Jobs and Work

Lord Spellar Excerpts

Wednesday 11th June 2014 Commons Chamber

[Vince Cable]

Yes, there are, and that is a very good example. We had an earlier exchange on the aerospace industry. One of the major accomplishments of the industrial strategy is that we now have a partnership stretching between Parliaments, guaranteeing large-scale investment by the Government as well by industry, and that is one of the factors contributing to the confidence that my hon. Friend described.

In my concluding remarks, I want to refer to the specific measures introduced in the small business Bill, which will support small business. Let me say at the outset that I fully accept the shadow Secretary of State’s point that one of the central issues affecting small business is access to bank credit. It remains a very big issue, and it is not difficult to understand why. We had the biggest banking crisis in our history going all the way back to the beginning of the 19th century. We have never had anything on this scale, and Britain was uniquely affected because of the scale of banks in the UK relative to GDP—it is higher, I think, than in any other country except Iceland—and, again, the Labour Government had responsibility at the time. The effect of the bank collapse and the subsequent deleveraging that has taken place, particularly in RBS, have been deeply damaging to business. We understand that and are taking steps to deal with it.

The British Business bank is now playing a significant part. Over the past year, I think there have been net flows of £660 million into the small business sector. That is a mixture of new flows to organisations such as Funding Circle and to the challenger banks, together with the guarantee schemes, which have increased by a factor of 75% since they came under the Business bank.

We are running up a downward-moving escalator, but the Government accept that we have a responsibility to intervene heavily to support like lending in the wake of an extremely damaging banking crisis. That is the context in which we are operating. The Bill will contain a series of measures that will help further. Late payment is a massive issue for small businesses, with something in the order of £30 billion in outstanding payments. The legislation will introduce a requirement on companies to be much more transparent in how they deal with late payments.

We also want to introduce much more competition in banking, to ensure that banks will come forward and lend to small businesses. Within the last year, we have seen the creation of a whole set of new banks, supported by the Business bank. The big obstacle—which I recall describing in the House 15 years ago at the time of the Cruickshank report—is the fact that the four leading banks had a stranglehold over the process through the payments system. We have introduced a new form of regulation of the payments system, opening it up to competition and preventing the kind of stranglehold that the existing banks have. The Bill will enable that to happen. In addition, we want to ensure that we have a proper system of data sharing. The lack of such a system is one of the obstacles to new banks coming in and competing. There are also problems with export finance, but the new Bill will enable us to extend export finance into new areas.

The shadow Secretary of State talked about the small business measures having taken a long time, and we accept that. There has been a massive consultation on pubs, for example. It has gone on for many years—indeed, it started long before this Government came into office—but we are now taking action. There will be a statutory code and an arbitration body. There will also be an option for an independent, market-based rent review. I am sure that we will discuss this legislation extensively, but it does represent action after many years of pressure from the Select Committee and from other Members.

Other business measures will include those relating to public procurement. This Government have opened up public procurement in central Government to small business in a way that has never happened before, but that has not always happened throughout the wider public sector, including local government. The measures that we are introducing in this big Bill will considerably improve practice in public procurement, opening up the rest of the public sector.

[Mr John Spellar (Warley) (Lab)]

The Secretary of State might have had representations from local opticians who had previously provided a service to the Driver and Vehicle Licensing Agency. All their contracts have been taken away from them, bundled up and handed to one big national company, Specsavers. Does not that show that, although the rhetoric might be fine, many Departments are still letting the system down?

--- Later in debate ---

[Mr John Spellar (Warley) (Lab)]

I refer to my entry in the Register of Members’ Financial Interests and my proud 45-year membership of a union.

Let me start by referring to the exchange that took place between my right hon. Friend the Leader of the Opposition and the Prime Minister earlier today about the transatlantic trade and investment partnership. I have to say that I was disappointed by the Prime Minister’s response—not by its substance but by the fact that he did not really seem to be engaged with the issue. He offered, generously, to write to the Leader of the Opposition outlining the Government’s response to concerns about the TTIP’s impact on the national health service.

There are several campaigns under way regarding people’s beliefs about the impact of the TTIP. Personally, I think that many are misplaced. For example, on concerns about privatisation in the national health service, the biggest threat in that regard would not be the TTIP but the re-election of a Conservative Government at the next election. I accept, however, that those concerns are out there. Equally I accept that some of them are whipped up by those who are opposed to trade, and, even more so, viscerally opposed to the United States. None the less, these arguments have to be taken on. Frankly, there is a lack of that by Ministers or officials, and I have raised that with them directly.

This is important because it involves about half the world’s GDP and a strategic transatlantic linkage of the liberal democracies and liberal economies. It has great potential for our manufacturing industry, particularly for small and medium-sized enterprises involved in niche manufacturing, many of which have great difficulty in dealing with all the paperwork of international trade—much more so than the multinationals—and would be better able to expand their business. This is an important trade deal for the future that should not be allowed to go by default. Trade deals are never easy, as many of those who have been involved in several over the years will agree. However, they are very important, particularly because if we do not have trade deals between the liberal economies, international standards will be set by economies that do not take such a view.

The essence of the success of trade depends on our capacity to produce, and Government have a very significant role in this. I will be a little more generous to the Business Secretary than he was to his predecessor, because I think that he has not only pioneered several issues but very much followed on from many of the initiatives taken by his predecessor, Lord Mandelson.

I also pay tribute to the Foreign Secretary, who has brought about a significant cultural change in the Foreign and Commonwealth Office, directing it more towards battling and selling for Britain. I was recently in Auckland —the England rugby team are there—taking the opportunity to sell British goods. The GREAT Britain campaign is an extremely successful brand that our incoming Government should and will continue. I accept there is a need for more communication to ensure that many small and medium-sized enterprises are made more aware of the assistance they can get.

Although the FCO and the Department for Business, Innovation and Skills are doing well, other Government Departments are letting them down. Too often, we focus on Government as legislator or policy maker and miss out on their role as a client. My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) has drawn attention to what can be done in construction. However, on the purchase of police vehicles, the Home Office’s framework prevents Jaguar Land Rover from competing. No other country in the world would behave like that, and such behaviour runs through a number of Departments. I could give other examples if I had time. I ask the Minister to get his colleagues in other Departments to see reality and to start behaving like officials in other countries and put the interests of British manufacturing first.