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Mr. McFadden:
It is important that any statements made by banks about the availability of lending are reflected in the reality on the ground. That is why the Small Business Finance Forum has updated the statement of principles that govern lending by banks to small businesses. I referred to RBS earlier, but Lloyds TSB has announced a charter for small businesses, which commits to maintaining overdraft limits and margins at existing levels, and HSBC has announced a £1 billion business support fund for UK small businesses to fund
working capital. Some action has been taken, but we will, of course, continue to work with the banks to ensure that the sort of statements made by the banks and mentioned by the hon. Gentleman actually feed through to the small businesses in his and other constituencies.
Alan Duncan (Rutland and Melton) (Con): The real truth is that businesses are increasingly desperate because their credit lines are drying up, the cost of borrowing has increased dramatically and credit insurers are refusing to underwrite the payment chain. Surely the Minister would agree that the recapitalisation of the banks has not yet filtered adequately, if at all, into the real economy. Why, then, has he chosen to reject our clear policy for a national loan guarantee scheme that would augment and underpin credit lines in a way that no Government policy yet does—or is he really saying that the Government have no ideas of their own and are simply rejecting it because it has on it the label, “Not invented here”?
Mr. McFadden: We announced a loan guarantee scheme in the pre-Budget report, based on a balance of risk sharing between the Government and business. As far as the hon. Gentleman’s proposal is concerned, as I have already said, the Conservatives have not made clear what proportion of the loans would be underwritten or what balance of risk will be shared between the Government and the lenders. It is important that proposals in this area are properly costed. That is what we have done and if further action is needed to help small businesses, we will not hesitate to take it.
Alan Duncan: But one thing the Government could definitely do to extend credit to businesses is to let them delay their VAT payments. Yesterday the Prime Minister said at Prime Minister’s questions that that was his policy and it should happen, but businesses are saying that, in fact, they are not being allowed to do that because Her Majesty’s Revenue and Customs says, among other things, “Oh no, it would give such a company a competitive advantage.” How can the Minister reconcile what the Prime Minister says one day with what is actually happening on the ground, and what instructions—what clear instructions—have the Government given to HMRC about the deferral of businesses VAT?
Mr. McFadden: The Chancellor announced in the pre-Budget report that HMRC would, on a case-by-case basis, allow businesses to spread their tax and VAT payments over a longer period of time. It is not the case that they have all been refused, as the hon. Gentleman claims that they have. It is judged, as I said, on a case-by-case basis.
In terms of policy—I know that the Conservatives like a leak—perhaps I should draw attention to the hon. Gentleman’s approach. I have an e-mail to him from his colleague, the hon. Member for Hertford and Stortford (Mr. Prisk)—
Mr. Speaker: Order. We will not bother with that.
Car Industry
5. David Taylor (North-West Leicestershire) (Lab/Co-op): What recent representations he has received on the effect of the current economic climate on the car manufacturing and components industries; and if he will make a statement. [242335]
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): We have wide-ranging contact at all levels with the automotive industry. The Secretary of State for Business, Enterprise and Regulatory Reform and I met automotive manufacturers, suppliers and retailers on 27 November and we continue to have close dialogue.
David Taylor: Factories such as Nissan in Sunderland, Honda in Swindon and Toyota in south Derbyshire have components supplied by extensive networks of much smaller firms, which, lacking significant cash reserves, suffer disproportionately as car production is scaled back. Does the Minister agree that a possible erosion of jobs in parts suppliers by up to 25 per cent. will reduce the anchorage of car plants in the UK, with remaining firms sourcing much more from abroad? Further to the question asked by my hon. Friend the Member for Birmingham, Northfield (Richard Burden), what steps is the Minister taking to ensure British component firms have the necessary access to credit to enable them to trade through the deepening recession?
Ian Pearson: My hon. Friend is absolutely right to point to the importance of the supply chain and UK automotive manufacturers sustaining it in the future. Clearly, some of the major difficulties that the automotive industry faces have an impact on the supply chain. We saw Wagon Automotive going into administration in the UK only very recently. Any job losses are regrettable.
As a Government, we need to ensure that we continue to provide measures—the finance that is available—to the sector. As I explained, I have written to automotive suppliers, through the lead manufacturers, outlining a range and package of measures that are on the table and available now or will be available very shortly. Again, we need to see whether there is more that we can do to help some of the companies that are viable but are facing unprecedented shocks to their businesses as a result of the problems that we are seeing internationally.
Mr. Gary Streeter (South-West Devon) (Con): Will the Minister confirm that it is not just about the manufacturers, or even the component manufacturers, but about the national network of dealerships, which employ dozens, if not hundreds, of people in each of our constituencies? As we know, they are struggling and have had a very bad year. Will he help them by the clarifying precisely which cars will have their vehicle excise duty increased over the next year or two, because people out there are still completely confused by this and it is acting as another deterrent to cars being sold? Will the Government enter into a campaign to demonstrate precisely which cars will have their VED reduced or increased, and clarify the situation for the people at large?
