§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]9.35 am
§ The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)
I welcome this opportunity to discuss enterprise and deregulation. To my knowledge, this is the first occasion on which the House has debated these subjects together. The debate shows the priority which the Government attach to encouraging enterprise and removing unnecessary regulations and it is particularly appropriate following the recent publication of the White Paper "Building Businesses … Not Barriers".
I am particularly pleased to be taking part in this debate because of my own involvement within the Government in enterprise and deregulation. I have been the Minister responsible for small firms for three years now, both at the Department of Trade and Industry and now with my right hon. and noble Friend the Secretary of State for Employment at the Department of Employment. Enterprise and deregulation are, of course, linked and in my remarks I shall show that one of the best ways to encourage enterprise is to remove unnecessary regulations, which act as barriers to business success and the creation of more jobs. The Government have acted consistently to create favourable conditions for enterprise, through our economic and other policies. We have also taken action to reduce barriers to business success and new jobs. As the new White Paper shows, further action is planned to remove restrictions which prevent business from providing more opportunities for enterprise and employment.
Our policies have aimed at creating the right conditions for enterprise and growth, and the attack on inflation has been rewarded with the lowest level of price increases since 1968. Competitiveness has been improved and the labour market made more flexible. The benefits of this strategy have been seen in a sustained period of growth with increases in manufacturing investment, exports and the creation of new jobs.
We intend to continue this process. As my right hon. and learned Friend the Paymaster General told the House last week, it is important that we keep our industry competitive by keeping unit wage costs down, improving further the working of the labour market—linking pay with performance, improving training for both young people and adults, and encouraging business and enterprise of all kinds.
In addition to squeezing inflation out of the economy, the Government have taken a wide range of action to free markets and to remove unnecessary obstacles. On coming into office in 1979 the Government took early action to 666 remove controls on foreign exchange, hire purchase, dividends and bank lending. We have also liberalised markets in telecommunications, bus and air services. Privatisation has encouraged wider share ownership and improved business understanding in the economy.
We have cut down bureaucracy in reducing the number of forms and statistical inquiries sent to businesses, and more recently we have produced two White Papers on removing controls which are a burden on business and act as a brake on enterprise. Our aim has been to reduce the time and resources that people in business are obliged to spend in meeting the requirements of Government Departments. Time spent filling in a form or writing to a Government Department could more profitably be spent in running the business, generating products, services or sales.
"Building Businesses … Not Barriers" contains a balanced series of steps, some admittedly modest, which are intended to help enterprise and employment. It also shows the action that the Government have taken to follow up the proposals in "Lifting the Burden" which was published last year. "Building Businesses … Not Barriers" also marks a first for the Department of Employment in that my right hon. Friend has included for the first time the objectives of the Department. These set the proposals on deregulation in the wider context of the Government's objectives for employment and enterprise.
The White Paper reflects our balanced approach to deregulation. We still need regulations — every society does. We must ensure proper protection for employees and consumers and the environment. The Government do not want to see a free-for-all where the strong exploit the weak. As my right hon. and noble Friend the Secretary of State has said, the line between liberty and licence is a fine one. Where controls are necessary, they will be retained.
The new White Paper also describes the new arrangements that have been established within the Government to pursue deregulation: there is the small central task force on deregulation, known as the enterprise and deregulation unit, based at the Department of Employment and including staff on secondment from other Departments or the private sector; there are the deregulation units in all Departments reporting direct to a Minister with responsibility for reducing burdens on business; and there is a new system to assess the cost to business of complying with new regulatory proposals.
§ Mr. Trippier
I shall give way to my hon. Friend when I finish this point, because it will particularly interest him, with his concern for small firms. An advisory panel on deregulation, which is a group of nine small business men, has recently been appointed to advise on the problems of deregulation in the real world.
§ Mr. Thurnham
Will my hon. Friend confirm that there is a deregulation unit reporting to my hon. and learned Friend the Solicitor-General, who introduced a Bill on Wednesday night that calls on businesses to keep records for as long as 15 years? That seems an excessively long period when the EEC is looking only for 10 years. Will my hon. Friend comment on that burden on business?
§ Mr. Trippier
Now that my hon. Friend has raised that point, I am under a moral obligation to look at it carefully. I was not aware of the provision introduced by my hon. 667 and learned Friend the Solicitor-General, but I shall look at the matter further and come back to my hon. Friend on it next week.
"Building Businesses … Not Barriers" contains some 80 proposals for action to reduce burdens on business. I shall not attempt to explain them all in detail, or even to list them, but it is worth picking out some of the main proposals which meet important concerns of business.
The Government's aim is to make it easier to construct or alter business premises, and the White Paper includes measures to remove from the planning system altogether developments and changes of use that cause no harm to the environment and do not therefore need to be subject to specific controls. My right hon. and learned Friend and my right hon. Friend the Secretary of State for the Environment will be announcing on Monday the detailed proposals for changes in the use classes order. These and other planning proposals are being taken forward in consultation with business, the planning authorities and other interested groups.
Taxation — whether through Customs and Excise or the Inland Revenue — is a major preoccupation of business and the White Paper makes a number of important proposals to help enterprise.
The major review of VAT and small business will provide an opportunity to identify precisely the problems being encountered by businesses with the working of VAT regulations, and suggest means to alleviate them. This will be a wide-ranging review, but it will look in particular at the possibility of cash accounting for VAT, annual VAT returns with a possible instalment system of payments and the special schemes for retailers. I know that these are matters of concern to small businesses. The recently introduced VAT penalties will also be the subject of a separate review.
On the Inland Revenue side, we will be modernising the PAYE form P35 which is used for end of year pay summaries and looking further at form P11D on payment of expenses and benefits in kind.
§ Mr. Paddy Ashdown (Yeovil)
Is the hon. Gentleman aware that there is a broad and widely held feeling among small businesses that the Inland Revenue in particular is adopting an unhelpful attitude to small business? I am inundated with letters from small businesses, which seem to have suffered considerably at the hands of the Inland Revenue, which is taking action against them that is unnecessary and damaging to their continued existence.
§ Mr. Trippier
That is why we think we should review this matter, and the Department of Employment has made representations to the Treasury on that point, which will be reviewed. My mail bag is heavy with complaints about Customs and Excise, but I have some sympathy with its proposals.
The evidence of the Keith committee showed that two thirds of those liable to pay VAT were paying late. I do not see that any right hon. or hon. Gentleman could possibly countenance that, because if we were to allow it to continue it would discriminate against those who were paying on time. The penalties introduced by Customs and Excise for the late payment of VAT are not particularly onerous. People are given two opportunities to delay payment, and on the third occasion Customs and Excise imposes its penalties. All that said, the Treasury has given 668 us the undertaking that it will review both matters, and I would have thought that that would be welcomed by the hon. Gentleman.
§ Mr. Michael Forsyth (Stirling)
Have my hon. Friend's representations to the Treasury included—or will they include—finding an easier test of self-employment and enabling it to be possible for people to be self-employed without being harassed by the Inland Revenue, which has been the experience of many in our constituencies?
§ Mr. Trippier
That point concerns me in my role as Minister with responsibility for small firms, and I am aware of the ten-minute Bill that was recently introduced by my hon. Friend. Again we have made representations to the Treasury and it has undertaken that, wherever possible, it will explore the progress that can be made to make it more easily discernible as to who is self-employed and who is not. I hope that that will, to a large extent, meet the point.
The White Paper also includes some further proposals to reduce the burden on employers of employment legislation. It has, of course, been said on the Labour Benches that the Government have dismantled the system of rights that we inherited. This is of course absurd. There is in this, as in all matters concerned with employment protection, a balance to be achieved between safeguarding the rights of employees and the encouragement of employment opportunities. The proposals in the White Paper are intended to modernise the system of employment rights to meet the present-day patterns of employment and in particular to encourage the provision of part-time jobs, which are much in demand. Those who say that we have not got the balance right should remember that employment protection legislation has never created jobs.
§ Mr. John Prescott (Kingston upon Hull, East)
The hon. Gentleman believes that employment protection has not created jobs, but we are concerned about employment protection rights. What jobs are created, and what help is given to small businesses, by providing for the payment of a deposit by people who wish to go to a tribunal to appeal against unfair dismissal, and restricting yet again the rights of pregnant women to return to work?
§ Mr. Trippier
As the hon. Gentleman knows, the proposals in the latest White Paper are open to discussion. He will be aware that in the Committee debating the Wages Bill we spent a considerable amount of time saying that it was seen by employers to be a considerable burden, when, from memory, 75 per cent. of claims were settled outside the tribunal. It is seen not only as a cost, but as something of a harassment to those who are concerned about whether they would be taken to an industrial tribunal at a disproportionate cost. That militates against increasing the number of people they employ. Some employers believe that it is not worth having the hassle, trouble and cost of employing people, and rather than make that decision they avoid it and keep the work force at its present level.
§ Mr. Prescott
I understand what the Minister is saying. Does he mean that, whatever the justification for the unfair dismissal case, the deposit is to be a deterrent to people going to the tribunal? Presumably that is the case because fewer will go to the tribunal and that will be less of a deterrent to the employer to take people on. What about justice?
§ Mr. Trippier
There will be a reduction in the number of people who might be trying it on taking cases to an industrial tribunal. It has to be made clear, as it was in the White Paper, that the deposit is returnable if the industrial tribunal upholds the case brought by the employee. The White Paper is also a consultation document, and we invited comments from both trade unions and employers' organisations.
§ Mr. William Cash (Stafford)
Despite the intervention of the hon. Member for Kingston upon Hull, East (Mr. Prescott), does my hon. Friend agree that on many occasions money is paid into court? That is well understood by litigants and other people, and in many respects this proposal does not depart from the normal state of affairs.
§ Mr. Trippier
That is right. I welcome my hon. Friend's intervention.
Our proposals on health and safety are based on the report of a special study to see whether the law on health and safety at work and its administration causes difficulties for employers, especially small ones. I am glad to say that the study revealed that the great majority of firms contacted had a strong commitment to health and safety. [Interruption] If the hon. Member for Kingston upon Hull, East (Mr. Prescott) would pay attention, he might welcome what I have just said. It is worth repeating, because I think that he would agree with me about it. The study revealed that the great majority of firms contacted had a strong commitment to health and safety. That commitment is shared by the Government and, as we said in "Lifting the Burden", we have no intention of lowering standards or of removing the necessary protection. We want to ensure that health and safety controls are practicable and as clearly understood by employers as possible. We are keen to improve consultation on new proposals and intend that paperwork or administrative arrangements which do not have practical benefits should be removed.
§ Mr. Prescott
I should like to make a point about health and safety. All hon. Members agree that standards of health and safety have improved since the setting up of the Health and Safety Commission. If the Minister looks at the evidence, he will see that accidents in the construction industry and in manufacturing industry have increased considerably in the last two or three years, coincidental with the reduction in the number of health and safety inspectors and the relaxation by the Government of some of the regulations.
§ Mr. Trippier
I do not think that the increase in accidents is related to the reduction in the number of inspectors. It is a cause of anxiety to me that there has been an increase in the number of accidents in the construction industry. I can meet the point made by the hon. Gentleman by telling him that I am more concerned about simplifying the regulations than about deregulation.
When I assumed my new responsibilities for health and safety and combined them with other responsibilities for relatively small firms, I asked for all the leaflets that we were sending out to employers to be brought in the Department. From memory, the number of leaflets was 71. Perhaps we are mad enough to assume that all employers read these leaflets. I found some or the leaflets extremely difficult to understand, and I think that the hon. Member 670 for Kingston upon Hull, East, and indeed my hon. Friend the Member for Stafford (Mr. Cash), would also find them difficult to understand. There is a case for repackaging some of these leaflets and for simplification, and that is one of my tasks in the Department of Employment.
If one looks at a pamphlet that one expects an employer to read, one might ask oneself whether the pamphlet is necessary. That might lead us down the track of asking whether the regulation itself is necessary. We ought to concentrate on the matter to see whether we can deregulate, but simplification must come first, and the Opposition ought to welcome that.
§ Mr. Trippier
The hon. Gentleman has a valid point and I am trying to meet it. I would love to show him some of the pamphlets that I examined. They are so full of verbiage, perhaps parliamentary language, and certainly legalese, that in most cases they would confuse the very people whom we are seeking to encourage. If we can simplify them and make them more easily understood, we would get increased compliance.
There are, of course, proposals on other subjects, such as company law, exports, transport and agriculture, and general proposals on licences, communications between the Government and business and on dealing with European Community regulations.
We are anxious to help those in business to get on with their job with a minimum of interference. It is the cumulative effect of regulations that places burdens on businesses, and especially on smaller businesses such as the owner-managed concern. The regulations which must be encountered when moving premises, or when the business grows so that it must register for VAT, or, most important, when the business man or woman wants to take on an employee, can mean that the business simply does not bother. The business does not grow and valuable opportunities for enterprise and employment are lost.
We aim to remove some of the mystery from setting up in business by removing some of the complications so that more people see running their own business as an attainable rather than a remote goal. We are also anxious to encourage people to go into self-employment, to work for themselves and their families.
There has been an encouraging expansion in the number of small businesses and self-employment and in the number of jobs being created in the United Kingdom. There was a net increase of 130,000 new businesses in the last three years for which figures are available. After declining steadily in the 1970s, the number of people in self-employment has increased to 2.6 million, the highest level for 60 years and representing 11 per cent. of the employed labour force.
The Government are keen to encourage small business and self-employment, while it seems — in fact I am certain — that the Labour party did not even mention small businesses in either of its last two manifestos. We are not concerned only with small businesses because we want to see enterprise succeed throughout the economy. Certainly we do not want to place any restrictions on small businesses to stop them from becoming large ones.
§ Mr. Trippier
There are also record start-ups, and the hon. Member for West Bromwich, East (Mr. Snape) and his hon. Friends should remember that the net increase in small businesses is the highest in recorded history.
§ Mr. Snape
I do not envy the Minister his task of having to read that dross. Since his Government came to power in 1979, 83 companies in the borough of Sandwell, each of which normally employed more than 100 people, have closed. The result is that 25,000 people have been thrown out of work. That is just one borough in the west midlands. Let us have less complacent nonsense and more action from the Minister.
§ Mr. Trippier
As an example of my interest in Sandwell, not long ago I opened the enterprise agency there. We are well aware that larger firms have shed labour. No one has a monopoly of compassion for people who, tragically, have found their way on to the dole queue. The Opposition assume that it is the largest companies that will increase their share of the labour market. They will not, and the major reasons for the shedding of labour in Sandwell and elsewhere are increased productivity per man and high technology. Sandwell has one of the best enterprise agencies in Britain, and I pay tribute to the hon. Gentleman's constituents and the enterprise agency. The agency will stimulate the growth of small firms and encourage people who have never in the past considered self-employment as an option to become self-employed. Instead of being so negative about the things that are going on in his constituency, the hon. Member for West Bromwich, East should be much more positive.
§ Mr. Cash
Does my hon. Friend accept that in Japan and the United States, where enterprise and small businesses flourish to a great extent, 50 per cent. of all businesses fail? That shows that the failure and bankruptcy rates do not necessarily suggest that America and Japan are not enterprising. Quite the opposite is the case, because those are the most enterprising countries in the world.
§ Mr. Trippier
There is another major difference between the United States and Britain. It is that firms that fail in the United States set up again very quickly. In Britain there seems to be something of a social stigma attached to firms that go down, whereas in the United States it is seen as part of the education process and the people who, unfortunately, go into liquidation learn from their mistakes. They have little or no difficulty in getting a second loan from the bank or in getting Government assistance. When a firm goes down in Britain, it is difficult for it to get a loan from the bank to start up again.
The rate of survival and growth is that much better here than in the United States. Although many people refer to the one in three failure rate over three years, saying that two out of three businesses succeed shows an encouraging record. It is a matter of saying whether the glass is half empty or half full. It is my main responsibility to ensure that the survival rate increases, but we want there to be growth and development as well. My hon. Friend's intervention met that point head on.
§ Mr. Trippier
Well, my hon. Friend knows more about enterprise now than the hon. Member for Kingston upon Hull, East will ever know.
§ Mr. Prescott
When comparing the success rates of companies, we must consider their character and that of those that are collapsing. New companies might employ only one or two employees, but the ones that are collapsing are probably established. They are altogether a much more serious proposition and are being replaced by small companies which are highly likely to fail.
§ Mr. Trippier
I must try to convince the hon. Gentleman otherwise. Unemployment in my consitituency reached 19.1 per cent. in the early 1980s — that is Rossendale alone, and not including the Accrington part of the travel-to-work area. We have now managed to get unemployment down to 13 per cent., which I accept is still far far too high, only through growth and the generation of small firms. All the evidence shows that we shall have growth in employment and a reduction in the unacceptable level of unemployment only through small firms.
I have not met one person in the past three years during which I have had responsibility for small firms who believes that large firms will increase their share of the labour market. The official Opposition should be aware that they will kid nobody at the next general election if they try to convince the electorate that large firms will take on more people. All the international and national evidence contradicts that view.
§ Mr. Thurnham
Would my hon. Friend like to comment on the nationalisation that Britain has suffered? Does he not think it surprising that the Opposition are not joining us in pressing for more privatisation immediately?
