Start-up Loans

Matt Hancock Excerpts

Wednesday 20th November 2013 Commons Chamber

[The Minister for Skills and Enterprise (Matthew Hancock)]

With permission, Mr Speaker, I wish to make a statement on start-up loans. Since the great recession of 2008, concern has been raised repeatedly across the House about access to finance, particularly for the smallest companies. The contraction in support for small and medium-sized business lending following the financial crisis led to a sharp drop in the growth of lending to, and support for, small businesses. All Members will recognise the constraints facing aspiring entrepreneurs across the country trying to access finance.

Those problems were a consequence of an overreliance on bank finance compared with our international competitors, a hollowing-out of business lending units in the big banks and too much concentration in our banking system, followed by the biggest banking bust ever faced in this country and the biggest bank failure in the world in 2008.

A calamity of that scale cannot be addressed by a single policy, so since 2010 we have engaged on a comprehensive programme of bank reform: splitting retail and investment banking; requiring greater capital; introducing a tax on leverage; introducing much stronger requirements to check that the people running banks are fit and proper persons, so that we do not get the likes of Fred Goodwin and the Rev. Paul Flowers sitting atop our banks in future; and introducing criminal charges for those who behave negligently in charge of big banks.

Those changes are part of a wider drive to change the culture of banking so that our banks serve the economy, rather than the other way around, but alone they are not enough. To help companies access finance, we have introduced the British business bank, doubled the seed enterprise investment scheme, expanded the enterprise finance guarantee, and last year we introduced start-up loans of up to £25,000 per founder—although, more typically it is around £6,000—to help budding entrepreneurs access the seed capital to make their idea a reality.

For too long Britain has been a home of great ideas that are then commercialised and developed elsewhere. We want British business men and women to take brilliant British ideas and turn them into blossoming British businesses. The first start-up loan was made in September 2012, and since then growth has exceeded expectations. Over a third of loans go to black and minority ethnic entrepreneurs and over a third go to people previously unemployed. In June this year the Prime Minister announced that start-up loans would no longer be restricted to young people, so the age cap has been removed altogether. We are now seeing strong growth in the number of people over 30 being helped to realise their full entrepreneurial potential through the programme’s mentoring and financial support.

In August we introduced specialised support to finance ex-military service personnel who want to start their own business within the start-up loans scheme. I am pleased to announce that today we have made the 100,000th start-up loan—[Interruption.] Today we have made the 10,000th start-up loan.

Mr Allen Martin, a Royal Navy engineer from Truro, is the 10,000th loan recipient for the programme. Allen joined the Royal Navy in 1991 as an engineer and mechanic, working with helicopters, search and rescue, and commando forces. He served for 22 years, in Bosnia, Kosovo, Iraq and Afghanistan. Having been medically discharged, Allen knew what he wanted to do—start his own business—so he applied for a start-up loan and founded Eclipse Property Cornwall, which will manage properties on behalf of landlords, renting them out and offering full or part-time management. Allen Martin has benefited from the extension of start-up loans to all ages and the specialised support of our ex-service personnel.

Given the success of this targeted approach within the full age range, we are now going even further. I can tell the House that we are committing a total of £151 million to the scheme this year and next, with the goal of backing 30,000 new businesses by 2015. From 1 January, the Start-Up Loans Company will specifically target priority groups: entrepreneurs over the age of 50, young people not in education, employment or training, and new mothers who are ready to return to the workplace and are seeking the ability to manage their own time and commitments on their own terms.

Age UK estimates that one in five of those over 50 now work for themselves—a growing trend accounting for 70% of the businesses started in the past five years, compared with 28% of those started by young people. With the added support of mentors who understand modern media and marketing, new retail platforms and communication channels, start-up loans can help to bring even more of those in this age group to success. That is why we are tasking Start-Up Loans to find the specialist providers who will make the loans a perfect fit for the older entrepreneur.

On NEETs, I know that Members throughout the House have seen just how valuable and popular these loans are in tackling youth unemployment. Working with the new enterprise allowance, start-up loans give specialist support to those who have been away from the workplace for a long time and need strong and committed mentors with an understanding of what it is to start from a very low base. The Prince’s Trust has already demonstrated just how effective that approach can be, and much more can be done to create a targeted offer that creates the right conditions for these businesses to survive and thrive within the safe environment of start-up loans.

Finally, new mothers are also turning increasingly to self-employment. According to Mumpreneur UK, self-employment for women is rising at three times the rate for men. So far, 37% of start-up loans have gone to women. We want to do more to increase that figure, so we will introduce specialised support for mothers seeking to start businesses who are juggling child care and seeking flexible ways to turn a business idea into reality.

With record new business creation, 400,000 new businesses, record jobs and a record 4.9 million companies in the UK, Britain is once again becoming an entrepreneurial beacon of the world. Our future prosperity rests on the entrepreneurial aspirations of the British people. This Government will not rest in our drive to support those who want to work hard and get on, and I commend this statement to the House.

--- Later in debate ---

[Toby Perkins]

You are very wise, once again, Mr Speaker, to notice that.

Will the Minister make a statement on the real access to finance crisis that he has done so little about? Will he recognise the need for radical change to the banks through the Labour party’s proposed network of local banks and support for challenger banks, which will lead to the desperately needed improvement in the position of small firms seeking access to finance?

[Matthew Hancock]

Mr James Caan, who runs the start-up loans scheme on our behalf and to whom I pay tribute, is absolutely right to say how important mentoring is—and I think we have just seen why. What a pity that the Labour party cannot be enthusiastic about and supportive of a scheme that has done so much: 37% of start-up loans go to BME entrepreneurs and more than a third to the unemployed. We are aiming for 30,000 and the pace of delivery is accelerating.

I will turn to the specific questions asked. I entirely agree with the hon. Gentleman’s point about business growth in hubs, which is why the development of Tech City UK and of start-up hubs around the country—in Manchester, Cambridge, Edinburgh and almost every city—is welcome and I hope it will get cross-party support.

The hon. Gentleman said that we need to ensure that this scheme is part of a package, but I am not sure whether he was listening to the statement. The whole point is that the scheme is precisely part of a plan to start improving access and helping people right at the start of their business careers, and to then expand the enterprise investment scheme, enhance the guarantees available, establish the business bank and, most importantly, turn around the banks. I think that a little more support from the Labour party for turning around the mess it created would be more appropriate.

[Several hon. Members]

rose—

[Mr John Redwood (Wokingham) (Con)]

As we wish to spread the news to constituents, what is the typical interest rate for loans and the average duration of them?

[Matthew Hancock]

The interest is typically 6% and the average duration is up to five years, but those matters are of course also dependent on the proposition that is made. So far, in the year and a bit that the scheme has been going, the amount paid back has been pretty strong.

[Mr George Mudie (Leeds East) (Lab)]

The Minister berated my hon. Friend the Member for Chesterfield (Toby Perkins) for not looking at the wider picture, but he will be aware that of the outstanding loans from British banks in August, more than 30% were loans to other banks and more than 40% were loans to consumers linked to house buying, while only just over 1% were loans to small businesses. After three years of having scheme after scheme, how can he persuade this House to take Government policies in this area seriously?

[Matthew Hancock]

That is precisely why we need programmes such as this one, which I hope the hon. Gentleman supports. It is important for us all to realise just how difficult it is to recover from the scale of the banking crisis under the previous Government. Many measures are of course needed, and this very important one is helping thousands of people to start their own businesses and realise their dreams.

[Mr Brian Binley (Northampton South) (Con)]

I congratulate Mr Martin and wish him well. I started two small businesses that now employ almost 300 people, having gone into a sub-branch of Lloyds bank and come out with a facility of £60,000 in 1989. That would not happen now, so my concern is about whether information is getting through properly at the coal face. Will the Minister tell us whether that is happening, and will he continue to monitor that matter to ensure that the people he rightly says are in need of loans can receive them?

[Matthew Hancock]

Absolutely. The development and acceleration of the scheme includes an acceleration in people being able to get hard cash. In many cases, the turnaround time from application to delivery of the cash is about two weeks and, given that speed kills in relation to starting a new business, that is an important part of the process.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

A Welsh Government-sponsored report by Conservative member Professor Dylan Jones-Evans recently recommended the establishment of a publicly-backed Welsh development bank, very much based on a model proposed by my party, Plaid Cymru. Will the Minister enter into negotiations with the Welsh Government, give them a nudge and offer Treasury support for that concept to ensure that Welsh businesses get the access to finance that they deserve?

[Matthew Hancock]

I can do better than that. In collaboration with the Welsh Government, the roll-out of start-up loans in Wales commenced on 15 October, and I would encourage anybody in Wales to get involved.

[Anne Marie Morris (Newton Abbot) (Con)]

I commend the Minister for all the help he has given to small businesses since he took up his post. I am particularly pleased that he has recognised the diversity of groups wanting to start businesses. With regard to the over-50s in particular, how will he get information out—not to the banks, but to local authorities, local enterprise partnerships and other places in which people who are not used to computers will look for such help?

[Matthew Hancock]

The Business is Great website is an important part of that. I commend my hon. Friend’s work in supporting small businesses, in pushing for improvements for them and in getting out personally to demonstrate what is available. There is a broad communications campaign about the scheme—yes, online, but also offline—and I take every opportunity to tell people what is available.

[Bill Esterson (Sefton Central) (Lab)]

Will the Minister confirm that the advice that goes with the funding, which is crucial, is specific to individual businesses and the markets in which they operate? Will he also confirm that funding and advice for existing businesses is equally important, because without that second element, start-up loans will ultimately lose much of their effectiveness?

[Matthew Hancock]

Yes. Those are extremely important points. The growth accelerator programme offers support for small and growing businesses and is itself expanding rapidly. The start-up loan programme is not only about access to finance for those starting businesses, but about mentoring. The number of businesses sponsored by each mentor is small, so that mentors have the opportunity to spend time and put effort into ensuring that such ideas get the best possible chance.

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

Many of the people who have so far benefited from the programme are truly inspirational. The Minister may be interested to know about a perfume called Pink Addiction—I have tried it—which was created by Nabila Ismail. She was so positive about the scheme that the only thing she asked for was specialist mentoring wherever possible, a point which has been mentioned.

[Matthew Hancock]

I pay tribute to Pink Addiction. My hon. Friend has put a huge amount of effort into supporting start-ups and small businesses. I am sure that being mentored by him would be one of the best ways in which someone could grow their business.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Minister told the House that there will be £151 million for the scheme this year and next year, but will he clarify whether that is new or additional funding, or is he simply announcing something that has already been announced? If it is new or additional funding, will he ensure that businesses in Scotland can benefit from the project either directly or with additional funding through a Barnett consequential to the Scottish Government?

[Matthew Hancock]

The £151 million is available over the next two years. Further details will be set out in the autumn statement. We are working with the Administration in Scotland to ensure that the scheme can be rolled out across Scotland as well.

[Andrew Griffiths (Burton) (Con)]

May I congratulate the Minister on a scheme that has helped to deliver the lowest unemployment level in my constituency since August 2008? I particularly congratulate him on the 4,500 disabled people who have been able to access a scheme that is hugely important in allowing them to reach their true potential. Will he assure me that he will continue to promote that objective?

