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Mr. Bercow: Does my hon. Friend recall that, shortly after the Chancellor's Budget speech, the Secretary of State said, in what should have been a joke but apparently was not:

"I am reviewing arrangements for business rescues"?--[Official Report, 10 March 1999; Vol. 327, c. 367.]

Was that not a good idea, given the likely exponential increase in the number of candidates requiring rescue as a result of the Government's policies?

Mr. Gill: I understand my hon. Friend's very good point. Most business people do not want help from the Government, but neither do they want hindrance of the sort represented by the legislation before the House today.

The Secretary of State may say, with some justification, that he receives relatively few complaints from the small business sector. I understand that, and I shall explain why that is so. The small business man is employed every waking hour trying to keep his business afloat and successful. They do not want to waste time appealing to politicians--particularly those from the Government party--because they know that their appeals will fall on deaf ears.

I am conscious of the fact that my hon. Friends wish to speak in the debate, so I shall conclude by informing the Secretary of State that I and my family have survived in business not because of Government, but in spite of them.

Mr. Fabricant: Does my hon. Friend the Member for Ludlow (Mr. Gill) think that his comments have fallen on deaf ears? Although the Secretary of State and his Ministers are quite charming, they have had no experience in business. A few years spent working as a polytechnic lecturer or working for a large public corporation does not equate with building a business for oneself.

When I rose on Second Reading, I spoke about Abraham Lincoln, and there was talk earlier about the American message for us, which is often seized on by the Labour party in its bid not only to gain power, but to hold on to power. Abraham Lincoln said, "You cannot make a poor man rich by making a rich man poor." That applies not only to large corporations, but to small businesses, which the Bill will strangle at birth. The legislation owes much to the tenet that he who pays the piper calls the tune. Where does most of the Labour party's money come from? It comes from the trade union movement.

My hon. Friend the Member for Buckingham (Mr. Bercow) pointed out that, in this quarter alone, 11,000 small businesses have gone bust. They needed to be rescued from the Secretary of State for Trade and Industry. I anticipate that, when he winds up the debate, he will say, "Ah, but many new small businesses have been formed." Let me pre-empt him. Information from Dun and Bradstreet reveals that the net losses in that quarter are the greatest for the first quarter of the year since the depths of the world recession--I emphasise the word "world"--of six or seven years ago. It is no use the Secretary of State saying that small businesses are being formed to compensate for the 11,000 that have gone bust--that is not so.

Mr. Byers: The hon. Gentleman rightly says that the Dun and Bradstreet report reveals that 11,000 businesses

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have gone bust in the first quarter and that the last time the figure was considerably higher was back in 1992, when the right hon. Member for Wokingham, the Conservative Front-Bench spokesman, was Under- Secretary of State for Corporate Affairs. The fact that records were far worse then than they are now owes much to his legacy.

Mr. Fabricant: The Secretary of State points out that the figures were worse in 1992, but I repeat that we were in the middle of a world recession, and that was at the time of the exchange rate mechanism. Does the Secretary of State not take Cabinet responsibility for his Prime Minister, who, far from gearing up for the ERM, which at least allowed us some latitude, wants to gear up for a common currency, which will make pressures on small businesses far worse?

I shall return to the new clause. The CBI, as hon. Members have already pointed out, says that the directives on parental leave that will apply to small businesses are gold-plating the EU directive. I shall let the House into a little secret. I recall that, soon after I entered the House in 1992, early in the Parliament, the Secretary of State's predecessor and then President of the Board of Trade, my right hon. Friend the Member for Henley (Mr. Heseltine), faced a similar situation with an EU directive that was not desirable for small businesses. He was advised by his officials that he had no choice in the matter--the directive had to be introduced. A few months later, the draft legislation appeared, and, like this Bill, it was gold-plated.

