§ 3.58 p.m.
§ Mr. Ian Stewart (Hitchin)
I beg to move,That this House urges the Government to alleviate the growing burdens imposed on businesses by official regulations and requirements.After that introduction by Mr. Speaker I hardly know what to say. It was by happy chance that my motion was drawn today to be debated after that concerning the memorial to Earl Attlee, because the first after-dinner speech I ever made was to welcome him back to Haileybury School. After my few halting words of welcome, I explained that I hoped one day to follow Clement Attlee to the House of Commons. He said "You will have to do a great deal better than that but I think that you will." That was a happy illustration of his sense of realism and encouragement which marked his contributions to the House as well.
When I realised that it would be my good fortune to have my subject for debate taken first, I decided to use the opportunity to call attention to the damage caused to industry and commerce by an excess of Government bureaucracy. Since the motion was first tabled I have been inundated by offers of help and information not only from firms in my own constituency but from people elsewhere. I must state in public my apologies to all those who have given me offers of help and information by letter, by telephone and by telegram. I have tried to take account of them and to distil the essence of what they were saying for the benefit of this debate.
I seem to have chanced upon the fuse of an explosive situation. There is no doubt that the problem is much more widespread and dangerous than I had understood it to be. In fact, I have become so snowed under with paper in the last few days as a result of the coming of this debate that I am beginning to know how people really feel about this matter.
To open the discussion, perhaps I may quote a typical example of what has come my way. It is a telegram from an important chemical company in Royston, 43 which is the largest employer in that area. It says,During the last two years the burden of Government legislation and the insatiable appetite of Government Departments for statistical returns, particularly in respect of the Price Code, have necessitated taking on an additional 12 people. They make no profitable contribution to our operation and make it increasingly difficult for us to compete in the export market. We employ 850 people at Royston and no supervisor and manager is entirely free to carry out the job of producing and selling goods. Their time is increasingly spent on providing information for Government.I am not primarily concerned today with the financial burdens on industry, although of course it has to contend any way with record rates of inflation under the present Government, with record interest rates as well, with levels of direct personal taxation which amount to confiscation, and with threats, by capital gains tax and capital transfer tax, to the very survival of the smaller businesses. Demoralising as these may be, they are matters that are frequently raised in the House. This afternoon I want to deal, as the motion says, with the red tape and paperwork that are gumming up the works of so much of British industry and commerce today.
Some of this, indeed, relates to taxation. One of the points that has been made to me time and again is that having a multi-rate system of value added tax doubles the amount of work involved. I have no doubt that a return to a single rate at the earliest opportunity is essential. This is a point that has been communicated to me by large companies and small companies.
§ Mr. Max Madden (Sowerby)
The hon. Gentleman has just identified VAT as one of the burdens on industry and commerce. Will he confirm that VAT was introduced by his Conservative Government and that it was imposed as a requirement of Common Market entry, and that the Common Market is perhaps the biggest bureaucracy ever dreamed of by man?
§ Mr. Stewart
The single-rate VAT that we introduced was widely accepted as an improvement in the system. The 8 per cent. rate and the extra luxury rate, which were introduced in 1974 as one of the cheap attempts to buy electoral votes in 44 October 1974, are the root of all the problems. I had not intended to make a party-political point about that matter but, as the hon. Gentleman has raised it, I hope that everyone will understand that that was the reason lying behind the multi-rate.
Another point in relation to VAT is the effect of inflation on the starting point for registration. It is a matter of urgency that the turnover figure for registration should be significantly increased. It has been estimated that 95 per cent. of those who are registered to pay VAT contribute only 5 per cent. of the yield. Taking the cost at £1.40 per hour of work done for the Government, that is equivalent to the whole of the 5 per cent. yield of the tax taken from those people. That is a problem that has come with inflation. I suspect, therefore, that the problem is getting worse every day.
Some figure provided in July by Thorn Electrical Industries showed that in the previous 12 months £1.2 million had been spent merely notifying hirers of television sets about the changes in the luxury rate of VAT. Even so, I have no doubt that if we could move to a single rate of perhaps 10 per cent., which would give a higher revenue, the saving in administrative cost alone would make it widely welcomed.
Another problem which is related to finance but also involves a heavy administrative burden is that of the Price Code. I think that I had better let it speak for itself. I should like to read an extract from Document PDS 17, of August 1976, about investment provisions, which was received for the elucidation of the problem in relation to the articles under the Price Code by a laundry firm in Hitchin. The document states:Application of the relief to net profit margin reference levels.3.7 The reference level of a profit margin unit entitled to investment relief may be increased by the number of percentage points which result from expressing the relevant expenditure (see para. 3.5) as a percentage of the unit's estimated turnover within control for the relief year (see para. 3.4). The revised reference level will apply throughout the period of the relief year; see also Part 5 for continuing relief in the period following the expiry of the relief year. An illustration is given in Annex 1. It should be noted that the permitted increase in the reference level is additional to any other modification of the 45 reference level under any other provision of the Code. Equally, any modification of the net profit margin reference level under any other paragraph of the Code must be calculated without "—underlined—taking any increase permitted under the investment relief provisions into account.How on earth is that sort of language comprehensible to any but the largest companies in the country which employ professionals to advise them on such matters?
§ Mr. Victor Goodhew (St. Albans)
The Minister of State will not answer because he was not listening.
§ Mr. Stewart
I believe that Imperial Chemical Industries has estimated the cost to be over £500,000 a year and that Unilever has estimated the cost to be £300,000 a year—just to comply with the rules of the Price Code and to process their applications.
Yet more perverse than this in many ways is the effect of the whole range of laws and regulations which any business these days must face. I must, though briefly, mention these: the Factories Acts, employment protection, fair trading, safety at work, redundancy payments, training boards, contracts of employment, consumer credit, wages councils, trade descriptions, price codes, shop and office premises, sex discrimination, and so on. Much of this is no doubt well-meaning and desirable in concept in some respects, but cumulatively and in total it is devastating.
I should like to quote again from what has been said by a small business in North Hertfordshire, a garage, motor sales and transport hire business. The financial director says,Since the present Government came into power the multiplicity of legislation and regulations particularly in the area of employment and industrial relations have taken up three to four times as much of my time as previously was the case. I would estimate that at least 20 per cent. of my time is involved in keeping abreast of, and ensuring that we comply with, Government legislation regarding employment, PAYE, VAT, health and safety, etc., etc. … Other members of our staff including Managers and our Accountant are involved in additional work as a consequence. We have recently had to employ a full-time person to cope with additional employee's records which we have to keep for our own protection. Alt this in the context of a small 46 Group which employs less than 100 people.…It may be that we could even accept this if the legislation was not so one-sided and totally in the interest of the employee without any consideration for the employer. We have the added problem that being a service industry we are looked upon by the Government as some kind of parasite even though we provide a vital service.On top of this there are a number of general and specific problems that companies come across. Again I shall quote one to give an example. It is from a pharmaceutical company in Hitchin:In so far as the pharmaceutical industry is concerned, the Medicines Acts of 1968 and 1970 are onerous, to say the least. These … are designed to guarantee the quality, safety and purity of all medicinal products. Whilst I would not disagree with the aims, no distinction is made between the practices of ethical pharmaceutical companies and proprietary medicine companies, such as ours. Thus, we have been obliged to incur capital expenditure at a level … not justified by strict necessity or by the market price of our products, in order to comply with the provisions of the Acts and avoid suspension of our DHSS licences, which would automatically put us out of business.Examples of this sort of thing can be multiplied many times over.
However, a more general consideration that affects a great number of businesses is that of pensions. The requirements for contracting out of the State scheme have only recently been made available, yet they involve, quite properly, making suitable amendments in many cases to existing benefits provided under individual private schemes. Three months' notice has to be given to employees and meaningful discussions must take place. This will involve already overworked personnel officers in additional burdens.
If there is any delay in obtaining approval by the Occupational Pensions Board to contracting out schemes—and that seems likely in view of the bunching of applications—it could mean that many schemes would not be approved by 1st April 1978 the date on which the new regulations come into effect. In addition, everyone who runs a pension scheme has had to cope with the difficulties imposed by the pay policy. I do not need to cite the pay of hon. Members as an example of the lengths which have to be gone to to protect and preserve pension rights at a time when incomes are distorted by pay policies. This inevitably brings greater burdens of administration.
47 So much has already been said in other contexts about the Employment Protection Act and the Sex Discrimination Act that I shall refer to them only briefly, but they are relevant here. Reports are already coming in of time and money being wasted in the process of advertising jobs under the Sex Discrimination Act. We have all heard of advertisements for fire persons with 36-inch chests. Any local trader or local newspaper could give us examples of the difficulties for local businesses in properly framing advertising in line with the Sex Discrimination Act.
However, the Employment Protection Act is much more widespread. What has been expected and predicted is beginning to happen. It is a measurable effect on the attitudes of employers who in most cases used to be able to sort out these things quite sensibly with their employees, but now feel so hidebound by the regulations that they dare not step over the limit.
A good example of this is the six months' period after which the full protection of employment comes into action. If a worker is on a trial period and he is not 100 per cent. satisfactory or has not completely proved himself at the end of that period there is inevitably a temptation for the employer to say "Goodbye" to him before all the provisions of the Act come down upon the employer's head. I know of instances—although I cannot quote them with references—where the benefit of the doubt has not been given by the employer, not because he did not want the employee, but because the cost to him if his judgement was wrong would be too great.
Just as the Rent Act dried up tenanted accommodation—although it gave security of tenure to those who already had it—so the Employment Protection Act will have a similar effect on jobs for younger women. It may be all right, for those in jobs, but young women will not find it nearly so easy to get a job in future. The pregnancy provisions, which were widely discussed in this House during the passage of the Bill, mean that there will be a bias against giving jobs to younger women because personnel officers will have it in mind that difficulties may arise.
48 Another perverse effect of what is again a well intentioned Act is that because of the burdens on an employer of having full-time employees, employers are often seeking two part-timers to do the same job. They will employ married women to do the job in their spare time rather than give a full-time career job to someone who may need it so much more.
No debate on this subject would be complete without reference to the problem of filling in forms and the general burden of paper work which has hit British industry and commerce in recent years. In an Adjournment debate in April my hon. Friend the Member for Harborough (Mr. Farr) drew attention to this in the context of a company in his constituency, a specialised power engineering company employing 34 persons. In one week it received 25 official publications running to 283 printed pages on questions, information, advice and requirements. I shall not repeat the details, but they can be found inHansardfor 2nd April 1976. In that debate my hon. Friend made the interesting suggestion that the Government should try to produce a monthly consolidated issue of all this bumf so that at least some order might come out of the chaos. Some of the questions that are asked in these forms are foolish.
There is the example of a Hoylake company with a work force of 38. In 1974 the company believed that it might qualify and it asked for a £2,000 grant towards the installation of a computer. A questionnaire was sent to the company from a gentleman in Whitehall and one of the questions was "How many trees are there in your garden?" Unfortunately, this company had two too few employees in the productive sector to qualify for a grant. When it looked into this problem it found that if a man stacked castings in a non-productive area under a tree, he was counted as nonproductive. If he stacked castings in a productive area, he was counted as being in productive employment. In that finest of distinctions, two members of the work force of this company were found to be non-productive workers, and the grant was refused.
There is another case, that of Brown's Colour Printers in Glamorgan, subjected to receiving a quarterly issue of a 15-page 49 questionnaire containing 129 questions. Poor Mr. Brown found it difficult to answer all the questions. Eventually, because he could not do so, he received a letter from the legal department of the Department of Industry. This prompted him to make an attempt to answer the questions in order to hold the law at bay. He was rather daunted when he came to question 69. The note said:Against heading 69: for example, music and books containing music, art reproductions, photographs; government, company and other authoritative matter—such as White Papers, acts, by-laws, company and other reports and accounts, prospectuses, insurance policies, passports, pension books, bank passbooks, rule books, forms and questionnaires, examination papers, playing cards, albums (stamps or photographic), transfers and plastic base and surface overlay.After hours of work Mr. Brown came to the conclusion that the only one which concerned him was examination papers. They were not produced during the specified period of return, so the answer to question 69 was "nil". That sort of thing is going on all the time.
My hon. Friend the Member for Arundel (Mr. Marshall) succeeded in getting an answer on 1st December from the Department of Industry about its share register survey. This has cost £115,000. According to the Minister the survey is purely for statistical purposes and is not intended as a basis for legislation. During the year ended October the Department of Industry is on record as having distributed 500,000 forms to companies involved in industrial production, and 340,000 forms to firms in the distributive trades. No wonder that the Business Statistics Department of the Department of Industry employs 1,000 inflation-proofed civil servants to produce and process all this stuff for us.
§ Mr. Goodhew
Does my hon. Friend agree that civil servants should be flame-proofed as well? It was announced on the wireless the other day that the Government Statistical Office had said that those who ate most in this country were the people in the North-East, because they liked buttered scones. What sort of value is that information to the country? How much does it cost to obtain?
§ Mr. Stewart
We shall have to say to them, "Let them eat paper". They 50 might be able to satisfy their appetites that way.
Where does all this lead us and the many companies that are so harassed by this paper work? I quote from the chairman's report of a medium-sized power company in the Midlands:In … recent years, we have been subjected to increasing control by burgeoning official bodies wielding wide statutory powers and we now expend much time and energy in completing multitudinous forms and satisfying exhaustive enquiries. … It would seem that a deal of the information we are required to provide is either irrelevant or of very limited practical use and, furthermore, we view with disquiet a tendency for official enquiries to include with in their scope much that is of innately private concern. We find this burden of bureaucracy ever more oppressive and costly to bear.What is true of industry and commerce in general is true in greater part of the smaller firms, and here I should like to say how helpful it has been to have information available this afternoon from the Small Business Bureau. The fact is that 25 per cent. of our GNP is produced by small businesses, and they provide more than one-third of the jobs in the private sector.
§ The Minister of State, Department of Industry (Mr. Gerald Kaufman)
It would be interesting to the House, and helpful to me in seeking to respond to the debate, if the hon. Gentleman would tell us the basis on which these statistics are compiled.
§ Mr. Stewart
I do not have the basis before me, but I shall be glad to communicate it to the Minister if I can before 7 p.m., or whatever the relevant time may be. Unfortunately, I do not have a battery of civil servants at my elbow who can run backwards and forwards with notes to keep me briefed.
The smaller companies in this country are a great source of invention. They have good industrial relations. They tend to be labour-intensive and so produce jobs that are so much needed. Many provide a reliable personal service. Their greater efficiency is indicated by the rate of return on capital, which is above the average in the country as a whole. Above all, smaller businesses have a fine record of exporting. Most of them are managed by two or three people, and often it is the burden of democracy which to them is the last straw.