[Matthew Hancock]

Yes. My hon. Friend makes an important point. It is vital that the scheme should allow everybody the opportunity to reach their potential through starting a business, and he put that very eloquently.

[Jessica Lee (Erewash) (Con)]

I congratulate my hon. Friend on the success so far of the start-up loans scheme, which I will continue to promote locally. Does he agree that the support of local business organisations, such as the successful Erewash Partnership in my constituency, is vital, in that they provide mentoring support and networking opportunities to help businesses to flourish?

[Matthew Hancock]

I pay tribute to the Erewash Partnership. Such local business support groups, as well as LEPs, the chambers of commerce, the Federation of Small Businesses, the Forum of Private Business, the CBI and the Institute of Directors, play a part in making sure that businesses get to know what is available and are given support. We work in partnership with many of those organisations, which have done a great deal to make such a success of the scheme.

[Mr Stewart Jackson (Peterborough) (Con)]

I believe it is a moral imperative for the Government to offer a route from welfare dependency and poverty to self-employment and prosperity, and on that basis I strongly welcome the scheme. Will the Minister undertake to look at the work done by third sector and voluntary groups, such as the Cambridgeshire Community Foundation and the Peterborough-based Cross Keys Homes, in helping tenants and those not usually involved in the business world to avail themselves of the scheme and access funding for micro-businesses and SMEs?

[Matthew Hancock]

Yes, I will do that. The fact that more than a third of the loans have gone to people who are unemployed is one of the scheme’s great strengths. Along with the new enterprise allowance, the scheme is helping us to reduce unemployment for people who do not want to go into an ordinary 9 to 5 job, and instead want to grow their own business.

[Mr Andrew Turner (Isle of Wight) (Con)]

I congratulate the Minister on his success with the start-up loan scheme. Will he reassure the House that he will continue to champion efforts to build on the scheme, particularly in my Isle of Wight constituency?

[Matthew Hancock]

Yes, I will take a special interest in ensuring that the Isle of Wight has access to the scheme. Many of the partners through which it is delivered are regional, but there are many national partners and much of it can be done online. I am sure that broadband internet is readily available on the Isle of Wight. If it is not, it soon will be. I will take a special interest in how many loans are taken up on the Isle of Wight.

[Justin Tomlinson (North Swindon) (Con)]

This is welcome news, especially as the start-up businesses have gone on to employ a further 10,000 people. To build on that, what more can be done to encourage an entrepreneurial spirit within the education system to equip the next generation of young entrepreneurs?

[Matthew Hancock]

I am grateful to my hon. Friend for adding to the statistics at my disposal. He is a doughty campaigner for enterprise in the education system. One of the main purposes of bringing together the skills and enterprise briefs is to ensure that the education system reflects and prepares people for the world of employment and enterprise. That is very close to my heart and I look forward to working with him to make it happen more.

[Stephen Mosley (City of Chester) (Con)]

The start-up loans scheme has been a fantastic success story. One reason for that success is the presence of business mentors. Will the Minister reassure the House that as the scheme grows, as new groups get involved and as the age cap is lifted, the number of business mentors will keep up in order to ensure that all the businesses have access to the support that they need?

[Matthew Hancock]

We are finding that lots of business men and women are interested in mentoring, partly because they feel that they got so much out of growing their business and want to give something back. Engaging more mentors is a vital part of the scheme, but that is not a constraint on expansion owing to the enthusiasm—to which I pay tribute—of business men and women who want to help others to get the sort of start that they had.

[Mark Pawsey (Rugby) (Con)]

As someone who started and ran a small business, I know about the challenges that are faced by people who want to run their own business, particularly in accessing finance. I was pleased to join the start-up bus when it visited Rugby. Does the Minister agree that the start-up loans scheme shows that the Government are providing real help to small emerging businesses, unlike the Labour party, which took advice on business and industry from the man who managed the decline of the Co-op bank?

[Matthew Hancock]

My hon. Friend makes an important point. It is surprising to see the Labour Benches almost entirely empty when the House should be uniting in support of the excellent start-up loans scheme. I pay tribute to my hon. Friend, who started his own business and who does much in this House to promote those who start their own businesses.

[Mr Marcus Jones (Nuneaton) (Con)]

I recently met a number of young entrepreneurs who had started successful small businesses using start-up loans. They had been refused loans by mainstream banks. Will my hon. Friend assure me that the scheme will be broadened to create tens of thousands of budding entrepreneurs of all ages across our great country?

[Matthew Hancock]

The scheme is growing and accelerating, and it has the capacity to do more. I hope that we can do more with it, not least because it is helping people who would otherwise not be able to start their own business. We started the scheme because of the difficulty that is faced in getting finance from banks at an early stage. The evidence that my hon. Friend sees in his constituency is what I see across the country. That is exactly what this successful scheme is for.

[Neil Carmichael (Stroud) (Con)]

I have great pleasure in welcoming this excellent statement because it brings good news about the real economy. Does the Minister agree that encouraging schools and colleges to have governors with business experience would enhance and embed the entrepreneurial spirit that we need in those places?

[Matthew Hancock]

I encourage links between colleges and local enterprise partnerships, which can be strengthened a great deal by their governors and board members sitting on each other’s boards. There are schools around the country that bring in businesses and entrepreneurs, not only to talk to students, for example through the brilliant Speakers for Schools programme, but to help design the curriculum and motivate children to improve their performance in academic subjects. That is a great success when it is done well and I encourage more schools to do it.

[Robert Halfon (Harlow) (Con)]

Is my hon. Friend aware that Harlow has had the highest business growth in the United Kingdom according to a BBC and Experian survey? Will he congratulate Danielle Field, a young mother who from nothing set up an apprentice hairdressing academy with her partner thanks to a James Caan loan? That has been a tremendous success. Is this scheme not an example of the Government helping the lowest-paid to get back into work?

[Matthew Hancock]

I pay tribute to Danielle Field. I also pay tribute to my hon. Friend. I did not know that Harlow was the best place in the UK to start a business according to the statistics. That shows just how brilliant Harlow is, almost all of which is down to its brilliant MP.

[Mr Philip Hollobone (Kettering) (Con)]

Northamptonshire was recently declared by the Department for Business, Innovation and Skills to be the most enterprising place in Britain. Will the Minister ensure that a ready supply of start-up loans is made available to the entrepreneurs in that county so that the entrepreneurial spirit that is abroad can be captured, developed and promoted to the full?

[Matthew Hancock]

There seems to be a competition to be the most enterprising place in Britain. That is superb, because enterprise is all about being competitive and getting ahead. I am glad that that has been brought to my attention. Of course, all Government Members know that Harlow is in Essex, not in Northamptonshire or Kent. Ensuring that Northamptonshire and all other places get the support that is needed for small business is vital.

[Several hon. Members]

rose—

[Guy Opperman (Hexham) (Con)]

People in Northumberland welcome the Government’s support for start-up businesses. Does the Minister agree that the key to the reform of bank lending is the development of local and regional banks? Is he surprised that in April 2012 the Labour party voted against such banks?

[Matthew Hancock]

That is a surprise, given that ensuring that there is more competition in banking is a key part of the answer to that problem.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

I strongly welcome the statement. Having started businesses myself, I know how hard it can be. A key element of the statement was mentoring. I urge my hon. Friend to build on the targeted approach to mentoring that he has outlined today.

[Matthew Hancock]

I pay tribute to my hon. Friend, who is the Prime Minister’s apprenticeship ambassador. He does a huge amount of work to promote apprenticeships, small businesses and start-ups across the country.

[Jeremy Lefroy (Stafford) (Con)]

I welcome the scheme and its extension to include sharia-compliant finance. The UK is a world centre for ethical finance on Judaeo-Christian principles, which, like sharia-compliant finance, concentrates on risk sharing. Will the Minister consider including an ethical product?

[Matthew Hancock]

I will certainly consider that proposal.

[Richard Fuller (Bedford) (Con)]

Would-be entrepreneurs will recognise the cynical, negative response of the Opposition as evidence that the Labour party does not share their passion for creating businesses. The Minister referred to the 100,000th start-up loan. We were only at 1,000 start-up loans in February and we are now at 10,000 start-up loans, so we might well get to 100,000 start-up loans. What will be the Minister’s response if this policy continues to enjoy the success that it has had so far?

[Matthew Hancock]

I was getting ahead of myself. Mr Speaker, if we get to 100,000 start-up loans, I hope that I will be able to make a statement about that too.

[Sarah Newton (Truro and Falmouth) (Con)]

My hon. Friend was right to single out Mr Martin as a great role model for people of all ages and from all backgrounds in setting up a new business. I would like to give one of the last words this afternoon to Mr Martin. It is important for everyone in this House to listen to what he has to say about start-up loans. He says that they have given him

“the opportunity to start a new life”

and that it is “an amazing feeling”.

[Matthew Hancock]

It is terrific to hear directly from Mr Martin’s MP, who is such a champion of Falmouth and Truro, about the effect that the loan has had on him. Similar stories abound from all 10,000 of those who have received the loans.

[Chris Heaton-Harris (Daventry) (Con)]

Start-up loans are helping many people to set up their own small businesses. We are coming up to small business Saturday, which is on 7 December. Mr Speaker, you are welcome to come to my networking event for small businesses at the iCon centre in Daventry on that morning and I will happily buy you a coffee. Will the Minister say how important it is to celebrate small businesses on small business Saturday?

[Matthew Hancock]

I love small businesses. I come from a small business background. Government Members have demonstrated their commitment to growing small businesses and doing everything they can to support them. To show that support, I urge everyone to get out there on 7 December—small business Saturday—to buy something from small businesses and to tweet about it, so the whole world knows how much we support small and growing businesses.

Oral Answers to Questions

Matt Hancock Excerpts

Monday 11th November 2013 Commons Chamber

[Stephen Mosley (City of Chester) (Con)]

1. What estimate he has made of savings to the public purse arising from the abolition of the education maintenance allowance.

[The Minister for Skills and Enterprise (Matthew Hancock)]

By replacing the education maintenance allowance with the 16-to-19 bursary fund, we are saving £380 million every year and targeting help more sharply at the young people who need it most.

[Stephen Mosley]

My local further education provider, West Cheshire college, is proving very effective at ensuring that the bursary fund helps those young people who most need it. What is my hon. Friend the Minister doing to ensure that the bursary fund is targeted at those most in need?

[Matthew Hancock]

My hon. Friend’s local FE college is not only very good; it is also the FE college I went to. I am glad to say that the 16-to-19 bursary fund allows colleges to target support at those who need it most. The most vulnerable receive a bursary of up to £1,200, which is far more than they could have received from EMA.

[Bill Esterson (Sefton Central) (Lab)]

The Merseyside Colleges Association told Merseyside MPs just this week that the bursary fund is nowhere near enough to deal with the need that it finds for food, travel, or books. Will the Minister seriously reconsider? It is not just the very poorest students who are missing out, but those just above them; colleges do not have the money to cover them.

[Matthew Hancock]

It was found that the education maintenance allowance was paid to 10 times more people than needed it to access further education. It is interesting that the hon. Gentleman mentions food, because the Government are introducing free school meals for those who need them in FE colleges—something the Opposition never did.

