Oral Answers to Questions

Michael Fallon Excerpts

Thursday 8th November 2012 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

6. What assessment he has made of the contribution of new start-ups to economic growth.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

One of the main contributions is the number of jobs created. The best estimate that we have is that start-ups are responsible for a third of all jobs created. Start-up activity has remained highly resilient, with Companies House reporting over 450,000 newly registered companies in 2011-12—the highest number since 1997-98.

[Harriett Baldwin]

I am sure that the Minister will welcome this week’s CBI report showing that small and medium-sized enterprises are very optimistic about adding jobs in the year to come. However, what would he say to a start-up in my constituency, Energetic UK, which builds eco classrooms for schools? It is run by very experienced people, but because it is a start-up they do not have the three years’ annual accounts needed to get local authority contracts. I have written to him about this company and wonder what the Department could do to help.

[Michael Fallon]

Instructions to contracting authorities emphasise that the assessment of financial risk should be based on a business judgment, not on a purely mechanistic application of financial formulae such as value of turnover or three years’ accounts, which could unreasonably shut out start-up companies.

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

Small businesses are being held back from expanding and taking on extra workers because they are unable to get the finance they need. This week Dave Fishwick, also known as Bank of Dave, addressed a group of MPs about a model of community banking that has worked in his area. What more could the Government do, particularly given the failure of their Project Merlin scheme, to ensure access to finance and better relationship banking in communities such as mine?

[Michael Fallon]

I am not sure that we need lectures from a party that introduced six new regulations every working day during its 13 years in office. We have cut red tape and business tax. There is an issue with access to finance. That is why we have set up the business bank, the funding for lending scheme, and a range of other schemes. It is now up to the banks to rebuild their relationship networks to make businesses more aware of the appeals mechanism. We are encouraging the British Bankers Association to do that to make sure that the money that the Government and the taxpayer are providing gets through to the companies that need it.

[Richard Fuller (Bedford) (Con)]

The Minister understands that every new successful entrepreneur is a new job creator, a new wealth creator, and a new net contributor to paying for our public services. Does he also understand the importance of the intention of people to become entrepreneurs? What is the Department doing to strengthen the entrepreneurial culture in our country?

[Michael Fallon]

We shall be playing our part in next week’s global entrepreneurship week, with 2,500 events throughout the country. I shall also be promoting a range of other Government schemes such as the CEiS scheme, which encourages more investment by entrepreneurs in start-up companies, and a number of other schemes that encourage enterprise in our schools and colleges to help those who are thinking of starting up companies as soon as they leave further or higher education.

[Nick Smith (Blaenau Gwent) (Lab)]

On economic growth, does the Minister agree with the National Audit Office’s assessment that a “significant portion” of the regional growth fund has been

“allocated to projects that create or safeguard relatively few jobs for the money invested”?

What steps is he going to take to address this concern?

[Michael Fallon]

I do not wholly accept that criticism. The regional growth fund has been a key part of creating and safeguarding 500,000 new jobs in rounds 1, 2 and 3. I find the logic of the National Audit Office report somewhat perverse. It argues that we should look only at net jobs. If a plant in the hon. Gentleman’s constituency closed with the loss of 500 jobs and 450 of the people affected were subsequently employed elsewhere, he would not stand up in this House and say that he had only lost 50 jobs.

[Sir Nick Harvey (North Devon) (LD)]

Does the Minister agree that new start-ups benefit from grant aid in particular? To that end, will he ensure that the UK takes advantage of EU transition zones in the next funding round, and will he structure them in accordance with the Heseltine recommendations of local flexibility to ensure that new start-ups are not put in a straitjacket and are unable to use them?

[Michael Fallon]

Yes, I will certainly look at that. We are now preparing how we manage and administer the programmes under the new multi-annual financial framework, which will begin in January 2014 and last until 2020. I want to make sure that we have a smaller number of programmes across the United Kingdom and that we therefore minimise the differing costs and start dates under the previous seven-year framework. We need a simpler approach to the cohesion funds, but I certainly take the hon. Gentleman’s point on the importance of the transition regions outside the category A regions.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

7. If he will establish an independent body to review the relationship between big pub companies and tied landlords.

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

15. What assessment he has made of the latest construction output figures; and if he will make a statement.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The latest figures from the Office for National Statistics show that construction output fell by 2.5% in the last quarter, but overall gross domestic product increased by 1%.

[Chris Williamson]

Earlier this year, the Secretary of State gave a commitment that the Government were taking steps to address the decline in construction output, but this week’s construction trade survey showed, for the first time ever, a decline in every single construction sector. What has gone wrong?

[Michael Fallon]

There are various surveys; another construction survey shows that output increased in October. In September, we announced a housing and planning package that will deliver up to 70,000 new homes and 140,000 jobs, with a £40 billion guarantee for infrastructure projects and £10 billion for new homes. We have also introduced the Growth and Infrastructure Bill to speed up the planning system and unlock new investment in housing and infrastructure. I am surprised the hon. Gentleman voted against it on Monday night.

