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18 Nov 2002 : Column 454—continued

8.45 pm

Mrs. Angela Browning (Tiverton and Honiton): The Chancellor had much to say about enterprise, and I shall concentrate on a particular group of entrepreneurs— small businesses and the self-employed. Some 55 per cent. of our private sector work force is employed by small businesses, so they are in the majority. I was rather disappointed that the Gracious Speech did not include a robust deregulation Bill that sought tangibly to remove the burdens on small businesses.

This country has had a reputation for having flexible labour markets and low levels of regulation, certainly compared with some of our European partners, but that situation is being increasingly transformed, particularly by the introduction of European legislation. When will the Government call a halt to that? When will they demonstrate that such regulation, which is now a burden on businesses on all sizes, but especially on small businesses, will be removed or moderated?

The self-employed, many of whom start out working from home, have particular concerns. The Mail on Sunday, which I know is read avidly by Labour Members, reported yesterday that the Chancellor intends to cut out red tape to help entrepreneurs mainly as a result of the plunge in self-employment in the past year. Perhaps we shall hear more about that in the Chancellor's autumn statement, but with the possible exception of some relaxation in the planning laws for businesses, there was nothing in the Queen's speech to make me think that the problem is being taken as seriously as it should be.

Self-employment is becoming increasingly difficult, but once one has established a business, it is more difficult still to make the quantum leap to take on another person and to assume the responsibilities of an employer. I was alarmed to hear that the Inland Revenue is being extremely active in identifying self-employed people who work from home with a view to taxing them through the business rates. An article in The Times last month made it clear that thousands of people have already been hit with bills of up to #600.

I am referring not to people who have, for example, changed their outbuildings into a large business but to people who are working from a bedroom. Apparently the Treasury's guidance includes a 6 o'clock rule that if domestic use can take place in a room after work has finished it is unlikely that business rates will be charged. I was self-employed and based at home for many years, although I travelled a lot, and there is no way that I would have wanted somebody going into what I called Xmy office" after 6 o'clock and doing anything with my paperwork or my computer.

I have to say to the Minister that we are getting mixed messages. The Chancellor talks about entrepreneurs, who are the backbone of the economy, risking their own capital to set up a business, often in a small way to begin with. However, punitive laws and regulations will put

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them off taking that risk. We are already seeing enterprise stifled in many small business areas. Residential and nursing homes have come under pressure, and we have debated many times in this Chamber the difficulties facing them. Sub-post offices and rural petrol stations are also experiencing difficulty. We all know that it is hard to get a plumber or electrician. Regulations affecting self-employed plumbers and electricians put people off doing the job, even though they can apparently charge whatever hourly rate they like. At the moment, it is not a question of whether or not one can afford a plumber—they can name their own price. It is about getting someone reliable to come along and do the work.

Many small businesses in waste management are under huge pressure. My hon. Friend the Member for North-East Bedfordshire (Alistair Burt) pointed out that the Chancellor must be aware not just of burdens imposed by the Government on business but of external factors that have an impact on entrepreneurs and the business economy. At my surgery a fortnight ago, I met a gentleman who is the third generation of a family business in waste management and employs just 20 people. He has had great difficulty obtaining public liability and health and safety insurance—at my business breakfast club last week that theme was picked up by people from just about every sector in my constituency. People who have been able to get insurance have found that premiums have gone up by more than 100 per cent. this year. The gentleman in waste management, for example, has to have a minimum insurance cover to get a licence and undertake work for local authorities such as fridge and car disposal under contract. He went right up to the day that his policy was due for renewal—even then, he had difficulty getting sufficient cover to be licensed to carry out those contracts.

Businesses in my constituency have asked whether their problems getting insurance and, if they are lucky enough to get it, the huge increase in premiums are a one-off or whether they will experience the same difficulties next year. Many of them say that if there is a repeat next year they will think twice—they may lay off employees and shrink their businesses rather than expand them. For some, it will mean the difference between staying in business or going out of business completely. Since 1997, there has been a plethora of tsars, envoys and all sorts of people with grand titles who all turn out to be Lord Haskins trying to reduce regulation on the Government's behalf—it does not work. My hon. Friend the Member for North-East Bedfordshire mentioned the European Union directive on temps—the Government, we are told, are braced for defeat this week. Marketplace flexibility and 160,000 people will be affected, yet it looks like the EU will force the Government to comply. The Government, however, are completely impotent to do anything.

Environmental taxes are being introduced. The Government were warned of the impact of the climate change levy, particularly on the manufacturing sector—I attended a briefing at which the Minister was lobbied by the industry about that long before it became law. It is not as if the Government have not had fair warning of all the factors that are having an impact on engineering

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and manufacturing. The Engineering Employers Federation says that there is going to be doubling of the landfill tax. I do not expect the Minister to say yea or nay, because he is in purdah—he can nod discreetly across the Floor of the House to me if he wants—but businesses affected by the plethora and cost of regulation, as well as additional Government taxes, cannot take any more.

Entrepreneurs are far from thriving in the small business sector. People do not want to take the risks that they would take in an economic climate with low interest rates. It is always more difficult to set up and run a business when interest rates are high because few businesses can run on capital without a high element of borrowing. Even at a micro-business level, businesses are struggling and are disincentivised. Nationally, we are seeing a reduction in our competitiveness. Another factor that the Chancellor did not mention is how we have slipped down the world's competitiveness league table since this Government took office.

