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House of Commons

Thursday 9 December 1999

The House met at half-past Eleven o'clock


[Madam Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked--

Competition (Regulations)

1. Mr. Michael Fallon (Sevenoaks): What account he has taken in his research into international comparative prices of the effect of regulations affecting business. [100524]

The Secretary of State for Trade and Industry (Mr. Stephen Byers): The aim of the research into international price comparisons is to show whether prices differ, not why they differ. If the results do show that British consumers are paying more for goods than consumers elsewhere, we will need to identify the reasons why, including the possible effects of regulation.

Mr. Fallon: Does the Secretary of State agree with the recent survey by the Forum of Private Business, which puts the cost of complying with all the new Labour red tape--working time directive, holiday pay and all the rest of it--at some £4,500 a year? That is a huge burden on village shops and very small businesses. Instead of the right hon. Gentleman getting himself into a lather about rip-off capitalists, why do we not have a rip-up Government who can get rid of the 2,700 regulations that he has been piling on business in the past two and a half years?

Mr. Byers: It ill becomes someone who was a Minister before the 1992 general election--before the good folk of Darlington had the sense to vote him out of office--to ask that question, when the Conservative Government introduced 10,000 regulations between 1994 and 1996. Indeed, in the Queen's Speech debate, the hon. Member for Tiverton and Honiton (Mrs. Browning), an ex-Minister, admitted that the Conservatives could have done a lot more to reduce red tape.

What is interesting about the hon. Gentleman's question is that he is confusing red tape with minimum standards. He talks about the national minimum wage and the working time regulations--those are all entitlements and benefits that individuals receive; they are not bureaucracy or red tape.

Gillian Merron (Lincoln): I welcome the Government's determination to make work pay. Does my

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right hon. Friend believe that as the Conservative party is so concerned about regulation, it would scrap the working families tax credit, the national minimum wage and all the other positive moves that the Government have made, which would obviously be to the detriment of millions of people throughout the country?

Mr. Byers: I agree with my hon. Friend. She has highlighted the confusion in the mind of the Conservative party, which cannot distinguish between, on one hand, lifting bureaucracy from business and cutting red tape and, on the other, basic entitlements and minimum standards for people in the workplace. There is a legitimate need to cut red tape, but there is also a need to ensure that we provide minimum standards for people in work, through the working families tax credit, the working time regulations and the national minimum wage--all of which would be placed at risk under the policies of the Conservative party.

Mrs. Angela Browning (Tiverton and Honiton): On 16 December, the Secretary of State is due to receive the report from the Competition Commission on an examination of the pricing of cars. In the press last week, when the right hon. Gentleman was asked by the industry to give an early response to that paper, he said that if a formal request was made, he would speed that up. Will he take my request this morning as a formal request? Whatever the outcome of the report, it is imperative that the retail car industry can get on and sell cars. The industry accepts that there may be some criticism, but what is damaging it now is the fact that people are waiting for the Secretary of State's report to be concluded and announced.

If the right hon. Gentleman delays his response much after Christmas, it will do untold damage to retailers selling cars in this country, because we then approach March, with the new registration. I hope that he can reassure us this morning.

Mr. Byers: For the record, it is not my report; it is the report of the Competition Commission, which is independent, and I have no control over when that report might be received. I understand that the commission has recently received representations from some major motor manufacturers about the remedies that have been proposed, so I believe that difficult issues are involved.

I want to get this matter right, which means that I shall consider the commission's report when I receive it. I understand the urgency of taking decisions, but this is a fundamental review of the pricing of cars--the first for decades--and we must take our time to ensure that we get it right, instead of taking a rushed decision that would not meet needs. It ill becomes the hon. Lady to criticise, when the Government of whom she was a Member did absolutely nothing about the needs of consumers.

We are taking action. We are looking, through the Competition Commission, into cars and into supermarkets, because we believe that the consumer should have a fair deal. That is our objective, and we shall achieve it.