§ Mr. Trippier
Absolutely. The record of denationalisation proposals shows the success of the Government's policies. The difference between the official Opposition and us is that they see the future in terms of Government interference, whereas we believe that we should stand back. If we are to stand back, however, we should take with us an awful lot of the paraphernalia, by which I mean regulation and red tape, which successive Governments have slapped on the statute book. It is one thing to say that we should stand back, but entirely another to say that we should stand back and take with us much of the red tape which is acting as a brake on enterprise.
There are many signs of successful enterprise in the economy. Since its inception in 1980, the unlisted securities market has seen 443 companies raise£750 million. The United Kingdom is creating more jobs than any other European country, more than 1 million new jobs being created since the spring of 1983.
§ Mr. John McWilliam (Blaydon)
When talking about creating new jobs, will the Minister be clear whether they are full-time or part-time?
§ Mr. Trippier
That question has been asked often. The hon. Gentleman does a great disservice to people in part-time jobs — he is rubbishing the work that they are doing. He is aware that unemployment remains stubbornly high because more young people are coming on to the job market than there are people reaching retirement age, and because more women are looking for work outside the home. That makes our task that much more difficult. The evidence shows that there is an increasing number of jobs in the small firms sector and that the vast majority of them are real.
We are also witnessing the development of new business opportunities with substantial employment potential in 673 the leisure and tourist sectors. Tourism is Britain's biggest growth industry, accounting for £13 billion worth of business each year and employing almost 1.5 million people. New jobs in tourism are being created at the rate of 50,000 each year, and there is scope for substantial further growth. There is nothing more annoying to those who work in the tourist industry than to hear Opposition Members say that theirs are not real jobs. Where employment provides a living it is real enough. Tourism is a major industry, and a very successful one.
The Government have been supporting enterprise throughout the economy through our broader economic policies and in practical terms through schemes of assistance and advice to businesses large and small. The loan guarantee scheme provides an important source of funds for companies which need to raise up to£75,000. The scheme has been extended for three years as a result of a Budget measure, and the premium has been reduced to2.5 per cent., which is 1.75 per cent. net. Because interest rates are so low, and because of the reduced premium, the scheme is cheaper now than it has ever been. It has been very successful in creating many new jobs at a net cost of£700 each. This bears favourable comparison with many other schemes for which the Government are responsible.
The business expansion scheme has also been successful. It has helped more than 700 companies to raise more than£100 million. It has been extended and is now targeted towards businesses with special potential for job creation.
The enterprise allowance scheme has helped more than 150,000 people to set up their own businesses. A recent survey which we commissioned shows that, for every 100 businesses which have survived for three years, 99 additional jobs have been created. Thanks to my right hon. Friend the Chancellor, we will have 100,000 places by the end of the current year. The scheme has helped many people, and two out of three of the businesses that have been set up have succeeded. That is a real attempt at job creation and self-employment.
Financial assistance for enterprise in innovation and exports is also available from the Department of Trade and Industry's support for innovation schemes and the British Overseas Trade Board. The Government also provide advice and guidance to businesses through the small firms service of my Department, which has doubled in size during the past three years. It is a service of which I am extremely proud. We have also launched the regional enterprise units, which are another way in which to have a presence at regional level and get away from Westminster.
The Government also help business through their own purchases. Government contracts offer many valuable business opportunities for small firms. Departments place contracts worth more than£14 billion each year with that in mind. I am pleased to launch formally today a new Prestel information system which will complement the booklet "Tendering for Government Contracts—Advice For Small Firms". It provides detailed information on tendering procedures, the products purchased and who to contact. Initially, the information covers three Departments — the Ministry of Defence, the Crown Suppliers and Her Majesty's Stationery Office, but I intend to expand it to cover more Departments as soon as possible.
The Government also have a substantial commitment to training—both to skills training and training for 674 enterprise, and to equipping people with the skills required for enterprise and employment The two-year YTS will cost almost£1 billion in 1986–87, and we arc also increasing our commitment to adult training with around 800,000 training starts planned at a cost of£270 million in 1986–87, as well as 60,000 places on the training for enterprise programme in 1986–87. The revised enterprise allowance scheme contains a new management training scheme that I have introduced to help new businesses to survive and grow.
The Government are also helping the long-term unemployed through the restart and job start schemes and support for job clubs. The community programme is being expanded to over 250,000 places by November.
We are also taking action to improve the awareness of enterprise and the nature of wealth creation. There is always much talk about how to slice up the economic cake. The Government are trying to get across, particularly to young people, the factors which determine the size of the cake, and how we go about making it bigger. We are also seeking to stress that wealth creation paves the way for job creation.
The Government are supporting Industry Year 1986, the campaign being run by the Royal Society of Arts to improve the understanding of industry and to encourage young people to take up the challenge of a career in industry. Our targets for Industry Year include the introduction of mini-enterprise projects in each secondary school to teach schoolchildren how business works, and to have a schools industry liaison officer in each local education authority by the end of the year. These initiatives contribute to the better understanding of business in schools and in society, and go towards creating an enterprise culture where entrepreneurship and initiative are respected and encouraged. Enterprise and education also come together in collaboration in high technology industry. The universities are realising that there is no place for the ivory tower in the modern world. There are 21 science parks already in operation, with another six under construction. Putting ideas into action creates new jobs.
It would be wrong to conclude my remarks without referring to local enterprise agencies, although I touched on them earlier. Enterprise and new businesses are encouraged not only by central Government but by established businesses, local authorities and other organisations, through local enterprise agencies in England and Wales, involving mo -e than 4,000 companies and organisations as sponsors, and funds from both the public and private sectors.
To assist the valuable work of the local enterprise agencies we have launched the local enterprise agency grant scheme. Our aim is to help to establish a network of viable self-supporting enterprise agencies with funding from non-Government sources. We are providing pump-priming funds for the first five years, matching other contributors pound for pound up to a maximum of£20,000. I commend those working in local enterprise agencies for the invaluable support that they provide for small businesses.
I commend to those hon. Members who have not already seen it the leaflet entitled, "Business in the Inner Cities" which is produced by Business in the Community — the umbrella organisation responsible for helping to strengthen and develop the local enterprise agency movement. That leaflet is very interesting. It covers a wide 675 range of projects throughout the country where established businesses have been helping others to get started. I refer to help in staff, premises and advice. I draw attention, in particular, to one of its paragraphs, which states:The primary contribution of companies to assist the inner cities is by remaining competitive, staying in business and growing. In this way a major contribution is made to the creation of wealth and the local economy through wages, rates, taxes and indirect employment in addition to the production and sale of goods and services.
That is true not only for the inner cities but throughout the country. Obviously the economy as a whole is vital in the encouragement of enterprise, and that is perhaps our overriding concern, but the Government also have other responsibilities. We have a responsibility to allow businesses to grow and expand and to stop people from being prisoners of their in-trays, so that they can get on with doing the job.
I conclude by referring to the United States and to the practical example of enterprise, deregulation and the creation of jobs, which is there for all to see. The United States' economy has been thriving and creating jobs—20 million jobs between 1974 and mid-1985. The United States has also been losing regulations, while Europe has gained regulations and lost more than 2 million jobs in the past decade. Within Europe, the United Kingdom has been creating jobs more rapidly than any other country. We hope that by reducing regulations further we can create the conditions to gain more jobs. Freeing the spirit of enterprise is the only way to create lasting prosperity and employment.
§ Mr. Barry Sheerman (Huddersfield)
Listening to the Minister, one would not think that the chilling unemployment statistics published yesterday were the grim reality. That is the backdrop to this debate, despite all the ebullience of the Minister at the Dispatch box. To give him credit, he seemed to give us a Cooks tour of the enterprise initiatives introduced by the Government. However, the grim reality is that we again have an upward trend in long-term unemployment. The Government have thus failed to come to grips with the economy's problems.
The Opposition welcome a debate on enterprise and deregulaton, because we take the subject very seriously. The Labour party very much values the notion of enterprise, but abhors unnecessary regulation, because it makes the lives of our citizens and companies more difficult.
§ Mr. Sheerman
I should like to continue my speech further before giving way.
We believe that two challenges face the country in our search for the successful creation of wealth. During the past seven years the Government have failed to create that wealth. When we refer to wealth, we mean wealth for all our people.
Those twin challenges in our search for the creation of wealth are meeting the challenges of international markets and of fast-changing technology. The country must overcome those challenges if it is to create wealth and jobs. However, there are fundamental differences of view between Labour Members and the Government over what 676 enterprise and deregulation mean. We believe that enterprise and deregulation should be liberating our country so that it can create that wealth. But the Government have given those twin notions a rather sinister and unique interpretation. They have come to mean not, as many of us might have thought, the liberation of our fellow citizens and their enrichment either individually or as a group, but the taking away of the fundamental rights that people have had for many years. I refer, for example, to rights such as safety and health at work, the right to a decent wage, the right to maternity leave, to trade union activity and to job security.
§ Mr. Trippier
If the hon. Gentleman is serious about enterprise— and it is quite a revelation to us that the Labour party is interested in it——
§ Mr. Trippier
It is a revelation to us. Today is only the second time that I have heard the Opposition Front Bench say that. But if the Labour party is serious about enterprise, why did it omit to mention small businesses in its last two manifestos?
§ Mr. Sheerman
The Minister had three quarters of an hour in which to make his speech, and he knows that what he said about our last two manifestos is not correct.
The Government's interpretation of enterprise and deregulation is not what we mean when we use those words. Many of the measures supported by the Government are rather sinister. Indeed, I hope to discuss some of the aspects which are more likely to enslave our people than to set them free.
The measures contained in the two most recent White Papers have been offered by a Government who offer precious little else to the unemployed, the employed, small businesses or the economy as a whole. The Minister's presentation was not complete, and my hon. Friend the Minister for West Bromwich, East (Mr. Snape) drew attention to that when he intervened to refer to local enterprise in Sandwell. Since 1979 we have seen the devastation of industry throughout the country. My constituency, which was so strong in textiles, engineering and chemicals, has been devastated. Large and medium-sized firms have been devastated. This has happened because of the exchange rates that the Government have inflicted on them, as well as cripplingly high interest rates.
§ Mr. Sheerman
I shall give way later.
Companies went down like ninepins throughout the 1980s, and many companies are still facing serious difficulties. When we ask our local business men what they want, they tell us that they do not want numerous small enterprise schemes: they want a Government with a sense of direction, interest rates brought down and a stimulation of the overall economy by Government-led enterprise.
The measures offered in the past two packages of deregulation offer precious little to most sections of our community. They are part of the Secretary of State's baggage. We know that the real power in the Department of Employment lies with the Secretary of State, Lord Young, not the House. Lord Young carts his baggage around Whitehall as he glides from No. 10 to the Department of Trade and Industry and now the Department of Employment. He cuts regulations and encourages enterprise everywhere he goes. I have no doubt 677 that many of those now languishing in Her Majesty's prisons cannot wait for the day when the noble Lord becomes Home Secretary and promptly sets up schemes to punish the wicked prison officers who are responsible for all the red tape and regulations, and begins to reward the enterprise of those planning or aspiring to escape.
Only a touch of humour is allowed when talking about Lord Young, because humour plays a small part in the story of everyday regulation and entrepreneurs. The story involves people losing their jobs. Of course, the Opposition do not like us talking about job losses.
§ Mr. Sheerman
Not for very much longer.
The Government cannot bear it when we discuss unemployment statistics. They cringe in their seats when we talk about 4 million being unemployed. The story involves people losing their jobs, often unfairly and without redress, having been stripped of the protection of wages councils. They are unable to resist environmental deterioration.
§ Mr. Sheerman
They are unable to protect their lives, even in terms of the environment, because of a lack of planning protection. People encounter serious risks at work because of the weakening of health and safety safeguards.
Having considered carefully the Government's actions over the past year and the two White Papers entitled "Lifting the Burden on Business" and "Building Business … not Barriers", we find that the Government could be trying to do two things. First, to give them the benefit of the doubt, they could genuinely believe that their measures will help the economy and do some good. I suspect, however, that there is another deeper and more sinister motive. I believe that they understand that the sort of measures that they have introduced help to deflect attention from their total and absolute failure to tackle the fundamental problems that besiege our economy and their incapacity to begin the process of rebuilding it on firm foundations.
We know only too well of the Government's belief in the virtues of the market. They have a profound ideological belief that merely to free market forces will free the individual and the company and bring about inevitable wealth creation. No one likes unnecessary regulation or red tape. The Opposition applaud the sweeping away of rules that have outlived their usefulness, or the eradication of regulations that make life more difficult for successful business generation. The Minister was talking to his Parliamentary Private Secretary and did not hear my last remarks. I repeat, the Opposition applaud the cutting of unnecessary red tape, but cutting through red tape is very different from doing away with rules and regulations that are often the hallmark of a civilised society, giving and ensuring rights of citizenship, employment protection, fair play and limiting the dislocation that is caused by planning abuse. We must be exceedingly careful in arriving at a balance. The Minister thinks that the Government have the balance about right, but anyone reflecting on the Government's proposals would be dubious about that claim. One person's red tape is always, or possibly, another person's personal protection.
678 The Government claim to be striking the balance, but we cannot agree with that. Their belief in deregulation and the market has been elevated to an article of faith. As we know, it is part of the Prime Minister's rhetoric and the ideological baggage of the Secretary of State for Employment. That is dangerous because, as a creed, it is so simplistic that it leads to ideological fixation.
§ Mr. Thurnham
Perhaps the hon. Gentleman will enlighten the House on the Opposition's ideological fixation on Clause Four which has been the cause of so much loss of enterprise. When does the Labour party intend to get rid of it?
§ Mr. Sheerman
In pursuing Clause Four we are applauding enterprise. We believe that the rewards of enterprise should be shared among all the people, not just a few of them. I take that intervention much amiss from someone who in Committee said that we should return to sweat shops. I believe that the pursuit of Clause Four is compatible with the spirit of enterprise, but enterprise that creates wealth for all our people.
§ Mr. Thurnham
On a point of order, Mr. Deputy Speaker. The hon. Member for Huddersfield (Mr. Sheerman) has misquoted me. If he cares to refer to the Hansard report of the proceedings of the Committee on the Wages Bill, he will see that I referred to wealth shops., not sweat shops.
§ Mr. Sheerman
The hon. Gentleman will have a chance to make his own speech. I presume that it will be more of the same.
The Government's creed is dangerous because it is so ideological and simplistic that it will lead to an ideological fixation. Those who peddle it court the label "ideologue", and there is no better example in the Government than the Under-Secretary of State. The evidence of this is the single-mindedness with which the market philosophy has been presented as the saviour of the British economy. The Government can see nothing but the freedom of market forces. That doctrine continues to be presented despite all the evidence of the past seven years, the disaster that has befallen our manufacturing capacity and the testimony of the 4 million who are unemployed.
We now have the emergence of Lord Young's review unit — the enterprise and deregulation unit. There is policing of Whitehall thinking in every Government Department to ensure that the correct ideological line is toed. That is the centrepiece of the recent and most pathetic White Paper.
It is clear that we have a Government with an ideological fixation rather than a practical programme of measures to help British industry. We know that that is so because of the gap between the rhetoric of Ministers and the reality of what they are doing. The claims made for the proposals in their White Papers and other similar measures are pathetically over-inflated. They range from the claim of the Financial Secretary to the Treasury, who says that unnecessary regulation has lost 1.6 million jobs to the British economy, to the claim from other quarters of the Government that their measures will help to generate an enterprise culture and free business to create significant new wealth.
Indeed, The Times leader of 23 May commented:Even judged by such sympathetic standards, however, the upbeat presentation cannot disguise the disappointing contents of the latest deregulation White Paper.In similar vein, the Financial Times said: 679Micro-economic reforms are necessary but they need to go together with appropriate macroeconomic policies and to be directed towards those areas of the economy on which they will have a really significant effect.
§ Mr. Cash
The hon. Gentleman has quoted from newspapers. I am sure he will have read The Times of 5 June, which contained a special report on small business. The newspaper said:The Labour Party, taking the wide view in its economic policy, has yet to examine the situation at a small business level.I am sure The Times consulted the hon. Gentleman's party before it published the article. That article shows that the Labour party has done almost nothing to examine the question of small business, and what we have heard today has added very little to it.
§ Mr. Sheerman
The hon. Gentleman does not know what is going on in the Labour party. The Labour party is, and has been, committed to the generation of small business and to helping small business and enterprise. The Labour party will present to the electorate, at the next general election, a package of policies for small business and enterprise that will be more acceptable and attractive to the electorate and the small business man than anything the Conservative party has done, will do or promises to do.
The claims that we have heard this morning about Conservative party policies far exceed any possible achievable results. That part of the Department of Employment which the Paymaster General retains must know what a limited effect, in terms of job and wealth creation, the range of measures has. Perhaps the Paymaster General lives in a different world from most of us. Recently, he was quoted as asserting that he and the Government were doing the same things that Lord Salisbury would have done 100 years ago. I must tell the Paymaster General that the world today is different from the world in Lord Salisbury's day. This is the age of microchips and multinationals. We have lost an empire and protected markets. We are struggling to survive in a turbulent international environment against a background of rapid changing technology and with a wholly inadequate capital machine and manpower stock to compete effectively. None of the policies mentioned this morning by the Government Front Bench do anything to create that kind of base. Indeed, the Minister actually boasted about the freeing of exchange controls.
