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Like my hon. Friends, I am always keen to speak out in support of businesses, and particularly small businesses, because of the vital role that they play in rural constituencies, such as South-West Norfolk, and in the rest of the country. In a thriving economy, Governments do not create the jobs; businesses do. It is
the job of government to create the environment in which businesses can thrive and a thriving, private enterprise, business economy makes the public sector work better, because taxes are paid, rather than artificial state subsidies and handouts.
UK businesses want to play a central role in the recovery of our country. Small firms generate more than half our national income and employ some 13.5 million people. They are enormously important sources of employment in these difficult economic times.
Mr. Pelling: The hon. Gentleman is speaking out very loudly on behalf of small businesses and is quite rightly saying that the Government should not distort the market. However, the Government have a role in regulation. Many big businesses are doing well in tapping the capital markets, but small businesses are not able to do so. Would it be better if the Government were less demanding in trying to get the banks to increase capital, and if they tried to slow down the rate of deleveraging, so that small businesses, which can recover our economy, can improve employment in constituencies such as South-West Norfolk?
Christopher Fraser: I hope that the Secretary of State listened to that comment. I concur that small businesses are penalised disproportionately by what the Government are doing.
The economic downturn has had a profound effect on businesses of all sizes as a result of falling revenues, rising energy costs, lack of credit and, most importantly, the burden of Government red tape. I make no apologies for repeating something that I have said in the House many times: during the '80s and '90s, SMEs were the backbone of our economic success and it is incumbent on the Government to create the same conditions in which they can flourish today and in future. However, too many small businesses in my constituency believe that the Government are failing them by-this is how they put it to me-over-regulation, wrong judgments about how they operate and a complete lack of understanding of the rural economy.
For example, let us look at the transitional relief scheme that expired in April. The scheme ensured that big increases or decreases in business bills due to revaluation were balanced and phased in gradually over a number of years to mitigate the impact on businesses, so why did the Government not put together another suitable scheme during a time of intense difficulty for businesses of all sizes, particularly when business rates have increased by 5 per cent.? Ministers had four years to do that and the deferral schemes have come too late for too many small businesses, because the Government did not implement the legislation early enough. Many companies will already have paid six months' worth of sky-high bills. What assessment has been made of the effect of that failure to act on the UK's ability to overcome the economic downturn, particularly on small businesses?
What about small business rates relief? Many small firms and shops are not claiming what they are entitled to, because they do not know how to go about the process of claiming or because they find it far too complicated. I urge all small businesses to check whether they are eligible for rate relief, which could save them thousands of pounds. If the debate advertises one thing,
it must be that there is an entitlement to such relief. It is up to the Government to ensure that all small businesses can apply appropriately. What assurances can the Secretary of State give that the Government are looking to apply the rate automatically to small firms, rather than small firms having to apply?
The Secretary of State will no doubt wax lyrical about schemes that the Government have introduced to support businesses through the recession, as my right hon. and hon. Friends have described this evening. One example is the enterprise finance guarantee scheme. Not only have local businesses in South-West Norfolk told me that they have not been able to access capital through the scheme despite appearing to fit all the necessary criteria, but figures taken from a recent written question clearly demonstrate that the value of loans offered to companies should not be mistaken for the value of loans that have actually been drawn down. Does the Minister recognise that although loans may have been offered to firms, the success of the scheme can only be judged on the amount of capital that ends up in the system?
Businesses want to help this country to recover, but they feel constrained in doing so. For example, some of the best apprenticeships programmes are so over-subscribed that there are more applicants for them than there are places at Oxbridge. The Government have imposed so much costly and burdensome paperwork on firms that want to offer apprenticeships that there is no incentive for them to do so. Why have the Government failed on their promise to reduce excessive red tape and bureaucracy? Do the Government accept that they have missed targets on apprenticeships? Research undertaken by the Prince's Trust shows that young people without qualifications are twice as likely to claim JSA before they are 25 as those with qualifications. In the light of that, the Government should make it easier for firms to offer apprenticeships, not harder.
Historically, manufacturing has been an important constituent of the economy of Thetford and the surrounding area in my constituency. It has been a vital source of employment, but the Government have presided over a decline in manufacturing in the past 12 years that has hurt towns such as Thetford. The numbers speak for themselves, as my hon. Friend the Member for Preseli Pembrokeshire (Mr. Crabb) mentioned in an earlier intervention. In 1997, the manufacturing sector employed more than 4.5 million people, but today the figure is just over 2.5 million. Why have Ministers allowed the manufacturing sector to deteriorate? In Norfolk and East Anglia, the manufacturing base wants to employ people, take on apprentices and make a contribution, but it is stifled by the Government's actions.
Can the Minister assure me that the rural economy, which is suffering as a result of rising unemployment, and the east of England, which has lost out under this Government at every turn, will get their fair share of help? That will mean supporting businesses, not penalising them. For those in South-West Norfolk, it also means understanding the needs of businesses in rural areas. We also need a proper roads infrastructure as a matter of urgency to ensure that Norfolk-the only county in England that does not have a dual carriageway linking it to a national trunk road network-can reach its economic potential and participate fully in the future success of the United Kingdom.