51 I should like to quote briefly from a letter written by a firm of local builders Hitchin. The writer says:… the figures required—that is for the Annual Census of Production—bear no relation to the figures we are obliged to supply to our accountants at the end of the financial year, and therefore require us to spend many hours extracting same.That sort of thing is happening all the time.
I think that it would be right for a class of special company to be created which could be exempt from the great mass of bureaucracy and regulation that faces industry and commerce. After the Bolton Report of 1971, my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) was appointed Minister with special responsibility for small businesses. I believe that the present holder of a comparable appointment is the hon. Member for Keighley (Mr. Cryer). That appointment seems to be a calculated insult to the private sector in view of the fact that the hon. Gentleman's political career has been dedicated to the disparagement of private companies. The only comfort is that his efforts on behalf of small businesses have been so inconspicuous that a week ago today at Question Time his hon. Friend the Member for St. Helens (Mr. Spriggs) had to ask him who really was the Minister responsible for small businesses. By contrast, my hon. Friend the Member for Basingstoke (Mr. Mitchell) has been a far more powerful advocate of the interests of smaller businesses than has any Government Minister, and to have done that from the Opposition Benches is a highly creditable performance.
There are many precedents for exempting smaller companies from the mass of onerous bureaucratic and legal requirements. For instance, there is the VAT starting point, corporation tax exemption, reduction at the lower level of application of the Price Code, and so on. it would be helpful if a new category of exemption could be extended to all companies below a certain level of turnover, staff or profit, or whatever it may be.
§ Mr. Kaufman
How would the hon. Gentleman seek to ascertain which com- 52 panies fall within the limits which he proposes should be exempted?
§ Mr. Stewart
I have no doubt that if companies felt that there might be some benefit from or relevance to the information that they were providing they would be only too happy to provide it. The cumulative effect of all this is becoming disastrous.
§ Mr. Geoffrey Finsberg (Hampstead)
If the Government's statistical department is as efficient as the Government claim, one extra feed into the computer would provide the names of the firms falling below that margin and thus disprove the old debating point that the Minister tried to make.
§ Mr. Stewart
That is probably true, and that is a helpful intervention. Some of the information collected by the statistical department is used for the Government's economic forecasts, and I should have thought that that made the case without any more being said for some reduction in the provision of information.
Morale in small businesses is low, and it has been lowered partly by this unnecessary burden of paperwork and bureaucracy. The Government's tax and pay policies treat skilled and qualified people, such as managers and accountants, as some sort of criminals against society. Their efforts and success are penalised and resented as anti-social. These are the people whom we should encourage. Their energies should be devoted to manufacturing and selling, but already there is a big credibility gap about the Government's industrial strategy and unless they do something about this problem, it will get very much worse.
To illustrate the difference between the attitude of industry and that of the Government to the problem I should like to quote from a letter written by the managing director of one of our engineering companies. He said:In industry when we seek to economise, we eliminate all bureaucratic and indirect costs, so that the output remains unaffected, but its unit cost is lowered.All Governments faced with the same problem seek to reduce the output of product … whilst leaving untouched the bureaucratic structures. The unit cost naturally increases.Unless that is reversed there will be serious consequences not only in the long run but in the shorter run, too.
53 Those in industry can no longer afford the burden in money or time of responding to the interference by the Government. They are gradually being suffocated by the avalanche of rules and regulations. If the Government are not careful, British business will soon become the Pompeii of the twentieth century, smothered and fossilised by the endless eruptions of our bureaucracy. I hope that the motion will commend itself not only to the House but to the Government before the damage becomes irreparable.
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Mr. Speaker has asked me to say that it might be for the convenience of the House if I inform hon. Members that as the debate on the previous motion on a memorial to Earl Attlee lasted for 26 minutes, the debate on Private Members' motions will now continue until 7.26 p.m.
§ 4.27 p.m.
§ Mr. Robert Kilroy-Silk (Ormskirk)
First, I congratulate the hon. Member for Hitchin (Mr. Stewart) on having come first in the Ballot and putting this motion before the House and, secondly, I commiserate with him for having failed dismally to make his case. The only evidence that the hon. Gentleman adduced for the rather generalised complaint that he brought before us was a series of telegrams and letters from his constituents.
I am sure, Mr. Deputy Speaker, that you are aware that there is not an hon. Member who could not produce the same kind of letters, except that we on this side of the House recognise that most of those who write such letters are politically motivated and inspired and that what they say bears no relation to the facts. The hon. Gentleman was attempting to produce evidence to show the damage caused to industry. In fact, he did not mention the word damage during his speech and he has not shown any of the damage that has beencaused to industry and commerce by an excess of Government bureaucracy.We have had no illustration of the damage to either industry or commerce. We have had no indication of the so-called excess of bureaucracy. I am sure that there is an excess of bureaucracy. I am sure, too, that there is a little fat in the Civil Service that we could pare. But 54 the hon. Gentleman did not illustrate it. He did not indicate specifically and directly the areas in which we should be paring the size of the bureaucracy.
The hon. Gentleman complained that small business men and small industries were asked questions, and he mentioned specifically a firm in Hoylake that was asked to answer a series of questions because it was asking for a grant of £2,000. I appreciate that the company felt that it was an intrusion to have to justify its need of £2,000, but after asking the Government and the taxpayer—because it is taxpayers' money that we are considering—to supply some money, the first should be required to account for its need.
The hon. Gentleman is not least among Conservative Members who complain about the disbursement of taxpayers' money. He is, no doubt, one of those who complain about scroungers and the amount of social security money that is handed out, yet here he is saying that we should give money to private industry with no control over that money and no accountability for it. He is saying that we should give a firm £2,000 to spend but the firm should not be asked questions about whether it needs the money, whether it will use it effectively, and whether it will be a beneficial use of taxpayers' money.
If a business man, whether or not he be a small business man and whether he be in Hoylake or anywhere else, wants public money in however small or large an amount, it is surely incumbent upon him to justify his request and to give his reasons, whatever questions are asked by the appropriate department. I find it strange that the hon. Gentleman should take exception to that.
The hon. Gentleman has talked occastionally about some of those people who have to answer detailed questions when they want money from social security. Now he complains on behalf of business men asking for £2,000 from the Government because they have to answer questions about their need for it. The hon. Gentleman should see the kind of questions that my constituents have to answer and the way they are means-tested when they are asking for nothing more than a miserable pittance with which to sustain themselves and their 55 families. That is a far more important and crucial area over which the hon. Gentleman could shed his crocodile tears.
§ Mr. Kaufman
Perhaps my hon. Friend, in this exceptionally effective passage of his speech, could also ask the Opposition about the questions required to be answered under the Conservative Government's Housing Finance Act before any of his constituents could get either a rent rebate or a rent allowance.
§ Mr. Kilroy-Silk
Precisely. This is the whole area which divides our society. It seems that one set of rules is to apply to one type of person and another set of rules and attitudes is to apply to other people. It is quite normal for hon. Members opposite not to make complaint about the intrusions into the private lives of individuals who happen to be unemployed, or who live in inadequate housing, or who are low paid, or who happen, through no fault of their own, to be inadequately or not educated. Hon. Members opposite make no complaints about intrusions into such people's private lives, when these people are having to apply either for supplementary benefit or for unemployment benefit.
Nor did hon. Members opposite complain about intrusions under the Tory Housing Finance Act—now, happily, repealed—or under a host of other provisions. But they complain bitterly about the VAT-man entering a small business man's home and about a few trivial—and I accept that they may be trivial—questions on a form that a business man has to complete.
However, the hon. Member for Hitchin gave a long and interesting list of the Government's achievements, such as the Industry Act, of which we are proud, although it has not done as much as it should, but at least is a start; the Employment Protection Act; the Health and Safety at Work Act; the Equal Pay Act; and the Sex Discrimination Act. Indeed, at one stage when he was reciting that list I thought that perhaps he was rehearsing part of a Labour Party political broadcast. It was an effective enumeration of the important legislation that the Government and the House have passed in two short years.
But the point that the hon. Gentleman failed to note is that it is accepted that 56 this legislation imposes burdens. Of course it imposes burdens both on small businesses and on large industry. But one must strike a balance between the burdens that this legislation imposes, whether upon workers or employers, and the benefits deriving from it—benefits that are a consequence, for example, of the Employment Protection Act or the Health and Safety at Work Act. But there was no sign of balance in anything he said in his somewhat mundane speech.
We do not pretend to deny that burdens have been, are being and will continue to be imposed on industry, but they are nevertheless worth while and justifiable in terms of the greater benefits which derive from them in the form of the positive and important rights now possessed by employees in British industry. I hope that hon. Members opposite would not suggest that we should remove the provisions of the Employment Protection Act or of the Health and Safety at Work Act—to name but two of the many Acts the hon. Gentleman cited—from the statute book.
The hon. Gentleman also complained about the amount of paper work, about the multi-rate VAT, and a whole series of other things which the small business men in Hitchin find so burdensome. It seems that they are hard done by in Hitchin and that all the moaners and complainers come from there. They seem to be the only people who write to him. But he did not tell us about the perks available to small and large business men and to the self-employed.
The hon. Gentleman did not tell us, for example, about the sort of thing that has been told in the newspapers in recent months, such as the interest-free loans which business men and industrialists receive, and how many of them can gamble away millions of pounds in a short period, and how they can get free houses and free cars. He did not tell us of the perks that they can get in addition to their normal incomes in the form of personal private enjoyments which are not necessary to their public performance as business men and which do not make a business more effective.
Why do we not talk about that sort of burden on industry and business? It is not the individual business man's money when he gets an interest-free loan, for 57 example. It is derived from the consumers in the form of higher prices, from lower wages for employees, or from lower rates of dividends for shareholders. Whatever money is disbursed among private individuals in the form of cheap houses and cars and interest-free loans or holiday homes or yachts is taken out of the community, whether the community be the shareholders—and heaven knows why I should defend them—consumers or employees. The money has to come from somewhere, but there was no mention of that in the hon. Gentleman's speech.
Nor did the hon. Gentleman mention the £900 million in tax unpaid by industry in the last year. There was the £39 million VAT which has been stolen from the Treasury by shop-keepers, and the corporation tax and capital gains tax which has not been paid. The Treasury gives the total figure as £930 million. That money has, in effect, been stolen from the Treasury by industrialists and business men, including small business men, quietly feathering their nests while complaining publicly to the hon. Gentleman about the little irritations they have to put up with in order to obtain grants and loans from the Government. We are told that they are hard done by and to be pitied, given their circumstances.
The hon. Gentleman complained about the burdens that the Government impose upon industry. Was it a burden to rescue British Leyland, or Chrysler or Alfred Herbert? It is a burden to spend millions of pounds daily in bailing out private companies with no control over that money, nor any accountability for it? Let us be clear about this. If we are complaining about what may be legitimate and justifiable interference with industry, let us also look at the other side of the coin and mention the things that the Government do without which industry would not exist or, if it did, would not be as efficient as it now is.
§ Mr. Goodhew
The hon. Gentleman is going very wide of the motion. It complains of thegrowing burdens imposed on businesses by official regulations and requirements.Perhaps the hon. Gentleman would like to put his brain to that question, which is the burden of the motion.
§ Mr. Kilroy-Silk
I thought that I had been doing that very well. Perhaps the 58 hon. Gentleman has been asleep for the last few minutes. I am trying to make sense of this nonsensical motion. The hon. Member for Hitchin comes here, hot-foot with telegrams clutched in his hot hand, and tells us all about these complaints by his constituents. But he does not make his case. I am trying to help him to make sense of the motion and to put some meat into it.
I am talking not so much about burdens which the Government put on Industry—because I can find none and the hon. Member provided no examples—as about the burdens which industry and commerce place upon the community and the country as a whole. That is the crucial issue. We are, after all, although the Opposition seem to forget it so often, in the middle of a so-called economic crisis—a crisis in which industry clearly is not taking its share of responsibility and is not doing enough to promote exports or productivity or increased pay in order to get us out of the crisis. Why? Let us look at some of the burdens which industry has imposed upon the country and therefore upon the taxpayer and the individual employee.
Industry has not, for example, as has been made clear time and again in this House, done enough to create investment. It has not invested in British industry. This is not a new complaint. It was made by the right hon. Member for Sid-cup (Mr. Heath) when he was Prime Minister. Time and again, he exhorted industrialists to invest more in British manufacturing industry. The climate under his Government was supposed to be conducive to investment, yet they did not invest in the regions, in plant and machinery or in the new profitable outlets to create jobs. They have still failed to invest, in spite of the inducements given by successive Governments. I am not making a party point. This was said long before we said it—by the previous Conservative Prime Minister.
The facts speak for themselves. We have a lower level of investment in private manufacturing industry than most of our major Western European competitors. There is far less capital behind each man in British shipbuilding and ship repair than in Japan, Norway, West Germany or Sweden. There is far less capital behind British car workers than behind those in Japan, Germany and 59 France. The list is endless. In almost every sector of British industry, those responsible have not shown the patriotism which we are asked to demonstrate. British industry has not been prepared to show its faith in its own future and that of the British economy by investing its profits as industry in other countries. with whom we have to compete effectively, has done for the last decade.
§ Mr. David Mitchell (Basingstoke)
I agreed with what the hon. Member is saying about the need for greater investment behind every worker. But does he not see that there is a relationship between investment and the investor? If he makes speeches like this, knocking investors, can he be surprised that they do not lay out their money by investing in British industry?
§ Mr. Kilroy-Silk
No one is knocking investors when they invest. The simple point is that they have not invested in British industry. They exhort everyone else to put his nose to the grindstone. Employees and the labour movement generally are told to restrain their wages, work long hours, get rid of demarcation disputes and become more productivity-conscious. Perhaps all that is fair, but why do not the same exhortations and complaints apply to those with the major responsibility for Britain's industrial future and enterprise, to those who have shown conspicuously in the last 10 years or more that they have failed to deliver the goods and to provide the investment which is needed?
§ Mr. Michael Spicer (Worcestershire, South)
Would the hon. Gentleman not agree that the considerable increase in red tape does not help? He seems to be arguing two ways. At the beginning, he seemed to agree that this situation did impose burdens. Now, he is saying that there are no burdens on industry. At the beginning, he said that the burdens were worth while. I wonder how worth while. The point of my hon. Friend the Member for Hitchin (Mr. Stewart) was that the cost might be severe in terms of jobs and investment. Will he not address himself at least to the question of this cost?
