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Mr. Deputy Speaker (Sir Michael Lord): Order. The House listened with civility to the Secretary of State making her speech—[Interruption.] Order. The House ought to do the same when the Opposition spokesman is speaking.
Mr. O'Brien: I am grateful, Mr. Deputy Speaker.
The Chancellor has presided over the largest trade deficit since records began, and the lowest economic growth of any major English-speaking economy over the past seven years. Following the even worse experience of 2001, more regulations were introduced by the Government in 2004 than in any other year in the past half-century.
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Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): The hon. Gentleman mentioned a golden legacy. Will he apologise to my constituents for the dreadful waste that was inherited in 1997, when we were paying out more to keep people unemployed and to service the national debt than we were spending on all our schools?
Mr. O'Brien: I am absolutely sure that my party and those who were responsible for building that golden legacy have nothing to apologise for, as we ensured that we locked in the macro-economic stability so valued by business.
A greater number of regulations were introduced by the Government last year than in any other year in the past half-century. So much for Prudence Brown and her sister, Constant Spin. What is the role of the Department of Trade and Industry in all this? According to the Department's recent business plan, the DTI's principal policy goal is to
and improve the competitiveness of the UK. Tragically, for the entire eight years under the Government's heavy trudge, the Department's overriding policy objective has had a staggeringly miserable record. Productivity growth is down by a third in comparison with the last Conservative Government, and the UK's competitiveness under Labour has fallen from fourth to 11th, according to the renowned World Economic Forum.
Mr. Salmond : Is Scotland included in the league table of English-speaking economies to which the hon. Gentleman referred? If so, can he answer the question that the Secretary of State so signally failed to answer, and remind the House when the last quarterly downturn in economic growth in Scotland occurred?
Mr. O'Brien: Unquestionably, I regard Scotland as a full member of the United Kingdom. Its native language is a wonderful dialect of the English language. As it happens, I am more Scottish than anything else within the United Kingdom, and I am very proud of that. As for the question that the Secretary of State signally failed to answer, I do not pretend to know the answer, but the hon. Gentleman is undoubtedly owed an answer by the Secretary of State. On my last visit to Scotland recently, I was aware that although some very good businesses are prospering, there are some serious challenges, not least because of net migration, which is causing severe difficulty in accessing the skills that Scotland needs.
Why has the DTI failed British business so miserably? As hon. Members might expect, I have been giving the question not a little thought, and my inescapable conclusion is that the DTI lives on a different planet from the rest of us—Planet Hewitt. On that planet, there is no correlation between the level of taxation and regulation of business and the productivity growth and competitiveness of the UK. On Planet Hewitt, the level of taxation of business has nothing to do with the Secretary of State whose Department exists to
We know that because, on 1 February, I tabled a parliamentary question to ask the Secretary of State
"what assessment she has made of the likely effects of additional tax rises on businesses in the UK in the period 2005–07 on national (a) private sector employment growth, (b) productivity growth and (c) competitiveness."—[Official Report, 15 March 2005; Vol. 432, c. 229W.]
That is a highly pertinent question, given that table C9 on page 254 of the Red Book reveals that the Chancellor expects his receipts from tax and national insurance to increase from 36.3 per cent. of GDP this year to 38.5 per cent. in 2008–09. The Ernst and Young Item Club, which uses the Treasury's model of the economy, calculates that the Chancellor will need to raise taxes by £10 billion to achieve that. Furthermore, the PricewaterhouseCoopers poll reported yesterday that 73 of the senior business people questioned believe that the tax burden will rise significantly in the next three years under Labour. We have shown how the inevitable tax rises that will follow hard on the heels of—electors forbid—a Labour third term can and will be avoided under an incoming Conservative Government.
I waited for a response to my question. While I waited, I wondered what the Secretary of State does with her time. Five weeks after I tabled it, on 10 March, I received a response from the right hon. Lady saying that my question was being transferred to the Chancellor. It is partly because all the discussion and all the decision making about the effects of business taxation have been transferred to the Chancellor under Labour that taxes have increased 66 times since 1997 while, at the same time, our productivity growth rate, our private sector growth rate and our competitiveness continue to fall.
"Business has become mightily fed up with being taken for granted. The cumulative rise in taxes of £46 billion between 1997 and 2005 has exacerbated a five-year decline in corporate profitability and sliced investment by 11.5 per cent. in just two years."
