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Mr. Cash: When the right hon. Gentleman is going on about the thousands of jobs that were lost during that regrettable period up to 16 September 1992, does he accept that the reason for the loss was the exchange rate mechanism, which many of us fought against all the way down the line? The real reason why the present Government have a more beneficial economy is precisely that they are out of the exchange rate mechanism and not in economic and monetary union. Does he not accept that those two things run together?
Mr. Byers: The hon. Gentleman has been a powerful advocate in the House for a particular position on Europe. Giving the Bank of England independence over the setting of the exchange rate in 1997 and getting public finances under control for the first time have laid the foundations for the economic stability that we are seeing.
I know that I will never convince the hon. Gentleman of the argument. He has a particular view. We talked about it for hours during the debates on the Maastricht treaty. Thankfully, we are not going back to those days--at least I hope not--but if he looks back at what we have been able to achieve since May 1997, he will acknowledge that one of the great foundations of that economic stability was laid by the politically difficult decisions that we took in the early days of office. They have been proved to be absolutely right, so we have created the economic stability in which businesses can start, succeed and grow and in which people can invest with confidence. That is the framework that we have been able to establish.
Because we were able to do that, there has been a dramatic increase in small businesses starting up. It is a tangible demonstration of our success that more and more people are deciding to start their own businesses. That is a far better test than anything that we hear from Conservative Members in relation to the success, or otherwise, of the Government's policy: the fact that, day in, day out, more and more people choose to start their own businesses. Small businesses are starting at a rate that we have not seen for generations.
That is because of Government policies, not because of anything that the Conservatives are doing. They will go on about the burden of regulation and so on, but, day in, day out, people start small businesses. Those people will make a clear distinction between the need to provide their employees with decent minimum standards in the workplace--there is broad support for that approach there--and the cost of administration, red tape and bureaucracy. The big mistake that Conservative Members always make is to confuse the two. They cannot distinguish between red tape and bureaucracy and providing decent standards for people in the workplace.
Mr. Ian Bruce:
The right hon. Gentleman will know that, six months ago, we debated on the Floor of the
Mr. Byers:
I know that Conservative Members find it difficult to understand that there are a Government and a Secretary of State who are prepared to listen. I hope that it will not affect the digestive system of the hon. Member for Tiverton and Honiton if I say that I shall not apologise for the fact that I very carefully examined the regulations, realised that a very powerful case on temp-to-perm was made by the hon. Member for South Dorset (Mr. Bruce), examined the regulations again, and said, "There is merit in the argument--so we'll change regulation of the matter." The whole point of consultation is to listen, and I have listened. I believed that the suggested approach was better, and we adopted it.
I also considered the value added tax issue. I said, "There is a better approach here. I have the agreement of my colleagues in the Treasury that we should not impose VAT", and we adopted that approach. Consequently, we have a far better provision, which has been applauded by the industry itself, which realises--
Mr. Bruce:
There was no need to change the regulations in the first place.
Mr. Byers:
As the hon. Gentleman will know, the industry itself is applauding our action--which stands in stark contrast to the 18 years of inaction by the previous, dogmatic Government, who listened to no one apart from themselves. That is the reality of the situation, and I make no apology for it.
Mr. Christopher Fraser (Mid-Dorset and North Poole):
Will the right hon. Gentleman concede that, given the debacle in the Department's handling of the Utilities Bill, the press are not complimentary to the Government? Rather, they are talking about a dog's dinner of a Government and are waiting to see the Secretary of State depart from the Department.
Mr. Byers:
The phrase "dog's dinner" is being over-used in the debate. The hon. Member for Tiverton and Honiton used it, in quoting Lord Haskins--who is chairman of the better regulation taskforce--on the working time directive. The hon. Lady will be delighted to know that the better regulation taskforce is not being abolished. I know that she will be celebrating that great news tonight. She said in her speech that it is to be abolished, but it is not.
Mr. Byers:
The star chamber is quite different. It is a very powerful body at the heart of Government. There are no tsars or tsarinas, but there is a star chamber--presided over by my right hon. Friend the Minister for the Cabinet Office.
Mr. Byers:
I do not think that my right hon. Friend would like to be called a tsarina. There are many ways of
I was trying to provide the framework within which small businesses are able to prosper, and explain why so many small businesses have been created under this Government. There have been so many start-ups because of the economic stability that we have been able to create and the fact that we have been able to get interest rates down, inflation on target and public finances sorted out. Another reason is that we have introduced some of the lowest corporation tax rates ever. We have also introduced special tax rates for small businesses. We have created a situation in which a record number of small businesses are being established.
To encourage investment in new companies, the small business tax has been reduced to 20p in the pound, and we have introduced a new starting 10p corporation tax rate for small companies. That will benefit 270,000 companies. We have also abolished advance corporation tax, thereby simplifying the tax system.
We also have to tackle the barriers that exist to enterprise flourishing in the United Kingdom. I accept that, currently, barriers stand in the way of many small businesses starting up and obtaining the finance that they need for success. Small businesses often have real problems and fail in their first three or four years because they have inadequate finance in their early days, when money has to be borrowed. In the early days, people over-extend themselves in credit and borrowing, then pay the price for it three or four years later. The Government therefore have to find ways of providing finance for small businesses to start up.
We have to recognise that one of the main issues concerning small businesses is the fact that some banks feel very reluctant to provide finance. The banking review that has been established by the Chancellor of the Exchequer, with Don Cruickshank as chairman, is very carefully examining the ways in which banks provide support, particularly to small businesses. The review will be reporting in the next few weeks. However, we shall have to take action over and above the recommendations that may be in the Cruickshank report.
We have to review all sources of finance available to small firms. One issue that we have been examining and that demonstrates a clear lack of support is provision of finance up to £500,000. Small businesses find it very difficult to access that level of finance. It is particularly difficult for some hi-tech start-ups and for small businesses in certain parts of the country to gain such finance. There is a real regional disparity in the finance made available to small businesses.
Mr. Brian Cotter (Weston-super-Mare):
Will the Minister consider encouraging mutual guarantee schemes as a way in which small businesses might combine together to provide self-financing? Such schemes have operated in many other countries, and there have been trials of them in the United Kingdom.
Mr. Byers:
The hon. Gentleman makes an important point. There have been trials in the United Kingdom, and we should learn from them. There are some very good
I was trying to identify the small business groups, such as those in the hi-tech sector, for which the market is not providing the financial support necessary for development. As I said, there are also regional disparities in access to finance. The third main group without sufficient financial support are small businesses in some of the United Kingdom's most deprived communities, where people who want to start businesses have huge difficulties in raising finance.
We have separate proposals to deal with the deficiencies affecting each of those groups--whether in the regions, hi-tech start-ups or business start-ups in deprived communities. In total, we have provided £180 million for an enterprise fund, within which we have targeted particularly those three groups.
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