HC Deb 09 June 1980 vol 986 cc9-11
8. Mr. Foulkes

asked the Secretary of State for Industry which of his measures to support small businesses has been most successful.

Mr. David Mitchell

It takes a considerable period for the effects of changes in policy to show themselves. The restoration of incentives and the reduction of burdens are likely to prove most successful in improving the business climate, once interest rates have been reduced.

Mr. Foulkes

That is an amazing reply. Does the Minister agree that public expenditure cuts, the level of sterling and the high interest rates are proving even more devastating to small businesses than they are to large businesses? Since, far from providing one extra job in every small business, the level of liquidations and bankruptcies is much higher than ever, does it not show up the Government's oft-repeated statements of support for small businesses as a lot of empty rhetoric?

Mr. Les. Huckfield

That is the real world.

Mr. Mitchell

I accept that many small business men are today mesmerised by the consequences of the high level of interest rates that they are having to pay on their borrowings, but that is a temporary phenomenon. When interest rates come down, small business men will find that, in a multitude of ways, we have changed the climate for their benefit.

Mr. Kenneth Carlisle

Does my hon. Friend agree that the biggest boost to small businesses in the long term will be the curbing of inflation, and that therefore the Government must be steadfast in their policies in order to bring about a lasting fall in inflation?

Mr. Mitchell

My hon. Friend is right. Inflation is a destroyer of jobs, a destroyer of businesses and a destroyer of business growth. Labour Members who peddle the causes of inflation have little right to complain when we have to deal with the problem.

Mr. Hardy

Before the last general election the hon. Gentleman and his colleagues appeared to be on very good terms with, and frequently to meet, organisations representing, or purporting to represent, small business men and the self-employed. Will the Minister tell the House what is the relationship today between those organisations and Ministers in the Department? Is it as cordial as it appeared to be before last May?

Mr. Mitchell

The hon. Gentleman is correct in saying that before the general election I maintained a constant stream of contacts with organisations representing small firms. It is also true that, since I have been in office as a junoir Minister with responsibility for small businesses, I have continued, on a basis that has been more open than it has ever been, regularly to receive all the organisations representative of small firms.

Mr. Kenneth Lewis

Is my hon. Friend aware that all the good that the Government are trying to do, and have been doing, for small businesses will be undone if interest rates carry on for too long at a very high level? Will he therefore press upon his right hon. Friend, working within the Cabinet, to get a phased reduction of interest rates so that we go down by two points not too far from now instead of waiting for a big reduction later on? That, at least, would help small businesses.

Mr. Mitchell

I know that my right hon. and learned Friend the Chancellor of the Exchequer is aware of the points that have been made by my hon. Friend, and I am sure that he will take them into account in his calculations about how soon he can make the move that has been asked for.

Dr. John Cunningham

In spite of what the Under-Secretary said, it has not taken the Government's policies very long to produce massive increases in company liquidations. The hon. Gentleman said that we would have to wait for the results, but they are already apparent. Is it not clear that reductions in public expenditure and reductions in private sector investment programmes and capital outflows, together with high interest rates, are creating a situation in which it is becoming impossible for small business men to make investments in small businesses attractive? Is not that the death knell of small business opportunity?

Mr. Mitchell

On the contrary. Once interest rates come down, hon. Members will find that we have made a substantial number of changes, by reducing burdens and by reducing taxes, that will restore incentives to small business men. In addition, the hon. Gentleman should take account of company births as well as company deaths.