National Insurance Contributions Bill

Jeremy Lefroy Excerpts

Tuesday 23rd November 2010 Commons Chamber

[Mr Gauke]

I am grateful for that intervention. We have to build this private sector recovery. This measure is a useful contribution, particularly to those regions where the private sector is not as strong as elsewhere. It is a transitional measure, scheduled to end in three years. We are committed to monitoring and evaluating its effectiveness over that period to ensure its success.

It is not our intention for this policy disproportionately to benefit businesses that employ highly paid staff. For that reason, the maximum amount that an employer can profit from any single employee is limited to £5,000. That cap ensures that the policy will not distort European Union markets and that it complies with state aid legislation. We do not expect any significant competitive disadvantage to arise either for existing businesses or for new businesses in regions where the holiday does not apply. The Bill also makes provision for the administration of this measure. Businesses benefiting from the holiday can withhold the employer contributions from the monthly payments they make to HMRC. If the payment cannot be withheld, the businesses can apply to HMRC for a refund. That will help to minimise employers’ costs as well as the costs of delivery.

The Government expect that hundreds of thousands of businesses will benefit from the measure over the next three years. In the Budget, we estimated that new businesses would save hundreds of millions of pounds worth of national insurance contributions during the lifetime of the scheme, giving them the ability to hire more staff, expand their business or invest in the recovery.

[Jeremy Lefroy (Stafford) (Con)]

The Government correctly emphasise the importance of the voluntary sector, and it is likely that there will be a surge in the number of charities that are set up. I declare an interest as a trustee of Stafford Works, which is a new charity. Will the Minister confirm whether charitable trusts and companies are included in the scope of part 2 of the Bill?

[Mr Gauke]

A charitable entity that is located in one of the relevant regions and that carries on a trade, vocation or business will benefit. That is likely to apply to, for example, shops that are run by charities. Such entities must meet that criterion to benefit, but not all charities will necessarily do so.

Financial Assistance (Ireland)

Jeremy Lefroy Excerpts

Monday 22nd November 2010 Commons Chamber

[Mr Osborne]

My hon. Friend makes a very good observation about a particular aspect of the Irish banking situation and its impact on those property investments in the UK. We have discussed this with the Irish, and I will get back to him on whether there have been specific developments in the last few days, but I have not raised the matter as part of the discussion on the international assistance that we are providing. We are trying to put the whole Irish banking system and the Irish state, which stands behind those banks and, indeed, behind NAMA, on to a much more stable footing.

[Jeremy Lefroy (Stafford) (Con)]

I thank the Chancellor for his welcome statement. Given that we have sovereignty over these matters, in what currency is the bilateral loan likely to be denominated?

[Mr Osborne]

We will set out the terms and conditions and the exchange rate of the bilateral loan when we agree them over the next couple of weeks, and I will bring that information to the House of Commons.

PAYE Contributions

Jeremy Lefroy Excerpts

Wednesday 8th September 2010 Commons Chamber

[Mr Gauke]

Our understanding is that the fundamental problem is changing working practices—that is the long-term issue. Of course, there may be circumstances in which HMRC has made errors, but changing working practices is the essential problem. It is also the case that the new computer system more accurately and rigorously picks up problems than happened before. That is why we have seen the increase in underpayments and overpayments. However, my hon. Friend is absolutely right that there have always been underpayments and overpayments under the payment-on-account PAYE system.

[Jeremy Lefroy (Stafford) (Con)]

I welcome my hon. Friend’s statement. The relationship between taxpayer and tax collector is extremely important. Many of my constituents find the fact that it is extremely difficult to get through to the Revenue at the moment very stressful, which they must do through no fault of their own, as other hon. Members have said. Will the Government look at that relationship and ensure that it is valued, so that both HMRC staff, who do an excellent job, and its customers, are treated the same way as we would expect in any public service?

[Mr Gauke]

My hon. Friend is right to raise those points. As I said, additional staff are provided to call centres in an attempt to address this matter. HMRC is endeavouring to provide a good service to taxpayers, notwithstanding the difficulties of the circumstances.

Budget Resolutions and Economic Situation

Jeremy Lefroy Excerpts

Thursday 24th June 2010 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

May I welcome you to the Chair, Mr Deputy Speaker? May I also congratulate those Members who have made their maiden speeches today: my hon. Friends the Members for Staffordshire Moorlands (Karen Bradley), for Hendon (Mr Offord) and for Camborne and Redruth (George Eustice) and the hon. Member for Kingston upon Hull East (Karl Turner)? We have heard some excellent speeches, and I was particularly pleased to hear from my hon. Friend the Member for Staffordshire Moorlands, whose constituency I often have the pleasure of walking through on my very rare days off these days.

