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4.43 pm

Mr. Mark Prisk (Hertford and Stortford): I congratulate the hon. Member for Gower (Mr. Caton) on his speedy race through the fascinating subject of cockles in Gower. I look forward with some enthusiasm to further discussions on that in the Select Committee on Welsh Affairs. I also join other hon. Members in congratulating the hon. Member for Ogmore (Huw Irranca-Davies) on his maiden speech. Perhaps unlike other Members who have to delve a long way back into their memory to remember what that experience is like, as a new boy I did it only about eight months ago. It involved a peculiar mix of terror and excitement which slowly eased away, leaving me with the realisation that I had to sit here for another half an hour or so to be polite. I therefore understand the hon. Gentleman's situation. I also congratulate him on getting Kylie Minogue and J. J. Williams into the same sentence; that is quite a remarkable achievement in a maiden speech. So—congratulations all round.

I want to focus on an issue about which I feel strongly, namely the condition of and prospects for the Welsh economy. Doing business in Wales has much to commend it. It is often said that the sign of a good economy is a high number of overseas investors prepared to put their money where their mouth is. Inward investment is a good example of how an economy is doing. During the 1980s and 1990s, the Welsh Development Agency was tremendously successful. We saw about £13 billion worth of inward investment during that period, and some 200,000 jobs were either secured or created.

One of the most interesting aspects of the structural reform of the Welsh economy in that period was illustrated by the fact that four of the world's six largest and most successful electronics manufacturers were based in Wales. That was a real vote of confidence in the Welsh economy in that period.

I would like to take this opportunity to pay tribute to the workers in Wales, and to their often excellent record of loyalty and commitment. In particular, I want to pay tribute to the many small business men and women who form the heart of any economy and, particularly, form the heart of the Welsh economy. It is often true to say that politicians do not take the opportunity often enough to say thank you. I would like to say thank you to the thousands—indeed, millions—of small business men and women across the United Kingdom, and particularly those

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in Wales. They are the ones who create the wealth; they create jobs for other people, and have the confidence to provide us with the services on which we rely. I am sure that all hon. Members share my gratitude for the hard work and dedication of small business men and women across Wales.

It is with regret, therefore, that I have to say that the confidence of those business men and women in Wales is at an all-time low. It is certainly much lower than the confidence of many businesses in the rest of the United Kingdom. We are all aware that manufacturing has been in recession for a whole year. We have seen 9,000 manufacturing jobs lost in Wales in that time. The trade deficit for the United Kingdom as a whole is also at a record level.

The Trades Union Congress said today that it did not foresee the recovery that has been heralded by some Ministers taking place this year in Wales. It does not foresee the recovery taking place in manufacturing until 2003. That means that we face two consecutive years of recession. The recession in manufacturing will have a devastating effect on the businesses involved and on the communities that support them.

I hope that the TUC is wrong in this instance, and that things will recover more quickly. However, its view is also shared by many entrepreneurs in Wales. I refer to a recent report published by Barclays on business start-ups. These start-ups are an important indicator, because they show the confidence that people have in the future of an economy, locally or nationally. The figures for the last year show a noticeable fall in the number of business start-ups planned in Wales. That is not unusual in a recessionary period.

The fall, however, is much greater in Wales than it is in the neighbouring English regions. In the west midlands, the fall in business start-ups in the last year is 6 per cent., but in Wales—right next door—the figure is not 6 per cent. or 12 per cent. but 19 per cent. That represents a fall of nearly one fifth in the number of business start-ups in Wales in the last year. Perhaps my hon. Friend the Member for Leominster (Mr. Wiggin) will understand this point particularly. In a region such as the west midlands, including the delightful county of Shropshire, the fall of 6 per cent. was not good, but it was certainly not devastating. Just across the border in Powys, however, there has been a fall of 19 per cent. That is worrying because it bodes ill for the Welsh economy and suggests the danger of a greater gap between the Welsh and English economies, which would be in no one's interest.

What is the problem, and what is the difference in Wales? I have talked to business men and women and their representatives, including the Cardiff chamber of commerce and the Welsh Federation of Small Businesses. They have identified a number of factors, and I shall raise two of them.

