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Mr. Yeo: Had the hon. Gentleman been listening to what I said, he would know that I referred not to investment in public services but to the swollen army of bureaucrats who work in the public sector. If he took the trouble to go to a library to consult the recruitment pages in newspapers and magazines, he would see that the advertisements for public sector jobs are not for nurses or doctors—they take years to train; there is no tap that can be turned on and off—but for posts such as performance review analysts. Such people do not deliver public services to patients and pupils, but simply create more and more bureaucracy.
I suspect that the Secretary of State will try to claim that the Government have been sympathetic to business by cutting corporation tax. If she does, she will simply expose her ignorance of small businesses, which seldom find that corporation tax is a problem.
Mrs. Claire Curtis-Thomas (Crosby): The hon. Gentleman must, like me, know of many small businesses that could not afford to employ the type of expert who would allow them to interact with bureaucracy, major fund providers, objective 1 requirements and European legislation. The public appointments advertised are for people who would provide that support and those services at little cost to those companies. Businesses were denied that under the previous Administration.
Mr. Yeo: I hope that at some stage during the next two and a half hours a Labour Member's intervention will demonstrate that he or she has had some contact with small businesses during the past two years. The hon. Lady's point might well have been handed to her by the Government Whips Office, but it could not have been suggested by any small business person.
Mrs. Browning: On the matter identified by the hon. Member for Crosby (Mrs. Curtis-Thomas), surely the real challenge is the forthcoming temporary workers directive, which is yet to hit small businesses. Small businesses could buy in expertise for a specific project, but they will be penalised for doing that by yet more legislation.
Mr. Yeo: My hon. Friend is absolutely right. The temporary workers directive will have an especially damaging impact on the United Kingdom. It is a typical example of a piece of European legislation that will have an uneven impact on EU countries because it fails to take account of the unique characteristics of the British labour market.
Geraint Davies: Will the hon. Gentleman give way?
Small businesses do not worry about corporation tax, especially in their start-up phase. Indeed, many would love to have a corporation tax liability. As soon as they start trading, however, all small businesses are hit by employer national insurance contributions, business
rates and the climate change levy—taxes that apply before a penny of profit has been earned. By shifting the burden of business tax away from corporation tax on to those other taxes, Labour's policy is directly damaging small business.If only Labour shared the Conservative goal of a fair deal for small business, in which no small business was held back or left behind, it might understand the damage that is done by draining cash out of a small business—
Geraint Davies: On a point of order, Madam Deputy Speaker. Is it in order for the hon. Gentleman to say explicitly that Labour Members have no business experience? I have run businesses with a turnover of £1 million; all he has is a connection with cattle semen. I do not want to talk about cattle semen; that is for him to discuss. I want to talk about my business experience, but he will not allow me to intervene.
Madam Deputy Speaker: That is a point of debate, not a point of order.
Mr. John Bercow (Buckingham): And a pretty bad one at that.
Mr. Yeo: My hon. Friend is right. It might reassure my hon. Friends to know that I do not intend to give way to the hon. Member for Croydon, Central (Geraint Davies) again.
If Labour Members shared our goals of aiming for a fair deal for small business, they might understand the damage done when cash is drained from a small business at its most vulnerable stage of development. I fear that Ministers in this Government do not understand that. People who have never been personally involved in small business seldom understand the importance of cash. People whose salaries have always been put into their bank account on the 28th of each month, regardless of what they have or have not done, do not know what it is like to wake up in the night sweating about whether one has the cash to pay the bills. They have never spent half their day chasing the payment of invoices to get a bit of cash. They do not realise the damage that the Government's tax policy is doing day in, day out to small businesses.
It is not only tax that drains cash from small businesses. Huge increases in employer liability insurance premiums are another heavy burden. The Federation of Small Businesses has reported on an Essex company that shreds confidential waste—probably a booming business in the light of the Government's difficulties. It faces a 400 per cent. increase in premiums on its latest renewal notice. That follows a 250 per cent. increase last year. Those premiums were demanded despite the company's having no machinery or factory premises, and despite the fact that it had not made a claim for 30 years. Given that the Treasury collects more than £2 billion a year in insurance premium tax, which is more than three times the amount of that tax that was paid in the last full year of the Conservative Government, we can be sure that the Chancellor is in no hurry to slow down the rate at which premiums are increasing.
Instead of the Secretary of State washing her hands of the problem, will she tell us whether the short-term measures proposed by the Government after the recent
Department for Work and Pensions review will be implemented in the foreseeable future? Does she plan to provide immediate relief for businesses that may be threatened with closure because of escalating premiums while the more fundamental reforms are considered? In the light of the Office of Fair Trading finding that problems exist in respect of asbestos-related risks and professional indemnity insurance for independent financial advisers, how will she tackle those problems? Does she share my concern, and that of the CBI, about the compensation culture? In addressing the problem of escalating insurance costs, does she agree that it would help if a greater share of the costs were apportioned to claimants who lose a case and if the cost burden were rebalanced, so that not only the claimant, but the claimant's lawyer, has to shoulder an element of the risk?The second concern is people. Many employers find it hard to recruit employees with appropriate skills. The Government's obsession with churning out more and more graduates, regardless of whether their degrees equip them for work in the 21st century, does not address the problem. Our approach is to make sure that everyone who will gain from university education receives it, and that those who will gain from other forms of education and training receive those. Even when a small business can find a suitably qualified and trained recruit, it faces other difficulties in the form of employment regulations, which frequently act as a disincentive to offering jobs. Our fair deal for small business will be a fair deal for employees as well as employers, because we want a country in which no one is left behind and no one is held back.
What does the Secretary of State think will be the effect on some of the more vulnerable potential employees, who might be left behind, of her cherished work-life balance? Does she agree with the Institute of Directors, two thirds of whose employer members believe that her policy will reduce the chances of younger women finding jobs? If she does not agree with that bleak but entirely predictable conclusion, on what does she base her own view? Has she undertaken an assessment of the impact of work-life policies on the job prospects of young people?
Given that the European Union will soon admit new members such as Hungary and Poland, where wage costs are only a quarter of those in Britain, could there be a worse time to pursue the agenda that the Secretary of State favours? Is it not grossly irresponsible to do so, presumably to curry favour with trade union bosses, secure with their comfortable salaries and expense accounts, without regard to the damage that she is doing to the chances of the next generation of British workers?
Mr. Bercow: My hon. Friend rightly highlights the absence of, and the need for, a light-touch regulatory environment. Is it not a damning indictment of the Government that for six successive years they have refused to publish an annual statement of the cost of regulation, or indeed of their plans for a reduction in that cost?
Mr. Yeo: It is, as my hon. Friend says in his usual elegant and eloquent way, a damning indictment. It is
also a clear admission, first, that, whatever they may say, the Government are not concerned about how much damage they are doing to business and, secondly, that they are fully aware that if they did publish such a statement, it would be clear that they were undermining the competitive position of British business and, therefore, the future job prospects of the British people.I hope that the Secretary of State will tell us whether she thinks that a small business will be more or less likely to take on new staff as a result of the Employment Act 2002. Does she consider that the 50 per cent. jump in employment tribunal claims shows that new Labour has created a more, or a less, harmonious relationship between employers and employees? Does she realise that if, in three or four years, private sector jobs are harder to find than they have been for the last two decades, the reason will be the policies of this Government, whose tunnel-visioned, old Labour passion for championing more and more employee rights may end up taking away the most fundamental employee right of all: the right of every woman and man to negotiate with a prospective employer the basis on which they are willing to work?
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