Draft Financial Assistance for Industry (Increase of Limit) Order 2002

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Brian Cotter (Weston-super-Mare): I welcome the measure. However, as with all grant and loan schemes, it is important that the funds are used effectively and directed to the right people and that the programme is operated economically for all concerned. I am sure that the Minister agrees with those points.

Concerns are often expressed that the way in which funds are administered—to achieve economic and effective use—results in unnecessary red tape and bureaucratic requirements. An example is the recent foot and mouth crisis, in which there was not the take-up that there should have been of various funds that were offered by Government. That was perhaps because the publicity was not good enough and people felt that the process was too onerous for what they could get in return. I know that to be the case from my research. People felt unsure whether they would get the help. Even if they thought that they would, they questioned whether it was really necessary to have to overcome so many hurdles before they received the

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assistance. In that context, it is worth considering the small business administration in the United States, for example, which has a clear system to deal with emergency funding support and the briefest of red tape. Assistance kicks in at a certain level of need or type of disaster. It is important for the Minister to recognise that.

As the hon. Member for Runnymede and Weybridge (Mr. Hammond) pointed out, the Department of Trade and Industry wanted to rationalise and review the various schemes that it was operating. I would be interested to hear from the Minister how that is progressing. We are covering lots of initiatives here and one problem with funding is how people in industry know what is available and where they should go for assistance.

The hon. Gentleman also pointed out that Governments are not especially good at choosing or implementing investment. That is why we Liberal Democrats support the concept of regionalisation and regional development agencies, unlike those on the Conservative Benches, although we are looking for improvements from the RDAs and their implementation policies. Is the Minister satisfied that enough progress is being made to rationalise the schemes? I met an RDA chairman recently, who told me that RDAs are trying to rationalise the various funding and loan schemes in the marketplace and put them under various hats, rather than leaving people confused about where to go for the money.

On industrial development, I welcome the work of the Phoenix fund, which is important. I have done some work on it, particularly on businesses in ethnic communities and women in business. I hope that the Minister will share my hope that good progress is being made in those two areas. Women, who are very capable and, I must say, often better than men at managing finances, sometimes find that when they go to banks for loans, they are asked ''Where's your bloke, and what does he say about it?'' That is unacceptable and I have seen clear evidence of it through the Phoenix development fund. Banks, in particular, are sceptical in considering women-run operations as viable businesses.

David Taylor (North-West Leicestershire): I agree with the hon. Gentleman about the patronising and short-sighted attitude that women who want to go into business sometimes encounter, although it may not be as difficult as it is for women who want to be chosen for winnable seats for the Liberal Democrats.

Brian Cotter: I accept 50 per cent. of that intervention.

I remind the Minister of the Small Business Service. It seems to be a movable fixture. Indeed, it recently moved premises down the road in Victoria street, but it is more of a movable fixture because of the air of uncertainty that has surrounded it. The present chief executive, David Irwin, is not standing again this year, and concern should be expressed about that. I link that, constructively and correctly, with the initiative, as delivery was supposed to be the responsibility of the Small Business Service. There have been many changes

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and uncertainties in that service and I hope that the Minister can assure me that it will play a significant part in delivering all the types of funding under discussion.

I also share the concern that has been expressed by the hon. Member for Runnymede and Weybridge about post offices. The Minister mentioned support for them but several of this weekend's Sunday newspapers reported that about 1,000 post offices and sub-post offices will disappear. If that is true, it is very worrying news.

I would be delighted if the Minister could reassure me that it is not true. Leaving aside whatever funding might be made available to support people who are made redundant—or who no longer have a sub-post office—the matter is of concern because we have heard so much from the Government about subjects such as people's banking systems. The Minister knows about that matter, because he has been intimately involved in it.

Several points must be addressed, in particular with regard to delivery, publicity and funding—which the Committee will, of course, approve today. I am particularly concerned about people in the area that I represent—Weston-super-Mare—as 300 jobs have recently been lost due to the closure of Westland. Perhaps some of the funding that we are talking about will help those people to get into business?

Mr. Ian Pearson (Dudley, South): On a point of order, Mr. Illsely. My hon. Friend the Minister mentioned that section 8 money has been used to fund projects that were identified by the Rover taskforce. I wish to place on record that I was a member of that taskforce. It is now adjourned sine die—as they say. Although I—of course—received no material benefit from it, I thought it appropriate to mention my membership of it.