[Mr David Hanson (Delyn) (Lab)]

Is the Minister aware that some people who attend college in Chester do get EMA? Those of my constituents who are from Wales get it, because the Labour Government in Wales provide it to all pupils. Will he accept that that EMA provision means that people stay on at school for longer, and improves their ability to learn at school?

[Matthew Hancock]

No, because the 16-to-19 bursary fund is better targeted. It is typical of Opposition’s proposals that the shadow Secretary of State’s proposal to bring back EMA came with a measure to pay for it that would have raised just over £100 million, leaving yet another black hole.

[Stuart Andrew (Pudsey) (Con)]

2. What steps he is taking to improve support for young carers.

--- Later in debate ---

[Chris Evans (Islwyn) (Lab/Co-op)]

10. What assessment he has made of current provision of information, advice and guidance for young people.

[The Minister for Skills and Enterprise (Matthew Hancock)]

We have introduced a new duty on schools to secure independent and impartial careers advice. For the first time, we have a National Careers Service and Ofsted will judge a school’s leadership on how well they deliver.

[Chris Evans]

Careers Wales has referred 9,000 people to the Jobs Growth Wales programme and 75% of them are now in sustainable employment. Have the Government studied the Welsh experience?

[Matthew Hancock]

Yes, of course; we have looked all around the world. We are increasing the amount of mentoring to ensure that we have the best people, including employers, to inspire young people to go into careers that will enable them to reach their potential.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Research conducted last month as part of professions week found that, of the 1,200 14 to 19-year-olds surveyed, just 40% had received any form of careers advice or guidance in the past year. In the light of Ofsted’s damning report earlier this autumn, will the Minister assure the House that further steps will be taken to ensure that the transfer of the duty to schools leads to an improvement in careers advice and guidance?

[Matthew Hancock]

Yes, we are clear that we are going to strengthen careers advice. Ofsted’s statement that it will look into the quality of the advice that is given will ensure that schools deliver appropriate high-quality careers advice. That advice needs to be of a high quality, and it must be delivered by people who understand how to inspire and mentor young people to enter careers that will interest them.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Government’s programme for school-based careers guidance has been slated by the OECD, Ofsted and the Chair of the Education Committee. Careers England found that the Government’s changes have caused a drastic reduction in careers services for some 80% of schools. What is the Minister going to do about that?

[Matthew Hancock]

I am going to execute the plan that we set out last month. I welcome the hon. Lady to her post. The best way to solve careers advice is not to insist on a bureaucratic system of requirements, but to ensure that people in the workplace are closer to education and that schools communicate with employers, so that those who deliver careers advice understand the careers on which they are advising.

[Damian Hinds (East Hampshire) (Con)]

Does the Minister share my experience that it is quite unusual to hear someone of any age spontaneously talking about the excellent careers advice they received, and even rarer to meet someone who is in the job that they were once advised was for them? Is not the best advice often to keep one’s options open by choosing valuable, trusted subjects, hence the EBacc and TechBac?

[Matthew Hancock]

It is undoubtedly true that the two most important vocational subjects are English and maths and that the best insurance against unemployment as a young person is to study more English and maths. I will, however, take my hon. Friend slightly to task. Many people were mentored by those who inspired them and from whom they learned a lot. Ensuring that all children have such relationships with people in the sort of careers that they want to enter is an important part of strengthening social mobility.

[Nic Dakin (Scunthorpe) (Lab)]

Ofsted reports that three quarters of the schools that it visited were not carrying out the duty to give impartial careers advice. That confirms what everybody out there knows: careers advice, information and guidance are in a state on this Government’s watch. When will they do something about it and protect our young people for the future?

[Matthew Hancock]

Yes, indeed, we are acting, having inherited a complete failure in careers advice. The Connexions service that the Labour party keeps talking about was well known to be a failing institution, and when it was taken apart, it was agreed across the House that that was the right thing to do because it was not delivering. Instead, we have put in place the sort of guidance and inspiration that will help and support people all the way through and into their careers. Ofsted will hold schools to account, and that is the right way to proceed.

[Mr Dominic Raab (Esher and Walton) (Con)]

11. What steps he is taking to allow head teachers greater autonomy in their schools.

--- Later in debate ---

[Mary Macleod (Brentford and Isleworth) (Con)]

T7. Last week, I was at the launch of the Sky academy in Osterley, which includes a Sky skills studio, scholarships for emerging talent, starting-out initiatives and living for sport. Will my hon. Friend meet me to discuss how we can create similar initiatives in other sectors and establish a business ambassador for each school?

[The Minister for Skills and Enterprise (Matthew Hancock)]

I would be delighted to meet my hon. Friend. She failed to mention that David Beckham was also at that launch, which was no doubt an exciting moment. I pay tribute to the Sky academy and to the work that has been put in to ensure that people going into the media and the arts have not only the skills but the mentoring and inspiration to make the best of their lives. That is exactly what is needed if we are to see more people getting the chance and the inspiration to reach their potential.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Today sees the launch of Juice FM’s Knives Wreck Lives campaign in Liverpool, which aims to raise awareness among people on Merseyside of just how damaging knives can be. Will the Secretary of State welcome the campaign, and tell the House what he is doing in our schools and colleges to inform young people about the perils of knife crime?

Low Pay

Matt Hancock Excerpts

Wednesday 30th October 2013 Westminster Hall

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mr Hood. I thank the hon. Member for Glasgow North East (Mr Bain) for securing the debate and giving us the opportunity for discussion. I have listened carefully to his arguments, which were passionately put. As he said, there is a strong cross-party consensus behind the minimum wage and the institution of the Low Pay Commission, which advises the Government on the appropriate rate. Interestingly, more Government Members than Opposition Members are in the Chamber, which demonstrates the cross-party support for the minimum wage and a commitment not only to it, but to its effective enforcement. We are absolutely clear that anyone entitled to be paid the minimum wage should receive it.

Before I answer some of the points made and set out what the Government are planning to do, I want to give some statistics in response to the hon. Gentleman. Times are undoubtedly tough following the great recession of 2008 to 2009, but since then the bottom quintile or fifth of the population have become around 6% better off, in part because of measures taken by the Government. Overall, household disposable incomes have risen in the past year and in the past quarter.

Specific actions taken by the coalition Government include freezing council tax; freezing and then cutting fuel duty; introducing the apprenticeship minimum wage, which did not exist before, in 2010; cutting beer duty; and of course raising the tax threshold, which was mentioned by my hon. Friend the Member for Hexham (Guy Opperman). The tax bill of people working full time on the minimum wage has been cut in half.

Government Members would argue that the best route out of poverty is work, with benefit and education reform and, as the hon. Member for Glasgow North East mentioned, an enhancement of skills. That is vital in the long term, but we have been able to take some shorter-term fiscal measures to support people’s disposable incomes—after tax—even in difficult times.

The hon. Gentleman also discussed universal credit and tax credits. Tax credits have the disadvantage of the withdrawal rate and the increase in marginal effective taxes. However, universal credit will ensure that work always pays, so it and a consistent withdrawal rate will be part of the solution to poverty. We want to ensure that incentives are right to support people who get on and work hard.

[Mr Bain]

How do the Government respond to the research produced today by Gingerbread? Given the new way in which universal credit will work—assessed on after-tax income—what lone parents get through the tax system they will in effect lose through universal credit. Frankly, will that not make it difficult for the Government to make good the pledge of the Secretary of State for Work and Pensions, that work will pay for every hour that people work?

[Matthew Hancock]

Absolutely; it is vital that work always pays for every hour, and that is why having a consistent withdrawal rate in universal credit matters. It is valuable that this debate is not particularly partisan, but I draw the hon. Gentleman’s attention to the fact that, with tax credits as they were, withdrawal rates were sometimes more than 100%, so in some cases—not in large numbers—people were taking home less when they worked harder. Universal credit will put an end to that, which should be welcomed in all parts of the House.

[Guy Opperman]

Does the Minister accept that the true way to engineer people out of low pay is to provide them with the skills to do a better job and to make progress? Last week, I opened an engineering academy in Hexham, and shortly we hope to welcome to the north-east the skills funding pilot of the Department for Business, Innovation and Skills. Does he accept that skills are the real secret for the future of the low-paid?

[Matthew Hancock]

Yes, of course. As the Skills and Enterprise Minister, everyone would be amazed—I would not be doing my job—if I did not support that argument, which I do.

[Nia Griffith]

As has been rightly pointed out, whether with tax credits or universal credit, there is an issue about tapering. More importantly, there is also an issue about the public purse. Whatever the history—which, in my opinion, shows that when the national minimum wage was introduced, it was opposed by certain parties, so it had to be brought in at a compromise level—the issue remains that, unless we look seriously at raising the minimum wage at a faster rate, we will continually have to top up from the public purse.

--- Later in debate ---

[Matthew Hancock]

I was about to answer that point. To consider what best to do to ensure that everyone gains from the economic recovery as it comes, we have to understand all the factors affecting low wages and low pay in our economy. I imagine that there is a common desire to see wages rising without damaging employment.

The Low Pay Commission was set up to get that balance right. We have now asked it to look at what economic conditions might be needed to allow the national minimum wage to rise more in future than current conditions allow without having an adverse impact on jobs. Improving incentives to work by having a higher minimum wage has a positive impact on employment, but we must get the balance right. Employment is growing strongly in this country, which is good because unemployment is worse than being in a job on the minimum wage. We must get that balance right.

We are doing what we can to protect the incomes of working households that have been squeezed, hence we have cut income tax by raising the tax threshold and taking almost 3 million people out of tax. The rises in the personal allowance are worth up to £700 in cash and more than £500 in real terms from April 2014, which is a significant improvement.

We are also taking important action on enforcement of the national minimum wage. Anyone who is entitled to it should receive it. Since 1 October, employers who fail to pay it will be publicly named, and revamped criteria were announced in August to make it easier to clamp down on rogue businesses. In 2012-13, more than 700 employers received penalties totalling more than £775,000 for failing to comply with minimum wage law. From the start of this month, I am writing personally to every new apprentice to ensure that they are aware of their rights under the legislation. Under the original scheme, we named only one employer because the benchmark was set high. It was introduced only in 2011 and did not exist in that form under the previous Government. We have strengthened it from 1 October.

All that is part of an effort to toughen up enforcement of the national minimum wage, not least because it is fair that scrupulous employers who pay the national minimum wage are not undercut by unscrupulous employers who do not pay it. We are taking a multi-faceted approach, including improved new targeted communications, to raise awareness in addition to letters from me, which I am sure every apprentice enjoys receiving. This work is starting to produce results. In 2012-13, Her Majesty’s Revenue and Customs identified £3.9 million arrears of wages for 26,500 workers.

Action has been taken, but we must get the balance right. We have asked the Low Pay Commission to take further action, but we must do that in a way that supports the rising number of jobs in this country. Overall, it is valuable not only to debate the issues, but to continue to try to get the balance right between ensuring that work always pays and that the minimum wage is at a level that supports people in work as consistently as possible with ensuring that it does not harm the employment prospects of those who are seeking work.

