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Mr. Bob Russell (Colchester): During the debate, news was faxed to me that the Colchester-based Spottiswoode Ballantyne and Ipswich-based Cowells printing firms have gone under, with a loss of 228 full-time employees.
Mr. Boswell: That makes the point eloquently. I am only sorry for those who have lost their jobs.
It is not terribly surprising that the Secretary of State should extend his new Labour initiatives to taking a close interest in the insolvency laws. That reflects the current equivocation in his Department. On the one hand, it is all right to introduce measures to enforce statutory late payment of debt; on the other hand, those who want to get their money back may not get it back from their creditors.
We now come to the Government's own role in this. They, of course, are programmed to deny: it is anyone's fault but theirs. Yet it is they who have increased business taxation through their acceleration of corporation tax payments, their raid on pension funds and a number of other measures--such as fuel duties--that have directly affected industrial costs. On top of that, they have piled on regulatory burdens to the tune of an estimated £14 billion over this Parliament, figures derived from their own compliance cost estimates. That is, of course, where we have those estimates. Only this week, I was told that we are not to have a compliance cost assessment for the "Fairness at Work" White Paper until the legislation comes forward. That is also before we aim off for what I might call a certain insouciance in calculating the figures, for example, for the Competition Act 1998 compliance costs.
Ministers never understand the sheer gut-wrenching effort that is required by a small business, for example, to comply with the requirements of record keeping, with a 17-week reference period for the working time directive and a separate four-week period for the national minimum wage. Only today, a medium firm employing 100 people told me that it would be taking on an employee. That employee was required for record keeping for those two functions, and so was not a productive employee, but that is the only type of employment that the Government can encourage. Of course, those figures are all on present labour costs, not on future ones.
The effect of all that is to load some £1,500 on to the cost of each British job. It is not surprising that there will be fewer of them. The effects have been damped by economic buoyancy--the golden legacy that the Government inherited from us--and the ability of firms to take out a year's foreign exchange cover, but, just as those are running out, we shall find the industrial consequences of last year's hike in interest rates and the escalation of the pound coming through.
The euro could make matters even worse if it is now going to work to a left-wing political agenda. If it softens and the pound stays high, that would be another blow to British industry.
My first advice to Government is simply to acknowledge the problem that they have. The second is to take some practical action to tackle it. Investment is not helped by the extra taxes on savings that they have introduced. Employment is not helped by the extra cost burdens that have been imposed on employers.
Just as the Government go around saying that industrial management should sharpen its cost cutting--and so it should--so Government can do some practical things to cut burdens on business: call a stop to extra regulatory burdens; freeze "Fairness at Work" until other burdens that they have already imposed have been assimilated; not impose green taxes on business unless other burdens on business are reduced at least commensurately; remember that other Government Departments have the capacity to do collateral damage to business unless the Government
practise the joined-up thinking that they always talk about; remember that excess government spending is inevitably feeding through into interest rates; and put some downward pressure on both.
Maria Eagle:
Just as we thought, the hon. Gentleman's prescription appears to be: pay lousy wages and cancel investment in the health service and education.
Mr. Boswell:
If the hon. Lady believes that, she is providing a prescription for the destruction of jobs that has always accompanied past Labour Governments and will, I fear, accompany this one.
Somehow, I doubt whether the Government could do those things. I think that they will use the McKinsey report not to improve productivity but as an opportunity for grandstanding and showing off at the expense of business. They will not give credit to business and the unions for the achievements of the past 10 years in making at least a large part of British manufacturing internationally competitive. Rather, they will use it as a platform for windy exhortation.
It is the Government, not the others, who should be sharpening up their act. It is not kind to someone who is sweating their guts out to get orders to tell them they should do, yet any minor douceurs offered by the Secretary of State and the Government, for example, to small and medium enterprises or high-tech companies will pale into insignificance alongside their matching increases in business costs. For all Ministers' proud rhetoric, they still do not understand the simple fact that a 1 per cent. uplift in costs, although apparently minor in itself, translates itself into a much higher percentage effect on the bottom line, which is the basis of all business success and new investment.
British manufacturing industry, then, is in a serious situation, but that situation is not terminal if the Government help. Ministers have claimed that they have put an end to boom and bust, yet their real concern is to pass the buck. Their attitude to British industry is four soundbites and a funeral.
If the Secretary of State finds sweat, scurf and dirty overalls too distressing for his fastidious tastes, perhaps he should remember Oscar Wilde: "To lose one parent"--or perhaps to lose one factory--"may be regarded as a misfortune; to lose more than one looks like carelessness."
The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche):
Today's debate has shown a cynical and desperate Opposition talking down the economy. Conservative Members are desperate for a recession for their own political ends and for nothing else, and what do they do to bring that about? They fly in the face of reality. They ignore the facts. They ignore the real
Mr. Brady:
Will the Minister give way?
Mrs. Roche:
Let me make a little progress first.
Unlike the Opposition, the Government are in touch with reality. As my right hon. Friend the Secretary of State for Trade and Industry has rightly pointed out, there is a serious downturn in the global economy and, yes, its effects have been felt by some companies in the United Kingdom. With one quarter of the world, including Japan, in recession, no country is immune from the effects of the instability in the world economy, but we are in a good position to survive the worst because of the prudent economic policies and actions that have been pursued since May 1997 to ensure the underlying strength of the economy.
The Government's job, amid all that, is to continue to ensure stability at home to withstand the worst effects of the world downturn and to create the conditions for sustained and steady growth. The response of all politicians--from the Government and hon. Members on both sides of the House--should be that we should not talk ourselves into recession.
The UK's economy is still growing. There is net job creation. I have yet to hear someone from the Conservative Benches admit that. Our economic fundamentals are sound, despite what the right hon. Member for Wokingham (Mr. Redwood) would have us believe.
Mrs. Roche:
What an embarrassment of riches, but it has to be the hon. Member for Buckingham (Mr. Bercow) because I missed him at the Select Committee on Trade and Industry today, so he has his opportunity to ask me questions now. I was there for him this morning, but he was not there.
Mr. Bercow:
I had a personal family commitment, so I hope that the hon. Lady will be understanding.
Why did the Secretary of State tell the Select Committee on Trade and Industry last week that his Department had made no estimate of the annual cost of the parental leave directive, when his Department had already published an estimate of an annual cost of £55 million? Why is he so palpably ignorant of the matters for which he is responsible?
Mrs. Roche:
It is such a shame, because the hon. Gentleman tries so hard. I have great admiration for his efforts, but he must get a grip on reality. That is not what the Secretary of State has said. He does not need to get back to the school drawing board.
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