Royal Bank of Scotland
Julian Smith Excerpts(12 years, 7 months ago)
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Julian Smith (Skipton and Ripon) (Con)
May I add to the tributes to Stephen Hester? He was very responsive to MPs’ letters and he was also very good at briefing Members of Parliament. May I also pay tribute to RBS staff, however, who across the country and worldwide have been working in very difficult circumstances, and may I urge the Minister to make sure that in this transition period towards privatisation a lot of focus is put on them?
Sajid Javid
I agree. We have talked about Stephen Hester and the role he has played in bringing the bank back from the brink, but that would not have been possible without the dedicated staff that RBS has had, and we must never forget the contribution they have made in repairing the bank.
Financial Services
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Greg Clark
I am not aware of those allegations but I will look into them. Any criminal activity in any part of the financial services industry ought to be prosecuted and pursued with the same degree of vigour as in any other walk of life. The hon. Gentleman overstates the case in his reflection of the City. Hundreds of thousands of people work in the City and do a decent job working hard for their clients and businesses up and down the country. They are as outraged as any of us in this House about the damage done to the City’s reputation. The future for us and for our interests is to see that reputation restored and root out the corrupt individuals—corrupt is the word in this case—who have done disproportionate damage to the reputation of a set of institutions that should be one of the prides of this country.
Julian Smith (Skipton and Ripon) (Con)
In the light of the report, I urge the Minister, and my hon. Friend the Member for Chichester (Mr Tyrie) and his commission, to look carefully at the Securities and Exchange Commission’s highly successful whistleblower incentive scheme, which gives whistleblowers a cut of fines, and at how we begin to replicate that model.
Greg Clark
The discount in fines given for co-operation is one reason for organisations to co-operate, but I will look at my hon. Friend’s point on individuals.
Autumn Statement
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Mr Osborne
I should like to take this opportunity to welcome the hon. Gentleman to the House of Commons and to congratulate him on his by-election victory. He rightly wants to speak on behalf of his constituents, but I would point out that the pressure on London school places has existed for some years and was a huge issue when we came to office. We have provided additional capital spending for new school places. We have also announced more than £1 billion today to deal with areas where there is high pressure. He makes a powerful case for Croydon, and I will make sure that my right hon. Friend the Education Secretary hears him.
Julian Smith (Skipton and Ripon) (Con)
More money for the regional growth fund and local enterprise partnerships is great news for Yorkshire. Can the Chancellor give further details of that?
Mr Osborne
There will be more money for the regional growth fund. That has been helpful in securing and creating up to half a million new jobs. I am glad to say that I am sure businesses across Yorkshire will benefit from that. We are also, of course, investing in enterprise zones and LEPs across Yorkshire, and Yorkshire businesses will benefit from the enhanced capital allowance and the increase in the annual investment allowance.
Business and the Economy
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Vince Cable
That is not correct. There has been a sustained improvement in private sector employment.
Julian Smith (Skipton and Ripon) (Con)
Will the Secretary of State list some of the international companies that have invested across Britain during the past six months?
Vince Cable
I would be here for much of the afternoon if I listed all of them, but I am sure that my hon. Friend will be familiar with some of the big and high-profile investments, including those in the car industry by companies such as Nissan, Jaguar Land Rover and others, which are important not just in themselves, but because they involve a long-term investment commitment to the UK and bring behind them a large supply chain of small companies.
Vince Cable
No, the Volcker rule as such is not in the legislation, but there is nothing stopping the hon. Gentleman bringing his proposals forward when the Bill is debated on the Floor of the House.
As several colleagues behind me have said, regulation is an issue, particularly excessive regulation for small companies, but inconsistent regulation damages businesses just as much, so the enterprise and regulatory reform Bill, as well as repealing some unnecessary requirements on business, will extend the primary authority scheme, enabling businesses that trade across local authority boundaries to deal with one authority on particular regulatory issues. If we consider that local authorities are responsible for 80% of inspection activity, covering areas such as trading standards, health and safety, and environmental health, the benefits of this approach are clear. As of last month, more than 450 businesses were members of the scheme, covering more than 50,000 premises in the UK, including many of our major high street retailers. Our reforms will make the primary authority scheme available to many more small and medium-sized enterprises and help improve the targeting of inspections, which can be so time consuming.
The Bill also contains provision for accelerating deregulation. Much is being done at present through the one-in, one-out system to prevent small companies, in particular, from being suffocated by red tape, and we are working with like-minded Governments in Europe, as I pointed out to the hon. Member for Stone (Mr Cash) a few moments ago, to roll back excessive regulation emanating from Brussels. The red tape challenge is repealing many of the 22,000 Government regulations that impose unnecessary costs on business, mostly by secondary legislation, but also, where necessary, through the Bill. The Bill will also embed sunset clauses.
Julian Smith
Will the Bill include the possible inclusion of European legislation in the quarterly statements that are now put in place for all Departments? Is that under consideration?
Vince Cable
I do not see why we should not do that, but I do not think that legislation is required to make that possible. We will certainly see whether it is feasible.
Small businesses also tell us that the fear of employment tribunals is a real disincentive to expanding and to taking on new staff. An employment tribunal is often a costly and stressful process for all concerned. I am fully persuaded that there has to be a balance between the legitimate expectations of workers that they will be protected from abusive employers and the legitimate expectation of businesses, especially small companies, that they can dismiss underperforming staff and not face costly and bureaucratic procedures. That balance is best pursued not through an adversarial system but by fostering conciliation in the workplace.
Our reforms will therefore promote the early resolution of disputes through the greater use of early conciliation and settlement agreements, so that fewer disputes end up in a tribunal. A tribunal is an admission of failure, so we want tribunals to be a last resort.
Vince Cable
That proposal is not in the enterprise and regulatory reform Bill. We are committing to extending flexibility at work in a way that avoids unnecessary costs for companies and delivers real economic benefits. Research from the CBI, for example, found that 63% of firms offering flexible working reported lower staff turnover, saving on recruitment and training costs.
Julian Smith
Will the Secretary of State confirm that there is a strong argument for excluding micro-businesses—those comprising fewer than 10 employees— from these proposals and allowing them just to get on and run their businesses on their own?
Vince Cable
I recognise that there are particular problems for small companies in adapting their work practices, but of course many of the most successful small companies have flexible practices. The idea of creating a two-tier labour market in this respect has many practical difficulties, but we can debate that as the Bill goes through Parliament.
Mr Umunna
If only the Foreign Secretary’s comments had been limited to those that I have just cited. There was more, however. Asked whether they amounted to a modern-day call to our people to get on their bikes, echoing the call from the noble Lord Tebbit back in the 1980s, the Foreign Secretary said:
“Well no, it’s more than that. It’s ‘get on a plane, go and sell things overseas’…It’s much more than getting on the bike. The bike didn’t go that far. ‘Get on the jet.’”
I know that senior members of this Government have a penchant for hanging out with people who own yachts and jets, but most business people in this country do not have those things or mix in such company. Chris Romer-Lee, the director and co-founder of an award-winning architecture practice here in London, said to me yesterday that his firm is working flat out and has been doing so through these bad economic times. He said that
“to suggest we could work harder is insulting.”
