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Manufacturing Industry
10. Mr. Mark Simmonds (Boston and Skegness): What discussions he has had with the Secretary of State for Trade and Industry regarding manufacturing industry competitiveness. [68407]
The Economic Secretary to the Treasury (John Healey): My right hon. Friend has regular meetings with the Secretary of State for Trade and Industry on a wide range of issues, and we recognise the vital contribution that UK manufacturing makes to the economy, exports and innovation. That is one reason why the Government are now investing so heavily in innovation, with Monday's announcement of the largest sustained increase in the science budget for a decade, and the announcement in April of the extension of the R&D tax credit to all firms—a measure that will overwhelmingly benefit manufacturing industry.
Mr. Simmonds: I thank the Minister for that answer, but is it not true that since 1997 UK manufacturing industry has had to suffer an explosion of red tape and bureaucracy, as well as an increase in taxation? No fundamental reform of public services was mentioned in the Chancellor's announcement on Monday, yet he was only too happy to throw the public's money around like a drunken sailor. In that context, I would like the Minister to tell us how the Government square the increase in red tape, bureaucracy and taxation on manufacturing industry with pretending to support an entrepreneurial and enterprise economy.
John Healey: I must say to the hon. Gentleman that effective regulation has important economic benefits. If it is properly framed, regulation can correct market failures, create a more level playing field for business, and put in place essential protections such as health and safety at work. This Government have a strong record in cutting red tape. As Minister with responsibility for customs, I can say that we have recently raised the threshold for VAT registration, and we are introducing a new VAT flat-rate scheme and new VAT import reliefs. Those changes were welcomed by the British Chambers of Commerce, which said:
- "We welcome the Chancellor's attempts to try to simplify the VAT system".
- "The Chancellor has left business in no doubt that he is committed to encouraging enterprise. The tax improvements, including the red tape burden, are welcome."
John Healey: My hon. Friend is precisely correct. It is such simplification measures, plus tax cuts targeted precisely at small businesses, that are bringing such benefits. Of course, all businesses also benefit from the greater economic stability that we have seen since 1997, including low interest rates and inflation rates, sound public finances, and steady growth. That is the best
support that Government can give to manufacturers small and large—precisely the support that they did not get in 18 years of Conservative Government.
Mr. Tim Boswell (Daventry): Have not Treasury Ministers cottoned on to the fact that increased costs on business operate at the margin, and have a completely disproportionate effect on competitiveness and profitability? Does the Minister not concede that further increases in labour market regulation are extremely unlikely to buy off labour market and trade union militancy, which sank the previous Labour Government and has returned to haunt this one?
John Healey: I simply do not recognise the hon. Gentleman's description. On costs for business—particularly small business—I should remind him that, thanks to a series of tax cuts since 1997 that were reinforced in this year's Budget, and to corporation tax reforms, we have the lowest rates in the UK's history. Capital investment for small firms—permanent in the first year—has given a real boost, and research and development investment has been welcomed across the board. The Budget's tax cuts for business across the piece mean that—even after the Budget—12 other European Union countries still have higher tax burdens on business than does the UK.
Credit Union Movement
11. David Wright (Telford): If he will make a statement on the growth of the credit union movement in the United Kingdom. [68408]
The Financial Secretary to the Treasury (Ruth Kelly): Credit unions have an important role to play in tackling financial exclusion and enhancing opportunity, through the provision of core financial services. That is why we are delivering a programme of strategic deregulation to enable credit unions to offer a greater range of services to their members, thereby helping them to develop and to grow.
David Wright: I thank my hon. Friend for her reply. Will she join me in congratulating and thanking the many thousands of people who give of their time voluntarily to support the credit union movement in the UK? Does she agree, however, that the term "credit union" is itself problematic, because for many people it implies getting into debt? Does she also agree that we should perhaps re-brand the sector, as has been done in Telford through the Fair Share credit union?