Doing that at the same time as trying to remove some of the fiscal costs—the taxes on jobs—asking the Low Pay Commission to take a forward-looking view of what economic conditions would be necessary to allow a faster increase in future and the stronger naming scheme demonstrate that we are working hard to ensure that the national minimum wage is effective, fairly enforced and supports people who do the right thing, work hard and are trying to provide for their families in tough times. That shows that the coalition Government are on their side.

[Mr Jim Hood (in the Chair)]

I confirm that the next debate must be concluded by 5.15.

“The Future of Apprenticeships in England: Implementation Plan”

Matt Hancock Excerpts

Monday 28th October 2013 Written Statements

[The Minister for Skills and Enterprise (Matthew Hancock)]

Today the Government have published “The Future of Apprenticeships in England: Implementation Plan” and the associated “Guidance for Trailblazers”.

Apprenticeships are at the heart of the Government’s drive to give people of all ages the skills employers need to grow and compete. They already deliver strong returns for the economy, for employers and for apprentices. A record 1.5 million apprenticeships have been started since 2010.

Following the Government’s endorsement of the employer-focused vision in Doug Richard’s independent review of apprenticeships, and our subsequent consultation on his recommendations, the implementation plan sets out policy, process and time scale for reforming apprenticeships in England.

Our reforms will ensure that apprenticeships become more rigorous and more responsive to the needs of employers. We will improve the quality of apprenticeships by introducing higher expectations on English and maths grading to incentivise apprentices to strive to be the best and an increased focus on assessment at the end of an apprenticeship to ensure full competence.

We are putting employers in the driving seat, by giving them responsibility for developing short clear standards and the high-level approach to assessment that will replace long and complex frameworks, to ensure they better meet the skills needs of employers. We also intend to announce our future approach to apprenticeship funding later this year.

Trailblazers will lead the way in implementing these new apprenticeships, ensuring that employers are involved in their design and that we deliver them in a way that works. We will learn from trailblazers lessons for the future delivery of all apprenticeships. The first trailblazers will focus on vital occupations in the following sectors:

Aerospace

Automotive

Digital Industries

Energy and Utilities

Electrotechnical

Financial Services

Food and Drink Manufacturing

Life Sciences and Industrial Sciences

In total, more than 60 organisations are already involved, including large and small businesses and professional bodies. Together they already had more than 13,000 apprentices start in 2011-12

Copies of the implementation plan and guidance for trailblazers, including a full list of the organisations involved, are being placed in the Libraries.

Oral Answers to Questions

Matt Hancock Excerpts

Thursday 24th October 2013 Commons Chamber

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is our priority that all adults throughout England have the English and maths that they need to build successful careers and support their families. We have put English and maths at the heart of our schools reforms and fully fund basic English and maths courses for adults who lack those skills.

[Mr Buckland]

I am grateful to my hon. Friend. Will he join me in congratulating Swindon organisations such as Uplands Educational Trust and Enterprise Works that are providing training and support opportunities to adults with disabilities? What plans does he have to ensure that that provision can be enhanced and increased?

[Matthew Hancock]

I am delighted to hear about creative enterprises such as Enterprise Works and Uplands Educational Trust in Swindon. I know that for many people with disabilities, school or adult education is a rewarding experience that helps them gain life skills. My hon. Friend is a passionate and effective champion of that, and I look forward to talking to him in more detail about those enterprises and others to ensure that we support disabled people as much as possible.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I know that the Minister will be as concerned as I am that unemployment among young adults is still more than 1 million, and that the number of apprenticeships among adults under the age of 19 is now below the level in 2010. Can he assure the House that in the next set of figures the number of apprentices under the age of 19 will increase? While he is at it, will he explain why he voted against Labour’s plans to use the power of public procurement to increase precisely those vitally needed apprenticeships?

[Matthew Hancock]

Of course we do use public procurement to increase the number of apprenticeships, not least in Crossrail, which is the largest public procurement and construction project in Europe at the moment. It is true that we had to take action to remove some low-quality provision in the 16-to-19 space when we introduced rules to ensure that every apprenticeship was a job, which it had not previously been. I would have thought that the right hon. Gentleman would welcome the improvement in quality. We also have a programme in hand to increase the numbers. Participation in apprenticeships is at the highest level ever, which I would have thought all parties would be able to support.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Young adults in north Northumberland who have left school without the basic skills to which the Minister referred do not have ready access to further education, because there are no college facilities within a reasonable distance of them. Will he work with potential providers to ensure that the gap is filled?

[Matthew Hancock]

I have visited Northumberland college, which serves my right hon. Friend’s constituency, and it is an impressive institution. Of course, it is important to ensure that adult skills are available throughout our country, and as the recent OECD study showed, spreading English and maths skills is vital to ensuring not only that we can improve our competitiveness as a country but, most importantly, that we can allow everybody to participate. Improving technologies in teaching will help, but we must ensure that there is access to basic skills throughout the country.

[David Mowat (Warrington South) (Con)]

6. What projects will be eligible for funding from the Green Investment Bank.

--- Later in debate ---

[Duncan Hames (Chippenham) (LD)]

12. What initiatives local enterprise partnerships are taking to support small businesses.

[The Minister for Skills and Enterprise (Matthew Hancock)]

The Government believe that local businesses are best placed to make the case on their needs. Local enterprise partnerships have consulted with small businesses to develop their strategic economic plans, which will help to give them access to the local growth fund and support skills, housing and infrastructure.

[Duncan Hames]

I thank the Minister for that reply and, while I am at it, for his support for investment in the further education college estate. Does he agree that, whether through the regional growth fund, Europe, city deals or local enterprise partnerships and the single local growth fund, supporting initiatives that help small businesses to grow and provide more jobs is critical?

[Matthew Hancock]

The Government are a passionate supporter of small businesses. The fact that 4.9 million businesses exist—a record number—is partly a response to the improvement in the environment for small businesses, supported by LEPs and the skills system, which we have done so much to put in place.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Our LEP around the Humber is supporting and wants investment by Siemens in Hull. Further to the question from my hon. Friend the Member for Warrington South (David Mowat), will the Department do everything possible to talk to the EU about changing the rules that restrict the ability of the Green Investment Bank to invest in great projects such as that with Siemens, which are so important to our area?

[Matthew Hancock]

Yes, of course. I thoroughly enjoyed my visit to my hon. Friend’s constituency. Many people raised the issue of Siemens, which would invest not only in the UK, but, through the supply chain, in many small businesses. I will look in detail at what he says.

[George Freeman (Mid Norfolk) (Con)]

May I congratulate the Government on the great news that 102,000 new businesses were created last year, bringing the total to an all-time record of 4.9 million? Does the Minister agree that many first-time entrepreneurs and start-ups find that compliance with a whole raft of Government red tape, often designed in Europe and gold-plated in Whitehall, is a genuine barrier? Will he meet me and representatives of entrepreneurial start-up companies to see what we might do to ease the burden on start-ups in particular?

[Matthew Hancock]

I am always delighted to meet my hon. Friend, so I would love to do that. We are always looking at how to ease the burden further. We have reduced the burden on business enormously. The one in, two out rules are in place and are working, but there is always more to do.

[Mr David Heath (Somerton and Frome) (LD)]

Is the Minister aware of the huge disparity in the attitude of local enterprise partnerships to rural areas? Some are fully engaged and interested, but others appear to think that rural Britain is simply the inconvenient gaps between cities. Will he disabuse them of that notion?

[Matthew Hancock]

I certainly will. Local enterprise partnerships are led by local businesses and, in large part, respond extremely effectively to the needs of local businesses. In some areas of the country, they are almost wholly reflective of the rural economy—that is true of East Anglia, which is largely rural. I take on board the point that that does not always happen everywhere, and I will ensure that it does.

[Clive Efford (Eltham) (Lab)]

13. What assessment he has made of the value for money for the public purse of the recent sale of shares in Royal Mail.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

16. What steps he is taking to promote provision of apprenticeships.

[The Minister for Skills and Enterprise (Matthew Hancock)]

There were almost 860,000 people undertaking an apprenticeship last year; that is more than ever before. We have raised standards, introduced higher apprenticeships, made it easier for employers to engage and created the £1,500 apprenticeship grant to encourage more employers to recruit an apprentice for the first time.

[Caroline Lucas]

Will the Minister’s Department do even more—a bit of ambition here—to help young people in my constituency taking part in schemes run by City College and organisations such as Proactive and make it his policy that suppliers winning public contracts worth more than £1 million should be required to offer apprenticeship opportunities on those contracts?

[Matthew Hancock]

I would be delighted to work with the hon. Lady to promote apprenticeships in Brighton. I might point out that in her constituency the number of apprenticeship starts has doubled since 2010. We have taken action to ensure that quality is improved as well, but the more we can do to improve and widen the opportunities for people to go into apprenticeships the better.

[Peter Luff (Mid Worcestershire) (Con)]

The scandalously low number of women in engineering apprenticeships is a missed opportunity for young women themselves, engineering employers and the wider economy. Does the Minister share my concern about the continuing and powerful evidence of gender stereotyping in schools, particularly co-educational schools, and the low number of engineering companies taking action to improve work force diversity, revealed by the Institute of Engineering and Technology only this week?

[Matthew Hancock]

Absolutely. I pay tribute to the work of my hon. Friend on this subject and look forward to following his leadership in driving up the number of women in engineering apprenticeships.

[Kerry McCarthy (Bristol East) (Lab)]

17. What assessment he has made of the potential effect on UK artists and creators of introducing a private copying exception without compensation.

--- Later in debate ---

[Christopher Pincher (Tamworth) (Con)]

T3. Tamworth borough council is doing its bit to back small business Saturday by promoting “created in Tamworth” and offering free market stalls to business people and free parking to customers. Do the Government agree that local authorities have a hugely important role in helping rather than hindering small business growth, not least by offering more free parking?

[The Minister for Skills and Enterprise (Matthew Hancock)]

We in Government are huge and enthusiastic supporters of small business Saturday, which has cross-party support. I encourage local authorities of all political persuasions to follow the lead of Tamworth and introduce policies that can help to support small businesses across the board, and especially on Saturday 7 December, small business Saturday.

[Pat Glass (North West Durham) (Lab)]

T5. I was disappointed by the Minister’s response to the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) earlier and surprised at his lack of basic geography, so I am going to give him another opportunity. I understand that we are all just “the desolate north-east” to Government Members, but I remind the Minister that Northumberland college is indeed in south-east Northumberland and up to 50 miles away from parts of north Northumberland. Once again, what will the Minister do to meet the basic needs of young people in north Northumberland?

[Matthew Hancock]

I know the geography well, not least because I have visited Northumberland college in the last few months—[Interruption.] Hold on. Transport issues are important. If the hon. Lady is saying that we need to ensure that we get basic skills provision into all areas, including rural areas, I entirely agree with her, but if she is saying that the best thing to do is to ignore large rural areas, I disagree. I would have thought that we could work together on this sort of thing.

[Jessica Lee (Erewash) (Con)]

T4. Will my hon. Friend join me in congratulating engineering and manufacturing firms in Erewash, including F. C. Laser and TecQuipment, which are continuing to grow and to recruit apprentices? In addition, F. C. Laser has recently won the D2N2 award for the most promising business in 2013, proving that the entrepreneurial spirit is alive and well in Erewash and creating many jobs.