That is what a business person said to me yesterday.
Julian Smith
The legislation that we are discussing today deals with deregulation. Will the shadow Business Secretary tell us about his proposals to lift the burdens on British business?
Julian Smith (Skipton and Ripon) (Con)
It will come as no surprise that I, in turn, disagree with most of what the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) said. This Government have done a lot of excellent work for British business. We have an increasingly competitive tax rate—now at 24%, but lowering by one percentage point a year until the end of this Parliament—and a 20% rate for small businesses. There is a wide range of schemes for investment, business support and business lending. The Chancellor has set the country on the right course to attract global business, and we have seen many businesses investing in Britain over the last 12 months.
From the Prime Minister’s trade missions, to Lord Green’s remodelling of UKTI, there have been great strides on exports. When they reported back to Parliament last week, British ambassadors were sizzling with ideas for British exporters. There was a £50 billion increase in exports in 2011. Exports to India were up by 37%, with 28% more sold to Thailand and 44% more sold to Indonesia. I hope that, with a rethink on runways in the south-east, British business will soon be able to maximise those opportunities further. The Government are doing a great deal for our businesses, from credit to exports, and from support to mentoring. The only frustration is that it does not always get through to every business in the land. I hope that the Minister will allow BIS to utilise all HMRC’s regular mailings, which would be a good route to get its message across.
One of the biggest issues, which a number of Members have raised, is the burdens on business from regulation. Although unsexy, the work of the Minister of State, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), to reduce regulation has been significant. We can now see, Department by Department, who has done what, and, with the one-in, one-out policy, which regulations have been introduced and which removed. As my hon. Friend the Member for Newton Abbot (Anne Marie Morris) described, the red tape challenge will see hundreds of regulations removed.
There has also been some dull, heavy lifting at the European level. Ministers have reduced the cost and the burden of the pregnant workers directive by about £2 billion. In health and safety, the Young and Löfstedt reviews will see positive and radical action in the months ahead. As my hon. Friend also described, in the area of employment law there is a big focus reform on mediation. The two years to trial employees is a great improvement and will allow more employers to take a risk. However, companies continue to complain about the burden of employment legislation. The reason this is important—Opposition Members seem not to get this point—is not to do with some ideological issue on our side, but because we want companies to take people on and take the risk. Indeed, a MORI poll has shown that more than 50% of small businesses say that the thing putting them off taking on new staff is our employment legislation.
Unfortunately, some of the developments on this front are clogged up in coalition politics. One side believes that we should take the risk on employment rights, in return for getting more people into work; the other side believes that we should simply explain things better. We need to meet halfway and find a compromise, whether through the use of sunsetting or reviews, to achieve a change in our employment legislation. There is currently a call for evidence on simplifying the dismissal process and the introduction of compensated no-fault dismissal. Those measures should be introduced as soon as possible. They could be voluntary or incentivised, but they would give a clear route for employers to terminate employment situations.
It is not only a radical approach to regulation from the Government that is required. Quangos need to get their act together, too. I have spent the past two years trying to sort out issues relating to brown signs that have been removed from the A1 around Masham with no explanation from the Highways Agency. This has been detrimental to the hundreds of small businesses in the town, which has had no directional signs on the upgraded A1(M) for the past two years. The fact that it has taken tens of meetings with the community, its MP and councillors to fix the issue shows that our Government agencies are not responding to the needs of business. The Bill should contain a duty of engagement with business for every public quango.
On Europe, the Prime Minister, along with 11 other countries, wrote a very good letter last February to the EU Commission advocating a more radical approach to growth. When I went to Brussels about four weeks ago with the all-party parliamentary group on European reform, we raised questions about what the Commission was doing to remove regulatory burdens. One of the directors general openly admitted that the regulatory reform agenda had stalled, and another felt that our questions about removing rules meant that we did not want any rules at all. We need a British-driven agenda at the heart of Europe to look at which rules and regulations can actually be removed and how we can institutionalise deregulation at Commission level.
Greater radicalism in employment law; starting to include EU legislation in our regulatory statements; a hard-line approach to deregulation in Europe and a statutory duty on every public body to get—
Chris Evans (Islwyn) (Lab/Co-op)
If there were a parliamentary award for the most bizarre speech of the day, I am sure that the hon. Member for City of Chester (Stephen Mosley) would earn it. We have heard that the happy days are around the corner. We have double-dip recession, but it is okay, because it was all Labour’s fault, even though the economy was growing when Labour left power. Apparently, 1 million young people unemployed is good news. Wonderful! That is not the only thing we have heard; we have also been told that stripping people of their employment rights is the way forward. Is it not funny that when they have blamed everything else, they start blaming employment rights for our problems?
I say that the major aim of a Government of any colour should be to make this country the best place to start and grow a business. Yes, I agree that a cut in corporation tax is a good way forward. I believe that cutting red tape is a good idea, too, and I look forward to seeing more concrete proposals over this Parliament. When red tape is tackled, I hope that the Government will start to talk about tax reform. When I speak to anybody who is hoping to set up their own business, they tell me that the main barrier they face is the fear of the complex tax system that they will have to tackle. It seems strange, but the more complicated the tax system, the more there is only one winner. It is not the small business man; it is the accountant. It seems odd that small businesses have to spend time form filling when they could be chasing orders. We need to realise that, however good the Government believe they are, it is ultimately people who make businesses successful.
Talking of people, and young people in particular, we are now operating in a globalised economy. Young people in Wales will not be competing with young people from the north-east, the south-west, Scotland or Ireland; they will be competing with the Chinese, Indians and Brazilians. That is why our competitive edge is all about creating a highly skilled and highly motivated work force.
I have two friends—[Interruption.] Yes, I have only two friends; I would only have to borrow 20p and I could phone them both. The two friends in question work in the training industry. One works in further education; the other works for a training company. Both come from the old school, where it was said that an apprenticeship lasted four years. What they tell me worries me. My friend in FE says that some FE colleges are subcontracting training contracts to training companies, offering so-called apprenticeships that are supposed to last for three years, but saying that people can become a qualified electrician in a year. Courses that should take three years are being done in three months. All the while, people are driving around in their high-performance Mercedes and Aston Martins—no doubt bought out of the money that they should be investing in young people. This scandal is already going on, as we saw in a BBC “Panorama” programme. It should be seriously investigated, because this seems to me to be a misuse of the word “apprenticeship”.
The word “apprentice” conjures up images of the ’60s and ’70s and of young people between the age of 16 and 21 doing full-time apprenticeships and coming out as draftsmen, toolmakers or even, for the lucky few who aspired to it, with a footballing career. The problem is that people are being called apprentices nowadays when they are nothing of the sort. Why is it that of all the apprentices in this country, one in 10 is based in the supermarket Morrisons? Are they apprentices when they are working in retail? What skills are they getting? What trade are they developing?
Julian Smith
I am shocked that the hon. Gentleman does not feel that the sort of training people get in a supermarket like Morrisons would provide a very good basis for a whole range of jobs.