§ Mr. Sheerman
The freeing of exchange controls has allowed footloose British capital to flow and to invest not in Britain, but in our competitors in other parts of the world.
Many of the implications of the recent measures are illustrated in their effect on real workers in real industries, many of which, such as the printing and the building and construction industries, are dominated by small business. Let us consider the implications for them. Labour Members have mentioned, by way of intervention, the amazing suggestion that, in this day and age, sacked workers must pay a fee of£25 to appeal against wrongful dismissal before a tribunal. If a worker wins his case, he will get the£25 back. If he loses his case, he will lose not only his job — and all that means to persons who, in most parts of the country, have poor prospects of getting 680 another—but his£25. A caring Government would not come forward with such a proposal. The Minister said that is still open for negotiation, but it is appalling that it had to be mooted even in the first place.
The qualifying period for providing detailed reasons for dismissal has been extended from six months to two years. That is another blow to workers' rights, which the Minister says does not matter. In this day and age, we must be interested in the rights of women in the workplace. Many talented women have never been allowed to use their abilities to the full—to get jobs that do justice to their talents and to be rewarded properly for those abilities. The Government have struck a further blow on working women. Until now, a firm with fewer than five employees was exempt from the obligation to allow women to return to work within 29 weeks of the birth of a child. That will be increased to apply to firms employing up to 10 employees. That is another cruel blow to the rights of women to work, to pursue a career and to return to it after they have had a child. It is a disgraceful and mean suggestion. I am surprised that the Minister supports such a measure. I see that he is not begging to intervene.
§ Mr. Michael Forsyth
Is the hon. Gentleman aware that in Italy all firms which employ fewer than 15 people are exempt from all regulations regarding health and safety benefits and so on? The effect has been a dramatic expansion in employment and the growth of such firms. Does he condemn the ideology of the Italian Government for that?
§ Mr. Sheerman
I should have thought that my responsibility and that of the Government was to the rights of people in this country. We believe in the protection of workers at work. We believe in the rights of women to work and to go back to work. We do not have to look to Italy in terms of the rights and the abilities of women to make their way in society. In fact. Italy is one of the last countries I would look to in that respect.
Regarding the right to time off for trade union matters, another damaging blow has been struck against genuine trade union activity in the workplace.
Amazingly, firms with fewer than 20 employees will be exempted from producing a written health and safety policy. The Government may think that it does not matter if they start trimming health and safety regulations in small business. Once again, health and safety at work are seen by the Government as not important in small firms. The Minister glided over the fact that most accidents at work occur in those small firms on which he has turned his back.
§ Mr. Trippier
I have already made that point. I wish to make it clear to Opposition Members that one of the major reasons for a higher incidence in accidents is that the material for which we are responsible, through the Health and Safety Commission, is misunderstood or not complied with in many instances. It is simplification, not deregulation, which will put that right. The hon. Gentleman is wrong to accuse me of wanting to deregulate health and safety.
§ Mr. Sheerman
The Minister is absolutely obsessed with pamphlets. It is not a matter of the clearness of pamphlets. The fact is that in real industries, such as the building and construction and manufacturing industries, the accidents occur in small firms. If we give up on regulation, having 681 cut back the number of factory inspectors by 200 between 1979 and 1984, how can we police and regulate whether employers adhere to proper health and safety standards? The fact is that the Under-Secretary of State and the Government do not care. The increasing number of deaths and serious injuries in small firms is a national scandal, taking us back to Victorian days when people were killed and maimed and no one cared. That is what the Government's deregulation policies are doing.
§ Mr. Jeremy Corbyn (Islington, North)
I heartily endorse my hon Friend's remarks about the Tory attitude to health and safety. Does he accept that one problem is the inadequate number of health and safety inspectors and the many loopholes in the regulations? Many serious health hazards and accidents at work could be prevented if the health and safety inspectorate were strengthened.
§ Mr. Sheerman
I agree with my hon. Friend. We do not want to inhibit small firms, but we owe a duty to people to protect and ensure their health and safety at work. That has been a long tradition. It used to be a bipartisan policy. We used to take it for granted that civilised Governments and political parties believed in protecting people at work, but obviously that policy is long gone in view of the present ideological climate of the Conservative party.
§ Mr. Trippier
Will the hon. Gentleman, either now or later, refer to that part of the White Paper that says we will deregulate on health and safety matters?
§ Mr. Sheerman
I have already given chapter and verse on the reduction in standards. Does the hon. Gentleman deny that firms with fewer than 20 employees will be exempted from producing a written health and safety policy? If that is not the document, will he say so?
§ Mr. Sheerman
If I start speaking in Italian, perhaps some Conservative Members will start to understand what we mean by health and safety at work. Unfortunately, my competence in Italian is not sufficient for me to use it at the Dispatch Box. I challenge the Under-Secretary of State to deny that policy.
What is worrying about the Government's proposals is their simplistic solution and rigid ideological trains of thought at their worst. Real problems are set to one side; they are not taken seriously. The Under-Secretary of State refused to deal with the problems of exchange rate fluctuations, interest rates, investment in Britain, and so on.
§ Mr. Sheerman
Those are the macro issues to which the Financial Times referred.
There is nothing wrong with deregulation done in a practical spirit with regard to a balance of interests, respect for the environment, concern for employment rights and a genuine interest in the fate of workers and consumers as well as private business. That is our view. There is nothing wrong with the right balance; nor is there anything wrong with enterprise. The problem is that the Government fail to see that enterprise must start at the top.
682 What we want, and what the Minister did not mention, is an enterprising Government who recognise that it is their job to be enterprising. We want a Government who will take responsibility for creating a framework for strong economic performance and who understand how our international competitors use planning and intervention in the market in an innovative and enterprising manner. That is what the Government cannot grasp and take on. Our competitors use innovation and inventive and enterprising policies and intervene in the market to ensure that their industries can compete easily with ours. That is the success story of other countries which are doing so much better than us.
The Under-Secretary of State boasted about how much training the Government were providing. What are the facts of deregulation in training? Instead of freeing enterprise, what happened when the Government abolished the industrial training boards? The Minister said that when we get rid of industrial training boards, private industry with free enterprise workers will train the work force.
§ Mr. Sheerman
All the printed evidence shows that private industry spends 0.15 per cent. of turnover on training, compared to our international competitors who spend between 1 and 2 per cent. of turnover on training. That is the reality of liberating enterprise without any regulation.
The Under-Secretary of State did not mention research and development and the extent to which freeing the spirit of enterprise had created research and development in our industries. There is an appalling level of research and development in most of our manufacturing and industrial companies. Without Government intervention, direction and incentives, research and development, like training. will not take place.
§ Mr. Sheerman
The hon. Gentleman has proudly boasted of enterprise schemes. If the country does not invest in training and in research and development, our economy's long-term prospects will be dismal. The hon. Gentleman knows that, but he did not address his remarks to the fundamental issue. The teal thrust of our economy will come from the major manufacturing companies. If they do not succeed, the small firms — yes, they are valuable, but most of them are running and working in the wake of the large companies—will perish. The Under-Secretary of State does not see that the real objective is to get the heart of our economy and manufacturing employment researching, developing and training its work force. If the Government do not do that, all the work of small business will be to no avail.
This morning, we heard of the wonderful parade of work that will be done for small businesses, but there was no understanding of the fact that, if prime manufacturing industry is allowed to go under, there will be nothing left and small businesses will die. Those small businesses live on the business of prime manufacturing units. There was so much rhetoric from the Under-Secretary of State that he missed the point about the reality of the manufacturing future for our people and our country.
683 I do not want to take up as much of the time of the House as the Under-Secretary of State. We want a Government who will force companies——
§ Mr. Sheerman
After the next election, the Labour Government—perhaps not many Conservative Members will be here then and perhaps the Under-Secretary of State will be showing his enterprise in stockbroking—will cooperate with companies in a planned way to ensure that investment, training and research and development take place and that there is investment in this country, not in other countries. Such developments will ensure that we can compete effectively with our rivals, by deregulating —[Interruption.] Does the hon. Member for Watford (Mr. Garel-Jones) wish to intervene?
§ Mr. Cash
The hon. Member for Huddersfield (Mr. Sheerman) is making great play of the fact that so-called declining industries are not playing their part. GEC, which is in my constituency, has just made £1.5 million available to a college for research and development.
I should like to take up many points in the hon. Gentleman's speech, but I will not do so now. However, I may refer to them when I speak later.
§ Mr. Sheerman
The hon. Gentleman has quoted the wrong company. Its chairman told the House of Lords Select Committee, as did Sir John Harvey-Jones, that we cannot base the future of our country on the service industries and that, if we do not pay attention to prime manufacturing industries, we are lost.
§ Mr. Corbyn
Is my hon. Friend aware that since Lord Weinstock took over GEC, 15 or 20 years ago, there has been carnage in jobs at the Stafford works and related factories in that area, which has led to serious levels of unemployment and the destruction of the electrical engineering manufacturing capability of this country by a process of asset-stripping by that gentleman?
§ Mr. Sheerman
I take note of my hon. Friend's serious and worrying point.
In many ways the Government have attempted to hijack the word "enterprise" and to use it as though they invented it. I shall illustrate what a real spirit of enterprise might do for our country — a spirit of enterprise interpreted in a rather different way. I would like a Government — especially the Departments of the Environment, Health and Social Security and Employment — with the vision to accept that this country suffers deep problems of housing disrepair and homelessness, to say, "There are hundreds of thousands of unemployed building workers. Construction is a great engine for economic growth; it has minimum import implications and a healthy multiplier effect when it starts growing. Let us get these unemployed building workers back to work building houses for people who want homes. Let us get them moving into that area, building up our country and getting rid of the dreadful scourge of unemployment." What a spirit of enterprise that would show.
684 A careful and detailed analysis of this country shows that such initiative and enterprise would lead to significant savings in public expenditure.
§ Mr. Trippier
With all that proposed Government expenditure, will the hon. Gentleman tell us by how much taxation would need to be increased and what rate would be levelled on, for example, the small firms that he purports to support?
§ Mr. Sheerman
Does not the Minister believe that it must be good sense and good value both for our country and people to pay people to work, to get them into the taxpaying bracket and to create real assets to hand on to our children? Surely that must be good value, even if it means an increase in taxation — [Interruption.] Conservative Members know that I am giving not a specfic answer this morning, but an overall picture of what the next Labour Government will do. They will be an enterprising Government who will invest in people, in assets and in the future of our country.
This Government, in so many areas of their policy, have abolished and stifled enterprise. For example, some of the best local authorities were leading the way in local enterprise. The Minister referred to Sandwell and its enterprise initiative. What about the enterprise initiatives of the metropolitan counties and the GLC which the Government abolished? They were leading the way in much of the social and industrial enterprise in their local economies.
Positive, not negative, enterprise is what the Labour party believes in and what our country so desperately needs. We must await the next general election, when a Labour Government will release a spirit of enterprise so that all our people can work together to create real jobs and real wealth—wealth that will be distributed fairly to all the people.
§ Mr. Nigel Forman (Carshalton and Wallington)
The House will not have failed to notice that during the 40-minute speech of the hon. Member for Huddersfield (Mr. Sheerman), with its characteristic windy rhetoric, he devoted only two or three minutes to discussing what the next Labour Government. if there were to be one, might do for enterprise and jobs.
I noted two salient characteristics in the small, positive aspect of the hon. Gentleman's speech. The first concerned the objective to plan to ensure that this, that and the other happened. It is clear that behind that lies an interventionist philosophy that was severely discredited — not only in this country but in all free economies — during the 1970s.
Secondly, the hon. Gentleman made a rather guarded admission that a Labour Government would increase taxation to pay for their approach. The figures on the record, which have not been seriously challenged, suggest that a Labour Government would increase taxation by at least £24 billion, and that is probably an underestimate. Therefore, the House should treat the policy part of the hon. Gentleman's speech in the spirit it deserves.
By contrast, I pay tribute to my hon. Friend the Minister for his excellent and positive speech which set out a whole range of measures in which the Government are engaged to stimulate enterprise and create more jobs. Against the background of the recent White Paper 685 "Building Businesses …Not Barriers" the Government have clearly established that there is much that we can still do to foster a tendency that is already evident in the economy—the creation of new jobs and new businesses.
I was heartened by what my hon. Friend said about the creation of 130,000 net new businesses during the past three years under the policies established by this Government. That, more than anything else, shows that if we create the right conditions for employment, small businesses will follow. What are today small businesses will, in many cases, tomorrow become the larger thriving businesses that will take on more people.
§ Mr. Forman
I do not have a detailed breakdown of the figures; I took them from my hon. Friend's speech. However, I have no doubt from my experience in my constituency that a large number of new businesses have been created—some because of the excellent enterprise allowance scheme which has been such a positive measure.
I wish to refer in a little detail to the important question of balance between regulation and deregulation — a point which, in all fairness, was touched upon by the hon. Member for Huddersfield. The Government rightly contend that in this country—and, indeed, in much of Western Europe—there is an excess of regulation, and has been for historic reasons for some considerable time when compared with the United States. Paragraph 1.12 of the White Paper makes the point that further deregulation along the lines of that carried out in the United States during the past 10 years could create a large number of new jobs.
One thing from which I think the House would benefit, not necessarily today, but subsequently, is to have fuller information than could be given in one paragraph in the White Paper about exactly how and to what extent the United States has deregulated over that period. One brief paragraph, which makes an important point, needs to be elaborated on on a future occasion. For example, it would be interesting to know the extent to which it is a matter of things not being regulated in the first place in the United States, or of active deregulation. There is some ambiguity in that paragraph. I think that my hon. Friend the Parliamentary Under-Secretary would do well to use an appropriate occasion to spell out further some of the benefits of the American model.
It is true that where regulation is a restraint on trade, it is absolutely right for Government policy to be founded on strong deregulation. I shall give two or three examples. There is no doubt that national regulations in the European Community have prevented the emergence of a genuine Common Market. It is most welcome that the Government's policy, in alliance with many other member Governments, is to make further progress, particularly during our presidency of the EEC in a little while.
Secondly, there is no doubt from historical evidence that trade union restrictive practices, based not so much on legislation, but more on historical collusion between employers and unions, have been against the national interest. That merits an approach of deregulation, which the Government have taken. I need cite only the examples of the printing industry, which is topical, or, traditionally, shipbuilding, to make my point.
Thirdly, to show that I am in a spirit to be fair about those matters, I say that there is no doubt that this country 686 has suffered over many years from what I describe as professional or commercial monopoly practices. Examples are the solicitors on conveyancing, or the British Medical Association's hostility to homeopathic medicine. Until recently, there was a self-regulating ban in the City of London on multiple capacity in financial services. All those things are examples of the barnacles of regulation which have grown up by collusion between private interests over many years. The Government are absolutely right to tackle all those things. Deregulation is bound to help the progress of the economy and the creation of jobs if it directed to those purposes.
§ Mr. Michael Forsyth
Does my hon. Friend put in the same category the recent contract negotiated between the pharmacists and the Government, which restricts the right of new pharmacists to open up in competition and dispense National Health Service products?
§ Mr. Forman
I do indeed. My hon. Friend has chosen a good example. I am afraid that it demonstrates how widespread is the almost automatic approach in too much of the British economy.
It is much more dubious to seek to deregulate on a large scale where the essence of the regulation involved is genuinely and widely recognised to be for the common good, public safety or the protection of the environment. In such cases, deregulation might please the business lobbies and might eventually increase profits as a result of reduced compliance costs, but will not necessarily produce many or any new jobs. Let me give a few examples of what I mean.
I represent a constituency that is very much interested in the future of the green belt. There is no doubt that any serious infringement of the green belt in London or the south-east, or any major revision of the Town and Country Planning (Use Classes) Order 1972—which I understand is to be the subject of a further consultation document, perhaps next week—would be a matter of considerable concern to many of my constituents. They believe that existing regulations in those spheres help to protect the quality of life in residential areas. They are right to believe that.
§ Mr. Corbyn
I welcome the hon. Gentleman's remarks about protecting the green belt. Does he agree that, by the same judgment, it is wrong of the Government to introduce special development orders for nuclear dumping sites? Does he not agree that there should be normal planning requirements for them?
§ Mr. Forman
That demonstrates the unwisdom of giving way to the hon. Gentleman. There is little relationship, either direct or indirect, between the point that he makes and the point that I was seeking to make about the genuine preservation of residential areas.
Another example of regulation that needs to be preserved is this. If the Government proceed, as they say they might in the White Paper, with the rationalisation of air pollution control—I understand that there is also to be a forthcoming consultation paper on that—or with simplified licensing arrangements for water abstractions and effluent discharges, notably in the context of water privatisation, once again, we must look carefully at such measures. Those are examples, in what I would describe as my balanced approach, of regulation that needs to he carefully preserved and used in a modern, sensible way.
§ Mr. Cash
I always have the greatest respect for my hon. Friend's opinions, fairness and sense of balance. Does he acknowledge that in the White Paper "Building Businesses … Not Barriers", paragraph 5.2 states thatThe chapter on 'Planning and Enterprise' in 'Lifting the Burden' reaffirmed the Government's concern to protect and enhance the environment in town and country, to preserve our heritage of historic buildings and rural landscape, to conserve good agricultural land and maintain the Green Belts"?That chapter is well written. The White Paper shows how the balance that my hon. Friend would like to see is in fact being achieved without derogating from the rights of individuals, which we all want to protect.