§ Mr. Kilroy-Silk
Of course, it may be—and that is a question of balance. If it 60 can be shown that a particular piece of legislation, however desirable on its own terms, is, through unintended and unexpected consequences, leading to a particular threat of loss of jobs, that should be looked at again. But I have heard no demonstration of that today. After all, the motion has been drawn up by the hon. Member for Hitchin and he has the House for the whole afternoon to make his case. The onus was on him to demonstrate, as I expected him to do, the burden on industry which was leading to loss of jobs. Had he done so, I should have been a receptive audience, but he did not. He gave no specific instances and no indication of where the worthwhile and applauded legislation of this Government has reduced the number of jobs.
My point simply was that although, inevitably, measures such as the Health and Safety at Work Act and the Employment Protection Act must impose burdens on industry—if they did not, there would be no point in having them—those burdens were necessary and were outweighed by the benefits to industry as a whole, particularly to employees. That is a fair and simple point which most hon. Members, I think, would take.
Not only is it true that industry has failed to invest and has therefore failed the nation, that it is failing to provide jobs and has therefore failed the employees: it has also failed to increase productivity per man, which is the responsibility of management. After all, those in management are supposed to be innovatory and enterprising, in a managerial society. If they fail to increase productivity, to invest and to promote more jobs, the responsibility lies squarely on them. The figures show that British management has failed to increase productivity, to take advantage of the tremendous export opportunities now presented to British industry—and not just because of the decline in the value of the pound. That has at least the favourable aspect of having given a tremendous edge to British commodities and services abroad.
Unfortunately, trade returns show that British industry is failing miserably to carve itself a major niche in the new export markets. It is not so enterprising and outgoing and adventurous as it likes us to believe, as it likes to pretend. It 61 is prepared instead to sit back complacently relying on reflation, the regeneration of the home market and perhaps the occasional handout and subsidy from the Government to keep it going. But it is not prepared to be aggressive and outgoing and to stake a claim for itself in the export markets which are now clearly an area in which it could have tremendous impact.
Therefore, in an important respect, British industry has failed the nation and those who work for it. It has certainly failed to provide jobs in such areas as Merseyside, which I represent, and it has failed miserably to train its young people for their new skills, responsibilities and techniques that a new advanced industrial age demands. I should have thought that the hon. Member for Hitchin would have mentioned that industry has a responsibility in training and retraining, particularly for the young and those coming direct from school. Yet it has not faced up to that responsibility.
It has not provided the skills, training and retraining which are necessary if British industry is to maintain even a semblance of competition with other European countries. Instead, the Manpower Services Commission on behalf of the British taxpayer had to fork out £140 million last year as an indirect subvention and subsidy to industry in order to train young people who have been made redundant to allow them to pursue another career.
The catalogue of the things which this private enterprise system, that we are told is so beautiful, is supposed to do shows only failure, failure and more failure—on exports, investment, job creation, training and productivity. It has failed abysmally. No hon. Member opposite denies this. On every count, they sit there morosely nodding their heads in reluctant agreement with what I am saying. One or two of them are even waking up.
But the hon. Member for Hitchin dealt with one aspect of this problem, by implication if not directly. He talked about one class only—the employers, the small business men. the commercial entrepreneurs of this system. He never once mentioned what the workers contribute, what would not exist if they did 62 not exist. He never once suggested that industry and commerce should have a sense of social responsibility, by enforcing the Employment Protection Act and the Health and Safety at Work Act to look after their workers. He did not indicate, except by omitting any reference to it, the class division in industry.
Perhaps if for once we took a lesson from Japan and tried to eradicate some of the clear class and status distinctions in British industry, we might be able to arouse the enthusiasm and co-operation of workers. It does not exist at the moment simply because they feel that they have no stake in an industry which treats them as mere cogs in a machine. They are treated as hired hands to be taken on and dismissed at the whim of an irresponsible, anonymous and bureaucratic power.
If we are talking about bureaucracies—one of the words in the motion—let us also talk about the private, irresponsible, anonymous bureaucracies in multinational companies. They are bureaucracies, too, and no different from public bureaucracies except that they exercise far greater power than public bureaucracies and they are accountable to no one. They can close down factories in my constituency at a moment's notice, blight the livelihoods of whole families and bring gloom and despair to towns such as Skelmersdale and Kirkby with no thought of the social consequences of their actions.
They take their decisions in secret and never have to defend them publicly or justify them to anyone. They will close a factory even though it may have received millions of pounds of public money. The decisions on Courtaulds and Thorn Electrical in Skelmersdale and Control Dataset and Albright and Wilson at Kirkby were taken in private behind closed doors by anonymous men who wield enormous power and are accountable to no one. Ought we not also to discuss that situation?
Is it right that their kind of power to destroy people's careers and the livelihoods of families and to bring despair and despondency to towns such as Skelmersdale and Kirkby—which were supposed to be the new boom towns, but are now virtually ghost town—should be exercised with no control by Parliament?
63 The hon. Member for Hitchin spoke about bureaucracies, but his only substantial complaint was about a firm which had to count its trees before it could get £2,000 from the Government for a computer. What a miserable condemnation of the capitalist system. Instead of talking about the real issues which confront this country and its people and the jobs and livelihoods which are at stake, he can complain only that, in order to get £2,000 from the taxpayer, this poor, little, piddling firm had to answer a few questions.
We did not hear from the hon. Gentleman about the Government grants and loans given to industry. Again industry is a burden on the community, the employees and the taxpayer, not just through lack of investment and the promotion of exports, jobs and productivity, but through the amount of money it takes out of the Exchequer.
In the North-West alone, selective financial assistance under Section 7 of the Industry Act totalled £34.6 million this year up to October. That saved 37,000 jobs. Another £9 million was given in the North-West under Section 8 of the Act. In the one year 1975–76, £36 million was given to the Merseyside special development area through regional employment premium. Another 40,000 jobs were saved, at enormous cost, by the temporary employment subsidy.
Do we hear of the burden which this money imposes upon industry? Is it a burden to give industry in the Merseyside special development area£36 million in one year? Is it a burden to give£34.6 million in special grants under Section 7 of the Act in the North-West and a further £9 million to the area under Section 8? Yes, it is. It is a burden on the rest of us. We have to bear it because of the failure of British industry and the sort of people represented here today by the lion. Member for Hitchin.
The Tories constantly complain, as did the hon. Member implicitly, though not effectively, that they do not want what they call interference but what is correctly called intervention. No doubt they will be indignantly citing cases of intervention which they oppose, but even a cursory glance throughHansardwill show it littered with pleas from individual 64 Tories asking for more help and handouts for interests in their constituencies. They will vote against aid for British Leyland, but will write letters to the Ministry and put down Questions and motions in high dudgeon to get grants and aid for factories in their own constituencies. We do not hear the complaints about public money going to industry then. They complain only that the money is not going to their factories quickly enough, in large enough quantities or on favourable enough terms. A terrible hyprocrisy pervades the Opposition Benches on such occasions.
I do not object to theirlaissez-fairephilosophy, if they are honest and sincere about it, or to their belief in the virtues and benefits of the free enterprise system, except that all historical evidence shows those beliefs to be unfounded and the system to be unfair, unjust and inefficient. I do not object to them propagating the ideas of private enterprise, but I object when, with their next hot breath, they are quietly asking for handouts. Virtually every hon. Member opposite has been guilty of that behaviour in the past two and a half years.
We hear complaints from the CBI and individual industrialists. They do not want the State interfering. They want the Government to keep out. Of course, they also want the money, but they do not want the forms, the questions and the accountability. They all queue up, as they have always done, at the Department of Industry and, now that it dispenses the largesse of public funds, the Department of Employment, with their sticky little hands, like children going to Father Christmas, asking for more grants and handouts.
We hear from the Aims of Industry, or whatever new-fangled title it has now, and the CBI asking to be left alone, but they trundle down Victoria Street, on the hot line from Victoria Station, to the Department of Industry asking for more taxpayers' money.
The Tories claim to be the stoutest defenders of the taxpayer, but why are they so reluctant to question this sort of subvention of British industry? They question severely the public money which goes to co-operatives such as the one in my constituency or that at Meriden. They get hysterical about where that money goes, but they will not 65 complain in the same terms about the much larger sums which go, on a continuing basis, to British industry. They seem to want it left in private hands with no accountability or responsibility for the way in which it is disbursed or whether it is efficiently used.
Unfortunately, industry has failed lamentably to provide the investment opportunities and jobs one could have expected and hoped for from it. It has failed to put back into the community anything like as much as it has received, and it has clearly failed the regions. This is not so much a critique of industry, business and commerce or of individual business men, industrialists and entrepreneurs as a critique of the whole private enterprise capitalist system.
Let us take just the Merseyside area which I represent. It has a dramatically high rate of unemployment—higher even than the rate in Scotland and Wales, and we hear a great deal about the alarming and enormous difficulties confronting those countries. But Merseyside, which is smaller than both, has a higher rate of unemployment than has either. There are more people unemployed in Merseyside than there are in the whole of Wales. There are two areas in Merseyside, Kirkby and Skelmersdale, where the unemployment rate is just touching 20 percent. Perhaps that is partly the failure of the regional policy of successive Governments, but it is clearly due also to the failure of British industry to direct its resources adequately, to invest in the regions and to create jobs.
Not only do we have more unemployment on Merseyside but we have a rate of unemployment among school leavers in particular which is obscene and depressing. We have suffered a net loss of jobs in the past 10 years. The whole area is now subject to a gradual and almost inevitable industrial decline. Most of the major industries that sustained it and made it proud and prosperous are now in decline and are not being replaced by further investment opportunities.
Not only are we not getting new opportunities and new investment but the firms which are there now are closing. Albright and Wilson in Kirkby is to close, with the loss of 130 jobs, Courtaulds in Aintree is closing, with the loss of 600 jobs, and at Skelmersdale, just across the border, Courtaulds 66 is closing with the loss of 1,000 jobs. Hygena in Kirkby is closing, with the loss of 150 to 200 jobs. Control Dataset, also in Kirkby, is closing, with the loss of only 50 jobs—and when it is only 50 on Merseyside there is almost a sigh of relief because we are used to talking in terms of hundreds and thousands.
But even though there are all these closures and redundancies in a short period, on top of the many others we have already had, the great cause of concern is that none of these factories is closing because it has suddenly become unviable, because it has cash flow problems or because it has become unprofitable. Albright and Wilson is going to Letchworth because it wants to rationalise and to concentrate production in one area. Control Dataset is doing much the same, and so is Courtaulds. They are closing not because of the present economic situation, not because they are not making profits, not because their specific plants in the area are unprofitable, not because of any act of Government policy, not because of the recession, but because they have no sense of social responsibility to an area of already intolerably high unemployment and they prefer for purely private economic reasons to go to areas where there is no real problem of unemployment.
It is disgraceful that such companies can take such a slight or dim view of their responsibilities to a town that has served them well over the last decade. Such a company as Albright and Wilson or Control Dataset can, almost at a moment's notice, exercising the private, irresponsible, anonymous power of which we have talked—and the bureaucracy of which the hon. Gentleman should have talked but did no—make a decision for its own private interests. which are never accountable and will never be justified—it will never have to give its reasons in this place—which will control the livelihoods of my constituents and demoralise a whole town, with no care for the social fabric of the area or region.
It is disgraceful that firms can do that to areas that have sustained them. Albright and Wilson, for example, has had an effective industrial relations record, with no industrial disputes, yet it can summarily dismiss those men and 67 destroy their future, paying no further heed to them. What is more, they do it when they have been in receipt of large amounts of Government money. Courtaulds at Skelmersdale and Aintree has, I believe, received about £56 million of Government money, yet its vote of thanks is to say that it will put another 1,000 on the scrap-heap at Skelmersdale, another 600 at Aintree and another 700 at Flint, which also affects Merseyside.
There should be far more Government intervention and far more Government control, exercising a system to monitor the way in which our money goes to private industry. That money should not be given unless it is shown conclusively that it will be used effectively to promote efficiency, productivity and jobs. If an industry cares so little for the people who serve it and for the towns which give it hospitality, the money should be returnable in full to the Government, which, unfortunately, has not happened until relatively recently.
We do not want an easing of burdens of this kind. They are not burdens on the workers. What we want on Merseyside is more Government help and more Government intervention. We shall never solve the problem of industrial decline or achieve the regeneration of industry on Merseyside, with the creation of new job opportunities, unless and until we have further Government intervention. It is not lack of Government interference or intervention in industry that concerns me. What concerns me is that it is not positive or far-reaching enough, and until we get that we shall not have sustained growth and regeneration on Merseyside.
We on Merseyside want the help that is already provided for Wales and Scotland, both of which have lower levels of unemployment. We want a Merseyside development agency that will be able to look at the total Merseyside picture, that will be able to analyse the defects and deficiencies and channel resources and finds into areas of need. We want a plan for the industrial regeneration of Merseyside. I have repeatedly asked my hon. Friends in the Government to look at Merseyside as a whole, to analyse its industrial problems and isolate its special needs, and to create a tailor-made plan for its industrial regeneration.
68 It is no good asking us to wait for the general upturn in the economy. That is like waiting for Godot. He never came, and the industrial upturn may never come. It is no good asking us to wait for an end to the international economic recession. Even in good times Merseyside suffers more than other areas. There has never been a good time for Merseyside in the last 10 years. Any crumbs that may come our way from an economic upturn or reflationary measures, or any new overall prosperity in the international economy, will still leave Merseyside with an unemployment rate that the West Midlands has now experienced for the first time and is creating all hell about, yet that is our normal way of life on Merseyside. An international economic regeneration will not be enough to solve our problems. Extra special measures are needed, measures which are tailored to and specific to our needs.
§ Mr. Michael Spicer
Where will the money come from? Will not much of it have to come from industry, about which the hon. Gentleman has been so disparaging for the past 10 minutes?
§ Mr. Kilroy-Silk
If the hon. Gentleman will allow me to continue, something else which I have to say will effectively cover that. I hope that my hon. Friend the Minister of State will be able to answer my specific questions at the end of the debate. Not only do we want a Merseyside special development agency, not only do we want a Government-inspired plan and resources to go with it for the regeneration of industry on Merseyside, but I ask him also to make an announcement today about the location of the headquarters of the new nationalised shipbuilding industry. He will understand that that could be a tremendous morale booster to an area which has suffered many knocks to its industrial future in the past 18 months or so. I hope that he will make that long-awaited announcement and tell us that we are to have that headquarters on Merseyside, that we are to have more quickly the 7,000-odd Civil Service jobs that were supposed to be dispersed to Merseyside as a result of the Hardman proposals, and that he will tell my right hon. Friend the Secretary of State for the Environment about the need to regenerate the construction industry.
