House of Commons Hansard Debates for 7 Dec 1992

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gobbledegook and empty jargon, experience a kick start into despair mode? My feelings towards all of you at today's Awards are, attitudinally, those of enormous encouragement ... God bless the Plain English Campaign."

I do not quite say, "God bless the Department of Trade and Industry", but I do salute Companies house, which is an executive agency of the DTI. It produces a lot of information to help companies avoid the many pitfalls of company law. A Companies house document won an award today : it is called "10 excuses for not filling company accounts and what Companies house thinks of them". I salute the DTI agency. During my short time in the House, I have noticed that hon. Members spend a great deal of time criticising Government agencies and flinging brickbats, and I think the occasional bouquet is in order. A bouquet was certainly forthcoming today, because this no-nonsense booklet gets its point across. It carefully demolishes the 10 most common excuses for not filing company accounts--and it is put in simple language too. I am pleased to say that it is one of those Government documents that are as modern as tomorrow, while being presented in a very simple style. It has not opted for an unnecessary use of colour, but it is quite legible.

The booklet begins by telling us that this is not just a "lot of red tape". It then tells us why, taking us through all the excuses that small businesses use for not filling in forms. For example, they may say, "I cannot afford it". The answer comes back,

"Can you afford not to? Apart from risking a fine and a criminal conviction, think of the impression that your failure to file accounts gives to those you do business with. And its effect on your credit rating."

There is the answer--in a couple of dozen words, not of gobbledegook but of straightforward business talk.

The last of the 10 excuses for not filing accounts really sums up the no- nonsense approach of the booklet. The reply to the excuse "I didn't know I had to"

is "You do now." I hope that the Minister will pass on my congratulations to the head of the London office of Companies house, Alan Bryant, on the work that he and his team did in producing such a clear leaflet. We want more clear leaflets.

Mr. William O'Brien (Normanton) : This document is obviously important to small businesses. Does it refer to the forms that are sent to small businesses, particularly those in the building trade, by water authorities demanding information about certain matters? What does the DTI say to bodies unconnected with Government that demand form filling and lengthy question answering before small businesses can operate?

Mr. Brandreth : I entirely agree with the hon. Gentleman. The leaflet to which I have referred is designed to encourage small businesses to file their accounts properly, and it explains to them, in straightforward business terms, why it is important for them to do so. There are many regulations that we do not like, but I think that I am right in saying that the Government are not anti-regulation ; they want deregulation--fewer regulations, simpler regulations and only the necessary regulations. I regard the filing of a VAT return to Customs and Excise on a quarterly basis as a necessary evil : it has spin-off benefits for small businesses, because it can help them to keep their accounts more effectively.

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The point made by the hon. Member for Normanton (Mr. O'Brien) is not answered in the leaflet, but I hope that the Minister will answer it, because I consider it valid.

We want simple forms, and we want as few of them as possible. We also want as few regulations as possible. One of the problems of the Minister's very existence is that, because he exists, he has work to do. I trust that he is working for his own redundancy : we want to secure sufficient deregulation not to need a Minister for deregulation any longer, the whole thing having become sufficiently simplified for him to be able to move on to even greater things in a Government whom he already adorns with such style, distinction, acumen and scholarship. Having buttered up the Minister to such an extent, I hope that I will get the right answers from him later-- otherwise Chester will want to know why not!