Small business closures do not make the news. Instead of the hundreds or thousands of redundancies that we see when big firms go bust, only a few people are let go at a time. But every one of those job losses is a personal and family tragedy, and the numbers quickly mount up. I urge the Government to take this maxim to heart and start giving small businesses the help that they need so that our economic recovery can be assured.
8.48 pm
Mr. Peter Bone (Wellingborough) (Con): It is a great pleasure to follow my hon. Friend the Member for South-West Norfolk (Christopher Fraser), who made a powerful speech. I recognise many of the points that he made, especially those about loans to small businesses and the fact that they are just not getting through. He is also right to say that just one or two redundancies in each firm mount up to large job losses throughout a constituency.
I can think of no better way-and I genuinely mean this-to spend my birthday than in the Chamber and in your company, Madam Deputy Speaker. There can be no more important issue than the economy and the recovery. I remember a catchy tune-I shall not sing it, because I am an appalling singer and Hansard would not be able to record it properly-called "Things Can Only Get Better". I think that Tony Blair commissioned it. People voted Labour because they thought that things could only get better, but somehow that went wrong in my constituency- [ Interruption. ] Did the Government Whip wish to intervene? Things did not get better in Wellingborough, if they got better anywhere in the country. I can remember the Prime Minister telling us that there would never be another bust, because it would always be boom. We never had the boom in Wellingborough, but we have had the bust.
While I was sitting here this evening, listening to some very powerful speeches, I jotted down some of the things in my constituency that are different now from how they were in 1997. We had a secondary school, which is now demolished. The higher education college was promised millions of pounds for further investment. It spent £1 million on the research for that investment, only to be told that it could not have it. The motor test centre closed. The sewage works are now at capacity.
We have fewer policemen and women on the beat now than ever before-only 10 per cent. of their time is spent on patrol. We have had closures of local police stations and our local police chief has been moved. We have almost the worst ratio of police to population in the whole country. Twelve post offices have closed. We have potholes that would look good in Zimbabwe. We have the worst-funded primary care trust in the country. We have no NHS dentists. We have seen the closure of an out-patient facility. We have no hospital. The tax office is closed and, more importantly, unemployment is up.
I will say a little more about unemployment in a moment, Madam Deputy Speaker, but in Wellingborough in 1997 you could have gone to school, you could have taken your driving test, you could have seen a policeman on your street, you could have had your teeth fixed, you could have gone to a hospital, you could have driven your car without wrecking the wheels and, what is more, you could have gone to the toilet without fear of it being blocked. How did things get better under Labour? They have got worse and worse.
However, the most devastating statistic is that unemployment has doubled in my constituency. I thought that Wellingborough was perhaps the exception, but 11 constituencies have had a bigger increase in unemployment. I can remember debating with the Prime Minister when he was in denial about this issue. He claimed that my figures were wrong. However, I think that he has come round to accepting that unemployment is not only worse in my constituency, where it has doubled, but worse in the whole country.
It is a matter of fact that unemployment has been higher under every Labour Government when they have been thrown out of power than when they came to power. There is no question in my mind, and there should be no question in the mind of the electorate, but that the Labour party is and always has been the party of unemployment. The reason unemployment has gone up is that the Labour party always believes in spend, spend, spend, borrow, borrow, borrow and tax, tax, tax. Labour Members think that the way to protect jobs is by having a bigger public service. What they do not realise is that it is the private sector-the SMEs-that creates the jobs.
David Taylor: I see the hon. Gentleman as a friend, as well as a political opponent, but does he really believe what he has just said about the Labour party being tax, tax, tax, compared, I guess he was implying, with the Conservative party? Does he realise that the proportion of GDP taken by taxation in the 11 and a half years of Mrs. Thatcher's rule in this country was six full points more than it was in the 10 years when my right hon. Friend the Prime Minister was the Chancellor of the Exchequer? That is true, is it not? How can that be tax, tax, tax?
Mr. Bone: I recognise the hon. Gentleman as one of the very best Back Benchers in the House, but it strikes me that there will be a clear difference when we go into the general election. There will be a Government saying, "We can get by by borrowing more and not cutting expenditure and raising taxes," and another party saying, "You have to make real-terms cuts in public expenditure." The Leader of the Opposition and my hon. Friend the Member for Tatton (Mr. Osborne) have given us an extraordinarily brave policy. In all the time that I have been involved in politics, I can never remember a party going in with such honesty and saying to the public, "Elect us and, in the short term, you'll be worse off in many regards, but in the long term the future will be better."
If we tell the public, "We are going to be honest with you. We are going to bring forward the year in which the retirement age increases. There is going to be a public sector freeze," that is brave and honest. That is what people out there want to hear-they want to hear the truth. I am immensely proud to be part of a party that is going into the election telling the truth and not pretending that there will be no cuts in public services. In their figures, the Government happily admit that welfare benefits and the interest on our debt are going up, but they cannot say that they have to cut departmental expenditure because of that. I think that the Chancellor would be brave enough to say that, but he cannot get the Prime Minister to say it.