Ian Pearson:
The hon. Gentleman is right to point to the importance of the retail end of the industry and the car dealership networks that exist in the UK. They employ significant numbers of people. While they might not be as geographically concentrated as some of the big automotive plants, the cumulative effect is that something like 500,000 people work in that retail sector. What we said about VED in our pre-Budget report was clear, but I will talk to some of my colleagues and officials in the Treasury to see whether there is more that we might need to do to ensure that that information
is widely available. The industry as a whole has welcomed the announcement that we made on VED. We need to ensure that we actively promote it.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): My hon. Friend will be aware that many small companies in my constituency are second, third and fourth-tier suppliers to the car industry. If they go under, it will not only be a tragedy for the employees of those companies, but it could undermine our future industrial capacity to meet the upturn when it takes place. Will he undertake to listen to their submissions and work on policies, but above all will he examine the potential role that Government procurement could have in the motor industry to sustain demand at this time when it is most needed?
Ian Pearson: My hon. Friend has made some key points. Obviously the development of lean production techniques and “just in time” manufacturing has led to a hugely interrelated supply chain. If one part of it suddenly breaks down, major problems can be caused to the process of making cars, so it is right for automotive companies themselves to take a close interest in the financial performance of their supply base. A number of companies have given their suppliers credit to ensure more prompt payment and to help the supply chain through difficult times.
I am not sure that a major Government programme of purchasing new cars would be effective. What we want is for people to start buying cars again because they feel confident about the future, and there are some pretty good car deals around at the moment.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The Government have already introduced a substantial bail-out package for the banks, and there have been calls for them to do the same for the automotive sector. Will the Minister tell us precisely what the policy is on the use of further taxpayers’ funds for future rescue packages, to enable the half million employees in the sector to whom the Minister referred to know exactly what they can and cannot expect from their Government?
Ian Pearson: We were absolutely right to make the decision to recapitalise the banks. Even the Conservatives have welcomed that decision, although they have cavilled at measures such as our credit guarantee scheme. The scheme is effective, and by the end of the year some £100 billion worth of guarantees will have been issued.
As I have said, it is important for us, as a Government, to see what we can do to help viable businesses through difficult times. We are engaged in a contingency planning exercise and we are considering a number of possibilities, which is the right thing for us to do. We will continue to consider what further sensible measures we can take to support the automotive industry during the current incredibly difficult period.
Topical Questions
T1. [242351] David Taylor (North-West Leicestershire) (Lab/Co-op): If he will make a statement on his departmental responsibilities.
The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden):
Our Department is concentrating fully on working with businesses through
what is a difficult economic period, and ensuring that British business can emerge from the downturn in as strong a position as possible.
David Taylor: In the absence of the Secretary of State, I must rely on my right hon. Friend, as his political amanuensis, to interpret Lord Mandelson’s views as reported in The Sunday Times last week. He said that
“it was up to individual companies to sort out their own future if they ran into trouble... ‘We”
“‘are not going to step in when banks and other lenders are capable of doing it themselves.’”
What does my right hon. Friend think Lord Mandelson meant by that, against a backdrop of potentially the worst economic situation for generations?
Mr. McFadden: What that means is that the Government cannot and should not seek to replace the role of the banks as the main lenders to the economy. We have introduced a number of measures—which I have mentioned several times today— to give small businesses access to finance, but the main lenders must be the banks themselves, and that is precisely what my noble Friend Lord Mandelson meant.
T2. [242352] Mr. Peter Bone (Wellingborough) (Con): I have given the Minister notice of this question. An important manufacturing company in my constituency has had to lay off a third of its work force, and 40 people face redundancy as a result. It would like some practical help and advice on how it can afford to pay the redundancy costs, keep going and develop into a slimline company. Can the Minister offer any advice on how the company can both pay the redundancy money and continue to operate in a slimmed-down form?
Mr. McFadden: The hon. Gentleman did give notice of the question. My understanding is that the company has laid off a number of people and is having difficulty meeting the redundancy payments that may be involved in doing so. There is a scheme: the financial difficulties scheme under the Insolvency Service. It is designed to avoid both stress and delay in employees applying under such a scheme. Under this scheme, the Redundancy Payments Office can pay employees the redundancy payments to which they are entitled against an agreement from the employer to reimburse the national insurance fund over time. I am happy to look further into that matter for the hon. Gentleman.
T8. [242358] Mr. Jim Cunningham (Coventry, South) (Lab): Is my hon. Friend aware that some major companies, such as Rolls-Royce, are trying to assist their suppliers through helping them with credit? What are the Government doing to encourage other major companies to do the same thing?
