Economy: Budget Statement

Lord Sugar Excerpts

Thursday 22nd March 2012 Lords Chamber

[Lord Sugar]

My Lords, I join the noble Lord, Lord Bilimoria, in welcoming the noble Lord, Lord Heseltine. I feel honoured to participate in a debate in which the noble Lord has made his maiden speech. I am sure that I will be joined by other noble Lords in saying that we look forward to hearing him speak a little more in the future. His maiden speech was interesting in the sense that there was no need for the normal preamble of him telling us who he is.

It is common knowledge that Governments across the world tend to spend far more money than they collect by way of taxes and hence create great piles of debt. Every so often there is a wake-up call where certain initiatives are put in place to try to reduce that debt. We are no different in this country. I understand, albeit that it is no consolation, that from 2014 we will receive itemised tax bills, which among other things will show how much each of us is paying by way of debt interest. Indeed, one may ask whether the current spending budgets of the Government are forecast to exceed income again. One thing for sure is that the debt is going to rise as we seem to be borrowing far more than was forecast since the last spending review.

The fact is that the economy of the country is supported by business. If one were to run a company in that manner—continually spending more than one’s income—we all know that that company would go bankrupt. If one of my companies did that and I started printing money, as mentioned by the noble Lord, Lord Higgins, to ease my situation, no doubt I would be put in prison for counterfeiting. We will not get this deficit down unless we have a plan for jobs and growth to get the economy moving. To do that, we need to encourage small and medium-sized businesses to invest, to be daring and to kick-start the economy and employ lots of people.

It amazes me that the Government’s Business Secretary announces a lot of hollow initiatives under the guise of helping small businesses, yet he has never been in business. He has never been on the coal face, never run a business and has never understood the needs of a small business. I am sure that if the noble Lord, Lord Sassoon, had a pain in his groin, he would not want me to remove his appendix since I am not a surgeon. That may be a stupid analogy, but I am sure that I am making my point.

Yesterday’s Budget contained the usual lip service of how the Government are going to help small business. They have continually made these statements but so far we see no evidence of it. As my noble friend Lord Eatwell mentioned, it is the same as the promise made to put fuel into the tank of the British economy. Instead, the economy has stalled and unemployment has risen, as has the aforementioned debt.

On the subject of lip service, I am concerned about politicians deflecting the real issues and placing blame elsewhere—for example, jumping on the bandwagon of bank bashing and singing the same old songs about the lack of money being lent to small to medium-sized enterprises, or bonuses being paid to bank executives. All this does nothing other than depress the business environment. It is not encouraging in any way, shape or form. It is sheer political capital. I urge all politicians to change the record and to start to instil confidence in the marketplace instead of depressing it.

One never hears outrage expressed at the bonuses payable to, say, Sir Terry Leahy, Sir Stuart Rose or Sir John Rose in their capacities as chief executives of Tesco, Marks & Spencer and Rolls-Royce. I say “quite rightly so” because that is business: you employ experienced top executives and set them targets to get things done—in other words, incentivise people. Yet when banks, some of which have a large public shareholdings, employ top executives whose sole purpose is to take over, clean up the mess, and improve the financial position and in turn the public’s investment, those executives are chastised for accepting bonuses. The reality is this: carry on doing that and those people will simply go and get a job in a different type of company where the culture of paying bonuses is not frowned upon. Replace them, pay peanuts, and you will get monkeys. There is no question about that. You will delay recovery of the billions that have been invested from the public purse.

Then there is the alleged issue of banks not lending to small and medium-sized enterprises. I had first-hand experience of this issue just under a couple of years ago when I was a government adviser. I investigated it in depth and discovered what I believe is still the position today, and that is that many companies out there are depressed by the messages of doom and gloom about the current economic situation. They are not investing, they do not wish to invest, and in fact they are tightening their belts. They do not want any money and are not asking for it because they are nervous due to the lack of confidence in the marketplace, and much of that is created by politicians jockeying for position or applause on BBC “Question Time” and a very mischievous media.

Then there are some companies that do want to borrow money. However, I regret to inform noble Lords that none of your Lordships would lend some of these businesses one brass farthing because they are simply not worthy and a bad risk. Yet it is those people who shout the loudest and make a lot of noise, which again attracts the newspaper headlines that are regretfully being used by certain politicians to popularise themselves. The noble Lord, Lord Bilimoria, mentioned the £20 billion credit-easing scheme. I am sorry to be so sceptical about this thing, which is designed to underwrite cash lent by banks to SMEs. I hope that it is not an open invitation to the banks to act in an irresponsible manner by dishing out loans that they would normally have rejected as high-risk. We must bear it in mind that they now have the Government underwriting those loans.

I have always stated that the last thing any businessperson wants is government interference. All that businesses require is an environment where enterprise can prosper, and that of course means allowing people to trade freely on a level playing field, and to work in an environment where taxation is reasonable and where there are no onerous regulations or obstacles. That is the sole job of the Government. They also need to create a more positive feeling in the marketplace to encourage small to medium-sized enterprises and indeed give people the confidence to start up their own businesses, become self-sufficient and in turn go on to employ other people.

Noble Lords have already talked about the Budget so I shall restrict my own comments. It should have contained some meaningful offerings to encourage investment and instil confidence. We need things that are tangible and can be touched, such as a reduction in VAT, a one-year national insurance holiday for small businesses taking on extra workers, a reduction in business rates and a reduction in duty on diesel. Those are just a few things that would make an immediate impact and be a genuine help to small businesses. Instead, regrettably, we have the hollow promises that we continue to hear.