§ Mr. Forman
I am grateful to my hon. Friend. That endorses the importance of the point that I was seeking to make. It is not that I do not trust the Government—I trust them implicitly. The point is that I wish my hon. Friend the Minister, and through him all my right hon. and hon. Friends, to be acutely aware of the strength of public feeling in those areas.
§ Mr. Sheerman
Is the hon. Gentleman particularly worried that the present Secretary of State for Employment's only real claim to being an entrepreneur is as a property speculator?
§ Mr. Forman
I am not at all worried about the provenance of the Secretary of State. He is doing an admirable job in his sphere of responsibility. He is one of the most positive members of the Government.
There is one other example where I express a small concern and put down a marker, in my willingness and keenness to preserve the balance. The Government speak in paragraph 7.10 of the White Paper of raising the hours of work thresholds above which employees qualify for the main employment rights. Once again, the Government need to be cautious in that area because those are far-reaching measures. I have nothing against part-time work. Indeed, the expansion of part-time work has been one of the positive characteristics of recent job creation. But we must be careful of a society that might emerge, in which there is a stratification of the labour market and in which a growing proportion of those in work find themselves without the normal protection and understandings that would be available to full-time workers. The Government need to be cautious before going too rapidly in the direction suggested in paragraph 7.10.
The overall picture that I draw is that deregulation has a very important part to play in stimulating enterprise and jobs, but the balance must be preserved. More important even than the thrust of deregulation are the Government's other policies to facilitate and enable the creation of new employment. Let me give some examples. The enterprise allowance scheme, to which my hon. Friend the Minister referred, is an excellent example of the success of the Government's enabling policy. I should like to press, as I have done in pamphlets and elsewhere, that the qualifying conditions and other aspects of the scheme should be further relaxed to make it demand-led. Secondly, I welcome very much my hon. Friend's remarks on the loan guarantee scheme, and the Budget extensions to the scheme. Once more, it is an example of the effective use of public money. If one can get a net cost per job of some£700, as my hon. Friend said, obviously that is a cost effective scheme.
Thirdly, I repeat my plea for the Government to continue efforts to persuade our EEC partners to raise the 688 VAT threshold from its present far too low level of£25,500 to nearer£50,000. The Government's idea of an optional maximum threshold, about which more could be said, is good in the sense that it would allow more flexibility in what seems to me to have become rather tight arrangements.
My final example is the promotion of tourism, both at home and abroad, and the use of a range of policy intruments for intelligent regional policy, combined with institutional mechanisms which will bring together public and private finance. The Government would do well to consider public procurement and use as a model the Scottish Development Agency which has been successful in attracting investment. The Government would do will to encourage the embryonic Northern Development company which typifies the mixed public-private approach that I recommend.
Such changes in the climate for enterprise make it easier to encourage jobs and to make changes of a positive character. However, the Government often make changes easier to make prospectively than retrospectively. We must always carry public opinion with us when contemplating such changes, especially in those areas around which I have put some markers.
It is worth bearing in mind that a growing number of people put a high value upon the quality of life. In many people's minds that is associated to some extent with regulations in the environmental and similar spheres. The Government are wise to concentrate on trying to eliminate some of the estimated compliance costs, which all new legislative measures involve, especially those emanating from the European Commission in Brussels. Extra compliance costs on the private sector produce extra enforcement costs to be borne by the public authorities—central and local government.
I support the continuing work by the enterprise and deregulating unit in the Department of Employment, but, like everything else, progress should be on a balanced basis. We must guard against going too far in either direction.
I am glad to have contributed briefly to the debate. I wish the Government well in their efforts to encourage enterprise and new jobs without abandoning the essential regulations necessary in a civilised society.
§ Mr. Paddy Ashdown (Yeovil)
I listened with pleasure and much agreement to the speech by the hon. Member for Carshalton and Wallington (Mr. Forman). His wise comments on deregulattion and the balance that needs to be struck will bear reading in the Official Report on Monday, particularly by those in his party who seem to be driven more by ideology than by pragmatism or practicalities.
I apologise for the fact that I shall have to leave the debate for about an hour about midday, but I shall return to hear the winding-up speeches. I am sorry that I shall miss the speeches by other hon. Members.
We can all understand why the Government wish to have a debate to show off their achievements in enterprise and deregulation, but it is sad that it is being held on a Friday. All our debates on small businesses and enterprise seem to be held on a Friday. The last exception was on a rare alliance Supply day, when we chose the subject for debate mid-week. The Government are right to have this debate.
689 I congratulate the Government on beginning to tackle the task of altering Britain's culture to give appropriate standing, status and impetus to enterprise. Uncharacteristically, I want to pay tribute to the Under-Secretary of State for Employment, the hon. Member for Rossendale and Darwen (Mr. Trippier), whose long commitment to and knowledge of the small business sector is broadly respected and well understood by the small business sector.
I hate to temper that comment with some harsher words. I do not call into question the hon. Gentleman's personal commitment or the respect in which he is held, but I have rather less confidence in the Government's commitment. Shifting the responsibility from the Department of Trade and Industry to the Department of Employment and the rest of the evidence available shows that the Government are now regarding enterprise and the small business sector in the context of the battle against unemployment. They see it as a soft option.
§ Mr. Trippier
I appreciate that there could be balancing arguments about whether the responsibility for small firms should remain in the Department of Trade and Industry or be moved to the Department of Employment, but I should have thought that the hon. Gentleman would acknowledge that since the change last September the policy for small firms has assumed a much higher profile.
§ Mr. Ashdown
I am happy to concede that, but the Government's attitude is driven by the desire to use enterprise as an instrument — perhaps the only instrument — to bring down the scandalous unemployment levels. I am worried that enterprise, which is so important and vital to the industrial restructuring of Britain, is being treated in some senses as a PR exercise. There is far too much froth and far too little substance in what the Government say.
As I go round the country I find, like the hon. Member for Huddersfield (Mr. Sheerman) and others, that the first complaint that small businesses make to me is about the generally low level of economic activity. Valuable and important though enterprise is, it is not a substitute for economic regeneration. It is only part of a general plan for economic regeneration, which is so desperately needed in Britain. Encouraging enterprise can be successful only if it takes place in the context of a thriving economy, and in particular of a regeneration of the manufacturing sector, one-sixth of which has been wiped away since 1979. I accept that some of that is to do with world recession, but some of it is a result of the Government's general and rather surprising dependence upon the miraculous power of the market place. They believe that that will achieve all that needs to be achieved. I say that while dissociating myself from the comments and tone of the hon. Member for Huddersfield, who seems to think that everything can be planned into existence and that prosperity can be achieved because it is in the will of the Government.
We need to establish a partnership between Government enterprise and small businesses — I congratulate the Government on having begun one side of it—to regenerate the economy. That partnership cannot be driven by ideological concepts on either side of the equation.
§ Mr. Cash
One of our difficulties is that the alliance parties so often try to have it both ways. An SDP industrial policy document speaks of 690a situation in which there is little prospect of a significant increase in employment in large enterprises in either the private or public sector".The hon. Member for Yeovil (Mr. Ashdown) argues in support of enterprise, while saying that we must stimulate the larger public and private enterprises. The SDP document contains a realistic appraisal of the position, which we acknowledge.
§ Mr. Ashdown
I suppose that it must be because of the hon. Gentleman's training as a lawyer that he has the habit and skill of deliberately misunderstanding what is said. I did not say that we can necessarily generate new employment in the larger industries, whether state or private. I share the Minister's view that small industries will be the employment growth sector. The hon. Member for Stafford (Mr. Cash) overlooks — probably deliberately, because he is too intelligent to do so accidentally—the fact that small industries depend on the wealth and prosperity created by larger firms. We cannot pass Britain over to a service sector industry.
The experience of the United States has proved time and again that effective service industries depend on an effective manufacturing and industrial sector. That is the key point. I make it, the SDP makes it, and hon. Members in all parts of the House make it.
§ Mr. Ashdown
I have a number of points to make. I shall allow the hon. Gentleman to intervene, but that must be the last intervention that I take in this speech.
§ Mr. Thurnham
The hon. Gentleman makes the same mistake as the hon. Member for Huddersfield (Mr. Sheerman) in thinking that small firms depend on larger firms. The statistics from our major competitors show that it is the other way round, and that larger firms depend on successful small firms. We have only half as many small firms as our competitors.
§ Mr. Ashdown
The hon. Gentleman is deliberately misreading the figures. Japan and the United States have a much larger small industry sector than we have — I look forward to the day when ours is equally large — and small firms in those countries are an essential part of the economic infrastructure on which larger firms depend. The subcontracting part of the manufacturing sector needs small firms, but those small firms depend on the prosperity of the larger firms. The statistics referred to by the hon. Gentleman prove the exact opposite of what he suggested.
The regeneration of our manufacturing sector is an essential ingredient — no one claims that it is the only factor — in a decent strategy for our economic regeneration. The Minister rightly pointed to the Government's record on inflation. I agree that it is a good record. They have reduced inflation and deserve congratulations, but that compliment must be tempered by setting our record against the performance of our competitors. When the Government came to power in 1979 we had the highest unemployment and the second highest inflation in Europe. We still have the highest unemployment and we still have the second highest inflation. As any small business man knows, inflation in Europe is significantly lower than in this country, and real interest rates in Europe are very much lower.
Deregulation and enterprise are two parts of the same debate. I have no doubt that the Government's moves on 691 deregulation have been welcomed by small businesses, and I do not wish to diminish the start made by the Minister or the energy that he puts into his work, but the Government's efforts remain patchy. In too many cases the left hand seems not to know what the right hand is doing. For example, the Government's proposals on family credit would dump an enormous new burden on small businesses. Those proposals may be reviewed, and we shall have to wait and see how they eventually come out.
The Government increasingly treat small business men as unpaid tax and social security collectors. That worrying trend hits small firms harder than it does larger companies. The cost of acting as a Government tax collector is proportionately greater for a small firm. There are figures to prove that fact, and I hope that the Minister will produce more figures, because I believe that they will reveal a worrying trend. The National Federation of Self Employed and Small Businesses has wittily said that it seems appropriate that the key Minister involved in this area should be the Paymaster General, because the small business man feels like a paymaster general for the Government.
I am proud to have led my party in its opposition to the Data Protection Act. We were the only party to vote against the Act, and we did so at least partly because it will dump huge new burdens on small businesses. The form that small businesses using new technology have to fill in under the Act is a horrific and leviathan document, which most do not understand. When I filled in my form I had to get consultants to advise me. There has been a proliferation of agencies to assist small businesses.
All too frequently, deregulation has taken the shape of an attack on employment rights. I agree with the hon. Member for Carshalton and Wallington that a closer study of United States' experience would prove valuable. I understand that not one of the deregulation measures in the United States has had anything to do with employment rights. This is an important factor which needs to he taken into account. I accept that there are fewer employment rights in the United States, but we cannot ignore the fact that if new jobs have been created there, it has not been done by an attack on employment rights.
It has been suggested that deregulation has accounted for an upsurge in employment in the United States. I urge the Minister to be cautious about using the statistics in their raw state. I understand that a young person in the United States who has never had a job does not go on the jobs register. In addition, there are hundreds of thousands—perhaps millions—of illegal immigrants in the United States, and whereas those who get jobs are recognised as being in the employment market, those who have no jobs dare not register.
§ Mr. Ashdown
I hope that the hon. Gentleman will forgive me if I do not give way. I am sure that he will have a chance to speak, and I do not want to take up too much time.
Of all the deregulation measures that the Government have introduced, the one that I cannot understand—it makes no sense in justice or common sense — is the attack on the wages councils. I cannot see that it will create any significant uplift in employment. I do not believe that 692 paying less to people who earn the very low wages that some wages councils have sought to protect will create more jobs. The Government's action is motivated more by ideology than by any other consideration.
Enterprise is the second part of the debate, and I should like to repeat a strategic point to the Minister. I regret that 99 per cent. of the Government's excellent measures for encouraging enterprise are still directed towards new starts. I understand why that is done. The Government understandably want to take credit for the maximum number of new starts. They are the easiest development to measure and to crow about.
However, much of the Government's enterprise policy can be described as the policy of the Cornish wrecker. Lights are hung out on the rocks, but still one third of those embarking on new starts go down. I do not want to diminish the fact that that proportion has been reduced and our record is better than that of the Americans, but each failure is an individual personal tragedy. Not only is a person made bankrupt, but he loses his job and perhaps even his house. It is nonsense to suppose that we could ever ensure that there were no failures, but we must keep working at the problem.
The Government ought to shift the emphasis towards giving advice and ensuring that small firms survive. That would reduce the number of failures and contribute much more significantly to the growth of employment and prosperity. It is at the point of expansion that the quantum leap from one employee to three can be made and significant prosperity can be generated.
I believe that we need a better system of measurement of the reasons why firms fail, and that more Government resources and assistance should be put into that area. If we are under tight budgetary restraints, the resources should be at the cost of employment measures to encourage startups. I would not wish to see that, but if that is the choice I hope that the resources will be diverted in that direction.
I shall now deal with VAT, where we come on to the subject of small firms being the Government's tax collectors. I ask the Minister to comment on the often suggested measure, which we might be able to put into practice and to which I know he has given some thought, to eliminate VAT between registered traders. This is an important measure which would, at one bound, reduce the immense burden of paperwork on small businesses.
Inevitably, one is making a number of unco-ordinated comments. I shall now deal with discriminatory discounts. We have talked about restrictive practices. I say bluntly to the Minister that the level of discriminatory discounts now being operated by the larger operators against the small retail shops is a monstrous injustice. For example, Safeways is able to buy in a tin of dog food more cheaply than a small retail outlet can sell it. We have looked carefully at the power of the monopoly seller. We now need to look at the power of the monopoly buyer, because the large retail outlets now command such power in the buying market place that they are able to command discounts that are all too frequently at a cost to the small retail outlet. It is an injustice that is beginning to hit many of our small grocery outlets and the Government will have to take action.
I am aware that we have had the Binder Hamlyn report, but that report was little more than a whitewash. It will be necessary to take action, and it may be that our starting point should be a code of practice. If, in the end, we have to introduce legislation, defective though it might be, like 693 the Robinson Pasman Act in America, the Government should not shrink from it. In my view, the effect of the monopoly buyer in the market place—monopsony is the correct term—is now becoming so large that it must be tackled.
I shall now deal with the centralisation of finance. I and others are worried about the grip and power that the City of London has over providing finance for small businesses. I remind the Minister that 60 per cent. of all the business expansion scheme funds dispersed in Britain have, I understand, been dispersed to firms in the south-east. A mere 13 per cent.—perhaps the hon. Member for West Bromwich, East (Mr. Snape) will make this point—has gone to the midlands. If one wants to obtain finance for one's company in Britain, large or small, unlike in America or Germany, where there are decentralised banking systems to go to, one must in most cases go to the City of London. In my view, there is a real case to be made for decentralising the financial structure of our country so that small firms can go to somebody who knows and understands their problems, and even perhaps knows their personalities, in order to obtain finance.
I shall now talk about co-ordination. The assistance available to small businesses, especially for new starters, is bewildering in its complexity. Let me remind hon. Members of who are involved in assisting new businesses and new starts today: nearly all county council departments, many district councils, the Manpower Services Commission, the Council for Small Industries in Rural Areas, the Small Firms Service, the urban programme, the Development Commission, local enterprise agencies — I commend them — local enterprise boards, regional bodies, such as the Highlands and Islands Development Board and the Welsh Development Agency, ad hoc groups of business men up and down the country. churchmen, enthusiasts, chambers of commerce, banks and valuable organisations such as Business in the Community. To the person starting out it is a mass of duplication, confusion and, in all too many cases, muddle.
I firmly believe, and have written a pamphlet on the subject, that we need a strategy and framework in which we can co-ordinate the activities in this vital and important sector. In my view, Britain should look towards a national community enterprise agency, something that would coordinate with community enterprise units, perhaps positioned at county level, which would deal with the initiation of enterprise, the co-ordination of assistance and the establishment of funding and would be a channel for Government assistance and support. That could be more elegantly expressed as the "one-stop shop", which I believe would draw all the activities together in a much more coordinated and effective fashion.
I believe that through these measures we could build a start. It may be defective in places, but and that is not surprising. However, the Government have made an important start. We could establish the partnership which is so essential for the economic regeneration of Britain and which is so lacking at present. It would be a partnership between a Government determined to plan and act to reverse Britain's economic decline in the macro-economic sense and to assist small business men in the micro-economic sense, and business men who wish to create prosperity and employment in their own communities. The establishment of that partnership is the essential task that now confronts us.
§ Sir John Osborn (Sheffield. Hallam)
The Parliamentary Under-Secretary spoke about enterprise and small businesses, and he listed what the Conservative Government have done in six years. That needs to be put on the record. He has spoken about the White Papers dealing, first, with lifting the burden off the shoulders of small businesses and, now, "Building Businesses … not Barriers". I believe that what he has outlined gives hope and new opportunities in many areas, including my city of Sheffield.
