| Previous Section | Index | Home Page |
Mr. Syms: My speech will be short, but I hope Ministers will accept that it is heartfelt. I have been a small business man for nearly 25 years, and some Governments--even those whom I have supported--have not been sufficiently aware of the burdens that law-making places on small businesses.
Inevitably, the administration and employment costs of running a small business will be high. I am not talking about large businesses with personnel departments and, perhaps, professional managers; I am talking about small firms dealing with a small number of people, while also dealing with a range of problems, trying to acquire customers, trying to get the money in and trying to keep going. The most difficult bit, I think, is getting the money in. Some of the administrative burdens placed on small businesses cause a real problem, distracting those who run such businesses from the important process of doing the work, getting the money in and ensuring that they stay in business.
I have always believed that the future of this country lies in nurturing and supporting small business. If every business employing five, 10 or 15 workers could take on one or two more, our chances of lower unemployment would be immeasurably greater, and we would have a dynamic impetus in the economy. As a matter of policy,
we as a country ought to do what we can to support, sustain and encourage small business. If anything, however, the Bill will increase the number of burdens that we already have in the form of the working time directive and many other European regulations. It will make it far more difficult for small businesses to remain a profitable entity, continuing to employ people, to grow and to provide services for the community.
My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) made a convincing case for the amendment, to which I listened carefully. I also listened carefully to the hon. Member for Northavon (Mr. Webb), who expressed a preference for 20 employees. I would like the figure to be even higher. I am not sure that it is fair to shift the burden from the state to private companies, and to allow those companies to cover the cost. No doubt the private companies could do it a little more efficiently, but it would involve a tremendous burden of work.
I made an important point in an intervention on my hon. Friend the Member for Bognor Regis and Littlehampton. Many people who set up small businesses are husband-and-wife teams, or partners. The business may be run by a husband or wife who may, while doing another job, have to come in and deal with the books and the administration. That imposes an extra burden--a burden, perhaps, on the marriage.
This measure will cost £103 million, which is a huge amount. It will impose a terrific burden on small businesses. It is unacceptable for a Government who are currently enjoying surpluses because of what is happening in the economy to shift the burden of state regulation on to small businesses.
The Federation of Small Businesses says that the Bill
Those people run businesses. They know business. A Government who are supposed to be business friendly ought to take their advice. I hope that the Government will consider the amendment very carefully.
I have run a small business, and I know that those who run such businesses have a close relationship with those who work with them. They are employees, but many are also friends. Inquiring into their personal background is
difficult: it changes the relationship. I do not want employers whose businesses have five, seven or 10 employees to have to sit outside people's homes to see who they are sleeping with, but the Bill may well mean that. I do not think that such matters are the legitimate concern of employers. They might be a legitimate concern if they conferred a benefit, but small business men should not have to take on that task when they should be going out to find custom, ensuring that the money comes in, keeping the business going and creating wealth.
Mr. Webb:
I sympathise with what the hon. Gentleman is saying. A moment ago, we discussed privacy. Does that not apply in spades to small businesses? The Minister has said that privacy is not a problem, because employers are under a common-law duty of secrecy which prevents them from telling everyone else in the firm certain facts, but, in small firms, the employer is everyone else in the firm, and the employer will know. Is that not undesirable?
Mr. Syms:
It is a slippery slope. There must be a proper relationship between employer and employee. Some years ago, if an employer had started asking whom his employees were sleeping with, he would have been told to mind his own business. I thought that we had left behind the old days when landowners lorded it over the people and told them how to live their lives. I do not want employers to be peeking into their employees' bedrooms. Ministers may laugh, but this is a serious point. I think that the amendments would improve the relationship between small businesses and the dynamics that are so important to our economy.
Mrs. Roche:
At the end of his speech, the hon. Member for Poole (Mr. Syms) had the good grace to laugh himself--because his comments were plainly ridiculous. It would be a different matter if the previous Government, whom I am sure he would have supported, had not landed regulation upon regulation on small businesses. Opposition Members failed also--because of a fundamental misunderstanding of the advantages of employer payment of tax credits--to recognise the provision's positive aspects for small business.
I should give a little credit to the hon. Member for Brentwood and Ongar (Mr. Pickles). Just a few weeks ago, in our debates on the Bill in Committee, he came up with the phrase "the kitchen table". Clearly, the Leader of the Opposition listened to him and developed a new policy. It was all due to the hon. Gentleman, and my hon. Friends and I were there when it happened.
The Government firmly believe that payment of tax credits by employers--which, from April 2000, will be the predominant method of delivering tax credits--will unambiguously demonstrate to employees that tax credits are a reward for work. Businesses themselves--small, large and medium-sized businesses--will have the advantage not only of reinforcing that fact, but of adding to the loyalty that employees feel towards a firm, thereby aiding productivity.
Showing credits on the pay slip, as an increase in net take-home pay, will emphasise the place of tax credits in the tax system, thereby helping to break any perceived link with benefits and to reduce the stigma of claiming in-work support. My hon. Friend the Paymaster General quite rightly referred to the academic work on the subject.
For those reasons, we should not be looking for ways of excluding large numbers of employers from the scheme--as this group of amendments would do--and thereby depriving many thousands of employees of their right to receive their tax credits through the payroll.
About 925,000 employers--more than 80 per cent. of all employers--employ fewer than 21 people. Excluding them would be wholly inconsistent with our objectives. Excluding employers with fewer than 10 employees would not be much better, as 825,000 employers--about 70 per cent. of the total--would be outside the scheme.
Mr. Webb:
I mention the precedent of statutory maternity pay. A previous Government said, "We shall ask employers to handle the administrative burden of paying money from the state to the employee. However, as it is a cost on them, we shall reimburse them for that cost and for the statutory maternity pay itself." Why do the Government reject reimbursement in the one case but not in the other?
Mrs. Roche:
I understand the hon. Gentleman's point. Although I do not blame him for making it, it is exactly the same one that he made in Committee. The difference is that maternity pay is a benefit, and this is a tax credit, which is being made using a different system. I think that his question exposes the fundamental political and philosophical differences between the attitude of the Liberal Democrats and that of Labour Members.
"would mean another administrative burden placed upon small business owners".
The federation would know. Here is another view:
"The result of any new burden, combined with the impact of the minimum wage, could be to discourage companies from taking on low-skilled or semi-skilled employees . . . It is not the job of employers to administer the benefits system".
That is what was said by Tim Melville-Ross, director general of the Institute of Directors, and reported in the Financial Times on 14 January 1998.
"I wonder whether government advisers have any real concept of what it is like to run a small business. It's a recipe for disaster".
That was said by Michael Snyder of Kingston Smith management consultants, and quoted in The Sunday Telegraph on 25 January 1998.
"From a purely business standpoint there are major administrative concerns about the complexity of the administration, especially if, in order to pay the credit, employers have to inquire into employees' family circumstances in much more detail than is needed today. This will be especially burdensome for small firms".
That was said by the CBI, and reported in the Financial Times on 14 January 1998.
8 pm
| Next Section
| Index | Home Page |