HC Deb 15 December 1986 vol 107 cc971-86

5.5 am

Mr. Henry Bellingham (Norfolk, North-West)

This debate provides me with an opportunity to speak about a very important subject albeit during the early hours of the morning. When I met my hon. Friend the Under-Secretary of State for Employment at the end of last week I told him that I had some very good news for him, and I meant it. However, I should have told him that I had appalling news for him, because I have been instrumental in dragging him out of bed on Tuesday morning at about 3.45.

The debate provides me with an opportunity to say a few words about the Government's record in the small firms sector. During the last few years the Government's commitment to the small firms sector has been unprecedented. Six years of socialism led to over-regulation, over-taxation and a general overburdening of the small firms sector. It was completely demoralised. When they first came to power, the Government's aim was to reverse that decline in morale and, above all, to create a structure that would enable small businesses to be established and encourage existing small businesses.

There has been a plethora of measures, the most important of which are the loan guarantee scheme, the enterprise allowance scheme and the business expansion scheme. Never before has the climate been so favourable for the setting up of small firms. That is borne out by the evidence. There is now a record number of self-employed people, and a record number of people want to start up small firms.

There has always been a need for the right advice on start-ups and for "hands on" advice. Above all, existing small and medium-sized enterprises that might have run into difficulties need the right advice. Where did people go? They went to local accountants, solicitors or banks, but often they were overawed. They could go to the small firms service, but in most cases it was too remote, even though the local small firms counsellors were men of high calibre. A local focal point was needed to which people could turn for friendly advice and help. There was also a need for winners to be backed. That was one of the problems that had to be tackled during the first Parliament of this Government.

That point is summed up well in this week's edition of The Economist. It refers to the numerous measures that have been taken by this Government, and then says: These strategies aim to create a range of opportunities which small businesses may draw on, and an environment in which they can prosper and expand. Such aid is unselective: it does little to pick promising firms for special help". From the beginning a local focal point was needed. My hon. Friend the Under-Secretary of State recognised that need in his constituency, because he played a major role in setting up his local enterprise agency—one of the first to be established.

When my hon. Friend was appointed to his present position in 1983, his first priority was to expand the local enterprise agency network throughout the country. He pinned a great deal of hope for the overall small firms strategy on the local enterprise agency movement. That has undoubtedly been a considerable success and I pay tribute to my hon. Friend the Minister for that. Will he tell us the up-to-date figure of enterprise agencies, the number of jobs that they have created and the cost per job? Of course, the Government, again to their credit, have now significantly increased their commitment to enterprise agencies. Will my hon. Friend also say something about the success rate of small firms under local enterprise agencies as opposed to those that start up in a non-local enterprise agency environment?

That is the national scene, but the scene in my constituency is important because it is a microcosm of what has happened nationally as we have recently had set up a successful local enterprise agency. When I became the Member of Parliament for Norfolk, North-West three or four years ago, it had a diversified industrial base, but, because of four large plant closures and the general reduction in agricultural labour unemployment was above the regional average. Now unemployment is mercifully on its way down. It is down to just under 12 per cent., and there is every possibility that it will continue to go down because real jobs are being created.

It is interesting that during the past five years every time unemployment has either marked time or once or twice gone up slightly, my political opponents have gone on to the offensive. They have attacked me, and I can understand why. When the last set of very good figures came out, which showed an underlying decline in long-term unemployment in my constituency, the Labour party, to its credit, shared my cautious optimism, but the alliance showed itself in its true colours.

Mr. Barry Sheerman (Huddersfield)

Where are they?

Mr. Bellingham

Although I said that I was cautiously optimistic, alliance Members attacked me. They have shown what they are about, because to them a fall in unemployment is thoroughly bad news. They have shown that they care only about scoring political points. No alliance Members are here tonight, because they do not care about local enterprise agencies or small businesses.

I saw that there was considerable scope on the small firms front, because Norfolk people have always been self-sufficient, independent and gregarious. There was already a strong small firms base, but we needed to ensure a greater success rate and also that the right advice was available. I decided that I had two big priorities. First, I had to do everything I could to assist the small firms sector and, secondly, to do what I could to back the borough council's campaign to improve communications.

Communications fit into the general economic pattern of what has been going on locally. We in Norfolk are fortunate enough to have a railway link to London, a strong industrial base, a growth in population, in tourism and in the small firms sector, and we are not very far from Cambridge where there has been a phenomenal increase in high tech companies. We believe that if we had a fast, modern and efficient railway link to London, many more people would use it and it would boost the economic prospects of west Norfolk. British Rail is electrifying the line from London to Cambridge. It would be an obvious extension of that programme to electrify it from Cambridge to King's Lynn. It is a chicken and egg position, because British Rail says that the link must be considered in terms of economic viability. It is doing a feasibility study at present. It has said that it is not too happy about the number of passengers using the line at present, but if British Rail provided us with a fast, efficient and modern service, people would use it. There is evidence from examples elsewhere in the country that if a service is improved it will attract business people, tourists and others.