Mr. McFadden:
My noble Friend the Secretary of State yesterday met major businesses and the Institute of Credit Management to agree a code of prompt payment from large businesses through their supply chains. The Government have said they will do their best to be a good and responsible customer during this period, and we understand the importance of prompt payment to small businesses. I entirely agree with my
hon. Friend that this is a job not just for Government, but for the many large businesses upon whom countless thousands of small businesses depend for prompt payment and their day-to-day business.
T3. [242353] Greg Mulholland (Leeds, North-West) (LD): One important area of British industry that is continually ignored by the Government is the pub industry. There is particular concern at this time of year about the income levels of publicans. May I bring to the Minister’s attention the Morgan Stanley report that revealed that between a fifth and a quarter of licensees make under £20,000 a year, which is deemed to be the minimum acceptable level? That equates to £3.30 an hour each for a couple, which is clearly below the minimum wage. Does the Minister therefore agree that the way in which the big pub companies operate the tie is not fair and that the Government should look at that again?
The Minister for Trade, Investment and Consumer Affairs (Mr. Gareth Thomas): The hon. Gentleman might be aware that the Business and Enterprise Committee is currently looking at the issue. We are closely watching the different strands of evidence that are presented to it, and we will carefully consider any recommendations arising from the Committee’s work. As he alluded to in his question, pubs are crucial small businesses in many communities and, as he will be aware from the answers that my ministerial colleagues have already given, the Government are taking a series of initiatives to help small businesses, and pubs might be able to access them as well.
Mr. Austin Mitchell (Great Grimsby) (Lab): A written statement was issued this morning extending the compensation given to Icelandic waters fishermen to aggregate service not interrupted by 12-week breaks. That will be warmly welcomed in all the fishing ports, but will my right hon. Friend tell us what estimates he has of the number of fishermen affected? In terms of the unacceptable proposal to extend the conditions to requiring two years of service during the cod wars, will he bear it in mind that there were in fact three, if not four, cod wars, two of them in the 1970s?
Mr. McFadden: I thank my hon. Friend for his welcome for the written ministerial statement tabled today, which is in response to the ombudsman’s recommendations on the Icelandic waters trawlermen’s compensation scheme issued last year. The statement says that we will run a new scheme based on aggregate service and not using the previous breaks rule. We estimate that that will benefit about 1,000 former trawlermen, who should receive additional payments. I pay tribute to my hon. Friend and all Members representing port communities who campaigned so hard and effectively for their constituents on the issue, and I hope he is right that this news will be warmly welcomed in port communities that have been affected over the years.
T5. [242355] Sir Nicholas Winterton (Macclesfield) (Con):
I tabled a question on 11 September relating to the numbers employed in the various sectors of the textile industry. It appeared on the Order Paper on the first day back after the summer recess. Despite
numerous calls—and answers to the effect that it was currently with two Ministers—the question fell at Prorogation. How can Members do their work properly if Ministers and Departments take so long to reply to vital questions?
Mr. Thomas: I hope that the hon. Gentleman will forgive me for not knowing the specific details of what happened to that question, but I will investigate what happened and get back in touch with him by the end of the week.
Mr. Frank Doran (Aberdeen, North) (Lab): May I add my warm congratulations to my right hon. Friend the Minister for Employment Relations and Postal Affairs on the statement that he made this morning about opening up the cod war trawlermen’s compensation scheme and on finding an answer to a very difficult problem? He will be aware that many of the people who will qualify under the new scheme are elderly, and some have died and their widows are also elderly. Can he give us some idea of the programme for the introduction of the scheme, because it needs to be done quickly?
Mr. McFadden: My hon. Friend makes a good point and I know that he has campaigned hard and effectively on that issue. We are aware that this has taken a long time. It is a complex scheme because, as my hon. Friend the Member for Great Grimsby (Mr. Mitchell) said, we are often dealing with fishing records going back for some decades. I can assure my hon. Friends and other Members with an interest in this area that we will implement the new scheme as quickly and efficiently as possible.
T7. [242357] Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): When will the Hooper review on postal services be published? When it is, will the Minister ensure that he resists any attempt to reduce the scope of the universal service obligation? Will he also use it as an opportunity to put pressure on those many companies that charge excessive costs for deliveries to the highlands and islands and suggest that they use the universal rate for parcel delivery offered by the Post Office?
Mr. McFadden: If I may quote the Secretary of State who, when asked about the timing of that report in the House of Lords a couple of weeks ago, said, “Not before too long.” I echo that. In terms of the USO, I remind the hon. Gentleman that it was this Government who enshrined the USO in primary legislation.
Church Commissioners
The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
Church Collections
2. Miss Anne McIntosh (Vale of York) (Con): Whether the Church Commissioners hold information on the amount of money taken in collections in churches. [242323]
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