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The complexity of the present system is such that it is very difficult for young people to know what is available to them. The area director of the Learning and Skills Council kindly came to see me the other day to explain all the various courses and routes available to young people in my patch. By the end of an hour and a half, it was Nurofen-inducing. It was not his fault; there are just so many schemes. Some are age-related, some are rather like a bus-once they are full up, there is no room
for anyone else till it comes round again. On paper the scheme exists, but when people apply for a placement, they are told, "Terribly sorry, but you have to wait till next year."
It is crazy that for the youth cohort going to university-about 50 per cent. -matters are relatively straightforward: GCSEs, AS-levels, A-levels, university application. To the cohort not going to university we give all the complexities. Do they stay at school and do a diploma, do they leave school and do an apprenticeship, and who advises them? What is the quality of Connexions in many of our constituencies, and how much access do young people have to that service?
We need to improve the working of the job market considerably. I want to share with colleagues the experience in my constituency. We were determined that no one should be left behind, so we set up two job clubs, with everyone involved in them. It is not rocket science. We are now getting employers such as Sainsbury's coming along to the job clubs to recruit. What is sometimes not realised is that traditional recruitment methods are very expensive. It costs on average £7,000 to fill a vacancy in the public sector and takes on average an eye-watering 156 days. That is an incredibly long time. We are trying to make sure that vacancies that come up are filled much more quickly.
I commend to the House the new website www.zubed.com, which has geospatial mapping, drawing down every job in the country that is known about and mapping it so that people can go on to a website and start to access jobs much more quickly. We must use new technology so that jobs that can be filled quickly are filled quickly, and those who need greater help to get into employment, perhaps because they have a disability, can be given the support that they need. That is what we are doing at the job clubs. We are trying to ensure that we can get people back into the world of work as speedily as possible. We are giving them financial and benefits advice, and help with their CVs. Nowadays most employers want job applications to be done online, so we are determined that people in Banbury and Bicester will be able to have help doing their CV online. It is all good, straightforward stuff.
We are determined as a community to do what we can to ensure that people get back into work as quickly as possible, but in talking to employers I find that, although they are enthusiastic about what we are doing to try to make the labour market locally work more efficiently, they are frustrated, as I said to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) at the start of the debate, trying to work out which Government schemes are real and which are press releases. Employers spend more time trying to work out whether they are real schemes or press releases.
I shall repeat the example that I gave earlier. I, like every other Member, sit in the Chamber, listen to Ministers from the Treasury Bench giving information about new programmes and think, "How does that affect my constituency?" So I table parliamentary questions and the answer arrives. One such query was about the strategic investment fund. I tabled a question on 16 July, and it took the Secretary of State until 12 October to answer, but hey-ho. Lord Mandelson wrote in a letter:
"The SIF is not a fund that is open directly to companies. It is a resource that the Government is using to increase investment through existing measures-like Launch Investment for aerospace"-
"or Grants for Business Investment"-
"or the UK Innovation Investment Fund. Our extra support for business is delivered through these measures, not directly from the SIF."
It is like one of those crazy Russian dolls-various funds that all interrelate. However, if we ask businesses in our constituencies, "How many of you have actually managed to access any funding from any of these Government schemes?", we find that the answer is very few indeed. That is why my hon. Friends on the Front Bench are absolutely right to bring forward proposals that are much more straightforward and sensible, with three or four focused points that everyone can understand. Everyone can see where we are going and what we intend to deliver. They are going to tackle youth unemployment, make the labour market work much more efficiently and give business the support that it needs to get Britain back to work.
8.22 pm
Mr. Brian Binley (Northampton, South) (Con): I shall concentrate on one issue only: the plight of the small and medium-sized enterprises sector. I am sure that it will not surprise many of my hon. Friends, but that is where I am and that is where I stay. I do so for three reasons. First, the sector has the greatest potential for jobs growth-given the right support-in the country. The House will know that in 10 years, the sector put on 2 million jobs, while UK plc shed 1.5 million. That makes the point about the sector's potential. Secondly, 70 per cent. of British creativity comes from the sector, and if ever we need creativity it will be when we need to pick up the green shoots and run with them. Finally, 94 per cent. of the people who work in the private sector in my constituency work in the SME sector, so I have a personal interest in the situation.
The point that I really want to make, however, is that the sector is still suffering as it was six months ago, and people in the sector do not think that the Government understand their problem. Those people feel rather let down, and that the spin that the Secretary of State for Business, Innovation and Skills is putting on the recovery suggests that his only thought is about party political advantage, not about encouraging a sector that is so important to our economy. In fact, they do not believe his spin, because they do not see it or feel it. Indeed, nor does the civil service, and that is quite alarming. I noticed that Jonathan Baume, the general secretary of the senior civil servants union, warned that mandarins were getting nervous about it, and that Mike Eranett, former head of Government information services, accused Lord Mandelson of abusing public money with "outrageous political sloganeering". Of course, the Opposition have never trusted Lord Mandelson, and with good reason. Indeed, the sector has not trusted him. One man from the sector told me the other week that its members felt that he was as slippery as a bag of eels-a good old fen-country saying. When civil servants begin to agree, however, it is surely time for the Government to take notice, and I hope that they will.