I was disappointed by the contribution of the hon. Member for Huddersfield (Mr. Sheerman) who described the White Paper as pathetic. I would have been more understanding if he had concentrated on the positive side. He made a plea, although he changed his tune towards the end, for more regulation and controls and then spoke about more training and more research. That would lead me into areas that I deal with elsewhere.
When I was a director of one company in Sheffield and there was an adverse cash flow I had to face decisions about what to cut out. Many other companies in Yorkshire had to face similar decisions. The first thing to cut out was research and the second was training. That was at a time when Labour Chancellors of the Exchequer wallowed in taxing industry and creaming the top off the milk. We paid the price of that in subsequent years, and the Government have had to live through that since 1979.
The Paymaster General and the Secretary of State for Employment had reason to visit Sheffield frequently because the headquarters of the MSC is there and I welcome the fact that my hon. Friend the Under-Secretary who opened the debate will be speaking to business men in Sheffield about business opportunities this July.
There are many struggling small businesses in a difficult environment in a city such as Sheffield. They have been helped by Government policy and there has been correspondence with the Parliamentary Under-Secretary and a number of my constituents about the red tape and burden on established small businesses. Some recent correspondence obviously deals with VAT thresholds on small businesses, a point already made this morning, and I welcome the fact that the Minister will be seeing what people are to do in Sheffield, and I look forward to spending the day with him.
What has happened in Sheffield presents an immense challenge to that city. It may also present challenges to cities such as Newcastle, Liverpool and others. However, there are many people of goodwill, often top executives who have taken early redundancy, who are working to bring Sheffield back to the top again. As the only Conservative Member of Parliament for Sheffield, I am working with them willingly. I ask Ministers for more help for my city.
The debate provides an opportunity to touch on many other issues. The hon. Member for Huddersfield touched on rights, perhaps health and safety at work. I have found that if one industry, one region or one country concentrates on rights too heavily it is not competitive and competitors take business away.
We have touched on the international impact for small businesses and particularly on the scene in Europe. I welcome the reference to the EEC directive. The year 1983 was Europe's year for small and medium-sized enterprises. and it was a Liberal German who initiated the work of the 695 Economic Affairs and Development Committee of the Council of Europe of which I am still a member. Paragraph 6 of its resolution says:there is still ample scope for action by governments and the competent international organisations in order to meet the specific needs of SMEs and to improve the environment in which they have to operate".I would have thought that the Government have reacted effectively to that Council of Europe and EEC initiative.
Another aspect that has to be dealt with is the contract of employment. When I was in the European Parliament, I initiated a private Member's Bill, but in the mid 60s, together with the trade unions, I had initiated the first blueprint for a contract of employment. There was the subsequent protection of employment legislation but, by the end of the 1970s, the Labour party chose to destroy my private Member's Bill, at a time when too much protection meant that employers would not take on labour. It must be remembered that when the Labour party was in government unemployment doubled. I know that it has continued to increase since then.
In a league table, 102 major European cities have been dealt with according to their urban growth or decline. This was mentioned in the Sheffield edition of the Star last week. Sheffield was rated number 95 in 1984, and if its situation does not improve it could become number 98. That would leave it above only Sunderland, Messina, Belfast and Liverpool. This is proof to EEC Commissioners that it is an area badly in need of their funds, but it has also aroused some hot reaction from the Lord Mayor of Sheffield and other leaders.
I have been a Member of Parliament for Sheffield for 25 years and I have lived there for many more years, and I wonder why Sheffield is now in such a bad position. Nationalisation of steel was a disaster for Sheffield, and accelerated its demise. Part of the problem has been the long existence for over 50 years, with the exception of 1968, of a powerful Socialist council. it has vetted those industries who sub-contract to the city council, but it has been vetting new businesses as to their political acceptability for the city. I now hope that this political vetting will be reduced.
§ Mr. Sheerman
I may be anticipating some remarks, but is the hon. Gentleman going through his speech without paying tribute to the enormous enterprise initiatives that Sheffield city council has made to help to improve the dreadful unemployment situation inflicted on the city since 1979?
§ Sir John Osborn
I thank the hon. Member for that intervention. This is what I shall speak about in the next five minutes. I shall try to cover the invitation adequately. I hope that I shall not be on my feet for too long.
One of the snags has been high rates in Sheffield. I spoke in a debate on the rate limitation orders and said that 48 per cent. of firms questioned by the chamber of commerce said that high rates were the cause of their difficulties. Traditional heavy industries have been heavily hit, with the result that businesses and residents have chosen to leave the city and avoid the rates bill, so that the declining rates base hits even harder those who are left behind. As recently as January, there was a scare in the newspapers of a 71 per cent. rate increase. That has now been reduced. One article dealt with an internal report by 696 the council's budget chairman and deputy leader. It lambasted the Socialist leadership for not facing up to the realities of the situation, but continuing to spend, spend, spend when there was not enough money. There has been a division in the Labour-controlled city council.
There is still resourcefulness in Sheffield that will overcome the exceptional difficulties. Individuals, local companies and councils are involved. I sense a willingness to co-operate even across political boundaries. My hon. Friend mentioned the industry year, sponsored by the Royal Society of Arts, which has had my full support. It has been extremely successful in the city. The chamber of commence and the Industrial Society commissioned a seminar in the early weeks of this year, and one of its outcomes has been an awareness of local industry, and industry in general, by the people to a greater extent than has ever happened before. At one working lunch sponsored by one company, masters, headmasters, managers and trade union leaders were all at the same table. That has resulted in works visits taking place this summer.
Another activity that bodes well for the city's future is the encouragement of links between industry and education in a city where the Socialist city council has in the past banged on, presenting a doctrinaire picture of management as being intent on exploiting the worker. Local businesses have been quick to realise the opportunity for showing young people, through their experience, that this is not the case. The success of the venture Young Enterprise, mentioned by my hon. Friend the Minister, is remarkable. Some of those people will be visiting the House of Commons soon. Local companies are ensuring that people get some idea of the business ethic and what goes on in business. Sheffield has been helpful towards young persons setting up their own businesses.
I hope that my hon. Friend the Minister will see the activities of Volserve, the community programme agency. It has brought together people with experience of insulation, draught proofing and home decorating to try to help them set up their own businesses. My hon. Friend will be meeting the chamber of commerce. which set up its Springboard project two months ago, in association with the MSC. It is helping to assess business potential. Assuming that it is found to be feasible, Springboard will give ongoing moral support and guidance, while the individual receives funding under the enterprise allowance scheme.
The local enterprise agency has set up the Sheffield business venture. As I am the only Sheffield Conservative Member of Parliament, many problems have been brought to my notice, and to be able to send small business people struggling in established or new businesses to an agency where they can get help is an example of the type of help that the Government have been able to give. The city council has an economic development and advisory committee, a meeting of which I should have been attending this afternoon. It has made good suggestions and bad suggestions, but one of the means of attracting the expanding industry and commerce is to establish a one-stop bureau staffed by council personnel from the relevant departments. Again this is another move by the city council.
The other side is the fact that there are more research associations in the city. Surely more than the science park can be given a boost. I have been in touch with my hon. Friend the Under-Secretary about a technology park 697 alongside the polytechnic. I hope that he will look at that. Only two months ago, my hon. Friend the Member for Chertsey and Walton (Mr. Pattie), the Minister for Information Technology, came to the university to set up an institute of information technology. All these ventures have started, but it will take time for them to develop. A city can do much for itself but it needs encouragement from outside and from Government.
Following the Green Paper "Lifting the Burden" there has been the White Paper. We must accept that every region has its own problems. If after this debate there is greater hope that the trade unions, employers, Government and Opposition will all learn to work together to put communities back on their feet, then something will have been achieved.
When I was a boy and when I first entered industry, business was carried on by large companies. History might be repeating itself. For centuries we have had the "Little Mesters" of Sheffield, and in 1634, if I remember the date correctly, the Cutlers Company was founded to support small businesses. My great grandfather established what became a big business, and both he and my great-great grandfather were merchants and had small businesses.
History has its cycles, and for that reason a city like Sheffield will have once again to build up small businesses. There must be no illusions: economic circumstances are making the growth of the small business more important in Europe. Chapter II of the White Paper, entitled "The Next Steps", deals with:The machinery established to monitor progress on deregulation—I welcome that. It goes on:The need to assess regulations in this way should gradually change the context in which decisions are taken and permeate the machinery of Government".That is a reference to the enterprise and deregulation unit and is welcome. The chapter goes on to deal with communications with business. Both White Papers have proved complex to even the CBI and to Chambers of Commerce, but not to secretaries and legal and financial experts in the companies that make up their membership.
I welcome the illustrated booklet. For the self employed the complexity of life is great. I started a small business with an energetic parent company some 30 years ago. I had the advice of secretaries and financial directors in the parent company and that is the sort of advice small businesses want now. The White Paper goes on to acknowledge that the task of implementing the Government's many proposals will be a major one, and hon. Members should work with my hon. Friend the Minister who is responsible for small businesses, who has shown enthusiasm and courage. I look forward to welcoming him to Sheffield so that he can see for himself what the city is doing, and outline to business men the next steps.
§ Mr. Peter Snape (West Bromwich, East)
The hon. Member for Sheffield, Hallam (Sir J. Osborn) will forgive me if I do not linger too long on the problems of his great city. He would not expect someone born on the other side of the Pennines to spend too long in his part of the world anyway.
The hon. Gentleman's outline of the problems facing Sheffield was little more than a ritualistic attack on the city council. By implication, he said that it is the high rates in 698 Sheffield that have wrought the sort of industrial damage that we see in that once great city. No one likes paying rates, and any business man would say that he would prefer to pay less in rates. It is generally accepted that rates form a marginal part of the outgoings of a business. If high rates are the sole reason for the industrial ravages of Sheffield, why is it that unemployment in areas like the south-west, which are traditionally low-rated areas and where traditionally and regrettably the councils are not controlled by the Labour party, unemployment is as great as it is anywhere else?
§ Mr. Snape
The hon. Member for Stafford (Mr. Cash) has just returned to the debate. He has intervened on a number of occasions, and I have no doubt that he will try to intervene again. I have a recurring nightmare, having spent a night last week listening to the hon. Gentleman, of being strapped in an aeroplane with the light on which shows that I cannot leave my seat, and sitting next to me is the hon. Member for Stafford clutching a copy of "Erskine May". I would be grateful to the hon. Gentleman if he would restrain himself for the next few minutes.
The Minister represents a Lancashire constituency, and I compliment him on that. Perhaps it would be an apt metaphor to say that he wove a fairly elaborate tapestry with some fairly coarse cotton. We should not allow his loyalty to the Government and the quality of his briefing to blind us to the fact that his material was thin stuff. Like other members of his party, the Minister takes the view that Governments cannot do very much. Speeches by Government Members would lead one to believe that there is not much point in taking part in national elections because the activities of the Government are peripheral, except of course when a Labour Government are in power. All the economic ills of the nation are held to be the responsibility of the last Labour Government and the result of the incompetence of their policies.
Over the past couple of years a not very subtle sea change has taken place. The Government are playing the red card for all they are worth. They say that it is the terror and loathing of the next Labour Government that is causing all the damage to British industry and that they themselves are responsible for none of its ills. Within their first few weeks of office the Government virtually doubled value added tax. That had a serious impact on the profitability of small businesses in particular and industry in general. During their term of office the Government have presided over the highest interest rates in Britain's history. Does that not have more than a marginal impact on the profitability of large and small businesses? The Government have presided over — or perhaps just watched, as they do not believe in interference — the wildest fluctuations in the rate of exchange in British history. Have none of these things played more than a marginal part in the virtual collapse of industry in the United Kingdom?
Like other Ministers charged with the unfortunate task of speaking from the Dispatch Box, the Minister said that. many jobs have been created. The hon. Member for Carshalton and Wallington (Mt. Forman) spoke about the thousands of new jobs that have been created. Perhaps that is thanks to the policies of the Government. Perhaps their policies do have an impact on job creation. That is what the Government tell us, but it is only in areas of 699 unemployment that their policies have no impact. When asked where these jobs were, the hon. Member for Carshalton and Wallington could not tell us. I do not know either, but I am prepared to accept the figures that the Minister trotted out. I know where jobs are not being created. They are not being created in my constituency, and not in the borough of Sandwell or in the west midlands, despite what the hon. Member for Stafford says.
The statistics for the west midlands show that the number of people in employment in June 1979 was 2,241,000. The latest month for which I have figures, and I have no reason to think there has been an increase since then — they are more likely to have decreased — is December 1985. The number of people in employment in the west midlands at that date was 1,960,000, a drop of 281,000. That ignores the sea change that has taken place in the type of job that we are talking about. There is a net and not insignificant overall reduction in the number of people in work in what used to be regarded as one of the richest parts of the United Kingdom.
The west midlands traditionally had lower unemployment than the rest of the country, but the reverse is now true. Outside Northern Ireland, we now have almost the highest rate of unemployment in the United Kingdom. Is that something for which the Government or the Conservative party bear no responsibility? Has there been this enormous decline in employment just because of world economic conditions? The bulk of the decline between June 1979 and December 1985 in the west midlands and, no doubt, elsewhere has been in manufacturing industry, in which no fewer than 278,000 jobs have disappeared since the Government tragically, for the future of the nation, took office in 1979.
§ Mr. Cash
I am grateful to the hon. Gentleman for giving way. Unemployment in the west midlands region is of course serious, and the current level is about 15.2 per cent. Stafford is an industrial town. That is why I take exception to what the hon. Gentleman has said. The unemployment rate there is lower than the average for the region. There are some lessons to be learnt from Stafford. Although we have lost jobs in heavy engineering and major industries, we have kept unemployment down. That has much to do with the work force, enterprise and small businesses.
§ Mr. Snape
I am grateful to the hon. Gentleman. I noticed that his intervention was more general than specific. He will know the exact rate of unemployment in his constituency—at least I hope he will. I could hazard a guess, which would be fairly informed, as I spent some time in Stafford canvassing for one of the hon. Gentleman's opponents during the by-election campaign. Regrettably, he was unsuccessful—regrettable, that is, from a political point of view. The hon. Gentleman will understand what I mean. My guess is that the rate of unemployment in Stafford is far higher now than it was in June 1979.
§ Mr. Snape
We are backpedalling pretty desperately before we get on our feet, if such a thing be possible. If he succeeds in catching your eye, Mr. Deputy Speaker, the hon. Gentleman will be able to tell the House what the rate of unemployment in Stafford was in June 1979, compared with the latest date for which figures are available. Even if the increase if lower in his constituency than in the rest of the west midlands, the fact remains that the rest of us are not so lucky.
In the Sandwell and Dudley travel-to-work area, there were 46,818 unemployed people in May. In the borough of Sandwell alone, more than 28,000 men and women have lost their jobs. I have mentioned the devastation in manufacturing. As my hon. Friend the Member for Huddersfield (Mr. Sheerman) said, it is no good the Minister glibly assuring us that there are alternative jobs for people who formerly worked in manufacturing industry.
In Sandwell we would take some exception to the inference that we should confine our economic activities to the production of hot dogs for American tourists or postcards for passing Japanese visitors. We do not have too many of either. Without the manufacturing capacity that we once had in Sandwell, the nation is poorer. It is tragic for the individuals concerned, but the nation suffers. We have not stopped buying the things that we used to produce in Sandwell — we merely buy them from elsewhere.
§ Mr. Forsyth
I am grateful to the hon. Gentleman for giving way. Whose fault is it that we buy such goods from other countries? Is it not the result of the restrictive practices and behaviour of trade unions during the past two decades, which he has supported?
§ Mr. Snape
It is my own fault. I should not allow someone with such an obviously unformed mind to participate. is it the trade unions in areas such as the south-west, where unemployment is tragically just as bad as in my constituency, who are responsible for job losses there? Is it the trade unions in the tin industry in Cornwall——
§ Mr. Corbyn
Perhaps I can help my hon. Friend, as I have here unemployment figures by constituency and by local government area. On 10 May 1979, 1,689 people were registered as unemployed in the local government district of Stafford That figure rose to 4,719 by 14 March 1985.
§ Mr. Snape
No, I did not. I said 1979. The Conservative party took responsibility for the nation's affairs, or not, depending on which member of it one listens to, in June 1979. It is not unfair for us to compare circumstances then with now. It was not my party that had an expensive advertising agency to coin the slogan, "Labour isn't working". I do not know whether those actors appeared 701 on the main street of Stafford as they did in West Bromwich during the 1979 general election campaign, but we do not need actors in Stafford, West Bromwich or Sandwell now if the Conservatives want to repeat such a campaign.
We are in a way fortunate to be able to discuss enterprise and deregulation today. I understand from my colleagues in the shadow Cabinet that the motion was originally entitled "Action for Jobs" but somebody pointed out to the noble Lord who is responsible for these matters that, by giving the debate such a title, he might, as he habitually does, be shooting himself in the foot, so the title was changed. We can now talk about deregulation as well.
Some of the more simple minds on the Conservative Benches—we have not heard too much from too many of them other than by way of intervention—talk about privatisation and deregulation with almost as much reverence as some members of far Left splinter groups talk about nationalisation.
