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Mr. Nigel Dodds (Belfast, North): The hon. Member for Montgomeryshire (Lembit Öpik) mentioned the large increases in business insurance premiums and their effects on small businesses. Figures for Northern Ireland show an increase in average business insurance premiums of 28 per cent. for 2001 and a swingeing 49 per cent. for 2002. What advice can the Secretary of State offer to my constituents who run small businesses and who tell me that if that continues, they will be driven out of business?

Ms Hewitt: The hon. Gentleman raises an important point, because all around the country small businesses are suffering from increases in insurance premiums. He will be aware of the report that my hon. Friend the Minister for Work recently published on that very subject. The problem lies in the insurance market and the steep fall in stock markets—not only in Britain, but across the world—that makes it impossible for insurance companies to continue to cut premiums and rely on investments. That option is no longer available. Add to that some very big risks and the failure of at least one major insurance company that was big in that market, and you end up with an enormous problem. However, the Government cannot wave a magic wand over the insurance market to deal with those problems. We have worked with the industry to ensure that no small business is left without insurance, a problem that was threatening to happen last year. I think that we have largely dealt with that, and we are now looking to get much more information about why companies are raising premiums as much as they are. We will then see whether we should insist on a longer notice period for renewal of the premiums, so that businesses can shop around more effectively. It is a very serious problem, and we are working with small businesses and the insurance industry to resolve it.

I shall end by saying that, although it is wonderful to see so many small businesses starting up and growing, we still have much more to do to extend to everyone, in every community in every part of our country, the opportunity to start and grow a business. The start-up rate in our poorest regions is only one sixth of what it is in the most prosperous parts of the country. In the north-east, gross domestic product per head is only half what it is in London, and business research and development is only one tenth of what it is in the south-east.

Mr. Peter Duncan (Galloway and Upper Nithsdale): Will the Secretary of State give way?

Ms Hewitt: No, I want to make progress. In the north-east and other regions where business start-up rates are low, we need to ensure that we increase our efforts to

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support potential entrepreneurs and ensure that they get the help that they need to help grow businesses that will generate wealth in their regions.

We also need to reflect on the fact that the Global Entrepreneurship Monitor has found that we do better than many other developed countries in terms of our start-up rate—[Interruption.] I do not know what I have done to attract this fly. It is obviously very pleased with something that I have done.

Mr. Peter Duncan: Will the Secretary of State give way?

Ms Hewitt: No. I am conscious that other hon. Members want to speak and I want to make progress.

Although we compare well with most other developed countries in terms of our business start-up rates generally—and the rates have improved under Labour—we do not do well when it comes to entrepreneurship among women. If women were able to start businesses at the same rate—if they were able to find it as easy to get funded as men—we would have an additional 100,000 new businesses every year. The same applies to some of our minority communities. For example, start-up rates in the Afro-Caribbean community remain low. Too many of our minority entrepreneurs still find that they cannot get the finance that they need, on the terms that they need.

We have business links and the learning and skills councils working much more closely with the regional development agencies to strengthen the economic development strategies in their regions. We are working with organisations such as Prowess, the women's entrepreneurship support network, to ensure that the potential women entrepreneurs all over the country get the opportunity that they deserve.

Much has been done, but much is still left to do. However, we must not understate the achievements of this Government. Above all, we must not run down our great British business. I am proud of the 2.5 million new businesses that have started in Britain since 1997. I am proud of the 107,000 new businesses that started in the first quarter of this year—up 12 per cent. on the same period last year, despite the economic downturn. I am proud of the fact that we have the best survival rates, economic environment and regulatory framework for small businesses.

We in this House should be proud of our small businesses. We should celebrate the work being done by the Government and the public sector in partnership with the private sector to support those entrepreneurs, and I commend the amendment to the House.


Madam Deputy Speaker (Sylvia Heal): I now have to announce the results of the Divisions deferred from a previous day.

On the motion on Defence, the Ayes were 432, the Noes were nil, so the motion was agreed to.

On the motion on Immigration, the Ayes were 265, the Noes were 164, so the motion was agreed to.

[The Division Lists are published at the end of today's debates.]

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Small Businesses

Question again proposed.

5.29 pm

Brian Cotter (Weston-super-Mare): I very much agree with the hon. Member for South Suffolk (Mr. Yeo), who is rushing out of the Chamber, that there is a need for this debate. I am glad that the Secretary of State is here to listen to it, as a commitment was given some years ago that there would be an annual debate on small business; I hope that we can reinstate that in the future.

I declare an interest, which is in the register, as managing director of a small business—a manufacturing company.

One of the strongest calls from small businesses is that Government and politicians should get off their back. They want a business-friendly environment so that they can get on with the job. As managing director of a company, I certainly support that.

Mr. Peter Duncan: I am pleased that the hon. Gentleman now espouses a policy of getting off the back of business. Can he justify his party's position in Edinburgh, where as part of the coalition it is imposing a 9 per cent. surcharge on business rates for businesses in Scotland?

Brian Cotter: I am not aware of that particular policy in the devolved area, although I am aware of policies in Scotland that are extremely beneficial for business. Lacking the knowledge to pursue it, that is all I have to say on the subject, but I shall happily look into at another date.