69 Liverpool, let alone Merseyside, has many derelict buildings and much industrial dereliction and obsolescence, all of which could be changed if the unemployed construction workers were used. We have a great need for new housing in Liverpool and Merseyside generally and for a new hospital at Skelmersdale and Ormskirk. We have the skilled manpower idle, drawing unemployment pay and social security. Is it not a condemnation of the private enterprise system that while we lack necessary facilities, and there is a great need for more money to be spent on house building, house maintenance and the refurbishing of our derelict industrial structure, there are unemployed construction and building workers? Unfortunately, in the measures he announced last week my right hon. Friend the Chancellor of the Exchequer has gone further and will create more unemployment by the increased cuts in expenditure on construction.
All this is highly irrational. It is not just an irrationality of the system but is irrationality of the Government. It is not inflationary to pour money into the construction industry in the way that other public expenditure would be inflationary. That could meet many of the important social needs on Merseyside, while providing much-needed beneficial employment. The real criticism of the private enterprise system is that it does not serve the country as a whole. It has not provided the jobs, productivity, exports or investment and has not served the regions, such as Merseyside. The power to make major decisions affecting our lives is in the hands of a few men, without public accountability or responsibility. It is irrational that that kind of power should still exist in our so-called civilised society.
We shall not solve our employment, investment or export problems, certainly not those of the regions, until we plan our economy and industry effectively. There can be no justification for the discrepancies between Kirkby and Hitchin, no justification for one town being demoralised by 20 per cent. unemployment and the other having an unemployment rate so low that it cannot be counted. Is it an accident that one area must suffer all the handicaps, not only the industrial decline but also the highest 70 rates of infant mortality, bad housing, low pay and all the other social evils? If it is an accident, cannot we put it right? Private industry cannot do it, or refuses to do it. We can achieve a fair distribution of our economic resources and the direction of necessary investment to the regions only if we take a far larger stake in public and private industry than has been taken so far.
Despite all the homilies of the hon. Member for Hitchin, private industry has lamentably failed the people of this country, and particularly the regions. It has been on trial for far too long, and it has failed to produce an adequate defence. The National Enterprise Board needs to become what it was supposed to be. The Industry Act needs to be amended along the lines of what it was intended to be. We want compulsory planning agreements and buying into private industry, so that firms can be directed towards the regions and investment can be directed to where it is needed and will be most beneficial.
We must remember that when we talk about industry we are talking not only about profits but about the people who serve industry and are supposed to be served by it. Unfortunately, the vast majority of the people of this country, including my constituents, have not adequately been served by industry. Let us consider pay, holidays, overtime and productivity in the United Kingdom compared with other countries. Why must the British worker be lower paid than his German or French contemporaries? Why does he have to work longer hours in worse working conditions? Why does he have to work with inadequate capital equipment behind him, and with fewer holidays, perks, pensions and all the rest? It is because British industry has failed to sustain the kind of life, productivity and enterprise that its apologists pretend it sustains.
We shall achieve the conditions we seek only when we have the courage of our convictions and the Government act as a proper Socialist, Labour Government. We must acknowledge that we can have a fair, rational, efficient and just society only when we take into our hands the ownership and control of industry and direct it to ends determined by social criteria and not the whims of irresponsible private entrepreneurs, certainly not the vagaries 71 and exigencies of a market that puts profit before the interests of people.
§ 5.16 p.m.
§ Mr. Paul Dean (Somerset, North)
It is rare for the growing weight of government to be defended from the Back Benches, but the hon. Member for Ormskirk (Mr. Kilroy-Silk) made that attempt early in his speech, though for most of it he addressed himself not to the excellent motion, moved so effectively by my hon. Friend the Member for Hitchin (Mr. Stewart), but to trying to deflect attention from it.
The hon. Gentleman talked about industry's not showing faith in the future. It is no wonder that it does not when the fact or threat of nationalisation hangs over every industry and when people hear the sort of speech the hon. Gentleman has just made.
§ Mr. Kilroy-Silk rose—
§ Mr. Dean
The hon. Gentleman spoke for a long time. Perhaps he will be good enough now to listen for a few minutes.
The hon. Gentleman also talked about industry's failing the nation. It is the Government who have failed the nation, as we can see from last week's mini-Budget, the record levels of inflation, unemployment and bank lending, and all the sensitive economic indicators. The way in which industry has been clobbered is the source of the trouble, and the responsibility is that of the Treasury Bench, not the work people and management in industry and commerce.
The hon. Gentleman said that we must plan. Who are the all-seeing individuals who will produce the plans and solve the problems? The Government should concentrate on the things that only they can do and leave industry and commerce a great deal freer to get on with the job that only they can do effectively.
The House is greatly indebted to my hon. Friend for putting the parliamentary spotlight on the growing burden of government on industry and commerce. Bureaucracy hangs like a heavy cloud over every work place and many homes where work is done. The ever-growing torrent of Acts, regulations, forms, questions, rights of entry and inspections adds 72 up to an onerous and oppressive burden on businesses, especially smaller businesses and the self-employed.
Too much effort is deflected from wealth production, exporting, after-sales service and good management. Too much energy runs into the sand in unproductive paper work and in complying with regulations that make the law look an ass and almost invite evasion. Too many people have given up in despair, taking the view that if they cannot beat bureaucracy, they had better join it. Far too many of us are minding each other's busines on behalf of Government instead of producing wealth for the community as a whole.
It is only fair to put the blame where it belongs. It does not lie with officials, who are carrying out Government instructions, although it is fair to note that it is impossible for officials to be adequately supervised when there are so many of them and when their work is so wide-ranging. Basically the blame lies with Government and with Parliament.
There was one point in the speech of the hon. Member for Ormskirk with which I agreed. He said that when a problem arises it is almost automatic to say" What are the Government going to do about it?" It is almost automatic and it may well be right that as Members of Parliament we table Questions. We adopt that approach and ask what action the Government propose to take. It may be that that is right, and in many cases it is, but we must recognise that in so far as Governments respond to that pressure it probably means a new regulation, a new Act, or more officials to carry out the action that is decided.
By far the biggest offender is the Government. That applies especially to the Government now in office, who have an irresistible urge to meddle, to interfere, to control and to direct. As my hon. Friend the Member for Hitchin said, it is not so much each individual act that produces the burden, but the cumulation of them all.
There is also the natural momentum in the machine itself. Once it starts rolling, it is difficult to stop it. I wonder how many of the hundreds of regulations now in operation are still relevant to modern conditions. How many of the forms that go out from Government 73 Departments have been considered carefully in recent years to see whether they are necessary? What happens to all the questionnaires that are completed in ever-growing numbers? We are told that many of them are used for forecasting. As my hon. Friend said, if there is a classic case against questionnaires being used for forecasting it is to be found in the almost total inaccuracy of the forecasts in recent years.
My hon. Friend illustrated his theme by mentioning a number of problem areas, including VAT, the Price Code and the problems of the Employment Protection Act, especially for small firms. I shall illustrate my remarks about the growing weight of government with two examples. One relates to the construction industry and the other concerns pensions, to which my hon. Friend also referred. I have selected different areas but my two examples illustrate two of the main dangers that are inherent in over-government.
The first danger is the threat to individual freedom and the ability to choose how to earn a living within the law. In this context I refer to the construction industry. The second danger is the complexity and the multitude of regulations that can frustrate the intention of Government policy and legislation. It is in that sense that I wish to refer to pensions.
In speaking of the construction industry I am thinking especially of the independent sub-contractor and the new tax certificates that will come into operation in April 1977. No reasonable person would complain about the Government's cracking down on tax evasion, but are they taking a sledgehammer to crack a nut? There is some disturbing evidence in the construction industry, especially when we recall the background against which the new regulations are coming into operation.
There is a severe recession in the building industry. There is a higher level of unemployment than the industry has suffered for many years past. It is important that we should not do anything more to make a grim situation even grimmer. We have also to take into account that there is a long and honourable tradition of self-employment and sub-contracting in the construction industry. That is essential in an industry that requires such flexibility and mobility.
74 There are also the political overtones to be remembered. Sub-contractors see a threat to their independent existence in the Government's proposed direct labour Bill, which will extend the powers of local authorities to engage in construction work. They suspect that subcontractors will get squeezed out of all public contracts through the twin pincers of the closed shop and the so-called voluntary registers. They remember the Labour Party's pledge to nationalise companies within the construction industry and so to extend still further the tentacles of the State.
Against that background there is no wonder that the sub-contractors are suspicious. It is no wonder that they suspect the Government's motives. It is no wonder that they are reacting against the requirement to produce photographs on the tax certificates.
Let us consider the facts and the evidence. The facts are provided inHansard.On 7th December I received a reply from the Financial Secretary to the Treasury. He told me thatAt the most recent count on 12th November, 268,669 applications had been received, of which 185,730 had been approved and 20,960 refused. It is not possible to estimate how many more applications will be received. —[Official Report, 7th December 1976; Vol. 922, c. 117.]That Answer had a misprint in it that the Minister subsequently put right.
The main point that I wish to pick on from those figures is that over 20,000 certificates have been refused. From the evidence that I have so far, it appears that some of them may be refusals without good cause, where there is a previous tax record which is in order. Some, it appears, refer to British subjects returning from abroad who, by definition, do not have three years' tax records but who are prepared to show their good faith in meeting their tax obligations now that they have returned. That is one of the disturbing factors.
Another disturbing factor is that there appears to be delay in the hearing of appeals. A third factor is that local authorities and others are requiring the certificates as a condition of contracts. It looks as though the certificate is becoming not merely a tax collection instrument but a certificate to work. If that is happening, that is contrary to the 75 pledge given by the Financial Secretary in an Answer to me on 11th November.
I am grateful to the Minister for agreeing to my request to receive a deputation so that these matters can be discussed, but I wish to refer to the disquiet about the new arrangements. I refer to the danger to livelihood and employment of genuine sub-contractors and the likely high cost of vetting applications and maintaining a register of up to 400,000 firms. I give this as an example of the new regulations posing a potential threat to fundamental rights and to the freedom and right to work.
My second example concerns pensions, and I declare an interest in the subject of pensions and insurance. I wish to refer to the complexity of the situation which frustrates the intentions of policy. After years of political in-fighting in pensions in which some of us were involved in trying to get an agreed scheme and to maintain some stability in pensions, we saw the advent of the Social Security Pensions Act 1975, which was a compromise. Since that compromise was produced the official Opposition have many times said that we would accept it and work it.
As a result, a heavy sigh of relief went out in the firms concerned with pensions. They thought that here at last was a chance of political stability. There is no doubt that the Act is complex and that the regulations are even more complex. There are a mass of specialist things to be done, consultations to be undertaken, and decisions made on every one of about 65,000 pension schemes. It is a formidable task, particularly against the background of a grim economic situation. Time is short, but the Government are making the task still more difficult by their own ambitions and by imposing restrictions on pensions improvements as part of the pay policy. I believe that that is a mistake.
It is not the purpose of my remarks this afternoon to dwell on that matter. I wish to point out that the Government pensions policy cries "Forward" while the Government pay policy cries "Backward". This creates an impossible dilemma. I must warn the Government that their pension policy is in danger of not getting off the ground. There is a 76 danger that the deadline of April 1978 will not be met unless they make an early announcement removing restrictions on pension improvements.
A further example of the Government making a complex situation even more difficult lies in the announcement in June this year outlining the Government's intention to introduce legislation for employee participation in the management of occupational pension schemes through the agency of the trade unions. To introduce a new element in an over-burdened programme was bad enough, but it was worse when this was a highly controversial measure. The approach through legislation was contrary to the advice given by the Occupational Pensions Board, which preferred a code of practice to legislation.
There is broad agreement to the concept of employee participation, but there is strong opposition to its being done ex-explicitly through a trade union agency. Again, it is my purpose not to argue the merits of the matter but to point out that in an already over-burdened programme this amounted to a spanner in the works. It added a new controversy, new complications and new delaying tactics. The Government are risking their own policies and deadlines by over-burdening employers, trade unions and pension practitioners.
Those are two further examples to be added to the list already given by my hon. Friend the Member for Hitchin of the sheer overweight of Government legislation. I have tried deliberately in my remarks to be non-controversial. I recognise that the weight of legislation has been growing over the years under Governments of varying complexions. However, it tends to be more oppressive under the present Government because of their desire to interfere in so many affairs. It is a problem that has grown over the years.
If we wish to restore the economic health of our country, as I am sure we all do, sooner or later—and sooner rather than later—we have to tackle this overburden on industry and commerce through the sheer weight of Government legislation and the regulations that flow from it. Until we are prepared to do that, industry and commerce will operate with one hand tied behind their backs and we shall find far too much productive effort— effort that should be channelled into new enterprise 77 and increased production—going into unproductive, and in some ways counterproductive, activities.
I hope that, whatever else happens as a result of today's debate, note will be taken of this important and growing problem. It concerns us all, and I emphasise that this problem is not of a party-political nature.
§ 5.36 p.m.
§ Mr. John Cockcroft (Nantwich)
This debate is mainly concerned with the burdens of small businesses in industry and commerce. In present conditions that is where the shoe pinches most harshly.
In the last week I have taken the opportunity to speak to large numbers of small business men in my constituency, which geographically is very large. Most of it, however, is centred on Nantwich town. There are 300 firms in that small area.
I asked the business men to whom I spoke how much of their working time was spent in filling in VAT forms and various other documents. The average figure was about 17 per cent. of that time—in other words, the amount of their time taken up in acting as unpaid tax collectors for the Government.
Those concerned bitterly resent that activity, whatever may be the reason for it. In any case there is a higher proportion here of tax collectors directly employed by the Government than in any other comparable country. I understand that we have four times as many tax collectors in proportion to our population as there are in the United States. Hence there are enormous hords of unofficial tax collectors who should not be doing this work themselves.
The people to whom I spoke believe that the reform of the rating system is urgent. Many people employ members of their own family: and, as well as paying rates as small businesses, they are also taxed as individuals. They believe that the tax burden has fallen particularly heavily upon them in the past three years. Many of the rates paid by this section of the community have risen by 100 per cent. or more within a very short period.
In Nantwich town several businesses are up for sale if a purchaser can be found. One shop is closing completely because the owner feels that he can do 78 better if he retires, sells his business and lives by investing whatever money he gets from that source. There are many shopkeepers in my constituency who feel that, if and when they can sell their businesses, it will be simpler for them to invest their money in a building society or in gilt-edged securities, or in some form of fixed security that will bring them in, say, 15 per cent. per annum return and enable them to retire into tranquility, rather than having the worry of all the problems that confront them in a small business. The present legislation tends to lead people to become dishonest in order to escape the extreme rigours of the present burdens that weigh on small businesses.
