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costs which averaged £7.80 for every £1,000 of goods sold ; the corresponding figure for companies with a turnover of £10 million was 3p."

That shows quite clearly the burden that has been placed on small businesses.

Let us look at the Government policy of introducing student loans. What will be the reaction of the banks to a new graduate wanting to set up a business or become self-employed when that graduate already has a substantial loan hanging around his neck from his days at university? My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells), in his excellent speech, outlined the Government's policy on fishing and expecially on farming. Government policy in those areas is putting great pressure on the self-employed.

As I have said, high interest rates and the uniform business rate place a great burden on the self-employed small business man. The hon. Member for Macclesfield (Mr. Winterton) put his finger on the problem when he said that, in a glib but competent speech, the Minister of State tried to slide over the problem of high interest rates in some 30 seconds. Time and again, people in small businesses speak about the pressure of high interest rates not only on their own indebtedness, but on the spending power of those seeking their services or wishing to buy from them.

An economic outlook report yesterday from the Royal Bank of Scotland said that the difference between the present recession "and that experienced during the early 1980s is that this time the impact will be felt by the service industries".

It is in the service industries that we have seen such growth in small business and the self-employed. The Minister did not address that problem. The hon. Member for Great Grimsby said that the stock answer of my party is entry to the exchange rate mechanism of the EMS. Perhaps we say that time and again because we genuinely believe that it is the answer. Interestingly enough, when freed from the constraints of collective responsibility, Conservative Members have also said that.

If the Minister spoke for only 30 seconds about high interest rates, he said nothing at all in response to the point made by my hon. Friend the Member for Truro (Mr. Taylor) about the uniform business rate. That the House could have demanded more answers about that is shown by what the Prime Minister has said :

"The present transition period is five years, but that is not an absolute figure and it could be extended if need be."--[ Official Report, 23 January 1990 ; Vol. 165, c. 737.]

The state of the small business sector needs to be fleshed out. What do the Government intend to do? Those of us north of the border well remember the problems experienced by the small business sector in Scotland after revaluation. For months, the Government said that they would do nothing and then had to rush legislation through in a week or a fortnight to bring much -needed relief. They subsequently paid the political price for not having acted earlier. Great pressure will build up on Government to respond.

The hon. Member for Great Grimsby cannot say that this is purely a problem for the south. He represents a constituency in south Humberside and may not know that in north Humberside a hardware shop had rates in 1989-90 of £2,611.

Mr. Austin Mitchell : I said that it was a daft tax.

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Mr. Wallace : Under the uniform business rate, that will increase to £3,740--an increase of 143 per cent.

The hon. Gentleman says that it is a daft tax, but businesses in the north will not be entirely exempt. We are not trying to provide exemption for Harrods. If he understood the transitional scheme and had listened to the speech of my hon. Friend the Member for Truro, he would know that our efforts are directed towards helping the small business community.

It is important to leave the Under-Secretary of State adequate time in which to reply to the debate. My party is committed to the interests of the small business. That was shown by my hon. Friend the Member for Ceredigion and Pembroke who said that when we had an opportunity to influence Government we brought about a profound change in the attitude of the Labour Government to the self-employed. In the local government areas where we have control we have helped small businesses. In Government we would carry through our promises and bring benefit to the self-employed and the small business sector.

9.54 pm

The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls) : The hon. Member for Orkney and Shetland (Mr. Wallace), who has just made an eloquent speech, flatters me if he thinks that I can do justice to the debate in the six minutes that remain. I say to him what my hon. Friend the Minister of State said when he opened the debate--that we welcome the fact that the hon. Gentleman and his colleagues decided to choose this subject for debate. Although the debate has been short, it has been useful. I shall deal first with the speech by the hon. Member for Fife, Central (Mr. McLeish) who had two limbs to his attack. One was what he described as the crippling rate of interest ; and he also spoke about the effect of the uniform business rate.