[Pat Glass]

Given the importance that the Government placed on the national infrastructure plan just a year ago, why has the value of new construction orders for infrastructure fallen by more than 40% in the first two quarters of this year?

[Michael Fallon]

It is being so cheerful that keeps you going, isn’t it? I would have hoped that the hon. Lady welcomed the £4.5 billion contract won by Hitachi to build the next generation of inter-city trains, creating 900 new jobs in north-east England. The north-east also did particularly well under round 3 of the regional growth fund, with 29 bids selected, worth £120 million, creating or safeguarding 30,000 jobs. I am looking forward to my visit to the north-east next week to open new factories in Blyth and on Tyneside.

[Mr Iain Wright (Hartlepool) (Lab)]

The 2.5% quarterly drop in construction output to which the Minister referred is dire enough, but year on year, activity in the construction sector has fallen by a massive 12%, and further decline is predicted through to at least 2014. The sector is crying out for assistance from, and co-operation with, a Government who value construction as an important part of an active industrial strategy. Will the warm words, the excuses, the complacent tone that we have heard this morning, the protestations of just how difficult it is and the bland and vague promises of help in future stop, and will the Minister take decisive action that will help the construction sector now?

[Michael Fallon]

As I have already said, we are investing £4.5 billion to fund new affordable homes over the spending review period, all of which is committed to be spent in this Parliament. That is leveraging in a further £15 billion of private sector investment. We are on track to deliver 170,000 affordable homes by 2015.

[Sir Bob Russell (Colchester) (LD)]

14. If he will bring forward legislative proposals to prevent owners of businesses which have failed with debts outstanding from starting new businesses of an identical or similar nature.

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[Mr Clive Betts (Sheffield South East) (Lab)]

18. What recent estimate he has made of the number of jobs that will be created by the regional growth fund.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The regional growth fund will generate over half a million gross jobs over the period 2011-2021, with 80% of the impact coming in the first five years. Some 300,000 jobs will be delivered by projects and programmes in rounds 1 and 2, and 240,000 from bids selected for round 3. In rounds 1 and 2, eight out of 10 projects and programmes have now started and 149 bidders have now signed final agreements.

[Mr Betts]

When the regional development agencies were in existence, they provided important match funding to enable European regional development fund money to be properly used. When the Communities and Local Government Committee looked at this, we suggested that a portion of the regional growth fund be earmarked to ensure that all our ERDF money could be properly spent. That suggestion was turned down. If we do not spend all the ERDF money to ensure that we create the maximum number of jobs, will it be the Minister’s responsibility or that of his colleagues in the Department for Communities and Local Government?

[Michael Fallon]

We are certainly looking at how we can spend money better in the next seven-year framework. There has been underspend, not least because there were so many programmes. I am trying to rationalise and simplify them, working with colleagues in the three other Departments affected. The House will want to note that the regional development agency Yorkshire Forward employed 434 people and spent a large amount of public money, but did not leverage in anything like the amount of private sector money that the new regional growth fund is doing.

[Jane Ellison (Battersea) (Con)]

T1. If he will make a statement on his departmental responsibilities.

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[Mr Robin Walker (Worcester) (Con)]

T3. Having recently taken a trade delegation of Worcestershire businesses to China, as per my entry in the register, I was impressed by the support from UK Trade & Investment that was available to small and medium-sized enterprises, many of which received sponsorship towards the cost of the trip. What is the Minister doing to ensure that the message gets out about the help that the Government are providing to smaller companies to export to the world’s fastest growing markets?

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I congratulate my hon. Friend, who I think took part himself in a trade mission to China last month. I encourage other hon. Members to follow in his footsteps.

UK Trade & Investment is building relationships with its private sector partners to increase awareness of its services for exporters throughout the networks. UKTI will host export week from 12 to 16 November, when there will be more than 100 events around the UK designed to reach out to small and medium-sized enterprises, including events being organised in the west midlands to promote forthcoming market visits to Austria and Romania.

[Jack Dromey (Birmingham, Erdington) (Lab)]

T2. Jaguar Land Rover and Tata have committed to Birmingham and Britain, transforming the Jaguar plant in my constituency into a world-class success story. Just when the plant is taking on 1,100 workers, the High Speed 2 route unnecessarily threatens its rail terminal, which would have serious implications for the company and the community. Will the Secretary of State intervene with his counterpart in the Department for Transport and meet me, because nothing must be done to put at risk the success of the biggest plant in Birmingham?

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

T8. Chester has seen record numbers of new businesses being set up in the past year, with 305 being registered during the first six months of the year—a 323% increase on the year before. Does the Minister agree that these and other recent figures show that the work that the Government are doing to encourage private sector growth and redress the north-south imbalance is beginning to deliver results in the north-west of England?

[Michael Fallon]

That is encouraging news and shows the strength of the small business sector in the north-west in particular. The key to encouraging small businesses is to continue to cut back the burden of red tape imposed by the last Government, to reduce the level of business taxation imposed by the last Government and to ensure that they have full access to finance through the banking system.