Let us inject some reality into the debate. I can tell the House about company after company that complains that banks are not dealing with them and money is not
getting through. Every time I argue that point, however, I get the feeling that I am not being listened to. It might be because I am so repetitive or because I am boring, but for the sector at least I urge the Minister to take real account of its concerns, because its members are massive opinion-formers, if nothing else. They come into contact with customers day in, day out-more than UK plc does. I should have thought that the Government would have had some motivation for understanding the plight of the SMEs, but they do not seem to.
Trade is still declining in the sector. The latest survey from the Federation of Small Businesses shows that 40 per cent. are still experiencing decreasing trade, and that many others are treading water, waiting for something to happen. Aged debt is still lengthening, too. The survey notes that 33 per cent. say that they are still being paid late and many others have seen little improvement. Insolvencies are also still increasing: in the second quarter, there was a 39.1 per cent. increase on the same period one year ago, and an increase of 2.9 per cent. on the previous quarter. Insolvency agents are also taking too big a cut of the money in the first place. I am told that they charge up to £700 an hour. No wonder small businesses do not get paid when other businesses go to the wall. Perhaps the Government ought to think about that. Worst of all, unemployment continues to rise by 2,000 per day.
I could talk at length about the relationship between the public and private sectors, but I shall refer to only one set of statistics. In the 15 months up to June, the private sector lost 1 million jobs. In the same period, the public sector put on 300,000. If ever the Government's priority were made clear, it was in that set of statistics. The sector is not foolish, however; it understands exactly what is happening.
John Mason: I am interested in the hon. Gentleman's comparison between cuts in the private and public sectors. Would he go so far as to say that if there were a 5 per cent. cut in the sales of Coca-Cola, there should be a 5 per cent. cut in education?
Mr. Binley: The hon. Gentleman misses my point. I said that there was a cut in the private sector and an increase in the public sector. The balance is out of kilter.
Mr. Newmark: The point that the hon. Member for Glasgow, East (John Mason) seems to miss is that the private sector should be the engine of growth and job creation for the young people of this country. The private sector pays the taxes that help to pay for the public sector, and that is why we should help SMEs as much as possible.
Mr. Binley: I am most grateful to my hon. Friend for his contribution. He makes my point with greater clarity than I was clearly able to.
For every person who becomes unemployed, two or three other people fear for their jobs, and that adds to a tremendous feeling of uncertainty. It means that less money is circulating, which adds to financial constrictions-and therein lies another problem.
John Howell (Henley) (Con): Does my hon. Friend accept that, as others have said to me, one or two job losses in any particular company in the SME sector have a devastating effect because of the size of the company, whereas one or two in a bigger company might not?
Mr. Binley: That is absolutely right. It is the same with regulation-such things impact much more heavily on the SME sector than on any other, particularly on the smaller businesses.
Let us look at the credit crunch and financial constrictions. The CBI's report said that the second quarter of this year showed an improvement in credit, although it was largely driven by the largest firms with more than 5,000 employees, and that the SME sector saw a decline in existing credit lines and expects similar tightening over the coming three months. The Bank of England said that the flow of net consumer credit was negative in July and that it expects the negativity in credit lines to increase over the coming three months. Credit insurance is being withdrawn from the system, which is a remarkable thing for the Government to allow to happen.
"Trade credit insurance remains a pressing concern...availability had worsened over the past three months",
says the CBI, which is quite an authority; one might think that Lord Mandelson would pay some attention and stop spinning. We cannot talk to Lord Mandelson very much, so I want Government Front Benchers to tell him what is happening in the sector: cash-flow difficulties are increasing; more companies are going to the wall; unemployment is rising; and, most importantly of all, companies are finding it increasingly difficult to get credit from the banks. I want him to concentrate on those facts and forget the spin. He is not employed by the Labour party-he is employed by the people of this country to do a job, and it is about time he got down to it.
I could give many examples of the difficulties faced by business after business, but I will not bore the Minister because I am sure that he has read them all. I am certain that in surgeries he faces the same thing that I do-business people coming to him and saying, "I can't get money from the bank." A survey by the business school at the university of East Anglia noted that 33 per cent. of people said that there were cuts in the availability of capital, 55 per cent. reported a reduction in investment finance, and 60 per cent. cited a decrease in funds available for mergers and acquisitions.