Some of the regulations about which my constituency complain have turned out to be phantom regulations. I received a number of telephone calls, and several letters, a week or two ago, following a television report that was shown in the north west. It may have been seen in other parts of the country. It featured a European Community regulation which, apparently, would require fishermen--I suppose that, in this context, I must tolerate the use of the word "fishermen" rather than the word "fisherperson"--to wear hairnets. The programme showed fishermen wearing hairnets, looking embarrassed and running down the regulation. I was of course appalled to discover that the European Community was insisting that fishermen wear hairnets, but it turned out not to be true--it was one of many phantom regulations. The Community has agreed that there should be a high standard of cleanliness on board fishing vessels but that does not mean that fishermen must wear hairnets. It is left to member states to decide the appropriate standards of hygiene. I understand from the Department of Trade and Industry that headgear is not included. I imagine that the measure was confused with a directive agreed last year on hygiene standards for fish processing and packaging plants on land, which is an example of necessary regulation. We all want high standards of hygiene and business requires them--that is the fine line which must be drawn between unnecessary regulations and regulations that will lift standards and improve life for businesses. It was extraordinary that in the same post I received letters telling me that jams and cakes sold on charity stalls would need to comply with European Community labelling requirements. Again, I was requested to speak to the Minister in charge of deregulation to ensure that that was one of the first regulations that he repealed. It turns out that it was another phantom regulation. Food sold on charity stalls for the benefit of a society officially registered under the Industrial and Provident Societies Act 1965 or food sold for anything other than commercial gain at, for example, school fe tes and church bazaars--the type of event which we are rather good at in Chester--is exempted from the general labelling requirements which are designed to assist the consumer. Therefore, it is not a regulation that needs to be withdrawn.

I sometimes feel that as a country we always want to believe the worst in everything. We half want such regulations to be true so that we can complain about them,

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like people who enjoy collecting examples of gobbledegook because it is fun to mock them. I want to see the best in everything. I know that under their deregulation initiative, the Government are working to minimise the administrative and regulatory burdens on business and to cut unnecessary and outdated regulation by improving the focus and administration of essential regulation. We accept that some regulation is necessary but please, let us keep it to a minimum by taking into account the views of business people when framing new policies and regulations, especially with regard to the potential cost of compliance.

I salute the Minister because it is one thing to say that one will take into account the views of business and welcome letters from people saying what they want, but it is another to travel to a chamber of commerce meeting--as he did--and listen to and make note of what people said and promise to take action. I shall prove how effective the Minister can be and he can confirm the veracity of what I am about to say.

During the meeting at Chester college of further education there were repeated demands for a cut in interest rates. The Minister had to take a break and left the room. He returned half an hour later bringing news from the Chancellor of the Exchequer that, during the meeting, the decision had been taken to bring down interest rates by a further percentage point. He is very much a Minister who delivers, and the Chester chamber of commerce sends a serious message of gratitude.

To operate effectively, businesses need rules and regulations, but they need them to be kept to an absolute minimum. Those which are enforced should be clear, simple and light.

7.44 pm

Mr. William O'Brien (Normanton) : We are fortunate to have the opportunity to discuss deregulation as it affects small businesses. The hon. Member for City of Chester (Mr. Brandreth) mentioned a number of reasons for deregulation, but regulations covering small businesses involve Departments other than the Department of Trade and Industry. The Under- Secretary of State for Corporate Affairs may be responsible for deregulation, but other Departments are involved in creating regulations which target small businesses.

The hon. Member for City of Chester mentioned the Treasury and told the story of how the Minister left a meeting in Chester and returned to say that the Chancellor had just announced a reduction in interest rates. Clearly, one must take the Treasury into account when considering small businesses. From time to time, there is a need for more regulation of small businesses, especially when banks are involved. On 27 October I wrote to the Chancellor of the Exchequer requesting that he take action against banks which were levying exorbitant charges on small businesses.

A constituent had written to tell me that a bank had raised its charges by 500 per cent. in one quarter earlier this year. If there is a call for regulation involving small businesses, it is to ensure that banks cannot attack small businesses in such a way. Banks may be having difficulties in making ends meet, but it should not be taken out on small businesses.

When considering deregulation, I hope that the Minister will consider a point made by a Treasury colleague who, in a letter to me dated 13 November --only

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a few days ago--wrote that it was impossible for the Government to intervene when banks applied such pressure on small businesses. He stated :

"I am afraid that there is nothing directly that the Government can do to help since the level of charges applied by the banks for particular services is a matter for the commercial judgment of the banks and is not something in which the Government can intervene." If there is a need for regulation, it is on the issue of bank charges.