[Matthew Hancock]

I commend my hon. Friend’s work in supporting small businesses and jobs in Erewash, through supporting enterprise. This is all about ensuring that companies can start up and grow and that they can employ people as easily as possible. I hope that our employment allowance, which comes in next April and which will give every company that employs people a £2,000 tax break, will help to take that a step further.

[Caroline Lucas (Brighton, Pavilion) (Green)]

T6. Small businesses in my constituency have been flagging up the importance of local enterprise partnerships focusing more on skills training and apprenticeships, and on the fact that that could be better promoted if all LEP boards included at least one specialist education representative. What does the Minister think of that idea, and will he consider making it a prerequisite for LEPs receiving Government funding?

[Matthew Hancock]

Unusually, I agree with both the suggestions that the hon. Lady has made. I look forward to working with her to support skills and small businesses through the LEP in Brighton.

[Mr Marcus Jones (Nuneaton) (Con)]

T7. Manufacturing in the midlands is going through a renaissance, but the challenge is to create the skills necessary to meet future needs. Will the Minister join me in welcoming Tomorrow’s Engineers week, and tell the House what more can be done to enthuse young people, particularly young women, about engineering?

[Matthew Hancock]

Yes, I am an enthusiastic supporter of Tomorrow’s Engineers, and the Government are backing that project in every way that we can. Tomorrow’s Engineers is about demonstrating that engineering is part of the future of our economy, and that it is an exciting career for someone to get into, whether they are a man or a woman. It is where the future of our economy is going, and providing the necessary skills is a vital part of what we are doing.

[Julie Hilling (Bolton West) (Lab)]

The Secretary of State has spoken proudly about the new businesses that have started up, but can he tell us how many businesses closed last year, and how many jobs were lost as a result of those closures?

[Fiona Bruce (Congleton) (Con)]

T8. What steps are the Government taking to address skills gaps, create jobs and increase productivity by improving the information given in schools about vocational job opportunities, particularly local ones?

[Matthew Hancock]

We are making the skills system more rigorous and responsive to need, but schools have a duty to secure careers advice. I want that advice to be inspirational and impartial, and to include more mentoring, especially from people who have real jobs, so that we can help each child to reach their potential.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Last week, I attended the Hounslow enterprise showcase, organised by Dawn Edwards and Isabel King from the Real Business Club, which was run with the support of the local jobcentre and Hounslow chamber of commerce. I spoke to three women from my constituency who were looking for advice on how to start or grow their businesses. Does the Secretary of State think that we need to do more to support women-led businesses, particularly as research shows that the UK has a higher gender gap in entrepreneurship than many of the OECD countries?

Share Capital (Businesses)

Matt Hancock Excerpts

Thursday 24th October 2013 Commons Chamber

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a great pleasure to respond to this debate, because I agree with the central thrust that motivated my hon. Friend the Member for South West Bedfordshire (Andrew Selous) to call it, namely the importance of equity finance, especially for small and medium-sized businesses, and the fact that it is not discussed as often as it should be in this House.

It is telling, as my hon. Friend has pointed out, that during Treasury and Business, Innovation and Skills questions we tend to get more questions on access to finance than on any other subject. There is some evidence that access to finance is improving, although it is still not in a strong position. Thanks to the tough choices we have made since 2010, I think it is widely recognised that the economy is, broadly speaking, on the mend. It has not fully recovered by any means, but it is on the way back. That is reflected in the number of businesses, not only in my hon. Friend’s constituency, where businesses are creating jobs, but across the country. Companies House records show that there were 480,000 new incorporations in 2012-13, which is the highest figure on record. If I may correct one of my hon. Friend’s figures—I do so as gently as possible—yesterday’s figures show that the number of SMEs in this country is now 4.8 million, not 4.5 million. I hope he is not too disappointed by that minor correction.

I accept my hon. Friend’s challenge to be, along with the BIS team, a champion of smaller businesses in their quest to access finance. Our programme is vital. The Breedon report made a series of recommendations, many of which have been acted on, including the introduction of the business bank, which my right hon. Friend the Business Secretary announced in September.

We know that it has been much harder for businesses to access finance since the crisis. One of the lessons of the crisis was that the economy had become too reliant on one source of finance, namely bank finance from the four big banks. The business bank will help to solve that problem, but it is by no means the only solution, because we need to increase the supply and diversity of finance available, which brings me to the subject of equity finance.

I will take on board all the points my hon. Friend has made and if I miss any out I will read Hansard and make sure they are acted on. I would stress that when talking about equity finance, we need to be cognisant of the importance of the wider availability of both private equity finance and public equity finance. Although it is difficult to measure with precision, in recent times, the amount of private equity finance, whether through angel investing, venture capital investing or bigger private equity financing, has been greater than the amount of public equity finance. Both are important. It is important to have diverse forms of finance, not only so that if one form struggles, others can take up the slack, but because different forms of finance are right for different companies.

It is true that we have extended tax relief, not only by cutting corporation tax, removing stamp duty on AIM shares and allowing individual savings accounts to invest in AIM shares, which is a tax relief in a sense, but through the extension of the enterprise investment scheme and the introduction of the seed enterprise investment scheme, both of which are extremely popular schemes for investing in small and fast-growing companies for those who pay UK income tax. The encouragement of equity finance, in whatever form, through tax relief is an important part of our programme to solve the problems that my hon. Friend highlighted.

Tax treatment plus regulatory costs, whether in the public or private sphere, make up the gap between the equity that an investor can put in and the investment that a small business receives. I hope that drilling down on both will bring more liquidity and finance where they are needed, which is in growing companies that can make good use of them.

I was struck by the figures that my hon. Friend set out. In the United States, 19% of this kind of finance comes from the banks, compared with 81% in Europe. The UK is one of the more friendly destinations in the EU for non-bank finance, but the figures are striking. When I was in the United States last week, I was struck by the powerful fact that more venture capital is available in the skyscraper in which the British consulate in Boston is housed than is available across the whole of Europe. That shows the difference between the two continents not only in the amount of finance that is available, but in the number of people who have started and grown a business and are now reinvesting. The United States, whether on the east coast or the west, is a generation ahead of us. Part of our job is to catch up as fast as we can. That challenge is real; the good news is that the opportunity that it presents is great.

My hon. Friend spoke eloquently about the various small exchanges. I urge him to look also at peer-to-peer finance, whether equity or loan, because that is a small but growing part of the market that companies can look to when trying to access finance.

As well as bringing tax relief and bearing down on regulatory costs, the Government make direct interventions. In the business angel sector, the Angel CoFund makes equity investments of between £100,000 and £1 million in SMEs. It does that alongside syndicates of business angels. It encourages greater levels of angel investment and syndication, and provides companies with experience and expertise alongside the capital. I echo my hon. Friend’s remarks that when finance comes into a small business, it brings not only pure capital, but better governance and advice from people who have skin in the game and who therefore take care in the advice that they deliver.

In the Budget this year, we announced that another £50 million would go to the Angel CoFund, doubling its size. I hope that it will help to strengthen the whole business angels sector, because it invests only when appropriate due diligence has been undertaken and a deal is structured properly. The UK Business Angel Institute, founded by the UK Business Angels Association and AngelNews, is creating standards of professionalism in UK angel investing, which by its nature often involves investing early in quite high-risk companies. If we can have more quality in training courses for private investors, such as those that the UK Business Angels Association is delivering, that will strengthen investing skills in that important area of the market.

My hon. Friend made the point that equity is taxed four times whereas bank debt is tax-deductible. A number of non-tax factors have an impact on whether a business decides to use debt over equity financing, so tax is not the only issue. Different companies look to different forms of finance, and debt can be quicker to obtain and less complicated to use. Of course, there is the also the question of the amount of ownership that is given up in return for equity financing.

I turn to deductions for interest as a business expense. To protect the UK Exchequer, a number of rules limit how much interest a company can deduct from its tax liability. My hon. Friend made the point that dividends are paid out of a company’s tax profits. However, they are exempt from tax in the hands of the company receiving them. In the case of an individual shareholder in the income tax system, the combination of dividend tax credit and the lower rates of tax for dividends ensures that dividends are taxed at broadly the same level as other forms of income, even after corporation tax is taken into account. It is important to take into account not just the number of different taxes that apply to a piece of income but the rates of them, so that we can work out the relative rate on each form of finance. Having said that, it is clear that the Government are moving in the direction that he wants, for instance through abolishing stamp duty on AIM shares and other growth markets, making investments eligible for ISAs and so on.

I wish to mention one other area of tax, which is the entrepreneurs’ relief. That is a valuable incentive and reflects the fact that entrepreneurs take risks and are often the beating heart of growing businesses, which should be recognised in the tax system. We have increased the amount of relief that can be used and allowed it to be used in more situations, so that more businesses and entrepreneurs can benefit from the 10% capital gains tax rate rather than the normal 28% or 18% rates. Over a number of Budgets, there has also been an increase in the lifetime limit for entrepreneurs’ relief to £10 million, so shares acquired from the enterprise management incentive can qualify for a lower capital gains tax rate. There has been action on stamp duty, capital gains tax and corporation tax, three of the four taxes that my hon. Friend mentioned as part of the barrier. The direction of travel is clear, and his argument is strong.

The value of small businesses to our economy makes them absolutely vital, and helping small businesses create jobs and take people on has been one reason why we have had such strong growth in the number of people employed in the private sector in the past few years.

[Andrew Selous]

I am heartened by what the Minister has said and by the tone and general thrust of his reply. Will he reflect briefly on my points about the cost of regulation? Might he perhaps meet Martin Wheatley of the Financial Conduct Authority, who admitted to me yesterday morning that the costs of raising capital are high? With his business hat on, representing 4.8 million businesses, will he consider whether there is any way to lower the costs of raising capital through regulation, while keeping investors safe?

[Matthew Hancock]

My hon. Friend will be delighted to know that I am already arranging a meeting with Martin Wheatley to make the arguments that he has eloquently made today and broader arguments about ensuring that we can get good finance into our small and growing businesses.

Question put and agreed to.

Adult Literacy and Numeracy

Matt Hancock Excerpts

Thursday 10th October 2013 Commons Chamber

[The Minister for Skills and Enterprise (Matthew Hancock)]

I echo the words of the hon. Member for Chesterfield (Toby Perkins) in saying this has been an excellent debate and congratulating my hon. Friend the Member for Gosport (Caroline Dinenage) and the other supporters of the motion. Not only has the debate been informed and valuable—there is now no need for me to read out many of the statistics I have to hand to set the context as they have already been given—but it is timely given Tuesday’s OECD report. It was a shocking report and it will reverberate down through the education debate in Britain for many years. I hope it will persuade many who are sceptical or resistant to the reforms being put in place to come onside and support more rigour, and support stronger maths and English within schools.

The OECD demonstrated that over 8 million people in our country lack functional numeracy and over 5 million lack functional literacy. While Britain is strong at the top of the skills range, on these measures we have gone from being about the third best in the world to about the third worst in two generations between 55-year-olds and 16-year-olds.