Two things have gone wrong. First, Government schemes are not performing: it is as simple as that. The plethora-the shoal-of initiatives that Ministers have created, clearly for public relations purposes, as I now understand, are not working. The enterprise finance scheme announced on 14 January 2009 has provided for 4,132 accepted loans-6.3 loans per constituency. I want 100 loans in my constituency to keep small businesses going. On 12 October, only five businesses had received investment from the capital for enterprise fund, as revealed in a written parliamentary answer. Only one firm so far has received assistance from the automotive assistance programme, which was shouted to the heavens as the great saviour of the British automobile industry. Finally, there was the trade credit
insurance scheme, announced in the April Budget. Do you know how many insurance covers have been issued to businesses?
Madam Deputy Speaker: Order. May I remind the hon. Gentleman of the correct parliamentary language to use; I am sure that he is aware of it.
Mr. Binley: I am grateful for your correcting me, Madam Deputy Speaker, but you know that I get carried away because I am so excited about this subject.
Madam Deputy Speaker: I hope that now you will be calmer and therefore keep within the rules.
Mr. Binley: I will do my very best.
Do hon. Members know that only 52 businesses have been covered by the much-vaunted trade credit insurance scheme? That is one for every 13 constituencies. I hope that you have one in yours, Madam Deputy Speaker, because the chances are that I do not have one in mine. That is a total indictment of this Government.
Mr. Andrew Pelling (Croydon, Central) (Ind): Will the hon. Gentleman give way?
Mr. Binley: No, I will not. My time is running out, and I have been rather generous.
The Government schemes are not working and the banks are not lending. I referred to examples that I could have used, which I will send to the Minister. Why are banks not understanding the problems of small and medium-sized businesses? It is very simple: because the guy in the middle at area and regional level is getting two messages. One is from the director for small business loans, saying, "Lend to small businesses." The other is from the guy responsible for building up assets in the bank, who is saying, "Don't risk money." There is a conflict at area and regional level. Businesses at the coal face tell me that when they talk to their local branch there is encouragement, but of course every decision is made at regional level and that is where it all stops. The bank asset guy wins out, which is why we get higher interest rates, high renegotiation fees, shorter overdraft facility periods and many more personal guarantee demands. It is all about building up bank assets, which is taking massive preference over supporting the SME sector.
What should the Government do? First, they should get out there. Sadly, they do not have much business experience on their Front Bench. The Secretary of State for Business, Innovation and Skills himself has never worked in the private sector, so perhaps that is not surprising, but the very least that they ought to do is get out there and find out what is happening. If they are doing that, they are missing the point. If they are not, as I believe, they do not understand the point. I see heads shaking on the Government Front Bench, but I come from the sector, I talk to people in the sector every day, and I tell you, you need to take the message on board-
Madam Deputy Speaker: Order. Once again, the hon. Gentleman-
Mr. Binley:
I meant to say Ministers need to take the message on board, Madam Deputy Speaker. SMEs are suffering. They are not getting the money, and all the Government promises in the world do not count for
aught in the sector. We want to see action, which means these people in the Government getting out to understand what it is all about.
8.36 pm
Christopher Fraser (South-West Norfolk) (Con): May I just say first that to see the Secretary of State for Work and Pensions, who is to respond to the debate, only just arriving in the Chamber to listen to Back-Bench contributions is a great shame? I do not say that with any malice or for political reasons, but this is an important debate for us all, and it was important for her to listen to all the contributions, if she could. Perhaps she will assure us that she will respond personally to each and every Member who made one of the contributions that she did not listen to, so that the issues that they raised are taken seriously by the Government.
This debate is about the economy, the recovery and welfare, as has been mentioned. It is now a year since the Government announced their multi-million pound rescue package for struggling banks, hoping to get credit flowing once again. How much has changed since then? We talk of recovery, but people on the ground in my constituency are still having hard times. Throughout the summer, businesses were telling me that the banks were simply not lending. People are being forced to cut college or training courses because of a lack of funding, and most importantly people are still losing their jobs. That is key, and unemployment is still at a very high level. The latest figures released by the Office for National Statistics show that unemployment is at a 14-year high and the claimant count has increased. Moreover, and importantly, almost 1 million 16 to 24-year-olds are out of work.
I do not wish to be overly pessimistic, but does the Secretary of State agree that it is complacent to talk of recovery? The full recovery is still some way off, and we should talk up that fact, so that the proactive strategy that we have to undertake is understood by all. Does she recognise the problems that I have listed, and what are the Government doing to remedy them? In constituencies such as South-West Norfolk, we have suffered immeasurably. Unemployment in my region is currently at 7.5 per cent., and the number of jobseeker's allowance claimants has increased by almost 70 per cent. in the past year in one local authority area in my constituency and by 60 per cent. in another. Yet last year, in the midst of rising unemployment, the Government pressed ahead with their jobcentre closure programme.
People in South-West Norfolk have their own particular struggles. The rural nature of my constituency means that there are great distances between training courses and the remaining jobcentres. Public transport is scarce, and it is no option for many people. As for the 2p rise in fuel duty, which was implemented last month, it has not helped matters at all. In fact, it has made things worse for those who are out of work and trying to get a job. There is no doubt that that tax rise has hit many people in rural areas.
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