5.1 pm

Mr. Dennis Skinner (Bolsover): One thing is certain with regard to the order; it increases the sum from £2.3 billion to £2.5 billion, but that will be increased a lot more. The Government should bear that in mind. The manufacturing base in the United Kingdom is shrinking, and has been since about 1950. Intervention will now be the order of the day. Wonderful market forces were paraded as a virtue for about 18 years. That is now a thing of the past.

I lived for many years at Clay Cross. A firm there called Bywaters sold out to a French company, because it was obeying market forces. Before anyone could bat an eyelid, the French had closed the whole thing down. About 700 people were made redundant. The Enron case provides a similar example. I could talk forever about how the capitalist system, based on pure market forces, is not working, and I look forward to greater sums being made available. The Railtrack case offers another good example. That involves 21 more firms that we could pay some attention to.

The new Labour Government are not adopting the third way. They are going back to the old-fashioned tradition of ensuring that the manufacturing base

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remains in tact. That is significant. With regard to when, and if, the farmers received their money, I say to the hon. Member for Weston-super-Mare that they received it a lot quicker than did those miners who are still waiting for their payments for chest disease.

Brian Cotter: Let me clarify what I said. I was referring not to farmers in particular, but to the business communities that have been affected, such as tourism.

Mr. Skinner: They also did better than the miners, who are still waiting—although they have been awarded money for chest disease, and vibration white finger payments.

I agree with the hon. Gentleman that the communities to which he has referred must get their money. The frustration is caused by the tin-pot lawyers who are hanging on to the money. That is another matter that the Committee cannot address. However, you know so much about it, Mr. Illsley that I am sure that you would love to Chair a meeting on it.

I arrived late at the Committee because I have been dealing with matters to do with Guantanamo bay. On matter under discussion here, I am pleased that the sum has been increased, but I hope that the Department of Trade and Industry bears in mind that there will be many more casualties, and that we will therefore need to increase it even more. We must ensure that that happens. We have been successful—to some degree—with regard to unemployment in the course of the past four years, and although a blip is occurring, we cannot afford to let unemployment rear its ugly head any further.

David Taylor: Does my hon. Friend think that the flexibility that the extra sums will allow the responsible Minister will be sufficient to return one or two of the privatised industries, such as the coal industry, to the warm embrace of the public sector?

Mr. Skinner: The Chairman would not agree to a discussion about that, although it is covered by the amount of money in question.

The mining industry has 17 pits: a minuscule number compared with the 700 pits when I started work in 1949. Had it not been for Government money during this financial year and the previous one, those pits would have gone. The Tories get on their high horse and talk about undiluted market forces, but that does not work any longer in the real world. As my hon. Friend the Minister returns to his wonderful Department, he should remember that we shall need even more money to ensure that unemployment figures are kept down and that the manufacturing base is saved.

5.7 pm

Alan Johnson: The hon. Member for Runnymede and Weybridge pointed out that I used the speech made by my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) in 2000. He used the same speech made by the Conservative Minister in

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1996, and both debates lasted about 20 minutes with no controversy or questions. I thought that I should stick with a winning formula. The Conservative Under-Secretary, who left the House in 1997 to spend more time with his Cuban wine bar near Waterloo station—which is highly recommended—had a particularly easy ride. I will try my best. I am grateful for the support from all parties: I hope that that survives my closing remarks.

The hon. Gentleman commented on the speed with which the orders were laid before the House under section 8. The last Conservative Minister—and it could be the last—said in 1996 that he expected another order to be introduced two and a half years from that date; we are allowed only four under the 1982 Act. That would have taken us to the middle of 1998, but we did not introduce another statutory instrument until 2000.

We have introduced another order, having predicted in 2000 that we would not have to do so for three to four years. However, the introduction of the UK coal operating aid scheme must be taken into account. Funds have been set up by new schemes during the past two years, including five to support small businesses, which were going out of business at a rate of one every three minutes of every working day when we came into office in 1997. The UK coal operating aid scheme began in April 2000, and the hon. Gentleman asked about it. My hon. Friend the Member for Bolsover (Mr. Skinner) mentioned 17 pits, 16 of which have received assistance from the scheme. That assistance will get the coal industry through a difficult time and ensure that it can take advantage of an expected renaissance at the end of that period. UK coal and steel legislation limits the amount that the Government can spend to £170 million, and we have spent within that limit. My hon. Friend raised the important question of whether that aid and assistance should have been given much earlier to the coal industry.

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