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12.11 pm
Barbara Follett (Stevenage): I welcome the opportunity to speak in this debate, but I must apologise because I shall have to leave before its conclusion. A long-standing constituency engagement calls me.
It is not often that the House has the chance to debate issues such as enterprise and innovation, which are more often the subject of academic debate. When I was at university studying economic history, we spent a lot of time learning about enterprise and innovation. Those concepts baffled and fascinated economic historians, who wanted to recreate circumstances similar to those that occurred in this country in the mid-18th century and gave the world its first industrial revolution. At that time, enterprise and innovation came together and were combined with an unusual run of good luck, which for Britain included good weather--highly unusual at any time in this country.
In the 20th century, there has been no lack of innovation in Britain. As my hon. Friend the Member for Eastwood (Mr. Murphy) reminded us, we owe much of today's technology to the British talent for innovation. Listening to my hon. Friend, one would think that all that talent was confined to the northern part of these islands rather than spread throughout them. In the past 60 years, Britain has given the world the computer and antibiotics, and has pioneered the life-changing work on the DNA helix.
Unfortunately, that innovative genius has not always had sufficient entrepreneurial follow through. That is why Europe's largest pharmaceutical research and development facility, which is situated in my constituency, is not British owned. That is why the huge computer defence and satellite companies, which are also housed in my constituency, are only partially British owned. We are good at innovation, but not very good at creating the climate of enterprise in which innovation can flourish. As the hon. Member for Eastleigh (Mr. Chidgey) emphasised, that is the challenge that we face today.
Only once in this century in Britain have we seen the cluster of circumstances that allows innovation and enterprise to combine to create a British-based boom. That
was the boomlet in the 1960s, when innovative young people in the music and fashion industry transformed this country and its capital: it went from being lethargic to swinging. For a brief moment, they made the economy swing. Despite that mini boom, for Britain, the 20th century has been a century of relative decline. The challenge facing us is to reverse that decline by raising the sustainable rate of growth in the economy.
As my right hon. Friend the Minister pointed out, if we are to do that, we must foster innovation and encourage enterprise by creating macro-economic stability and an entrepreneurial culture. That is Government's role. I do not agree with much that is said by the hon. Member for Buckingham (Mr. Bercow), but I do not think that, in this instance, Government can do more than provide a stable framework in which that entrepreneurial culture can develop.
So far, the debate has concentrated on what is happening nationally. Let me say a little about the progress that has been made in my region, which is in the east, and which is one of the most prosperous and densely populated parts of the country. Over the past two years, there has been a change in its macro-economic stability. As any economist will confirm, such changes result from a combination of good luck and good management. I believe that we have had the good management, along with a certain amount of good luck.
The economic indicators for the eastern region show the results of both factors. We have the lowest interest rates for the past 22 years, employment is rising steadily and unemployment is continuing to fall. In January 1999, 73,000 people were unemployed in the region. Although that figure is still bad, it is 87 per cent. lower than the figure that obtained at the peak of unemployment under the last Government--573,000. Eighty thousand more people are in jobs than at the end of last year, and 100,000 people have been helped into jobs, work experience or training under the new deal. That is good for my region and particularly good for Stevenage, where unemployment has fallen by 60 per cent. over the past two years.
We must create an entrepreneurial culture. In the eastern region, we have pockets of terrible deprivation, some of which are housed by my constituency. We must give people the opportunity to innovate, and we must make the investment to back that innovation. I join my hon. Friend the Member for Eastwood in praising the work of the Prince's Trust; but the new deal has made a huge difference to the mood and the economy of my constituency. In Stevenage, 1,126 young people have already embarked on jobs, work experience or training.
Mr. Bercow:
I note what the hon. Lady says about participation in the new deal and, presumably, the benefit derived from that participation. Given that people who take part in the training and education option are twice as likely not to find a job as to find a job, and given that youth unemployment has risen in every quarter since the introduction of the new deal nationally in April 1998, why cannot the hon. Lady admit that this flagship has sunk?