I therefore give the Secretary of State advice about gold-plating, which he could take from the former President of the Board of Trade. My right hon. Friend asked his civil servants, "Why is the document so thick? Why have we gold-plated the legislation?" They answered, "If we did not gold-plate it, it would be unenforceable. There would be too many loopholes." As I understand it, my right hon. Friend said, "Great! We do not want the legislation. Let us put it through Parliament without gold-plating it." It was passed and it was unenforceable.

Far be it from me to suggest that Parliament should occasionally pass laws that are unenforceable and contain loopholes; but, when they are forced on our nation by unreasonable, ill-thought-out diktats from Brussels which will result in not only small, but large businesses going under, let us pass such legislation for the sake of businesses at home. That is exactly what France, Italy and Spain do. They have to do that because they want to keep their businesses solvent.

6.15 pm

Earlier in the debate, the hon. Member for Croydon, Central (Mr. Davies), who has now left the Chamber, asked a perfectly reasonable question of my right hon. Friend the Member for Wokingham (Mr. Redwood), the shadow Secretary of State. He asked, "Why is the threshold in the new clause set at 50? Why not 20 or 100?" One of the reasons is that many of the states in the US use the threshold of 50.

The Secretary of State's view is that 20 is a reasonable figure, and that is backed up by all those who are concerned with the welfare of small businesses. However, let me tell the Secretary of State, if he does not already know, that a survey conducted by the members of the

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Institute of Directors said that 28 per cent. of respondents believed that firms employing up to 50 people should be exempted and only 13 per cent. were happy with the Government's definition of a small firm.

Mr. Bercow: Does my hon. Friend agree that the Government are inconsistent in their approach? Is he aware that, although the Government have opted, in this context, for the definition of a small firm as one that employs no more than 20 employees, Ministers have chosen the threshold of 50 employees for the purposes of the Late Payment of Commercial Debts (Interest) Act 1998? Why can they not make up their minds?

Mr. Fabricant: My hon. Friend is right. I could talk about the National Minimum Wage Act 1998. I shall not say much about that because I know that you will rule me out of order, Mr. Deputy Speaker, if I talk about it at length.

Mr. Deputy Speaker: Or, indeed, almost at all.

Mr. Boswell: While my hon. Friend is getting his angle straight, I remind him that in the United States, to which he has referred, the minimum wage is comparatively acceptable precisely because it is set at a reasonable rate and not applied to small businesses.

Mr. Fabricant: My hon. Friend anticipated my next point, and I am delighted that you did not rule him out of order, Mr. Deputy Speaker.

The Institute of Directors "Fairness at Work" research paper of September 1998 quoted a company that said:

"We employ less than 20 people at present and with the Government's current attitude we're likely to stay that way".

That echoes the words of my hon. Friend the Member for Ludlow, who asked what incentive there was for a small business to expand. The Bill is absolutely symptomatic of the Government: they are full of bright ideas that are never thought through. They do not empathise with business, because their paymasters are the trade unions and because they do not come from a business background.

As I said on Second Reading, one can read about and study business as much as one likes, but, if one has not immersed oneself in it, one cannot understand the pressures that small businesses are under.

I shall quote a business man--I anticipate that I will be receiving a brown envelope from Hansard--whose name I shall try to pronounce correctly. Mr. Darsghan Thiara, a clothes factory owner from Birmingham who has a staff of 85, was reported in the Financial Times in January as saying: "Overall it"--this legislation--

"puts a big pressure on employment; we are seriously considering cutting the number of people we employ."

We must ask ourselves what the company will do. Will it cut staff to 20 or 19 to try to avoid the provisions of this legislation?

Ministers, who are used to teams of civil servants, believe that understanding and implementing legislation are easy. They think that civil servants have all the time in the world. I know--this is certainly the experience in

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the Treasury--that civil servants work all the hours that God gives them. Ministers arrogantly take such an attitude, but small firms simply do not have such teams of people. As has been pointed out, the managing director is often the finance director, and often also the personnel director--or the director of human resources, as they now call it. The Government Front-Bench team will like that term because they like modern jargon and slogans.

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