported by information in the Library, so nobody can jump up and question it. The number of unemployed claimants in my constituency rose to 3,460 under Labour. That is 7.4% of the economically active working population. In 1997, my constituency was only 440th among the 630 or so constituencies in terms of the highest proportion of claimants. It rose to 132nd under Labour. There was such a big effect in Northampton, because 94% of the people who are in the private sector work in small and medium-sized businesses. That is how much the previous Government helped my constituents.

As I have said, I could go on. I could talk about a number of schemes, but time is limited. The truth is that the manufacturing industry is beginning to grow. My town has the fastest rate of employment growth in the country. That has only happened since this Government came to power. They have created a new confidence and a new belief that we have a Government who help small and medium-sized businesses. David Noble, the chief executive of the Chartered Institute of Purchasing and Supply, said:

“UK manufacturing steamed ahead in January as the sector continues to expand quicker than even the most optimistic amongst us could have predicted. As well as improved market conditions abroad, demand in the UK market also showed signs of growth. This is the much needed kick start to 2011 everyone in the sector was hoping for. A very different picture from last year.”

That message will be repeated by small businesses in my constituency again and again. I have one plea, however: they need help from this Government, and they need more cash to help sustain the growth agenda. It is not happening, and I ask the Secretary of State to ensure that we put our money where our mouth is. If we do not, the growth agenda will be much more difficult to sustain.

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[Mr Weir]

Again, we hear, “It is almost there, it is coming”, but it is not here. Help is needed now. The Merlin process seems to have stalled—we were told that there would be announcements, but they have not come. If they do not come soon, it will be too late for many businesses.

I turn to the second point that I wish to discuss. I agree with the Secretary of State that it is ridiculous that there is no mention of the Post Office in the motion. I tabled an amendment to that effect, but Mr Speaker did not select it. I suppose that, to be honest, it is unlikely that the Secretary of State would have supported it even if it had been selected.

If we are talking about growth, we have to remember that a postal service is an engine of growth for many small companies. Many of them are very worried about it. This morning I chaired a session of the Westminster eForum at which we talked about Royal Mail’s universal service obligation. It was interesting to hear the Federation of Small Businesses say that when the Government initially talked to it about privatisation, it was given assurances that small businesses would be okay and that their interests would be looked after. However, it is becoming increasingly worried about what is happening. It points out that in April, first-class mail will go up by 12%, large letters by 13%, a 2 kg parcel by 8% and a special delivery by 8%. Worse still—I find this utterly ludicrous—a business that currently goes to a sorting centre to collect its own mail will apparently be charged £210 for the privilege of doing so. Where is the logic in that? What on earth is going on?

I urge Members to read, if they have not done so, Postcomm’s research paper “Business customer needs from a sustainable universal postal service in the UK”, which was published towards the end of last year. It makes very interesting reading about how small businesses see the postal service.

[Mr Binley]

rose—

[Mr Weir]

Sorry; I have taken two interventions.

Many small businesses continue to use the post, as they do not have the ability to get the special deals that are available from other carriers. Of those that spend between £100 and £500 a month on mail, which include the smallest businesses, 72% have either stayed at the same level of Royal Mail usage or increased it in the past year. Many businesses see e-fulfilment, as I am told we have to call it, as a way to extend and grow their business, but they need access to the postal service. Many are becoming increasingly worried, as I am, about what will happen to the universal service after privatisation. They see a reduction in service as meaning that they will be unable to access business at a reasonable cost. The changes that are already coming in show that that cost will go up and up, at a time when businesses are already suffering from fuel price increases. They have been hit all ways, and action is needed now to help them.

[Gavin Williamson (South Staffordshire) (Con)]

I share some of the incredulity of my hon. Friend the Member for Northampton South (Mr Binley) at Opposition Members’ apparent total denial of the fact that their party was greatly responsible for the catastrophic economic situation that it bequeathed the coalition Government.

I remember talking to a gentleman from a trade organisation who told me that the problem with the previous Government was that they were obsessed with presentation and constantly wanted to change the names of the Department, but did not consider the problems affecting business. I am shocked that a Department led by Lord Mandelson would be more interested in presentation, marketing and publicity than anything else.

[Mr Binley]

I am incredulous that my hon. Friend was surprised at that fact.

[Gavin Williamson]

I put it down to the naivety of youth. Hopefully age will make me wiser.