Manufacturing and SMEs

Debate between John Stevenson and Tony Cunningham

Wednesday 4th September 2013 Westminster Hall

[John Stevenson (Carlisle) (Con)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I hope this will be a worthwhile and interesting debate.

Today we could discuss Government support for small and medium-sized enterprises across all sectors: services, construction and, of course, manufacturing. Indeed, all sectors and industries will have many similar issues and problems—lending, taxation and employment law, to name but a few. There are certain issues, however, on which there are significant differences between the sectors. Indeed, even within sectors there may be different needs, requirements and problems that warrant different solutions. The reality is that it would be easy to have a debate on each sector, and probably many debates within each sector.

Today, however, I will concentrate on the manufacturing sector, the matters that apply to that sector and what the Government can do to support manufacturing, to enable the sector to grow and to ensure that it makes a larger contribution both to local economies across the country and to the national economy. I will address the help that the Government can give to all manufacturing businesses, including larger businesses that seek to develop new products or deal with EU regulation.

[Sir Tony Cunningham (Workington) (Lab)]

I obviously welcome Government support, which is very important, but companies can often help each other. Will the hon. Gentleman say a little about the supply chain, which is so vital to many small and medium-sized enterprises, particularly in Cumbria?

[John Stevenson]

I completely agree. Companies can help each other, particularly within the supply chain, but today’s debate is primarily about the Government’s role in helping to support businesses, both large and small.

The Government can help smaller enterprises that are seeking to expand and start-ups that need very basic advice on how to get going, and they must recognise that businesses of all sizes have their own individual roles to play. The Government have stated that they want to rebalance the economy—a laudable aim that is clearly supported across the House. Arguably, the Government want to go further and see growth in the country within an economy that is far more structurally balanced between the various sectors and which has a larger manufacturing sector, in particular.

Not only the economy but the country needs to be rebalanced. The country needs to move away from an over-reliance on a dominant financial services sector that is so overwhelmingly run from and centred on London. London has been, and is, a huge success, but there is a danger that it adversely affects the rest of the country. London dominates politics, the media, finance and business. It is almost overpowering, which can cause policy makers to forget or overlook the many other important contributors to our future prosperity.

--- Later in debate ---

[John Stevenson]

My hon. Friend makes a valid point. People sometimes forget that in manufacturing there are many highly paid jobs—it is not a low-wage sector, as many think.

There are already signs that our economy is beginning to recover and that manufacturing is playing its part. In the food and drinks industry, exports are up to more than £12 billion; the manufacture of cars is now at its highest level since the 1970s; we are still a world player in pharmaceuticals; we are a leading nation in aviation; and this Monday there was the announcement of a significant rise in manufacturing activity—all welcome signs. It is easy, however, for parliamentarians and Ministers to get caught up in the larger, more glamorous companies with the sexier products such as cars and planes, rather than with the more mundane products, such as storage doors or food, even though those are equally important and often produced by SMEs.

In reality, SMEs are central to the future success of manufacturing, whether as part of a supply chain or as a stand-alone entity with a local or national market share, whether innovating and expanding alone or as part of the next national or international conglomerate. The purpose of today’s debate is to examine what Government can do to support, encourage and enhance the SME manufacturing sector. Government support, assistance and encouragement are critical to the success of our manufacturing sector. The debate is about a few specific issues whereby a role for Government can help businesses of varying sizes to prosper.

Other Members will have their own ideas, as will Government, lending being the obvious one—it has already been referred to, but I am avoiding lending today, because I am sure that others will touch on it. It is important that we all share ideas, to ensure maximum benefit for the manufacturing sector and the industry. It is a given that Government should create an environment in which all businesses can succeed: a tax regime that is friendly, rewarding and supportive; regulation that is sensible and proportionate and ensures a level playing field for businesses to work and compete on; and the confidence that it is important for Government to give to business, so that they are supportive and consistent, without any big surprises for industry.