[Toby Perkins]

That statistic was given earlier today by the Leader of the House. The OECD report said we were third bottom of 24 countries, not third-bottom in the world. I am sure the hon. Gentleman would not want to mislead people. He is out there fighting for British jobs, and he would not want to tell people that the situation is worse than it is.

[Matthew Hancock]

Absolutely. We are third from the bottom in the developed world, as surveyed by the OECD. We are 22nd out of 24 in numeracy and 21st out of 24 in literacy and however we want to cut those figures, they are bad.

I pay tribute to all those who have worked so hard in this area, especially the National Institute of Adult Continuing Education and its chief executive, David Hughes, whose lifelong work has been spent trying to drive up adult literacy and numeracy. So much of the solution is about high expectations and standards and, as a country, we have tried over the last decade and more to find one merely by throwing money at the problem. It is clear that while money is part of the answer, it is only part of the answer, and a lot of it is to do with making sure we get the right teaching to the right expectations with the right level of rigour.

This problem must be solved first in our primary and secondary schools. We can then try to solve it, for those who do not succeed at school, in colleges and further education, and then, of course, for those for whom that still does not work, throughout life. This problem must be tackled at all levels, therefore.

Let me set out some of the actions the Government have taken. The focus on numeracy and literacy in primary schools is crucial, but, as well as time spent on these issues, we have to make sure we have high expectations of children at a young age. We need to make sure that grammar is taught properly and that mental arithmetic matters—that we do not rely only on calculators, and instead the understanding of basic maths is inculcated deep in pupils. Then we must reform GCSEs and have a more stretching curriculum for teenagers, and then, for those who do not get the crucial C or above in GCSE, make sure they continue to learn English and maths. The introduction of the tech level and the tech bac will drive that among those who do not go down the A-level route. As announced this week, we are introducing a core maths paper that is somewhere between a GCSE and an A-level so that for the 40% who get a C at GCSE but do not continue to study maths there is a qualification that is not as big as a full A-level but allows them to continue studying maths.

[Kelvin Hopkins]

I wonder whether the Minister is going to touch on teaching methods in primary schools and some of the points I made. Some of his ministerial colleagues and former ministerial colleagues were keen on examining teaching methods, particularly in primary schools, to make sure that we have got that right. If we do not get that right, we will not make much progress.

[Matthew Hancock]

I could not agree more with almost everything the hon. Gentleman has said in this debate. He made a remarkable contribution and I was coming on to respond in more detail to it. I entirely agree that getting teaching methods that work matters, but what also matters is that the teachers believe in the methods they are using—that is what the evidence shows—and move away from what he called an “utterly misguided” philosophy of learning. I like him more the more I listen; thank goodness there are people on both sides of this House who think that it is utterly misguided not to stretch pupils and not to have rigorous and evidence-based methods of teaching.

We are also tackling levels of illiteracy among benefit claimants, introducing new conditionality to require the learning of English and looking towards introducing a concept for younger benefit claimants of “earn or learn”, so that we incentivise people into training rather than pay them so long as they do not train for more than 16 hours a week.

Apprenticeships and traineeships are, of course, close to my heart, and they increasingly require English and maths. Some people say, “If you go into an apprenticeship, you should not have to do English and maths because apprenticeships are for people who are going into jobs that do not require those things.” But there is almost no job that does not require a basic standard of English and maths. In this modern workplace—by that I mean around the country, not necessarily in this building, as it is not the most modern of workplaces—the level of English and maths required is vital.

[Mr Binley]

The Minister knows I am keen on using community assets in a much more imaginative way. How might we do that in this context, particularly with libraries, which are very underfunded, as the shadow Minister stated? How might we improve that situation and have a more involved local community push in this respect?

[Matthew Hancock]

I was coming on to deal with the role of community facilities, where I understand my hon. Friend is driving forward the argument. Academies and free schools are one way to help, because giving more autonomy to head teachers allows them to use their buildings as they wish. On libraries, managing community facilities more imaginatively is important, and a lot of that is down to the individual managers of individual institutions. I strongly support what he said about that.

Of course, good teaching of English and maths requires good English and maths teachers, so we are today announcing new Department for Education support for the national centre for excellence in the teaching of maths to develop a maths enhancement programme to upskill existing teachers of maths in further education. The programme will be delivered by professional development leads associated with the centres for excellence in teaching and training. We need more maths teachers, and we are on track this year to have trained more than 600 FE teachers. So we are constantly working to drive up the number of English and maths teachers, as well as the English and maths taught.

Above all, this comes down to school reform, because without excellent schools we will not solve this generational problem. I hope that the OECD report will have helped to build a stronger consensus behind our school reforms, which remain opposed—inexplicably—by some people who otherwise describe themselves as “progressive”. As the shadow Minister said, the OECD showed the problem of the link between deprivation and education being greater in England and Northern Ireland than elsewhere, but the problem is that poor education entrenches deprivation. Education needs to be the foundation of social mobility, and in the UK that is not happening nearly enough now. The hon. Gentleman did not mention the collapse that the OECD study showed in the results among 16 to 24-year-olds, where this country has gone from the top to very near the bottom. We are driving forward on making sure that we reform our schools system, bring in free schools, give head teachers powers under academisation and improve the standards of teachers. However, we have opposition, and I do not understand why people who otherwise call themselves “progressive” say that they are opposed to these things. I wonder whether we are going to get a change of heart from the Opposition Front-Bench team on so-called “unqualified teachers”, not least because the new shadow Education Secretary once was an unqualified teacher.

[Toby Perkins]

The report makes it absolutely clear that England and Northern Ireland need to address social inequalities, particularly among young adults—that was a key part of its recommendations, which is why I focused strongly on it. Of course I understand that educational inequalities can lead to social inequalities, but this report is saying that social inequalities will lead to educational inequalities.

[Matthew Hancock]

I am sure that the hon. Gentleman will want to welcome the fact that inequality in Great Britain is at its lowest level since 1986 as a result of the efforts of this coalition Government.

The hon. Member for Huddersfield (Mr Sheerman) made a passionate speech. I hope that this debate will not become party political because there is no need for it to be; if we all listen to what the OECD said and drive rigour and standards through schools, it does not have to be party political. He also mentioned mentors. We are reforming careers advice to make it about inspiration and mentoring, and to help brokerage between businesses and schools. If anyone had him as a mentor, I have no doubt that they would absolutely value that. He made many extremely important points, crucially recognising that this has not gone well for a long time and needs to be turned around. He said that we have failed to deliver the most basic of education over a number of years, and that is exactly what we are trying to turn around.

[Mr Sheerman]

May I remind the Minister that I was also trying to get over the fact that we have been very successful for one section of our population, really expanding things, at the same time as we have been totally unsuccessful with, and almost wilfully neglectful of, the lower achievers?

[Matthew Hancock]

Absolutely; I believe somebody once called them the forgotten 50% and they were indeed forgotten. That is no longer the case. Educational reform has to be about making sure that everybody can reach their potential. I was going to say that an intellectual error has been made in the past and we have to put it right. I am talking about the argument that because someone has a low level of education or they are undertaking a low-level qualification—level 1 or level 2—what they are doing does not have to be rigorous, stretching and high-quality. At every level of education we have to make sure that we get as much improvement in pupils as possible. We are trying to put right that mistaking of a low level with the “need” for low-quality and sloppiness.

It is fantastic and an honour to be answering the first speech that my hon. Friend the Member for Ribble Valley (Mr Evans) has made from the Back Benches for several years. He rightly argued that this is about the fulfilment of lives as well as about jobs and the economy. He, like my hon. Friend the Member for Tamworth (Christopher Pincher), mentioned the importance of tackling the issues faced by those who have dyslexia, and I could not agree more. It comes back to the previous point: just because someone has dyslexia does not mean they cannot have decent English and maths. It makes those things harder to teach and we need different techniques for teaching them, but we should not have low expectations just because people find something difficult. He also mentioned the importance of the context for learning and, as the Minister responsible for apprenticeships, I often find that people who failed in English and maths in a formal setting thrive in them as soon as they encounter them in a job. That is because suddenly it matters whether or not they can do their maths. If they can, they can do their job.

The hon. Member for Sunderland Central (Julie Elliott) mentioned Unionlearn, and I am grateful to her for highlighting it. The Government support it and fund it—it would be great to get some acknowledgement for that. My hon. Friend the Member for North Swindon (Justin Tomlinson) talked, as he often does, about financial literacy, and it was great to be able to put that into the curriculum. I hope that it works and that we do not think that the job is done just because we have put it in the curriculum. We have to keep an eye on it and make sure that it really works. He also talked a lot about school reform, which is the heart of the long-term solution to the problem.

My admiration grows for the hon. Member for Luton North. I did not know that he was an economic historian until now.

[Kelvin Hopkins]

An economist, not an economic historian. I am sorry.

[Matthew Hancock]

It was going so well. Never mind, I will forgive the hon. Gentleman. I am a former economist, but I have repented my sins.

My hon. Friend the Member for Worcester (Mr Walker) talked about employer concern and the problems highlighted by the CBI, the FSB, the BCC and the EEF. I want to put the Government’s position on the record on one point. He said that there is sometimes an impression that people are not mathematically minded and went on to say that they should still be able to learn maths. The concept of people who are not mathematically minded does not exist anywhere else in the world. It is a peculiarly British cultural concept and we must eradicate it, because everybody can do maths. It is just a matter of how they are taught. I absolutely hope we can turn that around, although changing cultural perceptions takes time.

Many Members talked about probation and prisons and we are working hard to drive up English and maths in prisons. We are paying by results and outcomes rather than simply the number of classes taught to try to improve that.

The challenge is historic and is set next to an historic publication. The shock from the OECD’s report has brought up an objective fact, which needs to be answered. I hope that it has finally settled the debate between those who say that a constant increase in qualifications passed represents a constant increase in quality of education. Increasing numbers of qualifications matters only when those qualifications are of constant value and we know that they have not been. The evidence shows that we have a serious problem that has got worse in the past 10 years.

We have learned that, above all else, alone in the developed world, our 16 to 24-year olds are not better educated in English and maths than those aged 55 to 65. Yes, money is important in solving the problem, but money alone is not the answer. Expectations, rigour and challenge matter too. The solution will not happen quickly. It takes years to turn around schools, but then it takes years for those turned around schools to educate the next generation. It is a vital task and I hope that all parties and Members of this House can get behind it so that everybody in this country can reach their potential.

UK Trade & Investment

Matt Hancock Excerpts

Thursday 12th September 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Sir Roger, not least because of the value of our debate and the sheer number of interesting contributions. I welcome very much the work of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and his report. I had read an electronic copy, but now I have a hard copy to take away.

I shall try to respond to all the points that were made, but I start by saying that the most significant speech this afternoon was that of the hon. Member for Hartlepool (Mr Wright), who demonstrated passionately the strength of feeling in favour of bipartisan openness in Great Britain. As a country, we can be proud that we have a political tradition across all major parties of openness to trade and the value of trade. The argument about the benefits of trade—not just financial, but in terms of innovation and the improvement of business practices—was powerful, and long may that cross-party openness to trade continue.

