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Small Businesses
Madam Deputy Speaker (Sylvia Heal): I must advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
4.16 pm
Mr. Tim Yeo (South Suffolk): I beg to move,
- That this House deplores the impact of Government policy on small and medium-sized enterprises; condemns the Government for increasing the burden of regulation, taxation and bureaucracy, for blurring the economic and social agenda and for wasting money on Government branding and quangoes; and calls for fair treatment for small businesses to allow British enterprise to create jobs and wealth for the benefit of the whole community.
I warmly welcome the Secretary of State for Trade and Industry to her place in the House today—a place, as I read in The Daily Telegraph today, she intends to occupy not merely until the age of 60, but well beyond then. Of course, that date is many years hence. I wonder whether she has checked that ambition with the Prime Minister, because she rubbished his attachment to the cult of youth in terms that were so candid as to be worthy of the Leader of the House.
I also wonder whether the electors of Leicester may have a say in that matter. Perhaps they will be so grateful to her for the fact that she proposes to postpone not only her own retirement but that of all her constituents that they will regard that as a reason to go on electing her as long as she chooses to honour them with her candidacy—[Interruption.] I hope that the Secretary of State will listen to the debate. I welcome her decision to address the real issue of age discrimination, and I look forward to debating it with her on another occasion—since she did not choose to make a statement to the House when she published her consultation paper, I hope that there will be a proper opportunity to debate the issue on the Floor of the House at a later date.
Madam Deputy Speaker: Order. The hon. Gentleman ought now to address the motion.
Mr. Yeo: I am, but I would be dismayed—I know that this is not your intention, Madam Deputy Speaker—if it were thought that age discrimination was not relevant to small businesses. I believe that it is absolutely relevant to them.
This is the first debate on small businesses on the Floor of the House since the Secretary of State took office, although some years ago we were promised an annual debate on the subject. The Opposition have chosen to remedy that omission by giving up half our time today for such a debate. The Government's reluctance to discuss small business is in marked contrast to their enthusiasm for debating hunting. As there has not been a whisper of protest about that extraordinarily distorted set of priorities from the Secretary of State, people involved in small business must conclude that she agrees with her colleagues in the Government that considering the needs of small business is less urgent than pursuing the vendetta against field sports.
Mrs. Angela Browning (Tiverton and Honiton): I congratulate my hon. Friend on drawing attention to an election pledge by the Labour Government—to hold an annual small business debate. Does he agree that when the Government came into office, the slogan was "Education, education, education", but as far as small businesses are now concerned, it is "Legislation, legislation, legislation". Is not that what is crippling small businesses?
Mr. Yeo: My hon. Friend makes a powerful point. I know how many times she has raised on the Floor of the House and privately her concerns about the plight of small businesses in her constituency. The Government's unwillingness to debate the needs of small business is perhaps not surprising, given that many of the difficulties faced by small business today are directly or indirectly the result of the Government's actions and inactions. Small businesses bear a disproportionately heavy share of the cost of the extra regulations to which my hon. Friend has just referred: regulations that this Government have introduced, which the British Chambers of Commerce estimates are costing a total of £20 billion. Small businesses are disproportionate victims of the extra taxes imposed on business by this Labour Government, estimated in total, by the CBI, to amount to £47 billion. According to this year's Budget submission from the BCC, the cost of complying with new employment regulations is 50 times higher for a small company than it is for the largest company. Against that background, it is no wonder that Labour does not want to debate small business.
Lembit Öpik (Montgomeryshire): I am sure that the hon. Gentleman will agree that small businesses are suffering terrible stress—economically as well as psychologically, for very small businesses—with regard to insurance. Insurance companies can effectively drive out of business small businesses that are profitable in all other respects, because they cannot afford the incredible and often extortionate insurance premiums.
Mr. Yeo: The hon. Gentleman anticipates a point to which I shall refer in a moment. He is right to raise it.
Against the background that I have described, it is no surprise that when I met the Forum of Private Business yesterday in Manchester, I was told that fewer of its members expect their businesses to grow now than at any time since Labour came to power. Whatever pro-business rhetoric Ministers like to deploy, their actions tell a different story: a story of neglect of the overriding need to protect the competitive position of British business; a story of increasing hostility to the aims and values of business and enterprise, which are now respected by Government only in so far as they create a milch-cow from which Labour can extract more and more taxation; and a story of ignorance and even disdain for the challenges faced by small business.
Geraint Davies (Croydon, Central): Does the hon. Gentleman accept that the vast majority of the estimated on-costs that he has just quoted relate, first, to the minimum wage, secondly, to the European working time directive and, thirdly, to holiday rights? Is he saying that he would try to repeal any of those, or is he simply uttering a lot of hot air? Does he not accept that
measures such as the working families tax credit reduce real wage costs for small businesses and help to stimulate them in a stable economy?
Mr. Yeo: The hon. Gentleman will regret making that intervention, as he has clearly exposed his ignorance of small businesses' concerns, which will not go unnoticed by his electors.
My point was that under this Labour Government, in the six years since 1997, the burdens on small business in terms of taxation and regulations have risen to levels that have never been seen in the whole of Britain's history.
Angus Robertson (Moray): Is the hon. Gentleman aware that small businesses in Scotland have to pay a much higher burden than small businesses in England and Wales, with a business tax rate 9 per cent. higher than that south of the border? How does he think businesses in Scotland can compete in an environment that is clearly uncompetitive?
Mr. Yeo: Businesses in Scotland are suffering under the particularly burdensome regime of a Labour-Liberal Democrat coalition: a warning to the rest of the United Kingdom if ever we were faced with a similar threat. They are also labouring with the problem of devolution, which has meant that no one is clear about which responsibilities lie on which side of the border in terms of policies that impact on business.
The harm that new Labour has done to small business is especially worrying, because more than a third of all employees work for enterprises that employ fewer than 20 people. Historically, small business has been the engine of job creation. According to the Federation of Small Businesses, six out of seven private-sector jobs created between 1995 and 1999 were created by small and medium-sized enterprises.
Geraint Davies: Under this Government.
Mr. Yeo: Exactly, because under this Government today, the only engine of job creation is the obsessive determination with which Ministers spend more and more taxpayers' money to expand the ranks of the already swollen army of bureaucrats who work in the public sector.
Despite a huge increase in Department of Trade and Industry spending, the Government do little to addresses the real concerns of small businesses. Those concerns focus first on cash, secondly on people, and thirdly on time. Cash is being drained out of business by huge rises in taxation. Employer national insurance contributions take £10 billion more from business today than they did in 1997, and business rates take £4.5 billion more from business today than they did in 1997. The new tax on pensions is draining away a further £5 billion a year and, from a standing start only two years ago, the wholly anomalous climate change levy is draining a further £1 billion a year from business.
Jonathan Shaw (Chatham and Aylesford): The hon. Gentleman referred to our investment in public services. Does he realise that investment in school buildings,
hospitals and public construction works provides much-needed business opportunities for the people about whom he is talking?
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