Jobs and Growth

Guto Bebb Excerpts

Thursday 17th May 2012 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

I had intended to speak about a number of issues in relation to the Queen’s Speech, but I will concentrate on three specific points because the time limit has been curtailed.

Before I do so, I should like to respond to a comment by the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who said that the changes to public sector pensions would demand of some workers a 13% contribution towards their pensions. I entirely accept that a 13% contribution would be a significant sum of money. It is important to say, however, that our proposed changes to public sector pensions will protect those pensions. Labour Members should contrast the 13% requested in relation to public sector pensions with the equivalent contribution of about 38% that would be required of a private sector worker. I honestly believe that our proposed changes to public sector pensions will be the saviour of the system rather than its enemy, because people working in the private sector—taxpayers working extremely hard to try to pay their way—will feel increasing resentment unless there is an increased level of fairness between those in the public sector and those in the private sector.

On jobs and growth, I want to talk about two issues. First, there is a serious problem in relation to bank lending for small businesses. My constituency in north Wales is extremely dependent on small businesses—more so than on the public sector. There are not many constituencies in Wales where one can say that private sector employment is greater than public sector employment. People from those small businesses come to me time and again complaining that they are not getting support from the banking system. We have a Bill in the Queen’s Speech to deal with banking reform, but it is absolutely crucial that any changes do not make it even more difficult for small businesses to attract finance. Following on from the comments by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), in my experience the problem has been not only a lack of long-term support from the banking system but an unwillingness even to offer short-term support.

I heard the bizarre example recently of a business in the tourism sector that employs more than 40 members of staff and that, despite the recession, has increased its turnover and its profitability by taking important steps to deal with its cost base, and yet its bank expects it to renew its overdraft facility monthly. It would be a challenge for anybody running a business that employs 40 people to plan for the future if they had to deal with their bank on the basis of a monthly renewal of their overdraft facility. The bank in that example is 94% owned by the state. I find that situation unacceptable.

When we consider the reform of the banking system, it is therefore imperative that we ensure that support is available for the small business community. In my constituency, growth will come from the small business community or it will not come at all.

Secondly, I will talk about the need to reduce regulation. I take exception to the comments of the hon. Member for Great Grimsby (Austin Mitchell), who complained that there was not enough in the Queen’s Speech. In my view, the important thing for a Government is not to legislate all the time. I assure him that nobody comes into my constituency office saying, “Please, please, we want more legislation.” What they want is for us to enact the promises that we made in the first Queen’s Speech and to deliver on behalf of the country. One thing that we said we would do for the small business community was to deliver on the burden of regulation.

In the Budget, the Chancellor made an effort to deal with some of the VAT anomalies. On the back of the two months that he has enjoyed as a result of some of the proposed changes, he might not want to visit VAT again. However, I say to him that there are anomalies in the VAT system that need to be dealt with, some of which affect the ability of small businesses to grow. The anomaly that I want him to deal with, which would boost growth in constituencies such as mine, is the way in which the VAT threshold damages businesses that aspire to grow. A small business that hits the £76,000 threshold has to get its turnover up to £100,000, otherwise it will be worse off as a result of being successful. If a small business turning over £76,000 decides not to grow because the implications for its bottom line would be bad, it will not employ more people and it will not contribute to economic growth. We need to deal with VAT anomalies, but let us start with one that is a barrier to growth.