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6.3 pm
Mrs. Claire Curtis-Thomas (Crosby): The nature of manufacturing in the UK is changing and, as a responsible Government, we need to change and to develop our policies if we are to maximise the benefit of our manufacturing sector. This Government work to encourage successful business start-ups and to increase the capacity of business, including small and medium enterprises. I shall talk about that sector, including the sharing of good practice, skill shortages, funding, regulation, and working in partnership with people and organisations in our communities.
Enterprise and innovation are critical factors in the creation and growth of successful businesses. The pace of innovation in our knowledge-driven economy means that competitive advantage has to be refreshed constantly by businesses of all sizes across the range of business sectors. The DTI is working with intermediary organisations to bring about a step change in the level of enterprise and innovation in the UK economy, throughout the regions. It offers a range of targeted expenditure programmes to address cultural barriers to entrepreneurship and innovation, to provide support for start-ups and manufacturing SMEs, to promote the skills agenda and business best practice, and to facilitate a more effective exploitation of the knowledge base.
In December 1998, the Department published a much welcomed White Paper, "Our Competitive Future: Building the Knowledge Driven Economy", which set out a clear agenda for strengthening the capabilities of the UK economy to meet the challenges of the 21st century. As a consequence, the Chancellor announced in the Budget last year the Government's intention to establish a new body, the Small Business Service, which would be especially designed to meet the needs of the smaller business.
Last week, I met David Irwin, the new chief executive of the Small Business Service, and he confirmed that its objective was to act as a strong voice for small business at the heart of government and to improve the quality and coherence of delivery of Government support programmes for small businesses, ensuring that their needs are addressed. He also said that the issues raised by the business community included skill shortages, funding, sharing good practice and, to a lesser extent, regulation.
The Government made a commitment in their manifesto to support small businesses by several innovative means, including statutory interest on late
payment of debts. That commitment was met when the Late Payment of Commercial Debts (Interest) Act 1998 came into force on 1 November 1998. Several targets in the public service agreement relate to the objective of promoting enterprise and increased productivity. In particular, the DTI is working towards securing an increase in the number of high-growth business start-ups; increasing the productivity and profitability of SMEs assisted by business link partnerships; showing year-by-year improvements in the quality of services under the Business Link brand; increasing to 1 million the number of UK SMEs wired up to the digital marketplace by 2002; and increasing by 50 per cent. the 1997-98 number of companies spun out by universities by 2001-02.It is crucial to provide locally delivered business support for SMEs. National, regional and sectoral strategies for competitiveness and economic development have to be backed by first-class business support services. Most of us are aware that Business Link is a national network of 85 local partnerships, which provides a simple route to information and advice for small businesses through a single point of access. Business link partnerships work closely with private sector sources of advice and services to improve the overall quality of help available to SMEs and to increase the market demand for such services. The network in England is now complete, with all businesses having access to the services provided.
In October 1997, the then Minister with responsibility for small firms, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), launched "Enhanced Business Links--A Vision for the 21st Century", which focused on quality, customer service and continuous improvement and excellence. The document outlined 18 action points, 14 of which have now been completed, including the launch and delivery of the enterprise zone, which is a significant and important regional initiative.
The Business Link vision was refreshed the year before last at the Business Link national conference, which identified six new challenges for implementation last year and this. Those challenges included building up, within three years, a high quality, customised advice service throughout England to support 10,000 high-growth start-ups a year; forging new partnerships, especially with the regional development agencies; using innovation and advanced techniques to satisfy rising customer expectations; preparing business links and SMEs for the opportunities of electronic commerce; getting to grips with brand managements; and recognising that continuous improvement must be a fact of everyday life. I would welcome a comment from my hon. Friend the Minister on how the Government have responded to those important challenges.
Business finance is essential to the development and promotion of small manufacturing enterprises. In 1998, a very good innovation was launched that recognised the tendency for firms still to rely on debt finance when equity might better meet their needs. However, equity in smaller amounts could often be hard to source. That was a complaint that those of us who visited small companies often encountered. As a consequence, a new enterprise fund was established to provide flexible financial support for SMEs with growth potential. The enterprise fund is intended to stimulate and support partnerships with the private sector to improve the availability of venture capital for early-stage, high-technology firms, and I am
pleased to note that the venture capital available in the UK is at record levels. The fund will also deliver a more cost-effective small firms loan guarantee; invigorate local and regional provision of equity in smaller amounts to growing businesses; and allow finance providers to bid for support for new products that expand their activities into untried areas. This fund is worth about £160 million over three years from 1999 to 2002.There is an increasing premium from successful development and commercial exploitation of new technology. Thus, research and development play a vital role in enhancing company performance and promoting economic growth. I am aware that the Department of Trade and Industry is continuing to work closely with the Treasury and the Inland Revenue in examining new incentives to encourage United Kingdom SMEs to invest in R & D. I welcome especially the tax break that was announced, not only in this year's Budget but in last year's.
