Economic Growth and Employment

Guto Bebb Excerpts

Wednesday 23rd November 2011 Commons Chamber

[Stephen Metcalfe]

I could not agree with my hon. Friend more. That is another problem that we have to sort out by clearing up the mess left by the previous Government.

Despite what Labour Members say and despite the sentiment behind this motion, we are, I believe, making good progress. As we have heard, we are creating the most competitive tax system in the G20; we are investing in businesses to help them start up and grow; we are encouraging inward investment and supporting exports; we are investing in science and technology and creating a more educated and more flexible work force. Of course there is still more to do, and I believe we are doing it.

For example, today, my right hon. Friend the Business Secretary announced new reforms to employment law—mentioned by the hon. Member for Streatham (Mr Umunna)—as part of the Government’s plan for growth, which will cut unnecessary demands on business while safeguarding workers’ rights. However, if we listen to the instant reaction from Labour, we find that they would have us believe that these measures are anti-employment and the reforms are about making it easier for companies to fire staff. I believe that the reverse is true. The Opposition spend a lot of time trying to cast employers as the bad guys—as a group of money grabbers trying to get rich off the backs of the workers.

[Guto Bebb (Aberconwy) (Con)]

Is my hon. Friend interested to hear the comments of the former Labour MEP Eluned Morgan, who is now a Baroness, when she stated that many in the private sector had sensed the animosity of the Labour party towards that sector?

[Stephen Metcalfe]

I would indeed agree with that view. I believe that all Government Members, and I suspect some Opposition Members too, would agree that the vast majority of businesses, especially small and medium-sized enterprises, know that their most valuable asset is their staff. Employers need staff and staff need employers. The problem has been that in the current economic climate firms are cautious about taking on additional risk, and that often means being cautious about taking on additional staff. I believe that making it easier for companies to manage their staff levels makes it easier for them to take on staff. Knowing that the risks of employment have been reduced might well unlock the employment door.

--- Later in debate ---

[Guto Bebb (Aberconwy) (Con)]

I am grateful to have the opportunity to bring a Welsh perspective to this debate. The hon. Member for Streatham (Mr Umunna) is no longer in his place, but I must say that his speech was much more coherent than the Opposition’s motion.

When considering economic growth across the entire United Kingdom, it is important to remember that there is a Labour Government in Wales, and we can compare and contrast what is happening in Wales with the positive steps the coalition Government are taking in supporting enterprise and private sector growth. Businesses in Wales are crying out for the enterprise zone idea to be implemented in Wales, yet we are still awaiting a coherent announcement from the Welsh Assembly. We in Wales have a Labour Minister for enterprise and the economy who has stated that she regrets capitalism. It is therefore no surprise that the Institute of Directors and other organisations have stated they feel that there is no partnership with the Labour Assembly Government and that Labour rejects, rather than embraces, the private sector.

[Steve Rotheram]

Does the hon. Gentleman not understand that there is a symbiotic relationship between the public and private sectors? If we cut one, the other bleeds. What is needed at present is a transfusion for the private sector, which is part of Labour’s five-point plan.

[Guto Bebb]

If what we are seeing in Wales is an example of Labour economic thinking, I am very pleased that it is in opposition in the rest of the United Kingdom. The truth of the matter is that the Labour party in Wales has shown across the generations a failure to understand the importance of supporting enterprise.

[Bill Esterson]

Will the hon. Gentleman give way?

[Guto Bebb]

Not at the moment, as I wish to finish the point I am making. The valley communities in Wales have suffered extremely badly not just for 10 or 15 years, but over a period of 30, 40 and 50 years, and it is fair to point out that throughout that entire time they have, unfortunately, been electing Labour councillors, Labour MPs and Labour Assembly Members. There was a fantastic business support programme in the south Wales valleys called the heads of the valleys innovation programme. It was such a good programme that in 2010 it won the award for the most successful enterprise support programme in the entire United Kingdom. What did the Labour Administration in Cardiff do? They cut its funding, and that was the end of an organisation that had supported hundreds of businesses and protected more than 4,000 jobs in some of the most deprived communities in the United Kingdom. It was cut because it was supporting private enterprise, which the Labour party does not understand or embrace.

Despite the fact that the motion, in general, is incoherent, I want to follow up a few points. In my constituency, we are extremely dependent on tourism, which is a major driver of growth in north Wales. It is imperative, in my view, that that sector is supported. I should point out that under pressure the Welsh Assembly has finally acknowledged that the sector deserves support, but initially the Welsh Assembly Government stated that tourism deserved no support whatsoever.

My concern about tourism is that as a coalition Government we stress the need to create a competitive tax regime for our businesses but in Europe other countries are significantly reducing VAT on tourism. It is important that we have a level playing field and I ask the Secretary of State to consider discussing the issue with the Treasury to ensure that tourism in Wales can benefit from similar VAT rates to those in other parts of Europe, including Ireland and France. There are reports to which I have access that state that the multiplier effect of making such cuts would be financially beneficial to the Treasury.

The other issue that is imperative for growth in the economy is support for small businesses. It is all very well to say that there will be a cut in the corporation tax rate, but most of the new start-up businesses that are creating real employment in my constituency will be sole traders and partnerships. Obviously, they will benefit from the increase in personal allowances, but a key issue that creates a problem for them is the VAT registration threshold. Nobody denies that the UK has a very high VAT registration threshold at £73,000, but that is not my complaint. As businesses grow and start to reach the threshold, they find themselves on a cliff edge. If they go over that level, they have to register for VAT and lose a significant part of their profitability. We need to reconsider the VAT threshold to support small businesses.

I understand that we are running out of time in the debate, so I shall leave that issue with the Secretary of State. To support small businesses in my constituency, we need to consider the VAT threshold and how it interacts with profitability.