The new town of Winsford lies in my constituency. It caters for the Liverpool and Manchester overspill. It is a town of about 17,000 voters, with about 27,000 people in all. Set up 10 years ago, it has not been a great success, having relatively high levels of unemployment, a shortage of jobs, a general depression and a lack of amenities. A few years ago there were about 100 shops on the High Street. Then the High Street was redeveloped. The shopkeepers were forced—or certainly heavily persuaded—to move into the new shopping precinct in the town. Many of the shopkeepers went to other parts of the town where there were fewer customers but where the accommodation was cheaper. About 10 of the 100 or so small shopkeepers moved into the new precinct three years ago. Now only two remain.
The main reason for this fall in numbers was the high rent and the enormous increase in rates over a short period. The other shops have been taken over by the large multiples. The situation is depressing, unless one thinks that the future lies with the big battalions and there is no future for the small business man. That is a depressing view because we are talking of a section of the community which in the past contributed much to the greatness of the British nation.
One of the sad features is that in the past so many towns and councils took the view that the centre of their towns should be redeveloped. This pushed the small shopkeepers away from their traditional positions.
I believe that there is a case for aiding the small business men who have been so badly hit in the past few years as a result 79 of these enormous imposts by means of differential interest rates. Nowadays there are many handouts, grants and other indiscriminate forms of aid, some of it going to large firms. Perhaps a small proportion of this money could be used to subsidise interest rates for small businesses.
I am told that in Nantwich these business men pay 3 per cent. to 4 per cent. above base rate because they are officially classified by the banks as not being particularly prime borrowers. Perhaps a few tens of millions of pounds a year could be used to help these people who contribute so much to the economy.
The big employers do not have the same difficulties, on the whole. They do not face the same cash flow problems. The answer is to have lower rates of taxation, less prying into privacy and less employment of these people as collectors of taxes. There should be greater incentives for enterprise and a reduction of the cash flow problems which were unforeseable, unforeseen and undeserved.
§ 5.43 p.m.
§ Mr. Michael Spicer (Worcestershire, South)
This debate, launched by my hon. Friend the Member for Hitchin (Mr. Stewart), is more important in terms of the future of our economy than, for instance, tomorrow's debate on the Chancellor's latest proposals. When it comes to what the country will look like economically and politically in ten years' time, the short-term remedial macro-action which the Chancellor can take does not have very much effect. Certainly the proposals of last week will not have very much effect next year, because most of the economic forces which will shape next year are already in the pipeline. We are heading for 15 per cent. inflation, high rates of unemployment and absysmally low growth rates. Nothing that the Chancellor can do in a mini-Budget is likely to have much effect on that.
What will determine the future of our economy and our society is the attitude we adopt as a country towards business and the creation of wealth. We do not claim that over-bureaucracy—the burden placed upon business by red tape and form-filling—is the only deterrent to the efficient running of businesses and suc- 80 cessful investment. We make the point that it is an inhibiting factor. Anyone who thinks that the multitude of red tape is an irrelevanace as the hon. Member for Ormskirk (Mr. Kilroy-Silk) seemed to imply, should attempt to export to Japan. It is becoming almost a truism to say that in attempting to export to that country it is not overt barriers which present problems but the amount of red tape. Clearly, this multitude of red tape is an important factor.
There are other factors which affect business, too. For instance, our managers are more highly taxed than any other set of managers in the Western world. In addition, when we aggregate all forms of taxation, business in this country is taxed more heavily than practically any other industrialised country. Those are added factors but the bureaucracy item is a most important element in all of this. I hope that the Minister will at least accept this and move on from there to discuss what can be done.
We accept the need for accountability when public money is provided. We accept the need for a certain amount of form-filling in connection with taxation. The problems arise when the Government begin to practise heavy discrimination by means of the questions they asked. This whole process of discrimination was aggravated by the introduction of selective employment tax—the attempt to distinguish between two sectors of the economy one of which was called "services" and the other "manufacturing" That was the beginning of a most slippery slope. We now have VAT, which is a continuation of the SET idea.
We find as a result of all this that rebates in connection with export services are treated differently from those arising from manufacturing. A whole compendium of questions arises. Anyone trying to export services is rapidly made aware of the heavy hand of bureaucracy as he seeks to discover which aspects of his services are zero-rated, which aspects are exempt and which carry VAT, which, incidentally, acts as a form of discrimination.
§ Mr. Kilroy-Silk
Would the hon. Gentleman like to tell us what representations were made to the former Tory Government when there were a whole series of regulations interfering in the most minute 81 detail with company administration by means of the prices and incomes policy'?
§ Mr. Spicer
This is a personal opinion, but I believe that a prices and incomes policy is a perfect example of what I mean. A prices code is one of the costs to industry which the hon. Member discounted. He never tried to quantify those costs in terms of jobs lost. A prices and incomes code is a perfect example of a bureaucratic operation that does not further the ends the hon. Gentleman claims he wishes to further—namely, the creation of more jobs and greater prosperity. I was not in the House at the time of the Conservative Government's prices and incomes policy and cannot answer the question in personal terms. But we have here a perfect example of a legislative framework which results in the most appalling discrimination and bureaucracy, particularly concerning prices.
I am very glad that the hon. Member for Ormskirk has returned to the Chamber. He was allowed to open up a very interesting and, I believe, rather fundamental chain of argument which is entirely relevant to the debate. As I said in my opening remarks, the attitude that the Government take to this question—symbolic as it is of a general attitude towards industry—is entirely relevant to the future course of this country. The hon. Gentleman did us a great service by opening up this topic. He seemed to be saying that because industry had let us down, we should put increasing burdens upon British industry with the aim of driving free enterprise out of business, as a result of which, following whatever philosophy he subschibes to, he would replace private enterprise by State enterprise.
That is a perfectly logical point of view for the hon. Gentleman to put forward. But if he were to take it to its logical conclusion—as he is bound to do and, I think, wishes to do—he would have to pay the price in terms of personal freedom. Under any truly Socialist system, such as he was advocating, there has to be direction of labour. This is implicit in what he said. We are far too coy on the Conservative side about this. Under true Socialism the first institution to be abolished is the free trade union as we know it.
If the hon. Gentleman is not prepared to pay the price in terms of personal free- 82 dom, the only alternative is to have a mixed economy motivated to a large extent by free enterprise. During the hon. Gentleman's speech I asked him how he would get all the money that he wished to spend. Obviously, it is his right to try to get more money spent in his constituency, but where is it to come from? Certainly in the kind of society to which I subscribe ultimately it can only come from freely motivated enterprise and industry.
The hon. Gentleman cannot have it both ways. Many of his hon. Friends wish to abolish the free system of conducting business and of providing labour. Either the hon. Gentleman wishes to abolish that system or he and the Minister must accept that the only alternative is the one I have just mentioned.
Why has industry not invested in this country? My answer to that question is very different from that of the hon. Gentleman. In a multitude of different ways, an atmosphere has been built up which militates against industry. It is represented in a multitude of different policies towards industry.
All successful Western industrialised countries have Governments which have worked on behalf of their industries in different ways. The Japanese have done it in their way, the Germans in theirs and the Americans in theirs. It has been the misfortune of our country progressively to have had Governments which worked against industry. This has been assisted by the kind of point of view that the hon. Gentleman was putting forward.
The hon. Gentleman asked, from a sedentary position, what was the threat to industry in 1970 and why industry did not invest then. The reason is that breathing down the Government's neck were a whole set of people who were basically anti-industry. There was the fear that one day they might come to power, as they did, and introduce legislation against the interests of industry.
The Minister may not be able to accept the full import of what we are saying on the Conservative side. He may not be able to renounce his own legislation. But I ask him as a Minister of State representing a Government who ostensibly believe in the mixed economy whether he will say something to discount the views being put forward from Left-wing 83 Members on the Government Back Benches. Unless he does so—and it may take him great courage to do it—he will be adding yet further to the anti-industry atmosphere which is at the root of the lack of investment.
Investment is not turned on and off by a mini-Budget here and a mini-Budget there. It is something much more profound. Successive Governments have not accepted this and have not realised their peril. People invest not for tomorrow but for 10 years ahead, and therefore they judge investment in terms not of the handouts or subsidies but the kinds of things which are being said by Ministers and by other politicians. That is the atmosphere which either builds up or diminishes the level of investment. In this country we have not had the atmosphere of militant support for industry which has been present in other Western industrialised countries. For this reason they have had investment and to a large extent we have not.
It is not a question of trading off the costs, as the hon. Gentleman was prepared to say, against subsidies. Subsidies are totally different. Governments have them in their wisdom or otherwise, as they wish. But we on the Conservative side believe in something totally different. As has been said, we have not only the indiscriminate burden or red tape but the fiscal and, above all, the verbal burdens that militate in this country against industry as a whole and against investment in particular.
Until we get a consistent approach from Governments of all persuasions in favour of industry and the creation of wealth, the investment will not flow. For these reasons I have enormous pleasure in supporting my hon. Friend on this specific subject which is of great importance, even more important than the sort of subjects we shall be discussing in general terms tomorrow.
§ 5.59 p.m.
§ Mr. Greville Janner (Leicester, West)
The speech by the hon. Member for Worcestershire, South (Mr. Spicer) was a potent example of the sort of paranoid attitude which we on the Government side have come to expect from Conservative Members. Every time an industry goes wrong, they blame the Government 84 —unless they happen to be in power themselves, in which case they blame foreign Governments, or anyone other than themselves.
In this country industry has got itself into the frame of mind of never accepting responsibility for what it does wrong. I have seen in the past six years some mismanagement in private industry that has been hideous. But, equally, there are some enormously successful and productive industries with managements that have produced very fine results.
Many of these industries are under pressure—those who work in them have to be especially careful, energetic and intelligent to survive and to flourish. On the other hand those industries which blame everyone else, and indulge in the sort of self-pity which we have heard from the last three speakers, tend to go down.
I have a vivid memory of a company in my constituency which went bust in the week before the General Election before last. I telephoned the acting managing director and asked him why he had said nothing to me—the local MP, when 1,800 constituents were about to be thrown out of work. In effect, his reply was "What business is it of yours?" I told him that it was very important to a Member of Parliament that his constituents should have work.
I urged him to tell me what I could do to help. His reply was " Have a word with Tony Benn". He spat it out as if it were an invocation of the devil, but which might nevertheless produce something useful. I suggested that he should have made that suggestion three months earlier and run his business properly, instead of as a family misery. Then the Government might have been able to assist, because it is the job of any Government to help industry.
I remember well the "lame duck" speech made at the beginning of my time in this House by the then Minister for Industry, who was rescued from the CBI, the right hon. Member for Knutsford (Mr. Davies). After he said that the Government would not help lame ducks, Rolls-Royce was saved, and rightly so. However, when we do it the Conservatives call it interference with industrial freedom, or nationalisation of the worst kind, or propping up those who do not deserve to 85 live, and therefore imposing burdens on those sections of industry which remain in operation. There is paranoia and schizophrenia in the Opposition's approach. They have double vision on these matters. If they do it, it is good and right; if we do it, it is wrong and a burden.
I specialise in employment law—I lecture on it and write books—and I was concerned to hear the hon. Member for Somerset, North (Mr. Dean) talking about the burdens of the present. What about the burdens of the past? I shall give an illustration of this. The managing director of a firm in the construction industry told me that the trouble with that industry was that in the past people had been treated like pigs. Now that they were treated decently, they just did not believe it.
It is very difficult to create a new atmosphere. For example, in the car industry the industrial relations burden of the past is a bitter one, and it is not possible to throw it off in a matter of months. It takes years to do something like that. The burden of the past affects both sides of industry, and it is something which must be taken account of in considering worker participation in decision-making. t hope that the Minister will take this opportunity to say something about this matter and tell us what the Government hope to do.
As far as management is concerned, too many managers are totally authoritarian and take the attitude that their job is to manage, the workers' job to operate the machines, and that each side should shoulder its own burden. They have had this arrangement for so long that many union leaders—fewer now, I am glad to say—are saying that they prefer to be on their side of the bargaining table and to have no information and to take no part in decision-making.
The future for our industry lies in sharing the responsibility between both sides and the creation of trust. This is not impossible. It exists in many industries, firms and sections already, and not only in the private sector. It exists in both private and public sector industries that are well run. Being well run is not a monopoly of the private sector, and the public sector is not all badly run, as the Opposition suggest. Unfortunately, 86 we have some bad management stretching throughout the spectrum.
In winding up the debate my hon. Friend the Minister should pay attention to the special burdens being carried by traditional industries such as those in my constituency—boots and shoes, textiles and hosiery. These industries have survived the depression and the recession in the thirties and now today they are faced with drastic problems. They are industries within which there are some sections which are still flourishing because of superb management. But through no fault of their own they are faced with competition with which they cannot contend, and they are finding life becoming increasingly difficult.
I pay tribute to those sections of industry in Leicester and elsewhere which are building in spite of the problems and increasing employment in spite of general unemployment. In Leicester we happily have a lower unemployment rate than many other places, but it is still the highest we have ever had. I hope that the Minister will bear in mind the burden on traditional industries faced with competition at home and overseas, the efforts they are making to face that competition, and the fact that they have managed to retain a high level of employment and a high production rate.
Finally I refer to the traditional attack on this Government and on Socialist policies generally which has come from the Opposition. They say that we impose huge burdens of legislation on those who are unable to carry them. I can speak with an enormous degree of knowledge of one area only—the area of employment law. The trend for legislation was started by Conservatives in the Industrial Relations Act of 1971, the most important and least controversial parts of which—those concerning unfair dismissal rights—have been carried on in the Trade Union and Labour Relations Act and strengthened in the Employment Protection Act. I suggest that those industries, companies and firms which already have and have had the highest standards of management are very little affected by this legislation. They are potentially affected if a manager makes a mistake and dismisses an employee unfairly, and that is only right. But where they are 87 already exercising humanity, kindness and decency by giving plenty of warning of redundancies and where they care about health and safety of employees, they have little need for the Health and Safety at Work Act with its huge potential penalties on managers, directors and secretaries.
On the other hand where employers do not come up to normal decent minimum standards, it is right that the law should intervene and enforce those standards on them. That is what the law is for—to set up minimum standards with which people should comply and with which, unfortunately, too many do not comply. Therefore, I suggest that these laws should not be regarded as a burden on industry, but should be welcomed by industry as providing the best environment in which to produce better treatment and conditions for and relations with their own work forces.