§ Mr. Snape
I do not have to if I can look at the hon. Gentleman, because nothing behind me would equal what I am looking at opposite me for simple-minded simplification.
The benefits of widespread deregulation ought to be examined. That is one of the things about which we are supposed to be talking. I have the honour to have some responsibility on behalf of my party for transport matters. Conservative Members worshipped at the altar of transport deregulation for some years. They started in 1980 with the long-distance coach business. They said that the restrictions on that business were unnecessary, so they virtually wiped them out overnight and almost completely deregulated the industry.
Since the passage of the Transport Act 1980, there has been a considerable increase in long-distance coach mileage, but almost exclusively to and from this city. That has brought problems such as unrestricted coach access to any large city. Many continental cities that are not controlled by Socialist administrations have had to act to prevent the tidal wave of long-distance coaches engulfing them.
One of the side effects of the 1980 deregulation has been the appearance of far more coaches in London. Moreover, the facilities available to them are not very good. The National Bus Company, to name but one, was one of the first to say that. Moreover, that well-known Left-winger—at least in the 1930s—Sir Alfred Sherman, has always complained about the number of coaches passing the end of his, I believe, very fashionable street near Victoria coach station.
The Government introduced deregulation overnight in 1980 without giving it much thought, but it has not been without its peripheral effects on the coach business, and particularly on the cross-country coach business. Most of the operators that are left have had to withdraw their coaches from long-distance cross-country routes in order to run coaches to and from London. The NBC has also had to withdraw them from its stage carriage services.
readily concede that there were some benefits to the industry from that Act, but the NBC now covers about 20 million fewer rural miles than prior to that Act's 702 introduction, and employs about 15,000 fewer people than before. That may give some Conservative Members enormous satisfaction, but deregulation has also had an effect on the coach-building industry.
In their rush to deregulate, the Government never thought to consult British coach builders about their capacity to provide more long-distance coaches. Consequently, our roads and motorways, which are already pretty crowded, have seen the addition of hundreds of foreign-built long-distance coaches. The hon. Member for Stirling (Mr. Forsyth) holds his head in his hands. Presumably he is in favour of that.
§ Mr. Snape
I have learnt my lesson about giving way to the hon. Gentleman. No doubt he will catch your eye. Mr. Deputy Speaker, in due course. The directors of Metro-Cammel or of Dennis—to name but two coach firms — could put the hon. Member for Stirling right about the impact of that legislation on our bus and coach building industry. Once people had rushed in to buy foreign-built coaches, the market more or less collapsed. Virtually no British operator has bought a new coach or stage carriage since that deregulation measure was first published. Was that the Government's intention when they decided on deregulation?
The Government's deregulation policy has had a serious effect on other parts of our industry. The Government admire what goes on in the United States. Some might say that there is more than admiration in the relationship between the Prime Minister and the President of the United States. It is almost hero worship — [Interruption.] It is certainly not heroine worship. It is a one-way sort of worship. American-style deregulation has been adopted in respect of British aviation, and early on we saw the effects of such deregulation. In the United States there is an enormous market, with many customers and many successful, and some not so successful, airline companies. In Europe and in most of the world, airlines cannot compete in the same way. The market is quite different. Poignantly, the first casualty of airline deregulation was one of the Prime Minister's new knights, Sir Freddie Laker. He discovered that the world of deregulation was not quite as profitable as he had thought.
Deregulation and the encouragement of small wharves has meant about 30,000 lost jobs in the docks. No doubt that pleases the Conservative party. It obviously thinks that a good dose of unemployment is needed there, but as recently as 1982 one of our strategic industries, the shipping industry, was praised by the Government Front Bench for its efforts during the Falklands war. About 30,000 seamen have lost their jobs since the Conservative party took office, and about 1,000 ships have been withdrawn from service. The British maritime fleet is as small now as it has ever been in modern times. Deregulation has not brought too many benefits to the shipping industry, and I only hope that some of the lessons have now been learnt.
The Minister made something of training for our young unemployed. I should have thought that both sides of the House were united on the necessity to provide adequate training for our young unemployed people, but the Government show no sign of doing anything apart from paying lip-service to that principle. Their latest palliative for the young unemployed is known as restart. That might 703 apply to the Government's policies, because a good restart is what is needed there. The scheme is intended to be nationwide.
I shall quote from a Manpower Services Commission course booklet on restart. It says:Many people develop a negative attitude to unemployment".The Government had that sort of attitude to unemployment right from the start. The Manpower Services Commission appears to believe that it now permeates the ranks of the unemployed, but that is a somewhat heartless and out of touch view, because the vast majority of the unemployed are desperate for a job of any description.
The booklet does not quite go along with what the Minister had to say about training. It says that the restart scheme initially involves a five-day course at a training centre, during which the unemployed must discuss their attitudes and feelings about being without work. In the blunt speaking part of the country that I have the honour to represent, that could no doubt be disposed of fairly quickly. Next, the unemployed should do "confidence-building" exercises. That is a bit steep coming from this Government. No one has done more than they have to undermine the confidence of the unemployed. Perhaps the unemployed are supposed to do mental press-ups to make them feel better. Next, it says that the unemployed should set themselves "goals". That is a bit like Bobby Robson's pep talk the other night, but he was more successful than the Government look like being.
Finally, the Manpower Services Commission says that they should draw up a checklist of personal strengths and weaknesses. Perhaps the title of the scheme should be "Teach Yourself Psychology".
The young unemployed are supposed to attend the training centre for one day a week for certain periods. The MSC states that newspapers should be made available. It does not specify whether they should be Murdoch newspapers or others. In any event, it says that newspapers should he made available and that help be provided in letter writing with facilities such as photocopiers being on hand. The idea and purpose of the visits is that the trainees should practise writing letters in their quest for a job.
Perhaps I am being unfair, and perhaps this might be a job-creation exercise. I have no doubt that Basildon Bond and other notepaper manufacturers will benefit. The supply of photocopiers might benefit 3M. This is an example of the training that the Government will give. It is an example of the acquisition of skills that the Government will make available to the unemployed. Colleges throughout the country where the courses are to be held are already being asked to prepare their budgets. They are told to make estimates of the number of young people who will be staying for tea.
§ Mr. Forsyth
Has the hon. Gentleman studied the results of the pilot schemes which have been carried out by the Government to help the long-term unemployed? 704 Has he seen the figures, which show that about 90 per cent. of these people are helped either in obtaining employment or in finding a place in training? Does he not welcome that? Is he not being a little cynical about the Government's efforts in this direction?
§ Mr. Snape
The hon. Gentleman is the one who is being cynical. He knows full well that the "jobs" that young people find are mainly community scheme jobs. They are not jobs in the accepted sense of the word. They are temporary jobs. I can imagine a similar scheme being instituted in an eastern European country, and if it were the hon. Gentleman would be the first to complain about people being directed towards the sort of work that is felt to be good for them.
§ Mr. Snape
It seems that the Conservative party thinks that freedom should benefit only those who have proved by their own success or income that they can handle it properly.
The cynicism that lies behind the Government's so-called schemes for young people has led, and is leading, to the economic and unemployment tragedies that we are seeing in the west midlands and elsewhere. The one small ray of sunshine is that some Conservative Members will have the benefit shortly, we hope, of learning just what it is like to be unemployed. It will be a long time before the people of the west midlands forget the experience of two successive Conservative Governments.
§ Mr. Michael Forsyth (Stirling)
I am grateful for the opportunity to take up some of the remarks of the hon. Member for West Bromwich, East (Mr. Snape). When he was talking about the success of the Government's policy of deregulation of long-distance coaches, it was significant that he did not once mention the consumer. He did not say that people are able to journey across the country now at substantially reduced fares and that the range of services has been greatly extended.
§ Mr. Snape
I am sorry to interrupt the hon. Gentleman so early in his speech, but he must get this right. People are not able to journey across the country in the way that he describes. Cross-country long-distance coaches have virtually disappeared since deregulation. I accept, however, that the public are able to journey much more easily to and from London, but that is a different matter.
§ Mr. Forsyth
I accept that the effect of deregulation has been a substantial increase in the number of services to London. That increase is a result of the demand from consumers. People want to travel to London at prices that are much lower than those which prevailed before the Government's efforts to deregulate long-distance coach travel. Before that it was impossible for them to travel by coach so cheaply. The only other option was to use the overpriced rail system, which was not subject to competition and was weighed down with restrictive practices and overmanning, on which the hon. Gentleman did not lay enough emphasis. It is true that some cross-country coach services have been reduced. That is because coaches have been taken off those routes to meet demand on the London routes.
I found it interesting when the hon. Gentleman said that there are many foreign coaches on our roads and that the British coach-building industry was not able to supply 705 British-built coaches because the Government had not warned it that demand for coaches would increase. At the same time he was arguing that there were fewer drivers in employment. I have yet to see coaches being driven along motorways without drivers at the wheel. I wonder how the contradiction is resolved.
The significant feature of the hon. Gentleman's speech—this was clear also in the speech of the hon. Member for Huddersfield (Mr. Sheerman)—was the enduring myth in British politics that it is possible to create additional employment through additional Government spending. The extraordinary thing about this myth is that it has managed to survive for so long and that Labour Members should find themselves going along with it in the absence of any evidence to support it.
In this respect, the speeches of Opposition Members have two main themes. First, they contend that it is possible to create jobs by direct subsidy to enterprises. I suppose that we must think of the De Lorean model, and Linwood and Invergordon in Scotland.
§ Mr. Forsyth
Jobs in Rolls-Royce are not being created by direct subsidy. I agree with the hon. Gentleman in respect of British Leyland because the Government have put£1.4 billion into it. One must ask how many jobs have been destroyed in the private sector and elsewhere in meeting that bill.
§ Mr. Sheerman
The hon. Gentleman is urging the Government to pull the rug on all state aid and subsidy to all industries. Is that what he is saying? Does he realise the impact that that would have in the west midlands, which has already been affected disastrously by unemployment, especially in the car industry, and specifically at British Leyland and Rolls-Royce at Derby? Throughout the country firms have been helped positively in the past by previous Governments, and this has created and maintained jobs.
§ Mr. Forsyth
The hon. Gentleman must not try to put words into my mouth. I am not urging the Government to withdraw all state support as he suggests. I am merely saying that it is a delusion to believe that it is possible to create jobs by direct subsidy. The hon. Gentleman makes the point for me extremely clearly, for he takes no account of the fact that the money that Governments provide has to be found from somewhere. It is found by taxing free enterprise in the private sector, and if that is taxed we preempt resources which would otherwise be employed in providing jobs within the private sector.
§ Mr. Forsyth
If the hon. Gentleman will allow me to develop my argument, I shall give way to him willingly.
No account is taken by Labour Members of the fact that the levying of taxes on small firms and private enterprise generally will mean that their prices will be forced up and they will become less competitive. They will have less money to invest in developing and expanding their businesses. There will be less demand within the market place and we shall become less competitive as a nation. The hon. Gentleman must answer that point.
§ Mr. Sheerman
Does the hon. Gentleman understand that the largest charge on public expenditure and on the taxpayer since the Conservatives came to office in 1979 has been the massive and wasteful cost of unemployment— 706 the massive dole queue? All our revenue from the North sea has been spent on that. Would it not be much better, in terms of value for money, to put money into productive firms to keep them going and get them over a difficult patch?
§ Mr. Forsyth
The hon. Gentleman is perfectly correct in pointing out that the largest increase in Government spending has been on the social security budget. Indeed, it has increased by more than 25 per cent. in real terms. It was gratifying to see the hon. Gentleman make that clear to the House. The largest proportion of the expenditure has gone on increasing pensions, for which the hon. Gentleman gives the Government very little credit.
§ Mr. Forsyth
The largest increase in the social security budget has been for the provision of pensions. The hon. Gentleman made a further mistake, which takes me on to the more convincing and sophisticated part of the argument. He said that it is possible to create employment by increasing public expenditure on the infrastructure— roads and construction. The hon. Gentleman made that point by way of intervention. He argued that if we spent the money on extra building, roads, sewers — the infrastructure— it would create employment and provide savings in that section of the social security budget devoted to unemployment benefit. I think I am right in saying that that was the substance of the hon. Gentleman's argument. It is a complete delusion. His argument presupposes that the extra jobs created in the construction industry, the building of sewers and so on, will be available to those on unemployment benefit.
The experience of both Labour and Conservative Governments who have tried to do that is that large sums spent on capital projects do create a massive demand for workers in the construction industry, but that, on the whole, the demand is for skilled labour. We are talking about creating jobs in particular pockets of the country for those who are unskilled. lithe economy and the system are so rigid that workers are unable to move around the country—for example, because of rent control, which the hon. Gentleman supports—high demand for labour is created in some sections of the country at the expense of others, as well as massive distortions in the rest of the economy as false signals are set up by artificial demand.
The most damning aspect is that when roads are finished and sewers are ultimately repaired, the jobs will no longer be available for those brought off unemployment benefit. [Interruption.] The hon. Member for Huddersfield laughs, but that is the difficulty. Jobs created by public spending on the infrastructure last as long as the money goes into providing for the project. Jobs created in the free enterprise sector, based on goods and services, which are in demand and for which there is a ready market, are not only secure in the long term but allow the creation of further jobs as those enterprises expand.
§ Mr. Nick Raynsford (Fulham)
Will the hon. Gentleman explain why jobs in housebuilding and construction in the public sector are not ongoing jobs, whereas jobs in the private sector housing and construction business, according to his analysis, are? Does the hon. Gentleman accept that, during the lifetime of the Government, housebuilding has fallen to the lowest level recorded since the end of the war, purely as a result of cuts 707 made by the Government in the public sector house building programme? Does the hon. Gentleman recognise that the enormous unemployment in the construction industry could be tackled substantially by way of quick action to build new houses and to renovate the enormous number of houses in poor condition?
§ Mr. Forsyth
The hon. Gentleman and Labour Members are obsessed with the public sector and public sector spending.
§ Mr. Forsyth
I give the hon. Member for Fulham (Mr. Raynsford) credit for not going down the road taken by his colleagues and talking about infrastructure projects. He seized on housing repairs. Certainly, in that area the cost per job is lower. Therefore, in terms of the public money put in, more jobs will be created. The hon. Gentleman said that we have the lowest house building programme ever, but he does not take into account the dramatic expansion in the private sector. The hon. Gentleman asked me about the difference between public and private sector housing. It is simple. Private sector housing is funded out of private money. Public sector housing is funded out of public money. Public money must be raised by way of taxation. That taxation pre-empts resources from the private sector which are invested by the private sector far more efficiently than public money which is directed by politicians, committees and bureaucracies. Private money invested in the economy is far more productive, in terms of creating jobs and wealth — the multiplier to which the hon. Member for Huddersfield referred—than public sector money. That is the difference.
§ Mr. Forsyth
Perhaps the hon. Gentlemen will allow me time to continue. I have been very generous in giving way and I should like to deal with the point that I am trying to make.
Job creation with public money is a high-cost approach and is at best marginal. It is short-lived. It does no one any favours. If Labour Members are concerned about that, they should look at what is happening in their constituencies. If they cannot see what is happening in their constituencies, they should come to Scotland—to Bathgate, Linwood and Invergordon—to see the social misery that has been created by Conservative and Labour Governments in trying to create jobs by pumping in money and giving subsidies. Large enterprises, such as British Leyland, move in and attract people to the area. Then sooner or later they find that because they are located in a disadvantaged place in relation to the real market, they have to close. The subsidies cannot sustain them. People are left, beached like whales, without any prospect of employment.
§ Mr. Snape
Forgetting British Leyland, which I have no doubt the hon. Gentleman would like to do, will he tell the House whether he supported his Government's desire to renovate private sector housing? They drastically increased public funds for the renovation of privately owned housing. Does the hon. Gentleman agree that that 708 legislation actively assisted private companies? Did he support its restriction and virtual abolition within two years by his Government?
§ Mr. Forsyth
No. It may well be that, in terms of the Government's housing policy, it is desirable to encourage private money to be invested in the rehabilitation of properties. The hon. Gentleman must not confuse that policy with a policy of job creation. I am talking about employment. Spending large amounts of public money is not the most efficient way to create jobs. It may well be that a grant system is a good way to improve housing, but the two policies should not be confused.
§ Mr. Forsyth
I certainly supported the temporary introduction of the 90 per cent. grant levels. That was a successful policy. The Government, having sown the seed, were right to reduce the level, because the activity had begun.
It is unfortunate that the hon. Member for Yeovil (Mr. Ashdown) is not present.
§ Mr. Gerald Howarth (Cannock and Burntwood)
Does my hon. Friend agree that under the Socialist Government the amount of funding available——
§ Mr. Howarth
Labour Members obviously had a tiring and emotional night last night.
Does my hon. Friend the Member for Stirling (Mr. Forsyth) agree that the last Labour Government were so concerned to help in the provision of renovation grants, and so on, that they managed to provide about£92 million? That figure increased to more than£500 million under a Conservative Government.
§ Mr. Forsyth
I am grateful to my hon. Friend. In almost every aspect of policy where the Labour party attacks the Government — whether it is spending on the Health Service or help for pensioners, the unemployed, education or, as my hon. Friend pointed out, housing — the Government's record is far better than the Labour party's. We have invariably increased expenditure and improved performance. The Labour Government so financially mismanaged the country that, in the hands of the International Monetary Fund, they had to introduce real cuts in many of those areas.
