| Previous Section | Index | Home Page |
Mr. Alan Reid (Argyll and Bute) (LD):
The Secretary of State talks of encouraging investment. Will not the swingeing increases in duty on Scotch whisky deter
investment in what has been a Scottish success story? Whisky is already charged a higher rate of duty per unit of alcohol than other drinks. If the Government want to tackle binge drinking, surely they should target the drinks that are responsible for it rather than targeting whisky.
Mr. Hutton: No doubt the hon. Gentleman has made a very strong constituency point. He takes a close interest in all such matters, not unreasonably given the constituency that he represents. It should be borne in mind, however, that 90 per cent. of Scotch whisky is exported, and that changes in duty relating to the UK will not affect the strong position of the Scotch whisky industry in international markets.
As I said in response to the hon. Member for North-West Norfolk (Mr. Bellingham), the UK—thank goodness—remains a magnet for overseas investment. There was a stock of over a trillion dollars of foreign direct investment in 2006 and, in the same year, a flow of $140 billion of foreign direct investment. In that regard, we were second only to the United States. I do not believe that any of those things would have happened if Britain were still locked into the cycle of short-termism that had begun to characterise much of British economic policy in the 20 years before the Government came to office. If there is one thing on which Members on both sides of the House should be able to agree, it is that we should not return to those times.
That economic success, and a powerful commitment to attracting and developing the best in global talent, have helped to make Britain one of the best places in the world in which to do business, but in today’s global age no one can afford to be complacent. Everything that we seek to achieve as a country must have its foundations rooted first and foremost in greater enterprise and higher investment.
This Budget sets a course that will help Britain become, I hope, the most entrepreneurial economy in an increasingly competitive global marketplace, creating an enterprise framework that responds to the aspirations of so many of our people to start and grow a business of their own. That aspiration is evident in a record 4.5 million businesses already operating in the UK, or in the growing number of young people who say they want to form their own businesses.
Miss Julie Kirkbride (Bromsgrove) (Con): Given his remarks just then, will the Secretary of State explain how a company such as Land Rover, which is adjacent to my constituency, will be helped by the Budget in comparison with other car companies not based in the UK that will clearly have an advantage as a result of the green taxes that the Government are proposing?
Mr. Hutton: Those issues have been debated extensively already— [ Interruption. ] If any of the hon. Members want to say something on the record, let them come up to the Dispatch Box and make their comment instead of chuntering like a lot of hopeless parrots, which they are, I am afraid, beginning increasingly to resemble.
If the hon. Member for Bromsgrove (Miss Kirkbride) wants to support investment in manufacturing why does she support the halving of the capital allowances, which her party is proposing, for investment in new
plant and machinery and equipment? At some point in the debate, she and others who would want to argue from her position will have to justify that.
Our commitment to Britain’s entrepreneurs is reflected in the business environment that we have helped to develop, delivering higher business survival rates than a decade ago. We have overtaken many of our competitors in the EU, but we need to make more progress when we compare ourselves with the United States, the world’s most enterprising economy. The US still has more businesses per head than the UK and more of them achieve quicker and higher growth than is often the case in the UK.
A range of new measures launched as part of the Budget aims to bridge that gap, creating opportunities for every section of our society, every region of our country and every sector of our economy. It is an
“innovative package of measures designed to promote enterprise.”
Those are not my words, but those of Martin Temple, the chairman of the Engineering Employers Federation, who has said that the initiatives will
“tick many of the boxes for manufacturers”—
including, we hope, Jaguar and Land Rover.
Mr. Bellingham: I am grateful to the Secretary for State for being so generous in giving way. Are the proposals in the Budget to give tax inspectors the power to enter small business premises unannounced and without an official warrant a good way of building confidence between the SME sector and the Government and regulatory bodies?
Mr. Hutton: Of course there have to be proper safeguards, and a proper judicial framework and the rule of law within which all such activity takes place—that will remain so—but the hon. Gentleman and others will have to answer some important questions about how we deal with tax evasion. It is important that Revenue and Customs inspectors have the right powers to do that. If the hon. Gentleman has an alternative set of proposals that would avoid the need for the measures that we have set out, we should hear from him. We can then look at them in turn. Those who criticise should always have an alternative and, so far, I am afraid that I have not heard one.
We should compare the record with the business reaction to the Tories’ flagship proposals on corporation tax—I am sure that the hon. Member for Rutland and Melton (Alan Duncan) will want to explain them to the House shortly—which the CBI has warned will damage manufacturing in Britain by cutting capital allowances to the tune of more than £3 billion, according even to the Tories’ figures. On 19 March, Richard Lambert said in The Guardian:
“there are dangers that the removal of these tax reliefs will have potentially wider consequences, particularly on business investment in manufacturing and by introducing volatility into the taxation of capital gains.”