Mr. David Borrow (South Ribble): Last Friday, I had a meeting with the local chamber of commerce in my area--one of a series of regular meetings. At that meeting,

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the concern on regulation that was expressed, especially by smaller businesses, was not necessarily that regulations exist, but that they are so complex and difficult for small businesses to understand. Will my right hon. Friend consider streamlining the complexity of regulations and perhaps work with small businesses to put them into a format that would be user friendly to small businesses and reduce the amount of time that proprietors spend trying to understand the regulations? I am sure that something could be done.

Mr. Byers: My hon. Friend makes an important point about the need to simplify the regulations. The Government would certainly support such an approach. We do not support the Conservative party's approach, which is not about cutting red tape, but about cutting paid holiday entitlement for workers; not about lifting the burden of bureaucracy, but about denying the national minimum wage to more than 1.5 million people. The Conservative party has not learned any lessons--it is a modern Conservative party for the few, not for the many. This Christmas, when people receive their paid holiday entitlement, they need to recognise that that would be taken away from them by the Scrooges on the Opposition Benches.

Small Firms (Payroll)

2. Mr. Christopher Chope (Christchurch): What plans the Government have to assist small firms with the cost and administration of their payroll. [100525]

The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): Last month, my hon Friend the Financial Secretary and I announced that we would be providing extra help for new small businesses running their own payrolls by expanding the new enterprise support initiative.

Mr. Chope: That is a very disingenuous response from the Minister. In the 1998 Budget, the Chancellor of the Exchequer promised that, by April 1999, there would be a national automated payroll service in place for small businesses. In the 1999 Budget, he promised that £40 million would be invested to help small businesses in that way. Now the Government's policy is an absolute shambles. Does the Minister agree that the best way forward, bearing in mind the additional burdens of administering the working families tax credit, would be to allow all small businesses to deduct 1 per cent. of their pay-as-you-earn and national insurance contributions at source to meet some of the administrative costs that they have to bear to finance the Government's ludicrously high taxation programme?

Ms Hewitt: We did exactly what every sensible business does--we asked our customers how best we could help them. Our customers, the small businesses, told us that they prefer on-going, one-to-one help rather than one-off support. That is precisely why we are expanding the excellent service that the Inland Revenue offers through the new enterprise support initiative. That is what small businesses want.

As for the working families tax credit, we have made it clear that the average cost for a small business with a working families tax credit employee will amount to

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£37 a year. The Conservative party would deny nearly 1.5 million people the considerable help that they will get through the tax credit.

Mr. Peter L. Pike (Burnley): My hon. Friend referred to the working families tax credit, which I strongly support and welcome. However, does she believe that some businesses are suffering cashflow problems as a result of the introduction of the credit through the payroll system? Does she think that steps need to be taken to resolve such difficulties? The scheme is in its early stages and we need to ensure that it is right and does not cause major problems for small firms.

Ms Hewitt: My hon. Friend the Paymaster General and the Inland Revenue have been working very closely with small businesses to ensure that the administration of the tax credit through the payroll system is as simple and efficient as possible. As part of the those discussions, the Inland Revenue will put in place arrangements to assist businesses which need it with cashflow support.

Mrs. Angela Browning (Tiverton and Honiton): It is not just the working families tax credit that has to be paid through the payroll of small businesses; there are other items that the Government expect small business to administer on their behalf. For example, they include the recoupment of student loans and stakeholder pensions. What other plans does the Minister have for businesses to use their payroll systems as a benefits agency on behalf of government? Why is it necessary for stakeholder pensioners to be administered through the payroll? Surely that is not necessary; it is just an additional burden on small businesses.

Ms Hewitt: It was, of course, the previous Government who imposed on many employers the responsibility to deduct child support payments through the payroll. Every Member will be aware from their constituency surgeries of the complete shambles that we have inherited in the Child Support Agency, and are now having to put right.

We are working closely with business to ensure both minimum standards for employees and efficient administration of regulations and of payroll. We are determined to get intelligent and effective regulation and good support for business in this country.

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