The other important aspect of our communications campaign is the trunk roads. King's Lynn has always been a communications centre where three major roads converge—the A10, the A17, and, above all, the A47, which is our main link with the west and the midlands and the motorway and dual carriageway national network. King's Lynn is also the gateway to east Anglia, which is really the gateway to Europe. That is shown by the recent figures from the port of King's Lynn which is now in the hands of Associated British Ports. Since it was privatised, along with numerous other ports, its attitude has changed enormously. It is now one of the most go-ahead small ports in the country and is already breaking new tonnage records.

A combination of that and our diversified industrial base, and the growth in tourism, means that there is tremendous pressure on the trunk road network. I and the borough council have told the Department that new bypasses should be dual carriageway if at all possible. My hon. Friend the Under-Secretary of State for Transport who has responsibility for roads and traffic came to west Norfolk the other day and said that he would consider each project on its merits. The good news is that since April the Department of Transport has changed its criteria for assessing whether a trunk road should be a dual carriageway or not. The traffic flows which decide whether a road will be a dual carriageway have been reduced. That is good news for all busy trunk roads, particularly the A47 and A17, the main arteries that feed northern east Anglia and west Norfolk in particular.

It is interesting that in the 1970 White Paper on roads, the A17 and A47 were scheduled to become dual carriageways. A few years later the Government of the day went cap in hand to the International Monetary Fund and major cuts were made in programmes across the board. One of the biggest victims of those cuts was the national trunk road programme. At that stage the A47 and A17 lost their chance to become dual carriageways in the immediate future.

This Government, on the other hand, have increased expenditure on national roads every year that they have been in office. During the past three years there has been an increase in real terms. When the Minister visited us, he said that £82 million is being or is programmed to be spent on roads into and in west Norfolk. That is exceptionally good news. The Minister agreed with us that he must look at every scheme on its merits, and we urged him to consider dual carriageways carefully for those particular schemes. If we can obtain a trunk road network with a significant number of dual carriageways it will greatly improve our economic prospects and at the same time boost the small firms sector.

When I first became a Member of Parliament, I saw tremendous potential for improving and boosting the small firms base. I also realised that there was a danger, because if one did not try hard to improve communications, a lot of the effort on the small firms front could be in vain. There was a definite need for a local focal point.

My hon. Friend the Minister came to my constituency not once or twice but three times in his first year and a half in office. He made it clear that he felt strongly that there was a definite need for a local enterprise agency. His first visit coincided with Sir Charles Villiers coming to address the local chamber of trade and commerce. As a result of his first meeting and Sir Charles Villiers' meeting, the chamber of trade and commerce, greatly to its credit, picked up the ball, started running with it and set up a steering committee under the chairmanship of a well-known local business man, Martin Crannis, and at that stage John Storrs was president of the local chamber of trade and commerce. They seized the initiative, and a great deal of hard work and effort went into the preparatory stages of setting up the local enterprise agency. An enormous amount of work is required. One of the heartening aspects of this local enterprise agency, the West Norfolk Local Enterprise Agency Trust, was that the borough council of King's Lynn and west Norfolk decided to become involved. It was always supportive. Some people may say that it is a mistake to get the local authority too involved in the setting up of an enterprise agency. That may well be the case in some areas, but in this instance the borough council was supportive from the word go.

When one has a pro-small business, pro-enterprise council with people running it who are also pro-small business, one finds that that local authority can provide the extra impetus that is often essential to get an enterprise agency off the ground. That is exactly what happened in west Norfolk, because in the final run-up to the launch, the borough council took an even more active role and appointed the chairman of its land and estates committee, Councillor Jeremy Bagge, to chair the steering committee, and he was the chairman designate of the enterprise agency. In all of this he was fully supported by the chief executive of the borough council, Mr. John McGhee.

Four highly ambitious aims were set out: to find 50 sponsors who would each put up £500 at the rate of £250 per year for two years; to acquire a set of offices in the centre of town; to find a secondee from a top firm; and to get a VIP to come and open the enterprise agency early this year. We succeeded beyond our wildest dreams in all those aims. Not only did we find 50 sponsors, of which I am proud to be one, but people were queueing up to become sponsors. We found an excellent set of offices in the middle of town and got a secondee from the NatWest bank, Geoff Sturgeon. Although the Minister kindly offered to open the enterprise agency, I have to tell him that His Royal Highness the Prince of Wales got there first.

