SMEs (South of England)

Gary Streeter Excerpts

Wednesday 15th June 2011 Westminster Hall

[Several hon. Members]

rose—

[Mr Gary Streeter (in the Chair)]

Wind-ups will begin at 20 minutes to 11. Seven colleagues are seeking to catch my eye, so by my rough calculation that is about six minutes each if we are to get everyone in. I am leaving it to you to regulate yourselves.

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[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

I add my congratulations to my hon. Friend the Member for Gosport (Caroline Dinenage). The debate gives me an opportunity to explain something of what we are doing in my constituency. We have set up the Sittingbourne and Sheppey Link 2 Business, which has its own website that offers local businesses direct access to my office and a range of other services. We set that up because, during my term as MP, one of my top priorities is to help local companies get through the tough economic challenge that our country faces.

As and when the economy improves, I want those businesses to be better placed to expand and provide the extra jobs that my constituents need. At 8.7%, my constituency has one of the highest unemployment rates in Kent. I am determined to do everything I can to help bring that figure down. I am lucky that Swale borough council and Kent county council are two local authorities that recognise the importance of private enterprise to wealth creation. They are both doing all they can to attract more investment into our area. Of course, much of the future prosperity in my constituency is dependent on those companies that already do business in the area, which is why helping them is so high on my priority list.

One way in which I can achieve my goal is to ensure that local business men and women have easy access to advice and are able to get quick answers to any questions they might have about Government policy. The Sittingbourne and Sheppey Link 2 Business provides that service. We hold monthly business breakfasts at which local business people can share with me their concerns and problems. I have been running those breakfasts for a year and the three gripes that are continually raised are the burden of red tape, the lack of a skilled work force locally and the difficulty of accessing Government grants because we happen to be in the south-east of England. As a number of hon. Members have pointed out, we actually have areas of deep deprivation in the south-east. In my constituency, two of my council wards are in the top 10 most deprived nationally.

It is for the people living in those areas that I would like to issue my plea to the Government for help. Swale borough council, Kent county council and I are working together to do all we can to encourage investment into our area. As the Minister will know, Kent took a hard hit recently when Pfizer decided to pull out of Sandwich, with the loss of 2,500 jobs. On the plus side, Vestas is seriously considering setting up a wind turbine factory in Sheerness to create another 2,000 jobs. I am sure that we could seal that deal if there was some access to Government aid. Bringing in such investment would give a huge boost to small and medium-sized businesses in my constituency. Losing that investment would be a tragedy.

I know that the Government’s aid policy is pitched towards regions where there is a need to rebalance economies that have become over-reliant on the public sector. As a business man, however, I know that when times are tough the way to create growth is to invest in those areas of the business that have a proven record of success, rather than those that have been a drain on company profits. The same should apply to Government investment, and I urge Ministers to rethink regional aid policy. The country needs more private sector jobs. In Kent, we are doing all we can to help our local businesses create those jobs, and I am sure the same goes for other southern counties. We need Government help, however. We need financial help. Give us that help and we, in the south and south-east, will help kick-start Britain’s economic recovery.

[Mr Gary Streeter (in the Chair)]

I thank all colleagues for co-operating on timing. The winding-up speeches now begin. I call Chi Onwurah.

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[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

I congratulate my hon. Friend the Member for Gosport (Caroline Dinenage) not only on securing the debate but on her excellent contribution. How refreshing, in this Parliament, in a debate on small businesses, to see a significant number of hon. Members such as myself with a business background. I know it is meant to be a dangerous thing for a Minister to have some knowledge of his subject, but it is actually immensely helpful. Many of the representations, on whether we can do a little more of this or extend a particular scheme, are in many senses a process of singing to the choir. I am sympathetic, but we have inherited a tight financial situation and, without wanting to get partisan, we have therefore been restricted in some areas in which we would like to do more. Hon. Members of all parties appreciate that.

As was pointed out by all hon. and indeed right hon. Members, small businesses are vital. We heard from the Opposition spokesman, the hon. Member for Streatham (Mr Umunna), and I welcome him to his position; this is the first opportunity we have had to debate in Westminster Hall. He is right to talk about how small businesses represent a significant proportion both of businesses as a whole—99% in the south-east—and of the jobs created, accounting for just over half of private sector jobs. In my book, small businesses are the drivers of growth and the leaders of innovation, and as we try to move away from the recession, we want to improve on that.

Let me say at the start that this Government are absolutely committed to enabling more people to start businesses, and then to grow them. Many of the initiatives that make a real difference to people’s bottom line in running a business, whether micro, small or medium, are policies that affect every business throughout the country—national policies. I shall come to some of the specific aspects, and the spatial and regional dimension. The Government have started by trying to ensure that people who want to begin the journey of starting a business can do so.

The new national enterprise allowance, which is available throughout the south-east and the country as a whole, will be rolled out over the next year, and will help thousands of unemployed people, whether in Gosport or elsewhere, to take that first step on the crucial journey from being unemployed to being self-employed. That is why we are overhauling the whole bureaucratic process of, for example, registering a company. It has been ridiculously complex in the past, and when I started my business at the bottom of the last recession, it was immensely slow and expensive. We are putting the process online, and making it quick and cheap so that people can get going and get under way.

That is why the Government, during our first 12 months, sought to stop the planned increase in national insurance, which would affect every small business and could have cost, according to the Federation of Small Businesses, some 47,000 jobs. We stopped that, and that helped businesses up and down the land. It is why we are reforming the tax system, to which several hon. Members referred, and cutting the rate back to 20p instead of increasing it, as had been planned. It is also why we are ensuring that the system is simpler. In the past, too much time has been lost in trying to comply with bureaucracy, reliefs, allowances and the ever-changing two-Budgets-a-year process. Simplification and greater predictability are crucial when trying to run an SME.

