Department for Business, Innovation and Skills (Performance)

Julian Smith Excerpts

Wednesday 2nd February 2011 Commons Chamber

[Mr John Denham (Southampton, Itchen) (Lab)]

I beg to move,

That this House notes that the Business Secretary in June 2010 called the Department for Business, Innovation and Skills (BIS) the department of growth; believes that the overriding priority is growth and jobs; expresses deep concern that after nine months BIS has failed to deliver this promise on growth, that the Growth White Paper is still not published, that the dismantling of regional development agencies is ‘chaotic’, that local enterprise partnerships lack powers and resources, and that regional development funding is slashed and grants for business investment abolished, causing oversubscription to the Regional Growth Fund; regrets the refusal of the Sheffield Forgemasters loan; notes with concern that responsibility for the digital economy has been transferred to another department without consultation with business or rationale, that there has been no progress in securing lending to small businesses, while bank taxes have been cut, and that BIS has failed to persuade departments not to change planning policies and public services which damage jobs and growth; further notes the sharp reductions in adult training, that there is no longer a 10-year science funding strategy, and that BIS is prioritising unfair and damaging reforms to universities instead of enabling them to support growth; notes the lack of strategy or leadership for key sectors vital to rebalancing the economy; shares the CBI Director General’s concern that the Government has no plan for growth and that BIS is a ‘talking shop’; and calls on the Government to take decisive action to remedy the deficiencies in that Department.

On 3 June last year, the Secretary of State for Business, Innovation and Skills said that he wanted his Department to be the Department for economic growth. At that time, growth was running at 1.2%. Britain was emerging from the deepest global recession for two generations. Nine months later, Britain’s economy was shrinking—so much for the Department for growth. The Government blame the snow, but in the USA the snow struck too—and there last quarter growth was 0.8%. We must have had the wrong sort of snow—or perhaps the wrong sort of Government.

People are seeing prices rise, they are worried about their jobs and they wonder where jobs, growth and prosperity are meant to come from. The Business Department has failed to give the leadership on growth and jobs that this country needs. It has made the wrong choices, harming growth and business instead of supporting them. At a time when other Departments needed to be persuaded to put business first, the Business Department has lost the argument.

[Julian Smith (Skipton and Ripon) (Con)]

I cannot believe that the shadow Secretary of State has started his speech without admitting the appalling inheritance that he gave this Government and without coming clean about the mess in which his party left this country and the debt and deficit that it left behind.

--- Later in debate ---

[Vince Cable]

No doubt the hon. Gentleman will tell us where that fits on the shopping list. On industrial support, I shall simply say that where the previous Government promoted good schemes, such as the manufacturing advisory service, we are building on them, because we are looking at them on their merits, not doctrinally. However, where schemes were failing and were not cost-efficient, we have reduced them and scrapped them.

[Julian Smith]

Small businesses across Britain were delighted to hear last week’s announcement by the Government on tribunals. May I encourage the Secretary of State and his excellent employment Minister, the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), to go further and faster on freeing things up, and freeing small business from Labour’s legacy of red tape?

[Vince Cable]

I am grateful for my hon. Friend’s encouragement, and the Government intend to do exactly what he suggests. Shortly, we will take a forward look at the pipeline of regulation, and how we plan to reduce regulation and make it proportionate.

--- Later in debate ---

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

In America the official unemployment rate is 9.5%; unofficially, it is 13%. Americans face the worst fiscal deficit since the slump of the 1930s, and, despite the huge fiscal stimulus package introduced by President Obama, the US economy is not producing enough jobs to reduce those rates of unemployment, let alone to create enough jobs for new entrants to the job market.

Unfortunately, our economy faces similar conditions, and, as I said in my speech during the Budget debate on 23 June last year, it is essential that as the public sector contracts, everything is done to encourage the private sector to grow as fast as possible in order to take up the necessary slack and to create desperately needed jobs, particularly among the young. At this time, small and medium-sized enterprises collectively account for 99.9% of all enterprises, 59.8% of private sector employment and 49% of private sector turnover. It is clear that our economic recovery will be fuelled by those firms, to which the Government should provide all possible help. The Government have taken a number of steps to help in doing so. They have reduced corporation tax, both large and small; increased the threshold at which employers begin paying national insurance contributions; they are consulting on reforming employment tribunals; and there is a welcome and significant increase in apprenticeships.

There are significant problems out there, however. The banks are lending to certain favoured sectors, and even in other sectors their arrangement fees have increased hugely over the past year or so, thereby increasing borrowing costs. The introduction of regulation on flexible working and paternity leave, although desirable in themselves, could have serious negative implications for small businesses, which can ill afford to lose a member of staff for a considerable time. It is vital that the Department for Business, Innovation and Skills wins those arguments with other Departments, and that business policy is ruthlessly put first.

[Julian Smith]

Does my hon. Friend agree that on family-friendly policies, which are vital for supporting the improvement of children in our country, small businesses with very few employees need to be given special attention? They are special cases, and we need to look after their needs as much as possible.

[Geoffrey Clifton-Brown]

My hon. Friend is prescient, because I was about to move on to that subject. The European Union has what it calls a “Small Business Act”, which requires the EU to look at every new regulation before it is introduced and consider its effect on small businesses to see whether very small firms might be exempted from it. We should do more of the same here.

The greatest challenges and opportunities lie in inward investment—foreign direct investment, FDI—and exports. As I identified when I was shadow Trade Minister, the previous Government’s policies on those matters were incoherent, particularly with regard to the enormously expensive regional development authority offices that were based throughout the world, often in the same city, and competing for the same inward investment to UK. Thankfully, we have put a stop to that, and I am delighted to hear that my right hon. Friend the Secretary of State is about to produce a White Paper on trade. That will be very welcome, indeed, and I am sure it will address several measures that I am going to discuss in my speech.

If the newly created local enterprise partnerships are not to have any role in FDI, presumably UK Trade & Investment will deliver the policy centrally from London, with small teams on the ground in the regions, something that I have advocated. Perhaps the Minister, when he makes his winding-up speech, will confirm that, because FDI is a vital part of the economy. We must not only seek new FDI from throughout the world, but carefully look after what we have. I was alarmed to see that Hua Wei, one of the world’s largest IT companies and based in Beijing, has just moved its European headquarters from Basingstoke to Düsseldorf. Eventually, that could affect 6,000 jobs, and the Pfizer decision today is another reminder of FDI’s importance.