My constituency is in the south-east, in the heart of the Gatwick diamond and the heart of the south-easts economy. The area is an enormous driver for business in the UK, and I firmly believe that before 1997, it was ignored and simply left alone to be in the forefront. It was always felt that it did not need help and support. That was utterly wrong. The first thing that we needed to do was to put in regional support, even in those regions that were incredibly successful. I support the
Government in the introduction of the regional development agencies, which have been a great driver in moving forward.
At this time of global economic turmoil, nobody is immune, but there is plenty that we can do. Business, Government and Members of Parliament can come together to understand what business needs and to try to address the most pressing issues. Plenty of advice is available from Government agencies and organisations. Many of them were mentioned by my hon. Friend the Minister, so I shall not go into detail. We ought to pay tribute to many of the businesses in our communities that take the supply chain seriously and that value small businesses as a part of that supply chain, helping them to become more efficient and paying them decently.
I welcome the announcement that the public sector will pay decently for procurement, but business can do that, too. Thales in Crawley employs 2,500 people and has made a new investment of £100 million in the area. That company values its supply chain, meets those who form a part of it and talks with them about how best to proceed. Varian, a company that produces fantastic diagnostic and treatment linear accelerators, values its supply chain. It brings the members of that chain together once and year and awards are handed out. All those companies, in these difficult times, have protected themselves against waste and against being unable to face difficult circumstances. There are many such examples. BAA has a regular Meet the buyer event where people from large and small businesses can come together and understand what small businesses need.
The issue is not just about how we support business and that is why, listening to the debate so far, I have found it limiting. What matters is how we treat our communities and the places where we live, and how we deal with transport issues. Whenever we address our business communities, the one thing they want to talk about is how to make transport systems better and how they can best get into London more quickly. That is only possible when we invest in rail and when we ensure that such changes happen.
Small government cannot deliver the sort of investment that businesses need to do their job. I do not think that this is the time to start to talk about cutting investment in the public sector or in our communities. The heart of those communities will make our business communities successful, too.
Last Friday, I was at the Crawley and Gatwick chamber of commerce. I pay tribute to its president, Steve Rham, who brought together more than 100 small businesses to celebrate that organisations 70th birthday. I gave the keynote speech, which gave me the opportunity to speak to the people at each table. I learned that they want the Government to listen and to give them down-to-earth support. They want Ministers to make sure that there is enough runway capacityand I know that Opposition Members have opposed the development at Heathrow. The people to whom I spoke are deeply worried about that, as they know that doing business overseas means that they must have access abroad. They do not support the Oppositions stance on that matter.
The people I met on Friday want Ministers to listen to their concerns. They were delighted with the campaign led by Jeremy Taylor of the Crawley and District Industrial Association to retain the Gatwick Express. People need to be able to get into London as quickly as possible so
that they can do their business and return to their firms in the south of England. That is how a Government can truly listen to business, and it is about more than simply producing headline-beating figures.
The other big issue that many people choose not to talk about is the provision of affordable housing for the work force. It is no good talking about providing businesses with what they need if the regional assembly opposes the Governments figures for how much housing is needed in the south-east. We have to be able to house workers properly and decently, as they are the people who make businesses in the south-east operate. At present, for all that is said in Government, the people in the regional assemblies do the opposite, with the result that business is more difficult to operate.
We must fight that sort of opposition tooth and nail. We must support business, take action on banking and get transport right. We must make sure that there is enough runway capacity in the south-east, and that people have access to training and education. It is hard to believe that there are thoughts about getting rid of Train to Gain, which has so much supportboth among those who undertake the training and among the employers who know the value of that training. Getting rid of Train to Gain would be reckless at a time like this.
The Government are getting on with the real work of supporting business, but we need more than just a quick fix. Ministers need to listen to Back Benchers and their ideas, and to bring forward proposals accordingly. We will get through this awful time if we support our businesses and our communities.
Mr. Brian Binley (Northampton, South) (Con): First, may I congratulate my party on bringing this vital debate forward? Hundreds of thousands of people involved in small business will pay attention to our words tonight.
They will hear some fine words in the debate but, as my grandmother used to sayand I have mentioned this to the House in a previous debatefine words butter no parsnips. People outside the House are looking for action, and that is what we need to talk about.
I need hardly tell the House that people in the small business sector are very worried. They recognise that they are vulnerable because they do not have the financial depth of the big corporates, and they are concerned that they will have to handle the present economic difficulties for perhaps two or three years to come.
However, the people who run small businesses are not foolish, and they know that they present difficulties are not their fault. They know that their fight for survival was created, not by themselves, but by a corporate sector that forgot the basic rules that we all live by, and by a Government who encouraged that sector to do so. My grandmother could have told us that 125 per cent. mortgages were crazy, but Northern Rock seemed to want to live off the back of that foolish mechanism. My grandmother could have told us that the build-up of personal debt was crazy, but that was encouraged by our now Prime Minister, who used to be Chancellor.