It would be interesting to consider the careers of the hon. Gentleman and me. We are both virtually the same age, we appear to share the same sort of interests and we are both Members of this House. However, at a time when I was running a small business, the hon. Gentleman was earning his living in a quite different way. The hon. Gentleman spoke about interest rates as though they were far more important than the rate of inflation. When I was setting up my small business in the late 1970s, I was worried not about interest rates but about the rate of inflation. I must reiterate that the Government do not enjoy the current interest rate policy. No Government could enjoy the effect that it has on business in the country. However, it is the proven way to prevent inflation from getting back into the system.

I tried to run a business in the 1970s when inflation rates exceeded 20 per cent. at times. That was incomparably more important than the interest rate. The hon. Member for Truro (Mr. Taylor) said that people in his constituency were not talking to him about the rate of inflation. They would not be talking to him about that, because, even though it has peaked under this Government, it is still only at the low mark of the rates reached under the last Labour Government. The hon. Gentleman knows that I am well acquainted with his part of the world. I have a good memory, and I remember what people were talking about in parts of his constituency when the inflation rate was in

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excess of 20 per cent. If anything wrecks small businesses, it is the rate of inflation. If there is one proven instrument to deal with that, it is interest rates. It is not a comfortable instrument, but it works.

The hon. Member for Fife, Central spoke about the Labour party policy, but understandably he did not want to dwell on it overlong. Labour party policy is to support a property tax on business. I remind the hon. Gentleman what the hon. Member for Copeland (Dr. Cunningham) said :

"we support the revaluation of business property because we are in favour of a property tax."--[ Official Report, Standing Committee E, 3 March 1988 ; c. 1186.]

The Labour party should not shed crocodile tears. The hon. Member for Fife, Central does his homework well--much better, I suspect, than some who have spoken tonight. He knows that the uniform business rate produced seemingly large increases in certain areas, not because of the concept of the tax itself, but because of a lack of revaluation since 1973.

It is a matter of great personal grief to me that, in the three minutes remaining, I shall not have time systematically to take apart the spurious arguments of the hon. Member for Truro. I remind him that there has not been a revaluation since 1973. The first time that the revaluation was ducked was in 1978 ; the significance of that date is that it was the date of the Lib-Lab pact. Indeed, the Earl of Stockton once said that the Liberal party produced policies that were both interesting and original-- the trouble was that none of the original policies was interesting and none of the interesting policies was original.

The hon. Member for Truro took the same approach today. He said nothing about any Liberal alternative to the uniform business rate. He told us about a man who kept coming to see him to complain, but he did not say that he had told him what the UBR was all about. He did not tell him about the lack of revaluation, because his party was opposed to it. He did not tell him that, on average, factory rates would come down by 31 per cent. and warehouse rates by 20 per cent. Obviously there is no such thing as a popular charge. There never is, and there never will be. There is no such thing as a popular tax either, but at the end of the day the uniform business rate will be the fairest form of charge. Bearing in mind the fact that the hon. Gentleman's policy is committed to a land revaluation tax as well, it is a bit thick that he should have criticised us today.

Question put, That the original words stand part of the Question :--

The House divided : Ayes 13, Noes 164.

Division No. 60] [10.00 pm

AYES

Alton, David

Ashdown, Rt Hon Paddy

Beith, A. J.

Campbell, Menzies (Fife NE)

Carlile, Alex (Mont'g)

Fearn, Ronald

Howells, Geraint

Hughes, Simon (Southwark)

Kirkwood, Archy

Maclennan, Robert

Michie, Mrs Ray (Arg'l & Bute)

Steel, Rt Hon Sir David

Taylor, Matthew (Truro)

Tellers for the Ayes :

Mr. James Wallace and

Mr. Malcolm Bruce.

NOES

Alexander, Richard

Allason, Rupert

Amess, David

Amos, Alan

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Column 402

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Tom (Hazel Grove)

Ashby, David

Atkins, Robert

Baker, Rt Hon K. (Mole Valley)

Baker, Nicholas (Dorset N)

Batiste, Spencer

Beggs, Roy

Bellingham, Henry

Bennett, Nicholas (Pembroke)

Benyon, W.

Bevan, David Gilroy

Biffen, Rt Hon John

Blackburn, Dr John G.