I want to touch on four specific key areas; first is the definition of an SME. According to European Union law, the main factors determining company size are the number of employees, the turnover and the size of the balance sheet. Those factors can then be divided: micro-businesses have fewer than 10 employees, turnover of less than €2 million or a balance sheet of €2 million; small businesses have fewer than 50 employees, turnover of €10 million or a €10 million balance sheet; and medium-sized businesses have fewer than 250 employees, turnover of €50 million or a €50 million balance sheet.

There are, however, varying definitions in the UK, with one under the Companies Act 1985 and a different one under the business bank scheme. For the purposes of research and development schemes, Her Majesty’s Revenue and Customs defines SMEs in a different way again. In fact, depending on which definition is used, an SME can have anywhere between 10 and 500 employees or a turnover of between £1.7 million and £86 million.

The real issue is that the actual definition of an SME is not helpful. It would be far better to break the definition down into different sizes and types of businesses with their own reference. A clearer idea of exactly what type of businesses we are discussing is necessary, rather than lumping them all together.

More definitions would be beneficial and help to target support to the right businesses in the right circumstances. For the manufacturing sector, that would demonstrate and recognise the importance of companies and raise their profile, and identify a sector as important in its own right. Any definition needs to acknowledge that larger manufacturing companies often have little in common with smaller ones and they should therefore not necessarily be linked together.

Size and numbers matter: they have an impact on how businesses structure themselves, how they function and what type and level of support they seek. I certainly find it hard to equate a manufacturing company with a turnover of several million pounds and, for example, 200 employees, with a two-man engineering business with a turnover that does not even exceed the VAT threshold. A better group of definitions, certainly in the manufacturing sector, would help to simplify a business’s ability to access the correct support, help and guidance that it may be seeking. That might also help Government to steer a business of a particular size or industry towards the appropriate support.

My second issue is simply what support there is, and whether it reflects the actual needs of manufacturing. What can Government actually do? What is the real support and help that Government can give to the manufacturing sector? Clearly, small businesses have their own particular issues; large businesses that want to expand are likely to have different requirements and problems; and there are individuals who want to start their own small manufacturing businesses.

A significant number of issues therefore need to be addressed for businesses of different sizes and complexity within the manufacturing sector: strategic advice and business plans will vary depending on the size of the business; procurement, too, is different for small and large businesses; there is involvement with UKTI—UK Trade & Investment—for exporters; skills and qualifications depend on the needs of the different sizes of businesses; there is the issue of funding, grants, loans and, as mentioned, banking facilities; there is involvement with trade federations, because larger organisations invariably hold greater sway and influence, or relations with the chamber of commerce; there is legal, accountancy and intellectual property rights advice; there is dealing with relevant regulation, because cars, for example, are very different from the food industry; and, equally important but sometimes forgotten, there is succession planning.

I appreciate that the Government are helping where they can—the manufacturing advisory service is an example—but there needs to be accessibility and relevance to the manufacturer. A common complaint is that the Government do not understand the user, and that their support is inaccessible or inappropriate. I appreciate that the amount of such support will vary considerably.

Larger manufacturers will contact Ministers or officials and have an ongoing dialogue. They are more likely to work through the trade organisations, and many will have the resource to research matters or to take paid advice. To be honest, a small manufacturing business in Carlisle with five employees is unlikely to contact central Government, while a 200-employee company with a £30 million turnover may well do so. Often, however, the smaller businesses have the greater needs, but they find it more difficult to access such help from Government.

I acknowledge that the Department for Business, Innovation and Skills is having some success. The best example is the R and D credit uptake, which has been welcome and demonstrates a successful policy and implementation. My concern, however, is that much of the effort is not as effective as it could be for many businesses. AXA Business Insurance carried out a study in the UK suggesting that many are unaware of the initiatives designed to help them. Darrell Sansom, the managing director of AXA Business Insurance, said:

“The numbers of small businesses in the UK continue to climb rapidly, but it seems that many could be missing opportunities to help their business along the way through a lack of awareness of the support that may be available to them.”

That leads me on to my next two points. Talking about government can be slightly misleading. What do we actually mean? Which aspect of government is the most appropriate? Today, I am clearly ignoring the EU, but we still have central Government as well as local government. There are clear issues with central Government: where to go, who to talk to and what Government should be doing. What advice and level of support should they be giving? That applies equally to local government, which really does matter. In many respects, the local council matters more for small manufacturers and businesses than central Government.