There was always the danger that we would not live up to these high expectations, but we have had total success in achieving our initial aims and in getting the agency off the ground. People were waiting to see whether it would live up to all the expectations, and, just one year on, over 500 people have come for consultations. One third of those people were unemployed. So far 50 have started up new businesses. We have estimated that, as a result of this new local enterprise agency, over 100 new jobs have been created.

It is easy to say that when a plant closes 300 to 400 people will be thrown on to the dole, but many of those jobs would not have been created if it were not for this local enterprise agency. The firms that have been created will get hands-on advice, and because of that they will have a far better chance of survival than would otherwise be the case. Perhaps the Minister will comment on that when he is winding up.

After only one year, the West Norfolk Local Enterprise Agency Trust is seen as the local focal point for help and advice for small businesses. It is seen by those who want to start a business or who seek advice as the place to which to go. We must maintain the present effort because there will be an ever-increasing need for more hands-on advice for businesses that have started up as a result of help from this local enterprise agency.

There will also be a need for Geoff Sturgeon and his team to come back to some of the original clients to ask how their business plans have materialised and what new ideas they have. That is because one of the roles of a local enterprise agency is to tell people in fairly harsh terms that their business plans do not strike the right balance and that they should go away and do more work on them. Perhaps they need to be told to find another partner. I hope that Geoff Sturgeon and his team will contact some of their original clients and ask how their ideas and plans are progressing.

I should like our local enterprise agency and perhaps every such agency to play a greater role in helping existing small firms. There are many small firms employing, perhaps, between two and 30 people, and from time to time such firms run into difficulties, but their owners are too proud or too busy to look for assistance to people other than their solicitors or bank managers. People in those firms now know about the existence of this enterprise agency and I hope that they will come and visit it from time to time and, if need be, seek advice.

One of the main projects for next year is the setting up of the managed workshop scheme. This may sound fairly ambitious, but one of the main items discussed when people come for consultation is premises. Councillor Jeremy Bagge, the chairman of the West Norfolk Local Enterprise Agency Trust, feels very strongly that, if he could have under his control a managed workshop complex, he would be able to put some of the better and most promising clients straight into that complex and they would be linked up very closely with the enterprise agency. Perhaps the Minister could comment again on the concept of these managed workshop complexes and how they operate elsewhere in the country.

We are thinking also in the longer term of setting up a locally based business expansion scheme fund. At the same time links with the small firms service, with the Council for Small Industries in Rural Areas, and with other bodies, especially the Norfolk college of art and technology, and the local further educational college, are most important. They are being extended and looked at all the time and hopefully improved. This enterprise agency has been a great success. It is a microcosm of what has happened elsewhere in the country. The whole enterprise agency movement is one of the Government's great success stories. It may be that we have not said enough about it or sung it from the roof tops as we should have done. We now have a national network. The links of these enterprise agencies are growing all the time, cultivating improved and close relationships with local authorities, the small firms service and with other bodies, particularly in the towns and bigger cities where there are urban development commissions.

There has been a significant expansion also in the enterprise allowance scheme. That is another reason why I think the enterprise agencies will have an enhanced role. I saw in The Times yesterday that Ministers are planning a 25 per cent. increase in the enterprise allowance scheme and are to boost it by another 75,000 places. If so, that is very good news indeed. Many of the applicants on the enterprise allowance scheme will need the right kind of advice. Now, because of the national network of enterprise agencies, they will know exactly where to go to. Certainly in west Norfolk, anyone contemplating setting up on that scheme will be directed by the jobcentre to the local enterprise agency. There will be a natural link-up between them. It has been a tremendous success story. During the past six or seven years a significant number of new jobs have been created as a result of local enterprise agencies, and they have played a crucial role in combating unemployment.

5.29 am
Mr. Barry Sheerman (Huddersfield)

I am grateful to the hon. Member for Norfolk, North-West (Mr. Bellingham) for raising the role of local enterprise agencies, albeit so early in the morning. It is important, even at this time of the day, to discuss a matter that is close to all our hearts. The Opposition are in favour of enterprise, but I ask the House to bear with me while I examine the background of enterprise under a Conservative Government before I talk more specifically about how successful the Government have been in stimulating local enterprise and enterprise agencies. We are all in favour of enterprise, but the Government have been more in favour of it as a public relations smokescreen or as an advertising agency's buzz word than as a genuine enthusiasm for the qualities that created the wealth of the country during the past few centuries.

Enterprise in Britain, under the Conservatives, has become associated not with genuine hard work, with the entrepreneur, or with manufacturing industry, but with the smart-alec deal in the City of London, with asset-stripping, with needless wasteful takeovers, and with the growth of American enterprise over British enterprise. It has not been associated with the genuine process of wealth creation, where British workers and management come together with the aim of meeting the twin challenges of the market—providing the goods that people want at the prices that they can pay, around the world and at home, and changing technology. Britain must meet those two challenges and create wealth. The Government have answered neither challenge.