When a small business person enters into an agreement with a bank, certain assurances are given, but the bank has the power to increase its charges without notice to the client. Although I agree with the principle beind the debate--deregulation of Government intervention in small businesses--there is sometimes a need for additional regulation and, from time to time, the Government should consider what small businesses have to face.

One of the highlights of this period is the fact that small businesses are finding it difficult to make ends meet and to keep themselves alive. The reason is invariably that they are subcontracted to large undertakings that go into liquidation, which has an effect on small businesses. Reducing regulations is important, but the Minister should consider additional regulations where necessary. The banks impose exorbitant charges for their services. A regulation should be introduced to control bank charges and the Government should intervene to ensure that there is fair play at all times between banks and small businesses.

Another question concerns Government regulations on the rating of small businesses. I realise that it is not the Minister's Department that issues regulations in that respect for small businesses. The hon. Member for City of Chester referred to the Treasury, and I accept that Treasury regulations need to apply to small businesses. The Department of the Environment also issues regulations concerning small businesses.

I hope that the Minister will analyse the regulations that apply to small businesses, especially the uniform business rate. All non-domestic rates are paid directly to the Government. Small businesses, often as a result of Government policy, find it difficult to continue in business because the rates demand means that about one third of their income is taken by rates. There is need to reconsider the regulations that control the rates for small businesses. The Government's philosophy, which I do not support, is that large companies should pay the rate poundage as small companies do. In many instances, about 30 per cent. of the profits of small companies are taken to pay the rates. For large companies, the sum needed to pay the rates may be only about 3 per cent. of their profits. There is an anomaly there.

The regulations on non-domestic rates should be reconsidered. If small companies have difficulties in making ends meet, the regulations should be amended so that such companies can have a rate rebate to help them over a difficult period. Such a measure could be introduced in co-operation with local government. There is no reason why the Government should not consider a rate rebate for small businesses.

I assume that there is a periodic review of how the uniform business rate applies to small businesses. The Minister should examine the possibility of giving a rate rebate to businesses that are in difficulties. I make that point because the Government encouraged people to invest in small businesses. Many people in my constituency

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and elsewhere mortgaged their homes and everything they had to set themselves up in business. As a result of recession and hardship, families lose everything if the businesses goes into liquidation. A little Government help in the form of a rate rebate might have got them over a difficult period. When the Minister considers the question of regulation, or deregulation, he shoould consider carefully whether there should be a rate rebate for businesses that find themselves in difficulties.

The Minister should also give further consideration to the question of loans to businesses. The hon. Member for City of Chester gave the example of the Minister advising Cheshire chamber of commerce of a reduction of 1 per cent. in the bank rate. All the Minister had to do was to go outside, lift up the telephone and talk to the Chancellor of the Exchequer or to Treasury officials. The Minister should discuss with his Treasury colleagues the possibility of there being a sliding scale under which small businesses which are having difficulties could be given a concession in the form of a reduction in interest charges. Over the past few years, interest charges for small businesses have been very high.

In an intervention, I spoke about the attitude of water companies. I accept that the Government can act only on the regulations for which they are responsible, but I assume that there is nothing to stop the Government considering the legislation that controls the utilities, especially the water companies. There should be a regulation that prevents the water companies from putting pressures on small businesses in the shape of the forms and questionnaires that they have to complete. Small companies should be allowed to continue in business without having such demands placed on them, expecially by the water companies.

Yorkshire Water is responsible for the control of effluent in my constituency. Yorkshire Water demands that companies put money up front. In one case, a small company could not meet all the demands. Some 90 jobs were lost because the water authority could not and would not help that small company. One reason is that Yorkshire Water has a monopoly. Although I represent a constituent who is having difficulty with the water authority, I could not raise the matter in the House with any Minister. This is the only opportunity I have had to present my constituent's case. We are talking about deregulation, but there may be a case to introduce regulations to control the monopoly position of water companies and of other utilities. It is all very well for Ministers to say that there is a regulator for the water industry. The question is, who regulates the regulator? Who tells the regulator what is fair and what is wrong? Conservative Members support competition, but there is no competition in the water industry. The Minister responsible for deregulation should consider the way in which the water industry affects small businesses. A few years ago, the association that represents small businesses called for the appointment of a Minister for Small Businesses. Conservative Members often refer to the last Labour Government. However, 13 years ago the last Labour Government had a Minister responsible for small businesses, but the Government have abolished that position.