Boscawen, Hon Robert

Boswell, Tim

Bottomley, Peter

Braine, Rt Hon Sir Bernard

Bright, Graham

Brooke, Rt Hon Peter

Brown, Michael (Brigg & Cl't's)

Buck, Sir Antony

Budgen, Nicholas

Burns, Simon

Burt, Alistair

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Carttiss, Michael

Clark, Sir W. (Croydon S)

Colvin, Michael

Coombs, Simon (Swindon)

Cormack, Patrick

Couchman, James

Cran, James

Currie, Mrs Edwina

Davis, David (Boothferry)

Day, Stephen

Devlin, Tim

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dunn, Bob

Durant, Tony

Dykes, Hugh

Eggar, Tim

Emery, Sir Peter

Favell, Tony

Fishburn, John Dudley

Forman, Nigel

Forsyth, Michael (Stirling)

Forsythe, Clifford (Antrim S)

Forth, Eric

Franks, Cecil

Freeman, Roger

Fry, Peter

Garel-Jones, Tristan

Gill, Christopher

Glyn, Dr Sir Alan

Goodlad, Alastair

Greenway, Harry (Ealing N)

Greenway, John (Ryedale)

Gregory, Conal

Griffiths, Peter (Portsmouth N)

Grylls, Michael

Hague, William

Hamilton, Hon Archie (Epsom)

Hampson, Dr Keith

Hargreaves, A. (B'ham H'll Gr')

Harris, David

Hayes, Jerry

Hayhoe, Rt Hon Sir Barney

Hayward, Robert

Hind, Kenneth

Hordern, Sir Peter

Howarth, G. (Cannock & B'wd)

Howell, Rt Hon David (G'dford)

Hunter, Andrew

Irvine, Michael

Jack, Michael

Janman, Tim

Johnson Smith, Sir Geoffrey

Jones, Robert B (Herts W)

Jopling, Rt Hon Michael

Kilfedder, James

King, Roger (B'ham N'thfield)

Knapman, Roger

Knight, Dame Jill (Edgbaston)

Knox, David

Lamont, Rt Hon Norman

Lawrence, Ivan

Lee, John (Pendle)

Lightbown, David

Lilley, Peter

Macfarlane, Sir Neil

MacKay, Andrew (E Berkshire)

Maclean, David

McLoughlin, Patrick

McNair-Wilson, Sir Michael

Mans, Keith

Marlow, Tony

Martin, David (Portsmouth S)

Maude, Hon Francis

Maxwell-Hyslop, Robin

Meyer, Sir Anthony

Miller, Sir Hal

Mills, Iain

Miscampbell, Norman

Mitchell, Andrew (Gedling)

Moate, Roger

Molyneaux, Rt Hon James

Monro, Sir Hector

Montgomery, Sir Fergus

Morrison, Sir Charles

Moss, Malcolm

Neubert, Michael

Nicholls, Patrick

Nicholson, David (Taunton)

Paice, James

Patnick, Irvine

Peacock, Mrs Elizabeth

Porter, David (Waveney)

Raison, Rt Hon Timothy

Renton, Rt Hon Tim

Rhodes James, Robert

Riddick, Graham

Ridley, Rt Hon Nicholas

Ridsdale, Sir Julian

Rifkind, Rt Hon Malcolm

Ross, William (Londonderry E)

Ryder, Richard

Sackville, Hon Tom

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shaw, Sir Michael (Scarb')

Shepherd, Colin (Hereford)

Skeet, Sir Trevor

Smith, Tim (Beaconsfield)

Squire, Robin

Stanbrook, Ivor

Steen, Anthony

Stevens, Lewis

Stewart, Andy (Sherwood)

Stradling Thomas, Sir John

Summerson, Hugo

Taylor, Rt Hon J. D. (S'ford)

Tebbit, Rt Hon Norman

Thompson, D. (Calder Valley)

Thompson, Patrick (Norwich N)

Thorne, Neil

Thurnham, Peter

Twinn, Dr Ian

Walker, Bill (T'side North)

Waller, Gary

Walters, Sir Dennis

Wheeler, Sir John

Wiggin, Jerry

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