Barbara Follett:
Because it has not sunk--particularly in my constituency, where most of those who took advantage of the new deal needed a great deal of training and work experience. Those people were very unlikely to
The entrepreneurial culture in the east of England has been greatly helped by several Government initiatives, some of which came from the last Government. The East of England development agency has been particularly helpful in developing a vision of the eastern region as one of the leading knowledge-based areas in Britain. The Business Link in Hertfordshire has helped firms to become internationally orientated, information technology-literate and innovative. That strategy has been developed within the framework of the strategy of the regional development agencies.
In my constituency, the Stevenage business initiative--which was established by Hertfordshire university, Hertfordshire county council and Stevenage borough council--has provided a wealth of information to small businesses. Each year, it helps between 50 and 100 businesses to set up in Stevenage and north Hertfordshire, bringing employment to the region and providing the mentoring that so many entrepreneurs need.
The Stevenage business initiative has also started a business incubation project, in which we are helping--with help and money from the Department of Trade and Industry--small businesses to develop their businesses on premises owned by Stevenage borough council. We are helping people to learn how to manage their businesses. Britain's main failure has been that, although people may be sufficiently innovative to develop a new product, they probably will lack the managerial skills necessary to ensure that the product is manufactured. In Stevenage, we are doing a great deal to counter that.
The Stevenage business initiative also makes annual enterprise awards to businesses that succeed. This year, I was lucky enough to present an award to 30 young people who had succeeded in a variety of businesses, making a difference not only to their lives, but to the life of their communities.
Innovation and enterprise are vital to our country's future. For far too long, we have derided those who have taken risks--taken their lives in their hands--by not only inventing new and wonderful things, but showing the courage to take their products into the marketplace, to try to sell them.
Mr. John Bercow (Buckingham):
It is a pleasure to be called to speak in this debate. I am particularly delighted to follow my hon. Friend the Member for Rutland and Melton (Mr. Duncan), whom I should like to congratulate both on his appointment to the shadow Trade and Industry team and on his outstanding opening speech for the Opposition.
My hon. Friend is a formidable and forensic critic of the Government, and an equally formidable exponent of the Conservative case. I think that both Government Front
Benchers and Government Back Benchers will discover that, to their cost, in the months ahead. He flayed them this morning. If precedent is anything by which to judge, he will flay them before breakfast, before lunch, before tea, before dinner and before he consumes his cup of Horlicks or Ovaltine before retiring to bed at night. I am also delighted to follow the hon. Member for Stevenage (Barbara Follett).
It is essential to put the debate in context, not least for small firms--which is why the presence of the Minister for Small Firms, Trade and Industry is so welcome. We talk about small firms, and everyone says how critical they are, but none of us adequately emphasises their centrality to enterprise and innovation.
Specifically, we should recognise that companies employing fewer than 100 people constitute 99.6 per cent. of British firms, employ 50 per cent. of the private sector work force, and produce two fifths of the nation's output. That is the measure of their centrality within the British economy. They are the key engine of economic growth, the major source of new employment, and the seedcorn of our current and future prosperity.
The second point that needs to be understood about small firms is that they are in difficulty. Lately, there has been an exponential rise in business failures, which must be a source of concern to hon. Members on both sides the House.
The Minister will be aware that in the first quarter of this year, relative to last year, based on the findings of the respected credit information agency Dun and Bradstreet, there has been a 9 per cent. rise in company liquidations. That in itself is a matter for anxiety, but when the House reflects on the fact that for small businesses the increase in liquidations is 32 per cent.--three and a half times the rate of increase in liquidations generally--the serious plight of small companies becomes abundantly clear. On one hand they are important because they employ so many people, are the engine of growth and are crucial to our future prosperity; on the other, they are suffering disproportionately from a general increase in liquidations. Therefore it is important for us to focus not just on what the Government can do to assist small businesses by active measures, but on what they can refrain from doing and thereby assist the development of small businesses.
I want to focus on one particular aspect of public policy that has been touched on by other hon. Members. I shall elaborate on that feature, namely regulation and the burgeoning over-regulation of British small and medium enterprises.
Conservative Members differ fundamentally and conceptually from Labour Members. The Conservative party takes the view best expressed by my right hon. and noble Friend Lord Lawson of Blaby that the business of government is not the government of business. That is the fundamental distinction.