The director general of the Confederation of British Industry is referring to a fundamental structural failure under this Government. Faced with a complacent Chancellor who has an obsessive-compulsive tendency to micro-manage the private sector, there is no one at the top of the Government to stand up for the interests of British business. The losers are not only the somewhat powerless Prime Minister and his equally hapless Trade and Industry Secretary, but, more importantly, the wealth creators and risk takers on whose profits we all ultimately depend for our essential public services. Let us not tiptoe around the subject: profit is good, as well as essential to the standing and welfare of our nation and her peoples.
Not for the first time, we have heard the Secretary of State's torrents of words about family-friendly policies, the importance of diversity and the position of women in the workplace. Let me make it absolutely clear that there is no dispute between us about the importance of harnessing all the resources and talents in our society. The best means of delivery is not the words uttered on Planet Hewitt, but the best practice of companies of all shapes and sizes up and down the country. The most important opportunity for us all to take is to enable all
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British businesses to be more competitive. Any more Government-inspired burdens on business only take this country backwards, not forwards, under Labour.
If the Secretary of State really means what she says, she should put her own house in order. Given that the work-life balance is so important, why do a majority of staff at her Department—55 per cent.—say that they work
according to the DTI's 2003 employee survey? Given that diversity is so important, why in the same survey do a significant majority of DTI officials—60 per cent.—not agree with the statement
"I believe that the DTI recognises the diversity of its customers and adapts its policies to reach them"?
If the Secretary of State believes as strongly as I do in narrowing the gender pay gap, why is there still a 16 per cent. difference between male and female salaries at the DTI—only marginally different from the national average?
In this outer orbit of Planet Hewitt, apart from tax, the major bugbear of business is over-regulation, which deflates corporate profits, absorbs valuable management time and drains entrepreneurial ambition. On Planet Hewitt, however, British business is not over-regulated, only "better regulated". The Secretary of State and her Ministers have been absolutely adamant on that point. The right hon. Lady said in November 2003:
"The number of regulations each year that impose a cost on business has fallen since 1996".—[Official Report, 6 November 2003; Vol. 412, c. 915.]
Back in the UK, the incredulity that greeted that claim was accompanied by sharp intakes of breath. According to a CBI survey, an overwhelming 95 per cent. of businesses say that they are having to spend more time on red tape now than they did five years ago.
Even the Chancellor's Hampton review, which was published last week, found that
"The predominant mood, particularly among small businesses, was one of concern of . . . the cumulative burden of regulation. Many surveys and much academic research confirm that this is the general consensus. This issue has been more prominent in recent years".
The Secretary of State's big conversation about business regulation cannot have extended far beyond the Treasury Bench, because she is mysteriously absent from the "general consensus" referred to by Philip Hampton.
According to the British Chambers of Commerce, Labour has placed a "millstone" of slightly less than £40 billion around businesses' neck since 1998. On Planet Hewitt, the BCC's figure is wearily disputed. The Minister for Small Business and Enterprise told the House last year:
the BCC's estimate of the cost of business regulation introduced between 1998 and 2003. He continued:
"The real cost of administering the regulations is only a fraction of that."—[Official Report, 30 June 2004; Vol. 423, c. 399.]
Last week, however, the Government's own Better Regulation Task Force admitted in a report that
"Complying with the information requirements of UK regulations is estimated to cost some £20 billion to £40 billion per annum."
According to the BRTF, whose report the Chancellor has accepted in full, he tells us, the cumulative burden of business regulation introduced under the Labour Government is between £140 billion and £280 billion. That is at least three and a half times greater even than the BCC estimates, which from their distant planet DTI Ministers vehemently reject.
The big tent of consensus from which the Secretary of State and her Ministers are mysteriously absent does not extend merely to the cost of over-regulation, but includes the policy tools to lighten the burden on business. Back in the real world, the Conservatives have been listening to individual business men and women, to business organisations and, of course, to our own panel of senior business practitioners and economists. Based on their input and advice, we have published a series of reports on how to reverse the flow of over-regulation. Our reports, which are accessible on www.conservatives.com/policies, have been welcomed by all the major employer bodies—[Interruption.] It is a great shame that Ministers have no idea of the terminology of e-business technologies. As I said, our reports have been welcomed by all the major employer bodies, including the Confederation of British Industry, the Federation of Small Businesses, the Forum of Private Business, the Institute of Directors, the Engineering Employers Federation and the British Chambers of Commerce.
After listening to British businesses' concerns about the stock of existing regulation, we have also announced plans to introduce deregulatory Budgets and a deregulation Bill containing specific measures to reduce the volume of regulation introduced by the Labour Government. We shall include that Bill in the first Queen's Speech of an incoming Conservative Government. [Interruption.]
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