I am a fair-minded and, I think, reasonable person and I always try to be fair to the Conservative party. In one sense, I must congratulate the Conservatives on the tax proposal, which is clearly enterprising and innovative. In fact, they have given a whole new meaning to the term “creative economy”. They have come up with a
host of new spending pledges that can be met only if one were to design a new mechanism that allows the Government to spend the same pound several times over. No such mechanism exists. Creative economics is not an approach to inspire business or public confidence. The Conservatives’ £10 billion black hole is a recipe for risk and instability, but companies look to Government to do all they can to minimise instability in uncertain times such as now.
The Government want everyone with entrepreneurial talent in the UK, regardless of their circumstances or background, to be able to turn their ideas into reality, creating new jobs, businesses and wealth for our country. [Interruption.] An Opposition Member, who does not wish to stand up to make his point, is arguing from a sedentary position about the tax burden. It is worth reminding ourselves that the tax to GDP ratio is well below the peak set by previous Tory Governments and continues to rank below the EU 15 average.
Mr. Mark Prisk (Hertford and Stortford) (Con): The Secretary of State was referring to me when he mentioned a Member who was talking about tax rises. He is talking about his enterprise White Paper, which I am sure he finds exciting, but if he is so keen to encourage small firms, why is he going to add £1,000 million to small firms’ tax bills? What is the economic case for doing that?
Mr. Hutton: I shall come on to that later in my speech. [Interruption.] No, I will come on to it when I am ready to do so, not when the hon. Gentleman pops up with a question on it. What I would say, however, is— [Interruption.] I will answer the question, but let me say this now: the hon. Gentleman has described this package of enterprise measures as of interest to me, but he should get out more and read what people are saying about the measures. [Interruption.] He is saying that they are exciting, and they are; that was the view of the CBI, the Institute of Directors, the Federation of Small Businesses and other employers’ organisations. He needs to respond to that.
To achieve what I have set out, we must do everything we can to strengthen the culture of enterprise in Britain today. Taking the stigma out of failure and properly rewarding risk are two essential ingredients in helping move our economy forward. By the end of 2009, insolvency officials will be able to decide on whether publicity, in addition to a notice in the London Gazette, is appropriate in every case and, if so, the right medium to use. Currently, all insolvency advertisements appear in local newspapers, so such a change would help reduce the perceived level of stigma associated with bankruptcy and benefit creditors by lowering the costs of administration.
We will also ensure that British businesses have the support of a modern tax regime that balances sustainability and fairness with opportunity and competitiveness. In the pre-Budget report, a package of simplifications was announced that will save British business up to £100 million a year. The Budget will help increase those savings with a new consultation to simplify tax calculations and returns for small companies. That will enable companies to spend less
time on tax and more time on business growth. From April, the main rate of corporation tax will be cut from 30p to 28p, the lowest rate in the G7. With the introduction of a new annual investment allowance from April, more than 95 per cent. of small and medium-sized enterprises will be able to write off all their capital expenditure on plant and machinery in the period in which it is incurred. That has been warmly welcomed by business organisations, but it is opposed by the Conservative party.
Following consultation with business on our changes to capital gains tax, the introduction of the new entrepreneurs relief will ensure that 80,000 business owners and investors annually will have their entire gains taxed at 10 per cent. The enterprise investment scheme has raised more than £6.1 billion, which is now invested in more than 14,000 smaller, higher-risk companies. To help even more businesses prosper, we will now increase the investor limit from £400,000 in one tax year to £500,000 from April, and we will consult on the simplification of that scheme. Those changes will all ensure greater simplicity, fairness and growth for more businesses, rewarding entrepreneurs and risk takers and rightly recognising the importance of wealth creation.
We are also bringing forward new ideas and investment to deepen the culture of enterprise in the UK. We are committed to spending a further £30 million to extend enterprise education into primary schools and tertiary colleges, bringing the total spending in this area to more than £200 million over the comprehensive spending review period.
Mr. Philip Dunne (Ludlow) (Con): The Secretary of State refers to the greater simplification that the Budget provides to small businesses, saying that it will mean business men taking less time to prepare their tax affairs. Has he assessed how much time it will take them to read through the 107 new tax notes included as part of this Budget?
Mr. Hutton: The hon. Gentleman, for whom I have a lot of respect, has argued with me before about the extensive administrative burdens reduction programme that the Government have been pursuing for the past two years. It will produce significant benefits in the round to small businesses’ dealings with regulation and tax matters. The Government are seized of the importance of trying to reduce all compliance costs associated with these matters.