I end with the case of the safety regulations which are to be implemented before long. Here the CBI and TUC have combined to say that these are minimum standards which should be enforced with the weight of criminal law. However, the Government are saying "Not yet." It is not the burden which matters in this case, but the concern for life, limb and decency. I believe that these objectives have the blessing of people on both sides of industry, who understand that they are necessary for industry, they will enable people to work together, and industry to survive, flourish and be successful. So long as people go on blaming this or any other Government for introducing minimum standards for industry and blaming other people for their own failures, industry will not flourish as it deserves.
§ 6.10 p.m.
§ Mr. Geoffrey Finsberg (Hampstead)
I hope that the hon. and learned Member for Leicester, West (Mr. Janner) will forgive that I do not follow him, but he heard none of the opening speeches and what he said contributed little to the debate. I appreciate his position, but I, too, know a fair amount about employment, because I am a professional personnel manager. The unnecessary burdens upon employers did not begin with the 1970 Government, but were the result of such legislation as the Industrial Training Act, the Redundancy Payments Act 88 and so forth. I do not say whether the burdens were necessary or unnecessary, but they did not start with the 1970 Government.
§ Mr. Finsberg
If the hon. and learned Member stays for the rest of the debate, he will hear me deal with those matters in my own order.
The hon. Member for Ormskirk (Mr. Kilroy-Silk) introduced a strange dimension to the debate. He lives in a dream world which only exists in the minds of Mr. Bevan in Transport House and those determined to overthrow democracy in the House and the country. The hon. Member for Ormskirk spoke of loans and grants being given to British firms as though somebody else's money is handed out to them. These loans and grants are given to firms from the vast sums taken from them in taxation. If taxation were lower, many firms would happily cope without such loans and grants.
The hon. Member's speech reminded me of speeches made in the 1970 Parliament by the hon. Member for Manchester, Ardwick (Mr. Kaufman) who could be relied upon to make 50-minute speeches irrelevant to the motion in hand. He had to be dredged up by the Whips because no one else wanted to make such speeches—good though his speeches were.
The hon. Member for Ormskirk blamed companies for deciding their future on an economic basis. What sort of double Dutch is that? Does he not realise that the saving of jobs by rationalisation by some of the firms that he mentioned may be contributing overall more to keeping jobs than by saving them in wide and scattered areas? The nationalised industries are the main industries which do not work on an economic basis and they are the biggest eaters of taxpayers' money.
That reality does not interest the hon. Member. His speech, more than any that we are likely to hear tonight, or for a long time, shows the genuineness of this Government when they state that they are wedded to a mixed economy. Mixed economy, my foot! They will have a mixed economy only after everything has 89 been done to preserve their so-called manifesto.
I am sorry to say some nasty things about the hon. Member for Ormskirk, but his speech was squalid and over-long. It was designed to blur the excellent speech by my hon. Friend the Member for Hitchin (Mr. Stewart) who concentrated on the subject in a non-political sense. Virtually every word of the speech by the hon. Member for Ormskirk could have been contained in an election address to his poor constituents. I shall go back to examining the matter on the basis upon which the debate began—a non-political basis.
Year after year, Governments of all colours, as my hon. Friend for Hitchin has said, have been placing more and more burdens on the back of industry. Industry cannot go on taking it. Those who devised the excellent Pay-As-You Earn scheme during the War did not realise then, and people realise even less today, how much extra work has to be done by industry as unpaid tax collectors for the Government. I stress that all Governments are guilty of placing these burdens on industry and then asking why industry does not do a better job.
All parties are equally guilty of placing extra burdens on local authorities by more and more legislation—whether it is good or bad does not interest me in this context. All parties say how terrible it is that the rates go up, but this House has willed the extra legislation and is not prepared to will the extra means. I stress that both parties are guilty, because we are not altogether fair about that in the House.
The last three years' demands for statistics and returns show that the proverbial straw has broken the camel's back. The Minister tried to deride my hon. Friend the Member for Hitchin when he was talking about the VAT cut-off at £5,000. He almost seduced my hon. Friend into saying that traders could apply or make yet another return knowing that the information was already available to the Government statistical branch and could be provided without any extra forms being filled in by industry.
An old canard was brought forward—the wickedness of VAT. My hon. Friend the Member for Hitchin made it plain 90 that VAT replaced purchase tax, which operated on a multi-rate basis. The late Sir Gerald Nabarro did more than anyone to blow purchase tax out of this place by the nonsense of it that he exposed.
This Government brought in multi-rate VAT in one of its nine Budgets—one loses count of the times one has been told that such a measure will solve the problem. Small businesses are finding it difficult to cope with multi-rate VAT. I speak as parliamentary consultant for the National Union of Licensed Victuallers the members of which are the salt of the earth and the epitome of those who run small businesses in this country. They are having their lives made more difficult by having to work out the rates of VAT. This extra burden of double rates makes many of their already grey hairs even greyer.
I urge the Government to realise that the more burdens they place on small businesses, the more likely they will fail to flourish and fail to grow into large concerns. One of the reasons small businesses do not want to grow is that the burdens become greater at each stage. That is particularly true of taxation and the need to fill in quarterly returns for VAT.
The cut-off level of VAT was fixed at £5,000 some time ago. It would not be difficult for the Government to raise this figure to £7,500 or £10,000 for those who want to take advantage of it. Such a step would relieve the VAT officials and individuals of an enormous amount of hard work.
I should like to turn to another subject. Perhaps at first it may not appear to be relevant to the debate. However, it is relevant. It is the Seventh Report of the Expenditure Committee for Session 197576 on guided weapons. I should like to read two paragraphs from page 69:The Rayner system of monitoring, however, requires frequent and substantial submissions of detailed information by the Contractor thus engaging a number of administrative staff and imposing a severe overhead burden.Further on it says.In general, however, we believe that Ministry of Defence … places too much emphasis on the part played by committees. Taking the Short Blowpipe as an example, we found a total of some 26 Ministry committees operating in 1970 to administer the 91 R & D phases of this relatively small project. The result of this organisation was an excessive amount of travelling to attend meetings and the loss of much working time by senior personnel. Today"—this was in April 1976—the number of committees has been reduced to about 16 and the frequency of meetings reduced in some cases from monthly to quarterly.Here, perhaps, is the punch line:Although Company attendance at many of these meetings has now been reduced to a few or even one representative, Ministry representation remains virtually unaltered.That shows that throughout the spectrum Ministries are burdening industry with more and more requirements, and they are burdening themselves with them.
Again, I am not blaming any particular Government. I am blaming the system. As my hon. Friend the Member for Somerset, North (Mr. Dean) said, the system is getting out of control. That is so under even the most well-intentioned Minister, such as the Minister who is decorating the Front Bench at present, the Secretary of State for Industry, who is a thoroughly well-intentioned Secretary of State. However, he and his colleagues do not know exactly what is being done in their names. That is the problem that faces all of us.
There is a particular worry that comes through in the wording of this excellent motion, which speaks about damage to industry and commerce. It has, perhaps, a special application in London, where jobs have been lost, where commerce is moving out and where industry is being discouraged. If I had to put the blame upon any particular section, I should put it upon the blind subservience of politicians of both major parties in London to the views of the planners. The planners have done more to blight and to kill prospects for employment in London than any Government of any political colour. I think that at last that is being realised.
I wonder, for example, whether we could improve the prospects of employment in London and remove more of the burdens on industry if we seriously asked ourselves whether we need any longer the Location of Offices Bureau, which is designed to move people out of London and causes more unemployment, and whether we really need the industrial 92 development certificate system in London now, by which firms are discouraged from extending their works in London and encouraged—in inverted commas—to move out. Do we really need the tight system of office development permits in London today?
I am not asking for financial help for London. All I am saying is that we should treat London in the same way as other parts of the country. There are parts of London with a higher unemployment rate than that of Merseyside, yet those trying to find jobs in London are operating with one hand tied behind their backs by the various Government restrictions that have been brought in by a Government of one party and kept by a Government of another party. We should look at this matter and see whether it is right still to continue the very tight restrictions.
Unfortunately, I cannot overlook the hon. and learned Member for Leicester, West. He is sitting in his place so demurely. Let me deal with one of the points that he mentioned—the Employment Protection Act. When Ewan Mitchell, or someone else, comes to write a book in due course on this subject, he might well decide, with the benefit of experience, that the Act has cost jobs, because companies are not taking on people because of the burdens placed on them by the Act. These are companies with first-class records of employment.
§ Mr. Greville Janner rose—
§ Mr. Finsberg
I shall not give way now. I want to leave time for my colleagues to speak. If the hon. and learned Gentleman had come into the Chamber earlier, he could have made a longer speech.
§ Mr. Finsberg
The keeping of massive numbers—[Interruption.] I do not answer sedentary interruptions.
The keeping of massive numbers of records which is now being forced upon good employers by the Employment Protection Act is no help to anyone. It is adding to overheads.
§ Mr. Greville Janner
Will the hon. Gentleman be good enough to redeem 93 for once the promise that he made—namely, that if I stayed in the Chamber throughout his speech, despite all temptation to go out, he would say whether he approved of the protection given to employees by the Redundancy Payments Act and of the unfair dismissal rules? That was the hon. Gentleman's promise.
§ Mr. Finsberg
That was not my promise—asHansardwill show. I gave a promise about three Acts, and not one.
§ Mr. Finsberg
The hon. and learned Gentleman would perhaps like a deposit on which he can have some interest paid.
The Industrial Training Act has produced in many cases a massive unnecessary bureaucracy of form filling.
§ Mr. Greville Jannerindicated dissent.
§ Mr. Finsberg
It is no good the hon. and learned Gentleman shaking his head. It will fall off one day. That will not help him.
I speak with 10 years' practical experience of the Industrial Training Act—not lecturing about it but having to work the wretched thing. The Act makes good companies fill in unnecessary forms, and they still have their good people poached by firms which are not doing any training, so the Act has had no real effect. I do not question its motives, but in practice it has not worked out very well.
I have never criticised the Redundancy Payments Act. I am merely saying that it has placed a burden upon companies which ultimately must be met by the consumer and not by the Civil Service. Every time we pass these pieces of well-meaning legislation, someone must pay, and it is usually someone who gets no benefit from them—the poor consumer.
Any firm worth its salt is already operating a good system concerning the prevention of unfair dismissals. What the Act tries to do is to make firms fill in many unnecessary forms and to give unnecessary lengths of notice, and that is just not achieving what one was told might be achieved.
§ Mr. Finsberg
The debate, started so excellently by my hon. Friend the Member for Hitchin, descended to a level that has not done any credit to the House 94 when the hon. Member for Omskirk spoke to us. What we must try to do is to get over to the people of Britain, in what I should like to call a non-party political sense—which was the whole basis of my hon. Friend's speech—the fact that the burden placed upon industry is an unnecessary burden if it produces nothing of value. So far, nothing that I have heard from the Labour Benches has made me hopeful. I cannot say what I shall hear from the Minister.
If the Secretary of State is to reply to the debate, I hope that he will forgive me if I do not stay to listen to his scintillating remarks—I mean that genuinely. I hope also that my hon. Friend the Member for Basingstoke (Mr. Mitchell) will similarly forgive me. The debate has continued for longer than I anticipated, because of the previous motion. I shall leave at 7 p.m. to fulfil a pre-arranged commitment. I shall hear some of the reply.
I hope that the Secretary of State of the Minister of State will pay a lot of attention to the points made by my hon. Friend the Member for Somerset, North and my hon. Friend the Member for Hitchin, and to the words of wisdom that I am sure will come from my hon. Friend the Member for Basingstoke.
§ 6.29 p.m.
§ Mr. Giles Shaw (Pudsey)
I am grateful for this opportunity to intervene briefly in the debate. I apologise to you, Mr. Deputy Speaker, and to the House for not having been able to attend all of the debate.
I want to draw attention to three or four elements of industry which concern me particularly. First, I take the view—I do not think that many hon. Members would disagree with me—that industry, be it large or small, fully recognises that it is involved in the political process. It can no longer contract out of its obligations towards the Government, whether it be in implementing legislation that the Government have passed or in contributing to taxation that the Government seek to raise. All industries, all companies and all employers recognise that these responsibilities are now theirs, and they do not seek to shirk them. The importance of the job is recognised, and they realise that if they carry these responsibilities two things happen. First, they have to expand services in that specific 95 direction—namely, the maintenance of their role towards the Government and the State. Secondly, unless they are prepared to expand they have to reduce their costs and services in their prime direction—namely, the production and distribution of goods and services at competitive prices.
The consequence of the balance is absolutely crucial. It seems to me—I think I take the Secretary of State with me on this—that Governments would be most unwise to tip the balance of administrative cost against, for example, the small employer, just as they would be most unwise to tip the balance of taxation against the larger employer. They recognise that there are thresholds that are crucial. Therefore, we must proceed by some degree of agreement, hopefully consensus, and fairly careful planning and consideration. It is on this aspect of planning, coming as it does from me rather than from the Government Benches, that I crave the indulgence of the House.
In recent years my hon. Friends have retailed the specific amount of legislation which industry is to some extent carrying. I shall add a couple of additional points to that. The whole trading climate for industry has shifted immeasurably with the access to the European Economic Community. Membership of the EEC has given a whole new raft of responsibilities for commercial and industrial legislation. We have the problems of harmonisation of standards of trading and of seeking to establish in product specification those products that are acceptable throughout the membership of the Nine. In this way, the burden on industry has taken a massive leap forward.
I shall refer specifically to the food industry, in which I declare an interest and with which I have been involved for about 18 years. The results of membership of the EEC on food harmonisation is tremendous. The facts are that such humble things as composition standards of foodstuffs have to be negotiated afresh. In many cases, the use of simple things such as additives, colouring matter or flavouring probably has to be redetermined from lists which have been used in the United Kingdom for about 100 years. The whole matter has to come into the melting pot. This has involved food 96 manufacturing companies in tremendous additional work and costs.
I read an article recently in the magazineFood Processingwhich said that to deal with one particular additive alone —the permitted colour used by British food industry within the European framework—the industry was now embarking on a programme of additional scientific research which would last for four to five years and would cost £500,000. That is one simple food additive. This system is required because European harmonisation regulations demand that all such additives should be specified. In the general framework of the food industry that figure is of no real consequence, but the principle is of great consequence.