Under this Government, we have seen the collapse of British enterprise, not just small enterprise but large and medium-sized enterprise. We have seen a record number of bankruptcies. For the first time, we have imported more manufactured goods than we have exported—not just in one year, but year after year, we are importing more from abroad than we export. That is a course for national suicide in a manufacturing and wealth-creating nation. Such problems did not arise under any Government since the industrial revolution, but they have under this Government. While the Government's macro-economic policies have laid waste the economy, they have introduced a stream of palliatives and placebos to gull the public into believing that they are nevertheless committed to enterprise.

The backdrop of the operation of Government policy, certainly under the present Administration and the present Secretary of State for Employment, is gimmick after gimmick and small initiative after small initiative. Not all of them are bad. There is nothing wrong with local enterprise agencies. There is nothing wrong with a range of programmes that try to get small business going again after the devastation has been wreaked upon them. But there is every difference between a genuine commitment to enterprise, to job creation, to cutting the waste of unemployment and a series of schemes with little money, spread very thin, around the country when we have 4 million people unemployed. Manufacturing industry has collapsed in many constituencies.

The facts of the matter are that the Government's response has been absolutely pitiful. It was completely inadequate to help the desperate needs, the collapse in manufacturing industry, job losses and rising unemployment. Listening to the hon. Member for Norfolk, North-West one would not believe that we had nearly 4 million unemployed—4.5 million, if the Government had not fiddled the figures time after time. In some parts of the nation it is common to find 25 per cent. or more male unemployment. That is unacceptable, but it is the background that provides the reality, which overshadows the pathetic range of responses from the Government.

It is difficult to ascertain the contribution that the local enterprise agencies have made. The hon. Member has introduced this debate and later on Tuesday he will be asking a question of the Paymaster General to ascertain how many enterprises have been set up under any of the Government's policies. I shall be interested to hear the Paymaster General's response. The Official Report shows that, time after time, when the Secretary of State or the Paymaster General are asked how many jobs local enterprise has created, they say that they cannot really say. They do not really know how many local enterprise agencies there are. The list of agencies in the Library shows that many organisations are duplicated. The greatest number that I have seen reported is 326.

Mr. Bellingham

Surely one of the reasons why it is difficult to obtain immediate statistics is that there is a significant increase in the number of small firms that are being set up. Some firms do fail, but there is a record net increase in small business and firms that are setting themselves up in business. That fact cannot be disputed.

Mr. Sheerman

I know that the hon. Gentleman is a great expert on business. He is a barrister at law and a member of Lloyd's. He is associated with property and, I believe, horses. I am talking about manufacturing industry and genuine service industry that provide jobs, which I believe are important from wherever they come. I represent an industrial constituency that has had its fair share of the devastation brought about by the Government's unemployment policies.

The facts speak for themselves. Since 1979, when the Government came to power, we have seen a decline in industrial output of 25 per cent. and a decline in Britain's ability to create wealth. When there is mass unemployment and a range of schemes that encourage the unemployed to become self-employed, we see a growth in the number of small businesses and self-employed. That is a fact of life, but I challenge whether that sort of growth and response is anywhere near adequate to meet the devastation that we see under the Government's policies.

The Government provide booklet after booklet and scheme after scheme, but little hard cash is made available. I ask the Minister how many local enterprise agencies are in the network and how much cash is provided to them beyond the pathetic £2.5 million grant scheme which was announced earlier this year? How effective has the loan guarantee scheme been in helping local enterprise? I expect that the Minister will point to examples, and perhaps even to my constituency. I do not need him to tell me that in the Huddersfield area there is the Kirkless Venture Trust. That is more to the credit of the local chamber of commerce and Keith Welton, the director of that enterprise, than to the Government's policies.

Local enterprise needs to be local and it needs to be based on a genuine participation between the Govennment, local government and local enterprise. As we have seen the Government's attempts to stimulate local enterprise agencies, so we have seen the Government cynically attempting to destroy the foundations of local democracy. We must balance what has been added to enterprise and enterprise agencies by giving a little—as I said, £2.5 million was announced earlier this year in the form of a grant scheme—as opposed to the destruction that has been wrought by a Government who have sought to destroy local government and the local enterprise that it supports.

With the Government's legislation that abolished the metropolitan counties, we saw the destruction of a range of initiatives and programmes that were successfully creating small business, small enterprise and co-operatives. They were doing a job that increasingly was becoming something of which to be proud. The Minister will know that local government enterprise initiatives have been more successful than central Government enterprise initiatives. They have provided jobs more cheaply and more effectively—for three reasons.