Good engineering is based on good research, and research investment fell to an all-time low during the previous Administration. The Labour Government have met commitments with funds. During 1998-99, the comprehensive spending review announced a boost to investment in the science and engineering base of £1.4 billion over three years. Real-term increases in funding have gone to the Royal Society, the Royal Academy of Engineering and the six research councils. The joint infrastructure fund was created in partnership with the Wellcome Trust to address infrastructure problems in universities. These problems had been increasing over 20 years.
The continuation of the joint research initiative was secured. Last but not least, funding was announced for a private finance initiative to provide super-computing services for academic research.
I have discussed a range of services and support for the development of manufacturing in the United Kingdom. There is a passionate commitment to enable British companies to respond to a rapidly changing environment. Issues of funding and business development support have been tackled, but I remain deeply concerned that we are continuing to fail to attract sufficient individuals into manufacturing to meet sector demands. There are requirements not only for professional engineers but for technicians and skilled and semi-skilled workers.
The previous Administration introduced the Deregulation and Contracting Out Bill in 1994. It is now acknowledged that the measure was so restrictive that only 42 orders have been exercised since the Bill's enactment. That has saved British industry about £40 million. The measure clearly failed in its objective to cut red tape. It was with great pleasure that I noted in the Queen's Speech this year that a better deregulation Bill would be introduced. I welcome the measure, which will enable better regulation to be delivered to British business. I am grateful for the opportunity to contribute to the debate. I have no hesitation in supporting the amendment.
6.13 pm
Sir David Madel (South-West Bedfordshire): I welcome this short debate, which is taking place at an appropriate time. Some sections of manufacturing industry are doing all right and others are not. As has been
said, many companies are struggling with the high value of the pound. As always in British industry, the picture is somewhat uneven. As the debate is short, I shall raise only one local and one national issue.In the Luton and south-Bedfordshire area, we are extremely pleased that Vauxhall will invest £162 million into my constituency and next-door constituencies. Nothing could be a better boost than the 500 new jobs that will be created as a result of the Vauxhall-Renault van deal. As one of the local Members in the area, it goes without saying--I shall say it again, anyway--that I appeal to Vauxhall to give priority, in placing people in the new jobs, to unemployed truck workers, who for years kept General Motors going by working with great skill and devotion in the now, alas, shut truck plant in Dunstable.
I am grateful to the hon. Member for Ellesmere Port and Neston (Mr. Miller) for nodding in agreement. I think that he will agree with me also that GM remained in this country, when there was a great deal of trouble at Ellesmere Port and at Luton, because Dunstable was trouble-free in many ways. Whatever else GM thought about the United Kingdom, it knew that trucks were being turned out at Dunstable and that the work undertaken there reflected the highest skills.
I do not want the Government to sit back and luxuriate against that background. Instead, I want them to do two things that will help us locally. First, I hope that the new investment will result in the creation of new supplier companies to the car industry locally. Some of these firms will be small, and I ask the Government to re-examine restrictions and red tape that hamper small businesses. I want new and small supplier companies to get started in the area that I represent as a result of Vauxhall's investment. Nothing hampers a small company from growing into a larger one more than some of the regulations and red tape that they now have to endure.
Secondly, Dunstable has firms that supply cars to Vauxhall and to the car industry in the midlands and the north-east. We shall keep the jobs that they provide only if those firms can move their goods quickly out of Dunstable into the midlands and north-east, but the local road network is becoming steadily worse. I want the Department of Trade and Industry to elbow its way into the debate on where new roads should be built for industrial purposes. There is an unanswerable case on behalf of Dunstable for a new A5 bypass. That would make it easier for supplier firms in my constituency to move their goods quickly in a highly competitive industrial market, which will become even more competitive as time passes.
My criticism of the Government's industrial policy is that sometimes the DTI leaves undone those things that it should do and engages in things that it should not do. Left undone is the provision of certain essential strategic industrial roads.
A national issue is that we do not take enough pride in what our engineers have produced. Figures from Japanese industry show that more than half of all new patents taken out anywhere in the world are based on ideas that have originated from the UK. We should take immense pride in what we have done. However, we cannot sit back and think that all is well on the basis of what Japanese
industry has said. We have worsening shortage problems. We have a shortage of qualified engineers in systems engineering, aerospace engineering, automotive design engineering and electronic and software engineering. There is the perennial shortage of technicians. Alas, the number of students undertaking teacher training in science, technology and mathematics is falling.We should think carefully about the learning and skills councils that the Government are setting up. The evidence that the Engineering Employers Federation has given is as follows:
- Many employers are afraid that the proposed Learning Skills Councils will become supplier driven instead of demand led; that the employer work-based route will become even more subservient to the academic/qualification pathway than already exists.
Dot.com technologies, excellent and growing as they are, are not enough to sustain virtually full employment. They cannot do it all on their own. I am all for young people mastering the internet and technology, as so many of them do, but I wish that more of them would master one major European language as well. The languages that young people learn at school and university will do so much in future to help industry export to the critical European market.
I end my speech with one question for the Government. The latest inflation report overview from the Bank of England states:
- The paramount objective of UK monetary policy is to meet the 2½% inflation target.
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