Finance (No. 2) Bill

Debate between David Rutley and Bob Stewart

Tuesday 1st April 2014 Commons Chamber

[David Rutley]

That is a good question and I thank the hon. Lady for giving me the opportunity to respond. Of course I speak to members of the public in Macclesfield and outside my constituency, too.

[Bob Stewart (Beckenham) (Con)]

It’s a great place.

[David Rutley]

My hon. Friend says, from a sedentary position, that it is a great place.

These are, of course, challenging times, but things are improving. The reason for having a Budget that is useful and important for business is that it is through business and the private sector that we create jobs to enable people to take care of their needs and those of their families. The hon. Lady will know—as will, no doubt, Mr Deputy Speaker, although he cannot comment—that under the Labour Government 100,000 public sector jobs were created in the north-west over a period when net new jobs in the private sector came to approximately 18,000. Surely, that is completely unsustainable.

--- Later in debate ---

[David Rutley]

I did: absolutely. In fact, as Hansard will record, I referred to “the extraordinary deficit” that had been created by the Labour Government.

A budget surplus is now in our sights. We are likely to see it in 2018-19. According to the International Monetary Fund—which is often quoted by Labour Members—the UK is achieving a larger reduction in both the headline and the structural deficits than any other major advanced economy in the world. Unemployment is falling, growth is up, and we have a record number of businesses and a strengthening culture of entrepreneurialism and self-employment. Those are clear results from a Government with a clear sense of direction.

This Bill will doubtless be remembered for years to come for the great work that it is doing to help to promote the interests of savers and pensioners through the reforms that it introduces in clauses 39 to 43, which we will debate in Committee.

[Bob Stewart]

I think my hon. Friend will agree with me that the Bill will also be remembered because, apparently, it gives £700 more to everyone in the country.

[David Rutley]

Certainly, very important steps are being taken, such as raising personal allowances, which will help all our constituents who are facing challenging times. However, there are also measures in the Bill that will help businesses to create more work and more wealth, and help us to achieve greater growth and prosperity.

Returning to clauses 39 to 43, the Chancellor has championed the consumer’s right to take decisions in accordance with their own life circumstances, over and above the procrustean desires of the state. Much has been said about these reforms, and no doubt plenty more will be said in the days and years ahead, but I want to focus today on how other clauses in the Bill are equally supportive of consumers by bolstering competition and lowering barriers to entry for British enterprise—clause 10, on capital allowances, clause 6, on corporation tax, and clause 73, on air passenger duty, to name but a few. Encouraging new entrants—those first-time entrepreneurs, employers and exporters—is vital in increasing choice for consumers and in keeping established businesses on their toes and responsive to their customers. This Government have slashed barriers to entry through deregulation initiatives—an ongoing process that I have been involved with on the Deregulation Bill Committee—and there is also the red tape challenge and the one-in, two-out regulatory arrangements. These are important steps in creating much-needed supply-side reforms.

I hope to contribute further on the Finance Bill Committee—if I can catch the Whip’s eye—because the barriers to small new businesses, new employers and new exporters have been kept far too high in the previous decade or more. We need to get on and finish the job and create a real enterprise pathway. There is little point in trying to address the problem of firms that are too big to fail if we do not also seek to address that of new businesses that are too small to succeed against barriers to entry that have been in place for far too long. This Bill helps us to take significant strides forward. In the words of the British Chambers of Commerce:

“By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.”

It is the economics of strong, long-term measures for long-term growth.

National Insurance Contributions Bill

Debate between David Rutley and Bob Stewart

Monday 4th November 2013 Commons Chamber

[David Rutley (Macclesfield) (Con)]

It is an honour and a privilege to follow the impassioned speech of my hon. Friend the Member for Skipton and Ripon (Julian Smith).

I was fortunate enough to secure an Adjournment debate last week. The good news was that it was on the subject of supporting first-time employers, but the bad news was that I secured the 2.30 pm on a Friday afternoon slot, which is not always prime time in Parliament. I am therefore pleased to be able to return to the subject and debate it further in the presence of a few other colleagues.