United States experience is a key example that we should follow. Employment during the 1970s grew by about 26 per cent. compared with a United Kingdom figure of 2 per cent. It is significant and symbolic of the Opposition's negative attitude, endorsed by the hon. Member for Yeovil, that they constantly harp on about unemployment when they should be talking about employment and the way to create new jobs. Because the Opposition are so tied to the trade unions for support and succour — and must worship at that altar — they are 709 obsessed with large, unionised enterprises which have nothing to offer this country in terms of employment and growth. That has certainly been experienced in the United States. During 1981 to 1983 the 500 largest companies shed 3 million jobs — over the decade the figure is between 4 million and 5 million — whereas 20 million new jobs were created exclusively in the small business sector.
Opposition Members who argue that large enterprises must flourish and be successful in order to keep the small businesses going should study the United States economy, and other economies, where they would find that that is not the case. In the United States, small businesses are now responsible for 38 per cent. of the gross national product. In the service sector, which is the largest growing sector, 90 per cent. of new jobs are in small firms. Surely the real challenge in creating new employment lies in the expansion of existing small firms and the creation of further small firms.
I welcome the Government's attempt to establish an enterprise culture, which is central to meeting our obligations to employment and creating the social welfare conditions that Conservative Members want. However, having listened to the catcalls and the negative attitude of Opposition Members, I am concerned that the Government's task may prove greater even than the energy shown by my hon. Friend the Minister. It is a matter not of deregulation and creating the right climate for competition and enterprise to survive, but of getting into our society an understanding of the ways in which wealth is created. Rather than treating entrepreneurs as second-class citizens — and there is still a feeling that they should be using the tradesman's entrance — they should be revered, because we depend on them for the quality of life to which my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) referred.
Few Opposition Members have tried to get people to set up in business. If, as an exercise, they did, they would quickly learn that it is rather like surmounting an obstacle course, despite the many measures introduced by the Government to make life easier. As Conservative Members recognise, it is not sensible for the time and energy of business men, which could be devoted to selling their goods and services, to be diverted into the minutae of regulation and form filling.
There is also a role for the schools, which are not doing enough to create an enterprise culture. Indeed, many aspects of the curricula are positively anti-capitalist. There is still an anti-capitalist version of history, where the industrial revolution is portrayed as a period of great poverty and deprivation. The reality is that while conditions were considerably worse than they are today, by our standards, they were considerably better than those achieved by previous generations within the agrarian and feudal economy. The reality is that the industrial revolution liberated people. It improved their standard of living and resulted in an upward mobility in society, which was impossible for all generations before that.
§ Mr. Raynsford
There has been some discussion in another place recently about the importance of religious education. How would the hon. Gentleman reconcile the advancement of the precept,Lay not up for yourselves treasures upon earth",with the views that he has been putting forward about the need to encourage enterprise in schools?
§ Mr. Forsyth
The hon. Gentleman's smugness is appalling. Has he not heard of people such as Andrew Carnegie? Is he not aware that some of the great charitable works that have been carried out in this country and in the United States are the results of entrepreneurs? [Interruption.] The hon. Gentleman has never heard of Andrew Carnegie. Has he not heard of Lord Nuffield? Perhaps William Morris is the name that he will find easier to grasp. The hon. Gentleman does a great disservice to the many wealth creators throughout history and today who have played a significant part as charitable benefactors.
§ Mr. Cash
Will my hon. Friend reflect on the fact that it was the Quakers in the mid 19th century, many of whom Opposition Members would admire, and who deserve the admiration of our generation, who built up both enterprise and the sense of genuine concern for fellow people? Frequently, it was the Quakers who set up businesses of the type that my hon. Friend mentioned. They were and they remain highly successful.
§ Mr. Forsyth
I am grateful to my hon. Friend. He is right. Indeed, as a Scottish Presbyterian, I agree with what he said about the Quakers.
The values of thrift, enterprise and hard work are central to the small business culture. The Church has prospered on the back of the free enterprise system. The systems of government and the ideology to which Opposition Members are wedded have resulted in the destruction of the Church and religion in many countries, including the Soviet Union. But, of course, Opposition Members distance themselves from Socialism in practice. The difference is that we in the Conservative party can embrace capitalism in practice and point to the success of capitalist countries in meeting the objectives to which Opposition Members pay lip service.
I say to my hon. Friend the Parliamentary Under-Secretary that we need to go further. We must make it easier for small business men to transfer capital and retain profits. I welcome the measures that have been taken—action on capital transfer tax in the Budget and the gradual reduction of corporation tax. I think it was my right hon. Friend the Prime Minister, before she became Prime Minister, who said that capital transfer tax could destroy a medium-sized family business in two generations.
There are still some difficulties in getting self-employed status. I know that my hon. Friend the Minister will do everything possible to persuade his colleagues in the Treasury about the importance of taking action on that matter. We need a clear objective test for self-employed status. If we can increase the numbers of people who can be self-employed, that will enable employers to take on labour without having to worry about whether it will take them over the VAT threshold and about being locked into expensive and burdensome employment protection laws. It could enable hundreds of thousands of people to be employed at lower cost without lowering wage levels. That should be a priority.
I have no doubt that Opposition Members will refer to massaging the figures, but why, for goodness sake, when calculating the unemployment figures, is no account taken of the large numbers of self-employed people in Britain? They do not exist in the figures and that is a major disadvantage.
711 Self-employment in the United States is rising 50 per cent. faster than paid employment. We could mirror that success. In the United States self-employment accounts for one-tenth of new jobs.
The hon. Member for Huddersfield seemed amused when I mentioned Italy. He offered to conduct the remainder of his speech in Italian, but said that he did not want to be associated with the Italian experience.
§ Mr. Sheerman
I hope that the hon. Gentleman does not intend to misinterpret my remarks. I said that I did not look to Italy for an example of a country where women's rights have been championed and furthered. That is what I said, and I hope that the hon. Gentleman understands it.
§ Mr. Forsyth
I am grateful to the hon. Gentleman. I would not want to misquote him. I asked him if he would endorse the Italian experience of deregulation under which all firms with fewer than 15 employees are exempt from a raft of regulations and requirements concerning benefits connected with health and safety, and so on. The hon. Gentleman replied by telling me about women's rights. I wish that he had addressed the issue because Italy cannot be said to be under a Right-wing, free market Government. Italy has introduced deregulation to a greater extent than my hon. Friend the Minister. I urge the hon. Gentleman to embrace the Italian example to create the renaissance that we need for employment. The system has worked well for Italy.
At the risk of upsetting Opposition Members, I shall discuss the material signs of prosperity created by deregulation in Italy. Car ownership has increased from 6 to 242 per thousand population. Italy imports more champagne and whisky than any other European country. It has the highest ownership of second homes and is well ahead of any other European country in terms of the numbers of holidays taken. Its people save 24 per cent. of their income, compared with 13.5 per cent. in West Germany and 5.7 per cent. in France. A total of 28 per cent. of the Italian working population is self-employed, compared with 7 per cent. in the United Kingdom.
Why has that come about in Italy? It is the result of the stalemate in labour relations in large enterprises. The trade unions became so powerful that they fossilised the system, and enterprises are now contracting out to small firms so that they have none of the hassle, and costs are lower. Employers, by encouraging their employees to set up mini shops and small businesses within their own factories, have introduced flexibility into business.
As a result, in the depressed regions and areas far from the centres of economic activity there is a boom in small businesses — mini silicon valleys, producing high technology as well as traditional manufacturing products.
The hon. Member for Fulham talked about the Church. The Church has played a key role, not in making great speeches calling for greater public expenditure to repeat the mistakes of the past, but by priests helping to coordinate local cottage industries. That is what is happening in Italy.
§ Mr. Corbyn
I am delighted to see the hon. Gentleman's conversion to the radical priests' movement, and I am sure it will be welcomed throughout the world. However, will he temper his argument and reflect on what the churches' 712 report "Faith in the City" said about the Government's policies on enterprise and deregulation and about unemployment in inner urban areas?
§ Mr. Forsyth
I thought that I had hinted at my view, but, so that it is clear to the hon. Gentleman, let me say that I regard our churches' approach to unemployment as wholly irresponsible. Like the Opposition, they have nothing to offer. They merely mouth the policies that have failed Britain in the past. I contrast their efforts with those of priests in Italian communities who have grasped the fact that free enterprise will be the salvation of their people and have helped in practical terms by assisting the establishment of businesses in those communities. If vicars in this country are prepared to do the same, we shall welcome that. I hope that the hon. Member for Islington, North (Mr. Corbyn) will give them the support that the Socialist Administration in Italy are giving to their people.
The hon. Member for West Bromwich, East went to great pains to tell us about the need to do something for textiles and manufacturing industry.
§ Mr. Forsyth
I am sure that the hon. Gentleman would have done so if he had had time. In Italy the production of textiles, clothing, shoes, furniture, tiles and electrical equipment — all the goods that the hon. Gentleman protested British people were buying in our shops — invariably takes place not in large companies such as GEC, but in firms employing 15 or fewer people. Is it not an extraordinary coincidence that that links up with the 15 employees that marks the limit on regulation, restriction and control in Italy?
Britain has the same reserves of people with the necessary skill in textiles and manufacturing industry, but they are either in the black ecomomy or languishing on the dole. They are not getting opportunities, because Opposition Members and others like them continue to support stifling regulation and control which is preventing employment from being generated and the removal of which has been so dramatically successful in Italy.
Perhaps we should leave Italy, because there is so much that my hon. Friend the Under-Secretary is beginning to achieve, though there is so much more that needs to be done.
§ Mr. Forsyth
The task of my hon. Friend the Under-Secretary is simple to define, but hard to deliver. If we make it easier and cheaper for small firms to employ people, they will do so. If we make it less burdensome and more rewarding for people to start firms, new firms will be created. If we make it easier and more advantageous to expand, firms will expand and grow.
The delight of the strategy on which my hon. Friend is embarking, which has already produced dividends, is not just that it leaves the Opposition with nothing to say—the speech of the hon. Member for Huddersfield proved that—but that it is not inflationary. The more new firms that are created, the broader will be the tax base and the lower will be the pressures on public spending. The supply side strategy of freeing firms to grow has the great advantage that it ends the idea of high inflation being the price paid for ineffective action on employment, which is all that the Opposition have to offer.
713 Of course, my hon. Friend's strategy will be long lasting and will create the wealth that we need to meet our obligations to the poor and the most vulnerable in society. In short, it enables us as a country not only to create jobs, but to create wealth—an aim on which the Opposition have no ideas of substance to offer the British people.
§ Mr. Jeremy Corbyn (Islington, North)
During the 40 minutes or so in which we have listened to the Adam Smith Institute contribution to this debate, my hon. Friend the Member for Fulham (Mr. Raynsford) and I have been able to do a little research. We found that the majority enjoyed by the hon. Member for Stirling (Mr. Forsyth) is the same as the Conservative majority in Fulham in June 1983. Therefore, as a portent of things to come, the hon. Member for Stirling may have made a historical speech in the debate.
This debate is also a debate within the Tory party. It is a debate between the pre-industrial revolution Tories, such as the hon. Member for Stirling, and the land-owning classes. The hon. Member for Stirling's analysis of the industrial revolution is incredible. To claim that the movement of people from the land to urban centres resulted in an improvement in their living standards is to turn history on its head. One does not have to read a Marxist interpretation of history to discover the social conditions of the mid to late 19th century in all the urban centres. People were forced off the land by mechanisation and an increased grab for profits by landowners and into urban centres in even worse conditions than they had left in rural areas.
The hon. Gentleman should study a little history before coming here and giving us the garbled view that somehow deregulation and lack of any controls on the ability of companies to exploit individuals lead to a higher living standard. If he believes that he should go and look at the teeming tenements in Hong Kong and places such as the Philippines where capitalism is unbridled. There he would find dirt, disease, squalor, misery, short lives and high levels of infant mortality. That is where the policy that the hon. Member for Stirling has been expounding to the House would lead us.
§ Mr. Michael Forsyth
I did study a little history, admittedly at St. Andrews, which the hon. Gentleman would probably write off. I do not dispute the fact that in Hong Kong and in 19th century urban Britain conditions were squalid. I was simply saying that conditions in Britain at that time were much better than they had been previously in rural areas. I ask the hon. Gentleman to address his attention to the conditions which exist in the squalid flats of Hong Kong, which I have seen, compared to conditions which exist in Communist China. The conditions in Hong Kong are much better by far than they are in the sort of society that the hon. Gentleman supports.
§ Mr. Corbyn
The hon. Gentleman obviously did not do enough history at St. Andrews while he was enjoying the benefits of a publicly funded education. His analysis of Chinese history is as cock-eyed as his analysis of British history. He should realise that the appalling social conditions in Hong Kong are the result of deregulated unbridled capitalism. The conditions enjoyed by people in China now, compared to 1948, are immeasurably better. 714 The country has pulled itself up without the assistance of anybody else, but by collectivising its economy, its efforts and its energy.
Starvation and poverty are not common in China as they were in 1948. Before the hon. Gentleman lectures the world on the way in which capitalism can improve living standards he should look at some of the countries which had to develop their own economies without the assistance of anybody else. I know that Conservative Members are now going on a "love China" spree. They should remember that the present prosperity in China is based upon a collective economy and not on an individual and market oriented economy.
§ Mr. Trippier
If that is the case, why do we not have people queuing up in Hong Kong trying to get back to Communist China?
§ Mr. Corbyn
The Government of both China and Hong Kong are looking after each other quite well. Hong Kong is the major port for China and it is also the route by which much foreign capital is invested in China. The Minister and the Government knew that very well when they negotiated the Hong Kong treaty.
I shall bring the debate slightly nearer to home because I believe that we are talking about enterprise and deregulation in this country. However, international comparisons are obviously important. The Government make much play of what they have done about employment and unemployment in this country. In June 1979 the number of employees was 23,157,000. By September 1985 it was 21,346,000. During that period the working population had increased from 26,609,000 to 27,669,000, a very large increase in levels of unemployment, as anyone can see.
Unemployment has more than trebled since the Government came into office. yet they still lecture us that somehow or the other the economy is on course and is more efficient. I can think of nothing more inefficient than having over 3 million people doing nothing with close on 1 million people on various schemes that are largely designed to massage unemployment figures rather than providing real jobs. They are trying to con people into believing that deregulation and lowering wage levels and living standards provides prosperity for the many. The Government's economic strategies have led to the highest ever levels of poverty in modern times, the highest ever levels of unemployment, and a feeling of desperation, desolation and hopelessness in the inner cities that has not been experienced since before the war. That is the effect of Government policies, but they tell us that we are turning the corner, and all that they have to do is a little more deregulation and then everything will be all right.
§ Mr. Cash
The hon. Member started his speech by referring to the connection between unemployment figures and election results, and has now turned to the question of the difference in the rate of unemployment between 1979 and the present day. He has tried to draw conclusions relating to the electoral consequences of that. I am not denying, as in my constituency, that the level of unemployment is higher than it was in 1979, although I was not a Member of Parliament at that time. By 1983, the unemployment rate had increased, but much of that was the consequence of the policies pursued by the Labour party when in government——
§ Mr. Corbyn
What a curious view of history the hon. Gentleman has. I seem to recall the 1983 general election campaign being dominated, as usual, by a number of sycophantic newspapers with gung-ho chauvinism about the Falklands unprecedented in modern times, which resulted in a swing against the Tories. The election in 1983 was not a great victory for the Tory party. It had fewer votes then than in 1979. If we take the pattern of history forward, the hon. Gentleman may lose his seat, and we can look forward to having once again a Labour Member for Stafford.
I move now to the situation in Greater London and the effects that unemployment is having on inner urban areas such as that which I represent. The level of unemployment in the Greater London area as of April 1986 is 402,700 people. That is a regional number as high as, or even higher than, many other parts of the country, but this is supposed to be in the prosperous overblown south-east, the prosperous part of Britain. In fact, the number of people unemployed is higher than in Scotland and many other regions. It is a terrifying figure.
The structure of unemployment within London shows that in the inner urban areas the levels of unemployment have consistently been higher than the national average and there has consistently been a structural level of unemployment that has meant that older people have been unable to find more work when companies have closed and the number of school leavers out of work is higher. The level of wages in those areas is often considerably lower than for other places, yet Conservative Members lecture us about the connection between wage levels and unemployment.
Recall the figure of 402,700 people unemployed and compare it with the number of vacancies notified at the job centres, which in April 1986 was 26,600. For the community programme agencies the figure was 2,032. The opportunities for employment in Greater London, especially for young people and for middle aged people who have lost their jobs because of redundancy. are limited. On 10 April in my borough of Islington, 12,131 males and 4,908 females were unemployed. That gives a total in the borough of 17,039 people. Those people want work. They are prepared to work and see around them the possibilities for work which would be realised if money were pumped into the economy by way of public investment and enterprise.
I have here the figures for full-time education school leavers registered in benefit offices on 10 April. In Islington those under the age of 18 numbered 283; for 18-year-olds the figure is 181, and for 19-year-olds and over it is 1,118. That is a total of 1,582 people of school leaving age or near it who are unemployed in the borough that I represent. Those figures are a devastating indictment of the Government's policies.
