Business Confidence

Gareth Thomas Excerpts

Tuesday 15th October 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Business and Trade (Gareth Thomas)]

I too take the opportunity in the usual way to thank the hon. Member for East Grinstead and Uckfield (Mims Davies) for securing this important debate. At the outset, let me echo her thanks to businesses across the country for the wealth they create, the better communities they help promote and, crucially, the good jobs they offer. I do not know where her “Taste of East Grinstead” event is taking place, but if it is in the House, I will happily come along if I can. If not, I would be happy to hear from her separately about the particular businesses that turn up to that event.

As a number of interventions from hon. Members have made clear, small businesses, in particular, are the backbone of our economy. I feel particularly privileged to be the Minister for Small Businesses and to hear some of the remarkable stories about how those small businesses came into being and the successes they have had in each of our communities. That is why I am pleased that we have been making progress in government on following through on the commitments we made in opposition in our nine-point plan to back small businesses. If time allows, I hope to touch on some of those points.

I welcome the support of all hon. Members who have spoken for their business communities, even if I did not quite agree with the tone of all their remarks. All of us need the businesses in our communities to succeed, and it is great to hear so many Opposition and Government Members wanting to back them to succeed.

The Prime Minister could not have been any clearer about this Government’s guiding mission: we will go for growth at every opportunity. Growth and backing business is the surest path to prosperity and to improving the living standards of working people. We have made it clear that our goal is to deliver the highest sustained growth in the G7, more secure jobs, better wages and, as a result, much greater funding for our public services, including our brilliant NHS. It surely goes without saying that investment is key to driving that growth.

I gently say to Conservative Members that the problem is that the Administrations of the past 14 years sadly starved our economy of the investment it needed. Whether it is the fall-out from the poor-quality deal the Conservatives negotiated with the European Union after the Brexit referendum, the revolving door of Prime Ministers— I think every Conservative Member here backed Liz Truss’s disastrous mini-Budget—the seven separate growth strategies since 2010 or the 11 different Business Secretaries in as many years, I say to Opposition Members that all of that might help to explain why they lost the confidence of business at the last general election.

If Opposition Members are not convinced by that, I would underline that there was also no plan to help small businesses grow, export or get into new markets. Support in that area was cut back and, in some cases, axed completely. There was no delivery on repeated promises to comprehensively reform business rates and no serious plan to tackle the scourge of late payments, which many small businesses face at the moment. Vital infrastructure projects that were fundamental to growth in many communities were cancelled, sensible measures to open up opportunities for investment in green energy projects were blocked, there was no obvious plan to back the high street—a point made by the hon. Member for South Basildon and East Thurrock (James McMurdock) —and, in particular, there was no serious plan to tackle retail crime going forward.

The result is that British firms have not felt that investing domestically was an attractive enough proposition. There has been much reluctance to adopt new technology, to upskill employees or to plough money into research and development. Sadly, that is why the UK has sat right at the bottom of global rankings for business investment for quite some time—27th out of 30 in the OECD last year, behind Mexico, Slovenia and the Slovak Republic.

[Robin Swann]

I thank the Minister for that point, which goes back to my contribution. This is about seeing what the Government can do in the next few weeks to give small businesses in my community in South Antrim the assurance they need to continue their online presence and sell into the UK.

[Gareth Thomas]

I thank the hon. Member for his earlier remarks and his intervention. Let me be clear that my Department will continue to work with local partners in Northern Ireland, including InterTradeIreland, to develop and deliver our trade and industrial strategies. If the hon. Member wants to speak to me, I would be happy to help the small businesses that have written to him to join up with the support available in Northern Ireland.