We are also working on the launch of global entrepreneurship week, and our work with the premier league of football clubs will open up the idea of entrepreneurship to many individuals and families who never thought it could be for them. I hope that hon. Members from all parts of the House will support that work. Those and other measures will, as Sally Low from the British Chambers of Commerce recently said,
“increase the level of enterprise education...Sowing the seeds for a new generation of entrepreneurs and business people”
If we are to succeed as an enterprising nation, we must remove barriers to success and, most importantly, we must redouble our efforts to support more women in starting and growing their own businesses. Despite a 17 per cent. increase in the number of self-employed
women in the UK since 2000, women remain the largest under-represented group when it comes to enterprise. If women started businesses at the same rate as men, there would be 150,000 extra business start-ups each year in the United Kingdom. If we matched US levels of female entrepreneurship, there would be 900,000 more businesses in the UK, employing millions more people. The social, as well as the economic, benefits to Britain are obvious.
We are therefore implementing a package of measures to improve knowledge, skills, finance and support for enterprise among women. We are investing £12.5 million in a co-investment fund with the aim of securing £25 million of new investment, to be invested primarily in women-led businesses. Ken Olisa, a member of the Women’s Enterprise Task Force, describes the fund as
“an opportunity to create a bridge between aspiring entrepreneurs and capital.”
We will also work with regional development agencies to pilot new women’s business centres, building on the very successful programme that has operated in the United States for more than 20 years and creating the right culture, environment and support network to enable more women to build their own business. Regional development agencies in the east of England, the east midlands, the north-west and the south-east have all agreed to participate in the programme, and I hope that all RDAs will join that new drive to support more women in business.
We will also test how we can make enterprise information and advice available in the family-friendly environment of children’s centres to help build the confidence, skills and knowledge of potential entrepreneurs, investing in our public services, not withdrawing funding from them as the Conservative party is committed to doing, as we all know. We are supporting the establishment of a new national centre of expertise to help build the economic case for women’s enterprise, encouraging the financial services, private and corporate sectors to see women-led businesses as key suppliers of products and services.
Miss Kirkbride: The Secretary of State is being generous with his time. Although I commend any efforts to get more women to launch their own businesses, is he not concerned that the number of women in board rooms has decreased over the past few years? Although we want women to set up their own businesses, we also want them fully represented at the top level in the board room. Why does he think things are going backwards?
Mr. Hutton: Like everyone, I am concerned about that issue, but it does not lend itself to more Government regulation in order to resolve it. [Interruption.] The hon. Lady might not agree with me, but perhaps one or two others on the Conservative Benches do agree. That deeply centred cultural issue must be tackled, and we should do all we can to support companies in trying to tackle it, but I do not think it lends itself either to regulation or legislation.
All the initiatives on women’s enterprise that I have described are modelled on the successful implementation of the programmes in the United States. We always know when the Conservatives do not like a policy,
because rather than say that they do not like it, they start sniggering—in this case about the importance of and the need to support more women in business. [Interruption.] They deny the sniggering, but we heard it. Whether or not they support these initiatives is an important test of their credibility. It would be good to hear from the hon. Member for Rutland and Melton whether he supports those initiatives.
To help bridge the enterprise gap faced by other under-represented groups in more deprived regions, we are also providing more financial assistance to the Prince’s Trust, which I hope will raise awareness of enterprise among some of our most disadvantaged young people. Support for community development finance institutions will also help businesses in poorer areas to access finance. Improvements to the operation of community investment tax relief will increase flexibility and confidence. We have also committed up to £10 million to establish a risk capital fund for social enterprises, the first fund of its kind, which will help social enterprises during their start-up and early growth stages.
Well targeted regulation can help us to achieve vital social goals and ensure that markets work properly for the benefit of consumers and business, but regulation has a cumulative cost and a consequence for the businesses, third sector organisations, public sector organisations and citizens who operate in our economy. Ensuring smarter, proportionate regulation will be critical to the UK’s future competitive position. So it is important that the Government do everything that they can to prioritise and simplify the regulation that really matters and remove unnecessary regulatory burdens wherever they exist.
In March 2005, following a request from this Government, the Better Regulation Task Force and Sir Philip Hampton published recommendations on how the public sector could better regulate, and we have made significant progress in implementing those recommendations. We are on our way to meeting the 2010 target to cut administrative burdens faced by companies by 25 per cent. More than £1.5 billion of cost savings have already been delivered to the economy through that mechanism. We have reformed the impact assessment process and continued to embed the Hampton principles in the work of local authorities and national regulators.
In this Budget, we are taking further steps to ensure that the impact of regulation on small and medium enterprises remains proportionate. We will strengthen our “think small first” policy so that Departments more rigorously assess whether SMEs can be exempted from new regulations or would benefit from simpler enforcement procedures. To help further reduce compliance costs, I have also asked Sarah Anderson to lead an independent review of ways to increase clarity and certainty for forms and official guidance.
| Next Section | Index | Home Page |