First, they put in more commitment. Secondly, they know more about their local patch. Thirdly, they base their local operation—surprising as it may be to the Government—on a genuine participation between the public and private sectors. Wherever we see a local government that has a radical policy towards combating unemployment by setting up enterprise through agencies and stimulating enterprise at every level, we see success, and at a low price.

Central Government weakens the basis of operation of local government. Time and again we see rate capping, for example through the abolition of the metropolitan counties, and every kind of strategy that the Government can devise. Decent, genuine local enterprise agencies run by local authorities have been hampered and destroyed. Some of the boldest and most imaginative schemes have come out, of local government. Why was the hon. Gentleman a Minister when those initiatives were stifled? Local enterprise and small business are of vital importance. Opposition Members say, "Do not let us get it out of perspective." The macro-economic picture is a dismal one. Whatever the Government may come up with in terms of numerous small policies with small money, it is small beer in terms of the challenge that the country faces.

After the next election, the incoming Labour Government will ensure that there is genuine partnership between the public and private sectors and between national democracy and local democracies. A Labour Government will ensure that the right macro-economic climate exists for all businesses—large, medium and small—to grow and to employ people.

The hour is late, so I shall not detain the House any longer. I hope that the Minister will answer some of the questions that the country asks about genuine job creation and genuine enterprise stimulation.

5.44 am
Mr. Colin Shepherd (Hereford)

I congratulate my hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) on introducing this important and interesting subject of enterprise agencies, and, furthermore, on the eloquence with which he did so and explained the beneficent effects on north-west Norfolk.

I was disappointed but not surprised by the thoroughly curmudgeonly attitude of the hon. Member for Huddersfield (Mr. Sheerman) to the debate. I have seldom heard a more negative contribution. It was thoroughly, destructively, negative. At one stage I thought that he had gone on to auto-pilot. The phrases ground out one after the other. They trickled out in a magnificent stew. They were tried and tested old friends—

Mr. Michael Cocks (Bristol, South)

There is no one in the Press Gallery. Get on with it.

Mr. Shepherd

If the right hon. Gentleman would like it, there is breakfast outside, and he can come back in a few minutes.

The hon. Member for Huddersfield is a member of a party whose Government ended up, come 1979, presiding over the most highly institutionalised, rigid and unimaginative industry that this country has seen. I am from small industry; a small business. That is my background. That is the base from which I like to look at things.

In 1979, we had massively hidden overemployment. All sorts of companies were carrying labour that they eventually recognised they could not afford. They had to make the necessary investment, which they had been discouraged from doing by previous policies, and it led inevitably to a shake-out of employment. That is the point at which I began to become worried.

In 1982 I said to all the leading employers in my constituency over the telephone, "Let's face it. With your investment programmes, your main interest is losing people because you can't afford to have the people and the investment." All the companies concurred with that view. I said, "You can do something about that. If you put people out because of the investment that you have been encouraged to carry out, you can help towards setting up an enterprise agency to encourage the formation of new business." I am pleased to say that a substantial number of them said yes.

Therefore, back in December 1982, we had the first of a series of meetings, accompanied by various bank managers, the Council for Small Industries in Rural Areas and representatives from the two local authorities involved. Members of industry came together under my initial chairmanship and discussed the setting up of an enterprise agency. As a consequence, we got an enterprise agency steering committee, and in 1983 my hon. Friend the Under-Secretary came to open the agency.

That is three years ago. I do not know to what extent my hon. Friend has been able to keep tabs on progress. The enterprise agency has been responsible for helping into existence—I think that that is the right way round to put it—90 new businesses, which is a conservative and cautious estimate. They are now up and flying. It is not just a matter of how many have gone out of the door, put down their money and started trading. These are the ones that the director of the enterprise agency considers are viable—I hate that word, and the next word—ongoing, businesses. They are working according to their business plan and doing a good job.

Furthermore, another 200 businesses would not be in business now if it were not for the counselling advice from the enterprise agency. That is a magnificent contribution towards employment, the employment so sneeringly dismissed by the hon. Member for Huddersfield—

Mr. Sheerman

No.

Mr. Shepherd

I feel that it was sneeringly dismissed. He says that it does not matter and that it is irrelevant. To Herefordshire, it is relevant, it matters. Many others have not got into trouble because their shaky business proposals have been examined and analysed. They have been told that a certain course of action will lead to disaster. Many people who may not be in business now have cause to be thankful to the enterprise agency because they have avoided financial disaster. Consequently, there is a lower rate of business failures. That is good news. I pay tribute to the manner is which the director has put together a tight organisation and to his staff. As my hon. Friend the Member for Norfolk, North-West said, some people who are overawed by the big faceless agencies can talk over their business problems with the enterprise agency.