[Sir Tony Cunningham]

Does the hon. Gentleman agree that local government—local councils in particular—should be proactive with SMEs, rather than reactive? Instead of small businesses coming to the council and saying, “We have a problem or an issue”, councils should be going out and looking for ways in which to support local businesses.

[John Stevenson]

I completely agree. The hon. Gentleman and I, as fellow Cumbrians, agree that our local council does not do enough to support businesses locally or to take a proactive stance in Cumbria.

Is local government up to the job? What support or direction is it getting from central Government to ensure that it gives support to businesses, especially manufacturing ones? Councils can have a direct link to businesses through their everyday activities—planning, highways, environmental issues, health and safety, and, often, property ownership and rentals. What about other advice and help that local government could give, such as with business plans, legal and accountancy advice, finance, business structure, regulations and changes within an industry, and consumer and employment law? I have already commented on many other matters as well.

My experience of local government is that it is not nearly active enough in support of business. I agree with the point made by the hon. Member for Workington (Sir Tony Cunningham).

Local Authorities (Cumbria)

Debate between John Stevenson and Tony Cunningham

Wednesday 11th July 2012 Westminster Hall

[John Stevenson (Carlisle) (Con)]

It is a pleasure to serve under your chairmanship, Mr Weir. I appreciate this opportunity to debate local government in Cumbria in the Chamber. Before specifically discussing Cumbria, I would like to make a few comments on local government generally. I believe that there is a growing acknowledgement that local government is more important to the success of this country than many previously thought or accepted. I commend the Government for their interest in local governance and for their pursuit of the localism agenda, which is greatly welcome.

However, there is more work to be done. I am delighted that there is a growing cross-party view promoted by many different MPs, councillors and think-tanks that local government matters. However, it is in need of reform. I fully accept that the Government have other priorities—primarily the economy—and it is right that that should be the case. Nevertheless, reform should not be put off or delayed. Indeed, local government reform could be a vital weapon in the Government’s battle to improve the economy and they could carry out those reforms relatively simply.

The Government could call for a commission to review local government. I am aware that Select Committees are already looking at a possible settlement between local and central Government. That commission could look at two key reform issues, namely restructuring local government—in my view, moving towards unitary local governance up and down the country—and furthering the localism agenda that has already been initiated by the Government in respect of passing further powers, particularly tax raising, to local authorities.

[Sir Tony Cunningham (Workington) (Lab)]

May I first put on the record the apologies of the hon. Member for Penrith and The Border (Rory Stewart), who would have been here but is giving evidence to a Select Committee? Does the hon. Gentleman agree that whatever decision comes out of this, it must have the ownership of the people of Cumbria? Whatever way we divide up Cumbria—whether we have one, two or three unitaries—there has to be the fullest and broadest consultation with the people of Cumbria, so that they feel a definite ownership of the final decision.

[John Stevenson]

I will come specifically to that point later in my speech, but, as a general observation, yes I have sympathy with what the hon. Gentleman is saying.

The commission could report in due course and the Government and Parliament could consider its views. The advantage of that is that it would not distract the Government from their current business of policy implementation and it would avoid distracting Ministers from their priorities. I have digressed somewhat, but it is important to state that, although the debate is about Cumbria, I and many others believe it is important to address wider issues.

I have had the good fortune to live in Cumbria for 20 years and I was a councillor on Carlisle district council for 11 years before my election to this place in 2010. Over that time, I have become all too familiar with the structure of Cumbrian authorities, as well as with their politics. Back in 1974, when local government was last comprehensively reorganised, Cumbria county council was created along with six district councils within the county council boundaries.

Arguably, that was the most sensible approach at that time: it suited the nature of local government and the needs of the different parts of Cumbria in the 1970s. However, life has moved on. We live in a different world, and government at all levels has increased and become far more complex. It is also true that the role of councillors has changed dramatically. Since 1974, there have been attempts to modernise and improve the arrangements, structures and roles within local government. Yet, I question whether the role of local government has truly modernised and kept up with the times. That is especially true of Cumbria.

