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Mr. Jim Cunningham (Coventry, South) (Lab): The work of my right hon. Friends the Secretary of State and the Minister for Industry and the Regions at the time of the Jaguar closure was much appreciated. What
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consultations did my right hon. Friend the Secretary of State hold with Peugeot before its recent announcement about redundancies?

Ms Hewitt: We have been working with Peugeot for some years, so we were disappointed that the company decided recently to announce that it did not plan to make the replacement for the Peugeot 206 in the United Kingdom, despite our offer of investment support and the hard work of my hon. Friend and my right hon. Friend the Minister for Industry and the Regions. I greatly regret the loss of 850 jobs, announced by Peugeot recently, which will be very bad news indeed for those employees and their families. We shall of course do everything we can, especially through Jobcentre Plus, to ensure that all the individuals affected get new jobs, with retraining and new skills if necessary, as quickly as possible.

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): I am sorry that I was not in the Chamber for the beginning of my right hon. Friend's remarks, and I hope that I shall be lucky enough to catch the Speaker's eye later in the debate.

Can my right hon. Friend tell us whether there is any way of getting in touch with Peugeot at the highest level to find out precisely what the company proposes for the future? There have been progressive cuts over last year and this year, although they are going down, but why will the company not tell us its intentions? It must know what it intends to do, because the car industry has to plan four to five years ahead.

Ms Hewitt: My officials and I, as well as other Ministers, are regularly in touch with Peugeot and other major automobile and manufacturing companies. I know that my hon. Friend will welcome the fact that the chief executive of Peugeot, Jean-Martin Folz, announced at the Geneva motor show that production of the current 206 at Wrighton will continue until 2010 or beyond. We shall of course remain close to the company so that we can understand its plans and ensure that we help it in whatever way we can.

Mr. James Arbuthnot (North-East Hampshire) (Con): The Secretary of State has twice mentioned China. Does she accept, as we have said all along, that lifting the arms embargo on China will do serious damage to Britain's relationship with the United States, and hence serious damage to British business and British trade?

Ms Hewitt: Let me underline for the right hon. Gentleman—as my right hon. Friend the Foreign Secretary has done repeatedly—that discussions about the arms embargo in respect of China need to be seen in the context of the extremely strong controls that we have put in place in Britain, and helped to establish throughout the European Union, on the sale of arms or dual-use technology to any country. Those controls, which we shall continue to strengthen, would apply if the arms embargo were lifted. We continue to discuss that with the American Administration and I hope to reassure them on that point.

I return to the theme of what the Government need to do, not to substitute ourselves for business—we can never do that—but to create the climate, the
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environment in which more people can set up and grow a business. We recognise that we must do even more than we have done already. The research and development tax credits, for instance, have already delivered more than £700 million worth of support for growing businesses that are willing to make the investment in research and development that will keep them competitive in the future. As my right hon. Friend the Chancellor said, we shall make it even easier, especially for smaller firms, to claim that support in future.

We are encouraging more high-tech small businesses to develop their research capability, with the £100 million reserved for them to which I referred earlier. I particularly welcome the announcement in the Budget that we shall be investing further in the most disadvantaged areas of England to promote enterprise through a new local enterprise growth initiative worth £150 million a year by 2008–09.

Mr. Jim Cousins (Newcastle upon Tyne, Central) (Lab): What my right hon. Friend is saying shows some recognition of the fact that the United Kingdom biotech start-up is one third the size of the United States biotech start-up. Will she strongly emphasise her commitment to ensuring that the R and D tax credit system reaches smaller enterprises, especially those in less favoured regions?

Ms Hewitt: My hon. Friend makes an extremely important point. We have been determined from the outset to ensure that the R and D tax credit is designed to meet the needs precisely of the smaller firms whose growth in the past was all too often choked off. By continuing to make the R and D tax credit even more accessible to small businesses, by setting up support for public sector R and D contracts and by sustaining the regional capital venture funds, which we created, we can ensure that those exciting businesses in the biotech sector, and in other sectors, can indeed fulfil their potential. I have no doubt that some will become the world-beating and job-generating companies of the future.

We in Britain are seeing a real change in people's attitudes towards entrepreneurship, with a significant increase in the number of people expecting to start a business over the next few years. Last November, over 150,000 young people took part in the inaugural enterprise week, and there is the increasing success of the Business Link network in helping businesses to grow. Last year alone, Business Link helped 458,000 small businesses, and another 164,000 pre-start-ups. Its reach into the business community continues to grow, as, I am delighted say, does the satisfaction of its customers. As the regional development agencies take responsibility from next month for the Business Link service, that business support will not only be sustained but made even more effective as it is delivered along with other regional support in the way that small business customers need.

Mrs. Claire Curtis-Thomas (Crosby) (Lab): How will my right hon. Friend ensure that the creative industries continue to enhance the productivity of our manufacturing and engineering base?
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Ms Hewitt: My hon. Friend makes an extremely important point, because I know very well from all the manufacturing companies that I visit that the ones that are succeeding best in the global economy are those that are harnessing the outstanding capability that we have in Britain, particularly in industrial design, and using that, as I saw for instance at a clothing company in Leicester last week, to keep themselves competitive, even against very low-wage competitors. The announcement in last week's Budget that George Cox, former chairman of the Design Council, will be invited to look specifically at this area of harnessing the creative skills of our people for the benefit of our manufacturing industry, will be welcomed by my hon. Friend, and certainly by industry.

Dr. Vincent Cable (Twickenham) (LD): If the Secretary of State believes that the Government have a special talent for helping disadvantaged areas in the regions, why did they first of all introduce and then withdraw disadvantaged area relief from stamp duty for commercial property?

Ms Hewitt: The stamp duty relief on property was a time-limited programme that has come to an end, and as the Chancellor said last week, we have now put in place a new local enterprise growth initiative which will deliver £150 million worth of support by 2008–09. If I may say so, I deplore the somewhat sneering tone that the hon. Gentleman adopted on the issue. I have seen the real impact that our policies are having in many of our most disadvantaged communities as far more people obtain the skills, confidence and support that they need to move into self-employment and, as their businesses grow, even to start taking on new employees of their own; and that is what we need.

Mr. Kenneth Clarke (Rushcliffe) (Con): The Secretary of State was asked about the short-lived stamp duty relief. I assume that when these flows of initiatives come out some attempt is made to evaluate the impact of such targeted tax reliefs. Has any evaluation been done on this and, if so, does it demonstrate any benefit to those who live in disadvantaged areas? How much is it estimated was wasted on giving stamp duty relief to developers who found themselves lucky enough to be in a place where they could take advantage on a valuable site of the tax relief that the Chancellor, probably unwisely, put forward?

Ms Hewitt: As I am sure the right hon. and learned Gentleman knows, my right hon. Friend the Chancellor evaluates every initiative and policy that we put in place in order to ensure that taxpayers' money is used as wisely and effectively as possible.

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