The Manpower Services Commission report for April shows that unfilled vacancies at the employment offices at Holloway numbered 187. At the Islington office it was 420, and at the careers offices there were just 25 vacancies notified at the Barbican and 114 at the Holloway office. Any hon. Member who cares to compare those figures 716 with the figures for unemployment that I have given will appreciate the misery and hopelessness felt by many young people. My borough council has done a great deal to try to promote employment in the borough. It set up and helped to fund a co-operative development agency and did a great deal through the GLC to open small factories. The Minister may laugh, but if he cares to visit Islington he will see how miserable life is for many school leavers, and he will see how his Government are detested because they are not prepared to do anything for young people.
§ Mr. Trippier
The hon. Gentleman is completely wrong. As a Minister, I have officially visited Islington on several occasions, even within the last 12 months, and I saw much enterprising work going on there. If I were the hon. Gentleman I would not pay credit to the GLC for what it did in that area because the greatest constraint on business and enterprise in Islington was the substantial increase in rates.
§ Mr. Corbyn
There are two errors in the Minister's argument. Firstly, no Minister has been able to produce any serious evidence to show that the level of rates has anything to do with the amount of business enterprise going on in any part of London. He knows that perfectly well. Secondly, he also knows that the GLC did a great deal to build factories and small workshop facilities, and that it funded various enterprises in the inner London areas. The GLC created a large number of jobs and saved a lot of jobs in London. Presumably that is one of the reasons why the Government were so keen to abolish the GLC, why the London Residuary Body is not prepared to take on the functions of the GLC, and why the Government are so hostile to the Greater London Enterprise Board.
My borough council has tried to create jobs through cooperative ventures and through the provision of factories and workshop space. The cost of creating those jobs is considerably less than the cost of jobs created in enterprise zones, which receive an enormous public subsidy by way of low rates.
The Government talk endlessly about solving our unemployment problem through the creation of small businesses and deregulation. The fault of that strategy is that the facts are against them. There are no more than 600,000 extra people employed in small businesses or self-employed than there were in 1979. The Government know perfectly well that their other policy of not supporting major manufacturing enterprises leads to a cycle of decline.
A few weeks ago we debated the shipbuilding industry and its need for Government support. The Government are not prepared to support that industry, and that leads to a knock-on effect on the loss of jobs. The same thing applies to all the other large, basic manufacturing industries. If the Government wish to solve the problem of unemployment they will have to start by being prepared to create and, support conditions for success in our large, basic manufacturing industries.
§ Mr. Trippier
I am sure that the hon. Gentleman would not wish to mislead the House in any way. He said that there was not an increase in the number of people employed in small firms. Indeed, I think that he suggested that there was a decrease.
§ Mr. Trippier
It is much bigger than that. Where is the hon. Gentleman getting his statistics? I take it that he is not including the self-employed.
§ Mr. Corbyn
The figures that I referred to were for the self-employed, and I recognise that there has been an increase. I was saying that there has been no increase to compensate for the loss of jobs in manufacturing industry. It has not solved the problem and it will not do so. The figures come from the Minister's Department. If he wants to check them, he presumably has better access to statistics than me.
§ Mr. Trippier
I suggest that the hon. Gentleman is misleading the House. He was talking about the number of people in small firms. If he checks the record on Monday, I am sure that he will find that that is what he said. My hon. Friends have spoken continually of the substantial increase in the number of self-employed people and people employed in small firms. Nobody disputes the fact that there has been a shedding of labour in larger companies, but the hon. Gentleman may want to check the figures in regard to manufacturing industry. They may be for industry as a whole.
§ Mr. Corbyn
The figures that the Minister referred to come from his Department and they show that there were 1,903,000 self-employed people in June 1979 and that the projected figure for September 1985 is 2,651,000. He will find that there was a loss of 35,000 jobs in energy, 43,000 jobs in manufacturing and 35,000 jobs in construction between September 1984 and September 1985. There has been an increase only in service industries. My point is that the Government's policies do not solve the problem and nor can they because the problem is that the Government are not prepared to maintain the country's industrial base.
We must consider the misery of inner-urban areas where small companies go bust because there are no orders from larger companies. That means that there are extremely high levels of structural unemployment. Such levels have many effects. They lead to a deterioration of the local economy, a feeling of hopelessness and misery to which many Labour Members are accustomed, and to dangerous health problems for unemployed people. The death rate among unemployed people is higher than that among people in work, as is the incidence of mental illness. Unemployed people suffer feelings of insecurity and anxiety about being unable to make ends meet. That is a consequence of Government policy.
All that the Government can offer us is the prospect of deregulation. They claim that workers should price themselves into a job. To that end, they remove the guarantees afforded by wages councils. Why? The same Government have given massive increases to people at the other end of the scale such as to the chairmen of nationalised industries, judges and Army, Navy and Air Force officers. They apparently need an incentive to work, but, at the other end of the scale, people apparently need lower wages to force them to work. The two do not add up. The Government are trying to create poverty at one 718 end of the scale and wealth at the other. That goes hand in hand with their taxation policies through which they have handed out£15 billion to people who earn more than£20,000 a year during the past seven years.
The Government are proposing a further round of deregulation. Deregulation does not necessarily create jobs, but it creates worse and often dangerous working conditions. The Government should ask themselves why some of the regulations exist and why workers have banded together in trade unions to demand safe working conditions, time off with pay to attend to other duties, and maternity leave. In the long run, the Government want to remove all those provisions. The Minister said that there were at present no plans to change the health and safety at work legislation. However, there is a tremendous shortage of health and safety inspectors, which can lead only to dangerous working conditions.
Unemployment can be defeated if the Government show a preparedness to direct and control investment, to support manufacturing industry, to ensure a shorter working week and earlier retirement, and to have, if necessary, a higher school-leaving age with more time in education. That could help to solve the problems of unemployment. We do not need the Government's nonsensical rush into unbridled capitalism with all that that brings with it.
In reply to my right hon. Friend the Member for Manchester, Blackley (Mr. Eastham), the Minister said last week that in the past live years those on lowest earnings had been underpaid by£12 million, and that the money had been retrieved by wages council inspectors. He thus accepted that there had been much underpayment in wages council industries. He then informed the House that only eight firms had been prosecuted for failing to comply with minimum wage laws. The Government's drive to get rid of regulations is entirely misplaced and is directed at the wrong end of the scale. Instead, they should support local government in its efforts to create jobs and support those who are trying to develop manufacturing industry. Above all, they should not rush headlong into removing all regulation. They should instead ensure that workers in small industries receive the protection that they need and so richly deserve.
§ Mr. William Cash (Stafford)
Several points have been made about the situation in my constituency. A few months ago Newcastle university produced a report on a political and entirely objective basis, showing that there were 70 boom towns in the country. They were categorised according to certain criteria, such as the level of unemployment, the number of cars, the extent to which people were involved in different activities, and so on. Stafford came 53rd out of over 250 in all.
The figures also show that since 1979 Stafford has had considerable unemployment, as the hon. Member for Islington, North (Mr. Corbyn) has illustrated. I do not deny that unemployment has increased since 1979. However, the results of the 1983 elections and of the by-election that I fought in 1984 were considerably better than people might have expected. The work force and management in Stafford produce products of a very high quality. As a result GEC has won the Duandong contract in China and a contract has also been won for the Queen Mary. Contracts like that provide tremendous opportunities for employment in Stafford and other areas.
719 Furthermore, the development of small businesses on the Raleigh Hall industrial estate, and so on, has shown that the spirit of free enterprise is very much alive in Stafford, with all its consequences for job prospects. Thus, the suggestion that the level of unemployment in Stafford is not complemented by that spirit of enterprise is entirely misleading.
The reality—this applies to all the matters that have been raised in the debate — is that, regrettable as unemployment levels may be, the crucial issue is how positive we can be in trying to get people back into work, when in truth most of the reasons why there is a high level of employment are those that are shared in all parts of the world. My hon. Friend the Minister and others of my hon. Friends have referred to the United States, Japan and European countries, including Italy. They have demonstrated the increase in the level of enterprise that has occurred in those countries. We must take account of overseas experience and be positive and constructive to try to improve prospects for our own people.
The Government take no satisfaction from the high level of unemployment that now prevails. We must look to the future and through measures such as those that are contained in the excellent White Paper entitled "Building Businesses … Not Barriers" to reduce the level of regulation to help those who are engaged in small businesses. We must help people set up small businesses and extend that help when they are in being. That is why I congratulate my hon. Friend the Minister on the help that the Government have given with local enterprise agencies. I understand that there are now well over 300 and that they are performing an extremely useful task. The agencies, in combination with local chambers of trade and other bodies, are showing that enterprise is something that we are learning about and developing at a rate that is enabling us to provide more real small businesses and more effective self-employment. The figures and the arguments are well known to all Members, and we know that we shall not be able to provide free enterprise and small businesses without a great deal of hard work.
An article appeared in The Times on Friday 6 June which referred to the work of Mr. Francis Blanchard, the veteran director general of the United Nations International Labour Office. I am sorry that not more Opposition Front-Bench spokesmen are in their places to hear what Mr. Blanchard had to say. I hope, however, that they will take note of his remarks.
The view is taken by Mr. Blanchard that self-help is of the greatest possible importance for those who are living in areas where economic conditions are not as good as we would like them to be. The same general point could be made about Britain. Mr. Blanchard says, especially about the third world, that the'informal' world of street vendors, repair shops, hoe makers and fish fryers should 'organise better the jobs they create themselves'. The road to a better life is not going to be via the factory floor.His report asserts thatto rely on policy measures, legislation and the promotion of proper standards would simply stifle the dynamism and creative abilities of the poor.The comment is made that this approachbreaks all the ILO moulds.Mr. Blanchard argues that 720it is time to recognise that the fight against unemployment and poverty is being lostand that by inference there is a need to make changes in the direction of helping people to help themselves and to provide the environment in which they can become self-employed because the prospects for them to be able to gain employment with a large manufacturer are no longer there and are not likely to be available in future.
We owe it to ourselves to examine the American and Japanese experience. The cutting of taxes, which has been discussed over the past few months, is an approach that we should consider carefully. I include in that a plea to increase the VAT threshold to£50,000. Cutting taxation remains a central issue in the debate. No doubt the debate will continue within our party. The importance of it may be highlighted by the fact that in the 1920s, when America — I think that President Coolidge was in office — reduced the tax rates significantly, an enormous increase in employment immediately followed. In the 1950s, in Japan, Tashan Ishibashi reformed the tax structure. There seems to be direct correlation between tax rates and the propects for self-employment and the regeneration of enterprise and employment.
There are other matters, such as education, to which we should pay attention in such a debate. Children must learn practical business skills to be able to take advantage of the enterprise structure that we are trying to create. We must accept that some children are not academically minded, and have a tremendous difficulty with academic subjects. The reality is that, eventually, they must find jobs. We must give them the opportunity, through the education system, to acquire the necessary skills to do so. They must acquire the adaptable and transferable skills that are necessary for them to get jobs when they leave school. I believe that initiatives are taking place. I have already mentioned that in my constituency GEC is providing practical study courses for schoolchildren. I recommend companies in other constituencies to follow that move.
The 18 million additional jobs created in America started very much in the home. Self-employment lay at the root. Deregulation and the reduction in the amount of legislation in America ensured that 85 per cent. of the jobs created in the past few years started in the home. That important point is reflected in the White Paper. The change in the use classes order could have a beneficial effect in providing an environment in which people involved in high technology or the rural economy will be able to provide themselves with an opportunity to set up in business on their own without unnecessary restrictions.
When redundant agricultural buildings are converted, they must be put to the best possible use. I congratulate the Royal Society of Agriculture of England, the Country Landowners Association, the National Farmers Union and Rural Voice. I thank the Bishop of Stafford and Rural Voice in my constituency for the work that they have done in helping to provide better opportunities for those who work in the rural economy. With new machinery and increased overproduction in agriculture, which is discussed in the White Paper, there are opportunities and there is a need for us to help those who live in the rural areas. We must put the redundant agricultural buildings to the best possible use.
Regulations take time. Time equals money. Regulations take time to absorb and time to put into practice. The need to reduce the level of over-regulation has been accepted by the Government. The White Paper 721 provides an intelligent framework within which the nuts and bolts needed to achieve our objectives can be found. It is one of the unstuffiest examples of "Dehumphrification" that I have seen in recent years. This first-class document deserves careful reading. It shows that we are committed not only to enterprise but to creating jobs.
A few years ago we introduced the Small Business Bill, which provided an opportunity for many people to examine the way in which to implement small business proposals. We in the Conservative small business bureau proposed a system of co-ordination between Government Departments to reduce the burden on small businesses. The Bill's opening words referred to the promotion of enterprise and employment—two crucial aspects facing this country.
Public services can be provided from private enterprise. Public services and public expenditure cannot be whistled out of thin air. We want to produce private enterprise on a scale that will dramatically increase over the next 25 years. We have a serious unemployment problem, but we are beginning to win through. The principles on which the Small Business Bill, the White Paper "Lifting the Burden"—which has now been implemented by the Government—and the new White Paper "Building Businesses … Not Barriers" are based provide the framework within which it is possible to start moving towards the fulfilment of the enterprise culture that we have discussed in this debate.
Reference has been made to trade unions and to the industrial revolution in the 19th century. I dare say that if I had lived in the mid-19th century I, too, would have wanted to stand up for the rights of workers who lived in appalling circumstances. My great grandfather, William Cash, was one of the first commissioners to deal with the treatment of coal workers on the London docks. He faced a big battle, which has been well documented, in getting the necessary legislation on to the statute book.
It does not follow that those of us who believe in free enterprise are necessarily antipathetic to the notion of trade unionism. We are concerned with the restrictive practices that have been built up around trade unionism, not its objectives. People from all walks of life need protection. It is equally important to ensure that we do not build up enormous monopoly interests, power centres and bases—whether in manufacturing, big industry or trade unions — which militate against the interests of the enterprise and the prospects for self-enterprise of the people as a whole.
Competition is part of deregulation. I was delighted to see the announcement by my right hon. Friend the Secretary of State for Trade and Industry of a review of competition policy. I have called for such a review in previous debates. Some months ago, I tabled a question asking for a review of competition.
I should have preferred this debate to take place in prime time rather than on a Friday, and Friday the 13th at that. This is a central issue and the debate provides an opportunity for us to consider questions in a balanced way. Despite one or two altercations, this has been a helpful and constructive debate, conducted in a reasonable spirit.
We have a national job to do, and through the White Paper the Government have done an enormous amount to reduce regulation and increase the prospects for enterprise. I congratulate the Government on the progress that has 722 been made. We are, of course. always impatient for more. I would rather see deregulation than White Paper, but I pay tribute to the work of Lord Young, the Paymaster General and my hon. Friend the Minister for their work in putting together the nuts and bolts that will lead to greater prosperity in this country.
It might be appropriate now to refer to Mr. Paul Twyman, head of the enterprise and deregulation unit, for his work during the past two years. I also thank the officials in the Department, many of whom are here today, for their hard work — which must not be underestimated—in putting together a package that will help this country to get off the ground and become more and more enterprising during the next 15 to 20 years.
§ Mr. Sheerman
With the leave of the House, Mr. Deputy Speaker. I shall not detain the House long.
There has been a sense of unreality about some aspects of the debate and I had to pinch myself when listening to some of the remarks from Conservative Members. The Government have been in power for seven long years. Indeed, the Conservatve party has been in power more often than any other party since the turn of the century, especially since 1945. If something is fundamentally wrong with the spirit of enterprise and the encouragement of new and small businesses, is there not something wrong with the catalogue of scapegoats put forward by the Government? The Government have an overwhelming majority and can obtain any legislation that they want, whether financial, industrial or trade. Yet, after seven long years, we are in the most pitiful position. We import more than we export and we have an appalling index of manufacturing production. For the period April to June 1975, it was 112.3, whereas, for April to June 1986, it was down at 102.3. Yet this country is devastated by mass unemployment unimagined by any Government since 1945. The Government are no longer committed to full employment ——
§ Mr. Sheerman
If the hon. Gentleman had listened to some of his colleagues' speeches, he would know that that is a common feeling in the Conservative party, which is no longer committed to full employment. The Government. want to talk not about unemployment, only job creation Of course we must talk about job creation, but we must also talk about unemployment.
We want to get the answers right and we desperately want job creation to be more successful than ever before. No Government deserve to be elected if they do not believe in the successful creation of wealth, competition from markets and the ever-changing needs of society where technology is moving so fast. We in the Labour party are committed to meeting those challenges successfully. We are conscious that we want to spread the benefits of that wealth creation differently from the Conservative party. We want to spread them across our society, to all sections of the community. That is the real difference between Labour and Conservative Governments when in power.
I have to nail some other myths before the debate closes. There is a myth that the Conservative party would love to promulgate, and does promulgate. No one is better at it than the hon. Member for Stirling (Mr. Forsyth). 723 That myth is a belief that the Labour party is anti-enterprise, anti-business and anti-wealth creation. Nothing could be further from the truth.
I tell the hon. Gentleman and other Conservative Members that, as I go round the country, business men and managers say, "Please let us have a Labour Government again." [Laughter.] Up and down the country, manager after manager says that. