Small Businesses

Debate between Huw Irranca-Davies and William Bain

Thursday 28th November 2013 Commons Chamber

[Mr Bain]

I certainly will not celebrate the three years in which we have had very little growth, which had a huge impact on SMEs. With respect to the hon. Gentleman, I want to speak about the positive issues on which we might find more cross-party agreement in this debate.

I refer hon. Members to the excellent report that Santander and Dods published recently in the House. It contains key recommendations that the Government should attend to quickly. It shows that 285 separate schemes are available to SMEs which, in the view of the report’s writers, is far too many. It sets out the good recommendation, which the Government could implement straight away, of developing a single portal through which SMEs can have contact with central Government. The report found that only 29% of SMEs were aware of the existence of the funding for lending scheme and that 28% of businesses thought that access to finance would be the biggest impediment to growth in the next few years.

Shockingly, the report revealed that only 12% of students in our colleges and universities would make working for an SME their first choice on graduation. That is a real concern, given that the vast majority of job creation in the coming years is likely to come from the SME sector, and it shows that there is much more that the Government, SMEs, colleges, universities and schools need to do to promote founding and working in small businesses as good career paths.

As a country, we need to do far more work on skills. Only yesterday, the Minister illustrated in a written answer to me the growing gap in early rates of pay between those who have level 4 skills and those without any qualifications at all. That hourly pay gap of £8.84 has widened by a tenth in the past six years alone. SMEs, the Government and local authorities need to do a huge amount to improve in-work training so that people can see wage progression in a job, and so that a job in a small or medium-sized enterprise can become a career with long-term prospects.

We need to improve the shockingly low rates of research and development in this country. In public and private sector research and development, we lag way behind our main competitors in the EU and many of the emerging markets. The Government must do much more to boost the innovation that comes from the many millions of small businesses throughout the country, such as Gaia-Wind in my constituency.

As a matter of urgency, we need to improve access to capital. When I speak to SMEs in my constituency, they make it clear that they are willing and able to take on more staff, and that they want to create more demand across our country. However, the banking system is simply not working for SMEs. We need new players to come into the banking system and regional banks that focus on the needs of the economies in Scotland, Wales, Northern Ireland and the different regions of England.

[Huw Irranca-Davies (Ogmore) (Lab)]

Does my hon. Friend agree that if that is to work, the regional banks in all parts of the UK, including Wales, need to be driven by entrepreneurial zeal, rather than a civil service ethos?

[Mr Bain]

My hon. Friend raises the important point that we need a culture of long-term investment, as has happened over the past few decades in Germany, where there has been strong support for SMEs from the Government and the financial institutions. We need to see more of that in this country and it would be best delivered through a system of regional banks that provide support to business on a dedicated, local basis.

Finally, in this most significant of weeks for Scotland, I must say that it is critical that the SME community speaks out on the question of Scotland’s continued membership of the United Kingdom. It would be disastrous for Scotland’s trade with the rest of the UK and disastrous for exporters if Scotland were forced out of the United Kingdom. It is important that all of us in the House encourage business to speak out on the need to keep the Union together.

I am incredibly supportive of small businesses in my constituency, and I look forward to hearing a positive debate among Members on both sides of the House.

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[Huw Irranca-Davies (Ogmore) (Lab)]

I welcome this debate and compliment the hon. Member for Newton Abbot (Anne Marie Morris) and the other Members who secured it through the Backbench Business Committee.

I want to begin by putting a human face on this debate. Several people have talked about the definition of small businesses. For me, that definition could include Worgan’s in Llanharry, a small, family-run enterprise that started as a small gift shop selling various things for the local community, but which extended by opening a café in the next-door premises and then a mobile chip shop. The definition could also include the former Sony site in Bridgend. Sony went through a difficult time when the market for cathode ray tube televisions completely fell apart—when flat-screen televisions came in, those jobs quickly went abroad—but the management retained the skilled work force and rebuilt the business on the basis of high-end engineering and their massive expertise in design, engineering and manufacturing. Working alongside other companies, it has built itself back up and now has 500 employees onsite, 150 of whom work in 28 incubation companies—small companies, built up with the assistance of Sony expertise, working in digital media, graphics, television and many areas, and supported as they grow from micro-businesses into small businesses and, we hope, into the giants of tomorrow.

The definition of small business could also include Ferrier’s, a local estate agent on Commercial street, in Maesteg, where my office is based. It was established in 1918—by coincidence, that was the same year Labour first won the seat of Ogmore, so I hope we will both shortly be celebrating our 100th anniversary—and it has extended to open other outlets in Kenfig Hill and elsewhere. There is a wide range of businesses. I think of Cwm Tawel Yurts, a tourism enterprise in a beautiful little valley around Betws, and of the Food Box. Then there are two brothers on the Maesteg industrial estate who left my state comprehensive school, one going on to study applied sciences, the other, following a different path, management. They came back together and established a 3D engineering company that did all the things expected from 3D engineering, but which has also now extended into life sciences. It applies 3D engineering to the life sciences, uses 3D modelling in the development of things such as heart valves that grow organically within the body and it supplies tiny parts that help the space station run.

