Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD):
I am sure that the Minister is concerned about the fate of house builders across the UK. In that
context, is he aware that house builders in Scotland face particular problems from rule changes introduced by the Scottish Government, which require housing associations to borrow a greater proportion of money for new affordable housing developments from the private sector? That is reducing the scope for such developments and making matters worse for the house building sector. Will he raise that with Ministers in the Scottish Government to ensure that the entire UK house building industry is given the boost that it needs?
Ian Pearson: I note what the hon. Gentleman says. As he will be aware, that is a devolved matter, but I hope that the Scottish Government would recognise, as the UK Government do, that the housing sector is an important part of the UK economy, and regulation needs to be proportionate and appropriate. We do not want regulation that gets in the way of construction projects that need to continue at this point in time.
Tony Lloyd (Manchester, Central) (Lab): My hon. Friend mentions the need for regulation to be proportionate and appropriate. Even in the good times, the construction industry makes use of false self-employment, which often leaves people unprotected and uninsured. Construction also suffers from high levels of health and safety risks. Now there is a downturn and competition is tight, those problems will increase, so can he make the regulatory agencies aware of the need for extra vigilance to protect people employed in that industry?
Ian Pearson: My hon. Friend makes a good point about health and safety issues in the construction sector. As he will be aware, we already have rigorous inspection regimes and it is important that we continue to be vigilant in regulating the construction sector. It is done through a risk-assessment methodology, and that is the right approach.
The broader point is that during these difficult economic times, it is right for the Government to want to invest in major construction projects that will bring long-term benefits to the UK economy, and that is what we will continue to do with programmes such as Building Schools for the Future and the new hospitals project. Only this week, we saw the 100th new hospital build implemented. Those programmes are important for the UK economy and we need to continue to make progress with them.
Mr. Mark Prisk (Hertford and Stortford) (Con): Many construction firms are facing a double whammy with projects being cancelled on the one hand and credit being withdrawn on the other. What they need, investment plans notwithstanding, is help with their cash flow. Given that, and given the potential appalling impact on jobs in that sector and in those sectors that rely on it, why are the Government refusing to let small firms defer their VAT payments? After all, they did it for farmers in 2001. Why will they not help builders now?
Obviously, we will consider all representations, but the Conservative partys policy, as I understand it, is to say that it wants a 1 per cent. cut on national insurance and it wants a VAT payment holiday. It will pay for that by cutting tax reliefs, but those reliefs are important to businesses and to their long-term investments, so I do not think that that is a responsible strategy. The simple fact of the matter is that the Government have taken action to recapitalise banks and to ensure that banks will continue to make available competitive lending to small businesses. I would like to think that that would be widely welcomed.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): May I reinforce the Ministers point? In constituencies such as mine, many jobs are dependent on the Governments sustaining their public sector investment. Will the Minister assure me that he will do everything within his power to press the appropriate ministries to sustain that investment in the coming years?
Ian Pearson: Yes, I can give my hon. Friend that assurance. The public sector construction market is hugely important given that it counts for about 40 per cent. of the industrys total output. At this point in time it would be grossly irresponsible to do anything other than to continue to seek strong investment in our national infrastructure. The public sector can lead the way in continuing to ensure that there is strong demand and that there are jobs in the construction sector. That is the responsible thing to do in difficult economic times. To suggest that we should cut that investment, which is what the Opposition seem to want to do, or to reject our proposals to do more, would not be welcomed by the public, who are concerned about construction jobs and about jobs more generally in our economy.
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): The Government are committed to supporting small businesses, including shops, which play an important part in local communities. Yesterday, we announced a cross-Government package of support that focuses on the things businesses have identified as top priorities: cash flow, access to finance and training for staff. We will also continue to promote policies to support vibrant town centres.
Mr. Sanders: There are about 500 empty businesses in my local authority area and that number is rising. It is customers with money in their pockets who keep shops open and the best way to that end is to have decently paid jobs and good inward investment, but the biggest barrier to investment in my area is transport links. The Government have said that they want to bring forward infrastructure projects. Will the Minister give his support to bringing forward the Kingskerswell bypass linking Torbay to the motorway and dual carriageway network? The absence of that link is the biggest barrier to investment that my constituents face.
