Small Businesses

Toby Perkins Excerpts

Thursday 28th November 2013 Commons Chamber

[Justin Tomlinson]

I very much love businesses, so I will send some love to my hon. Friend’s constituency.

It is great that businesses are suggesting the areas of red tape that need to be looked at, because they are very much at the coal face. Removing two regulations for every one introduced is a real challenge, but the initiative has certainly been welcomed by businesses in my constituency.

Several Members have talked about opening up local authority procurement, which is worth about £4.4 billion a year, and the Government have the commendable aim of getting SME participation in that to about 25%. My hon. Friend the Member for High Peak (Andrew Bingham), who has had to leave the Chamber, has got hold of some of the forms that small businesses have to fill in when bidding for such contracts. I know that, when I ran a business, it simply was not worth the hassle.

I also very much welcome the increase in the annual investment allowance from £25,000 to £250,000. One problem that we identified was the fact that, for the first time in living memory, businesses had more money in their current accounts than they were choosing to borrow, because they were worried about uncertainty in the market. Increasing the allowance is a brilliant way to encourage businesses to start unlocking some of that money, which will drive forward growth.

Cutting corporation tax always brings a cheer from Conservative Members. Although Labour says that it supports business, it is telling that that support seems to vanish as soon as a business makes a profit. I also welcome the extension of small business rate relief.

[Toby Perkins (Chesterfield) (Lab)]

The hon. Gentleman talks about corporation tax. Will he tell the House the rate of corporation tax when Labour came to power in 1997, and what it was when we left office in 2010?

[Justin Tomlinson]

I can tell the hon. Gentleman that, by 2015, we will have the lowest corporation tax market in the G8. That is what businesses are talking about, and I very much hope that the hon. Gentleman will join us in supporting that aim.

Many Members have highlighted the need to look at business rates. Greater minds than mine will solve the dilemma, but it is important to recognise that the world is changing. My hon. Friend the Member for Colchester (Sir Bob Russell) mentioned Amazon’s advantages over a traditional high street retailer because of the business rates that it pays. We must recognise that the world is changing and take that into account if we are to achieve a fair business rates system. The 27,000 business mentors are also crucial—I will come back to that subject in a moment—and the enterprise zones and the regional growth fund are kick-starting growth in key areas, which is most welcome.

Staying with the good things, I know that the Minister is particularly excited about the request that I am about to make—it is one that I make repeatedly—and that he is absolutely going to deliver on it. We as a Government are doing many good things, but business people are by their nature extremely busy and, all too often, these good schemes simply pass them by. However, the one thing that they cannot avoid is their bills, and every year they are sent a business rates bill. Even if they have nothing to pay, they are sent a bill telling them how much they would have had to pay but for the fact that the Government are allowing them not to do so. We should be communicating all the Government’s schemes through that mailer. The taxpayer has already paid for the mail, so let us include with it information on all the things that we are encouraging businesses to sign up for, and particularly on the advantages of taking on apprentices and of working with UKTI to develop exports.

I want briefly to focus on championing young entrepreneurs. I was the only one of the 350 students on my business degree course who went on to set up their own business. We all arrived at university keen to do just that, but we had entrepreneurial flair and risk-taking talked out of us. I obviously was not paying enough attention, because I ended up running my own business. The Government help to fund an organisation called the National Association of College and University Entrepreneurs, which encourages young people to take up practical, real-life opportunities for running a business. I have met a number of the young people who have taken advantage of those opportunities and who are now going on to be part of the next generation of wealth generators.

We need to look at what happens in business degrees. Along with all my fellow students, I was given a placement job in the corporate environment, rather than having the opportunity to test running my own business. We could use spare space at a university to run a retail business—that is very apt, given my forthcoming Westminster Hall debate. We could also consider whether part of a placement year could be spent running a business, as that might allow us to encourage a few more of those potential young entrepreneurs to take the step towards that.

We can also do a lot more for people before they go to university. For people who want to go to university, the UCAS system is in place—the conveyor belt is there. People choose their course and, if they get their grades, they head off to university. If people want to be an apprentice, they can look at the fantastic websites available, see what type of thing they would like to be an apprentice in, and go forward to the interviews. However, if someone wants to start their own business, it is pretty much up to them to work out how to do that, so we need to do a lot more to get those 20,000 business mentors to young people.