The Government seem unable to do anything about yet more regulations from Brussels—this time to do with financial services and the way in which our mortgages are set. We were told in yesterday's papers that the DTI is fighting back as new mortgage rules from Brussels hit us. It was interesting to hear the Under-Secretary of State for Trade and Industry, the hon. Member for Welwyn Hatfield (Miss Johnson), who is responsible for consumer affairs, pointing out how important mortgages are to such a greater number of people in the UK by comparison with other European Union countries.

I smiled just a tad as I heard the Chancellor talking about the five economic tests and I witnessed the euphoria of Government and Liberal Democrat Members over taking us into the euro and scrapping the pound sterling, because here we have a Minister on one hand pointing out the economic differential and differences in mortgage regulation between our economy and those of other EU states, while on the other trying totally to ignore the fact that the same would almost certainly apply to the setting of mortgage interest rates. Ministers seem very willing to concede such power to a body outside these shores.

The House has heard me before on the subject of the pound sterling versus the euro, and I promise will do so on future occasions. I would not want the unemployment of Germany or the fines imposed on Portugal. I certainly would not want the problems that Germany has experienced with its increased taxes. Why we should want to give up what the Chancellor paints as a sound economy for that sort of mess and chaos I really cannot imagine.

8.57 pm

Richard Burden (Birmingham, Northfield): In the short time that I have available, I should like to say a few words on the regional angle of the Queen's Speech, which has been touched on already today, but on which we shall have our main debate tomorrow.

Getting regional government right is hugely important, not only constitutionally and because it concerns reconnecting the citizen with the political process, but because it is vital to securing sustainable industrial and economic development. The reasons for

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that are fairly clear. We know that the gap between the best-performing regions and the worst-performing regions of England in gross domestic product per head is 40 per cent.—one of the biggest disparities in the European Union.

There are equally large disparities in productivity and in education and skills. It has been estimated in a Department of Trade and Industry and Treasury report that if we were able to level up average productivity performance to that of the best, the average person in the UK would be #1,000 better off. There are also disparities in the skills agenda. We have a great skills base in the west midlands, yet it is a source of anger to me and to many that we still have the second worst record on people having no qualifications.

Manufacturing is still hugely important to the west midlands; it accounts for 22.5 per cent. of the region's employment, compared with just over 15 per cent. nationally. The automotive sector is still at the core of the west midlands regional economy, and we are doing quite a lot regionally to try to bolster and modernise that. The Accelerate programme—a great partnership between the DTI and the Society of Motor Manufacturers and Traders forum—was pioneered in the west midlands and is doing very well. We have a modernisation and diversification programme, in which the regional development agency is actively involved. Indeed, I helped a number of businesses launch a seminar on that just a couple of weeks ago. The results of such effort are businesses competing not just domestically but internationally. Their ability to get the right advice and support to raise their game and productivity, and to spread best practice, is great to behold.

Motor sports and performance engineering—I draw Members' attention to my entry in the Register of Members' Interests—is a vital industry for the UK. In that industrial cluster we are world leaders, but we face big international threats. Again, it is great to see the RDAs coming together and working with the industry to secure the future. I am glad to see my right hon. Friend the Secretary of State for Trade and Industry taking a personal interest in that industry by bringing together a competitiveness panel to look to the future. If all those initiatives are to succeed, it is important that we keep them action-focused.

In the west midlands, our rich industrial heritage and our ideas base are being brought together in a bid to bring the national microsystems and nanotechnology centre to the west midlands, the heart of manufacturing, which would benefit other regions as well as ours. Birmingham international airport is an institution that is not only vital for transport links, but brings #165 million into the regional economy. All these aspects are important and are evidence that we are getting our act together in the region.

However, there is a gap. There is still a democratic deficit in that structure. About #8 billion is being spent in the west midlands by bodies that are often doing a good job, but do not have the necessary accountability to the public. That is a practical as well as a democratic problem.

We know that Germany is facing severe economic difficulties, but we should not lose sight of the fact that some of its successes in the second half of the last

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century, and some of its successes in rising to the present challenges, were conditioned by the fact that German political, industrial and financial institutions are intertwined at national and at regional level. On the Select Committee on Trade and Industry, we received powerful evidence from the Work Foundation about how and why it is so important for raising industrial competitiveness to get such intertwining and complementarity right. That is why the regional angle is important.

It is also essential for the Government to continue their good work in looking for new models of corporate governance. Community regeneration can play a role in building a healthy regional economy. That is why I was pleased that in the last Budget the Chancellor announced new initiatives to promote community reinvestment. I hope that in the winding-up speech today we will hear a little more about how that will be implemented.

I know that time is short and other hon. Members want to speak. In conclusion, one size will not fit all for regional assemblies. I am not interested in merely creating a new layer of county councils—county councils on steroids, so to speak. That is not what regional government or regional assemblies are about. If we can think creatively about democratic regional government, and be clear that we are not just combining local government functions, but providing a real voice for the region in the European and international context, regional government for England could be a very exciting prospect. It will help to reconnect the citizen with the political process. Equally important, it is a vital element in securing the industrial and economic regeneration that areas such as mine in the west midlands so desperately need.

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