In talking about the 99% of small and medium-sized businesses, we recognise that they are diverse, which gives them some resilience; that they are fragile, as my hon. Friend the Member for Rochdale (Simon Danczuk) said; and that they need the right support structures in place to assist them to thrive and grow.

[Mr Bain]

We have a burgeoning life sciences sector in Glasgow, too. Does my hon. Friend agree that the National Audit Office made a powerful point when it said that there is a potential funding gap of some £22 billion in the finance available to small businesses between now and 2017. Would it not help small businesses in his constituency and mine if the Government did something with the banks to help plug that gap?

[Huw Irranca-Davies]

My hon. Friend makes a valid point. There has to be cross-party agreement to take this forward and to ensure that finance is available.

Let me mention one stark figure. Even though there are signs of optimism in some parts and some sectors of the Welsh economy, a recent survey of members of the Federation of Small Businesses in Wales showed 55% of them reporting that credit was unaffordable, while 65% said it was not only unaffordable but completely inaccessible. The idea that these businesses can grow by getting affordable and accessible lending is simply not happening, which is a tragedy.

European Union (Referendum) Bill

Debate between Huw Irranca-Davies and William Bain

Friday 22nd November 2013 Commons Chamber

[Mr Bain]

My apologies; it is important to be able to distinguish between east and west.

The wording of the question is critical. In the 1975 referendum, specific reference was made to the UK staying in the EEC, as it was. There was a further clarification by means of the insertion of the words “Common Market” after “the European Community” in the referendum question. The Electoral Commission has identified that the question under consideration, in its current form, could create an ambiguity in the minds of an important group of voters, who might believe that the European Union was completely different from Europe or from what we are engaged in at the moment. The Electoral Commission’s advice should be taken carefully by the hon. Member for Stockton South and the Government.

As has been mentioned, the wording of the question is critical. In the Quebec referendum of 1995, when the proposers of separatism argued that a question could be framed around the word “sovereignty”, that generated an outcome of less than 1% in favour of those who wished to remain part of Canada. In Scotland, we saw a politically motivated process with the question as drafted being corrected by the Electoral Commission and other political opinion, which held the Executive to account. If the hon. Gentleman is to make any kind of persuasive case for a referendum, he simply must engage with the arguments that the Electoral Commission has made. The commission has said that there is a danger that his question, which is endorsed by the Conservative part of the Government, is too ambiguous, and that needs to be resolved by this House and potentially by the other place in future proceedings on the Bill.

[Huw Irranca-Davies]

Does my hon. Friend agree that the rewording in amendment 35 not only abides by the Electoral Commission’s suggestion but states a fact, as we would “remain” within the EU? Does he also agree that, in concurrence with my hon. Friend the Member for Ilford South (Mike Gapes), who has said that he is minded to press his amendment to a Division, the House should pass the amendment so that there is clarity for the voters of the UK should we have a referendum?

[Mr Bain]

My hon. Friend is entirely correct. The worst thing that this House and the other place could do is to put in place a referendum that leaves doubt in the minds of voters over what they are voting for. There is even doubt about the implications of a yes or a no vote in the minds of Members on the Government Benches. Quite simply, there should not be such doubt among the voters if a referendum were to take place. For that reason, it is essential that the strong arguments of the Electoral Commission are given due credence by the Bill’s promoter.

My hon. Friend the Member for Ilford South has tabled an interesting group of amendments. It is fair for him to raise the point in relation to Wales and Scotland. It would be appropriate to consult those devolved legislatures and to speak to the Scottish Government and the Welsh Assembly Government about the arrangements for translating the question into the appropriate language. The promoter should take such arguments on board.

I will seek to test the opinion of the House on amendment 71. I emphasise to both the Government and the Bill’s promoter that language is absolutely critical in referendums. As the question stands in this Bill, the hon. Member for Stockton South simply has not got it right.

European Union (Referendum) Bill

Debate between Huw Irranca-Davies and William Bain

Friday 8th November 2013 Commons Chamber

[Mr Bain]

My hon. Friend is clairvoyant in picking up that ambience from the Minister for Europe. I hope that we will hear more from hon. Members who are willing to comment on these issues later in the debate.

[Huw Irranca-Davies]

I wonder what bearing the fairly recent debate and vote that the House had on prisoners’ entitlements to vote will have on the amendment. In the light of the detailed way in which my hon. Friend has explained the difference between referendums and other elections, does that vote have a bearing on whether the amendment should or should not be put before the House?