My plea to the Government and to my hon. Friends is to recognise that while we may seek to introduce legislation of our own devising—say, consumer legislation, trade union legislation or employment protection legislation—at the same time the EEC harmonisation is going on. It must be incumbent on the Government to organise a priority and to understand that they cannot do this little thing, however desirable, without affecting yet again another turn of the ratchet when industry is seeking to cope with that little thing that somebody in Brussels told us to do the day before yesterday.
There are the problems of metrication which involve machinery suppliers in having to re-jig their tools and design new plant and equipment to produce different specifications for the range of products which normally, given time and planning, can be absorbed. But if at the same time they are required to shift employment practice and to undertake relabelling of their products and new standards are imposed upon them by the Community, these become conditions under which managements find it intolerable to take normal commercial decisions. This is the second point of substance—upon which I hope we all agree—namely, the job of those who work in the industry at any level to arrive at important decisions and to implement them, whether on the part of those on the shop floor deciding at what rate of output they and their colleagues will work on certain machines—and I trust that they are consulted on that matter— or on the part of management 97 in trying to decide how best to mount, say, a sales campaign for a product.
The fact remains that managements of industry are involving themselves, 24 hours every day, in decision-making. I am concerned that if we are not careful we shall undermine the resistance of industry to a point at which decision-making is something that those concerned dislike doing because the decisions they are called upon to take are not theirs in origin but are someone else's. When we reach that stage, we are on the slippery slope to both the bankruptcy of skill on the shop floor and the bankruptcy of decision-making by management. I have the honour to represent a constituency in the textile belt of West Yorkshire. My part of the world saw the birth of the Industrial Revolution. Many small textile industries which are still viable—I am sure that many Labour Members know this—have very small management teams of only two or three people. Many of them are still family companies, and they are all the better for being so. But they have very small management resources. I suspect that one of the proud reasons why the wool textile sector—I trust that I take the hon. Member for Sowerby (Mr. Madden) with me—has survived better than the cotton and allied textile sectors is that it has not found itself merged into larger units with heavier administrative overheads and with a more distant chain of communication and management. That has been a feature of the development of textiles on the other side of the Pennines, but it is not a common feature in the wool textile industry. Here one has a closely co-ordinated relationship between small managements and small work forces, with the result of excellent communications, an admirable record of industrial relations and an admirable record of contribution to the economy. But when it is laid upon the small man without expert accountants, lawyers and research and development directors, all industrial legislation can be traumatic indeed. It must involve paying fees for professional services externally and be a net addition to costs.
I should like to make one final point about the consumer, whose interest I have at heart. We in this House are prone to 98 believe that the consumer requires more and more information from manufacturers and more and more protection in a general sense against being defrauded wilfully by manufacturers. I agree that protection against wilful fraud or sharp practice is desirable. I have a feeling that consumerism does not represent the vast number of consumers in the United Kingdom but usually represents a concentration of pressure to which Members of Parliament are subject.
I put in a plea, together with my remarks about the burden on industry, that we should put into the correct context the pressures from the consumer—who is our elector—and relate them to what happens at the other end of the chain in industry if new steps are required to be taken on behalf of the consumer. I have in mind Acts of Parliament which cover labelling, merchandise marks, declaration of weights, unit pricing and all the information required on labelling and the possibility of restraints and developments in advertising. This kind of thing sounds fair and plausible for those who seek the interests of the consumer in a wide sense. But, as one of my hon. Friends said, there is a cost, and the cost has to be paid ultimately by the consumer. More than that, however the cost has to mean that management somewhere is deflected away from doing its normal job of seeing that employment is fully maintained, that output is at its highest level and that pricing is at the keenest level, and is diverted into interests which are ostensibly those of the dissatisfied consumer, even though its products have a wide and satisfactory consumer market based on rapid repeat purchase.
I beg the Government to take on board the fact that the consumer is somebody who must be served, but not somebody to whom industry should be a slave to satisfy every whim of protection. The burdens on industry are great. The resources of industry, I hope, are greater still, but there must be a balance in the way in which pressures are put, a spread in time, a plan and a recognition that the pressures of yesterday can scarcely be absorbed by today, and that usually before they are absorbed the pressures of tomorrow follow on too quickly.
Those are the problems with which those involved in management have to grapple, and I hope that the Government 99 will see that they are given some encouragement to believe that sympathy exists for the problems which they carry on our behalf.
§ 6.40 p.m.
§ Mr. Max Madden (Sowerby)
Let me at the outset apologise for not having heard the whole of the debate, but I was occupied on an urgent redundancy situation in my constituency which necessitated my being involved in the difficulties of obtaining information.
I approach the motion tabled by the hon. Member for Hitchin (Mr. Stewart) with mixed feelings as a Member of this House and as the son of a minor civil servant. As a Member of this House I must, like many of my colleagues, inevitably do battle every day with red tape and officialdom, and we all bear the bruises of that daily battle. As the son of a civil servant, I am aware of the many unfair and unjustified attacks on the Civil Service for the shortcomings and sins imposed by others.
Whatever our position in the political spectrum, I think we must all be concerned about the efficiency of information-gathering, and the purposes of it, be it by the Government or by public bodies. I believe that information-gathering must be done because it is needed and because it is relevant. But it must be done efficiently and it must impose the minimum burden on those who are asked to supply it.
I was able to hear the whole of the opening speech of the hon. Member for Hitchin. He attempted to argue his case and leave the impression that virtually all information requested by the Government was onerous or irrelevant and not really necessary, and that supplying it imposed enormous burdens on all sorts of industries. Perhaps the hon. Gentleman is an admirer of George Bernard Shaw, who said that if someone wished to make people sit up and take notice of his case he should overstate it. But that is not always an advisable dictum, and I think that the hon. Gentleman overstated his case.
The hon. Gentleman was at pains to list all sorts of Government legislation that has been enacted over recent years, and he seemed to put them with all sorts of other pieces of legislation which many 100 of us question as being worth while or necessary. To include measures such as the Employment Protection Act, the Health and Safety at Work etc Act and the Redundancy Payments Act, which the hon. Gentleman described as well-meaning and desirable in some respects, is to do a grave injustice to measures which I believe are important to working men and women in this country.
The hon. Gentleman went on to read numerous letters from various firms. Although some of the comments were valid and one could accept them as being fair-minded and reasonable, the recurring theme of the communications was, I am sure, typical of communications which we all receive from small businesses in particular. There were references to the position being one-sided to the fact that the information that firms were being asked to provide was giving increasing control to the Government, that what was being done was oppressive, and so on.
I believe that what we are seeing is a changing balance within industry, both private and, to some extent, public. Over recent years, small and medium-size businesses have not had the total power over their employees and their environment that they had enjoyed for generations past. I am glad to say that over recent years we have seen the balance of power redressed a little in favour of working men and women. For the first time, some employers and some firms are being forced to give more information about the decisions and the basis of those decisions than they gave hitherto. That is a desirable move because it will create the climate for industrial progress. It will create a climate of co-operation and good industrial practice that is so necessary in this country.
I, as a Socialist, believe in planning, and anybody who attempts to equate planning with bureaucracy is doing a disservice to the political argument and condemning Socialism in a way that is most unfair. I believe in a planned economy. I believe that it is necessary for the State to have information in order to undertake proper planning. The State needs to be able to exert an influence and to try to ensure that there is movement in a certain direction. Therefore, it is valid for the State to ask for information.
When we came to office it was clear that our industrial strategy rested upon 101 creating a new framework between the State and big business. We had hopes with the Industry Act and the National Enterprise Board of compulsory planning agreements enabling the State, for the first time, to have a real dialogue with big business so that there could be an understanding about forward planning, policy decisions, investment, product development and all the other major decisions within industry. To an extent we were hoping to have, for the first time, a new situation between productive manufacturing industry and the State.
The concomitant of that policy was to give more time for industry, in this new relationship, to undertake a new industrial dynamic. We hoped that there would be a new industrial stimulus, with time provided for more attention to be given to small- and medium-size businesses, which I and many of my colleagues believe are vitally important to the future of British industry and our economy.
That is where innovation is developed and where the most important strands of British industry lie, but I do not believe that we can create that situation because to some extent the major industrial strategy has not developed in the way that many of us wanted it to develop. Nevertheless, and I say this in all sincerity, I believe that there are enormous advantages in giving more active support to small- and medium-sized industry.
Why do we need information? I referred earlier to Members of Parliament. We are being rather hypocritical in sitting back and condemning the need for people to supply information to the Government. We are perhaps the biggest collection of information seekers in the country. I looked at the Order Paper today. It is not typical, and today might be described as a lazy one. Certainly the attendance in the Chamber cannot be described as a high turn-out, but today there were 41 Oral and 198 Written Questions asking for all sorts of obscure information. I am told that the latest valuation is£18 to reply to an Oral Question, and£12 to reply to a Written Question.
§ Mr. Stephen Ross (Isle of Wight)
Some Questions put many burdens on the Civil Service and on Secretaries of State. Does the hon. Gentleman agree that many of the Questions need not be tabled?
§ Mr. Madden
That is a matter of opinion. I have never met a Member who has tabled a Question which he did not think was of burning importance and required urgent attention, but I share the hon. Gentleman's view that one can often question the importance of a Question.
§ Mr. John Biffen (Oswestry)
Would not the hon. Gentleman perhaps agree that a lot of this inflation in the asking of Questions by hon. Members derives from the dubious practice of having research assistants?
§ Mr. Madden
That is a characteristic comment from the hon. Gentleman, whose views are well known. As far as I know, some of the most searching Questions that are tabled are put down by hon. Members who do not enjoy the privilege of research assistance. For example, there is a Question today from the hon. Member for Plymouth, Drake (Miss Fookes) asking aboutdifficulties experienced by consumers in obtaining spare parts for domestic appliances.There is another Question asking whether the Secretary of State for Prices and Consumer Protectionwill seek powers to require petrol stations to display the actual price at which they are offering petrol".Yet another Question asks whether the Secretary of Statewill list the percentage increases in average retail forecourt petrol prices in 1974, 1975 and to the latest available date in 1976.That is an indication of the hunger for information which exists in the House of Commons. I do not wish to resist that hunger, but if those responsible for tabling such Questions believe that it is imposing—
§ Mr. J. W. Rooker (Birmingham, Perry Barr)
I did not catch the names of the hon. Members who asked about the price of petrol. The fact remains that in the West Midlands motorists who have filled up their cars at petrol filling stations have found themselves charged a price which bears no relation to the price stated on the forecourt. Should we not probe where the responsibility lies under the Trade Descriptions Act?
§ Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. I encourage the hon. Member for Sowerby (Mr. Madden) not to go up that road.
§ Mr. Madden
Whatever the price of petrol may be, Mr. Deputy Speaker, I promise you that I shall not go up that road.
It is rather hypocritical, however, of hon. Members who are themselves so hungry for information to try to condemn the Government for legitimate information gathering. Ever since I came to this place there have been complaints about people being buried in paper, and we ourselves are targets in the paper war. I believe that the Civil Service would do well to take on an army of newspaper sub-editors to reduce the verbiage of many of the papers that it sends out, whether to industry, commerce or anyone else, to make it readable so that one could see what one was asked to do without having to have a degree in English. I believe also that this House and its Select Committees have little to be proud of, because many of their reports are extremely lengthy, unreadable and boring.
If we had a war on the paper emanating from this House, so that at least our views could be easily understood by industry, commerce and Government Departments, we would be doing a great service to many people, and there is urgent need for the Government to review their own information-gathering procedures. It is always necessary to monitor what information is being sought, asking oneself, " Do we need it? Do we need it in the form that we have always been seeking it? Do we not need to stop asking for certain information?" Such Government activity would be valuable.
But I do not want to throw out the baby with the bath-water. and I do not agree with the major claim behind the motion—a condemnation of Government information gathering, or the asking of industry and commerce to supply information. If we are to succeed in moving into a more successful industrial Climate —and that lies at the heart of our success —we must have accurate. extensive and proper information. But it must be done with the co-operation of industry and commerce, which must be able to see that it serves a need. If we go about it in the right way, it can be done. It means an end to the asking of stupid questions —and any of us can find such questions by a quick perusal of Government forms and questionnaires. These things should 104 be prepared in a more thoughtful and reasonable manner. This debate can do a little to persuade the Government and the Civil Service to do a little more in that respect. It is long overdue.
It is, however, a continuous chore. It has not just become a problem under this Government. It has been a problem under successive Governments, and no doubt it will continue to be so. I hope that we can deal with it with reasonableness without at the same time condemning all Government information gathering and all Government regulations. Some of this activity is irrelevant and unnecessary, but the vast majority of the information-gathering and regulations, certainly as engaged in by the present Government, serves a real purpose and need on behalf of the working people.
§ 6.56 p.m.
§ Mr. David Mitchell (Basingstoke)
The whole House will be grateful to my hon. Friend the Member for Hitchin (Mr. Stewart) for raising this matter. I say "whole House", but I am not sure whether that includes the Minister of State. It depends whether he is wearing his party political hat or will be helpful to us by accepting the motion and the fact that it is not put forward in a party political manner. I hope he will accept that the motion is such that he can use the opportunity to explain what he will try to do to ease the burdens facing business generally.
I am glad that my hon. Friend referred not only to industry but to commerce. There is a tendency in many places, including the Government, to overlook the importance of commerce to the country and its contributions, including the hotel and tourist trade, insurance, banking and shipping, to our overseas earnings. The whole area of what are loosely referred to as "City earnings" is important, so it is good that my hon. Friend drew attention to the problems of commerce as well as to those of industry.
My hon. Friend referred to the Government's insatiable thirst for information and to the management time taken up in coping with it. He referred to the multi-rate value added tax, for example. I was interested to hear the plea of my hon. Friend the Member for Worcestershire, South (Mr. Spicer) for an easing of the complexities of VAT. I believe that the 105 Government, in response to an earlier debate, have agreed to investigate the possibility of making VAT simpler, and I hope that the Minister will tell us how that inquiry is progressing.
My hon. Friend the Member for Hampstead (Mr. Finsberg) raised the important point that the VAT exemption limit had not been raised to take account of inflation since it was introduced at £5,000. There is an important aspect here. If the limit were to be raised only in line with inflation, no fewer than 250,000 firms would be taken out of the VAT net and all the work that goes with it. That is a multitude of small businesses, which are those worst affected by the work which has to be done.
During the past week the Treasury has been in negotiation in Brussels, and it has been suggested there that we should be prevented from lifting the £5,000 VAT limit in line with inflation. I and some of my hon. Friends have drawn the Treasury's attention to the need to make sure that we do not "sell the pass" and that we retain the right to lift the limit in line with inflation. Will the Minister of State explain and clarify whether his colleague in Brussels has retained that right for us?