The Secretary of State will recognise that the backdrop for business is the economy. Yes, the Government have brought stability to the economy and, to date, we have got away from the boom and bust that we experienced under the Conservatives. However, there are great concerns at present. For example, the high value of the pound causes problems for the manufacturing sector. As managing director of a manufacturing company, I very much share those concerns and can speak with personal knowledge of the cable industry, which has suffered badly from the high value of the pound. I have been in business for about 40 years and I have never known a time when so many products in that category were being imported. That is now an established fact owing to the high value of the pound and our economic climate.

Mr. Bercow: Given that the hon. Gentleman laments the impact of the exchange rate on business competitiveness, will he clear up a little point of uncertainty? Is it the stance of the Liberal Democrats that Britain should enter the euro at ERM mid rates?

Brian Cotter: I do not want to be diverted to that subject, although I should be happy to spend longer talking about it—[Interruption.] The hon. Gentleman knows that we have a clear policy on euro entry. The matter relates to the high value of the pound; euro entry should have been looked into four years ago and we should now be advanced in our thinking. The rate will be addressed at the time. I shall proceed with my speech, as other Members want to speak.

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It is worrying to learn from figures published by the Centre for Business Research at Cambridge university that business failures have trebled since 1999. By any standards, that is of great concern. Furthermore, Dun and Bradstreet show insolvency figures as at their highest for eight years. There are worrying signs in the economic backdrop and they have a strong impact on business.

On top of all that, the UK scores badly in terms of entrepreneurial activity. In the UK, 8 per cent. of the population are currently engaged in business start-ups, whereas the figure is 16 per cent. in Australia and New Zealand, and 12 per cent. in the United States. Obviously, the Secretary of State is aware of that issue, but she must share my concern.

I will not repeat the arguments about insurance that have been made this afternoon, because the Secretary of State will know that I have made them before. I have tabled an early-day motion on the issue, and I have done a lot of work in meeting the insurance companies, as well as other businesses. I will simply say that the Secretary of State said a moment ago that the problem lies in the insurance market, but the problem does not end there, as that implies that the Government are absolving themselves of responsibility.

The Department for Work and Pensions eagerly awaited review was published in April, but it was a grave disappointment because it simply rehearsed the problems and spoke about the Government returning to the issue in the autumn. I find that very unsatisfactory, as do businesses, and the Government need to engage in the issue now. Far from businesses being helped to meet their insurance premiums, to which the Secretary of State referred a moment ago, I have an example of a business that has had to pay 40 per cent. extra this year, and it says that it will go out of business if there is any increase next year. So I alert the Secretary of State to the fact that that issue has not been dealt with, and we expect it to be dealt with sooner than the autumn.

The Government must address other issues, such as business rates. The Government's proposed rate relief scheme will help small businesses to an extent, but only a few of them. The Local Government Bill will set the rate relief threshold at £8,000 of rateable value, so an enormous number of small businesses in England will have no relief at all. The Liberal Democrats' scheme is much more positive: businesses with a rateable value below £25,000 would be given an immediate relief, which would be funded by the biggest companies paying an extra amount. Our scheme would reach between 80 to 85 per cent. of small businesses in the country, so I urge the Government to look again at their scheme, which is only part of the answer to a very big problem.

The Secretary of State is aware that the small business community is concerned by a lot of issues, not the least of which relates to pharmacies. The Office of Fair Trading report has been promised shortly, in the next few days, and I hope that the Secretary of State will respond. She has said that she acknowledges the problem, but it is very worrying that she continues to say that competition must be brought into the industry. Many people are uncertain about whether she will respect the fact that pharmacies are part of the health service, that they are small businesses and that they need to be given the opportunity to survive and expand.

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A number of issues remain to be dealt with in relation to regulation and red tape, and I wish to make a general comment on the temporary agency workers directive and the working time directive. We need to ensure better consultation when addressing such issues, because businesses are entitled to propose constructive and clear points of concern. The impression given sometimes is that the Government just say, "These rules have been agreed and are being implemented despite what they will do to hit business." In the hope that the Minister espouses the idea that small businesses are the vital engine of the economy, we must hope that the Government will address both the temporary agency workers directive and the working time directive.

The Government have spoken frequently about the need for joined-up government, and I want to refer to one issue for the Secretary of State's attention. Currently, under the planning legislation going through the House, an issue is raised—it seems very small but it is not—in relation to planning applications and the addition of mezzanine floors to supermarkets, with which I am sure she will be familiar. The Asda Group has identified 40 supermarkets throughout the country that can be adapted in that way. The concern, which I hope she will pass on to her colleagues, is that that can be done without any fresh planning application. Many reports on the issue of small shops and businesses have indicated that large supermarkets are taking more and more of their business away. If there has to be a planning application, that can be monitored, but if not, local shopping centres can suffer badly. In terms of joined-up government, I therefore hope that the Secretary of State will raise that issue with the appropriate Departments.