Chris Evans
What I would say is that that is not an apprenticeship in the traditional sense. I believe that the word “apprentice” is being misused. All that is happening is that apprenticeships are taking the place of the youth training schemes that failed in the 1980s.
This is the main point that I want to make. We must formalise the process that apprentices undergo. In the 1960s a UK training industry board formalised the apprentice system, producing training manuals and setting the standard for what apprenticeships should be. Now the definition is so muddled that we do not know what apprenticeships actually are, and that is why we must take serious action now. Recently I went to Pensord, in my constituency, where Pensord Press has launched a major apprenticeship scheme. I fear that good schemes like that will be mixed up in the scandal of our not knowing what “apprenticeships” means.
When I speak to people who take on apprentices, they tell me that they meet young people who do not have the necessary skills. They do not turn up on time, they play with their mobile phones during interviews, or they do not know how to speak to people; sometimes they swear in ordinary conversation. That worries me. I could talk for a long time about it. We need to hold a serious debate in this country about how business and education can work together.
I visited Cwmcarn high school when I worked for my predecessor, and it was launching what was described as a basic skills passport. All the children in the school would be assessed for literacy, numeracy, performance and public speaking, so that when they were interviewed by employers, they would be able to say “These are my skills: this is what I have achieved during my time at school.” It is a good scheme, and it should be rolled out throughout the country.
Last Friday I went for a chat with people at the University of Wales, Newport, who talked of universities’ becoming hothouses for businesses. I have always said that we have massive academic resources in research, and that we should open up the universities for that purpose. Those people talked to me about the concept of an entrepreneurial university, drawing a parallel with teaching hospitals where the practitioners are lecturers and students must undergo internships as part of their qualifications. That could be applied to skills in areas such as computing, engineering and business. I do not know whether anyone has watched the documentary about Ayrton Senna, but that was made by a student at the university, or the BBC programme “Rhod Gilbert’s Work Experience”, produced by a company called Zipline Creative— another company formed by some of its graduates. We need to have that debate about business and education.
I prepared a longer speech, but I have only 30 seconds left, so let me say just one more thing. We must be very careful when we talk about employment rights. I was a trade union official, and I do not think that we should clamp down on people who go to tribunals with trade union representatives. It is hard enough already for someone, even with a strong case, to undergo the grievance procedure. If we take the vital right to union representation away from people we will cause trouble, and we will do nothing for competitiveness in this country.
Stella Creasy (Walthamstow) (Lab/Co-op)
I was very challenged earlier when I heard the hon. Member for Blackpool North and Cleveleys (Paul Maynard)—I am sad that he is not here—demeaning the contributions of Labour Members by saying that we thought that this was a “state of the nation” debate rather than a debate on the Queen’s Speech. That struck me as a powerful example of the strong differences between Labour Members and Government Members when looking at our country. While Government Members believe that we are just bystanders to the crises that are unfolding across kitchen tables, in businesses and in our economies at local and national level, Labour Members believe in action. That is why we hear this Queen’s Speech and ask, “What is it doing to act on the central crisis that we now face in our economy?”
We are in a double-dip recession for the first time since 1975. Our economy, which was recovering, has slumped backwards—not by accident, but by design. What is more, there is no end in sight—no happiness to come for our constituents, who are struggling in these difficult economic times. The most optimistic pundits say that we might get growth of about 0.4 %, but the majority are gloomy, with some even saying that the economy will continue to contract. In 2010, this Government inherited an economy that was growing, thanks to an active Government who were seeking consciously and purposefully to intervene to make sure that this country pulled through the economic times we were living in—a Government who invested in our infrastructure and, yes, used temporary tax cuts and looked at how they could grow the economy. What a contrast!
That is the context in which we judge this Queen’s Speech, because two years on, things are getting worse, not better, for our constituents and for our country. A range of factors have been blamed for that situation, whether it be snow or the royal wedding; this afternoon I even heard that television was the problem. It is as though the Government cannot see what is staring them in the face—the fact that the impact of the decisions that they have made and the way in which they are dealing with the deficit has exacerbated the situation.
Whether it is about the future jobs fund, which they have had to reinstate because it is bad value for money to have nearly 1 million young people out of work, or the fact that only 30% of the cuts have taken place so far, which means that the problems are going to continue, they simply do not get “it”. “It” is a very simple issue—the crippling lack of confidence that consumers and businesses are now experiencing. I have spoken at length in this House about consumer confidence and my concerns about how consumers are behaving in the present economic situation. That is why tonight I want to talk about businesses, which cite the lack of consumer demand as the biggest barrier to growth.
Many hon. Members have talked tonight about the problems in our economy as a result of firms sitting on £750 billion worth of cash and deposits. They are not investing because they have no confidence in this Government and how they are managing the economy. All the prophecies about austerity have become real, because everybody is shutting up shop, such is the uncertainty. Businesses themselves say, “We will continue to be on the critical list until companies get their chequebooks out.” That is the problem that Britain faces and this Queen’s Speech should be addressing it.
As all hon. Members have mentioned, John Cridland, the director of the CBI, said that he wanted a Queen’s Speech to help businesses grow and create the jobs that we all want. Even the Secretary of State himself admitted that we needed a compelling vision, for our economy and for the future, that we could all fight for, but there has to be more to drive economic growth in this country than hope that the Olympics or the jubilee might do it. It is striking that the contrast between a bystander Government and an active Government is shown in the concept of growth. The previous Government had Ministers dedicated to a plan for growth, but it has taken this Government two years to get round to a growth plan, and what do we see? It is small beer and not the kind of thing that will challenge the £750 billion sitting there waiting, not being used. That is why businesses have been so disappointed.
Let me mention just one example. The hon. Member for South Down (Ms Ritchie) spoke passionately about our green economy—a massive growth industry that in 2009-10 was worth £116 billion. We were sixth in the global economy in this regard, but where are we now? What has happened to our green economy? What does the green investment bank really offer? It offers little to change the situation, let alone solve the problems caused by cutting off the solar panels tariff.
Yes, there are good things in the Queen’s Speech, including measures on parental leave and shareholders’ rights, but they are not the drivers of growth that we need. We need something stronger. Many hon. Members from all parties have made many serious points about things that we could do to drive growth, so let me offer some ideas that have not yet been talked about.
First, this Government need to learn from America and Germany and create a state investment bank that could lead to businesses having the cash they so desperately need. This would not be one of my speeches if I did not talk about credit and the problems caused by a lack of credit or by expensive credit. Those problems are now affecting businesses, too. There is no more damning indictment of this Government’s failure to manage our economy and support businesses than the fact that the legal loan sharks have stepped into the breach. Ministers should be ashamed that Wonga sees a business opportunity in the failure of Project Merlin. This Government could have used the Queen’s Speech to correct that. They could have intervened and set up a state investment bank—22% of small businesses say that access to finance is also causing them problems—but they did not do so.
Julian Smith
Does the hon. Lady welcome the Government’s national loan guarantee scheme, which will reduce the cost of loans to those small businesses that apply through it?