We have to celebrate schemes such as the Young Enterprise challenge, but we need to ensure that they are not just a one-off opportunity for enjoyment. I took part when I was at school—we worked for a week, made quite a bit of money and really enjoyed it. I recently did something with Swindon college students whereby we got stalls in the local market—a tough trading environment. Seven teams were each given £10 of seed money, and all the money raised on the day went to charity. We raised about £800 for the Prospect hospice, but the crucial bit was that we did not have mentors just at the beginning; we had them at the end.

One lady called Jessica ran a cake stall. Millions of people think about running such a stall, but she realised that the market had an older customer base, so she set up a 1950s-themed cake stall. She made more than £100 on the day. She realised that she had the customer service ability, the skills and the innovation to set up her own business, and now that she has finished at college, she has set up the Little Lemon & Poppy Bakery. We made sure that mentors were in place to help to guide her after she used her initial burst of enthusiasm and went on to do that. I ask the Minister to do all that he can to encourage young people. They have the energy and the enthusiasm, so let us make sure they are a key part of that next generation of wealth generators.

--- Later in debate ---

[Toby Perkins (Chesterfield) (Lab)]

It is a tremendous pleasure to speak in what has been an excellent debate. I congratulate the hon. Member for Newton Abbot (Anne Marie Morris) on securing it. She speaks about small businesses with passion, dedication, enthusiasm and considerable vim, which I can inform the House, having been at the National Association of Commercial Finance Brokers dinner with her on Tuesday, is also the way she dances.

We have heard a tremendous amount about the importance of small businesses. As the challengers of tired orthodoxies and the drivers of social mobility, small businesses share one nation Labour’s values completely. It is a path that several of us have followed, as reflected in the debate. I worked in the private sector for my entire life and was running a small business when I became a Member of Parliament. From my perspective and, clearly, that of hon. Members across the House, there are few more important questions for us to consider than how we support small firms, which we all know are the engines of growth, the biggest employers of the long-term unemployed, and key drivers of economic recovery.

It is important that we listen to what the voices of business are saying. On Monday, I was in Harlow in Essex with the local chamber of commerce, meeting small businesses there and listening to their priorities. Another organisation right at the forefront of the fight to support small firms is the Federation of Small Businesses, which does a tremendous job. A report in the Leicester Mercury this week highlighted how a delegation from the east midlands, led by David Nicholls, chairman of the Leicestershire branch of the FSB, got the chance to lobby the Chancellor on the issues that he should address in his forthcoming autumn statement. What did the delegation choose to highlight? Interestingly, the Leicester Mercury tells us that they demanded action on energy prices, a reduction in businesses rates, and the Government taking responsibility for setting up a business bank—very wise indeed.

I pay tribute to the hon. Lady for securing the debate, but think she may have done so with a slightly heavy heart, because when it comes to the main issues being raised by small businesses, it is Labour that is leading the way. I want to reflect on some of the contributions to this balanced debate that have demonstrated that.

In her excellent speech, the hon. Lady talked about the need for a culture change that recognises the importance of small business across Government. We could not agree more. My right hon. Friend the Member for Doncaster North (Edward Miliband) made making Labour the party of small business a priority in his first conference speech and he has talked about it many times since. There are some good Government schemes out there but, as the hon. Lady said, many businesses do not know about them. The signposting is weak, and she was right to say that.

My hon. Friend the Member for Glasgow North East (Mr Bain) discussed the lessons we can learn from the Sparkassen in Germany. He was right to say that, under the German system and at the height of the banking crisis, they lent more to small businesses, not fewer, as happened here. He was also right to focus on the important issue of the number of businesses claiming that access to finance is still their No. 1 priority, a theme that the right hon. Member for Hazel Grove (Sir Andrew Stunell) returned to a few moments ago.

The hon. Members for Norwich North (Chloe Smith) and for High Peak (Andrew Bingham) were right to focus on the difficulty faced by small and medium-sized enterprises in getting on to Government procurement lists. It has been an issue for many years and clearly there is a long way to go.

My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) also spoke.

[Debbie Abrahams]

My hon. Friend is making a powerful speech. He will be aware that earlier this year I chaired an all-party inquiry into late payments. The key finding was that late payment is a cultural issue that needs to be seen as just as toxic as tax evasion. Does he agree that we need to push the Government to make progress towards ensuring there is a cultural change so that late payment is unacceptable?

[Toby Perkins]

I certainly do. I was in the process of paying tribute to the work my hon. Friend has done on that issue. She is absolutely right.