I have no reason to doubt the sincerity of the hon. Member for City of Chester about small businesses. He admitted that he was involved with small businesses before

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he became a Member of this House. If he believes that small businesses should be fully represented, the Government must consider appointing a Minister responsible for small businesses who would answer questions about small businesses at the Dispatch Box. The Parliamentary Under-Secretary of State for Corporate Affairs is halfway there as he is responsible for the interests of small businesses and for the regulations that apply to them. However, that does not go far enough. Perhaps we should consider the appointment of a Minister responsible for the interests of small businesses in total.

This debate is significant and important and I hope that the Minister will consider the issues that cause serious concern among many people who we represent in small businesses. We have been told that at least 70 to 80 small buinsesses go into liquidation each day as a result of the recession. We must do something to help those people and we can do that by pleading with the Minister to consider the regulations and, where they need amending to help small businesses, to amend them and where they need abolishing to help small businesses, to abolish them.

I hope that some action will be taken to help small businesses to survive because the Government have made it difficult for the small businesses that were encouraged to develop in the 1980s. The Government are now turning their back on them. They are not prepared to help them in any way, shape or form.

I hope that the Minister will consider my points about the banks and bank charges and about water companies and water charges. I hope that the Minister will consider the need for more investigation into the difficulties that small businesses face. The Government should introduce a rebate scheme to help small businesses over difficult periods.

Those are not unreasonable requests. The Government could attend to those issues without much difficulty. If the Government paid as much attention to the survival of small businesses as they paid to the survival of the pound on black Wednesday a few weeks ago, the country would be better off and small businesses would have a better opportunity to continue to be the backbone of the economy. I hope that the Minister will consider the points that I have made. 8.3 pm

Mr. Mike Hall (Warrington, South) : It is a privilege to take part in this debate about the future of small businesses. The hon. Member for the City of Chester (Mr. Brandreth) considered the effects of deregulation on the small business community and my hon. Friend the Member for Normanton (Mr. O'Brien) gave the Minister practical examples of how we might help small businesses in the British economy.

It is also a privilege to participate in this debate because the Under- Secretary of State for Corporate Affairs, who is to reply, is the Minister responsible for small businesses. I have been advised that he is also the Minister responsible for the north-west. He is also a fellow Cheshire Member. I want to focus on the protection of small businesses and my remarks will have as much bearing on the Minister's constituency and that of the hon. Member for City of Chester as they will on mine.

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I ask the Minister for practical help in relation to the protection of small businesses. He should use the powers of the Department of Trade and Industry to intervene in respect of what might be considered a larger fish in this particular pond.

I sought an assurance from the Prime Minister in Prime Minister's Question Time that he would intervene on behalf of the future of ICI which employs 4,000 people in the constituency of my right hon. Friend the Member for Halton (Mr. Oakes) in the chlora-alkali factory in Runcorn. The great majority of my constituents work in that factory which has seen a 60 per cent. increase in its electricity prices since April 1991. If it cannot negotiate a reduction in electricity prices or benefit from bulk purchases, 4,000 jobs will go at Runcorn ICI.

One can imagine the impact of that loss of productive capacity on the small businesses in Runcorn and, more generally, on the small businesses in the north-west. That loss may also have an adverse effect on the British economy and that would have a major effect on small businesses in general.

Another 3,000 ICI workers are involved in associated productions with the chora-alkali factory. It has been estimated that between 10, 000 and 17,000 jobs will be lost in associated production if ICI closes the factory in Runcorn. That haemorrhage of jobs will have a major impact on the small business community in the north-west and particularly in my constituency as 16,000 of my electors live in the Runcorn area.