Stella Creasy
The hon. Gentleman does not understand the scale or the severity of the problems that businesses are facing in getting hold of credit, whether that is because the loan system is not working or because there has been a contraction in the amount of money in our economy in the past year. In part, that is because people are paying off loans and the banks are not lending to people—indeed, one of the banks in whose operations we have the most say, Royal Bank of Scotland, has failed substantially to do so. Whether for consumers or businesses, credit at an affordable rate just is not there to allow them to grow and give them the confidence to invest in the plant and materials that they need to help get our economy going again.
In addition, I want the Government to take seriously the role that small businesses could play in our economic revival. All hon. Members have mentioned that this evening. We know that two thirds of new jobs in economies such as ours come from small businesses—those employing fewer than 50 people. We needed a Queen’s Speech for small businesses, announcing an arsenal of measures to help them and a tough look at what could be done in the tax and regulatory regimes to help start-ups and small and medium-sized enterprises—perhaps even a start-up business Bill. Where was that? Where was the recognition of the different needs of small businesses, as opposed to big businesses?
We could even have gone further and used sunset clauses to give tax breaks in this financial year alone to help unlock that £750 billion—money we need to be out there, being invested in our companies and our communities. However, it is not going to be out there, because this Queen’s Speech will not deliver the kick-start that our economy so desperately needs, as shown in the picture painted by my hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Edinburgh East (Sheila Gilmore) of the human cost of doing nothing and of being bystanders as our economy continues to deteriorate. There are consequences for our communities and our country.
This Queen’s Speech could have been a brilliant masterclass in thinking creatively and strategically about the role of Government in investing in our communities and in getting our economy to grow, but it was not. I believe the country will view the economy and the Queen’s Speech as people do when they see a toddler holding a hammer—with a deep sense of foreboding about the damage that it will do to anyone within its radius and no sense of how to stop it. I really hope that the Government will think again about both how they deal with people’s need to access credit in our communities and how they need to support small businesses. I fear that the Queen’s Speech does not meet the test that the country so desperately needs it to meet.
Rachel Reeves
I am happy to take an intervention if my hon. Friend wants.
The Chief Secretary to the Treasury and the Government have serious questions to answer after this debate, because there remains concern about the stewardship of the economy. As my hon. Friends said, particularly my hon. Friends the Members for Bethnal Green and Bow (Rushanara Ali) and for Huddersfield (Mr Sheerman), my right hon. Friend the Member for Birkenhead (Mr Field) and my hon. Friend the Member for City of Durham (Roberta Blackman-Woods), there is a lack of vision, leadership and imagination in the Queen’s Speech on the economy and business. The hon. Member for Cleethorpes (Martin Vickers), too, said that the Government needed a new narrative.
The facts are undisputed. Our economy is in recession—the first double-dip in four decades—with unemployment rates too high and business investment too low, although to listen to some speeches from Government Members we would think that the economy was booming, with businesses spoilt for choice over whether to invest. In contrast, we have heard excellent speeches from Members on both sides of the House about the concerns raised by our constituents. We heard particularly powerful contributions from my hon. Friends the Members for Llanelli (Nia Griffith), for Houghton and Sunderland South (Bridget Phillipson), for Newcastle upon Tyne North (Catherine McKinnell) and for Edinburgh East (Sheila Gilmore)—on the human stories behind the raw statistics, sound and successful businesses shutting up shop because no one is buying, families facing rising bills, rents and mortgage payments while wages are not keeping pace, school leavers and university graduates losing hope as months on the dole turn into years.
However, the Government’s legislative programme seems utterly disconnected from those realities. There was no mention of the new jobs that we need, and nothing to turn round the crisis of more than 1 million young people being out of work. The modest measures that the Government have claimed will help struggling families and businesses are turning out, under examination, to be woefully inadequate to the task with which we are confronted. Perhaps it is because, as the Foreign Secretary said yesterday, the Government think that it is just not their responsibility and that the reasons for the recession are to be found not in their own failure, but in the fact that the rest of the country is just not working hard enough. That is a view backed up by the Business Secretary, who referred to the Foreign Secretary’s remarks as “commercial diplomacy”, and by the hon. Member for Salisbury (John Glen), who criticised businesses for their ill-advised criticism of Government policy. I am not surprised that the Foreign Secretary’s comments have been met with incredulity by small business owners, who are working every hour of the day to keep their books in balance.
Julian Smith
Does the shadow Minister welcome the £50 billion increase in exports in 2011 from the UK to international destinations?
Rachel Reeves
I am sure that businesses welcome the fact that sterling has depreciated, which has made it easier to export, but that is because of the Bank of England’s decision to cut interest rates, under the last Government, and quantitative easing, also under the last Government.
We have seen another example of how out of touch Government Members seem to be with the reality facing businesses, families and young people. School leavers and graduates are filling out dozens of job applications week after week—should they be working harder? Millions of people who would work extra hours if the work was available; families feeling more squeezed by the month, worried sick about how to make ends meet—is it their fault that we are back in recession? Should they be working harder?
Let us remind ourselves—for the Government seem to be in denial—that the backdrop to this debate is the first double-dip recession that the UK has experienced in 37 years, an outcome that the Government assured us would not happen. However, less than two years after boasting that the British economy was
“out of the danger zone”—[Official Report, 15 December 2010; Vol. 520, c. 901]
and was now a “safe haven” from the storms raging through the global economy, the Government have succeeded in steering us into a recession of their own making. They have tried to blame the instability of the eurozone, but I point them to the European Commission’s spring forecast, which says of the UK economy:
“The main cause of weakness in 2011 was household consumption, which contracted for four consecutive quarters…Investment, which had been expected to contribute positively to growth, actually fell by 0.6% in the final quarter of 2011 and by 1.2% over the year.”
Indeed, contrary to Government claims that storm winds from the continent blew their plan off course, the European Commission confirms that for the UK:
“Net exports were the main source of growth in 2011, contributing 1% to GDP growth.”
We should therefore be in no doubt and under no illusion: this is a recession made in Downing street.
With the eurozone now teetering on the brink of another downward spiral, the real worry is that we have yet to feel the full effect on the UK of the economic turbulence on the continent. The Business Secretary is right to warn that the worst may be yet to come, which makes it all the more serious a failure to have put the UK economy in such a weak position to withstand further deteriorations in financial market confidence and export demand. As my right hon. Friend the shadow Chancellor warned over a year ago, when a hurricane is brewing, we do not rip out the foundations of the house, but that is exactly what the Government have done, and the hurricane is now gathering force.
Let us look at what this recession means for jobs and business in our country. The latest jobs figures show that unemployment remains at a 17-year high. Youth unemployment is at more than 1 million—an issue raised in today’s debate by my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe) and for Birmingham, Erdington (Jack Dromey) and by my right hon. Friend the Member for Knowsley (Mr Howarth). The number of 18 to 24-year-olds claiming dole for more than six months has gone up by 115% over the past year. The number of those claiming for more than 12 months is up by 213%. In the Prime Minister’s latest desperate dissimulation, the austerity he is inflicting on the country is now called simple efficiency. However, I do not see anything efficient about presiding over rising youth unemployment, as my hon. Friend the Member for Walthamstow (Stella Creasy) also pointed out.
