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18 Nov 2002 : Column 462—continued

9.17 pm

Chris Grayling (Epsom and Ewell): Our economy has prospered recently under Conservative and Labour Governments because, unlike the rest of Europe, we have a diverse, deregulated economy that has also been a low tax economy for a long time. Those gains are now being wasted. Step by step, the Government are interfering, regulating and taxing the creative, wealth-generating parts of our economy. The consequences will come home to roost.

The past five years show what can happen. Businesses and industries in which the Government have interfered have almost universally taken a step backwards. For example, the pensions industry was burdened with a tax of #5 billion and considerable Government interference. The establishment of stakeholder pensions has substantially reduced the margins of the financial services industry without generating much take-up. Consequently, our financial services industry is in a worse state than it has previously been in my lifetime.

The Government have failed to recognise the importance of profit and of businesses making money. They use a rhetoric that consistently decries success in our businesses and does not like our biggest companies to make significant amounts of money. The implications for our companies are fundamental. That is apparent in the performance of our pension funds.

Mr. Marris: Will the hon. Gentleman give way?

Mr. Grayling: I am sorry, there is not time.

The utilities sector represents the worst example of Government intervention, with the windfall tax and the over-regulation of sectors such as the electricity industry, the consequence of which is that many parts of the industry are almost no longer viable. British Energy is having deep financial problems, we are seeing the closure of power stations, and electricity companies are being taken over. The truth is that today, five years after the windfall tax, most of our major utilities have been taken over by overseas competitors, because they are no longer able to withstand the strength of their competitors' balance sheets, or the pressure from companies in countries that provide a degree of protection to their utility sectors. Our utilities have been left bare on the international stage.

We must also consider the impact of over-interference in the telecoms sector. The Government were no doubt delighted by the windfall that they secured from the mobile phone auctions. Many of our providers had no option but to enter that auction; if they did not bid, they did not have a business. Our telecoms sector has been significantly weakened as a result.

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It is in small business, however, that the real impact of over-regulation and over-taxation is being felt. It is crippling many of our smaller businesses, particularly those experiencing more difficult times. In the year and a half since I became a Member of Parliament, I have seen very little evidence that Labour Members truly understand the problems and issues involved in running a small business. Almost no Minister has had experience of running a small business. Ministers do not understand the human consequences of what they are doing.

Life in a small business is one of long hours and business uncertainty. Life becomes much more difficult when times are tough, as they are increasingly becoming now. I know that from experience. I have been in front-line business, in a concern in which the funding stream from a parent company dried up almost overnight when the company went into financial difficulties. I have also been in a company whose biggest customer went bankrupt, leaving us with a huge challenge to keep the business afloat. The last thing anyone needs when trying to keep a small business afloat in difficult times is additional taxation and regulation, yet that is what the Government are offering today. Next April, all small businesses will face a significant increase in the taxation on the employment in their companies, regardless of whether they are making money. That will mean fewer jobs.

This is the wrong moment to introduce more regulation. The Government are once again conducting a review of employment laws. We are seeing new directives coming from Brussels—often gold-plated in this country—such as those affecting agency workers and the haulage industry. We are also hearing about the Government's plans for landfill tax. Perhaps they are desirable for environmental reasons, but the consequences to a small business of implementing them could be devastating.

I see a common theme in the sectors that have suffered in recent years, and in the smaller business sector, which is increasingly coming under pressure, particularly in manufacturing—increased taxation and Government interference. The consequence to the wealth-creating part of our economy will be devastating if the Government carry on in this way. They must stop before it is too late.

9.23 pm

Mrs. Louise Ellman (Liverpool, Riverside): I would like to call on the Chancellor of the Exchequer and the Secretary of State for Trade and Industry to intensify their good work in supporting enterprise in the knowledge economy, particularly in developing excellence and in building on the excellent research work being carried out in our universities and other institutions outside the south-east. There will be a number of opportunities for them to show that commitment during the next 12 months.