Ian Pearson: I am sure that the hon. Gentleman will want to raise that transport issue at an appropriate point in Transport Question Time. His general point, however, is important, and it is about what we can do to help people and businesses during difficult economic times. The best thing that we can do is to continue to provide a package of support for small businesses that are going through difficult times. That is why we made the announcement that we did yesterday. In this difficult macro-economic climate, we need to take some fairly fundamental decisions about borrowing, too, and that is what the Government are doing.
Miss Julie Kirkbride (Bromsgrove) (Con): In his answer, the Minister rightly pointed out that cash flow is a big issue for small businesses. However, although there may have been argument in favour of empty property taxes in the boom times, does he accept that they compound the problem in the down times? Will he reconsider the matter, to help small businesses and others to get through this difficult period?
Ian Pearson: As the hon. Lady will be aware, both the Barker and Lyons reviews suggested that we should end vacant property relief, and that is what happened in April. That relief was regarded as a £1.3 billion subsidy for owners of commercial property, and not for the small and medium-sized businesses that are the backbone of this countrys economy. We need to help small and medium-sized businesses, and that is the focus of the package that the Government announced this week. That package has been welcomed by the CBI, the Federation of Small Businesses and the British Chambers of Commerce. I hope that the Opposition will welcome it too.
Sir Patrick Cormack (South Staffordshire) (Con): Barker and Lyons reported before the recession. What we need from the Government is specific action now, not mere generalities and platitudes. One specific thing that is within the Governments power is to suspend the rates on empty properties. Will the Minister do that, and do it now?
Ian Pearson: I can understand that the hon. Gentleman feels passionate about this issue. We are going through challenging economic circumstances: it looks as though we have tougher times ahead, and the best thing that I can say is that we need a Government who are on the side of hard-working people. We are providing help for small businesses with health checks, training support and business advice. In addition, the Government are a huge purchaser and we have said that we will ensure that we will pay our bills promptly. We are introducing all those measures at the moment, and a range of other measures is already available through the Business Link programme. The Government are committed to ensuring that support for business continues to be delivered effectively.
Alan Duncan (Rutland and Melton) (Con): This may be the first occasion on which a Minister of Cabinet rank is not available to answer questions in this House. Many consider that to be a complete insult to the democratic process.
Small shops need rate relief and credit lines, but there is an enormous gap between the Governments words about banks being prepared to lend to small businesses
and the reality on the ground. Even now, banks are cancelling overdraft facilities left, right and centre, often at just two days notice. Does the Minister accept that that is already driving many businesses to the wall?
Ian Pearson: I am certainly very aware that there is anecdotal evidence of the practices that the hon. Gentleman describes. It is one of the reasons why the Chancellor and my noble Friend Lord Mandelson are meeting the banks today. It is clearly right at this time that banks should continue to make lending available to small businesses. One of the conditions of the bank recapitalisation fund that we announced two weeks ago is that banks must continue to make competitively priced loans available to small businesses. We are discussing that with the banks and will continue to do so, because we want to make sure that small businesses are helped through this difficult time. We do not want the banks to turn off the tap and cause good businesses to face huge financial problems.
Alan Duncan: The Government say that there should be more lending, but they then addunderstandably, I supposethat financial conditions will have to be met. In a recession, are not those conditions bound to stop the lending that is promised? Whatever propaganda we get from the Government about what they want to happen, there will in fact be a further serious contraction in lending by banks to business, and not much of the promised expansion in lending.
Ian Pearson: It is not the role of Government to make decisions on lending between individual banks and companies, and it is right and proper that that business be conducted in the normal way. However, the Government can talk to the banks about the principles that underpin their lendingthe instructions that go from head office to branches and the managers who make decisions with companies on a day-to-day basis. It is right that the Government should show a strong interest in that, and right that when talking to banks about the bank recapitalisation package, we insist that they do all that they can to support small businesses and home owners with mortgages in these difficult economic times, and we are committed to doing just that. The hon. Gentleman should welcome that, not criticise it.
The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): The Competition Commission is undertaking an informal consultation on how to establish an ombudsman and is arranging a series of meetings with interested parties. Subject to responses, the commission plans to publish shortly, for wider consultation, a final order on the groceries supply code of practice and undertakings in relation to the ombudsman.
Andrew George: I am sure that the Minister will congratulate the Competition Commission on a thorough, balanced report, which draws conclusions and makes recommendations. Crucially, the commission found that
the transfer of unexpected costs and excessive risk
by supermarkets would impede investment and innovation, and would ultimately affect consumer interests, too. In what circumstances would the Government contradict the commissions carefully considered conclusions and recommendations, particularly with regard to the establishment of the ombudsman?
