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Mr. Hilton Dawson (Lancaster and Wyre): Will the hon. Gentleman give way?
Mr. Duncan: I shall in a moment.
There are also those Labour Members who--I do not know in which category the hon. Member for Lancaster and Wyre (Mr. Dawson) falls--slavishly merely follow a Blairite script, with little thought and even less respect.
Mr. Dawson:
Does the hon. Gentleman accept that many Labour Members are deeply committed to manufacturing industry? In his eulogy of the Conservative years, will he acknowledge that, in constituencies such as mine, the manufacturing industry was decimated during that time, and that we are still struggling to recover from that problem?
Mr. Duncan:
There is no doubt that, in the difficult years of the 1950s and 1960s, the manufacturing base was undermined--so that when reality dawned and hit the United Kingdom economy, there were some very hard times. We are seeing the same process under way, although much more extremely, in the former
If the hon. Member for Lancaster and Wyre really believes in manufacturing industry, he should come clean and tell us in which economic climate he believes that manufacturing industry will flourish--I should like to talk about that in the few moments in which I have to speak. We should then, perhaps, be able to see on which side of the Labour party divide he sits. Manufacturing industry is currently having a very hard time, despite the golden economic legacy that we left the Government in 1997.
The fact is that, 20 years ago, innovation and enterprise were words that the Labour party could not even spell. I welcome the progress that Labour Members have made, but ask them to understand more than they do.
Mr. Geraint Davies:
Would the hon. Gentleman be interested in knowing that the number of work days lost per month as strike days is now down to 23,000, whereas, in 1996, there were about 100,000 such days? Any suggestion that there was industrial harmony and success under the Conservatives is therefore quite false.
Mr. Duncan:
I am grateful to the hon. Gentleman for demonstrating the extent to which the previous Conservative Government succeeded in bringing the United Kingdom into reality. I am also pleased to say that there is now a climate in which there are fewer strikes. That is our legacy, and long may it continue. I also hope that the hon. Gentleman will realise that, in a climate of increasing global competition, future strikes will cause enormous damage, as will so many of the other burdens that the Government are placing on business.
Mr. Jim Murphy (Eastwood):
Will the hon. Gentleman comment on that golden economic legacy in the light of the number of business failures under the previous Government? Only five years ago, there were 20,000 more business failures each year than there are now.
Mr. Duncan:
The hon. Gentleman will know very well that the Government inherited a fantastic combination of low inflation, rising tax receipts and other factors, putting us in a perfect position to compete well with our European partners. The Government seem to be doing everything possible to destroy much of that competitive advantage.
This annual debate used to be entitled the "Small Business" debate. Sweeping that subject under the carpet is perhaps an interesting indication of the Government's priorities. They are not a Government who are friendly to small business. However, small businesses are enormously important, employing about 90 per cent. of United Kingdom employees. They are also the main innovators--the seedcorn of future commercial success. In fact, enterprise is usually more about taking that first risky step--as an individual, with an idea and a plan--than about the great corporate plans of larger concerns already present on the commercial map.
The small business is the embryo of a lifetime of commercial success. Microsoft started in a garage, as did Amstrad. Small businesses are the key matter, as they are our future. They are the ones on whom we should be directing so much of our thought and policy.
Despite the language that the Government use, they still do not understand what it takes to run a business and to manage risk. Instead, they look on all business as some great sector that can--or so they think--cough up more money, assume costly social responsibilities and support the Government's continuing collectivist approach to life. Ministers have a lot to learn.
Quite often, at the root of all enterprise and innovation is one simple decision that has to be taken time and again and made at the margin, so that one small Government action might push the decision one way or the other. Often, the decision is very finely balanced, and will make a difference not only to the enterprise and its progress, but to society generally. Which issue must be decided by small businesses? It is, "Should I employ another person?"
The Opposition say that the willingness of one person to employ another is something to be encouraged and admired, and supported by creating a climate in which that is likely to happen. The Government, however, still think that it is something to be milked in the sense that employers are compelled to fulfil a wider series of social and economic obligations, so that the person who wants to take a risk and is prepared to commit his own money becomes obliged to fulfil many responsibilities that should lie elsewhere.
Those who run small businesses have to count their pennies. They have to borrow and struggle. They, perhaps, have to send the wife out to work, or live in a smaller house. Those people really have to put their lives on the line.
The Minister for Small Firms, Trade and Industry (Mr. Michael Wills):
The hon. Gentleman was talking about the problems that small businesses face when trying to find the right finance, but under the Conservative Government, interest rates rose to 15 per cent. What does he think that did to small businesses?
Mr. Duncan:
I admit quite openly that high interest rates did a lot of harm to small businesses and everyone else. I do not want a regime of high interest rates; I welcome the current regime of low interest rates that the Government were fortunate enough to inherit from us.
There is no doubt too that in the past, the industrial sector has been too reliant on interest-variable debt. I welcome the ability to borrow at fixed interest over several years as that is very good for business. It is a welcome development which the free market in capital has delivered over the past few years to the business community. The present Government could not have done that and will never be able to do it in such an effective way.
Mr. Jim Murphy:
I listened with interest to quite a revealing insight into modern Conservative thought when the hon. Gentleman said that many small business men send their wives out to work. In my constituency, 36 per cent. of small businesses are owned and run by women. Whom do they send out to work?
Mr. Duncan:
I was hoping that the level of debate would be a just little higher than that.
Mr. Geraint Davies:
The hon. Gentleman suggested that the reduction in interest rates was somehow a
Mr. Duncan:
In its current role, the Bank of England must respond to economic conditions. It is responding to the economic conditions which, I repeat, his Government were fortunate enough to inherit.
The best way to encourage innovation and enterprise is simply to ensure a stable, low tax, low regulation environment for business. The Government speak that language, but deliver the opposite. There has been a massive increase in the tax burden placed on businesses since the Government were elected in 1997. They have done everything that they can to do it by stealth. They gave their promises and pledges in a way that was specifically designed so that they could be circumvented. They said that they would not increase certain rates, but they have slammed business with all sorts of other taxes, not just by stealth but by deceit.
Mr. Ian McCartney:
The hon. Gentleman is completely wide of the mark. In each Budget, the Government have consistently reduced taxation. We now have a 10p starting rate for small businesses and a 20p rate of corporation tax--the lowest ever rates--and we are committed to those rates for the rest of this Parliament. We have introduced new potential taxation releases for companies that invest in research and development and capital equipment. Across the board, where taxation impacts on the viability and competitiveness of a company, the Government's strategy is to reduce it, not to increase it.
Mr. Duncan:
I fear that the Minister requires some serious upskilling on tax economics. The Government may have reduced some tax rates, but they tend to go for the headline and cheat behind the scenes. A significant number of companies now have to pay their taxes quarterly. Large corporate concerns will have to pay five years' worth of tax in four years. That is a massive burden on cash flow and the financing costs of those big concerns, and represents an increase in their tax burden.
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