I agree strongly with the hon. Gentleman about my noble Friend Lord Green, who has worked extremely hard, travelling much of the time, not only directly to open doors along with the Prime Minister’s trade ambassadors, two of whom spoke in the debate, but to strengthen UK Trade & Investment as an institution. Its budget was increased in the 2011 and 2012 autumn statements, which was partly because of a recognition that its effectiveness and efficiency were improving. The private sector experience of many of those in UKTI who are promoting trade was raised as an important positive point by hon. Members on both sides of the Chamber. Some 75% of senior management in UKTI have private sector experience, the majority of whom arrived in the past 18 months under the leadership of Lord Green. The whole House can unite in commending his work and Nick Baird’s day-to-day leadership of the organisation.

I was delighted to see support in the report for the direction UKTI is taking. It also contained a recognition of some improvements, although I have noted the criticisms, which I shall try to deal with as well. Part of the question is about the need for scrutiny of, and transparency in, UKTI. I should tell hon. Members that there were reports from the Business, Innovation and Skills Committee in 2011 and 2012 and a Lords Select Committee report in 2013, while the UKTI chief executive will appear before the Public Accounts Committee on 6 November. I am sure that he will very much enjoy his trip to Shrewsbury on 5 November, perhaps spending the time ensuring that he is across all the questions that he might be asked and listening to the comments of my hon. Friend the Member for Shrewsbury and Atcham. Those reports demonstrate the intensity of the parliamentary scrutiny that has been conducted.

It is worth airing some of the evidence about UKTI’s performance. According to an independent organisation that reviews UKTI’s performance quarterly, three quarters of the 4,000 UKTI service users who were surveyed were either satisfied or very satisfied, while fewer than 10% were dissatisfied. From those who use UKTI, the results are pretty strong but, of course, 10% dissatisfaction is still too high, although I hope that we can agree that it is a good baseline from which to improve.

[Mr Iain Wright]

I thank the Minister for citing those figures, but am I right in thinking that UKTI’s annual report sets a target for satisfaction levels of 80%, yet it has consistently failed to achieve that? What active steps will the Minister take to ensure that it hits its targets on customer satisfaction?

[Matthew Hancock]

It is indeed important to have a target for satisfaction, and if three quarters are satisfied or very satisfied, that shows we are heading in the right direction, but more can always be done. For instance, since 2011, a realignment of UKTI has taken place to ensure that it can better serve the needs of UK plc. The process has included: the introduction of stronger senior management with private sector experience; new private sector delivery of trade services in England, with incentivised contracts, which my hon. Friend the Member for Shrewsbury and Atcham asked for; improving performance overseas and strengthening teams in key growth areas, such as China and India; and reviewing targets to ensure that they incentivise the behaviour of individuals on the ground. The right balance is having strong direct accountability to Ministers, which is appropriate, alongside the right incentives to give individuals on the ground the autonomy to be able to promote trade.

Several hon. Members mentioned—favourably or otherwise—the fact that UKTI reports to two Departments. I am a Minister in two Departments, and it is true that it is necessary to have co-ordination between the two. It would not be right to remove accountability for UKTI from either the Foreign Office or the Department for Business, Innovation and Skills, because UKTI is precisely about the link between business and our international relations. This is about, on the one hand, strengthening links between UKTI and domestic business, for which the Business Department is responsible, and, on the other hand, strengthening links between UKTI and our diplomatic service, which has happened a great deal over the past two or three years. Both those are valuable and necessary if the service is to perform, so it is therefore right that UKTI reports to a Minister who sits in both Departments but, of course, it is accountable to one Minister—my noble Friend in the other place—so there is a clear line of sight for ministerial accountability.

Several hon. Members talked about the links between UKTI and the Department for International Development. UKTI has an aid-funded business service that works with DFID to try to ensure that opportunities for procurement through DFID, not least from SMEs, are valuable. UKTI holds seminars with businesses, including SMEs, and it will hold another seminar in November to ensure that SMEs and domestic British companies have the opportunity to make the most of procurement through DFID, which these days, of course, bears the Union Jack.

My hon. Friend the Member for Stafford (Jeremy Lefroy) talked about the importance of inward investment and the business bank. It is vital to ensure that finance is available for exports, and funding for lending and strengthening the domestic private banking system are important parts of that. We are also seeing the growth of challenger banks, which are increasingly providing business finance. We will, of course, have the first ever British business bank, which is being set up precisely to look at the sorts of investments that he talked about. It is right that the British business bank does not take direct instruction from Ministers for each loan because, quite properly, they have to be made on a commercial basis.

[Jeremy Lefroy]

Will my hon. Friend examine the relationship between UK Export Finance and the commercial banks? My constituents have said that some commercial banks—not all but some, including very large ones—do not seem to be interested in promoting export finance and are unaware of the new products that are available. As the hon. Member for Hartlepool (Mr Wright) said, they are not interested in exports at all. Will the Minister challenge the major UK banks to say what they are doing to promote exports?

[Matthew Hancock]

I can go one step further because we have already been raising those challenges with UK banks to ensure that the facilities on offer are better integrated into their services. My hon. Friend will also know that the GREAT campaign to which many hon. Members referred, which brings together the promotion of UK export under one strong brand, is being piloted domestically in the north-east of England to promote export by UK companies in addition to Britain overseas, as has been the case hitherto. The promotion of the different Government schemes available for British-based businesses will be brought together under that brand in the pilot, which I hope is successful and can be rolled out further, to do exactly what he talks about.

Regarding the broad discussion about the recognition of UKTI, I strongly agree that it is important to ensure that every business, as appropriate, knows about UKTI and its services. We are doing an awful lot to try to make that happen, not least through local engagement. More than 100 constituency seminars have been put on by UKTI with local MPs, serving about 150 constituencies. A seminar in my constituency was very well attended and has led to increased contacts between UKTI and local businesses. If any Member wants UKTI to come to their constituency, we can look at that, because I think that we have been able to meet every request that has been made. Such events mean that UKTI, with the help of the local MP, can reach businesses that it has not yet reached. I am sure that the hon. Member for Hartlepool knows of many businesses in Hartlepool, so that is the sort of thing that we can put on for MPs of all types.

[Daniel Kawczynski]

To support my hon. Friend on that point, we invited Paul Noon, the regional director for UKTI from the west midlands, to come to Shrewsbury, and we had about 25 local businesses there. The follow-up from the conference has been extremely good and the event has led to exports, so I thank the Minister for that.

[Matthew Hancock]

Well, there you are. It sounds as though it works in practice in Shrewsbury as well as in Haverhill, and I am sure that there are other parts of the country to which it can also reach.

There was a brief discussion about trade figures. I gently point out to the hon. Member for Hartlepool that the Opposition cannot have it both ways. They cannot blame the fact that growth has been slower than was forecast in 2010 on the Government’s domestic policies and then complain that growth in exports has not been as strong as we would have liked. In the past three years, there has been a massive crisis in the eurozone; I do not know whether he has been watching TV. One of the Government’s arguments has been that that has had a negative impact on the British economy. That argument is supported by a huge range of independent and international experts.

It is great to hear a Labour Front Bencher come to his senses and make the argument that, partly owing to the eurozone, export performance has unfortunately not been as impressive as we had hoped and that that has had a dampening impact on the UK economy. I will report back that the Labour party seems to be getting the message that that has been one of the main problems, as was set out in reports by the Office for Budget Responsibility, the OECD and other organisations. That is absolutely terrific.

Exports to India have risen 13% on the year and exports to non-EU countries rose by just over one fifth between 2010 and 2012. The move has been gradual, but for the first time in my adult life, exports to non-EU countries have become bigger than exports to EU countries. It shows the importance of rebalancing trade institutions such as UKTI around the world, in the EU as well as outside it.

[Mr Iain Wright]

The Minister selectively quoted the growth in non-EU exports between 2010 and 2012, but he will recall that I mentioned the £2.2 billion drop in non-EU exports last month. Given sterling’s performance and declining value, how does he explain that and what is he going to do about it?

[Matthew Hancock]

We will pursue the strategy on which we have set out, which is ensuring that the UK economy is strong at home by dealing with our debts, making it more competitive, doing everything that we can to win what we have called the global race and ensuring that UKTI plays its part, not least by delivering a UKTI budget increase over the past couple of years, so that it can reach the target of doubling exports to £1 trillion, as the hon. Gentleman mentioned.

The Government’s ambition of doubling exports to £1 trillion by 2020 also involves getting 100,000 more UK companies exporting. The hon. Gentleman asked how we are doing on that. As he said I would say, the monthly figures fluctuate, but UKTI is on track to achieve its target of supporting 32,000 businesses for the 2012-13 financial year. Some 90% of those 32,000 businesses are small and medium-sized enterprises. That support has helped generate additional sales of more than £33 billion. I would say that that is money well spent.

My hon. Friend the Member for Gloucester (Richard Graham), who is no longer in his place, discussed the importance of encouraging small businesses to export. He particularly mentioned chambers of commerce and other business groups. We are piloting the use of chambers of commerce; as non-governmental organisations, they can play a different role and fill a niche. There are 20 pilots, including in Brazil, India, Hong Kong, Russia and Singapore, using chambers of commerce as well as UKTI. He also mentioned one of my personal passions: Education UK—a specific unit within UKTI to help our education exports.

I will also come to the point about the link with the British Council. My hon. Friend mentioned the West Kowloon cultural district project, which has been supported by both UKTI and the British Council working together. That is an example of those two organisations working collaboratively to very good effect.

The good news on languages is that, although entries to A-level were down, entries to GCSE rose sharply. I hope that after a long period of decline, the increase in GCSE entries this year shows that people in English schools who take languages are coming through the pipeline. Let us hope that that is an early indicator of better things to come.

The hon. Member for Islington North (Jeremy Corbyn) asked about defence exports. Of course, as he said, the end user certificate system has been in place for a long time—more than 20 years—and the Government have confidence in the export licensing system, which we think is thorough and robust enough to address human rights issues that might arise from individual sales to individual countries. Any application for an export licence is considered against consolidated criteria in the light of circumstances in that country.

That brings me to the point raised by the hon. Member for Hartlepool about exports to Syria specifically. He mentioned two licences issued in 2012. I can confirm that those licences were never used to export chemicals and were revoked under the new EU sanctions. I hope that that addresses his question.

[Jeremy Corbyn]

The point that I made was that the FCO’s website expresses serious human rights concerns about regimes to which a large number of British arms exports are approved by the Department for Business, Innovation and Skills. I particularly draw attention to Bahrain, but also to the whole operation of the defence and security equipment international exhibition, which is on at the moment. A Russian company there that has been supplying arms to Syria is openly parading its wares at the exhibition, which is subsidised by the British Government. We need a lot more transparency about the operation of the defence services organisation and what eventually happens to those weapons. When people are assaulted by anti-personnel weapons supplied by Britain, they do not feel very benign towards this country.

[Matthew Hancock]

As I said, any application for an export licence is considered against the criteria, which have been in place for some time, in the light of circumstances in that country and depending on the products’ end use. The system has been supported by Governments of all three major parties. In the specific case of Syria, which has been raised as a concern, no chemicals were exported under that licence. I think that that addresses the point.