There is surely no greater waste than the waste of youth unemployment. It is a waste of talent and of life chances that will cost our economy and our Exchequer for decades to come, as the commission headed by my right hon. Friend the Member for South Shields (David Miliband) set out so lucidly in its report. There is no more egregious an example of Government mis-spending than the billions that they are spending on benefits—the cost of their own economic failure. They are now borrowing £150 billion more to cover rising benefit bills and the loss of tax revenues as businesses go out of business.
Finance (No. 4) Bill
Julian Smith Excerpts(13 years, 9 months ago)
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Danny Alexander
I shall return to the subject of tax avoidance and I want to make some progress, as I know many hon. Members wish to contribute to the debate. We are taking decisive action to clamp down on avoidance. It is utterly abhorrent that a minority of the population seek to avoid paying their full and fair share of tax, distorting the tax system to the detriment of the vast majority who pay their fair share of taxes in full. Whereas the previous Government allowed avoidance to grow and spread, we are putting a stop to it.
In total, this Finance Bill contains 15 measures to close loopholes and tackle avoidance. For example, clause 212 introduces a new stamp duty rate of 15% to deter those seeking to put their high-value property into a corporate structure to avoid tax—so-called enveloping. In a future Finance Bill, we will put in place an annual charge on properties that are enveloped in this way. Residential properties should be within the stamp duty system, full stop. It is shocking that the previous Government did so little on this matter. We are not being so complacent about the tax position of the most expensive properties in the country.
Julian Smith
The Yorkshire Post has recently established that the police chief constables’ body ACPO—the Association of Chief Police Officers—has been paying money to ex-chiefs of police forces through special purpose companies. Will the Chief Secretary confirm that the rules on this process will be tightened up under Government proposals?
Danny Alexander
I certainly can confirm that, and I shall bring some proposals before the House in due course. The hon. Gentleman may recall that it was the case of the chief executive of the Student Loans Company that brought this issue to light. We have conducted an investigation into this practice in and across government, which has highlighted the fact that this process is far too widespread. As I say, I shall announce the details in due course, but the hon. Gentleman can rest assured that the Government take this issue very seriously indeed.
Debt buy-back measures announced last month will raise more than £500 million from banks that tried to avoid paying their due tax. In addition, the introduction of the UK-Switzerland agreement into legislation will help to ensure that we can tackle the tax loss from those who put their money into Swiss banks to evade paying tax.
Through the anti-avoidance measures in this year’s Finance Bill, we are already increasing revenue over the next five years by around £l billion and are protecting a further £10 billion that could have been lost. Going even further, we will consult on the potential for a general anti-avoidance rule—a new rule that will at last put the Government one step ahead of the tax avoiders. It is because of these far-reaching reforms that we will raise £500 million more each and every year from the wealthiest in our society. That is five times more than we lose by cutting the ineffective and uncompetitive 50p tax rate.
The 50p rate raised just a fraction of the amount that the previous Government said it would raise, but by cutting the rate to 45p, the direct cost to the Exchequer is only £100 million—a figure certified by the independent Office for Budget Responsibility, which I thought the Labour party welcomed, which described the figure as “central and reasonable”. Instead, the measures we have announced in the Budget will raise considerably more from the wealthy—five times more in total—allowing us to help millions of people on lower incomes to keep more of their earnings through the largest ever increase in the income tax personal allowance.
Rachel Reeves
The analysis of the measures in the Budget shows that the changes to the personal threshold are not a progressive policy, as hon. Members seem to be claiming. In fact, they benefit those dual income households on higher salaries much more than they benefit the poorest people in society, many of whom do not pay tax. Of course, the changes do not benefit pensioners at all as they are seeing their tax allowance frozen. As a result, many pensioners will lose out by up to £83 whereas people who are coming up to retirement will lose out to the tune of more than £300 a year.
The Chancellor of the Exchequer’s new economic model—this idea that we will have a rebalanced economy with lower borrowing, more saving and more investment—has failed to materialise. Indeed, the precise opposite is predicted. Their plan has failed: the policies are hurting, but they are not working. This Finance Bill, which was a chance for the Chancellor and the Chief Secretary to learn the lessons and to start to repair some of the damage that they have done, has been a huge missed opportunity.
Julian Smith
Does the hon. Lady agree that at the moment business confidence is key? I was surprised that at the start of her speech she did not welcome GlaxoSmithKline, Nissan, Sahaviriya, Jaguar and the other international investors that have made a commitment to Britain because of this Government’s policies. Is she not pleased that those companies are bringing jobs and investment to Britain?
Rachel Reeves
The hon. Gentleman said that investment is coming to Britain, but business investment fell by 2% last year, whereas a year ago the OBR predicted that it would grow by 8%. The reality is that the economic data show that investment is falling and the OBR says that nothing in the Budget will materially affect the economic forecast. The proof of the pudding is in the eating and the numbers show that things are moving in the wrong direction. I find it incredibly out of touch for Government Members to try to speak about the economy as if it is booming and creating jobs and as if businesses are investing when all the economic data show just the opposite. Jobs are being shed and investment is falling, rather than rising.
Mark Field (Cities of London and Westminster) (Con)
I want to make a brief contribution to this important debate. The phrase that comes to mind is “something will turn up”. It is one of the classic stratagems of last resort in politics and perhaps life in general. I suspect that the Treasury’s handling of the UK’s economy owes rather more than it might be willing to admit to the Mr Micawber principle. After all, time often alleviates and sometimes even eliminates what seem like intractably difficult problems. In stark contrast to the first Thatcher Government, who front-loaded much of the economic pain, the modern-day Treasury, while espousing a tough austerity message, has adopted a more pragmatic, steady-as-she-goes path.
Despite the protestations of the hon. Member for Leeds West (Rachel Reeves), we must get one thing straight: there is zero veracity in Labour’s contention that the Government are cutting too far, too fast. In the past 12 months, the UK Government’s current spending has totalled some £613.5 billion—the highest figure in history. The Government are still borrowing, even this year, £1 in every £5 that they spend. However, more than half the deficit reduction was predicated on annual compound growth through the Parliament of 2.7% to 2.9%, and it is clear that, for the first half of the Parliament, we shall struggle to achieve growth of even one third of that figure.
Rather than respond to that deteriorating situation by imposing more savings, we have taken the path of ever more debt, courtesy of the Bank of England’s quantitative easing programme. In my view, the real purpose and impact of the UK’s central bank intervention has not been to ease the path of investment borrowing for small business, which is perhaps what it should be. Instead, it has mopped up the substantial proportion of gilts that are being issued. That is where the Mr Micawber principle particularly comes into play. The Bank of England’s actions will not be sustainable in the longer term without a very real risk of inflation. I suspect that global conditions in the years ahead may make it much more difficult to finance our current levels of deficit. That is one reason why we need to get the deficit down as quickly as we can.