[Mr Bain]

My hon. Friend raises an important point. One of the issues that must accompany the referendum debate is the cost and potential cost to the taxpayer. That is why we need a definitive opinion from the UK Government and the relevant Law Officer about whether the ruling in the Polish case in 2008 would apply to this referendum. If it did, that would mean that there would be no money incurred, potentially, through legal disputes raised by prisoners who were not given the right to vote. That is why we need guidance from the Attorney-General and from the promoter of the Bill on the legal position.

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[Mr Bain]

Thank you, Madam Deputy Speaker. I hope that the Prime Minister will grace us with his presence later, given his keen interest in the Bill.

[Huw Irranca-Davies]

A crucial point is the cost of compensation resulting from prisoners mounting challenges under the legislation. Would my hon. Friend be willing to give way if the promoter of the Bill—

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[Mr Bain]

I am somewhat perplexed. The Conservative party has for decades, if not centuries, marketed itself as the party of business, but we now find Conservative Members in complete opposition to what the CBI is saying is in the best economic interests of this country. I think that most people will find that staggering.

[Huw Irranca-Davies]

Will my hon. Friend give way?

[Mr Bain]

Yes.

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[Mr Bain]

I give way to my hon. Friend.

[Huw Irranca-Davies]

It is very good to make my first intervention under your chairmanship, Madam Deputy Speaker, and I will comply with your very helpful guidance.

I suggest that my hon. Friend’s amendment and the other amendments to do with the timing of a vote are a distraction, because the timing is about what is politically more advantageous. The point is that the National Farmers Union and the Food and Drink Federation, which represents the biggest manufacturing sector in this country, have echoed the CBI’s words. For many people, it is not about timing—it is about getting out of the EU.

[Mr Bain]

My hon. Friend is entirely right. As a specialist in the common agricultural policy and the needs of our rural economy, he knows that it is incumbent on the Government to spell out the consequences of leaving the European Union—what a yes vote in the referendum would mean and what a no vote would mean.

It is intriguing that the CBI, having requested more information and explored the potential consequences of a vote to leave the European Union, concluded:

“While the UK could certainly survive outside the EU, none of the alternatives suggested offers a clear path to an improved balance of advantages and disadvantages or greater influence.”

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[Mr Bain]

I entirely agree with my hon. Friend.

It is interesting to explain the purpose behind these amendments, and I can best do so by contrasting the referendum proposed in this Bill with the referendum that was held in 1975, when two White Papers were issued on the terms of the renegotiation between the United Kingdom and our European partners. That was prior to the Bill’s publication and its being presented to Parliament. When Parliament was asked on that occasion to consider legislation to establish a referendum, it knew the full details of the implications of a no vote and, indeed, a yes vote for the electorate. That is what my amendments seek to put into the Bill, because, as drafted, it simply does not achieve that aim.

[Huw Irranca-Davies]

In probing amendment 68, may I ask my hon. Friend whether he envisages consulting organisations such as the Farmers Union of Wales, NFU Cymru and the National Farmers Union in Scotland and in England? That would be important because of their specific interests in the European Union and because they have expressed their clear desire not to leave.

[Mr Bain]

That is correct and I agree with my hon. Friend in his ambition to make sure that when the Government produce proper documents to accompany any referendum, they take into account the interests of farmers and the rural economy. Leaving the EU would have profound implications for this country’s farming industry.

[Mr Bain]

If I may point out some of the problems with the hon. Gentleman’s argument, the reason for my amendments is that when a similar referendum was held in 1975, this House had had the benefit of two White Papers, a full debate and a full consultation. None of that has accompanied this Bill. It is because the interests of the farming industry, exporters and workers—whose rights at work might be diminished by the renegotiations—have not been considered that we should put the amendments in the Bill. The Government need to consult on the real interests of this country, not simply have an internal conversation within the Conservative party.

[Huw Irranca-Davies]

Perhaps I have a helpful suggestion with regard to amendment 68. When Wales held a referendum on the Government of Wales Act 2006, my right hon. Friend the Member for Neath (Mr Hain) pulled together wider civic society. A similar action with regard to this Bill would particularly help Wales, which benefits to the tune of roughly £40 of surplus per head as a result of farming and structural funds. We could pull voices together if the amendment is agreed to.

[Mr Bain]

I entirely agree with my hon. Friend.

I want to further explain the reasons for and rationale behind my amendments by examining the context of the referendum that will take place on these islands, in Scotland, next year. I may have my differences with the UK Government, but I entirely agree with the way in which they have published a series of detailed, factual accounts looking at the consequences for Scotland and the rest of the United Kingdom of Scotland’s leaving the UK. They have explored the consequences for macro-economic policy and the impact on trade, financial services and business. The publications have been produced by the Government even before the Scottish Parliament has fully passed its legislation to establish the question for next year’s referendum. If that process is good enough for the referendum in Scotland, it should be good enough for any referendum that the Bill’s promoter and the Government are keen to have.