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Geraint Davies: I, too, have run a small business. Does the hon. Gentleman accept that some red tape, such as the working families tax credit in the payroll, are part of enabling more people to access the job market, which reduces small business wage costs because more people are in the market? Although small businesses moan and groan about red tape, it is part of the reason why they are growing and creating more profit, and they cannot have it both ways.
Mr. Page: The hon. Gentleman seems to be trying to fight both ways. Certain regulations are necessary; they exist to provide protection. We certainly would not want a complete free-for-all, without rules and guidance, but there is excessive enthusiasm for regulation and gold plating. Either he is right, or a substantial percentage of the small business sector and the Minister are wrong, and I am wrong. The Minister has just spent half an hour at the Dispatch Box arguing that regulations and red tape need to be reduced for companies, and I endorse that position.
Nigel Griffiths: I spoke for 20 minutes.
Mr. Page: I hope to speak for only 20 minutes—so long as I do not keep getting interrupted.
The Government inherited a golden legacy, and I admit that when the economy is going from strength to strength, help and protection for small businesses is not so urgently needed, but when there is a downturn, it becomes vital to try to reduce the burdens on them. The Chancellor claims that he has done away with boom and bust. I seem to remember that there was a king called Canute who thought that he could stop the tide, but he was unsuccessful, and I strongly suspect that no Chancellor can insulate a country from world conditions.
The Minister and I are as one in believing that future employment will come from small businesses. Large companies are downsizing whenever possible and subcontracting out more and more work. The old concept of large businesses doing everything in-house is dead. Small businesses must be part of the supply chain. I know that over the years the Government have endeavoured to build up a supply chain involving small firms so that they can develop flexibility, which is essential, and larger firms can keep their products up to date and their designs fresh and exciting, rather than ossifying in traditional patterns.
The Government use many fine words, but over-regulation and gold plating carry on apace, and each year sees a new record figure for regulations established. The Government have, using psychology, carefully named the taskforce headed by Lord Haskins. The fact that it is
called the better regulation task force, rather than the "less regulation taskforce", means that it will not necessarily reduce the burden of regulation, but rather try to make it better. However, the Government simply pile regulation on regulation.Lord Haskins has expressed his frustration about the fact that the taskforce is failing even to slow the remorseless flood of regulation that spews out of Whitehall every day. Much has been made of the Regulatory Reform Bill. I served on the Standing Committee that considered the Bill, and I wish it well, as we all do. However, the power to examine regulations comes into effect only when they are two years old. There is no mechanism to check the existing Whitehall regulation machine, as Lord Haskins is so obviously aware.
The Small Business Service is supposed to explain regulations to puzzled, concerned business men, but the head of the service, David Irwin, has complained that the task grows more complex each day. Last September, he said that he wanted to introduce a red tape index, which would monitor the amount of regulation introduced each year by each Department, and then he would try to make the Departments cut that amount. That sounds fine, but the service has failed to meet its target, and a series of parliamentary answers shows that little, if any, progress has been made. Again, we have spin, but no delivery.
I agree with almost all of the "Think Small First" report. Its executive summary says:
- "Businesses have a range of needs, including access to advice and training, finance, workspace, labour with the appropriate skills and information. They desire a tax and regulatory environment that is fair, simple and straightforward. Ideally, they would like a culture that is supportive of business rather than antagonistic."
- "manage all of the government's small business support programmes and cut back regulation".
Today, the Small Business Council has announced 21 measures. In true Labour style, the announcement was made on the "Today" programme. I look forward to hearing about those measures, but I look forward even more to hearing whether the Government will set up an independent organisation that could say "Stop!" when a regulation was proposed. The House could be told that the organisation had objected, and that would inform our decision whether to agree to the proposed regulation.
There is talk of the Department of Trade and Industry wanting to establish a Brussels bureau to be closer to the source of regulation. The aim would be to make it self-sufficient in two years. That is a bit rich because the Government are saying to business, "Please pay us to tell you what regulations we will impose on you in the coming years."
Returning to the Whitehall regulation sausage machine, I anticipate that anyone who objects to a regulation will be told by the Government, "Don't worry, if it does not work, we can use our new mechanism to examine it after two years." I wonder whether that attitude will permeate through the legislative process, and result in even less enthusiasm for halting regulation.
I advise the Government to consider our manifesto commitment to establish an independent body that can prevent a Department from introducing a regulation unless it is referred to the House of Commons. The House should be paramount in these matters. I hope that it will be paramount on Monday in the decisions on Select Committee membership because those decisions should not be imposed by the various Whips Offices. If the Government are twitchy on that subject, I have grave doubts that they would be prepared to set up an independent body to control regulation.