Red tape is continually raised as an issue for business, and I agree, with my background in manufacturing, that it is a severe problem. A short while ago, the Secretary of State said that it would be useful to her if people who had examples of red tape or burdens on business brought them to her attention. I want to draw her attention to the experience of a small business in Stockport called Trolex Sensors, which pointed out in a letter that, under existing regulations, it and many other firms must comply with a whole list of requirements. Under the Statistics of Trade Act 1947, they are required to fill in the following: a quarterly capital expenditure inquiry, an annual business inquiry parts 1 and 2, a monthly wages and salaries survey, a quarterly stocks inquiry, an annual survey of research and development, an annual register inquiry, an annual inquiry into international trade in services, an annual/quarterly production inquiry, and a sales quarterly inquiry. The Government must justify that list alone. Is it necessary for firms to be burdened with such a list of requirements? In addition, in the case of the company concerned, when it said it had had enough, and refrained from filling in the forms, it was told that it would be referred to an enforcement squad, which I presume would rush in—what action it would take I do not know—and require it to fill out all those forms. I hope that the Secretary of State will take on board the concerns of those of us in manufacturing and business in that regard.

I hope that the Secretary of State will bear in mind—it has been alluded to already—the fact that, in terms of regulation, there can be two solutions. First, sunset regulations can be used more and more in relation to business to ensure that such regulations drop away

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without renewal. Secondly, and most importantly, the Government can ensure—this did not happen under the previous Government, and still does not happen under this Government—that impact assessments are meaningful, accurate and clear, both in the early stages of regulation and when Bills are considered in Committee and on the Floor of the House. I urge the Secretary of State, as I have in the past, to consider introducing an independent system like Actal in the Netherlands, so that regulations could be assessed independently and efficiently from a detached viewpoint. Much as it might seem acceptable for departmental officials to do the work, there would be nothing better than having an independent organisation to examine regulations and ensure that impact assessments are done.

Much work has been done on regulatory impact assessments. The British Chambers of Commerce says:

of course, that is true. However, the real issue that it mentions is:

regulations rather than alerting people to the problems associated with them. It adds:

The British Chambers of Commerce accepts the benefit of impact assessments, but the work is not being done sufficiently rigorously.

I shall press on to other matters relating to red tape. Will the Secretary of State address such issues as health and safety? It is laudable that this country has good health and safety regulations, although most hon. Members would agree that some are a little over the top and others should be further enforced. However, understanding all the different health and safety regulations is one of the biggest problems faced by business. The Secretary of State might recall that I said that Liberal Democrats want a single inspectorate operating with a light touch, rather than the plethora of different inspectors who visit businesses to acquaint them with the different regulations. The ministerial response to my suggestion was to ask how a single inspector could possibly understand all the regulations and give advice on them. However, businesses themselves are supposed to understand all the regulations. I hope that the Secretary of State will take on board the need to re-examine the inspection procedure and consider whether the Small Business Service could institute a service so that firms would be given a better understanding of what they must achieve.

I read many reports on the Small Business Service. Liberal Democrats worked on the service when it was first proposed, but I am disappointed that it is not as we envisaged. When I visited the Department of Trade and Industry to meet Ministers, I was somewhat disconcerted to learn—perhaps I should have known—that the service was based in an office down the corridor.

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Our understanding was that the Small Business Service would be rigorous, independent, robust and detached from the Government. We thought that it would have a critical frame of mind and more connection with business than the Government. Notwithstanding the difficulties that the Government faced while getting the service up and running properly, I am gravely worried that it is too much under their control.

We need to reduce the burden on business and increase the possibility for business to influence the Government and to know exactly what is in the arena for business. That is why Liberal Democrats want decentralisation to be stepped up and more work to be done through regional government, in due course, and regional development agencies. I am worried about the make-up of several RDAs. Although they want to be representative of business, they should have a democratic aspect so that they are representative of the electorate. The RDAs are reasonably effective in some areas, but not at all in others. I urge the Minister to consider the structures associated with the RDAs to ensure that business is properly represented. A new organisation, Business West, has been established in my part of the country. It combines the chambers of commerce in an endeavour to influence the RDA locally. We need to help business organisations to influence the Government effectively.

There is still a problem of red tape. In February 2002, the Government promised 250 measures to reduce the burden placed on business. I asked what progress was being made, and for a description of them. The problem with Governments is that some of the things they do sound good—they are doing this, that and the other—but there is no clear answer to what is going on beneath the surface. Despite asking for details of those 250 measures, I was given only two or three examples. In her response, the Paymaster General also said:

Those included 250 to do with business. Perhaps the Secretary of State can help me to get the details of those measures. If they do exist, can they be implemented soon? They are part of a scheme that the Government introduced to deregulate business and to reduce the burdens on it.

I welcome the debate. I hope that the Government ensure that we have such a debate every year and that there is an annual report on the impact of regulations on small business. Liberal Democrats have called for that for a long time. I cannot understand why that request should not be granted. Every year we should re-assess how regulations have affected business. A system of sunset clauses would enable us to abandon regulations that are not helping anyone. Again, I express concern about the latest figures on insolvency, which is three times the 1999 level. The Secretary of State must be worried that the signs for the economy and small business do not look good. I hope that we hear more about that.

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