Before the Budget, I firmly believed that our focus should rest on some radical supply-side reform to ensure that we get the growth that we need. That would apply partly to the tax system, but also to employment legislation, with forensic attention paid to the impact of high marginal rates of income tax and the disincentives that have crept into the system as a result of both the poverty trap for the low paid and the removal of reliefs for higher rate payers.
I was pleased that a small part of my desire was realised: some progress has obviously been made on taking people out of tax entirely through the increase in the threshold for the basic rate of income tax and the reduction in the top rate tax from 50% to 45%, which is particularly important for entrepreneurs.
I was also personally delighted that, after three years of campaigning alongside the local animation industry in my constituency, the Chancellor announced the Government’s intention to introduce a tax credit for televised animation and video games. I congratulate him and my right hon. Friend the Secretary of State for Culture, Olympics, Media and Sport on securing a bright future in the UK for Peppa Pig, Olive the Ostrich and their animated brethren. Finally, we have the level playing field that our creative industries deserve, and the tax credit will help raise the quality of children’s television and retain valuable intellectual property in this country. That is the key reason why I agreed to lead the parliamentary charge on the matter. It is also fantastic news for the vibrant sector in my central London constituency and beyond.
However, rather less progress has been made on arguably the more urgent and important supply-side reform: legislation on employment rights. Once more, the glad, confident morning of June 2010’s Budget has given way to starker reality. It is worth recalling that, at that point, the increasingly discredited Office for Budget Responsibility predicted that unemployment would peak in 2010-11. We now know that it is likely to rise further in the next two years and remain stubbornly high for the foreseeable future. Yet the UK continues to gold-plate continental employment legislation and grant ever more generous paternity and maternity rights. Little wonder that employers are so reluctant to take on more staff.
I disagree with the analysis of the hon. Member for Leeds West about the position in the US. It is instructive to witness how the US has shown signs of turning the economic corner. In simple terms, it is easier to hire, but also to fire staff there. That allows flexibility and supports a rapid readjustment economically.
Julian Smith
Does my hon. Friend agree that that does not just apply to the US? Recently, Italy and Germany have exempted their small and medium-sized firms from many of the burdens of employment law.
Mark Field
My hon. Friend is absolutely right, particularly in respect of the German model for the micro-sized businesses that are in the growth phase. There is no doubt in my mind that our recovery phase will commence only when we are able to have that sort of readjustment.
Mark Field
My point was along these lines. One difficulty occurs if all our trading nations are going through austerity; austerity can be done only by one country in such a group. We need to focus attention on growth. Indeed, the last words of a speech I made in the House almost two years ago, after the June 2010 Budget, were that we have talked about and made the right case for austerity, but we needed attention on growth—I fear that there has been too little.
I agree with the hon. Member for Leeds West in her analysis and on trying to assist small and medium-sized enterprises by allowing them to take on extra employees over the next two tax years without paying further national insurance. Better still, we could extend a national insurance holiday to all employees under the age of 25. That opportunity was missed both in the Budget and in the Bill.
I wish to touch on three specific concerns that I strongly hope will be dealt with in Committee in the weeks ahead. I confess that I am a little uneasy at the prospect of the general anti-avoidance provisions and powers that are heralded in the Bill and to which the Chief Secretary referred. Senior coalition Ministers interchange the terms “avoidance” and “evasion” in a rather casual way, which should be of concern to more than merely the tax advisory community. Individuals and businesses in a free society are, and should be, entitled to organise their affairs in such a way as to minimise their tax liability. I have no problem with that.
Although I sympathise with the Treasury, which is forced virtually continuously to update its rules and regulations, any general powers on avoidance should keep retrospection to an absolute minimum, and should be used only in extreme cases of what is regarded as so-called aggressive anti-avoidance. Moreover, it is surely incumbent on the Treasury, if it moves in that direction, to ensure a comprehensive pre-clearance regime to allow companies and their advisers to road-test their proposed taxation schemes with senior HMRC officials.
I appreciate that banks have few friends—I represent the City of London and am perhaps one of the few left—but the treatment meted out by the Treasury to Barclays bank in February set a very unfortunate precedent, not least because in recent weeks the Treasury has sought to lecture the Indian Government on the undesirability of retrospective tax. Barclays bank had sought and obtained clearance for its £500 million tax minimisation scheme. It was overturned in a blaze of publicity. If we are to raise the substantial levels of taxation that UK Governments of all stripes need, given the electorate’s addiction to public spending, we should be wary of anti-business rhetoric, which will give further encouragement to globally mobile institutions wishing to leave these shores. Being open for business depends on certainty in commercial practice, not simply verbal assurances.
Julian Smith
Will my hon. Friend update the House on what contribution the financial sector makes to the tax take of UK plc?
Mark Field
I am not sure I can, to be honest, but suffice it to say it is a significant amount. I can appreciate, though, that in these difficult times it is hard to make the case for the huge bonuses in the banking sector, other than to say that it is a globally competitive industry. Financial services will be a big industry going forward. Growth in Asia is adding 20 million or 25 million people a year to the ranks of the global middle class in India, China and South Korea. These will be the customers and consumers, not least because of the cultural reasons for saving, of the financial services industry in the future. That is one reason, in the midst of trying to rebalance our economy, as the Chief Secretary mentioned, we should not lose sight of our global competitive advantage. In the financial services industry, in particular, our global advantage is looked upon jealously in France, Germany and other European countries. They often feel that some of the anti-banking rhetoric coming through will be entirely self-defeating.
Banking (Responsibility and Reform)
Julian Smith Excerpts(13 years, 11 months ago)
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Julian Smith (Skipton and Ripon) (Con)
Will the shadow Minister confirm that at that time he was an employment lawyer and was involved in structuring the compensation packages of investment houses? Does he have any regrets about how he behaved at the time?
Mr Umunna
I am glad that the hon. Gentleman brought up that point, because I anticipated it. First, I think it is good that Members of this House have experience in working for business. Secondly, my experience of advising different companies and financial institutions on such arrangements has convinced me that we must reform the way in which the system works—[Interruption.] I would also say to Ministers, who are crowing, that they might wish to reflect on the fact that my ultimate boss at the time when I was more deeply involved in drafting such arrangements was the senior partner of Herbert Smith, whom the Prime Minister ennobled in the first tranche of peers at the beginning of this Parliament—no doubt because of his services to the legal profession and the City of London.
As the Leader of the Opposition said last week, we are still dealing with the aftermath of the moment to which I have referred and the recession it caused. Many thousands of people lost their jobs and now face the biggest squeeze on their living standards in a generation. Thousands of robust, profitable businesses have struggled to access finance or have gone under. At this juncture, I want to tackle head on the accusation that to raise those issues and criticise the financial services sector is to be anti-business—some have even referred to it as indiscriminate business bashing. That is an utterly absurd notion given that among the most vociferous critics of our banks are the small and medium-sized businesses that make up the overwhelming majority of businesses in this country. The people making those outlandish claims of anti-business sentiment talk as though large financial institutions are the only businesses in this country. Yes, those institutions are an important part of our business community, but there is so much more to British business than big finance. Indeed, we need to rebalance our economy not to diminish our competitive edge in financial services but to grow other sectors so that we are not so reliant on that one sector.