My grandmother could also have told us that people cannot have what they cannot afford to pay for. She knew some very simple and basic concepts that people in the clever banking sector forgot about. They thought
that they could beat the market in real terms by lending money to people who could not afford to pay it back, and that what they called derivatives would let them come out the other end of the deal in a successful way. We now know that that was crazy, but we also know that the present Government have contributed sizeably to the situation in which we find ourselves.
Other Members have gone through many of the issues, and I will not rehearse them. All the small and medium-sized businesses out there will say that this is not about the death of capitalismwe have heard a lot about thatbut about poor financial sector dealings and a Government who refused to recognise that one cannot have what one cannot afford.
So how did this happen? I could talk about the deregulation of the Bank of England, the setting up of a regulatory agency that could not do the job, and the raid on private pension funds. I could talk about the growth of the numbers in public sector employment600,000 since 1997, all having to be paid for by the wealth-producing sectoror about regulation, with an extra burden of £66 billion, all on the back of the wealth-producing sector. We all know that those burdens have been placed on the wealth-producing sector, and know where the truth lies. No wonder that the International Monetary Fund has intimated that among the western nations we are one of the worst prepared to deal with the present crisis. If that does not lie at the door of Government, I do not know what does.
Let me turn to how the banks are dealing with this. If the banks get it right, we are in with a chance, and the Government, because of the taxpayers money that they have put into the sector, are in a better position to ensure that the banks do get it right. However, I am fearful that that will not happen to anything like the degree that is necessary. Too many small business owners are asking their banks what contingency they might expect should they hit a bad debt and they find it takes longer to have their invoices paid or have a one-off hit on an otherwise profitable business. Sadly, the banks are responding by putting up interest rates on overdrafts, threatening to cut overdraft facilities and asking for personal guarantees, so that a partner in a small business has to go home to his partner and say, Weve got to put our house on the line. She may well reply, Weve worked hard enough for this businesswere not going to those lengths. The Government need also to take those factors into account when they talk to banks.
Banks are no longer structured to help small businesses. In 1989, when I started a business that now employs 140 people, the bank manager was effectively in the cupboard and came out whenever I needed him. One cannot get those sorts of decisions at a local level any more, because they have to be shoved up the line to accountants who think they know better but, in truth, know nothing about the local sets of circumstances or the businesses they should be serving. Consequently, bad decisions are made. We need to ensure that the banks make quick decisions for small businesses. That means that those decisions are made by the branch concerned, not driven up the chain until they reach an accountant who knows very little about the situation.
The Government can be involved in several other areas, many of which have been set out by the Daily Mail. I want to relay to the Minister some of the messages that I have received from small and medium-sized
businesses so that he might take note of them. I am not suggesting that all these measures are practical, but they might be worthy of consideration or amendment or represent ideas that can be put into effect relatively quickly and greatly help the small and medium-sized business sector. Those businesses are fighting for survival and need a response now, not in two weeks or two months time. They need to know what their contingency is now so that they can properly plan to get through the vital period that they face over the next six, 12 and 18 months.
I have spoken to people in small businesses, who tell me that they need consistency from the banks. There is inconsistency between banks and between regions, and small businesses are getting different responses from different banks and different regions, depending on who they deal with and where they live. Surely banks ought to be much more consistent. Given that it is viable, people with a small business ought to know what they can expect when they go to talk to their bank.
May I tell the Minister that only three banks can access much of the EU funding for business? We should encourage all banks to register for the scheme. They are not doing so, and the Minister might consider that.
Lorely Burt (Solihull) (LD): Does the hon. Gentleman share my concern about the lack of flow-through of the European Investment Bank funding and the fact that the Government seem to be interfering in the process, which is holding it up? I do not know of a single company that has received any money yet.
Mr. Binley: That is true. Bureaucracy gets in the way of much funding that could otherwise flow more quickly. I ask the Minister to consider that fact, too. Furthermore, banks are not complying with what the Government are saying about negotiation fees, which are increasing, not decreasing.
Will the Government examine the scope for cutting fuel duty? We have spoken about it many times in the House, but there is now an opportunity to do so and I hope the Government might take that on board. Will the Government look at the rates charged on empty properties that builders cannot sell? A number of local authorities are charging rates on new builds that have not been sold and there will be more of those. Will the Government review VAT on repairs on property? ECOFIN proposes that it should come down from 17.5 per cent. to 5 per cent., which would be a great help for the small building sector and enable it to get on with the repair of our housing stock.