Alas, nothing comes without its problems. It is a pity that the biggest problem of such an exciting activity is the need to overcome the suspicion of existing businesses that, if they help, they will somehow cut their own throats by spawning competition. This is a sad, human point, but it is important. It is true that there is an element of justification in it. Our enterprise agency has found that about one in 40 businesses are capable of being considered as competitive with other businesses. It is a reasonable chance for a business to take—a one in 40 chance that it will not spawn competition.

Most businesses like to think of themselves as lean, efficient and effective, so what have they to fear from competition? Only if they are slack does the market give rise to the slot for competition. If businesses are tight and lean, there will not be that market opportunity. They might not, therefore, need to worry too much but they must look to their laurels.

Surely the crunch is that every business needs suppliers as well as customers. Each new business brings with it new opportunities for supply by existing businesses, even if it is only to the extent of greater spending power by consumers in the locale—for the bigger companies—or a lower rate of unemployment, and therefore greater activity in the economy. I must confess to being disappointed at the attitude of some well-established companies and businesses—large and small—which take a negative view. I sometimes feel that it is a case of "Pull up the trapdoor, Jack, I am all right." That is a pity. More and wider economic activity must be in the long-term interests of everyone. Enterprise agencies are good value for money, the more so when the money comes predominantly from the private sector. I tremble in my boots at the concept of this enforced partnership between the public and the private sectors. The organic partnership is that which originated in the private sector and which is participated in by the public sector, but never dominated by it, because that is when the dead hand of Socialism takes over.

Mr. Sheerman

Who is on auto-pilot now?

Mr. Shepherd

I thought that hon. Members might like to hear what auto-pilot was about. An enterprise agency should be a facilitating agency, the emphasis being on the word "agency". An agent is one who does something for another.

I have some worries. I disagree with my hon. Friend the Member for Norfolk, North-West on one point, as I palpably do with the hon. Member for Huddersfield. Enterprise agencies should be in the business not of procuring or managing workshop space or offering training courses but of pointing people towards workshop space and the training to their requirements. If one follows the other course, the enterprise agency becomes a self-perpetuating monster—an enterprise built for its own sake. An enterprise agency's real value is that it keeps close to the grass roots of industry, and does not lose its persepective as it starts, in effect, to build up a business of its own. Some inner city agencies have almost become businesses in their own right, except that invoices are never raised, with nerve-racking false economies and inefficiencies creeping in, not to mention the even more worrying siren calls for more money that we have heard again today. The purpose of an enterprise agency is to be a facilitator, not a creator in its own right.

Mr. Sheerman

The need is not just for more money, because the scale of the problem is so great, but for more commitment as well if enterprise agencies are to work. At present there are only 166 secondees from industry. Does the hon. Gentleman really think that that is sufficient to put British enterprise back on the rails?

Mr. Shepherd

I take the point to some extent, but everything does not lie with secondees. We were fortunate enough to start with a secondee, but we found our own director whom we now fund and pay. That director is remarkably good and I have no doubt that when the time comes we shall be able to find another. So everything need not hang on secondees, although a super job has been done in promoting them. Other people can be found.

The purpose of enterprise agencies is not to build empires but to help other people. Rivers are made out of raindrops, so let us not worry about the number of enterprise agencies. Let us just have a few more and start building a few rivers. In the task of helping, enterprise agencies need to be the creatures of the business community, not institutions provided by it. As I have said, they need comparatively small amounts of money. That does not mean that matching finance from the Government is not warmly welcomed, but the need is not so much for more cash as for a wider base of business interest and understanding to bring in the 50 quids and 100 quids in subscription support and provide the healthly base of operations that is so important.

I hope that my hon. Friend the Minister will consider this carefully, as it is a matter of the way in which he deploys resources. The need is to generate far greater enthusiasm in the business community. To that end, perhaps he will consider the production of another booklet along the lines of "Action for Jobs" setting out both sides of the task of an enterprise agency in terms of basic principles. I hope that he will also promote the use of public service television slots. I do not see why commercial television companies should not be approached on a national or regional basis, as they could help a great deal, rather as Central Television does with its job-finder service in the west midlands. Those slots could be used to make it clear that the friendly local enterprise agency is a good place to go for help if one is feeling nervous or one's business seems shaky. As my hon. Friend the Member for Norfolk, North-West said, that would help in the process of communications and understanding. It would get the message across that the enterprise agency is able and willing to help, in absolute confidence, existing businesses as well as new start-ups.

There is an immense range of activities, but enterprise agencies do not have massive resources for self-promotion. It is the concept which is so desirable and which should be promoted. That is where my hon. Friend the Minister could be very helpful at remarkably low cost—and to good effect in terms of developing employment.

6 am

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)

I am grateful to my hon. Friend the Member for Norfolk, North-West (Mr. Bellingham) for instigating this debate. The House will be grateful to him for playing such a significant part in forming an enterprise agency in his constituency, which he was kind enough to say that I had been associated with in the early stages. I expected to be invited to open it, but when I heard that my hon. Friend had invited the Prince of Wales I quickly stepped back. I know my place.