I want the Minister to focus on the following statistic when he considers how best to help small businesses in my community. In my part of the Runcorn constituency unemployment is 17.4 per cent. and that costs £13,554,000 in unemployment benefit and lost taxation. That amount of money is being taken away from the local economy and paid in unemployment benefit. It could be better spent to protect the small business community.

If the Minister is horrified at that statistic, he should consider what would happen if ICI closed the chlora-alkali factory. If we consider the associated job losses in small businesses that supply ICI, we are looking at £153 million or perhaps £198 million in money lost to the Government.

The Government could intervene and secure the future for ICI and, therefore, the future of small businesses in the community. The chlora- alkali factory in Runcorn uses 1 per cent. of the production of the national grid. If the factory closes, that 1 per cent. of national grid production will not be purchased and that will force up electricity prices for small businesses throughout the United Kingdom. The Minister should use his powers in the Department of Trade and Industry to intervene in that respect.

I welcome the President of the Board of Trade saying that he would intervene to protect industry before breakfast, before dinner and before tea. Intervening in big business--in respect of ICI--would have a major effect on securing the future of small businesses in my constituency.

I suspect that the Government may already have decided that they are not going to intervene. In a letter to the leader of Halton borough council about the future of ICI, the Parliamentary Under-Secretary of State for Employment, Viscount Ullswater, stated :

"Should major redundancies occur, then the Employment Service (ES) and local Training and Enterprise Councils (TECs) offer a wide range of options to help unemployed people find jobs, retrain or set up businesses on their own

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Local Action for Employment--Tackling Job Losses', which sets out the way in which TECs, the ES and Local Action Groups are helping individuals and communities respond to job losses."

The best way to respond to the potential loss of small businesses in Runcorn and elsewhere in the north-west is for the Government to intervene in a major way on behalf of ICI.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : I am listening to the hon. Gentleman with greacare. For greater clarification and so I can give some thought to the matter, which particular powers available to us in the DTI would the hon. Gentleman like us to use which would not fall foul of European Community competition law?

Mr. Hall : I am grateful for the Minister's intervention. I shall conclude my contribution by saying precisely why the Department of Trade and Industry should intervene and why that would be possible without offending EC regulations. The Minister should be a little more patient as I do not have much longer to speak.

ICI wrote to me and to the Minister concerned, because he is a Cheshire Member whose constituency is affected by the problem, saying :

"You will probably also be aware of the threat which this poses to the entire sector of UK manufacturing industry which is based upon the chlora- alkali manufacture".

That affects small and large businesses alike and it is relevant to the debate. The second paragraph of the letter states :

"In attempting to address this problem, ICI has had extensive discussions with the Generators, the RECs and the Regulator, but has been unable to find a solution within the current regulatory framework. The only possible route to a solution now lies through intervention by the Department of Trade and Industry with whom discussions continue."

The hon. Member for City of Chester said that burdens placed upon businesses must be kept to an absolute minimum. I agree with that. The burden that has been placed upon ICI with regard to the price that it must pay for its electricity could have a major impact on the small business community in my constituency. When I asked the Prime Minister to intervene, he said :

"I cannot intervene in the way in which the hon. Gentleman invites me to, and it would not be right for me to do so."--[ Official Report, 19 November 1992 ; Vol. 214, c. 409.]

PowerGen and National Power, from whom ICI directly buys its electricity, are 40 per cent. owned by the Government. The Government are the major shareholder. In consultation with the Prime Minister, the DTI could exercise its rights as the major shareholder to ensure that ICI is given a fair deal on electricity prices. To refuse to intervene in that way would condemn 4,000 direct jobs, 3,000 associated jobs in ICI, and 10,000 to 15,000 other jobs.

Mr. Neil Hamilton : What impact would it have in Brussels if we were to do as the hon. Gentleman invites us? What would Sir Leon Brittan, the competition commissioner, have to say to the Government?