The Minister might like to think about spreading business loss over three years for tax purposes, rather than looking at the situation for one year. I have many more ideas, and I shall write to the Minister to add those to the list that I have given. Small and medium-sized businesses are, and will be, fighting for survival over the coming months. Our duty in the House is to do all we can to support them through this difficult period because they provide jobs, growth and, more importantly, creativity in British industry. We must ensure that that lives and is around in two or three years time.
Margaret Moran (Luton, South) (Lab): If the small business community is not depressed enough by the current economic situation, it will be even more depressed by the speech of the hon. Member for Rutland and Melton (Alan Duncan) from the Opposition Front Bench. The speech was short on solutions and long on omissions.
The Opposition omitted to mention who was adviser to the then Chancellor at the time that we were dumped out of the exchange rate mechanism, with all the consequences of doubling unemployment and huge numbers of small businesses in my constituency going bust as a result. The Opposition omitted to mention that they got it wrong on Northern Rock and almost every other financial measure that we have introduced to ensure financial stability for businesses large and small. They omitted to mention that they advocated cutting Train to Gain which, as we heard, is enormously successful and will be extremely important to sustain our small businesses. They omitted to mention that they voted against the small business rate relief, yet are now campaigning as though they had supported itlong on spin, short on substance.
The measures that our Government have produced are practical, workable and swift in their implementation. I declare an interest. I was the first fellow of the Industry and Parliament Trust to undertake a small business fellowship. That has helped inform me about the incredible value of small businesses, certainly within my constituency. The energy, innovation and employment that they contribute to our economy are vital. I am also chair of the all-party group on social enterprise, and I want to ensure that in this debate we do not underestimate the importance of social enterprise in providing a triple-bottom-line value, which, although the sector is small, reflects where we need to go in terms of business confidence.
My constituency is generally seen as an area of bigger business. Vauxhall had plants there, although they are sadly long gone. I welcome the Oppositions apparent new-found support for regional development agencies; without them and European funding, thousands of my constituents would have lost their jobs and not been able to gain jobs swiftly. I sincerely hope that we will not need similar support for IBC Vehicles Ltd, which is seeing more down days. We need to ensure that our regional development agencies are on their toes so that they can support small businesses as quickly as possible and that all the mechanisms to allow them to do that are in place.
We have heard a lot of sensible and practical solutions from the Government; I do not want to repeat ones that have already been mentioned. We need to ensure that all public bodiesand I mean all: local authorities, registered social landlords and so onconform to the Governments suggested payment timetables. We need to encourage large companies to follow that lead as well. They should genuinely partner with small companies and protect their supply chains; we have heard how important that is. I commend London Luton airport, which recently held an event to encourage local supply chains and work with them more productively.
The Government must look at their procurement and tendering processes in relation to small businesses and social enterprise; frankly, they are not good enough. If
we are to ensure the lifeblood of small businesses, getting the contracts through quickly and in a streamlined way will be critical.
Given that we face a credit crunch, this plea may sound a bit bizarre, but I also want the Government to support small business so that it can maintain and not lose sight of its corporate social responsibility agenda. We talk about CSR in the context of big business; actually, we need to ensure that small businesses are part of the game and to recognise that there is a valuable bottom line for them if they get involved in CSR.
At this sort of time, it seems that that should be the last thing that we should suggest. I think, however, that the converse is the case. During the global economic crunch, people are losing trust in financial institutions and businesses, and they need to see trust and responsibility restoredwith customers and suppliers and between businesses. In this new economic era, people need to see that businesses and financial institutions can be responsible and that we can have confidence in them being there for us in the long term. In that way, responsible businesses will have confidence in their products and services, in buying and selling and in controls to reduce risk and maximise opportunity. They will then be focused on long-term successeconomic, social and environmentalnot on the short-term, get-rich-quick projects that got us into this mess in the first place.
People are looking for such businesses and we need to support our small business sector so that they get them. [Interruption.] Some Members are looking askance at me, as if what I am saying is totally irrelevant. I say to them that there is evidence to support my theory. Business in the Community has done research that shows that involvement in corporate social responsibility improves bottom-line financial performance. There is too little evidence in respect of small and medium-sized enterprises, but there is evidence of a real return on investment. Indeed, today, I had a meeting with a company called Commercial, which provides print, stationery and office equipment. It has taken that approach on the environment.
That company managed to reduce its waste costs by 80 per cent. over the last three years. It is now aiming for zero landfill, which will take a huge cost out of its bottom line. It is evangelical about it, and it is partnering other small businesses to give them similar benefits. That is the sort of model we should be aiming for, and that is the message that Government need to get across to small business. We need to support and co-ordinate small businesses so that they can see that there are environmental and economic benefits from that kind of activity, which will pay off in the short, medium and long term.