Businesses in other sectors are struggling right now. The most recent Bank of England trends in lending show that net lending to businesses has fallen in nine out of the past 12 months and lending has fallen by more than £10 billion in the past year. A report published by the Department for Business, Innovation and Skills last week states that the stock of lending to small and medium-sized businesses declined by 6.1% in November 2011 compared with a year earlier.
It is not just that the banks are failing to get the money out of the door to successful, profitable businesses with robust business models. There has been a move away from relationship banking, where banks saw it as their duty to get to know and understand their business customers properly. Yesterday, I met a number of successful export businesses in the home counties—businesses that help us pay our way in the world. I was told by the overwhelming majority that when it came to getting help from their banks to export and expand, their banks simply did not want to know.
Some have suggested that that is all the result of increased capital requirements on the banks, but Robert Jenkins, a member of the Bank of England’s interim Financial Policy Committee, told the Treasury Committee last month:
“Making the banks safer through greater resilience in their balance sheets and more capital does not, in and of itself, prevent additional lending.”
Despite all that, people and businesses have had to watch as billions in bonuses have been paid to bankers since 2008-09. It is worth stating that we are not talking about the sums earned by the average bank employee—the cashier, say, in a local branch—but about the enormous sums paid to investment bankers and a select few senior executives in the sector. Those bonuses have continued to be paid as a matter of course, regardless of the fact that many of the institutions, all of which directly or indirectly benefited from the interventions of the Government over the past five years and continue to benefit from an implicit subsidy, have been making thousands redundant, have seen their share prices and profits falling and have been found guilty of mis-selling payment protection insurance on a grand scale. To add insult to injury, Robert Jenkins, commenting on bank balance sheets, told the Treasury Committee:
“Every £1 billion of less bonus would support £20 billion of additional small business lending.”
It is no wonder that Sir Philip Hampton, the chair of RBS, himself said last week:
“Pay has been high for too long, particularly in the banks, particularly in the investment banks".
Mr Umunna
On guaranteed bonuses, there is an element of contract in that, in terms of the arrangements between individual banks—[Interruption.] Will the hon. Gentleman listen and let me finish the point? There is an element of contract that provides for a bonus, but also an element of discretion. The fact that large bonuses were being paid out regardless of performance is, of course, what people outside Parliament object to.
Julian Smith
In order to create a balanced view, will the shadow business Minister confirm the tens of billions of pounds paid from those bonuses in income taxes and other taxes, such as employment taxes, during the period he is discussing?
Mr Umunna
Ultimately, the taxpayer had to put about £1.2 trillion into the system to support it. Juxtaposing that with the amount paid in tax by the sector, I am not sure that it comes to the same sum. I get the point that the hon. Gentleman is making. I do not deny that the financial services sector has contributed in tax receipts, but that is not outweighed by what we have had to pay out to save it from itself.
The status quo will not do. Change is essential. In November last year, Bob Diamond, chief executive of Barclays, said in his BBC “Today” business lecture that
“the single most important thing for banks and for businesses now is to focus on helping to create jobs and economic growth; and being able to do that requires us—banks in particular—to rebuild the trust that has been decimated by events of the past three years; and that rebuilding trust requires banks to be better citizens.”
I agree with Mr Diamond, but actions matter far more than words to people and businesses.
At the Business Secretary’s instigation, the Government established the Independent Commission on Banking, for which he deserves credit. If its recommendations are implemented, they will help to deliver a banking system that supports our economy’s interests in the long term. However, a number of things must happen to address the issues in the short term, not least of which is the matter of remuneration, which can be corrosive of public trust in our banks.
First, greater transparency on pay in the banking sector is needed. A good place to start would be immediate implementation of the Walker review. In 2009, Sir David Walker recommended new rules on the disclosure of bankers’ remuneration within pay bands above £1 million. In government, we legislated for that fairly modest scheme to be put in place so that irresponsible remuneration practices could be identified and rooted out. So modest were the proposals that the now Business Secretary told the House at the time that Sir David had produced
“an embarrassing mouse of a report”.—[Official Report, 30 November 2009; Vol. 501, c. 900.]
In the June 2010 Budget, the Business Secretary and his coalition partners pledged to take forward these modest proposals, but in November 2010 the Chancellor suddenly declared that he would not countenance implementation unless he could secure international agreement for the measures. In giving evidence to the Treasury Select Committee in December 2010, however, RBS’s Stephen Hester indicated that unilateral adoption of the Walker review proposals would not put the UK financial services sector at a significant disadvantage. Given the modesty of the Walker review proposals, why on earth will the Government not implement them?
Secondly, to increase accountability, we have said that an ordinary worker should be placed on the company remuneration committees setting pay. I do not understand why the Government have been so resistant to this idea. The Business Secretary has said that he is very sympathetic to the idea but has raised practical objections on the basis that there are many FTSE companies whose employees are predominantly overseas. These practical obstacles can be overcome, however, not least through technologies such as telephone and video conferencing, which in this day and age are a common feature of board meetings.
The Economy
Julian Smith Excerpts(14 years, 2 months ago)
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Julian Smith (Skipton and Ripon) (Con)
I want to speak about small business—in particular micro-businesses, which are usually defined as those with fewer than 10 employees—and to thank the Government for their support for such businesses.
Since coming to power, the coalition has taken some significant steps on regulation. It has introduced the one-in, one-out policy—which Labour claimed to have introduced, but never implemented—and the red tape challenge, allowing the public and businesses to say which regulations they want scrapped. The Government have taken a number of specific steps for small and micro-businesses, and have begun to draw a clear distinction between the large multinational, the mid-size company, with a human resources department and a legal department, and the small owner-manager. The Government have created exemptions from all new UK regulations until 2013, delayed legislation on the right to request training for small businesses, extended the unfair dismissal period and introduced fees for employment tribunals. All are powerful measures, giving more confidence to small business to take on staff. The autumn statement also included an announcement on protected conversations, which, for the first time in decades, will allow a small business manager to have a chat with one of his employees without the fear of litigation. Further measures, on compromise agreements and other matters, are on their way.
I am delighted that business organisations have shown their support. I urge the Government to move swiftly with those proposals, because it is worth reflecting on who they are trying to help with those measures. Often we get a kick from the left whenever an attempt is made to reduce workers’ rights, but when we talk about very small businesses or micro-businesses, we are talking about just an owner-manager—a farmer in the dales in my constituency, for instance—setting up a business and trying to take on one or two people to help run it. We are talking about people such as Chris and Rebecca Blunstone from Pateley Bridge, who set up Helping Hands earlier this year while at the same time doing two jobs each. They also have two kids, so they were working flat out. It is people such as the Blunstones whom the Government are trying to support, because small firms and start-ups created two thirds of new jobs nationally between 1998 and 2010. They are the backbone of employment across the country, in all our constituencies, and we desperately need them to succeed and take on more people.
