Amendment of the Law

Simon Danczuk Excerpts

Monday 26th March 2012 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

Much has been said over the past few days about how the Budget will adversely affect pensioners, those on middle incomes and the less well off. There is no doubt that the vast majority of people living in Rochdale will be worse off, rather than better off, as a result of the Budget. But it is not just individuals who will be worse off; there is no doubt that businesses, especially small businesses, could have received much more assistance from the Chancellor. I want to concentrate on that subject this evening.

We are all aware that small and medium-sized enterprises create the most jobs in our economy. Given the present record levels of unemployment, I would have hoped that the Chancellor would do more to help small businesses, rather than just the larger corporations. The Government’s actions to stimulate the economy so far have failed, and if the Office for Budget Responsibility is to be believed, little in this Budget will improve growth. It is predicting growth of 0.8% this year, as opposed to its initial prediction of 2.5%. The cut in corporation tax might well encourage additional investment by larger corporations, but it will do little, if anything, to help SMEs to grow their businesses and create jobs.

I accept that there is some potentially good news in the Budget. Tax simplification for small businesses could work, enterprise loans for young people sound promising, and the expansion of UK export finance is a good thing in principle.

[Jim Dowd]

My hon. Friend mentions tax simplification. What does he make of the tax simplification for pensioners?

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[Simon Danczuk]

My hon. Friend is absolutely right to mention pensioners and the disadvantages to them of the Chancellor’s proposals.

The Government could get things right for small business by simplifying the processes, but none of those proposals will be enough to stimulate the economy. It is also fair to say that a number of this Government’s initiatives to help business have not worked. It has been pointed out that Project Merlin has failed to hit the mark, for example. It failed to provide £10 billion of investment for SMEs. The regional growth fund continues to fail to pay the money that it should be awarding. There is nothing to suggest that the Government initiatives—of which there are certainly many—will actually work. The Budget has also done nothing to allay the fears expressed by small businesses about fuel duty and fuel costs, which continue to go up. Related to that are the Government’s proposals to privatise the road network, which could place further costs on businesses.

Probably one of the biggest disappointments in the Budget relates to business rates. This April, they will increase by 5.6%, the biggest increase in 20 years. Business rates are the elephant in the room—one of what I would call the big three: costs to businesses are wages, accommodation and business rates. Greater Manchester chamber of commerce recently carried out research which showed that the 5.6% increase will add £54.4 million to the business rates that businesses across the region will have to pay, which equates to 2,407 jobs. In Rochdale, businesses will have to pay an extra £3.3 million, over and above what they are already paying, which will equate to 141 jobs. This is a real concern for local economic growth.

It is therefore not surprising that the British Retail Consortium, the British Independent Retailers Association and the British Chambers of Commerce are all calling for the hike in business rates to be revised downwards. It is no coincidence that retailers in particular are calling for reform of business rates, because they are the ones that carry the greatest burden. It is also worth pointing out that it is retailers that provide much of the employment for young people and women, so the Government could have done much more to help to stimulate employment for those two groups by reforming business rates. They could have used the Budget to really support and encourage small businesses, but they failed to do so. Instead of taking an active approach, they used the Budget to take a laissez-faire approach.