As my hon. Friend the Member for Rutland and Melton so appositely observed, the trouble with Ministers is that they mouth the words, but they do not understand them; they utter the sentiments, but they do not will the means to translate those sentiments into practical policies of benefit to the enterprises on which our prosperity depends. That is the problem. My hon. Friend characteristically, with that self-effacing charm for which he is renowned, understated his case. I have had words with him before about his unfailing tendency to understate his case, to be
a little on the modest side and a trifle too generous to Ministers. I hope that I do not have to upbraid him again on this point--I do so now in front of the whole House--but his gentle instincts got the better of him again and he was a bit soft on Ministers.
The problem seems to be that many Labour Members do not believe in anything in respect of enterprise, innovation and small businesses. Some of us entered public life because we have passionate beliefs, intellectual convictions and gut instincts. None of that is evident from Labour Members and that is part of the problem. Because they do not know quite what to do, they tend to go back to what Labour Administrations have always done in the past.
I draw attention to two aspects of regulation: the rhetoric of Ministers and the reality of policy. I should like to dwell on the rhetoric of Labour Ministers. That rhetoric is important; we have to understand it and see whether policy matches up to it or contravenes it.
The first statement to which I draw attention is in the form of a foreword to Labour's business manifesto entitled "Equipping Britain for the Future" and published on 11 April 1997, pretty well at the start of the general election campaign. It was composed or at least signed by the Chancellor of the Exchequer, the right hon. Member for Dunfermline, East (Mr. Brown), then shadow Chancellor. For the delectation of my hon. Friends, I shall quote him. He said:
On 7 November 1997, the hon. Member for Hornsey and Wood Green (Mrs. Roche), who was then the Minister for Small Firms, Trade and Industry--the predecessor of the hon. Member for North Swindon (Mr. Wills)--said:
The right hon. Member for Hartlepool (Mr. Mandelson), the former Secretary of State for Trade and Industry, who unfortunately is not favouring the House with his presence, made a similar statement almost 19 months into the term of office of this Administration. In one of his last pronouncements from the Dispatch Box, on 25 November last year, he said:
I would like to be charitable and think that the right hon. Member for Hartlepool was blissfully ignorant of the fact that his words were contradicted by the reality. That would be charitable in one sense, because it would mean that the right hon. Gentleman was innocent of bad motives, but it would be uncharitable--and probably inaccurate--in another respect, because it would imply that he was stupid. There are many sins of which I accuse him, but political stupidity is not one of them. He must have known that what he said was not true and that the Government were implementing measures that directly contradicted the reality.
The second feature of the debate is the reality of the Government's record. My hon. Friend the Member for Rutland and Melton dissected the record earlier. I should like to develop that dissection.
The first example is the working time directive, which will cost British businesses approximately £2 billion a year. British businesses received from the right hon. Member for Hartlepool 45 days' notice of the requirement to implement that directive. If that was not a calculated insult to small and medium-sized enterprises in the United Kingdom, it is difficult to know what is--a mere six and a half weeks' notice of implementation, and wholly inadequate consultation on the regulations.
"We will not impose burdensome regulations on business, because we understand that successful businesses must keep costs down."
We are grateful for that. The right hon. Gentleman is a sinner who repenteth. He underwent an apostolic conversion, suddenly discovering what the Conservatives had been saying for a long time. We must not be narrow, ungracious or unwilling to recognise the possibility that Labour Members can see the light, change their minds and chart a better course for the future. My hon. Friend the Member for Rutland and Melton was ready to acknowledge that and so am I. I took that statement at face value and waited to see whether it was put into effect.
"We are moving purposefully and very speedily to bring about simpler government and cut red tape, which is a real barrier to growth for small businesses."--[Official Report, 7 November 1997; Vol. 300, c. 483.]
That was an unexceptional comment that many of us could have made some years earlier, but I welcomed it. The problem is that it was not in accordance with what the Government were doing.
"we have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms."--[Official Report, 25 November 1998; Vol. 321, c. 214.]
The trouble is that the Government have been burdening business with additional regulations, costs, legislation and red tape since they came to office.
Approximately 2,500 additional regulations have spewed forth from the machinery of government in that time. That is a classic illustration of the point that my hon. Friend the Member for Rutland and Melton made earlier that Ministers mouth the words, but do not will the means. Worse than that, they do not merely leave a vacuum, but directly contradict those words.
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