Mr. Hall : The straightforward answer is that it would be wrong for me to presume what Sir Leon Brittan might say--I am not in a position to do so. I guess that he would be very supportive. He would see nothing wrong in ICI

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being given a bulk-purchase discount, because bulk-purchase discounts are a feature of the business community writ large. I am sure that that feature is prominent also in France and Germany. The Minister could give an assurance that he will intervene because of the potentially large number of job losses in the constituency of Halton, in my own constituency, and in the constituencies of Tatton, City of Chester and Ellesmere Port and Neston. I would be grateful if, at this late stage, he would intervene on behalf of small and big businesses alike. Thank you, Mr. Deputy Speaker, for giving me the opportunity to address the House.

8.12 pm

Mr. Ian McCartney (Makerfield) : It is a great pleasure to take part in the debate, Mr. Deputy Speaker. As one who is active in a small business called Featherstone Rovers, I commiserate in yesterday's result in Lancashire. St. Helens took them to pieces. Hon. Members can rest assured that Featherstone Rovers will once again represent successful small business in terms of winning rugby league cups.

The debate has been good-hearted. Behind the hype on the two Front Benches there is much common ground about how to develop small businesses and find practical ways and means to bring about partnership arrangements in the public and private sectors to develop local economies and the key role that small businesses play in local economies. I remember watching the hon. Member for City of Chester (Mr. Brandreth) as the agony aunt on TV-am when I was hospitalised for a long period. The hon. Gentleman kept me going in the mornings between the painkillers and the nurse manipulating my back. I thank him for that brief respite from the rigours of treatment. If we are to reach common agreement about the role of small business and its relationship with the public and private sectors, whether large-scale or medium-scale companies as subcontractors or directly providing goods and services, particularly in the north-west and in the Yorkshire, Humberside and northern regions, we have to accept that the small businesses that were created in the 1980s are now under great strain. Thousands have already gone to the wall. Consequently, there has been a loss of employment opportunities for people in already devastated communities, and the individuals who ran small businesses have lost not only their businesses but their homes, their life savings and their resources. On many occasions, they have lost redundancy payments.

One reason for that is the Government's colossal mistake in terms of interest rates. Interest rates have come down recently, but for tens of thousands of businesses it was too late. Businesses that are still struggling need further information from the Government on what they intend to do. Businesses are hanging on by their fingertips. They need information to be able to continue and, when we come out of recession, to be involved in the development of our local industrial base. The other reason is the way in which large institutions treat small businesses. Big business, month after month, failed to pay for the goods and services provided by small companies. In my constituency, companies have literally gone to the wall or have had to shed labour simply because larger companies have regularly refused to pay for goods and services. The Government owe it to small businesses to provide greater

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protection when large companies use small businesses as a free banking system and thereby risk the good management and financial stability of small companies.

The DTI has responsibility for small businesses and large manufacturing industries not only in the regions of Scotland and Wales but in Northern Ireland. In my area, by deliberate Government policy, large companies have suffered severe difficulties, and that has undermined the fabric of the local economy and risked substantial numbers of small businesses. When I became a Member of Parliament, my area contained more than 10 collieries either within its boundaries or in its travel-to-work area. Parkside colliery, in the constituency of my hon. Friend the Member for St. Helens, North (Mr. Evans), was the last colliery in the Lancashire coalfield to remain open, and it is now one of the 10 under threat of closure in the 90- day procedures.

Mr. Hall : Will my hon. Friend consider the future of the Point of Ayr colliery in north Wales? It sells 80 per cent. of its coal to Fiddlers Ferry power station, which is also threatened and might face a similar fate as that of the Parkside miners.

Mr. McCartney : My hon. Friend is absolutely right. I relate that remark to the position of subcontracting small businesses and what is happening to them during the 90-day period, to what is happening to the long-wall mining subcontractors and main contractors, and to the small companies that provide goods and services to them, and to the need for the Government to take some logical decisions.

Mr. William O'Brien : I am listening carefully to what my hon. Friend is saying. He is following the track that I laid, which is that, although the Minister may be responsible for deregulating small businesses, there is a need for additional regulations to defend the mining machinery industry and other industries for which protection is necessary. The Minister should take that issue on board. I wonder whether my hon. Friend would consider that matter.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. I remind the hon. Gentleman that the debate is about deregulation as it relates to small businesses, so he should confine his remarks to that.