[Alex Cunningham (Stockton North) (Lab)]

T4. I am grateful to the Secretary of State for meeting my hon. Friend the Member for Sedgefield (Phil Wilson) and me to discuss the rejection of the bid for a regional growth fund grant by Durham Tees Valley airport and for his offer to meet representatives from the airport and the local enterprise partnership. Will he reaffirm his support for regional airports as drivers of economic development, and tell the House what he can do to help our Durham Tees Valley airport to deliver on its development plan and ensure that the airport is sustained well into the future?

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[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

T5. Every pound invested in the construction industry generates nearly three in economic activity. What support is being given to construction companies, such as Marshalls in Halifax, to get them building, boost the construction industry and protect and create jobs now—before it is too late for these companies?

[Michael Fallon]

The best way that the hon. Lady can help that company is to support our proposals to unlock new housing, particularly affordable housing, and new infrastructure as set out in the Growth and Infrastructure Bill, which unfortunately the Labour party voted against on Monday night.

[David Mowat (Warrington South) (Con)]

Earlier the Secretary of State gave us an update on the good progress we are making on the green investment bank. Can he confirm, however, that EU state approval specifically excludes the nuclear supply chain, which is a major low-carbon industry, and that organisations such as Sheffield Forgemasters will be excluded if we do not appeal that?

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[Michael Fallon]

I will certainly do that. All unsuccessful bidders are offered feedback from the regional growth fund secretariat, and if that has not happened, I am happy to arrange it for Polestar in the hon. Gentleman’s constituency. There were a number of other successful bids in the Sheffield and Yorkshire region, which I hope he will acknowledge will bring more growth and jobs to Sheffield.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Perhaps the most valuable long-term economic legacy of the Olympics will be a boost in UK tourism. To achieve that we will need a few high-profile attack brands. London will of course be one of them; another must surely be the Lake district. What plans do the Government have to make the Lake district an attack brand for UK tourism?

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[Jenny Chapman (Darlington) (Lab)]

The Minister of State has been to Darlington and should be, but probably is not, embarrassed by the decision he made to decline the regional growth fund bid for Durham Tees Valley airport. Is he as shocked and frustrated as we in the north-east are to learn that there is now £1 billion of unallocated RGF money in his Department’s coffers?

[Michael Fallon]

I have not only been to Darlington, as the hon. Lady knows, but I spent 10 years of my life there—and, in the interests of social mobility, I was happy to give her predecessor a leg up the political ladder. I look forward to my visit to the north-east next week. The Secretary of State has already explained the circumstances in which the bid for the airport was turned down, but I have to tell her that the north-east did extremely well in round 3 of the regional growth fund. I look forward to hearing more about some of the successful projects when I visit next week.

[Neil Carmichael (Stroud) (Con)]

I welcome the good news that the British Antarctic Survey is to continue as an independent organisation. May I underline the need to ensure that it remains on a firm and sustainable footing, and also add my thanks to the Minister for helping in that matter?

[Mark Durkan (Foyle) (SDLP)]

Ministers tell us that they are well minded against capricious regulation, perverse taxation and over-interpretation of EU judgments. Will one of them therefore listen to the consortium of intermediate alcohol producers and exporters across the UK? They have profound concerns about the impact on their business of HMRC’s changes to notice 163, which go far beyond a one-off adjustment to a marginal tax rate.

[Michael Fallon]

I am certainly prepared to look at that. One of the purposes of the red tape challenge was to ask businesses themselves what were the issues constraining growth, and I am happy to look into that matter for the hon. Gentleman.

[Mr Marcus Jones (Nuneaton) (Con)]

I was disappointed that I could not join my right hon. Friend the Secretary of State on his recent visit to the MIRA technology park. Despite my personal disappointment, will he join me in celebrating this world-class project, which will create 2,000 jobs in the midlands region, and does he agree that it has been facilitated by the regional growth fund and the enterprise zone policies of this Government?

[Barry Gardiner (Brent North) (Lab)]

The growth of businesses in rural areas is being constrained by the lack of access to broadband. Even where businesses can achieve the Government’s target of 2 megabits, they are finding that that is the download speed, and they are still constrained by the greatly inferior upload speed. Will the Government consider reassessing the 2015 target of 2 megabits?

[Michael Fallon]

I will certainly do that. This is an issue for businesses in rural areas across the country. Clause 7 of the Growth and Infrastructure Bill will help to accelerate the roll-out of broadband, not least in rural areas, but the hon. Gentleman joined his party in voting against it on Monday night.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I think that most of us in the House would admit that the Secretary of State is passionate about manufacturing and business, and he exhibited that last Thursday when he came to Huddersfield to visit our textile training centre of excellence. Why cannot we have more all-party agreement on some of the challenges that we face? The recommendations in the Heseltine review give us an opportunity to adopt a common strategy across the House. Is that a challenge that the Secretary of State is willing to take up?