The good news is that over the past decade the number of people who work for themselves has increased to 4.2 million, or 14% of all those in employment—up from 12% at the start of the century. They are taking the chance to be their own boss and often embracing new technologies to enable that. Record numbers of people are working for themselves. As I have said, that is good news, but it would be even better if more of the self-employed, one-person businesses and sole traders took the step from being first-time entrepreneurs to being first-time employers. That is why I support the new employment allowance: it is a huge step forward.

Entrepreneurialism is a culture that spreads. Once a person is in it, they live it. They go native, as they say, and embrace risk-taking. Significantly, entrepreneurs are more likely than established businesses to take on workers from the ranks of the unemployed or the non-active, who often find the formalised application processes, let alone the working practices, of large firms restrictive. Established companies may tend to value the ability to adhere to existing processes and systems above the creativity, dynamism and individual flair that smaller businesses help to stimulate. Doing more to encourage the smallest firms to take on staff, particularly a first member of staff, has to be a step in the right direction.

Despite siren warnings from the unions and others that self-employed jobs are not proper jobs, there is clear evidence that the self-employed and those employed by them in the smallest companies enjoy better industrial relations. Data from the most recent workplace employment relations survey suggest that 67% of employees in the small and medium-sized enterprise sector strongly agree that managers treat them fairly, compared with 53% of those who work in large firms.

Furthermore, a survey by the TUC, no less, and YouGov has shown that a greater proportion of employees in small firms report the highest levels of job satisfaction, compared with employees in larger firms. However, as my hon. Friend the Member for Skipton and Ripon has said, there is still a tendency in Whitehall to prefer to deal with larger companies and to underestimate the burdens on the smallest businesses when introducing uniform regulations. The new employment allowance, however, shows that this Government understand the importance of measures that, though uniform, are of greatest benefit to the smallest operators, and that is why they should be commended.

[Bob Stewart]

I endorse my hon. Friend’s last point. It is clear that if the boss of a business works closely with his first employee, industrial relations should be excellent and there should be no problems. That is the reason for the 67% satisfaction rate.

[David Rutley]

My hon. Friend makes an important point. That is absolutely the case. This is about how we build good working relationships and a strong economic base through SMEs. That is far more sustainable than the approach adopted by the previous Government, which seemed to be underpinned by more and more public spending. That is completely unsustainable.

What a boost it will be for more of the growing army of the self-employed to become small employers. Indeed, if they all, or a vast proportion of them, took on one employee, that would make a huge dent—even bigger than the current one—in the unemployment figures. The number of self-employed people with no employees has increased, but the number of self-employed people with a small number of employees has not kept pace, and that is what the Bill seeks to address. In the past, the focus has been more on encouraging people to start up a business and less on taking the next step to becoming micro-employers. The Bill is an opportunity to further liberate the self-employed from barriers to growth and to nudge first-time entrepreneurs into becoming first-time employers. The prize is stronger, more sustainable economic growth.

Micro-businesses play an important role in Macclesfield, working in forums like Make it Macclesfield and the Poynton business forum. They make a huge contribution to strengthening the community and, at the same time, moving our economy forward by creating jobs.

Surveys and statistics abound to show that small businesses can be, and often are, job-creation machines. They also show that small businesses are more likely to employ the longer-term unemployed and those who may struggle to enter the job market as a result of a lack of formal qualifications or, indeed, their ethnic background. This is what the Federation of Small Businesses calls the “entrepreneurial pipeline” to what Professor Mark Hart calls “growth gazelles”. We need to encourage more growth gazelles. Essentially, this is about everyday entrepreneurs, street-level small businesses and office-share operators giving people a chance to work. Analysis by the FSB suggests that 74% of those who become self-employed and who have employees come from the self-employed who had no employee, and that a further 13% come from employees who had been working in micro-businesses. Clearly, there will be a multiplier effect once we get this right and start moving in the right direction.

The Government are absolutely right to introduce the new employment allowance. Slashing the cost of national insurance and taking many employees out of it completely will encourage more of the self-employed to become employers. However, this is not—and nor should it be—the only measure to increase the number of first-time employers. The Bill must be viewed in concert with the new enterprise allowance—for which Levi Roots is an ambassador for the Government—which seeks to encourage the longer-term unemployed into self-employment. The three-year moratorium on new regulations for small businesses is another important step in the right direction. I encourage Ministers at the Department for Business, Innovation and Skills to view it as a rolling moratorium.