Mr. McCartney : I am well aware of the content of the debate, and I do not intend to stray from it. It is important to highlight the fact that we can regulate to assist some small businesses and deregulate some of them when regulation does not assist them.

The regulatory body for the coal industry has failed, which has resulted in tens of thousands of jobs in small businesses and mining communities being threatened. Many of those jobs have already gone. In my constituency, and in the constituencies of my hon. Friends the Members for Wigan (Mr. Stott) and for Leigh (Mr. Cunliffe), Gullick Dobson is a classic example of a company whose future is at stake because of the way in which the electricity supply industry's regulatory body has interpreted the electricity regulations. In the past few years since the introduction of privatisation, Gullick Dobson has shed 70 per cent. of its work force and its United Kingdom market has shrunk to virtually nothing. Because of that shrinkage,

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the whole concept of its export market is put at risk. Its inability to have a market at home means that it cannot produce for an overseas market.

Many small businesses, such as fitters' companies, shot blasters, machine tool companies and transportation companies, are linked to the long-wall mining industry. In turn, they are linked to the decisions of the regulator through the Department of Trade and Industry because the mining industry is the largest employer. Therefore, there is a direct link between deregulation of large companies and the consequences for small companies when the regulatory machinery fails.

Another example of the failure of regulatory machinery which threatens the financial viability of small businesses is the regulatory body for tariffs and small users of electricity. It is scandalous that companies such as the North Western electricity board, the Merseyside and North-Western electricity board, the Eastern electricity board and the South-Eastern electricity board impose substantial tariffs that undermine the financial viability of small companies. The viability of local economies is threatened by such companies because they have a monopoly of the supply of electricity. The electricity suppliers make huge profits. Competitors abroad cannot believe their luck when they see what the British regulatory framework and the electricity supply industry do to large, medium and small businesses.

It is outrageous that the regulatory body has failed to take into account the effect of the pricing policy on small businesses. Having seen that effect, the President of the Board of Trade has failed to take any action against the regulator to rein in the profit-making activities of the supply industry which undermine small businesses in the United Kingdom.

Another sector in which a lack of regulation has affected small businesses is the housing investment programme of the Department of the Environment. The Minister should speak to the Secretary of State for the Environment about how the regulations have been framed and how local authorities disperse the resources for the housing investment programme. Millions of pounds which would go directly to small businesses in the private sector for housing refurbishment, housing development, new starts and new partnership schemes between the public and private sectors and the private and voluntary sectors have been held up. Those programmes will not take place as a result of the way in which the Government operate the housing investment programme.

If we are serious about getting out of the recession, we must recognise that one of the main vehicles is the businesses in the building supply and construction industries. The Minister knows that small businesses in the north-west are contracted to large companies, local authorities and housing associations which work in the voluntary sector. The Minister could make a dramatic input into the recovery by persuading his colleagues in the Department of the Environment to take some action.

Mr. Hall : Does my hon. Friend agree that one way of stimulating small businesses is to allow housing investment programmes to introduce capital repair schemes, which are much easier and quicker to introduce than capital projects? Capital projects may take two or three years to come to fruition.

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Mr. McCartney : My hon. Friend was a member of a finance committee of a local authority before coming here. He is absolutely right. The Government have suggested that the Conservative party is the party of small business and enterprise. However, when we see Conservative Members in action, we find that they are not the party of small business. Some of their activities and the way in which they interpret things are anti- enterprise. They believe that any investment in the public sector is bad, even though that investment goes directly through the local authority and the voluntary sector into the private sector.

Most of the public sector investment is picked up by small businesses in the private sector. The Government's ideological excuses and policies are a major stumbling block to small businesses in the construction industry. The Government owe it to the industry and those who are employed in it to conduct a serious review of their policies.

The President of the Board of Trade needs to talk to the Secretary of State for the Environment about the regulation of city grants. The regulations were introduced to ensure that capital projects took place in areas in which the Government deemed it necessary to build a local infrastructure. The regulations related to investment in which there was a direct input by the private sector, a direct benefit of jobs through the private sector and, especially, the creation of small businesses in the area designated by the Secretary of State for the grants.

