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Mr. Prisk: I give way to my hon. Friend the Member for Buckingham (Mr. Bercow).
Mr. Bercow: I am grateful to my hon. Friend for giving way because he is truly rivalling Cicero and Demosthenes in terms of the eloquence with which he is addressing the House. In the light of his philosophical points, may I put it to my hon. Friend that he should endorse the words of the late and great Winston Churchill, who famously said:
"The . . . vice of capitalism is the uneven division of blessings, while the . . . virtue of socialism is the equal division of misery"?
Mr. Prisk: Far be it from me to seek to compete with Cicero, but my hon. Friend has made his point well and I have no doubt that when it comes to awards, the one for the most sincere impression of Cicero will go to him, not to me.
Brian Cotter (Weston-super-Mare) (LD): What tangible proposals does the hon. Gentleman have to reduce regulations? We all agree that this is a very big problem; will he give us a flavour of what he feels we should do about it?
Mr. Prisk: It is always dangerous to try to answer such interventions in full, but I try to do so. In this case, let me simply say that I shall be touching on one measure in a moment, but first let me give another example of regulation—the ridiculous six-step, three-formula rule on abnormal rents, which Labour Members pushed through and which will have a punitive effect on business leases. I shall enlighten the House on other measures later.
I have talked about the costs of complying both in time and money, but another problem with regulation is that it restrains enterprises; it restricts their ability to compete in the international world. I am not afraid of the international world, and neither, I am sure, is the right hon. Member for Llanelli (Denzil Davies), but as the burden of regulation has increased this nation's ability to compete has declined. We have moved from the fourth most competitive nation in the world to the eleventh in just seven years, and that is a very disappointing trend.
Rob Marris: The hon. Gentleman mentioned the working families tax credit and its £105 million cost per year, which he saw as a burden on business. Is he aware that research from the Department for Work and Pensions shows that almost 90 per cent. of employers have no problem whatever with administering that tax credit?
Mr. Prisk:
My hon. Friend the Member for Havant (Mr. Willetts) highlighted the change that will happen, but if the hon. Gentleman were to talk to businesses in Wolverhampton he would find a very different picture from that portrayed in the Government statistics that happily spew out of Whitehall. Indeed, I have found that, for many small entrepreneurs, the problem is one of time. The Federation of Small Businesses found that
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the average time involved in dealing with the cumulative impact of regulations is now over 28 hours a working month. Many of those present will realise what an impact on family time that clearly has on many small businesses, and it is an unsustainable burden. That is why more and more of what I would describe as the serial entrepreneurs—the people who create and recreate enterprises—the people whom we want to keep, are retiring or selling up. That is a significant drain on the skills and the ambition that this country can ill afford to lose.
Over the past seven years, the tax system, as part of the regulatory burden, has become hideously complex. I am delighted that the Chief Secretary to the Treasury has joined us, albeit briefly. He will recall that this year's Finance Bill contained 310 clauses and more than 500 pages of new tax rules and regulations.
Mr. Prisk: Labour Members might regard that as lovely, but I suspect that their view is not shared by their taxpaying voters. It is a symptom of a Chancellor who, frankly, cannot help meddling, interfering and tinkering. Every year we have a raft of new rates, thresholds and rules. Let me, if I may, offer a classic example that directly affects small businesses.
In 2002, the Chancellor introduced a zero rate of corporation tax on the first £10,000 of profits—apparently a very good idea, although the Government had not looked at it carefully. Of course it created a significant tax advantage for small firms to incorporate. Indeed, as I recall, the Paymaster General told us that this was a gift horse, which small businesses should not look at in the mouth. That was the exact quote; I apologise for the English. However, the result, of which the Government had been warned, was a massive 43 per cent. increase in incorporations in the first 12 months. That was far more than the Government had expected, so suddenly they realised that they were losing more than £1 billion, as I understand it, in tax revenue that they had not accounted for. Suddenly, we were warned by the Paymaster General that this was not a gift horse but a tax avoidance scheme—what a farce! To compound the error, they have proceeded not to reverse the policy and admit their own error but instead to add a further change with a 19 per cent. non-corporate distribution tax rate, to try to recoup the loss. Therefore small businesses have in three years seen four changes on different rates, which directly impact on their profitability. That is a measure of the tinkering and meddling of this Chancellor.
Mr. Plaskitt: Will the hon. Gentleman give way?
Mr. Prisk: No, I am sorry but I am short of time.
We also had the farce of the IR35 regulations on the self-employed. That is a crude attack on freelancers and the self-employed. The regulations create barriers to work, especially in information technology. Even worse than that, however, despite being warned at the start that they would cost the Government £900 million and that they must act immediately, we discover three years on that, of the 500 cases that the Inland Revenue brought to challenge that apparently pernicious threat,
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it has won fewer than two—a woeful record. It has created enormous uncertainty for thousands of entrepreneurs and enormous legal bills for taxpayers.
In conclusion, small businesses do not want the Chancellor interfering and meddling. They want smaller government. They are fed up with being unpaid tax collectors and unpaid benefit officers for the benefit of the Government. They want fewer, not better, regulations. Above all, small businesses want to know where they stand.
Mr. Plaskitt: Will the hon. Gentleman give way?
Mr. Bercow: This is the peroration.
Mr. Prisk: It is a long peroration, so hon. Members must be patient.
Small businesses need a tax system that is not more complex, constantly changing and something that they can never trust. They need a tax system that is simpler, fairer and lower. Frankly, this Labour Government have failed to deliver for small businesses. They talk positively about deregulation, yet they pass more regulations. They talk warmly about tax reform, yet what have they done? Each year, they have passed a record-sized Finance Bill, with more rules, regulations and statutory instruments. That is the truth and the evidence of their record.
Despite the talk, the result of all that is that when I talk to small business organisations—I am sure the same thing happens when many of my colleagues speak to them—I discover that they have finally realised that behind the spin and the smokescreen this Government will never deliver for them and that only the Conservative party understands small businesses. Frankly, it is only a Conservative Government who will deliver for them.
3.37 pm
Mr. Tom Clarke (Coatbridge and Chryston) (Lab): Not only am I delighted to contribute to the debate, but I do so with real pride, rather than fear. I am enormously proud of the record for people in my constituency who have told me how much they have benefited from the various measures introduced by the Government, and who are encouraged by the promise that the Queen's Speech holds. They share my pride in having the lowest interest and mortgage rates for nearly 50 years, the lowest inflation for 30 years and the highest employment since the 1970s. The fact is that millions of people, whether they are young or old, or have young families, are benefiting from those hard-won gains, and I notice that the statistics have not been contested.
A record number of people are in work. That has to be a welcome development for hard-working families in constituencies such as mine, where unemployment is down by 37 per cent. and about 1,640 people have got jobs thanks to the new deal. Moreover, the Government are doing more for pensioners than any other Government at any time in our history. In my constituency, the winter fuel allowance alone warmed
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the homes of 12,286 pensioners in 2004, and Labour is helping all pensioners to enjoy a decent and secure retirement.
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