A report on governance in Cumbria that was published a few years ago said:

“Cumbria is a county which is over-governed and under-led”.

It was true then and it still applies today. In Cumbria, we have seven councils—eight if the Lake District national park, which has considerable authority, is included—and there are nearly 400 councillors, with seven chief executives and seven senior management teams. In the county, six authorities are responsible for collecting council tax, at a total cost of more than £4.2 million. There are six different departments for planning, environmental and property issues. All that administration serves a total population of around 500,000 people.

The structure of Cumbrian local government needs to be reformed for two reasons. First, any substantial restructure, if done properly, would lead to considerable savings for the county. When the possibility of a unitary in Cumbria was discussed a few years ago, the county council believed that it would make substantial savings running into millions. That point is even more important and relevant given the economic backdrop against which we are having this debate. Any savings, particularly from amalgamating senior management teams, unifying departments and reducing the number of councillors, could ensure that front-line services that are vital to the everyday lives of the people of Cumbria are safeguarded and, in some cases, even enhanced.

[John Stevenson]

I 100% agree with the hon. Gentleman and, funnily enough, that is what I am about to come on to. I take his point—he is absolutely right—and that is the second most important part of a reformed structure in Cumbria.

However, the second issue, better governance, is the most important in many respects. The reform of local government in Cumbria would in itself lead to better government, and the benefit for our county is potentially enormous. Currently, people often have no idea which council is responsible for the services that they need; they do not know the difference between the roles of the district and county councils; and the political parties on one council are often fighting the parties on another. Indeed, too often, we have the absurd situation of councillors of the same party but different councils battling each other. That can extend to the officer corps of the councils, with the officials of each feeling the need to defend their council’s position rather than pursuing policies that are in the interests of the local population. However, the ultimate absurdity is with individuals who are councillors on both councils. They might vote a particular way on policy in one council, but then go the other council and vote a different way in exactly the same policy debate—that takes place across the political divide, occurring among Conservative, Labour and Liberal councillors.

All that does nothing for the reputation of politicians in Cumbria, of councils or of political parties and, most importantly, it does nothing for the people of Cumbria. Over time in Cumbria, there has been a growing consensus in the political and business worlds, in local communities and among council employees and other organisations that a change is needed. Many organisations are utterly frustrated by the lack of decision making and consensus within the various councils. My right hon. Friend the Chancellor said that if are to pursue successful growth in the British economy, we need to remove the obstacles to growth. Worryingly, in Cumbria the business community sees the current structure of local government as an obstacle to growth. It is imperative, therefore, to remove the obstacle so that we can see a better performing economy in Cumbria.

One problem I acknowledge is that while everyone—I like to think—agrees that change is needed and that something must be done to streamline and improve the current arrangements, many say that a consensus on how reform should go ahead is impossible. The solution, in my view, is relatively simple: Cumbria should move towards a unitary system of government. My personal preference is for two unitary authorities in the county. The simplest way to achieve that is to ask central Government to request the Boundary Commission to come in, review the arrangements and produce a proposal. Such a proposal could go out to consultation before a final decision.

I take on board the comments of the hon. Member for Workington (Sir Tony Cunningham) that we must ensure a consensus in Cumbria. Whatever structure that the Boundary Commission came up with should have support in our different communities. I take that on board fully.

[Sir Tony Cunningham]

Does the hon. Gentleman accept, given that the Boundary Commission came up with whatever it came up with on the parliamentary seats proposals, that there ought to be a way to input into the process and to change the proposals, if necessary? The way in which the commission dealt with the parliamentary boundaries has been ludicrous.

[John Stevenson]

If the Boundary Commission were to agree new boundaries in Cumbria, I like to think that it would come to Cumbria, go around the place physically to see what it is all about, meet the communities, MPs and councillors, and then come up with proposals, rather than what happened with the parliamentary boundaries.

The advantage is that the politics would be taken out of the issue—at least, primarily, at the beginning—and the unnecessary squabbles that would inevitably arise if a decision had to be made by the various parties in Cumbria would be avoided. I therefore ask the Government to accept that there is a need for change in Cumbria, to acknowledge that the current arrangements are an obstacle to growth and to ask the Boundary Commission to come up with proposals for restructuring Cumbrian local government with a view to introducing unitary councils.