I understand that parts of the Government want to go further with reforms for micro-businesses, particularly in employment law. I believe that those forces are right. We need to make a strong case for rolling back the dead hand of the state on the smallest businesses in our country and make the argument that, despite the risk of having exceptions in the labour market, there are huge benefits for the economy. We cannot look at each measure through the prism of an individual impact assessment; rather, it is the cumulative impact of all the reforms that we need to move forward with. That will mean making some radical decisions on policies that our party is promoting in the areas of flexible working and the right to request training, because for very small businesses such rights legislation is a real burden and a hassle. Ultimately, the owner-manager will make the right decision—to train their staff or give them time off—and certainly does not need an edict from London.
Bob Stewart
In my constituency the complaint from small businesses is that they want to make a profit, not spend their time doing accounts or filling in regulation forms. We have to minimise that and, if possible, try to take it right out of the whole business—if it is small enough—because one in 10 still seems to be concerned with regulations.
Julian Smith
My hon. Friend makes a valid point. This is a controversial area, because although the Government are making great strides in shared parental leave, for example—reforms that I support—we need to look at how Whitehall is managing the relationship with micro-businesses on issues such as maternity and parental leave.
There are some exciting initiatives that did not make it into the autumn statement, but which I urge the Government to support and small businesses to show their interest in. They include, for instance, no-fault dismissal. Deciding when to finish an employment relationship as an owner-manager running a small business is really difficult. The idea of a compensated no-fault dismissal—the equivalent of a no-fault divorce in the business world—is worth looking at.
I urge the Government to have the courage of their convictions on policies like that. I would encourage micro-businesses everywhere to follow the Government on their call for evidence, as we need to make the case that expectations about workers’ rights in small firms must be different. We need the small business owner to be confident in taking on more staff. The doers and grafters need to know that this Government are getting fully off their backs.
Oral Answers to Questions
Julian Smith Excerpts(14 years, 3 months ago)
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Mr Gauke
As I say, we will be updating the House with all those details shortly, but there are 1,600 or so businesses in the north-west region that are benefiting from it. I visited one of them not far from her constituency a few weeks ago which was very appreciative of the scheme. Where the scheme is available, I encourage hon. Members to highlight it to their constituents.
Julian Smith
May I urge the Minister to reconsider auto-enrolling new businesses on to the scheme, so that rather than their having to apply for it they are placed on it automatically?
Mr Gauke
We looked at auto-enrolment but one of the difficulties was the fact that it would have been years before we could have put it fully in place and we wanted to move quickly to have the scheme in operation. It is important that we highlight the scheme and make sure that publicity is available and that businesses are aware of it. The businesses that I have met that have taken up the scheme are very appreciative of it and it helps them in those difficult first few months.
Finance Bill
Julian Smith Excerpts(14 years, 7 months ago)
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Mr Chope
Obviously, the Treasury will always say that there is what is described as a dead-weight cost associated with such initiatives, in that people who would be paying for health insurance anyway would get the tax relief—but that is looking at only part of the issue. What I am trying to do—as is my hon. Friend the Member for Mole Valley in his new clause—is to encourage more people to come into that category, so that we grow that cohort of people. We certainly do not want to allow that cohort to be reduced, as it inevitably is when people who were on schemes provided by their employers retire and lose that provision. Taking on that burden, or responsibility, for themselves is a significant expense; my hon. Friend’s new clause would not eliminate that cost, but it would reduce it by a useful amount.
Julian Smith (Skipton and Ripon) (Con)
Will my hon. Friend tell us how, in the current financial situation, we could pay for any dead-weight costs? Where would the money come from?
Mr Chope
It is a matter of seeing what the countervailing benefits would be, because obviously, if as a result of my hon. Friend’s new clause a lot more people who are not contributing anything towards the cost of their health care started to do so, thereby reducing the burden on the NHS, the dead-weight cost that my hon. Friend the Member for Skipton and Ripon (Julian Smith) mentions would be exceeded by the overall benefits, and a reduction in the overall burden of taxation. More people who are getting health care in this country would be paying for it, or contributing to its cost, rather than relying on the state and the taxpayer to do so.
Amendment of the Law
Julian Smith Excerpts(14 years, 10 months ago)
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Julian Smith (Skipton and Ripon) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests.
I am delighted that business, as well as families, took centre stage in yesterday’s Budget. Enterprise zones will be a beacon for growth. There will be two in Yorkshire: one in Leeds and one in Sheffield.
Mr Binley
My hon. Friend might also be pleased to know that West Northamptonshire Development Corporation will shortly submit an application to create an enterprise zone in Northampton, which will bring 10,000 new jobs to an area that is supposed to be building 50,000 new homes over the next 15 years. Does that not show that the Budget is particularly about promoting growth, and that this is just one way to achieve that?
Julian Smith
My hon. Friend is absolutely right, but he will be facing stiff competition from the North Yorkshire local enterprise partnership, which will be seeking to get ahead of his proposal.
The most exciting aspect of yesterday’s Budget was the direction of travel the Chancellor set in respect of the conditions for business that he wants in Britain, because growth will ultimately be achieved through the individual efforts of business leaders, not through Government. The 2% cut in corporation tax signals to companies that Britain is once again open for business. It is now clear to every potential investor, in the UK and overseas, that this Government are committed to putting in place the best corporation tax rates in the G20 by the end of this Parliament. Overnight, global companies such as WPP have said that that will make a difference to their decisions on where to invest. That is great news.
The Budget also encourages those who want to set up a business to go for it. It contains a big nudge from the Government for people to give entrepreneurship a go. There is a golden carrot to dangle before those thinking of taking a risk: a 10% capital gains tax rate up to £10 million. The profit motive is a motivator, and the Budget clearly says, “If you believe in your business, take the risks and are successful, you will be much better off financially.” Therefore the message is, “Unless you’re a cracking singer or can dance like the Business Secretary, forget ‘The X Factor’ and ‘Strictly’; this Budget gives you a golden ticket to join start-up Britain.”
The moratorium on new legislation for small businesses with fewer than 10 employees will be a big relief for entrepreneurs, who need to be fully focused on jobs and growth rather than the latest wheeze from Whitehall. When I was a small business owner, dealing with employment law took more time than any other management responsibility. Employment laws and regulations have been piled on British business since 1997.
Julian Smith
Not at the moment.
Let us be clear: employers want to get on with running their business. They want to allow their workers flexibility in their jobs and to give them training, but they also want to make decisions themselves. The changes in the Budget will provide welcome relief from administration, rules and red tape, which always come from new legislation. Opposition Members have already started putting about the myth of this being about “nasty Tories” who have no interest in equal rights. It is nothing of the sort. Labour took some good steps on employment, and we have accepted many of them, but the last Government ultimately failed to see that adding on regulation after regulation was counter-productive; they just did not know when to stop.
This Budget establishes two principles: first, that micro-business needs to be treated differently from other business, which is very important for my constituency; and, secondly, that creating jobs is more important than adding more regulations to existing ones. Everything we do should encourage business and make things easier for risk takers. Only by doing that will we get this country’s economy growing to its full potential. Jam-packed with other measures as well as the ones I have talked about, this Budget has set us firmly on the right course.