We need independent assessment of the cost of regulation, and I hope that, at the very least, a red tape index will be established. If the Government do not have the courage to set up an independent body, they should use their toothless tabby, the better regulation task force, to produce information on the cost of regulation. The information should be gathered by the taskforce, rather than by the Small Business Service, because it has got to be seen to be at arm's length from the Government. Many Bills have a little note in the back, saying that the Government believe that they will incur no appreciable cost to industry, or whoever is affected by the legislation. However, when one talks to the people who are affected, they say that their costs will increase. That is why an independent assessment is necessary.
The Government must put themselves in the shoes of small business men, rather than trying to adopt the attitude that nanny knows best. There was a classic example of that immediately after the Government came to power, when they established a statutory right to interest on late payments. I accept that it was a manifesto commitment, but they continued with it despite the fact that they were mistaken in thinking that it would enable businesses to solve their late payment problems.
The measure has now vanished without trace, and if there is evidence that it has been a glorious success, I would like to see it. I have asked for such evidence, but nothing has been forthcoming. All I have is an article that was in a national newspaper a few months ago which says:
- "The Labour party is today revealed as a 'maximum risk' late payer of its debts—despite introducing laws aimed at forcing businesses to settle up on time."
I do not oppose everything that the Minister said. Much of it was supportive and helpful, and Conservative Members want to encourage that. We all want business start-ups to succeed, but that applies only to those that have a reasonable chance of success, rather than those set up by graduates of the "it seemed a good idea at the time" school. I am not saying that the UK should be like Germany, where anyone who wants to start a business has to be endorsed by the local chamber of commerce. There should be greater encouragement to ensure that, before a business starts trading, there is some check or independent evaluation of its business plan. This is not the time and place to develop that argument to the full, but we should do what we can to prevent the phenomenon by which companies start but then go bust in a very short space of time. That causes heartache not only for the individuals involved, but for all the people connected to the company—the people who have provided it with credit and supplied it with goods. Everyone gets hurt when a business fails.
Small businesses in certain parts of the country have also been badly hit by the foot and mouth disaster. The problems do not affect just farmers; they go broader than that. Thankfully, my constituency has not had this terrible disease visited upon it, but NSR Communications, a company based in Rickmansworth that supplies public address and communications equipment, has found itself in trouble because the orders for its equipment have not materialised. As we all know, a number of agricultural shows and fairs in the north of the country have been cancelled and that has caused huge problems in many constituencies.
I pay tribute to the Secretary of State for Trade and Industry. NSR Communications was directed to the loans guarantee scheme and it was told that only companies that could demonstrate that they had a viable future would benefit from a loan guarantee. Obviously a company faces tremendous difficulties when it is affected by the problems caused by foot and mouth but, following my representations, the right hon. Lady went on to explain that she had asked her officials to discuss with the principal lending institutions the idea that viability should be considered on a long-term and short-term basis. She hoped that businesses that were successful before the onset of the disease would be supported by lenders until matters improved. I am grateful for her support.
I shall not describe all the difficulties facing the small businesses affected by foot and mouth, but the support that the Government have announced is inadequate. As the Minister will know, at Question Time yesterday, I raised that concern at the Dispatch Box and he made great play of the fact that £3 million had been allocated to the north-west to help the companies affected by foot and mouth. Given the effects on small businesses, £3 million is a mere drop in the ocean and we all understand the difficulties involved in channelling the money to those companies to ensure that they succeed.
We are as one in what we want to achieve, but we face a difficulty in how we are going to get there. The Government instinctively find it difficult to let things go and stop the control freakery that I mentioned earlier. Small firms are the main losers in that process. They lack the resources of the larger firms and they do not possess the same skills in dealing with the demands of the state. Just registering for VAT brings a 300-page book through the post from Customs and Excise. Many small businesses trying to stay afloat in competition with others cannot turn themselves into amateur tax men, health and safety officials or experts on employment law. The big firms can afford to employ specialists, but small firms cannot. Business Link can play an important role in that regard.
Government policies and regulations are not always put directly or exactly into effect. That brings the policies and the mechanisms of policy into disrepute. There is an excessive regulation of small firms and an indifference to their problems except in times of obvious crisis. That is discriminatory and unfair.
The gap between the two political parties is most obvious on this issue. We believe in less regulation and we think that small firms are likely to succeed in an environment in which the hand of the state lightly touches their affairs. The bureaucracy should exist to serve the interests of the people and of the small and large businesses that provide this country with prosperity. The Government's temporary political strength should not lead them to believe that the current conditions will last for
ever. Like the Minister, I believe that the future of employment and the future of companies in driving the economy forward rely on our small businesses. Conservative Members will do everything that we can to help them.
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