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9.54 am
Mr. Richard Page (South-West Hertfordshire): May I start by declaring an interest? I have an interest in small businesses in that I have owned, operated and worked in several of them. The number of employees ranged from six to 106. The turnovers were from a few thousand to tens of millions. It is exciting. It is rewarding—sometimes—but it is also hard work. Running a small business is tough. I make that point not only to demonstrate that I have some of hands-on experience, but also so that those who are interested in such matters will appreciate that I am declaring an interest. Those interests are in the register for all who want to examine them.
My work in small businesses has taught me that we cannot fire a magic silver bullet to make all the problems of small business disappear so that all will be well. The problems of this vital sector can be likened to a cake. That cake is cut into slices of varying thickness and digestibility, but all have to be tackled and consumed. When that has been done, the Government of the day will look down at the plate to find another cake there—also with slices of various sizes. The aim of the game is to ensure that it is a smaller cake and that when that one is gone, there should be an even smaller one, although I doubt that we shall ever arrive at the point when there will be no cake at all: no problems facing the small business sector. As the Minister said, the sector is diverse; it is made up of many, many parts, so what might help one part of the sector may often damage another.
From that perspective, I can fully understand why, over the past few years, Labour Members have highlighted the Government's efforts to maintain stability in the economy. Obviously I welcome that stability: no one wants high inflation or high unemployment. I was about to say "high taxation", but some Labour Members are rediscovering an innate restlessness on that subject. It was there years ago, but has been coming back since 7 June.
I want to deal with some of the larger slices and—surprise, surprise—the largest slice is the one on which the Minister spent some time: the question of regulation. As I listened to his remarks, I could have signed up to almost everything. As a former Minister for small business, I said, "Yes, that's right, that's what we want to achieve, that's good": but then I gave myself a little pat on the cheek, woke up and found that what the Minister was saying and what the Government were actually doing, although not diametrically opposed, were certainly not exactly the same thing.
The truth is that the Government put considerable spin on their claim to be the friend of business in general and of small business in particular, but that is belied by the facts. In April 1997, Labour's business manifesto stated:
- "We will not impose burdensome regulations on business, because . . . successful business must keep costs down."
I do not want to embarrass the immediate predecessor of the Secretary of State for Trade and Industry, but it was that right hon. Gentleman, the present Secretary of State for Transport, Local Government and the Regions, who—
Geraint Davies (Croydon, Central): Will the hon. Gentleman give way?
Geraint Davies: Does the hon. Gentleman recall that about 90 per cent. of that £10 billion consists of the costs of the minimum wage and the working time directive? The Conservatives are now in favour of the minimum wage and they cannot change the working time directive, so to present that as red tape is misleading.
Mr. Page: I was merely pointing out that since 1997 there is an extra cost burden on businesses of about £10 billion. It is made up of several things, some but not all of which we have signed up to. I do not disagree with part of the hon. Gentleman's comments, but I do not think that the burden is quite so heavily loaded on one side. It is much broader. I shall come to that point—he will be delighted to hear—as I progress through my few words.
I do not want to embarrass the Secretary of State's immediate predecessor, but he said on 2 February that he would
- "guarantee that we would not allow regulation to stifle enterprise".
- "too often regulations have been introduced with too little consultation and too little warning".
More regulations than ever before—well over 3,500—were imposed on British businesses in 1999, but that record did not last long. Last year, 3,865 regulations that affect businesses were passed by the Government. I am told that the overall cost of complying with European Union and domestic regulations is equivalent to about 3.7 per cent. of our gross domestic product. That approach can only be described as control freakery—a phrase that is now entering the parliamentary lexicon—and it is unsustainable. Big firms can handle the extra cost involved, but smaller firms simply cannot; it is too much for them.
The owners and managers of firms with 10 to 14 employees spent about 31 hours a month complying with such regulations, according to a NatWest survey conducted in the autumn of 1999. I suspect that they would probably spend longer doing so now. A more recent survey by Kingston Smith showed that 56 per cent. of small firms found employment regulations extremely or very time consuming; 42 per cent. reacted in the same way to pay-as-you-earn regulations and a similar proportion to health and safety regulations; and 35 per cent. found personal taxation forms confusing. I put myself in that 35 per cent., and I should be interested to
know whether any hon. Member does not do the same. Obviously, as all Labour Members are loyal to the core, they will leap up and say how simple all that is and how easy they find filling in their personal tax forms.In each of the regulatory sectors, significant numbers of businesses have doubted whether they are actually complying with the regulations. The Government, not small firms, are responsible for the complexity of the regulatory machinery. We all know that the Government have a number of inspectors who are expert in various disciplines—so they should be—but they expect small business men to be expert in all those sectors as well. That is a burden too far, but I am glad to say that the Government have been listening to what we have been saying. The inspectors are now trying to play—it will be a hard task for them—a more advisory role, providing guidance, rather than an enforcement role. I welcome that change and hope that it can be extended. The inspectors have to do their job, but only if a small business does not comply, having been warned. They should give advice when it is clear that small business men or women probably have not got a clue whether they are complying with the latest regulations.
I do not want to encourage kleptomania, but the time has come for the Government to adopt—dare I say steal?—Conservative party policies on deregulation. That should not worry them too much; they have stolen so many of our clothes already that a few more will not do any harm. However, an independent assessment of the overall costs of regulation to the economy is urgently needed, as is a willingness on behalf of the Departments responsible for those regulations to accept targets to reduce the burden that they impose, year on year.
New regulations should not be introduced unless, simultaneously, old ones are removed under the regulatory reform process. Sunset clauses should be used more often and more openly. Small businesses certainly have a good claim to be exempted from certain classes of regulation. I welcome the examples that the Minister mentioned, but such exemptions should be extended. There is evidence that businesses on the continent are allowed exemptions from European regulations, whereas we try to ensure that as many people as possible comply with them. If firms with 10 or fewer employees had been exempted from the parental leave regulations, more than 80 per cent. of firms would have been freed from an obligation that is especially onerous for micro- organisations, but only 20 per cent. of employees would have been affected. We should encourage that.
The Minister tells us that deregulation is part of the Government's agenda. Ministers often say that they want regulations to be lifted, but I wonder whether any of them has ever run a business. If they had, they would immediately tell their Departments, "We are not winning." Out in the real world, the Federation of Small Businesses has produced a red-tape dossier, which lists regulations that hurt small businesses, and a booklet entitled "Constraints on Business Growth", both of which should be compulsory reading for Ministers. We recommend that our party should go away and read the book, "Men are from Mars, Women are from Venus"; well, I recommend that Ministers read the booklet "Constraints on Business Growth" and the red-tape dossier. If they did so, they would start to grasp the feelings of those in small business towards what the Government have done in the past few years.
We can bat surveys back and forth, but part of the survey that underpins that booklet was carried out by Strathclyde university, which produced the statistic that some 50 per cent. of small businesses wanted to expand, but the fact that more and more burdens are being lumped on to employers has led to some 56 per cent. of them voicing concerns about the effect of regulation in relation to employing staff. I do not know how many people were involved in the MORI survey, nor whether MORI comes that high up the poll for accuracy in various parliamentary predictions, but the Strathclyde university survey polled about 21,000 people.
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