I wish to speak briefly about business finance. Some Members have talked about the lack of discussion of growth today, and growth is clearly vital for our economy. Members have referred to the importance of the private sector and of private sector investment taking us out of the situation we are in and creating jobs and tax revenues.

The Budget Red Book rightly states that small and medium-sized enterprises

“are fundamental to the economic recovery and to tackling unemployment”,

and I listened with interest to the remarks of the hon. Member for Liverpool, Wavertree (Luciana Berger) about tax relief on video games. However, some SMEs continue to have problems accessing the affordable finance that they need.

It is important to put that statement in context. According to figures from the Institute of Directors, in 2001, 45% of its members were financing their businesses through bank loans and 40% through overdrafts. A recent survey shows that now only 28% do so through bank loans, 36% through overdrafts and 20% to some extent through credit cards. That is not a sustainable model for SME finance when we are looking to SMEs to be the engine that pulls us into the strong growth necessary both to tackle the scourge of unemployment and to generate the tax revenues that we so desperately need.

Why have things changed so much? An IOD survey of 1,045 directors earlier this year was revealing. It showed that 57% of businesses seeking bank finance in 2009-10 were rejected by their banks. Perhaps even more discouraging was the fact that 83% of those declined bank finance were not even offered information on the previous Government’s and the current Government’s enterprise finance guarantee. Indeed, personal guarantees were sometimes asked for even when the enterprise finance guarantee was offered.

The Government have increased the enterprise finance guarantee facility by £200 million for the current year to support additional lending of up to £700 million. I welcome that, but it is clear that implementation is key. The EFG will not help small and medium-sized enterprises if the participating banks do not make their customers fully aware of it. Neither will it help if the procedures are lengthy. Profitable SMEs often run into short-term cash-flow difficulties—I recently came across one such instance in my constituency—and swift and decisive help is needed in such cases. I therefore welcome the processing target, which is mentioned in the Red Book, of 20 business days for all major lenders participating in the EFG. Indeed, I think that serious lenders could do considerably better.

Although the EFG is welcome, it will not fix the problem of the lack of bank finance. The announcement that the Government will publish a Green Paper on business finance before the summer recess is an important and clear sign that they understand the situation, but we need action from banks now. Their reputation has been tarnished in recent years, and I do not make that point with any satisfaction because they are not the only people in that position. What better way for British banking to restore its reputation than to provide most of the finance that UK SMEs need to carry out the task of profitably creating jobs and generating tax revenues?

Bank loans and overdrafts are not enough. SMEs also need greater access to riskier capital, particularly equity and quasi-equity, but the UK has not excelled in that area. The new or growing business cannot necessarily provide security for loans, so more unsecured finance is desperately needed. I therefore welcome the growth capital fund that the Government will create as part of the existing £237 million programme of enterprise capital funds. I credit the previous Government with recognising the importance of such funding and I am delighted that this Government will build on that work.

Those amounts are necessarily small. It is the Government’s role to take the lead, but they cannot and do not shoulder the whole burden. In north Staffordshire, we have the Michelin development fund, which was set up by the tyre company to provide unsecured finance to local SMEs, with the specific remit of creating sustainable jobs in profitable businesses. There is also the North Staffordshire Risk Capital Fund, which invests in businesses in my constituency. It is a public-private partnership, with investment from local businesses, individuals and the regional development fund. It was set up with a 10-year life and is drawing to a close. We must ensure that it is renewed or replenished, because it performs a vital role. I will do everything I can to assist with that. In south Staffordshire, we have the Black Country Reinvestment Society, which supports firms in Stafford with secured and unsecured funding.

I believe that Members of Parliament on both sides of the House have a vital role to play in encouraging such funds to form and grow in our constituencies. In my working life in business, over more than 25 years, the greatest pleasure was in creating new and lasting jobs, and the times of most distress were when someone had to be made redundant. Working with local people to create or support such funds gives us the chance to play a direct role in helping SMEs to do the job that they want to do and that we so desperately need them to do.

Financial Services Regulation

Jeremy Lefroy Excerpts

Wednesday 16th June 2010 Commons Chamber

[Mr Osborne]

I am not sure whether the Labour party in opposition will keep its promise to abolish boom and bust, but it proved pretty disastrous in government. All of us welcome the fact that my hon. Friend will no longer be regulated by the FSA, and instead will be regulated by the Whips Office.

[Jeremy Lefroy (Stafford) (Con)]

Despite some high-profile casualties, does my right hon. Friend recognise the importance of building societies and mutuals to the financial services sector? What steps does he propose to take to encourage that sector to increase?

[Mr Osborne]

My hon. Friend is right that building societies and mutuals have an important role to play in the future. We want to strengthen them and support those who want to create mutuals. We will set out the details of how we will do that in the next few weeks.