I was amazed when my hon. Friend told me in the Library that he had invited no less a person than the Prince of Wales, who accepted shortly afterwards. That was in the early stages of the Prince of Wales' involvement with local enterprise agencies. Since then, he has become president of Business in the Community—the sponsoring umbrella organisation that is responsible for spawning and encouraging enterprise agencies. He has played a distinguished role in that capacity. A few weeks ago, I had the privilege of hearing the Prince of Wales speak at Pebble Mill on small firms. I was impressed by his speech and knowledge of enterprise agencies.

Perhaps it was fortunate, in view of the speech of the hon. Member for Huddersfield (Mr. Sheerman), that my hon. Friend the Member for Norfolk, North-West started by saying that the Labour Government did not seem to express any interest in the small firms scene. When the Conservatives came to power in 1979, we faced an uphill struggle trying to inject into the economy the enterprise and entrepreneurship, which everyone recognises in the economy now.

There was such a decline in the number of self-employed people under the Labour Government that it has taken us longer than it might to put matters right, to steer towards an enterprising economy, to stimulate small firms and to encourage more self-employment. My hon. Friend was right to draw attention to the three significant schemes which have assisted the small firms sector more than anything else—the enterprise allowance scheme, the business expansion scheme and the loan guarantee scheme.

As a result of this Government's concentration on the small firms sector, we now have the highest level of self-employment for 60 years and the highest net increase in small businesses in recorded history. Before local enterprise agencies came along, people went to their local authorities, which the hon. Member for Huddersfield is so fond of referring to, or the small firms service. That service was often regarded as remote, however, because it was based at regional level.

Local authorities were often regarded as too bureaucratic. It did not matter one jot which party they were controlled by. I have manifestly failed to convince the hon. Member for Huddersfield on that score. People in business regard government, whether national or local, as the unacceptable face of bureaucracy.

Mr. Sheerman

No.

Mr. Trippier

The hon. Gentleman is quick to draw attention to the professions of those who speak in debates on small firms and enterprise and professes to know much about them. The hon. Gentleman must learn that people engaged in business would rather talk to other industrialists and professional advisers than to politicians like us, my officials, civil servants or even local government officers. That has been recognised, not only by my hon. Friend the Member for Norfolk, North-West but my hon. Friend the Member for Hereford (Mr. Shepherd), who has played a significant part in starting his local enterprise agency. Indeed, I had the privilege to open it officially. I pay warm tribute to him. He played the same role as I played in my constituency when I was pleased to pull together leading industrialists who recognise the importance of this exercise in self-help—the community pulling itself up by the boot straps. The success is there for all to see.

By referring to the small firms service as I have I am not saying that it has not an important role to play. The trick is to improve the interface between the small firms service and local enterprise agencies, so that they both have a role with the specialist in the small firms service being made available to directors of LEAs. My hon. Friend the Member for Norfolk, North-West has a secondee from the National Westminster bank. That is how we started in Rossendale. Indeed, the same bank was good enough to second a director to two of us.

My hon. Friend the Member for Hereford pointed out that that is not necessarily the way people wish to continue. The beauty of LEAs is that it is up to the boards to decide what they want. No two will be the same, because no two communities are the same. The board may decide on continuity and to have the director perhaps full-time under contract for a long period, and even a deputy director. That practice is certainly growing and is well and good.

I will not get involved in the discussion and, perhaps, slight disagreement between my two hon. Friends on the management of small workshops, because I have seen it work effectively where LEAs have decided to do it, where local authorities have gone to the LEA and asked it to do that, and where the private sector has built the managed work shops and the LEAs have provided the essential hand-holding service for sheltered work shops. That is fine. One should in no way rubbish that.

I may have to convince my hon. Friend the Member for Hereford, who has a considerable number of LEAs, that the Government have decided that the LEAs will be so much of a one-stop shop—more than we ever dreamt when we tried to set up LEAs in our constituency—that they are seen as the best providers of management training. Certainly, they have the signposting role. I would rather it were in their hands, as I am sure my hon. Friend would, than in the hands of different bodies which may seem too bureaucratic.

The hon. Member for Huddersfield stands shoulder to shoulder with me in recognising the importance of a partnership between the public and private sectors. The difference between the hon. Gentleman and my hon. Friends and I is that he wants the public sector to be in the lead, whereas we want the private sector to be in the lead. We believe that the private sector does the job a darn sight better, is closer to the "coal face", and understands the needs of small businesses. That political difference is not merely a crack; it is a yawning chasm which I see growing ever wider as time passes.