The hon. Member for Rugby (Mark Pawsey), whom I usually regard as a sound voice on the issue of small business, said that if someone is paid late they should refuse to supply the company, but that does not recognise the difference in the relationship between a powerful customer and a struggling supplier. Every year, 2,000 businesses go under simply because they are not paid money that is owed to them, so I think he was wrong about that. My hon. Friend is right to say that we need the Government to be at the forefront of not just encouraging people to pay on time, but ensuring that that culture change passes right down the public sector procurement chain to second and third-tier suppliers.

My hon. Friend the Member for Rochdale (Simon Danczuk) made a lengthy advertisement—I sense it was somewhat to his embarrassment—for Danczuk’s deli. Numerous Members wanted to know about the excellent wares he will be providing. He has been in business before and it is great that he and his wife are opening a delicatessen in the centre of Rochdale and that he is putting his money where his mouth is.

The hon. Member for Brentford and Isleworth (Mary Macleod), my hon. Friend the Member for Rochdale and the hon. Member for Colchester (Sir Bob Russell) spoke, among many others, about the tremendous difficulties caused by the increase in business rates, which I shall return to.

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) promoted the value of local innovative firms and also focused on access to finance. The hon. Member for Rossendale and Darwen (Jake Berry) is not in his place. [Interruption.] I see that he has moved—I do not know how I managed to miss that moustache. He encapsulated the bravery and pioneering spirit required to set up a business and he was right to say that it doesn’t half set the pulses racing. At such moments, people realise what colour adrenaline is.

My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) was entirely right to say that small businesses are undergoing a cost of living crisis, which I will reflect on in a moment.

The hon. Member for North Swindon (Justin Tomlinson) said that Labour always liked to increase corporation tax. If he was still here, he would be surprised to discover that corporation tax was actually 3% less after 13 years of Labour Government. Perhaps he should talk to the former Prime Minister about that.

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

Will the hon. Gentleman confirm whether it is still Labour’s policy to increase corporation tax?

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the shadow Minister answers the Minister, will they please remember that I will stop the debate at 3.45 pm? If the Minister is still on his feet at that point, he will lose the time, because we will have to start the next debate.

[Toby Perkins]

Our policy is well known, but I will go through it at length in a moment.

The hon. Member for Reading West (Alok Sharma) spoke for only five minutes, but he was wrong about just about everything he said. I will give two examples. He said that businesses want an EU referendum, but very few businesses are telling me that. He extolled the virtues of the arbitrary one-in, two-out red tape challenge and seemed to think that the Government have a good record on red tape, but he was unable to name any of their innovations that have made a difference.

The hon. Member for Rugby made an incredibly significant point about the importance of sales skills. I am sure he will be delighted to know that the Labour party is undertaking a large programme—headed by Kate Walsh, formerly of “The Apprentice”—on the importance of sales skills, and we will report on its work shortly.

The hon. Member for Carlisle (John Stevenson) focused broadly on the importance of small firms. The hon. Member for Daventry (Chris Heaton-Harris) was absolutely correct to say that the UK is right at the forefront of those places where it is easiest to set up a small business. The World Bank said that Britain was the fourth easiest place to set up a business in 2010.

I do not want to focus on the Government’s failures, but on the successful moves that a future Labour Government will make. We are considering the future of vital small firms, and Labour has the answers to their questions. The cost of living crisis for small firms is taking many of them to the brink, but Labour’s pledge to freeze energy prices until 2017 would save the average British small business £5,000. Hon. Members will be shocked to learn that business rates have risen by £1,500 a year on average under this Government, and that they face a further hike in April 2014.

To answer the Minister’s question, Labour proposes not to take forward the Government’s planned 1% corporation tax cut for 80,000 large firms, but instead to use all the money to cut the business rate bills of 1.5 million small firms. In a week of U-turns, it would be incredibly—

[Madam Deputy Speaker]

Order. I am sorry, but the hon. Gentleman has now had 10 minutes. This is a Back-Bench debate, and it will be followed by another Back-Bench debate. I want him to conclude in his current sentence, so that I can call the Minister, who will also have 10 minutes.

[Toby Perkins]

I will, Madam Deputy Speaker. On a range of issues from micro-business support to the need for Government to provide the necessary skills, small businesses are saying that the Government have more work to do. Labour is responding to that call from small businesses, and our message to them is, “We know how vital you are, and we are right behind you.”