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House of Commons

Thursday 3 May 2007

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Oral Answers to Questions

Trade and Industry

The Secretary of State was asked—

Regional Development Agencies

1. Robert Neill (Bromley and Chislehurst) (Con): What assessment he has made of the efficiency and effectiveness of regional development agencies in supporting businesses. [135424]

The Minister for Industry and the Regions (Margaret Hodge): The performance of the regional development agencies against their targets is laid before Parliament every six months. The RDAs have delivered tangible benefits to business. In 2005-06 they helped create or attract almost 19,000 new businesses, supported 800,000 businesses through Business Link, and assisted more than 166,000 businesses to improve their performance.

Robert Neill: One of the concerns that many of us have is that beneath those headline figures there is a lack of hard evidence and real performance analysis of the RDAs. For example, in the north-west they are funding 21 schemes but there is no significant evidence of any hard outcomes in terms of business. In London, the lack of transparency in respect of the schemes operated by the London Development Agency is such that it has sometimes been referred to in the press as the slush fund for the Mayor’s pet projects. Is there not a need for a consistent national template of target setting and monitoring? Otherwise, we might as well just open a suitcase full of money and throw it at them.

Margaret Hodge: There is a consistent way of monitoring and ensuring that RDAs meet their targets: through the reporting against their targets to Parliament. We have also ensured that the National Audit Office has undertaken an analysis of the performance of the RDAs, and it has classified all of them as performing either strongly or very well. I suggest that the hon. Gentleman take advantage of the opportunity to look at the data before Parliament and then come back and give us some real reasons why he thinks that the RDAs are not performing.

Peter Luff (Mid-Worcestershire) (Con): Against the background of the high administrative costs of the RDAs—which was most recently revealed in the Richard report—is the Minister confident that it will be possible to co-ordinate their activities better to ensure that they do not, for example, wastefully duplicate each other’s
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activities in overseas markets and that they are able to provide a proper national service to national industries such as aerospace?

Margaret Hodge: As the hon. Gentleman will know, because I gave evidence before his Trade and Industry Committee, we are working to ensure that there is much better co-ordination between the RDAs, particularly in relation to some of the major industries in the country. In respect of aerospace for example, they now have a common application form, a common monitoring form and a common assessment form. Therefore, although the money might come from different RDAs, for the industry there will be one form, and one gateway through which it has to travel. We are working hard to ensure that in the work done overseas there is proper co-ordination between the RDAs and UK Trade and Investment—UKTI.

Mr. Mark Prisk (Hertford and Stortford) (Con): Despite the Minister’s claims, there is significant duplication. At least one third of funding for regional business support is lost in bureaucracy; the Minister managed to overlook that. However, it also now appears that some RDAs are misusing their money. In March, the Economic Secretary to the Treasury launched a political pamphlet called, “Redesigning Regionalism”. That pamphlet said that the RDAs are wonderful and marvellous and should have more powers—and, indeed, that they should have more money. [Interruption.] It turns out that three of the RDAs spent £15,000 of taxpayers’ money on self-serving paper, so can the Minister explain— [Interruption.]

Mr. Speaker: Order. The Minister does not tell me my job; I tell her what to do. There should be a question. I think there was the hint of one somewhere.

Mr. Prisk: You are absolutely right, Mr. Speaker, and it is a good one; the Minister must be patient. Will the Minister explain, not only to the House but, more importantly, to the thousands of small companies whose corporation tax bills are about to rise, why the RDAs are spending taxpayers’ money to promote themselves instead of doing what they should be doing: backing businesses?

Margaret Hodge: This morning we are finally getting the old Tory agenda. The RDAs are probably up for grabs again, as it appears that they will be part of the £21 billion of cuts that the Opposition want to impose on the country as part of their tax-cutting efforts. Let me also retort to the hon. Gentleman that although he repeatedly says that one third of the expenditure on business support goes in administration, that is simply untrue. He will know from the work that we have done that the proportion is less than 10 per cent., and that we are constantly trying to cut that. Are the RDAs right to engage in a debate on how best to devolve government to areas where we can have the best intervention to achieve the most effective economic success? Of course the RDAs have a role to play in that debate, and the hon. Gentleman knows that we are currently considering which is the best level, below national level, for intervention to be effective and to help us to continue to achieve the great economic growth and prosperity that we have achieved over the past 10 years.

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Fuel Technologies

3. Sir Nicholas Winterton (Macclesfield) (Con): What steps his Department is taking to encourage development in biofuel and clean coal technologies. [135427]

The Minister for Science and Innovation (Malcolm Wicks): The Department supports a range of measures to encourage biofuels and clean coal technologies. These are important mechanisms, given our ambition substantially to reduce carbon emissions. More generally, the Government have provided some £500 million since 2002 toward research in, and development and demonstration of, low-carbon technologies.

Sir Nicholas Winterton: Obviously I am grateful to the Minister for that helpful and courteous reply, but does he not agree that it is better to develop forms of energy generation and other technologies that cause less or no carbon dioxide emissions, rather than caning with extra taxation those who are merely doing what has been legal and acceptable for many years? I am referring in particular to those who drive 4x4s, which are very advanced and safe vehicles. Given that we can develop new technologies, why should extra taxation always be the answer? We should also be investing more in the safe disposal of nuclear waste.