The first relates to the burden of regulation and the administrative costs of the regulations that fall on small businesses in Wales. Last year, the extraordinary number of 4,672 new regulations were introduced, which is a record since regulations have been counted. That is not my figure: it comes from the House of Commons. That comes on top of the £15 billion costs of red tape that the British Chambers of Commerce has identified from Labour's first four years in government. Unfortunately, there is little sign that the pace or scope of regulation is likely to diminish.

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A number of small business men and women have told me that they hope there will be change and a realisation by the Government that the burden on small businesses is disproportionate. I spoke to them today, and as regards the figure of 4,672 new regulations they have said to themselves, "We can kiss that money goodbye. The chances of those figures falling is very small."

The reality is that the average small business in Wales spends up to 31 hours each month complying with or administering Government regulations. That is the equivalent of four working days a month—another working day a week—merely to ensure that the business is complying with and administering the regulations. Is it any wonder that the productivity of businesses in Wales, or in the United Kingdom as a whole, is collapsing? The sad fact is that four years ago we were the ninth most competitive nation in the world, but we are now the 19th, and the danger is that Wales and the UK as a whole will fall further.

The second factor that businesses have mentioned to me and that has been highlighted in a number of surveys is the lack of confidence that Welsh businesses have in local and national authorities. Individual business owners have expressed to me their frustration in dealings with local councils and agencies from the Assembly or from Whitehall—indeed, in having to deal with all three when the different levels do not communicate effectively with one another. That has been borne out most recently by a comprehensive survey entitled "Barriers to Growth and Survival", published by the Welsh Federation of Small Businesses.

I shall pick up on a couple of brief points made in that survey which merit consideration. Across the United Kingdom, 33 per cent. of small firms said that they were dissatisfied or very dissatisfied with Government-funded business advice, but in Wales the figure was 51 per cent.—over half. People singled out the quality of business advisers, the co-ordination of services, grant funding, loan funding and training grants. If local authorities think that they escape criticism, I have bad news for them. Local support for small businesses also attracted criticism, with almost three quarters of firms in Wales saying that they were dissatisfied with their local authority as a whole. Moreover, 60 per cent. of them were fed up with local economic development departments— I hope that the new Assembly Minister dealing with that aspect will take note of that if he has time—and 40 per cent. were unhappy with the way in which local planning applications are carried out. That is a sad indictment of how the public sector is perceived by one of the crucial communities that it exists to serve. It clearly shows a breakdown in the confidence of those businesses in many of their public authorities, and a breakdown of communications and trust.

People may wonder why things have got to this stage. I shall give a simple example. As a chartered surveyor, I am relatively familiar with this issue, although not an in-depth expert, so I look forward to being corrected by Labour Members. As I understand the current situation—Labour Members will be happy to remind me of this—businesses in my English constituency will be able to veto any proposal from a local authority to create a supplementary or additional business rate, whereas businesses in the Welsh constituencies of Labour and

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other Members will not have that veto and their voice will not count in the same way. That is wrong, because it discriminates against Welsh businesses, and it makes many of them second-class citizens.

Some people may say—sadly, the hon. Member for Rhondda (Mr. Bryant) is not present to say it, but I am sure he would if he were here—that with devolution there will be differences of opinion and different approaches. That may well be, but from the perspective of the small business man or woman, it puts them and their business at a competitive disadvantage vis-à-vis their English neighbours. That is probably the worst possible signal about the nature of the devolution settlement that we could give the engine of the Welsh economy, and it is one of the saddest aspects of how devolution has been allowed to spin out.

In my lifetime, the Welsh economy has undergone a radical transformation. That is in no small measure due to the hard work and the willingness to change of the people of Wales. Small business owners and managers want and need better business support. They want less regulation, and resent the complex political and bureaucratic hurdles that they have to tackle. Understandably, they resent the fact that they are now required every month to spend the equivalent of four working days simply complying with Government red tape.

I believe that small businesses in Wales deserve better, not just because they create local wealth and local jobs, important though they are, but because entrepreneurs embody the essential ingredient of a decent society. No matter who a person is—whatever his background, class, colour or creed—if he has the ability, skills and will to work, he can be his own boss and make his own way in the world. That is a vital message of hope for all, in whatever part of Wales. That is why small businesses matter in Wales, and why I believe that they deserve our full support.

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