In the limited time that I have, I want to move on to a couple of points. One, which has not been touched on
very much, is the effect on markets of the fact that sterling has devalued because we are not tied to any other exchange rate. That is good news for our manufacturers because it makes their products cheaper in overseas markets and overseas manufacturers' products more expensive in this country. That can occur only because we are not part of the euro. Earlier, I challenged a Minister to pop up at the end of the debate to say, "We will no longer consider ever joining the euro." That is the Government's policy at the moment, but if they scrap it tonight, everyone in business will feel a lot better.
The other issue that I want to discuss has not been mentioned at all-it was not mentioned by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), by the Minister or by the Liberal spokesman, the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso). Next year, this country will pay the European Union an additional £4 billion compared with last year. That is not £4 billion in total-the total is £6.5 billion-but an increase of £4 billion. We paid £2.5 billion last year and we will pay £6.5 billion next year. There can be no possible justification in the middle of a recession for handing over British taxpayers' money to subsidise Greek, Spanish and Irish farmers. That is wrong. That is not an anti-EU point-it is just plain common sense. If you agree to increase your contributions as a percentage because you believe, and you are told by the Prime Minister-
Madam Deputy Speaker: Order. Can I just remind the hon. Gentleman again about the use of the word "you" in Parliament? Please do not bring me into the debate.
Mr. Bone: Sorry, Madam Deputy Speaker. I did not, of course, mean you-I meant the Prime Minister. The previous Prime Minister rightly said that he would surrender Mrs. Thatcher's rebate if the European Union reduced its budget, so our overall contribution would not increase. Unfortunately, he was fooled. The European Union's budget has continued to grow, and our contribution is going from £2.5 billion to £6.5 billion. I do not think that a single citizen in this country believes that that is right. Why are we giving such a sum to the European Union when we will have to cut Territorial Army training and the number of teachers and police officers?
Christopher Fraser: Does my hon. Friend agree that what really affects people is losing jobs in the real world and not getting support back home in our constituencies from the Government? Every single job lost in our constituencies means that a life is blighted, regardless of what Europe might do.
Mr. Bone: I entirely agree. My constituency has seen unemployment double, and it cannot be right to make public sector cuts when we are paying more to the European Union.
Finally, I should like to make a plea about the unemployment levels in my constituency. If Wellingborough had had a large manufacturing company that had gone bust, we would have had enormous help from the Government. Because smaller businesses have gone under, however, the overall total of people being made unemployed
is greater than if a big company had gone under. One of the best known retailers in my constituency is currently in a consultation process that will probably lead to its closure, and a major logistics company has laid off 100 people this week. While I have been in the Chamber today, I have received a note to say that another company in my constituency has gone under.
I have a lot of respect for Labour Members, but when they start talking about unemployment, I do not think that they really understand the situation. They should not try to say that it is not happening. They say that we have all these wonderful schemes that are putting it right, but they are not putting it right. Until they recognise the problem, they will never find a solution.
9 pm
Mr. Charles Walker (Broxbourne) (Con): We live in an age of historically low interest rates. They have not been this low for hundreds of years, if ever. At this time in our economic crisis, low interest rates are absolutely what we need. They are a very good thing, but who are they benefiting the most? I am not convinced that they are feeding through to mortgage holders and home owners. I am certainly not convinced that they are feeding through to businesses.
The LIBOR rate is now just a fraction over 0.5 per cent. That means that banks are borrowing money at 0.5 per cent. interest, but they are lending it out to young people who want to take out mortgages-not extravagant mortgages; just three times their earnings-at 5.5 per cent. That represents a 1,000 per cent. gross profit. If a business wants a loan, it might have to pay 11 per cent. interest, which represents a 2,000 per cent. gross profit for the bank. Most businesses would be lucky to make a gross profit of 12 to 15 per cent. The interest on a credit card could represent 3,000 to 4,000 times what the bank is borrowing the money for. Banks are using that money to strengthen their balance sheets, and perhaps that is not a particularly bad thing, because we want strong, vibrant banks. My concern, however, is that the benefits of low interest rates are not being shared around fairly.
My right hon. Friend the Member for Wokingham (Mr. Redwood) said in his excellent speech that we had a shortage of competition in the banking sector, and I agree with him. He are also pointed out that we are facing the prospect of banks that are propped up by the taxpayer paying out enormous bonuses. In essence, they are paying out taxpayers' money. I have a warning for the Government and the political class: the public-the electorate-will not stand for that at a time when many people in normal, ordinary jobs and earning normal, ordinary salaries in the private sector are seeing their take-home pay go down as a result of pay freezes or, often, pay cuts. They will not stand for it at a time when politicians are talking about public sector pay freezes, not for the fat cats who run quangos or who are at the very top of the Departments but for the people earning £18,000 or £19,000 a year. We have to accept that the people who will be bearing the real pain in the years ahead will just not accept bankers rewarding themselves with enormous bonuses.
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