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Ms Hewitt: That is true. As we said in our White Paper, our country has a brilliant record of creating new ideas and new technology, but all too often we have left it to other countries and other people's businesses to commercialise them and create jobs and profits from
them. We are starting to change that, and our huge investment in science over the past five years—which is in striking contrast to what happened during the Conservative years—is already showing results. The number of spin-off companies has trebled, and the emphasis we are now placing on knowledge transfer will enable far more businesses to take advantage of our science departments.
Dr. Gibson: Does my right hon. Friend share my pleasure at today's news that the Government have put £90 million—along with, possibly, another £200 million—into nanotechnology? That puts us in the top league in relation to an exciting new technology that will help medicine and other areas of work.
Ms Hewitt: I am delighted that my hon. Friend mentioned that. Our investment in nanotechnology will ensure the provision of nanotechnology fabrication centres throughout the country, allowing small firms that could not possibly afford such facilities themselves to apply this extraordinary new technology to their products.
First and foremost, however, Government must deliver economic stability to our businesses. That is precisely what we have delivered. The hon. Member for South Suffolk did not mention the Conservatives' record, but they delivered interest rates that rose to 15 per cent. and devastated entrepreneurs who lost their businesses, their savings and, all too often, their homes.
John Barrett (Edinburgh, West): Will the Secretary of State listen to small businesses that are genuinely concerned about the amount of administrative time that they spend collecting tax on behalf of the Government? That is the main issue that they raise with me now, whereas they used to raise the high cost of borrowed money.
Ms Hewitt: Of course we listen to them. Indeed, both the Chancellor and the Paymaster General have taken steps to simplify the system. We have already simplified VAT, which has helped a number of businesses.
Geraint Davies: Before my right hon. Friend moves on from macro-economics, may I ask whether she agrees that if we are to move from success to success we must instil the entrepreneurial culture in the education system? In the education action zone in New Addington in my constituency, business mentoring has proved successful: pupils have gained experience in work, and have learned how to manage their time, to run with ideas and to come up with products in a structured way. Would my right hon. Friend be interested in visiting Croydon at some point to observe the education-industry interface that is breeding entrepreneurial flair for the future?
Ms Hewitt: I readily congratulate everyone involved in that initiative. It is an example of the excellent work that is being done in many parts of the country to build much closer relationships between business and industry and our schools. Indeed, as a result of the excellent report from Howard Davies on the subject, my
right hon. Friend the Secretary of State for Education and Skills is ensuring that every secondary school student will have the opportunity of good work experience that gives them a taste of business.What we have delivered for our small businesses is the lowest inflation for 30 years, the lowest interest rates for 40 years and 1.5 million more people in employment. Having said that, it is difficult for our small businesses. It is difficult for every business at the moment with the world economic slowdown, but it is thanks to the decisions that we made on economic policy six years ago that our country continued to grow while others went into recession.
Mrs. Curtis-Thomas: Does my right hon. Friend agree that some of the 1.5 million people who have entered the workplace in the past few years were specifically excluded from the workplace under the previous Administration, including the vast majority of women, who could have provided an enormous contribution and, more important and more dear to my heart, people with disabilities? They were totally ignored under the previous Administration. They never had any hope of employment. They have been liberated into work under this Government.
Ms Hewitt: I entirely agree with my hon. Friend. She makes an extremely important point about how our action to tackle discrimination in the workplace is freeing people to take up new opportunities and making it easier for business people to recruit the staff they need. I add to her list the young people who were trapped in long-term unemployment during the Conservative years. We have virtually eliminated long-term youth unemployment.
Mrs. Browning: Will the right hon. Lady give way?
Ms Hewitt: If I may, I would like to make a little more progress before I give way again.
The second responsibility we have in government is to ensure that small firms can get access to the funding they need. It was clear that we needed to deal with the equity gap in our country, which in striking contrast to the United States left small companies unable to grow through equity finance. We created regional venture capital funds—more than £300 million of extra capital has been made available. We extended the small firms loan guarantee scheme, listening to small businesses that wanted that extended into sectors such as retail and leisure. Now we are looking at whether we should replicate the small business investment companies in the United States, which were so successful in helping Apple, Compaq, AOL and many others to grow from tiny start-ups into huge world beaters.
The third responsibility is to ensure that we get the tax environment right. The hon. Member for South Suffolk spent some time on that. We already have the lowest small firms tax rate in Europe. This year's Budget contained a raft of further measures to help small firms.
David Burnside (South Antrim): In referring to the low tax rate, will the Secretary of State give a commitment on behalf of the Government that there
will be no increase in taxation through another hike in the national insurance surcharge, which has been passed on to small firms? Can she give that commitment?
Ms Hewitt: We have made it absolutely clear that the 1 per cent. increase in national insurance contributions that we have asked people to pay is needed to deliver the record levels of increased funding for the national health service. I draw the hon. Gentleman's attention to the fact that, compared with the costs either of private medical insurance in the United States or social insurance in France, the 1 per cent. for the NHS that we have asked businesses, employees and the self-employed to pay is very small indeed. For a good health service, it is a bargain.
Mrs. Browning: Does the right hon. Lady recall the views of the Engineering Employers Federation at the time of the pre-Budget report last autumn? It pointed out that, in this financial year, an additional £6 billion of tax on business was due, equivalent to almost half the amount that business spends on research and development. It warned just before Christmas that that was affecting British competitiveness and driving investment abroad. That is what business is saying about the right hon. Lady's Government's taxation on business.
Ms Hewitt: I am fairly certain that the figures that the hon. Lady quotes ignore the benefits that we are extending to business, particularly the research and development tax credit, which has been so warmly welcomed and which is supporting exactly the kind of investment that we need.
Mrs. Curtis-Thomas: It was with great interest that I listened to the hon. Member for Tiverton and Honiton (Mrs. Browning) lambast this Administration. Perhaps my right hon. Friend might like to be reminded of what the hon. Lady said on 19 November 1999:
- "I say that after spending three years as a Minister under the previous Government, who tried to reduce regulation on business. We would be the first to say that we did not do very well".—[Official Report, 19 November 1999; Vol. 339, c. 250.]
Ms Hewitt: My hon. Friend is absolutely right and I shall come to the issue of regulation in a minute. Thanks to the reforms that we have introduced to the business tax system, 150,000 small businesses are no longer paying any corporation tax, and a third of a million have had their corporation tax cut. Today, the Conservatives have dismissed corporation tax as of no concern to small businesses, but it is of huge concern to the nearly 500,000 businesses for which we have cut, or completely abolished, corporation tax bills.
Mr. Adrian Flook (Taunton): I am grateful to the Secretary of State for giving way. She will doubtless be aware of the case involving T.P. Madgett and R.M. Baldwin, concerning VAT, on which a UK court ruled in 1998. In a similar case, Berry's Coaches of Taunton want to recover £27,000 of VAT from three years ago, but Customs and Excise says that it is awaiting a ruling
from Europe. Is it really fair that small businesses should have to wait quite so long to get their own money back?
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