At Daresbury, the Centre for Accelerator Science Imaging and Medicine—the CASIM project—is proceeding, and the fourth-generation light source is moving ahead very satisfactorily. The Sirius project for the detection and treatment of cancer appears to be

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more problematic, however. At Liverpool university, five-star graded departments have set up the AIMES project—the application of internet technologies and emergent systems—to develop grid technology for the support of business.

In that gem, the Liverpool school of tropical medicine, expansion is being sought to enable the school to continue its work in beating disease, developing health services and fighting poverty in developing countries across the world. In the last two or three weeks its director, Janet Hemingway, and her colleague Alastair Craig have published groundbreaking research on malaria treatment.

We have some of the means to deal with such issues. The Government are clearly supportive, as is the North West development agency, and in appropriate cases Liverpool Vision is giving its backing; but I would feel far more confident if we had a directly elected regional assembly that demonstrated transparency in decision making and followed up these vital matters, recognising the importance of enterprise and the knowledge economy in the north-west and elsewhere. I support what was said about this by my hon. Friend the Member for Birmingham, Northfield (Richard Burden).

I urge the Government to engage in joined-up thinking in this vital effort. I urge them to continue to support enterprise and the knowledge economy in the regions, and to remember that enterprise, expertise and excellence are not confined to the south-east. Indeed, developing the regions is part of developing the excellence of the United Kingdom.

9.26 pm

Mrs. Annette L. Brooke (Mid-Dorset and North Poole): I want to talk about funding for my local police authority in Dorset. I trust that the buoyant economy described by the Chancellor will provide a real opportunity to address the inequities in funds for different authorities.

This year's Queen's Speech contained even more proposals for law and order legislation. I believe that since 1997 there have been 20 such Bills, and we have criminal justice and antisocial behaviour Bills ahead of us. Some proposals are welcome and others less so, but the Government clearly recognise the concern and, indeed, fear that arise from a perceived or actual increase in crime. That is undoubtedly uppermost in the minds of many, including my constituents.

Violent crime has risen in Dorset, although Dorset is one of the safest places in the country. However, much of the existing and proposed legislation will do no more than move the deckchairs on the Titanic unless police authorities receive adequate funds. The Government have, at long last, increased police numbers, and my police authority is on target to achieve a record number of 1,410 officers by March 2003. Only last Friday, however, along with other Dorset Members, I was invited to hear powerful representations on future funding for our councils, police and fire authorities. We were told that the Dorset police authority needed #6 million just to stand still.

All our police authorities are experiencing pressures. There is, for instance, the issue of police pensions. Others have mentioned the general question of pensions today. It is vital for our public services—our fire and

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police services—that the Government help. It is predicted that pensions in Dorset will represent 25 per cent. of the budget by 2005–06.

My hon. Friend the Member for Truro and St. Austell (Matthew Taylor) spoke of micro-management. A further pressure arising from police reform relates to the expected national policing plan. Targets will be set, and it seems that individual forces will have to prove that they can use extra Government money to produce better results. It is a familiar story in every public service: more demand, more red tape, and, in this instance, the question, XWill officers be kept off the beat rather than, as we want, on the beat?"

There are further pressures, caused by public expectation, internet crime and so much more. What I want to know is whether Dorset's police will receive the extra money they need. Consultation is in progress on five options for funding. My police authority fears—let us set aside the Xfloors and ceilings" proposal for the moment—that 300 officers may be lost. It is an enormous problem, which applies throughout the south-west.

Either council tax will go up massively, or there will be massive cuts in police numbers. We have heard nothing about possible reforms in the way in which money is raised locally.

Successive Governments have reduced and changed Government funding of our local services, putting pressure on the council tax—an inequitable tax that needs to be reformed in the general round of the economy. We need a more equitable and fairer system of local taxation if the trend of pushing more and more on local councils and local bodies is to continue.

I want to refer briefly to the fire service, which has been mentioned by many Members. People want a quick and fair settlement, with modernisation taken on board, but the important point is that the Chancellor finds the funding from the Exchequer.

I shall conclude, as I am conscious of the time. The issue of policing, which is vital to my constituents, links into the economy, particularly the local economy. Unless we get our policing right, all our businesses and the quality of life of all our residents will be affected. It is essential that the Chancellor address it in the round.

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