My hon. Friend the Member for Wigan and his constituents, and my other colleagues in the north-west who represent areas which are taking part in the city grants, now find that the Department of the Environment is reinterpreting the regulations, which undermines confidence about the development of joint projects with small businesses in the community. That is unacceptable. We will not argue about whether city grants should be made available.

If the grants are part and parcel of the Government's policy because the major beneficiaries in the community are small businesses, why do they not just get on with it? Why do not the Government allocate the resources and say to local authorities, training agencies in the community and private firms involved in joint projects, "Here are the resources. Go away and get on with the job."? The Government should stop getting on the back of local authorities every five minutes of the day, changing decisions and rescheduling where the money should be spent. That undermines the extent to which small businesses in the community can bounce back.

Opposition Members do not accept that all that is necessary to rebuild the economy of Britain is to create 1 million small businesses. It was not true in the 1980s when Mrs. Thatcher said it ; it is not true now. However, small businesses must be part and parcel of the overall economic objective to work with and link in with medium-sized and large companies, with the private sector and the public sector. With such a partnership it is possible to develop job opportunities for young people, people with skills, semi-skilled people, women and ethnic minorities.

Unless the Government take on that challenge we shall come back next year to unemployment at 4 million, growing desperation in the communities of the north-west and another lost opportunity. It will be another decade of young people without hope or opportunity. That is the challenge for the Government.

The challenge is not to take regulation off the back of industry. It is to work side by side with industry to develop

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new jobs, new opportunities and new markets. If the Government can meet the challenge, they will go some way towards removing the misery of mass unemployment in our region.

8.31 pm

Mr. Andrew Miller (Ellesmere Port and Neston) : I offer my apologies to the hon. Member for City of Chester (Mr. Brandreth) for missing the first few minutes of his speech. I was in a meeting with a Minister to discuss a case which is a spin-off from the collapse of a small business and has had an effect on the domestic affairs of some of my constituents. I am grateful for the time that I spent with the Minister discussing that matter.

I have a particular interest in small businesses engaged in high technology. It is ironic that the debate was introduced by the hon. Member for City of Chester whom, as my neighbour, I have come to know reasonably well. I noted that a review in a magazine of a piece of software manufactured by a small business described the software as being somewhat like the hon. Member for City of Chester--"erudite as it is annoying."

I join the hon. Member for City of Chester in calling for deregulation and improvement of the resources and facilities available to small businesses, many of which in our area are suffering for some of the reasons that have been described by hon. Members on both sides of the House.

Businesses are suffering as a result partly of the regulatory regimes in force and partly of the spin-off of changes which impact on large industries which are themselves regulated. My hon. Friend the Member for Warrington, South (Mr. Hall) made that point in the context of ICI. My hon. Friend the Member for Makerfield (Mr. McCartney) made the point in the context of the coal industry. I recently met the Neston and Parkgate chamber of trade. The Minister represents a seat in the north-west so he will know that part of Cheshire ; it is one of the nicest parts. The chamber of trade made several points which impact on the debate. It made precisely the point made by my hon. Friend the Member for Normanton (Mr. O'Brien) about bank charges. It saw the problem in two ways. The first was the lack of control of banks. Banks can levy outrageous and variable interest rates and charges associated with the activities of small businesses in an unstructured way.

It also saw the problem in comparison with the system in other countries. The Minister asked in an intervention what he could do on some of the European issues. The chamber of trade made a comparison with the position in Germany. It is well known that small and large businesses in Germany can have assistance from the banking sector spread over a much longer period than is normally the case in the United Kingdom. Although that problem does not stem directly from the regulatory regime, the Minister and his colleagues from other Departments could take steps that would be of use to small businesses.

The chamber of trade also noted that several small businesses in the area had been set up by people who had received redundancy payments from larger companies which had shed labour for one reason or another. One of the most common factors in my area is that companies decide to dispose of what they describe as non-core activities. Those activities still have to be undertaken and

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