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The crisis facing us is global, interconnected and unprecedented in recent times. The depth and global nature of the crisis means that it affects not only the City of London and the financial markets but the wider economy.

A properly functioning banking system is the vital foundation stone for a thriving wider economy. When we do not have that, as we have not in recent months, businesses find it hard to gain access to finance, investment decisions become more difficult, and confidence declines.

Mr. Philip Hollobone (Kettering) (Con): Kettering borough council is organising a credit crunch summit involving local businesses, residents, banks, building societies and housing associations. Will the Minister or one of his colleagues accept an invitation to attend or, if he or they cannot, will the regional Minister be able to support this initiative? Will the Minister take this opportunity to applaud Kettering borough council’s efforts in this regard?

Mr. McFadden: I am sure that that will be carefully considered if the hon. Gentleman lets us know the date.

Last week, my noble and right hon. Friend the Secretary of State set out some of the measures that the Government are taking to help businesses through these difficult times. We are taking those steps because we are aware of the critical importance of small and medium-sized businesses to our economy—the wealth that they create, the creativity that they offer, and the contribution to the quality of life that they make. The Government are taking steps as regards cash flow, with early payment of bills; and on access to finance, with the important discussions between the Government and the banks relating to the availability of credit. Indeed, today my right hon. Friends the Chancellor and the Secretary of State are meeting the heads of the main banks, the European Investment Bank and business representatives to drive forward take-up of ElB’s loan facility for small and medium-sized enterprises. We also announced measures on access to training, advice and support, which are vital to businesses in these difficult times.

Mr. Mark Prisk (Hertford and Stortford) (Con): I welcome the re-announcement of the EIB money. However, as it originally occurred six weeks ago, why is that
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money yet to be received in any small firm’s account, even though the French Government have already issued the first tranche?

Mr. McFadden: I can assure the House that the Chancellor and the Secretary of State are pressing ahead with this as quickly as possible in their discussions with the banks.

Last night, in the Mais lecture, the Chancellor set out further steps in our approach to the situation, particularly with regard to public spending. He said:

He also stressed that the Government will take the decisions necessary to ensure stability in the medium term to return borrowing and debt to a sustainable level.

These statements matter for businesses in our regions because many businesses depend on the Government as a customer. Those businesses supply the goods and labour that are necessary for the building of schools, roads, and so on. They include companies such as Hill and Smith in my constituency, which I visited on Friday. It makes crash barriers for our roads, and the Highways Agency is one of its main customers. Such companies are very interested in the level of public spending that is to take place.

Mr. Prisk: Statements are welcome, but money would be nicer, from small firms’ point of view. Why have the French Government managed to get the money out and we have not?

Mr. McFadden: The hon. Gentleman says that money would be nicer. Perhaps he could take that up with his colleague, the hon. Member for Rutland and Melton (Alan Duncan), who last week, having posed the question, “Where should we be?” told the House that we should have “lower spending”. There is quite a contrast between the position that the Chancellor set out last night and the position of the Conservative party.

The steps that we have announced on support for businesses and on public spending are measures aimed at benefiting the whole country. We want to see businesses prosper and opportunities created in every part of the country. For that reason, we reject the notion advanced by a right-wing think-tank over the summer that we should give up on certain parts of the country and that if people wanted a better life they would simply have to move to get it.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): One of the announcements made last week concerned help for business through the way in which Her Majesty’s Revenue and Customs dealt with the collection of taxes and with companies in difficulty. At the time of the announcement, the Treasury Minister was unable to say whether new guidance would be placed in the Library on how that help would be achieved. Have there been any developments on exactly what message we can give in our constituencies that are facing trouble about how
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HMRC will put into effect the headlines on taking a more sympathetic approach at a time of economic crisis?

Mr. McFadden: If my Treasury colleagues are ready to issue guidance, they will do so, but the statements from last week stand.

As I said, we are not about to give up on the great cities, the smaller industrial or market towns or the rural parts of our country, as the report over the summer suggested that we might. We believe that action at national and international level is necessary to respond to the current problems, given the global nature of the crisis, but so too is action at regional and local level. One important lever in that process is the network of regional development agencies.

Mr. Simon Burns (West Chelmsford) (Con): On the regions, will the Minister acknowledge that there is a role for individual Ministers for each region to play in helping to encourage and foster good business conditions? If he accepts that proposition, could he explain why the Minister for the East of England, during the first 11 months of her tenure, never once stepped foot in the largest county in the east of England, Essex?

Mr. McFadden: I believe that all the Ministers of the regions are doing a good job in working with business, and I include the Minister for the East of England.

It is now a decade since the Government created the regional development agencies, though I note that the Opposition voted against the Bill that created them. Those organisations, together with business, local authorities and other local partners, have played an important role in fostering economic development in their areas, be it the new media city in Salford, the North East Productivity Alliance aimed at lean manufacturing, or the east midlands redevelopment to create the UK’s largest bioscience and innovation centre. Wherever we go, we can see value-added examples in which those organisations have been important partners.

Alison Seabeck (Plymouth, Devonport) (Lab): I thank my hon. Friend for giving way and for drawing attention to the role of the regional development agencies. He will be aware that marine skills and sciences are important to the south-west, particularly to Plymouth—there is a lot of international expertise. The RDA has been investing heavily in that area and supporting apprenticeships, which are important to small and medium-sized enterprises, of which there are many in the south-west, feeding into that industry. Will my hon. Friend give a commitment to ensuring that there is ongoing investment into RDAs to support apprenticeships in the south-west?

Mr. McFadden: As I said, we can find good examples in each region, and my hon. Friend highlights such an example in the south-west.

Anne Main (St. Albans) (Con): I ask the Minister again whether he has evaluated the impact of removing £300 million-worth of investment via the RDAs from small businesses. The hon. Member for Plymouth, Devonport (Alison Seabeck) may well have wanted
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some of that investment. It was a painful decision; has he evaluated it, and would he like to tell us what he thought about it?

Mr. McFadden: I have a couple of things to say to the hon. Lady, who has raised this point consistently during the past couple of weeks. First, it is not the case that that money has been removed from small business support. The RDAs will spend some £6 billion during the next three years. Some of that money is spending geared for 2010, which has been brought forward to spend on a housing package now which will make an impact in the regions. If she is worried about public spending, I suggest that she discuss the matter with the Members on her Front Bench. They said last week that we should have lower spending. Perhaps she might take up the matter with them.

Mr. David Kidney (Stafford) (Lab): I do not suggest for a moment that there is an equivalence of severity between today’s global shortage of funding and credit, and the collapse of MG Rover in the west midlands in 2001, but does my hon. Friend agree that in the aftermath of that collapse, which was severe for the region, the regional development agency, Advantage West Midlands, responded positively with support for the supply chain so that we did not lose the number of jobs that people thought we would? Is that not a model for the benefit that RDAs across the country can bring?

Mr. McFadden: That is a good point. I highlighted some examples of ongoing regional development around the country. At times of crisis and economic shocks, RDAs have played an important role. For example, during last year’s floods, RDAs were able to get short-term help to businesses quickly and effectively. The example that my hon. Friend gave is absolutely right. In the west midlands, following the collapse of MG Rover, the RDA played a critical role in supporting businesses in the supply chain and in co-ordinating the retraining of the more than 6,000 workers affected. The result, not just of the RDAs’ efforts, but of all those concerned, was that by late 2006 fewer than 500 of the original 6,000-plus workers were still seeking alternative work.

In the current circumstances, RDAs play an important role in working with businesses through their own initiatives, and they have already worked with businesses and local authorities to create a more user-friendly system of business support. In the past, too many of those schemes grew up, however well intended they were. Last week, my noble Friend the Secretary of State announced that they would be slimmed down to 30 advice, grant and loan products, which collectively will deliver some £1.4 billion in support to businesses. In individual regions, help is being provided to businesses in the current environment—for example, One NorthEast’s efforts to match jobseekers with vacancies in the area or, in the south-east, the development agency’s efforts to help businesses reduce the cost of their energy needs.

Last week, when I said that the Opposition had placed a question mark over the future of the RDAs, the hon. Member for Rutland and Melton said it was not so, but I have checked the statements of Opposition Members on that issue. The Leader of the Opposition said, just a couple of months ago:

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He went on to say:

When asked about restructuring regional quangos, the Conservative local government spokesman, the hon. Member for Brentwood and Ongar (Mr. Pickles), said that:

It is quite clear that the Opposition have placed at least a question mark—and that is putting it politely—over the future of RDAs.

Mr. Prisk: Let us be clear: no commitment has been made to do one thing or the other. We recognise that the regional governance of this country has become a muddle, which is why the assemblies are going. If the Minister is so keen to hear our policies, why is he not willing to wait? We have made it clear when we will make the final announcement. Good things come to those who wait.

Mr. McFadden: I do not think that the hon. Gentleman can gainsay the quotation of his own leader:

It is impossible to deny that that is a threat to the RDAs. The quotes stand, and if the hon. Gentleman thinks that the policy is in doubt, perhaps he should talk to his party leader—perhaps he has not been told. We appear to be hearing one thing from the hon. Gentleman and another from his party leader and his local government spokesman.

We will continue to help businesses through the current economic difficulties with national, regional and local action. Local authorities have an important role to play as a customer, as with national Government, and through the valuable economic focus that many have.

Business taxation has been mentioned in our debate about the best way in which to help business. The rate of corporation tax and the small business rate are lower than those that we inherited. It is important for business to know that the Conservative party proposes to reduce reliefs on investment in plant and machinery as well as to abolish the £50,000 annual investment allowance. That would have a direct impact on precisely the sort of investment decisions that businesses need to make during the downturn. It has been fairly said that, in the wake of the financial crisis, perhaps the country should rely less on financial services and do more to support manufacturing. However, abolishing or reducing the reliefs would hit precisely the sort of investment that the country needs to boost manufacturing. Given the part of the country that I represent, I believe that manufacturing is important and valuable to our economy.

There is no doubt that it is a difficult time for our businesses. We cannot insulate business or our country from the effects of a global downturn, prompted by a banking and financial crisis unprecedented in recent decades. However, we can say to businesses and their employees that we stand with them. Through the steps that we have taken internationally, nationally and regionally and locally, we will continue to stand with business to help it through. On the other side of the difficult economic period, we will work with business to ensure
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that the energy and creativity of British business, which is renowned throughout the world, can continue contributing to our country in future.

12.52 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): The debate comes, as the Minister suggested, at a time of great financial uncertainty. Businesses throughout the UK face falling demand, rising bills and—as was mentioned with regard to the banks—a squeeze on their finances. Throughout the country, businesses fear that the boom of the past 16 years is turning quickly to bust. The Prime Minister may be in denial, but many of our constituents do not have that option. They face potential redundancy, and the businesses that they have built up over many years face closure. That is why I believe that the Government should scrap their planned tax rises for small companies. What, for example, is the economic logic of increasing small company corporation tax by £370 million in this of all years? As business owners in Cornwall said to me recently, they need a tax rise like they need a hole in the head.

We need further action. The Government should cut payroll taxes for the smallest employers to help them save money and thus keep jobs. Conservative Members want to help more small firms claim business rates relief. The Local Government Association reckons that, across England, only half the eligible firms benefit from the relief, despite its being worth up to £1,100 per annum. More needs to be done to help eligible firms claim that money, and I am pleased to say that my party is leading the way.

May I bring to the Minister’s attention the concern about Government contracts that was raised with me when I met businesses in Birmingham last month? As he said, we have some excellent high-value manufacturers and service firms in the midlands. Yet some of the newer small businesses told me that they feel excluded from doing business with the Government because of the red tape around state procurement. The Government are the biggest purchaser of goods and services, spending roughly £125 billion this year alone.

What needs to change? First, the Government should scrap the rule that requires three years of audited accounts before firms can even be considered for bidding. Secondly, small firms in more remote locations need to be able to access contracts online more routinely than they can at the moment. Some contracts are online, but such a service is far from comprehensive. I have rural enterprises in east Hertfordshire, and their ability to keep track of Government contracts is limited, partly because of their location. Many Members will find that that applies to businesses in their constituencies if they are located away from major urban centres. To help them, all state contracts worth more than £10,000 should be published online as a matter of course, not on the current ad hoc basis.

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