Jobs and Growth

David Rutley Excerpts

Wednesday 12th October 2011 Commons Chamber

[Stewart Hosie]

That is absolutely right. I heard the Chancellor say this week that he has considered how the Government might fund business investment directly. There is merit in that. I am prepared to give this term of QE and the credit easing a chance to work, but I tell the Chancellor that if the £75 billion-plus of new electronic money goes to the banks or is used to buy back Government debt and does not hit the real economy, neither the banks nor the Government will be forgiven this time if it fails. Too many businesses are hurting due to a lack of business finance.

[David Rutley (Macclesfield) (Con)]

Will the hon. Gentleman give way?

[Stewart Hosie]

No, I shall stick to the same adage as everyone else and give way twice.

The third thing that needs to be done is to restore consumer confidence and economic security. Fundamentally, that means keeping people in their jobs, and Government and their agencies remain responsible for plenty of jobs. That means that pay policy in the public sector should bring down the salaries of senior people, bonuses should be removed from senior public servants, there should be temporary pay freezes for those on average incomes, help should be provided for those earning under £21,000 and specialist systems and a working wage should be introduced for those earning least of all. However, it also means delivering a no-compulsory-redundancy policy for staff employed by Government, the NHS and the other public bodies when agreement can be reached. We know that this plan—a mix of direct capital investment, confidence, and improved business finance or taking some of the burden off businesses—can work. We have seen it in Scotland, where even with the unemployment figures published today, unemployment is lower, employment is higher and economic inactivity is lower.

We know that such a mix of activity can work and, of course, it is broadly in line with what Christine Lagarde called for in September, when she said that

“countries must act now—and act boldly—to steer their economies through this dangerous new phase of the recovery”.

It also mirrors her comment in August to the Financial Times when she said that

“short-term measures must be supportive of growth, yet economical in terms of the impact on fiscal sustainability, and can include policies supporting employment creation, advancing planned infrastructure and easing adjustment in housing markets.”

There is no reason, other than dogma, not to follow the ideas laid out by those on the Opposition Benches today to kick the economy out of its torpor. I urge the Chancellor to use his autumn statement to do just that. He can call it plan A-plus, he can call it plan B, but he must change, develop and deliver quickly.

--- Later in debate ---

[David Rutley (Macclesfield) (Con)]

Thank you, Mr Deputy Speaker, for giving me the chance to speak in this important debate.

Our economy continues to face challenging times, with the crisis in the eurozone and ongoing problems in the global capital markets. The Government’s plan for recovery is therefore more important than ever, and entrepreneurs play a vital role in taking it forward. Our everyday entrepreneurs are critical to the agenda of innovation, job creation and economic growth; it is not just down to the Government.

In Macclesfield we have been doing all we can to support our vital small and medium-sized enterprises, with bi-monthly breakfasts at which up to 130 businesses come together to work out what can be done to strengthen the local economy. We also have an economic forum to implement the action plans that are needed, but it is clear that what entrepreneurs in Macclesfield and across the country want is a sound economic framework and sound economic policies to support them in their work.

Sadly, entrepreneurs are living with the legacy of not just the previous Government’s deficit but the £90 billion a year cost of new regulations on businesses that have been put in place over the past 13 years. That additional cost makes the difference between profit and loss for small businesses. My hon. Friend the Member for South West Norfolk (Elizabeth Truss) has already pointed out that our regulatory burden puts us 89th out of 139 countries in the perception of the weight of regulation. That has to change.

It is not just domestic regulation that is entangling our entrepreneurs, because the European Union has become a major source of red tape. Since 1997 the EU has produced 100,000 pages of new regulations that tie the hands of our SMEs and damage our economic potential. That must change.

There are several important priorities in building the entrepreneurial economy that Government Members want to see. We want to see a reversal of the regulatory tide, the simplification of UK employment law and the realisation of our SMEs’ export potential. The Government are already working very hard in those areas and have introduced a one-in, one-out approach to regulation, which will be vital. We have already seen the removal of 257 regulations in the retail sector alone. The new three-year moratorium on new regulation for the smallest firms will help to protect start-ups during their most vulnerable phase, and the red tape challenge will encourage businesses to identify the regulations that are preventing them from doing the things they need to do. Those are positive steps in stemming the tide of regulation.

In addition, we need to do more to simplify employment law, which, given that job creation is vital to our economic recovery, is a huge priority. As has been said, the Chancellor has done a great job in introducing an extension of the qualification period for unfair dismissal. That is a way of reducing risk for employers when they are taking on new staff, and it has been welcomed by many SME trade bodies.

Another area that needs to be worked on is realising the potential abroad of our entrepreneurial talent. A report by the Select Committee on Business, Innovation and Skills found that only one third of our SMEs are involved in international trade. Germany has a much higher percentage. The role of UK Trade & Investment is vital in that respect. It is extending its reach to more businesses, but when we look at the potential and the entrepreneurial flare of the 5 million SMEs in this country, it is clear that more needs to be done in communicating those great opportunities in overseas markets. We need to do more to help small businesses to do that.

The Government are working to improve the conditions for economic growth, but, as in a human body, not all growth in the economy is good, which the record of the previous Government shows very clearly. We had unprecedented growth in the deficit, the burden of debt and the weight of business regulation. In the good times, they could have created the economic equivalent of an entrepreneurial athlete, but they instead created an economy that was more like a couch potato, bloated on debt and ill prepared for the downturn. We are changing that.

The Government clearly cannot and should not seek to build an entrepreneurial economy by themselves. They are working with small businesses to create the conditions that will unlock the potential of our entrepreneurial, everyday heroes. Our SMEs also have a responsibility in that task. Now is the time for them to demonstrate the same energy, commitment and creativity that is required in the marketplace to help constructively to shape Government policy.