Members across the House will be pleased that there is good news on growth. I welcome the generous support of the hon. Member for East Grinstead and Uckfield for the work done yesterday at the international investment summit and in the run-up to it. A raft of measures were announced to help boost business confidence going forward and to spur growth, and I will recap on some of them. We are determined to make it simpler for companies to relocate to the UK through a new corporate re-domiciliation regime, which I am sure will strengthen our position as a global business hub. We have announced a business-boosting lift to the thresholds on company sizes, which means we will have new legislation by the end of the year reducing the burdens on start-ups and SMEs, saving them nearly a quarter of a billion pounds. We will be consulting next year on our ambitious modernisation programme for the UK’s entire non-financial reporting regime. We are seeking to make shareholder communication easier, and we are clarifying the law on virtual annual general meetings.

Those improvements, helping to reduce red tape, could be worth up to £16 billion a year to investment going forward. As a result of the pro-innovation, pro-business, pro-wealth creation policies we are pursuing, big-hitting global businesses are confidently investing in the UK. The total investment pledged by international and British firms, both in the run-up to and during the summit yesterday, now stands at an estimated £63 billion, which will help ensure that 38,000 jobs are created. I would gently suggest that that is a resounding vote of confidence in both the UK’s economy and the Government’s growth mission.

[Mr Frith]

The Minister is making a powerful and clear argument for this Government’s commitment to a new partnership with business. Does he agree that although the sum of investment yesterday is important, grabs the headlines and gets people confident about the future, part of the brief he is responsible for is small businesses, and seeing that they get part of the large investment that was committed to? Will he explore in his final remarks how important that is to small business?

[Gareth Thomas]

If I may, I will come to that in one second.

One of the measures announced yesterday that will strengthen business confidence further, and which many businesses have been crying out for, as they told us when we were in opposition and as they have been telling us since we came into government, is an industrial strategy. All Governments have an industrial strategy, consciously or not, through act or omission. This Government are choosing actively to have and implement an industrial strategy to help businesses plan, not just for the next year but for the next 10 years and beyond. That strategy will not just help large businesses or ones in urban areas, which is something the hon. Member for Chippenham (Sarah Gibson) asked about—I congratulate her on making her first speech as an Opposition spokesperson—but benefit all parts of the country and businesses large and small.

Our industrial strategy will inject capital into eight high-productivity, high-export, high-investment sectors in which the UK has a significant competitive advantage: financial services, professional and business services, clean energy industries, digital and technologies, advanced manufacturing, life sciences, creative industries and defence. Above all, our industrial strategy will show that we are listening and responding to the needs of businesses.

To that end, we will engage on those more complex issues that we know are barriers to investment: skills, data, finance, regulation, energy prices, grid connections, infrastructure and planning, which a couple of hon. Members rightly referenced. We want to view every single one of those measures through the lens of investment promotion. That is how we will continue to build long-term confidence, ensuring that our policies are made with business, for business.

Hon. Members raised questions about our Make Work Pay plan, and the number of businesses backing that plan is striking. On flexibility for employees, over 60% of UK managers surveyed by the University of Birmingham a couple of years ago said that home working improved their teams’ motivation, and a staggering 75% said flexible working boosted their teams’ productivity —something Opposition Members have complained about in the past. It is a similar story on pay. Research by the Institute for Public Policy Research shows that 70% of managers believe that raising the national minimum wage to reflect living costs would help, not hinder, their businesses. The hon. Member for East Grinstead and Uckfield referenced the fact that many of the measures announced as part of our package will come in in 2026. That will enable us to continue to talk to businesses and employee representatives to ensure that we get the details right.

I have no doubt that the Budget on the 30th of this month will be a Budget for growth. We face a very difficult inheritance as a Government, and we have to fix the fundamentals of our economy. I gently say to the hon. Member for Broadland and Fakenham (Jerome Mayhew) that he may not be comfortable with the mess his party left us, but figures released last month show that there was another month of record Government borrowing, with debt at 100% of GDP. That is the inheritance that the previous Government left us. We have to fix those fundamentals, and we will do. It will be a Budget for growth, and I have no doubt that our economy and British business will continue to grow from strength to strength.