Malcolm Wicks: And indeed we are spending a great deal on the safe disposal of nuclear waste through the Nuclear Decommissioning Authority. We need a range of measures to tackle climate change, such as low or almost nil carbon emission technologies. We will consult on nuclear energy and its future when we publish our White Paper later this month, and we are developing renewable energies. Significantly, probably 40 per cent. of global power generation in the foreseeable future will come from coal. Given that we will be burning fossil fuels, we need to develop clean coal technologies and carbon capture and storage, as we seek to demonstrate. So there will be a range of ways in which we tackle our climate change and global warming objectives.

Richard Ottaway (Croydon, South) (Con): The Minister will be aware that the Stern report suggested that some $16 trillion of investment is needed in energy infrastructure over the next 25 years. Ironically, the innovation needed might yet be the major contribution from the United States. Does this country have enough capacity to produce sufficient home-grown biofuels, or will we have to rely on imports?

Malcolm Wicks: I am advised that in theory, given our current objectives—under the terms of the road transport fuel obligation, for example, 5 per cent. of such fuel should come from biofuels by 2010—we have enough capacity. I am also advised, however, that in practice—this is the serious point—there will be a mixture of home-grown biofuels and those that we need to import. That raises a critical question about making sure that the environmental impact of such imported fuels is on the right, not the wrong, side of the argument.

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Susan Kramer (Richmond Park) (LD): The Minister will be aware that developing marine renewables is crucial. The UK should be the leading player in this field, based on its sub-sea industry. He will also be aware, however, that many such projects are stuck in prototype stage because of lack of financing. What work is he doing with private investors and banks to free up investment for this critical industry?

Malcolm Wicks: It is indeed a very critical industry, and as we were reminded earlier, Nick Stern’s important report referred to the economic opportunity for Britain to be in the right place, in the context of much of the renewables industry. The hon. Lady is right: there are great industrial opportunities if we are a leading country in this field, as we mean to be. As I said, £500 million has been invested in low-carbon technologies since 2002, and we are investing heavily in marine technologies, so that we can examine the potential of wave and tidal power. The renewables obligation, which we will reform to make it more sensitive to the new technologies, is another powerful vehicle. We have a range of measures in place to ensure that we can be a world leader in these renewable technologies.

Ann Winterton (Congleton) (Con): Given the Minister’s reply to an earlier question and his announcement of huge investment in biofuels technology, can he tell the House what discussions he or his Department have had with the Department for Environment, Food and Rural Affairs to encourage farmers to grow biofuels, and with the Chancellor to ensure that the taxation regime encourages the use of biofuels?

Malcolm Wicks: We received a report some time ago from Ben Gill, who obviously has a farming background, about the importance of biomass, and we will say more about it as part of the White Paper announcements. Of course we are discussing the issue all the time with DEFRA, and we are at one on this. It is an important mechanism to help us achieve our carbon emissions reductions. It is not the whole answer, but it is a new opportunity for the farming sector in the UK and elsewhere, and I recognise that.

Charles Hendry (Wealden) (Con): Has the Minister seen today’s comments by the Renewable Energy Association that Britain is “a million miles away” from hitting the Government’s target on renewable energy by 2020? The REA says that the Government have “no credible plan” on how to achieve that target, and that for it to be met we would need a biofuel pump on every forecourt, a programme of major renewable energy projects and a massive energy efficiency programme in the housing stock. The Government have quietly dropped their earlier target of 10 per cent. from renewables by 2010. Is not the truth about the Government’s targets that although they are designed to sound ambitious, they will the end and not the means and are set so far in the future that the Minister and the Government will be out of office long before the target date—and someone else will have to pick up the pieces?

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Malcolm Wicks: I certainly do not accept that last psephological point. We have long-term ambitions both to reduce carbon emissions and for the Labour party—[Hon. Members: “Where are they?”] It is not for me to answer that question. It is because we take our democratic politics and listening to people seriously that Labour Members are not here; they are where they should be.

I have seen some indications of the association’s report. It is a well-organised lobby group, but I am more interested in the facts, which are that this Government are taking renewable energy very seriously. It always helps if Conservative and Liberal MPs support wind farm projects, rather than opposing them. Big planning issues are also involved, and I hope that the Opposition will support us when we bring forward radical proposals for reform.

Salaries and Wages Insurance

4. Mr. Jim Cunningham (Coventry, South) (Lab): Whether he has had discussions with (a) ministerial colleagues and (b) companies on the establishment of a national salaries and wages insurance scheme. [135430]

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): We are grateful for my hon. Friend’s question. No discussions about this issue have been held either between DTI Ministers and their colleagues or by DTI Ministers with companies.

Mr. Cunningham: I thank the Minister for that answer, but would he consider meeting the CBI and the trade unions to consider the situation? Many people have been made redundant in manufacturing industries—for example, from Rover, Peugeot in Coventry, and Jaguar—and they lose an average of £3,000 a year because they have to take lower-paid jobs. I hope that my hon. Friend will consider that point.