I am grateful for the opportunity to have this wide-ranging debate. I am looking forward to working with my hon. Friend the Member for Shrewsbury and Atcham, to ensure that we can push UKTI even further. I think that the overwhelming support for the direction of travel within UKTI and, at a higher level, the overwhelming support for UK trade openness and the ability to trade with the whole world will have been noted clearly in this debate. Thank you, Sir Roger, for your chairmanship. I hope that all those who read the report of the debate will notice that we are a country that is very much open for business.

[Sir Roger Gale (in the Chair)]

Mr Kawczynski, do you wish to exercise your right of reply?

Oral Answers to Questions

Matt Hancock Excerpts

Monday 9th September 2013 Commons Chamber

[Mr Andrew Turner (Isle of Wight) (Con)]

8. What proportion of 16 to 18-year-olds were not in education, employment or training in (a) the UK and (b) Isle of Wight constituency in the latest quarter for which figures are available.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

Some 9.1% of 16 to 18-year-olds in England were not in education, employment or training in April to June 2013. This is a fall of 1.4 percentage points on the same period last year and the lowest figure in a decade.

Some 4.7% of 16 to 18-year-olds in the Isle of Wight were NEET at the end of 2012. That is a fall of 0.5% on the same period in the previous year. The progress is good, but there is much more to do.

[Mr Turner]

I thank the Minister for his answer. Will he clarify whether schools and colleges are required to get young people a GCSE in English or maths at level C or above or whether that is an aspiration? What sanctions will be imposed on those that fail to achieve it?

[Matthew Hancock]

It is a requirement on schools and colleges that students who have not achieved a C in English and maths GCSE will continue to study those subjects. From next year they will lose funding if they do not, because English and maths are the most important skills. They must study towards GCSEs but can take interim qualifications, such as functional skills, as a stepping stone.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Surely if we want post-16-year-olds to stay on in education, young people of that age who attend further education colleges should be eligible for free school meals in exactly the same way as if they were at school.

[Matthew Hancock]

The question of free school meals post-16 is very important. However, schools are not funded to provide them after the age of 16, so making sure that we have a level playing field requires that we get the funding organised as well.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Ahead of tomorrow’s Ofsted report on careers guidance in schools, does the Minister agree on the importance of careers advice in schools? Does he also agree that it is not working well and that it would be much improved if the National Careers Service were funded to provide support and a challenge for schools in fulfilling their duty?

[Matthew Hancock]

As my hon. Friend well knows, I am a passionate supporter of the inspiration and mentoring of children in schools and adults of all ages. It is important to make sure that the right people—pupils and students—get the right advice. I am looking forward to tomorrow’s Ofsted report. We will respond and make it very clear what we are going to do to ensure that as many people as possible have such inspiration, mentoring, support and advice.

[Angie Bray (Ealing Central and Acton) (Con)]

9. How many free schools are open in England.

--- Later in debate ---

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

14. How many young apprenticeship starts there were in the latest period for which figures are available.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

There were 129,900 apprenticeship starts by those aged under 19 in 2011-12.

[Steve McCabe]

Given that the number of young apprenticeships is going down, has the Minister given any thought to the proposal of the Institute of Directors that there should be an adjustment in favour of young apprenticeships to take account of how difficult the job market is for under-19s?

[Matthew Hancock]

The number of apprentices in that age group is 10% higher than it was. I saw that report and it makes an attractive argument. We pay twice as much for the training of apprentices who are under the age of 19, but I will certainly pay regard to that report.

[Graeme Morrice (Livingston) (Lab)]

15. What plans he has for Sure Start children’s centres.

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

T3. The Government have introduced a variety of initiatives to support small and medium-sized enterprises to take on apprentices, which are welcomed by Lowestoft college in my constituency. However, there is a concern that a postcode lottery is developing, in that a number of different schemes and levels of support are available across the college’s catchment area. Is the Minister aware of that, and does he agree that local enterprise partnerships could have a role in co-ordinating such schemes?

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

As my hon. Friend knows, I am a passionate supporter of small businesses and of apprentices in them. The majority of apprentices are in small businesses and the Government do what we can to encourage that. In some places, local authorities top up the support we give. I am thrilled when they do so, but if we can do more to ensure that provision is consistent across LEP areas, we should do it.

[Bill Esterson (Sefton Central) (Lab)]

T8. Both the Minister for Schools and the Secretary of State completely failed to address the question they were asked about free schools policy. Fifty-one per cent. of all free schools have been built in areas where there are surplus places while there is a crisis in primary school places elsewhere. Is not the point that free schools policy has failed to deal with the shortage of places where they are most needed?

--- Later in debate ---

[Nic Dakin (Scunthorpe) (Lab)]

Given the further squeeze on the funding of education for 16 to 19-year olds, is it not now the time for the Government to give sixth-form colleges the same freedom on VAT that is enjoyed by universities, technical colleges, free schools, academies and maintained schools?

[Matthew Hancock]

I am highly aware of the pressures on sixth-form college budgets, and of the work they do to ensure standards are very high. I am in constant dialogue with sixth-form college leaders to explore all options to ensure that they can continue to deliver the very high standards they achieve today.

[Charlie Elphicke (Dover) (Con)]

T9. A recent National Audit Office report showed an encouraging 10% rise in adoptions. What is being done to help even more potential adopters to have the confidence to come forward and to support them through what can be a trying process?

--- Later in debate ---

[Mark Menzies (Fylde) (Con)]

Last week, I had the pleasure of welcoming to Parliament Brad Hodgson from BAE Systems, who is currently north-west young apprentice of the year. Does the Minister agree that driving up the quality of apprenticeships is every bit as important as increasing the numbers, if they are truly to have parity with universities?

[Matthew Hancock]

Next week, I am looking forward to going to see BAE for myself, because it has one of the best apprenticeship systems in the country. A higher quality of apprenticeships is undoubtedly just as important as the number of people going through them, and that is what we will continue to focus on.

[Julie Hilling (Bolton West) (Lab)]

The youth service has always been the fourth arm of education. Now that responsibility is transferred to the Cabinet Office, how will the Secretary of State ensure a robust educational curriculum in the youth service and youth work?

--- Later in debate ---

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Support for bus travel is not available to my constituents in sixth forms or similar in rural Dorset—a problem added to when they now stay on for an extra year—which is placing a great burden on hard-working parents. Will the Secretary of State discuss that issue with Ministers in the Department for Transport?

[Matthew Hancock]

I have received representations from the hon. Lady on that issue. Ensuring that the costs of transport are represented in the bursaries available to young people is an important issue that we are looking at closely. I will ensure that the right representations are made to the Department for Transport, and I am happy to meet her to take that forward.

Manufacturing and SMEs

Matt Hancock Excerpts

Wednesday 4th September 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

As everyone has said, this has been a stimulating debate, and I will take away from it several specific points. I will address the points as well as I can in the time available, but I start by saying that I do so in the context of someone who began their career in a small business, albeit a software business rather than a manufacturing one. I understand the difficulty of engaging with the Government—they are a large organisation—and the importance of putting in place an improved environment in which small businesses can succeed in a way that is appropriate to their size and to the amount of time that the people running them have. My hon. Friend the Member for Warwick and Leamington (Chris White) asked whether the return of growth would mean that the Government would stop pushing on measures for growth, and all I will say is that he certainly will not get that from me, or my Department.

The context for the debate is, as my hon. Friend the Member for Weaver Vale (Graham Evans) set out, the sharp decline over many years of manufacturing in the UK, from about 23% to barely more than 10% of the economy, but it is on the rise again. Having the debate this week is good timing because we have the welcome news that data show the sharpest rise in manufacturing orders since 1994.

The current level of manufacturing output is of course below the level it was at before what the Governor of the Bank of England has called the great recession, of 2008-09, and there is a huge amount to do to recover that ground and go forward, but I think we can all agree that there is a new spirit and vision for the growth of high-tech, high-end manufacturing. Other countries, not least the United States, where energy costs have fallen sharply, partly due to new sources of unconventional gas, are bringing manufacturing back onshore, especially at the high-value end. That is a positive context for the debate.

The hon. Member for West Bromwich West (Mr Bailey) talked about the i54 development and the Jaguar Land Rover project, which I happened to drive past last week—there is a massive amount of building and earthwork going on. The Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), met Jaguar Land Rover only yesterday to discuss ensuring that we can keep the project moving forward. The links between the different local authorities have been an impressive part of its development.

In the context of the new growth we are seeing in manufacturing, I would be delighted to visit Gloucester and proselytise about manufacturing. I very much look forward to my visit.

My hon. Friend the Member for Carlisle (John Stevenson), who has rightly been congratulated on securing the debate, talked about the definitions involved in the Government approach’s to small businesses. It is important to ensure that we have as simple as is reasonable an approach across Government, and that each intervention is targeted at the right size and sector of business. Broadly defined, SMEs can run from a single-person business up to one employing 250 people. Those are hugely different types of business and we need to ensure that we segment properly.

The links between central and local government are important. Local enterprise partnerships play an increasingly vital role in bringing together local businesses and local authorities and providing a link to central Government, and we should push that forward further.

I want broadly to set out how we view the Government’s role, and to respond to some of the questions asked by the hon. Member for Hartlepool (Mr Wright). It is true that Britain fell down the league of competitiveness, not least on infrastructure, but now, finally, we have a national infrastructure plan, on which we are beginning to deliver. The earthwork along the M54 is not alone; across the country there is infrastructure development, not least for Crossrail, which is the largest construction project in the whole of Europe. It is vital that we turn the situation around and that is what we are doing.

The hon. Member for Hartlepool also mentioned finance. It is true that the funding for lending scheme, as the hon. Member for West Bromwich West said, has been helpful, and in April we announced that we were extending it to SME lending. I note that lending to small businesses rose by £262 million in July, which is positive news. On skills, the increase in engineering apprenticeships, which my hon. Friend the Member for Stafford (Jeremy Lefroy) mentioned, is vital and is something into which I personally have put huge effort. We have apprenticeship training agencies in the UK, but there is the potential for more because they can ensure that we draw together the needs of different companies to guarantee that training is co-ordinated and bureaucracy taken away from small businesses. We are also considering more radical changes to how we fund apprenticeships, to make them easier for small businesses to access, one option being to introduce funding through the tax system.

My hon. Friend the Member for Gosport (Caroline Dinenage) brought her own experience to the debate. The question of simplifying procurement bureaucracy is absolutely vital, and the hon. Member for Hartlepool made a point about procurement almost with the zeal of a convert. The target of awarding 25% of public contracts to SMEs is important and the fact that, according to his figures, only 10% of them go to SMEs at the moment just shows what work there is to do. I am glad that the Labour party is coming to the table on that.

[Mr Andrew Smith]

Will the Minister comment on the survey that I mentioned, which showed that, according to the perception of small businesses, things have got worse in the past three years rather than better?

[Matthew Hancock]

It is certainly taking time to turn the situation around, but there is no doubt that there is the enthusiasm to do so. Some Departments have already hit the 25% target, including the Ministry of Justice, so there is progress, and there appears to be cross-party support for it.

I will finish by saying that everyone who participated in the debate mentioned the scope and potential for the future of manufacturing in general and in small businesses, and we in the Government passionately support that. There is plenty more to do on tax and deregulation, the expansion of the R and D tax credit, the all-important funding and finance for growth and all the other issues we have talked about, but momentum is starting to build and we will not let up.