SMEs (South of England)

Debate between Stephen Lloyd and Caroline Nokes

Wednesday 15th June 2011 Westminster Hall

[Caroline Nokes (Romsey and Southampton North) (Con)]

I, too, congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing this important debate. As we have heard ably from her, and from the right hon. Member for Oxford East (Mr Smith) and my hon. Friend the Member for Brighton, Kemptown (Simon Kirby), prosperity is not uniform in many parts of the south-east, which has its share of deprivation, poor educational attainment, low aspiration and poverty. However, what is striking about my constituency is that it has extremes: areas of wealth and enterprise adjacent to areas of worklessness.

I do not want to paint too gloomy a picture. Romsey and Southampton North remains one of the most wonderful places in the country to live. The local authorities, both individually and collectively through bodies such as PUSH, the Partnership for Urban South Hampshire, and the local enterprise partnership, are working hard to promote regeneration and stimulate enterprise and growth.

Southampton city council in particular has pushed ahead with plans to regenerate the city. It has made some striking differences to the cityscape and to employment opportunities, and has promoted the city relentlessly as a place to do business and to establish companies, ideally located as it is, with a major international port, an airport on the edge of the city and opportunities for excellent university education, not to mention easy access to beautiful countryside, the coastline and superb recreational opportunities. The city has 7,600 companies, with 120,000 people employed, but it does not have the support of enterprise zones, and has no national insurance exemption for start-ups and no structural funding from Europe.

How much more could have been achieved for this regional hub with the same level of support that cities in the north received? Would 32% of the work force still be reliant on the public sector?

[Stephen Lloyd (Eastbourne) (LD)]

I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) on securing this debate on this important issue. Is my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) aware that a recent Federation of Small Businesses survey indicated that, if more than 30% of small and medium-sized enterprises in the south-east had access to the national insurance contribution holiday, they would take on new people? That would be good for the country and for our region.

[Caroline Nokes]

My hon. Friend makes an excellent point and is absolutely right—those companies would be willing to take on more people and create more employment in the private sector. As I was about to say before he intervened, in these straitened economic times, there will inevitably be a correction in the number of people employed by the public sector, and we need that slack to be taken up by members of the FSB and other small business organisations.

Landmark sites on the edge of Southampton that are earmarked for major corporate headquarters remain only partly used. One must therefore ask whether those sorts of sites would have been snapped up by now if there had been more support and more enterprise zones in the south-east.

If Southampton was lifted up—this is true of other cites in the south; my hon. Friend the Member for Portsmouth North (Penny Mordaunt) has left the Chamber, but there are close and obvious parallels and comparisons between Portsmouth and Southampton—and placed anywhere in the north, one would notice striking similarities between it and cities in that region.

On the 2010 recognised indices of multiple deprivation, Southampton is ranked as the 81st most deprived local authority area in the country, which is 10 places worse than in 2007. Therefore, in spite of being perceived as an economic powerhouse, there are places in the south-east where deprivation is getting worse, unemployment is going up, and we could benefit greatly from some support to the SMEs that will play a critical role in economic recovery. As we know, 60% of all new jobs are created by entrepreneurs and high-growth small businesses, and in a part of the country where, as we have heard, it is very expensive to do business and there are high rents and high rates, those small businesses need every bit of support. We neglect the south-east at our peril. The country needs this region to be accelerating growth, and if it is to do that, the full range of funding options must be available to entrepreneurs.

I hope that colleagues will forgive me if I comment briefly on some of the good things that are happening in Southampton. At Solent university, a culture of entrepreneurship is being fostered amongst the students—we have heard that something similar is happening in Portsmouth—and it applies to not just the alumni, but undergraduates and those who are about to graduate. They are all being encouraged to consider their own start-ups and given tools and practical support to do that.

The city council has worked hard to stimulate investment, much of which has come from the retail sector and hospitality, with hundreds of new jobs created with Costco, Sainsbury’s and Morrisons. There have also been manufacturing successes, with up to 700 new jobs in marine manufacturing in Woolston. The city is managing to buck the trend for job creation, but we should remember that that must still be held against the 32% dependency on the public sector.

Another thing that we have seen in the private sector—I am prepared to concede that this is not an SME—is the dramatic expansion of Southampton as a cruise terminal. Much credit must go to Associated British Ports, which has invested private money in the port to a massive extent and boosted the city’s economy, without subsidy from Government or Europe, unlike some of its competitor cities. What ABP wants from the Government is a level playing field, so that businesses are not disadvantaged in an unfair way and confidence is not undermined in a way that chokes off essential private sector investment. It is successful, but it has achieved that on its own and feels aggrieved to see other ports being given a leg up.

There is much to be proud of in the city, but there is still too much deprivation. There could be more stimulus if companies benefited from the same tax breaks available further north. How many more new graduates would find the impetus to start up their own business if they, too, could have that national insurance exemption?

This is an important debate on an important issue, and I urge the Minister to consider carefully what Members are saying about the south-east. The region is desperately needed to drive the economic engine of the country, to accelerate growth and to provide private sector jobs.