My hon. Friend the Member for Somerset, North (Mr. Dean) drew attention to the unfair burdens arising from what is known as Form No. 714 for subcontractors in the building industry. If there is such a scandalous loss of revenue as claimed, it is curious that the number of prosecutions under the existing legislation has been minuscule. It begins to look as if the Government have got their knife into the building industry and that they are out to destroy the small builders, leaving the large ones exposed for nationalisation.
The Minister asked my hon. Friend where he obtained his statistics. I can help. They came from the Small Business Bureau, a recently-formed organisation which is collecting and collating information on the problems and potential of small firms. My colleagues on the Conservative Smaller Business Committee have found its briefings very helpful, and I am sure that the Minister will hear more of it in future.
The figure of 25 per cent. of GNP created by small firms is derived from 106 the 19 per cent. given by the Bolton Committee and an approximate underestimate of that contributed by areas of small business activity outside that committee's terms of reference—small farmers, professional men and so on. My hon. Friend also referred to one-third of all jobs being outside the public sector and coming from small firms. I believe that the exact figure is 34 per cent. It would help us to understand the problems and the contribution of small firms if the Minister could tell us a little more.
One must underline the enormous number of forms, questionnaires and regulations which affect the business community today. In theDaily Mailon Saturday, under the headingRed tape paper chain protest chokes a court ",I read:An enormous multi-coloured paper chain was unfurled in a magistrates' court yesterday. Airline boss Mike Keegan was still unrolling it when he ran out of space. It was no Christmas decoration. It was a wholly serious protest.…Look at this lot,' he said to the Bench. 'They are all forms my company have to fill in every 30 days. We just can't keep up.'".Red tape is strangling British industry. My hon. Friend could not have found more concrete support for his point.
How many questionnaires are there, how necessary are they, what do they cost and what is their value and accuracy? Those seem four reasonable questions. On the first, the Government apparently do not know how many there are, so it is difficult for us to find out. However, I have discovered that last year the Department of Industry sent out 640,000 questionnaires requiring an answer. My hon. Friend earlier quoted a parliamentary answer received more recently than mine which gave a figure of about 900,000. I suppose that that is progress over the last 12 months. I learned that the Ministry of Agriculture had sent out 783,971 such circulars. The Department of Employment's answer was that they just do not know. The trouble is that that is true of so many areas of activity. I am sorry that the Minister responsible for small businesses is not here today, because they are affected more than large businesses. He should have been examining this subject to see whether all these forms are necessary.
107 I have here a selection of such forms. There is the Department of Employment new earnings survey 1976, with two pages; the Department of the Environment's continuing survey of road goods transport; the Department of Employment annual census of employment—pages of it; something calling itself a "statutory return" and sayingPlease note change of address,no doubt because of a move to larger offices; and the monthly return of total wages and salaries. Then there is a 14-page form from the Price Commission.
§ Mr. Madden
To what extent are these forms related to information required for submission to the Common Market or connected with Common Market directives which require consultation with all sections of industry, commerce and agriculture?
§ Mr. Mitchell
I cannot answer that off the cuff, but I can give some indication. For instance, I have here a letter from a lady about a small firm of plumbing and heating engineers, consisting of her husband and herself and four employees. They were advised by telephone one Friday by the Price Commission that they were required to complete a return for them which turned out to be 14 pages of most complicated questions. She goes on to say:The forms will take days to complete, but the Price Commission even rang from Reading on Monday and Tuesday to see if the forms had arrived.When Government Departments are sending 14 pages of forms to a firm employing seven people—
§ Mr. Kaufman
The Price Commission is not a Government Department. It is a body which was set up by the hon. Gentleman's own party when in office.
§ Mr. Mitchell
Yes, but the Minister knows that the inquiry relating to this firm was made on the instructions of his Government, if not of his Department. It relates to charges for servicing in the plumbing industry and to call-out charges. That is a matter for which the Government are totally responsible.
How necessary are these questions? There are 64 questions on the survey of labour costs form under the Statistics of Trade Act. One relates to the employer's 108 share of insurance contributions, including payments made under certain systems. All that information is obtainable from a company's accounts. The Government have the information and can produce it themselves without having to bother individual firms. Another question relates to provision for redundancy and the total redundancy payments made by the employer and rebates received from the Redundancy Fund under the Redundancy Payments Act. The Government have that information too. Why do they have to get it again? Another form asks how much regional employment premium has been received. The Government pay it, so they must know.
The Government ask for all sorts of information which is within their own knowledge. They even asked what marriage gratuities had been paid. Information was sought on training board payments and receipts, and this again is information which is obtainable from other sources. It is not necessary to burden firms with it. The answer to the question "How many?" is "Far too many". If we ask how necessary the questionnaires are, we find that many are not necessary.
I come now to the question of cost. In reply to a recent question, a Minister at the Department of Industry said that these operations cost it £7.7 million a year. I can assure the Minister that the cost to industry of answering those questions is 20 times as great. The Wine and Spirit Trade Association has told me about a firm which carried out a careful survey of the number of documents it received and the time taken to deal with them every year. The firm employs 95 people and it received 5,348 documents. A total of 912 hours was spent dealing with them. The effect is much worse for smaller firms because the smaller the firm, the higher up the management pyramid has to be the work of studying the documents, seeing how they affect the business and deciding how to deal with them.
What is the value of these questionnaires? The 1973 census has not yet been published. Whatever use will it be when it is published?
§ Mr. Mitchell
I know that the hon. Gentleman did not do that census, but he 109 is busy taking another and I hope that he will not continue it.
The 1972 census was carried out when my party was in office. I am not making a party point but am stressing that there is an excess of Government questionnaires and statistic seeking. Some figures in the 1972 census were wildly inaccurate in any case.
I do not want to steal too much of the Minister's time, having had some of my own taken. Small businesses are much more effective than large businesses. They have an important contribution to make to the quality of life, the economy, the gross national product and, above all, a great potential for helping the country's unemployment problem.
It is from small businesses that the large ones grow. Morphy Richards started in a barn in 1936. Plessey's started business in a shed next to a print shop. Wherever we look, we find large firms which had their origins in small firms with the energy and enthusiasm to grow.
The business community is alive. Like human beings, some grow old and tired and their places have to be taken by young, thrusting, vigorous, new firms. It is because the vigorous, thrusting small firms are being damaged and destroyed by the policies of the Government, including the excessive form-filling, statistics and regulations which are suffocating enterprise and intiative, that the House will welcome the action of my hon. Friend the Member for Hitchin in raising this subject.
The hon. Member for Ormskirk (Mr. Kilroy-Silk) asked why the British worker had lower pay and worked with less investment behind him than his Continental competitor. The answer is that this happens because the Government have made it not worth while for people to invest in British industry. When investors are taxed up to 98 per cent., can we be surprised that people do not invest?
The Government say that they want employment, but they regard employers as irrelevant. They say that they want investment, but they dislike investors. They say that they want industrial revival, but they destroy incentives. My hon. Friend the Member for Hitchin was right to draw attention to the burdens 110 on industry and commerce, and I hope that the House will accept his motion.
§ 7.14 p.m.
§ The Minister of State, Department of Industry (Mr. Gerald Kaufman)
The hon. Member for Hitchin (Mr. Stewart) should be congratulated on winning the Ballot and having an opportunity to introduce a motion. However, I do not think that anyone who listened to his pathetic, trivial speech in introducing the motion—which was so effectively carved up by my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk)—could possibly say that he had used his precious opportunity in a fruitful manner.
The hon. Member for Basingstoke (Mr. Mitchell) complained about the number of regulations and the excessive amount of information sought by the Government, but I have here a volume of more than 1,300 pages including the regulations introduced by the Conservative Government in the first four months of 1973. I did not notice any hon. Members opposite putting down motions at that time.
The hon. Member for Basingstoke spoke about the Government's insatiable appetite for information, but he has an insatiable appetite for information him-self. He has a Question today to the Chancellor of the Exchequer:What is the latest figure available as to the proportion of VAT which is obtained from companies with an annual turnover of £50,000 or less; what is the number of sole traders and companies with an annual turnover of £5,000 or less which have elected to be involved with VAT; and how many of these are net contributors and how many net recipients of tax.How on earth are we to obtain that information for the hon. Gentleman without getting it from the companies which he accuses us of bothering?
§ Mr. David Mitchell
All the information is available from the computer at Southend. It is not necessary to trouble any company for it.
§ Mr. Kaufman
I presume that the hon. Gentleman thinks that the computer is an anthropomorphic entity which thought up this information for itself. Computers can provide us only with information fed into them, and such information has to be procured from somewhere. It can be procured only by companies supplying it to the Government, and I should be surprised if they were not asked to provide 111 it on the forms sent out by the appropriate Government Department headed by my right hon. Friend the Chancellor of the Exchequer.
The hon. Member for Basingstoke spoke about the number of regulations before the House, and I had sympathy with his argument that many seemed excessively trivial, probing and detailed. It is all very well for the hon. Gentleman to tell me not to wear a political hat, but the debate has included some vigorous attacks on a political basis by some hon. Members, including the hon. Member for Basingstoke.
I find, thumbing idly through this 1,300-page volume comprising one-third of the regulations issued in 1973, that they include the Sugar Beet (Research and Education) Order, the Wages Regulation (Ostrich and Fancy Feather and Artificial Flower) Order and the Therapeutic Substances (Supply of Bacitracine Methylene Disalicylate for Agricultural Purposes) Regulations. Presumably these were all matters which the then Government considered to be of paramount importance.
Let us take the Customs and Excise (European Free Trade Association Countries) (Origin of Certain Goods) Regulations 1973. It includes a series of schedules, and Schedule 1 is there simply to interpret Schedules 2 and 3. Included in the information that it is necessary to obtain under Schedule 2(1) is information aboutVegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, derived from vegetable products:That is just an extract, and all the information dealt with in this tiny bit of a regulation is information on which the Government would have had to have relations with precisely those small businesses which Opposition Members have been moaning and whining about for the last three hours.
- A. Vegetable saps and extracts:
- (i) Opium
- (ii) Manna
- (iii) Quassia-amara extract
- (iv) Liquorice
- (v) Pyrethrum extract and extracts of the roots of plants containing rotenone
- (vi) Hop extract
- (vii) Intermixtures of vegetable extracts, for the manufacture of beverages or of prepared foods
- (viii) Other:
- (a) Medicinal
- (b) Not specified
- B. Pectic substances, pectinates and pectates:
- (i) Dry
- (ii) Other
- C. Agar-agar and other mucilages and thickeners, derived from vegetable products:
- (i) Agar-agar
- (ii) Mucilages and thickeners derived from locust beans or locust-bean-seeds
- (iii) Other."
§ Mr. David Mitchell
If the hon. Gentleman accepts that there are too many questionnaires, regulations and forms, perhaps he would not simply chew the cud over it for too long but would tell us what he can do to ease the burden on small businesses, regardless of party politics.
§ Mr. Kaufman
I want to chew the cud a little because there is a fair amount of cud to chew.
Unlike Opposition Members of Parliament who, like the House of Lords, seem to get some injection of adrenalin when in Opposition, I take seriously the question of the superfluity of forms, and the fact that there are too many surveys and questionnaires. There is too much intervention of an unnecessary nature, as distinct from that to which my hon. Friend the Member for Sowerby (Mr. Madden) referred—that is, necessary Government intervention. I want to do something about it. I say without hesitation that I am not at all satisfied that my Department should be spending nearly £8 million and that 1,200 civil servants should be engaged on surveys—
§ Mr. Kaufman
May I complete the sentence?
I am not satisfied, and if the level can be reduced I want it to be reduced.
First, I want to know how many surveys are imposed upon us by the European Economic Community; that is, surveys that we cannot do without, as members of the Community. The electorate voted clearly by a majority of two to one that we should be members of the Community, so we have to accept those things that the Community asks us to do.
113 I want to know how many of the inquiries are necessary for essential information such as the compilation of the retail prices index. There are a large number of Questions down today about the retail prices index, and I do not think that anyone would wish to dispense with it.
Much other information is necessary for the proper functioning of Government and business. Clearly, this should continue, and no one would quarrel with that.
There may, however, be other questionnaires—I do not know; I want to look into it—which one could dispense with. If they can be dispensed with, I want to dispense with them. If they can be made more simple, I want to simplify them. I do not believe in the propagation of questionnaires for their own sake. I only wish that this had been a continuous view held by all Governments.
I do not wish to make too much of a party point, but we cannot avoid making party points, since there is no one in the House who was elected as an independent. We inherited a very large number of surveys, and it is difficult to put a stop to matters that have continued under successive Governments.
The hon. Member for Somerset, North (Mr. Dean) was an extremely effective Minister at the Department of Health and Social Security, a Department which multiplied bureaucracy as few others have, through the reorganisation of the National Health Service. I am sure that he and his right hon. Friend did not want to augment and multiply bureaucracy in doing what they thought was a very proper reform of National Health Service administration, but acts of Government which do not of themselves seek to multiply bureaucracy often quite unwittingly or unwillingly have such effects. In looking at the way in which Government bureaucracy operates, one has to see what one can do to stop the momentum.
§ Mr. Madden
Did my hon. Friend see the revelation in yesterday's Sunday 114 Times of the amount of waste identified by survey teams working in certain sections of the then Ministry of Public Building and Works, which made considerable savings possible? Would he agree that this sort of information-gathering and survey work is valuable?
§ Mr. Kaufman
I regret that, as I spend so much of my Sundays approving answers to parliamentary Questions from members of the Opposition who want information from my Department, I do not have time to read the extremely long articles that appear in the Sunday Times, but if my hon. Friend would be good enough, with his slightly greater leisure, to offer me an epitome of it, I shall do my best to consider it.
§ Mr. Stephen Ross
I am grateful to the Minister for giving way. As I shall not have an opportunity to put the motion which I have down on the Order Paper, perhaps I may take a minute or so. The Minister has referred to the Department of Health and Social Security. He would undoubtedly be very popular if he were to announce the abolition of one tier of health authority. That would be wonderful news.
§ Mr. Kaufman
It is not for me to intervene in the activities of other Government Departments. If the hon. Member for the Isle of Wight (Mr. Ross) could swing the support of his party behind us on a number of pieces of legislation it might well be that we could spare time for things that hon. Members on both sides think desirable.
The Government have very much at heart the interests of small businesses. We believe that small businesses provide a very valuable service. They provide the kind of service which is necessary to a country of our complexity, they provide employment, and they add to the character of our society—
§ It being twenty-six minutes past Seven o'clock, the proceedings on the motion lapsed, pursuant to Order this day.