Ruth Kelly: I thank my hon. Friend for his question. I know that he takes a considerable interest in these matters, and I do of course congratulate the thousands of people who provide their services for free to help credit unions prosper. That is why we are undertaking a programme to make the whole credit union sector more attractive, to enable credit unions to offer a greater range
of services to their members, and to offer greater protection to members by regulating the sector through the Financial Services Authority.As to my hon. Friend's remark about the term "credit union", I do not share his enthusiasm for changing a brand name that is fairly well recognised not just in this country, but across the world. I would therefore hesitate before recommending to the sector that it changes the name.
Rev. Martin Smyth (Belfast, South): I join the Minister and others in congratulating the credit union movement and those who have done so much to help their own communities. I also welcome the fact that steps have been taken to strengthen the supervision of credit unions. Am I right in thinking that that has been done not to
hinder the credit unions, but to protect them in an age of creative accounting, when people often misuse money? Those measures should not be shunned, but accepted and supported.
Ruth Kelly: I completely agree with the remarks made by the hon. Gentleman. It is important for the sector itself, as well as for its members, that it is appropriately and proportionately regulated. I welcome the fact that thousands of members of credit unions, as well as the organisations themselves, took the opportunity to respond to the FSA's consultation on how that regulation should be carried out. The new framework will increase the reputation and credibility of the sector and it will also offer important investor protection to credit union members, bringing them under the same sort of protection regime as bank and building society depositors.
Business of the House
12.30 pm
Mr. Eric Forth (Bromley and Chislehurst): Will the Leader of the House please give the business for next week?
The President of the Council and Leader of the House of Commons (Mr. Robin Cook): It will be a pleasure. The business for next week will be as follows:
Monday 22 July—Second Reading of the Mobile Telephones (Re-programming) Bill [Lords].
Motions to establish the Transport and the Office of the Deputy Prime Minister Select Committees.
Motion on the summer recess Adjournment.
Tuesday 23 July—Debate on public expenditure on a motion for the Adjournment of the House. [Interruption.] I look forward to the contribution from the hon. Member for Buckingham (Mr. Bercow).
Wednesday 24 July—The House may be asked to consider any Lords messages that may be received.
Consideration in Committee and remaining stages of the Mobile Telephones (Re-programming) Bill [Lords].
The business for the week after the summer recess will be:
Tuesday 15 October—Motion relating to the Industrial Development Act 1982.
Remaining stages of the Public Trustee (Liability and Fees) Bill [Lords].
Debate on local government finance formula grant distribution on a motion for the Adjournment of the House.
Wednesday 16 October—Opposition Day [18th Allotted Day]. There will be a debate on an Opposition motion.
Thursday 17 October—Debate on defence in the world on a motion for the Adjournment of the House.
Friday 18 October—The House will not be sitting.
I would also like to inform the House that the business in Westminster Hall for October will be:
Thursday 17 October—Debate on the report from the Transport, Local Government and the Regions Committee on road traffic speed.
Thursday 24 October—Debate on the UN charter on the rights of the child.
Thursday 31 October—Debate on the report from the Foreign Affairs Committee on foreign policy aspects of the war against terrorism.
The House will also wish to know that on Tuesday 15 October, there will be a debate relating to major accident hazards involving dangerous substances in European Standing Committee A, and on Thursday 17 October 2002, there will be a debate relating to the European Union action plan on drugs in European Standing Committee B.
Details of the relevant documents will be given in the Official Report.
European Standing Committee A—Relevant European Union document: 15275/01, Major accident hazards involving dangerous substances. Relevant European Scrutiny Committee Reports: HC 152-xxxiv and HC 152-xix (2001–02).
European Standing Committee B—Relevant European Union document: 10207/01, The EU Action Plan on drugs 2000–2004. Relevant European Union Scrutiny Committee report: HC 152-ii (2001–02).]
As this is the last business statement before the recess, may I—
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