My hon. Friend the Member for Norfolk, North-West asked me how many LEAs there are at present, to which the answer is 354. None of us ever dreamt that the figure would reach that. I am grateful to him for the nice things he said about me when I set the target of 300 when I came to this office in June 1983. Many of us have surprised ourselves, including Business in the Community. It is truly remarkable. The failure rate of those firms that have been assisted by enterprise agencies dropped to 1:12 over a period of three years contrasted with a failure rate of 1:3 over the same period for normal, conventional businesses not receiving assistance.

The cost per job has been estimated by Business in the Community, and I emphasise that, because it is extremely difficult on occasion for the Government to do that. In certain assisted areas and because of certain grants that may have been used by small firms, it is difficult for the Government to assess the cost per job. However, Business in the Community has calulated the figure at about £600 to £700 per job. That contrasts with the £700 cost per job under the loan guarantee scheme. That is interesting, although it is probably coincidental. The Government's loan guarantee scheme, at £700 per job, is the cheapest and most cost-effective scheme in the Department of Employment. It contrasts favourably with the enterprise allowance scheme that we regard as the jewel in our crown.

I listened carefully to the comments made by my hon. Friend the Member for Hereford in connection with transport and communications problems. Despite the fact that my hon. Friend has recently received an official visit from my hon. Friend the junior Minister in the Department of Transport, I would be happy to alert that Department again to his vociferous arguments. My hon. Friend has always been a very able advocate on behalf of his constituents in relation to small firms and improved communications and I will make his point at the Department.

I was interested to hear my hon. Friend's comments about Mr. Geoff Sturgeon, the director. I must tell the House—and my hon. Friend the Member for Hereford would support me in this—that it is vitally important to get the right director. The board of governors or, as it is called in some cases, the board of directors, are very important. Without them and the sponsorship, there is no enterprise agency. We accept that, and I am grateful for the opportunity of being able to pay a warm tribute to these people in different communities helping enterprise agencies throughout the country.

The key person is the director, some of whom are called managing directors, and others chief executives. He has the day-to-day contact with the important people whom we are all seeking to encourage. I recall that I was greatly influenced by the first director of an enterprise agency, Mr. Bill Humphrey in St. Helens, whom I have always regarded as the patron saint of enterprise agencies. It was one of my greatest privileges, as the Minister responsible for small firms, to introduce Mr. Humphrey to the 300th enterprise agency director in west Lancashire. Mr. Humphrey could hardly believe it himself. He has set such a superb example that has been followed by many different people and that is an amazing tribute. We owe him a debt of gratitude that can be never repaid.

My hon. Friend the Member for Norfolk, North-West referred to the wider role for the agency in general terms. I have referred to that with regard to the managed work shops. If the board of governors of the agency in the area thinks that that is appropriate and that it can handle it, then it should go for it. My hon. Friend said that he thought that it was ambitious, and it is after being in existence for only just over 12 months. However, that is the kind of challenge to which most enterprise agencies are now rising and I am sure that they are up to it.

I was especially glad that my hon. Friend referred to the new initiative of the locally based business expansion scheme. That is so important. We need to encourage the investment from localities under the business expansion scheme into funds where money in the amounts of about £50,000 is going to the smaller firms rather than the huge amounts of money perhaps being invested through the City of London in excess of £100,000 and being confined to the immediate London area. The regional aspect of the funds is extremely attractive and is something that we must encourage.

I shall consider the idea of a booklet suggested by my hon. Friend the Member for Hereford. It has great merit. We are perhaps bringing out too many booklets for the hon. Member for Huddersfield. They are coming out at an amazing rate. The most important booklet is "Action for Jobs", which the hon. Member for Huddersfield displayed in the House this morning. I am grateful to him for doing that.

I was fascinated to hear the contribution of the hon. Member for Huddersfield. I agree with my hon. Friend the Member for Hereford that his comments were incredibly negative. I was fascinated by the fact that he ended his speech by saying that it was early in the morning and ended by saying that it was late at night. I was not certain whether he knew where he was or what time it was. However, I was grateful to him for saying that some of the initiatives of myself and my right hon. and noble Friend the Secretary of State were to be welcomed. That is pretty fair. Perhaps we might have to ignore the hon. Member for Huddersfield in this. I might be biased towards the view of my hon. Friend the Member for Hereford when I consider what I thought was a constructive suggestion to produce such a booklet.

The idea of using television wherever possible to push local enterprise agencies to make clear at community level that the hand-holding service is available is a first-class idea. I encourage television in the independent sector to take advantage of that facility.

Finally, I take the opportunity of thanking the companies — there are so many of them now — which have been kind enough to support local enterprise agencies, not all of them large although the bulk of them supporting BIC are large. I also pay a warm tribute to hon. Members who have played a significant part in helping the local enterprise agency movement to become such a success.