On regulation, I totally understand that there will be natural caution about how this Government, more than any other, are making progress. My hon. Friend the Member for Esher and Walton (Mr Raab) referred to one in, one out. During the first six months, when we invited representations on various regulations, we received 157 on different regulations. We have cut those by 70% down to 46 and only 11 will cost businesses anything. That is a start, as hon. Members have said, and they are right. This is the beginning of a process, and there is a lot more to do. I am working with my colleagues throughout the Government to consider the next half-year—July to December—so that that 70% reduction in the number of regulations can be matched and improved on. However, we can do more, which is why have introduced the new moratorium for new regulations on SMEs to ensure that micro, small and medium businesses can get on with their business without worrying too much about complying with Government bureaucracy.

That is also why we have taken the bold step of ending gold-plating of EU regulations in this country. We have had a habit of being the first to implement them, and in a way that is far more complicated for our businesses than for our European competitors. We are changing that, which is why we will not implement EU regulations a day earlier than we legally must, and why we will ensure that we do not add to directives and make life more complicated when our businesses are competing with their European partners. Those are crucial steps that will make a difference to the bottom line.

I turn to the specific issues raised by various hon. Members. My hon. Friend the Member for Gosport rightly pointed out the crucial role of exports in our growth overall, and in helping SMEs improve their productivity and innovation. The evidence is there. That is why UK Trade and Investment is changing its strategy to make it far more entrepreneurial. It also has a new “passport to export” service deliberately aimed at SMEs. We have worked with the Export Credits Guarantee Department to loosen up some of the regulatory processes, and to introduce a series of new schemes to help businesses in the credit area with a simpler credit insurance product, a new bond scheme to make things easier, and a new foreign exchange credit scheme. If my hon. Friend would like further details, I am sure that my officials will be happy to supply them.

I shall deal with an issue that is specific to Gosport, and then speak about generic matters. As my hon. Friend knows, I visited her constituency yesterday, and met other people in Portsmouth and elsewhere in the area. One initiative that we are driving forward is recognition of the tremendous value of the marine engineering industry. It is crucial for many hon. Members who have spoken today, but has been neglected. We have all recognised the importance of automotive engineering, and we have all pushed the case for aerospace, but the country has tremendous expertise in marine engineering. I am co-chairing the Marine Industry Leadership Council, and leading the strategy with the industry. It sets out the key issues involving technological change and the ability to take on new opportunities so that that industry is prosperous. That is crucial for areas such as Gosport. National political leadership can make a real difference to a local area.

My hon. Friend mentioned the national insurance holiday. A little perspective is important, but I understand people’s concern. The change will help new businesses. No existing business in any constituency will be treated differently, whether they are in the north or the south. That is important. Although the Chancellor is clearly under financial pressure, he wanted to make a difference, and to help business formation in areas where it is at a lower level, so we chose to help businesses outside the wider south-east. I note the representations, and I totally understand the point. I will come to the broader point about specific pockets of deprivation in apparently more affluent areas, but the policy has tremendous merit. These are early days but, like all tax policies, the Chancellor will keep a close eye on it. He has noted, as have I, hon. Members’ representations.

On finance, the Opposition spokesman, the hon. Member for Streatham, mentioned a couple of issues, as did another hon. Member who is no longer in his place, about access to finance. This is crucial in terms of ensuring that we hold the banks to their targets—I will come to that—and how we deal with equity finance and risk capital. That is why we ensured the continuance of Capital for Enterprise with a £200 million fund. It is also why we have pushed the banks to provide us with a business growth fund, aimed at the mid-caps, which will help unlock around £2.5 billion. The hon. Gentleman also referred to targets. It is the capacity targets to which we will hold the banks. Clearly, in any negotiations there will be other ways in which we wish to stretch the banks and challenge them, but we are monitoring the capacity targets.

On regional growth funds, I am well aware that if people have not won funding they will want to know why, and I understand that. The first round was very popular, and heavily over-subscribed. The second round is now in hand, and its capacity has doubled. It is worth pointing out that it is focused on areas with heavy reliance on the public sector, but the scheme is based on merit, and there is no attempt to place a limit on businesses applying in different parts of the country. That is important, and leads on to the wider issue.

As I discussed yesterday when I visited Gosport, such places have pockets of deprivation, as does my constituency in Hertfordshire, and in a strange way they are more isolated than if they were in an area that is generally recognised in the statistics as bring deprived. That is why the old regional debate about north-south is too crude. It is why I talked to the Solent LEP, as I have to others, about looking at the nomenclature of units for territorial statistics—the NUT statistics, which relate to the size rather than the sanity of the preparation—to ensure that we drill down and better understand the real problems. It is one reason why we are replacing regional development agencies with local enterprise partnerships. That will allow us and, more importantly, local business and civic communities, directly to address some of the problems and local issues that might be masked by more general affluence, which tends to colour the way in which Government policies work. That is why enterprise zones will be open for all enterprise partnerships to apply for.

I had the opportunity of seeing the former HMS Daedalus, which is a fascinating sight. We are in the bidding period, so I must be careful, but I am sure that my hon. Friend the Member for Gosport and her supporters and constituents will make a powerful representation.

Finally, issues were raised about the new generation of entrepreneurs, whom I totally support. Several hon. Members mentioned that, including my hon. Friends the Members for Romsey and Southampton North (Caroline Nokes) and for Newton Abbot (Anne Marie Morris). Yesterday, I was at my alma mater, Reading university, to open its new enterprise centre. We must do what is done in silicon valley, and bring investors—

[Mr Gary Streeter (in the Chair)]

Order.