Mr. Thomas: The hon. Gentleman will forgive me for pointing out to him that the Competition Commission published its report at the end of April. I acknowledge that it did a thorough piece of work. I hope that he acknowledges that the Government, who published their response to that document some three months later, after we had had the chance to talk to a number of interested parties about the commissions recommendations, also did a thorough job of work in thinking about how to respond to the commission. I hope that he will forgive us if, rather than speculate on what might happen and what might be in the order that the commission publishes, we wait to see what happens in the forthcoming consultation. We will allow the commission to do its work, and we will review our position at the end of the process.
The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Pat McFadden): Our Secretary of State has the Department firmly focused on working with business in this difficult economic period and on making sure that business comes out the other side of this period with the entrepreneurial strength and creativity for which British business is renowned across the world.
Philip Davies: The best thing that the Government could do to help small businesses is get off their backs. If the Government do not do something to ease the taxation, regulatory and employment cost burdens on small businesses, many thousands of them will go to the wall and many thousands of people will lose their jobs. May I therefore suggest that one of the first things he should look to do is exempt small businesses from huge swathes of regulation that some bigger businesses might be able to afford, but many small businesses certainly cannot?
Mr. McFadden: I agree that regulation can be a cost to businesses. We need some regulation because we operate in a society and a labour market with rules, but the Government make a significant effort to reduce administrative burdens. We have identified some £800 million of administrative burdens to be cutfor example, many small businesses no longer have to appoint a company secretary or have an annual general meeting, which saves costs, and we have made a number of other changes. The general point that the hon. Gentleman raises about regulation is fair, and the matter is one that the Government take seriously. We make a significant effort across Government to make sure that regulatory burdens are no greater than they need to be.
T5.  Mr. Eric Illsley (Barnsley, Central) (Lab): On the need to look at regulation across Government, in a time of great economic uncertainty, the glass industry has begun to suffer. It is a multinational industry, but Ardagh Glass has already closed a furnace in Worksop, and United Glass is closing a plant in Harlow. All those factories are affected by climate change legislation, including the integrated pollution prevention and control directive and the climate change levy, which has been increased even before its first term has run out. They are also affected by huge gas prices and by the emissions trading regulations. All those pieces of legislation or regulatory burdens are dealt with by other Departmentseither the Department of Energy and Climate Change or the Department for Environment, Food and Rural Affairsbut will my hon. Friend get together with colleagues across Government, as he has mentioned, to consider how to relieve that environmental taxation burden on industries such as the glass industry?
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): I know that the glass industry is important in my hon. Friends constituency. Overall, it is worth about £1.2 billion annually and provides about 28,000 jobs. He is right that climate change agreements and the EU emissions trading scheme cover the glass sector. We are obviously not going to reduce our commitment to climate change agreements, which are beneficial, or to the EU emissions trading scheme, which we strongly support, but he is right to point out the burden of some regulations, and I am certainly happy to meet him and talk to colleagues in the new Department for Energy and Climate Change about those issues.
Ian Pearson: It is money that is part of the budget of the Department for Innovation, Universities and Skills to the period 2010-11. We decided to give priority to small businesses, which I would have thought all parties in the House would welcome. We have also announced that we will remove some restrictions on how that money is spent. We have refocused measures, so that there will be less regulation on how the money is spent and so that it can be used to help to provide bite-sized chunks of training for companies. Companies that face having to go on to short-time working can take the opportunity to retrain staff, rather than lay them off. That is a sensible thing to do during difficult economic times, and it will be welcomed by business.
T3.  Mr. Andrew Robathan (Blaby) (Con): Since the Department is responsible for regional development agencies, will a Ministerany Ministertell the House what exactly regional Ministers do? What is the point of them, apart from their acting as regional cheerleaders for the Labour party?
Regional Ministers play an important role in working with businesses in their local area in difficult economic times, as do RDAs. The other night, we debated in the House measures to help small businesses.
RDAs are an important part of that work, because they can always move more quickly on information on the ground in local areas, and respond in a timely and appropriate matter.
Mr. Jim Devine (Livingston) (Lab): As my hon. Friends are aware, it is just over two years since the collapse of Farepak and people are still looking for answers to what happened to their money. Two weeks ago in business questions, I asked about the report commissioned by the Government, and I was given an assurance by my right hon. and learned Friend the Leader of the House, who said: