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Thirdly, there should be a single pre-qualification questionnaire for Government contracts that are worth less than £50,000. If a firm pre-qualifies for one Department, what is the logic behind making it go back to the beginning and reapply to another Department, given that it was clearly eligible for one Department? Taken
together, those reasonably small steps could make a big difference to many businesses in my constituency and, indeed, in every region.
Mr. Kidney: I understand and agree with many of the hon. Gentleman’s points. I am a great fan of the representative bodies, large and small, of business—the CBI, the British Chambers of Commerce, the Federation of Small Businesses. Does he agree that, with some co-operation from the public sector, those organisations would be great engines of support for the sort of the businesses that experience the difficulties that he described?
Mr. Prisk: I regularly meet representatives of those organisations and others. The hon. Gentleman is right that it is important that they have a strong voice. However, many of them are extremely good at doing what he suggests and it is important that the Government work closely with them. Indeed, several of my points came directly from the FSB, the CBI and other organisations.
Since the second world war, London has become a great world city. However, when we look at our international competitors, it becomes clear that some of our other cities have slipped behind. For example, Manchester, Birmingham and Newcastle, which are fantastic urban centres and have made great strides in recent years, have slipped behind their competitors in many major European countries, especially in GDP per head. That does not mean that we are a poor country, rather that we have become more divided between a Greater London metropolis and the rest. In the past 16 years of growth, the south-eastern economic powerhouse has moved further away from the rest of the UK.
Ten years ago, the Government presented their plans for regional development agencies. Yet from the start, those agencies were set two contradictory agendas: one collaborative, the other competitive. On the one hand, they are meant to help national Government close the gap between them, but, on the other, they are meant to promote their own prosperity. The most obvious example of that contradiction is the way in which RDAs compete abroad for inward investment.
If one travels abroad to the major centres of economic activity, one almost invariably finds different RDAs, with different offices, staff and budgets, each vying for the same inward investment. For example, in May, I went to Shanghai with nine other Members from different parties. There, we discovered that, in addition to the British consul and the team from UK Trade & Investment, there were four separate RDA teams, all bidding for the same projects. That makes absolutely no sense, and was completely bewildering to Chinese investors and businesses. I made representations to the Minister in May and June and I am told that some progress has been made. I hope that, following those representations, the nonsense has been resolved—perhaps he can tell us.
Mr. McFadden: The hon. Gentleman describes offices abroad organised by the RDAs as “nonsense”. Will he say whether his colleague, the Mayor of London, intends to close all the London Development Agency’s offices abroad, as he suggested during his election campaign?
Mr. Prisk:
If that is the best response that the Minister can make, we are scraping the barrel. The Mayor of
London rightly has his own agenda and will do what he thinks is right. I am talking about the Minister and his responsibilities. When we made representations in the past two years, he and his predecessors failed to make changes. I asked in May and June whether business in Shanghai had changed. Will he confirm that?
Mr. McFadden: We believe that such offices work well with UKTI. Indeed, we recently commissioned a review into how they were working by the independent consultants Arthur D. Little. What I am interested in is whether, as well as hanging the guillotine over the RDAs, to use the phrase that the hon. Member for Brentwood and Ongar (Mr. Pickles) used, the hon. Gentleman is still committed to closing all the RDA offices abroad.
Mr. Prisk: I have told the Minister what should be done. There should be one strong team working in all the key economic centres that pools our resources and uses the strengths in UK Government, so that when investors are thinking about coming to this country, they get a clear and consistent view. The current muddle causes conflict.
John Howell (Henley) (Con): Let me reiterate my hon. Friend’s point. My experience as an exporter and as someone who has helped UKTI is that the RDAs’ approach has fundamentally eroded any concept of UK plc. That approach has meant that this country cannot exercise the muscle that the countries that have maintained a country approach can. For me, that was illustrated by a businessman returning from a mission to China. He said that it had been a disaster, because the Chinese had failed to appreciate the difference between the east and west midlands.
Mr. Prisk: I can reiterate that point. I had a peculiar discussion in which I had to try to explain why two separate representations were being made to the same business about why Coventry was better than Leicester. Wonderful as those cities are, to someone in Shanghai that competition is confusing. The result is that the business went to Germany in the end. The Minister might be happy with that competition between our cities, but it is not productive. I am keen to ensure that we have the most effective UK voice. I am happy for it to draw on the talents across the regions, but there must be a single operation and one powerful voice.
Mr. Prisk: If the Minister is going to promise that he will provide that voice and remove such competition, I shall be happy to give way.
Mr. McFadden: The regional offices should work with UKTI, but the hon. Gentleman is singularly failing to answer a simple policy question. Given the chance, would his party close the regional offices or keep them open?
Mr. Prisk:
We believe that UKTI must be the lead voice abroad. The Minister can draw from that exactly what I mean. If the RDAs wish to participate, that is fine. However, there should be no competing offices and
no competing resources; rather, there should be one powerful voice abroad. I hope that that answers his point.
My main concern is not only the confusion in the Government’s policy of having competing bids abroad, but the fact that after nine years and £13 billion, the RDAs have failed to close the regional gap. Independent statistics show that, outside the greater south-east, England’s regions grew faster in the seven years before the RDAs were introduced than in the seven years afterwards. Indeed, the rate of business creation in some of those regions is static. The result is that whereas the seven regions outside the greater south-east represented 64 per cent. of the nation’s economic output in 1992, by 2006, the latest year for which we have statistics, that figure had dropped to 56 per cent.
I am not saying that everything that has been done has been wrong or that every pound spent has been wasted. However, the fact remains that the economic divide, which logically lies at the heart of a regional economy policy, is worse today than when those agencies began their work.
Alistair Burt (North-East Bedfordshire) (Con): My hon. Friend is being very generous with his time. He has illustrated that the RDAs have struggled to cope with the economic agenda that they have been given, but they have been given additional things to do, because of the failure of the regional assemblies and regional government, and have now been tossed the bone of new planning powers. Has my hon. Friend found any RDA that welcomes the new opportunity that it has been given?
Mr. Prisk: My hon. Friend is prescient as always, because that is precisely my next point.
The question is: what should the Government do now to help business in the regions? First—this relates to my hon. Friend’s point—they should not dilute agencies that are meant to aid business by loading on to them functions that they neither want nor need. I have had a string of meetings with RDAs, all of which made it clear that they do not want the planning powers. I look forward to meeting an RDA that does want them, but none has contacted me yet. As the regional assemblies are collapsed, the idea of transferring planning powers to the RDAs makes no sense. That is why we propose instead that responsibility for the regional spatial strategies should return to the hands of local government—to people who are directly accountable to the communities that they serve.
Secondly, the quality and accessibility of business support needs to be sharply improved. The Minister confirmed that the Government had announced a reduction in the number of business support schemes last week, but I am yet to be convinced that Ministers really understand how and why business support must be business led, not Whitehall driven.
It is also clear, however, that we need to look ahead to see how we can strengthen the economies beyond the south-east. To do that we need to ensure that the future of economic development is closer to the real centres of economic activity. After all, the administrative boundaries of the regions rarely reflect local economies. Let us take my county of Hertfordshire as an example. Hertfordshire’s economy faces south towards London, but we are lumped
in with East Anglia. The M27 corridor along the south coast, for example, is a natural travel-to-work area, but the Government have split it into two regions. The future lies not in Whitehall-led policies, with artificial boundaries, but in enabling closer co-operation both between local authorities and between councils and businesses.
After 16 years of continuous economic growth, business is facing the harsh prospect of declining demand and shrinking cash flow. It is vital for businesses, in whatever region they lie, that we focus on how we can help them to survive. That is why my party has set out positive ideas to help them to cut costs, keep jobs and ease cash flow. That is also why the Government should strip their procurement budget of needless red tape, to enable small businesses to compete for this valuable work. I hope that Ministers will consider carefully the suggestions that we have made in this debate. All tiers of government have a part to play in the coming months to help businesses survive. Like the rest of us in the public sector, the Government must not forget that it is not they who create wealth, but business. Business creates the wealth and jobs on which the rest of us rely. It is important that Government Members remember that.
1.7 pm
Mr. David Kidney (Stafford) (Lab): It is a pleasure to follow the hon. Member for Hertford and Stortford (Mr. Prisk), who was unfortunately unable to attend the meeting last night in Committee Room 10, which was organised by the Industry and Parliament Trust. Parliamentarians had a good discussion with representatives, owners and managers of and professional advisers to small businesses throughout the country.
The event was very useful and showed that the small business sector is in a healthy position, representing as it does 99 per cent. by number of the enterprises in this country—about half our enterprise employment and more than one third of the total earnings of the sector. People said last night that they felt they were entering this difficult time in a much better position than in 1990, when they were net borrowers. Now they are net depositors. Now they feel better managed and are more flexible and ready to respond to the situation.
Partly as a result of last night, I want to dwell on two things. One is the big picture of British enterprise in a global economy. The other is the more immediate issue of access to funds, especially when credit and funding have all but dried up. I want to start with British business’s global position by saying, “Let’s hear it for the entrepreneurial spirit in this country. Let’s hear it for the businesses and entrepreneurs who battle and who, with the right support, can carry the world with them, however global the markets in which they operate are.”
The people attending last night’s event were up for the struggle ahead and for seeing our way through to calmer waters, when the current difficulties will be over. We ought to respect the position of people who are willing to put their all into making this country a great place to do business and a great success in world markets. As policymakers and those who make decisions that affect their world, what do we need to do to make them
competitive in a global economy? For us, this means being globally competitive in the areas that affect businesses, including regulation, taxation levels and, in better times, access to funding. This country ought to be well placed in respect of those factors. The Hampton review set us on the road towards world-class, risk-based, proportionate regulation. I might offer a word of caution, however, in that, as a result of what has happened to the banks and financial institutions recently, the appetite for deregulation and light-touch regulation has changed. It will be a challenge for us, as law makers and rule makers, when we come out on the other side of the present crisis, to resist the calls for heavier regulation, and to stay true to the Hampton review agenda of risk-based, proportionate regulation. Of course, the definition of “proportionate” might be different after the experiences that we are all feeling so keenly and deeply at this time.
I should like to make a further point about regulation, although it admittedly relates more to the time when we come out of the present difficulty than to the present circumstances. Since 1994, we in this place have tried three times to set up a legislative fast track for getting rid of regulations that we accept are more burdensome than beneficial to British businesses. The first two attempts were well intentioned, but resulted in hardly any noticeable change. Last year, we made a further attempt, and we now have a Regulatory Reform Committee. The challenge for us, and for the business representatives and businesses that I mentioned earlier, is to work out a programme for sweeping away the regulations that we agree are too burdensome and provide too little benefit. We need to make use of the system that we in this House and the other place have established for fast-tracking the removal of those regulations from our system.
Mr. Prisk: The hon. Gentleman is right to say that red tape is a burden that particularly affects small businesses. Does he share my concern that, according to the Federation of Small Businesses, the cost of complying with the tax system is now estimated to be about £8,700 per firm? Should not that be looked at?
Mr. Kidney: Yes. We receive great advice from many sources about simplifying the tax system, and we should listen closely to it. There are gains to be made in relation to the detail of complying with our tax systems and, yes, there is progress to be made on that.
I should like to make a plea regarding our decisions on which regulations we no longer want. The most recent survey by the Forum of Private Business—which was recently reported to us, as legislators—asked its members to identify the most significant barriers to their businesses. The No. 1 barrier was health and safety regulation. Personally, I think there are great benefits to be derived from health and safety regulation for the safety of the businesses, their work forces and their consumers. Back in July, the Public Accounts Committee cited a telling statistic that should make this country proud of its health and safety record, which is the best in Europe: in 1974, 1,000 people died in their place of work in this country; in 2006, the figure was 250. We should not throw out with the bathwater the baby that is the reason why we have regulation in the first place. There are benefits, and we must not lose sight of them.
A long-term, and perhaps rather techie, point from a legislator such as myself is that it is quite difficult for
any business, but particularly small businesses these days, to follow the laws that Parliament has said they must abide by. We are constantly amending primary legislation, and passing secondary legislation that amends other secondary legislation. This is often difficult to follow. My solution would be to have very general primary legislation that permits things to be done through a secondary legislation system. A lot of the law that results from that should be codified. We should have up-to-date codes to which people can have access, so that they can find out everything they need to know about their subject. That is my long-term desire, and I hope we can achieve it one day.
I want to say a bit more about our global competitiveness and the taxation system. We need to be globally competitive through the tax rates that we charge in this country, compared with others. It is important for us, as legislators and tax raisers, to raise our eyes beyond the borders of our own country and be aware of the changes taking place in other parts of the world, to ensure that we remain competitive to the people who make simple decisions to move their investments from one place to another in this globally competitive world.
On the big subject of Britain in the global market, I would like to praise the workers and managers of JCB for their recent decision to work a four-day week to protect a larger number of the work force from redundancy. Perhaps some Opposition Members are not too keen on the involvement of trade unions in workplace negotiations, but I want to praise the GMB, in particular, for effectively brokering that deal and persuading the work force to vote for it.
Mr. McFadden: Does my hon. Friend think that a company such as JCB would be helped by the abolition of reliefs on investment in plant and machinery?
Mr. Kidney: I am quite proud of some of the reliefs and allowances that we have introduced since 1997. Reliefs on capital expenditure on equipment, and research and development tax credits, are positive things that we should not lose. I understand why my hon. Friend makes that point.
I should like to make a general point about JCB, which also applies to other employers. By making such a decision to keep together its skilled work force, the company is maximising its ability to respond when the upturn inevitably comes. It still has its skilled work force ready, rather than letting them go, which could result in their skills degrading or their getting other jobs and being unavailable to a world-class company such as JCB when the upturn comes. JCB is a creditable example of the British enterprise spirit, with its skilled work force and its trade union acting as a social partner in the workplace.
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