Jim Fitzpatrick: My hon. Friend raises an important point, but we do not have plans to consider the issue. It is our view that the UK economy is very healthy at present. Redundancies in 1997 were running at around 3 per cent., and that has fallen to some 2 per cent. on average. The Government’s arrangements to deal with people when redundancies occur—including Jobcentre Plus—are appropriate. The economy is healthy and we have more people in work than ever before. I am sorry that I cannot give my hon. Friend a more positive answer.

Business Support Schemes

5. Mr. Peter Lilley (Hitchin and Harpenden) (Con): When he expects to meet the Government’s target of reducing the number of business support schemes to 100. [135431]

The Minister for Trade (Mr. Ian McCartney): About £2.5 billion of public money is spent every year on direct business support. Money is spent by central Government Departments, their agencies and local authorities. The DTI is leading the cross-Government programme to simplify the number of business support services from around 3,000 to no more than 100 by 2010. By reducing the number of schemes and the
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“back room costs” of providing business support, we will ensure that a greater proportion of the money spent helps business and will achieve more with the same spend.

Mr. Lilley: I am grateful to the Minister for that answer. Is he not rather disappointed in it, and was he not upset when he learned from his officials that the simplification process would take so long? The array of available measures and schemes is so bewildering that, in my experience, it causes business men to go to their Members of Parliament to get help to find their way through it. Is it true that the administration of the schemes costs more than one third of the total made available for them? What is the compliance cost for businesses? Does the Minister have any quantitative evidence to suggest that the gains exceed the total costs borne by the taxpayer and, through compliance costs, by business?

Mr. McCartney: I thank the right hon. Gentleman, in the same spirit as was evident in his opening words. When he was Secretary of State for Trade and Industry, he held a world record: of every three businesses set up, two went bust. In his first year in the post more than 24,000 businesses went bust, and by the time he left office more than 1,000 businesses a week were going bust, so he does not have a good record in supporting business. For every pound that UK Trade and Investment spends in business support, £17 of additional business is created. That is why this country has the largest inward investment and research and development portfolios outside the US. In every region of England, and in Scotland and Wales, the number of jobs is increasing, not decreasing—unlike in the Conservative years, when inward investment was at its lowest. Then, the UK was 24th out of the 24 OECD countries, and the Government of the day were prepared to close down British business instead of supporting it.

Alan Duncan (Rutland and Melton) (Con): With 3,000 schemes administered by 2,000 public bodies, the Government spend an estimated £12 billion a year on business support, yet just 15 per cent. of small businesses have had any contact with the schemes. Does the Minister therefore agree with Martin Wyn Griffiths, the chief executive of the Small Business Service, that

in all respects?

Mr. McCartney: First, the Government spend £2.5 billion on these matters, and the money is welcomed by the business community. The reforms that we are making are successful, and the only scheme whose administration costs amounted to 30 per cent. has been closed down. The reforms will ensure that more money goes to front-line business, not less. This Government have a good record of investing in support for business. That support creates jobs, investment and trade for British business.

Alan Duncan: The absurdity of the schemes is illustrated by the fact that the Government want to reduce their number from 3,000 to a mere 100. Given that only 34 per cent. of locally run schemes have ever been assessed in any way for their effectiveness, and
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that most national schemes rely on customer satisfaction surveys alone, does he accept that the Government have no idea how to reduce the number of business support schemes, because they have no idea whether any of them were any good in the first place?

Mr. McCartney: The hon. Gentleman’s question makes it clear that the Conservatives do not want to spend a single penny in support of British business. They do not support the continuation of the regional development agencies. The RDA covering Yorkshire and the Humber has rationalised 100 different support schemes into six, and as a result businesses in the area each day get support to help them export and retain employment opportunities. The hon. Gentleman should support that, not deride it.

Post Office

6. Simon Hughes (North Southwark and Bermondsey) (LD): What assessment he has made of the effectiveness of the safeguards established to oversee the Post Office reorganisation process. [135432]

The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): Post Office Ltd and Postwatch are discussing the role of the new National Consumer Council in developing area plan proposals for local consultation. We expect to set out the agreed role in our formal response to the Government’s consultation.

Simon Hughes: Thousands of post offices have closed under this Labour Government. Moreover, the disappearance of Postwatch is on the cards and coincides with 2,500 closures over 18 months. Given all that, what customer guarantee can be given to people who use post office services in rural England, Scotland and Wales that the future watchdog will be more effective? How will people be assured that the sort of nonsense that I saw the other day will not happen again? A post office in York had been closed, and a new one opened after a local community campaign—yet the business was clearly a viable commercial operation, which should never have been closed in the first place.

Jim Fitzpatrick: Clause 16 of the Consumers, Estate Agents and Redress Bill replicates the provisions in the Postal Services Act 2000 that apply to Postwatch, which will ensure that the National Consumer Council has a specific function to investigate matters relating to post offices, and there will be a redress scheme. The hon. Gentleman and his party supported the amalgamation of those services into the new National Consumer Council. We are working hard with Postwatch to make sure that public protection and the consultative arrangements when Post Office Ltd makes its restructuring plans are as robust as possible.

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