I am fully aware that there is general reluctance in Government to get involved in local government changes, and I understand the reasons for that. I fully support Government policy to give greater control to local authorities. I ask this: if there is sufficient support for reform in Cumbria, from local politicians of all colours, local organisations and the local population, will the Government consider exercising their powers under the Local Government and Public Involvement in Health Act 2007 to initiate a review into the local government of Cumbria? If the Government agree, it will simply be up to Cumbrians to request such a review, and I hope that MPs across the county would support it.

The legacy of a reformed structure in Cumbria would be huge. It would lead to better local government, better management, better services, and, I like to think, a more vibrant economy. Instead of being over-governed and under-led, we would be a county properly governed and effectively led. The businesses, communities and even councillors of Cumbria are asking for the removal of unnecessary layers of bureaucracy and the streamlining of a currently cumbersome system. I hope that the Government are willing to give them, and us, the tools we need to see proper government in Cumbria.

Classroom Teaching Assistants (Cumbria)

Debate between John Stevenson and Tony Cunningham

Wednesday 16th March 2011 Commons Chamber

[Tony Cunningham]

If the previous Government’s policy had been continued, those classroom assistants would not have fallen within the single status process. That is the reality. It is not too late to change that; there are opportunities to do so. My figures are only rough but, interestingly, in Cumbria teaching assistants get something like £8.60 an hour, whereas in Lancashire they get £11-something an hour. It is not as though Cumbria has to, or is forced to, do what it is doing.

[John Stevenson (Carlisle) (Con)]

Is not one solution to make teaching assistants a sub-group for the purposes of single status, so that their job qualifications and requirements are analysed on that basis?

[Tony Cunningham]

That is worth looking at, but inherent in what the hon. Gentleman says is the fact that he, like many other Cumbrian MPs, can find faults and flaws in the system; otherwise, he would not suggest changes to it.

I return to the point that I was making. The council’s claim is denied by the assistants. They are contracted for 32.5 hours and are paid for 32.5 hours. As for holidays, they are paid term-time only, albeit in 12 equal monthly payments. The special educational needs allowance given to teaching assistants working in those schools, doing work that I have just outlined, is being abolished. I echo Brian Lightman, the general secretary of the Association of School and College Leaders, who said:

“Working in a school is not the same as working in a county hall or local authority. These people need to have a proper set of pay and conditions that recognises what they actually do in schools.”

As my hon. Friend the Member for Copeland (Mr Reed) pointed out, I taught for about 11 years in west Cumbria, and I am the parent of children who have gone through the system, so I know the value of teaching assistants. The proposed pay cut is not just about money. It is about the standing in society that it gives to those who get little but give a lot. It is about people who are already on a low wage having that wage reduced even further, with no regard for what they do, what they contribute, or their input into our community.

Let us imagine what would happen if the Deputy Speaker suddenly announced that the wages of all of us in the House of Commons were being cut by a third, and the furore that that would create. Teaching assistants are not asking for thousands. They are not asking for bonuses. We read in the papers about the millions of pounds that bankers get in bonuses. Teaching assistants are asking to keep their wages the same as they are. That is not too much to ask. As a further insult, they do not even have the individual right of appeal. The fact that the volume of appeals is large should not be a reason to take away someone’s right to be heard.

I go back to what this says about our values. Surely these people should not be subject to a pay cut. Such an attack demoralises the very people we need to inspire our children. For my constituents, it is vital that their children—our children—are valued. That means that we value, and show that we value, the people who work with them. We do not just give them warm words; we give them a decent wage. We need to help our schools to continue to improve. To do that, we need highly motivated staff. We need to recognise the value of teaching assistants and what they give to our schools.

I plead with the Minister to do everything in his power to stop what is happening, to ask the county council to rethink its strategy, and to work with the unions and any other relevant bodies to find a satisfactory solution. My message to Cumbria county council is clear—please, stop and think again. The bottom line is this: if the process goes ahead, it will be bad for the classroom assistants, for teachers, for schools and for the children we care so much about.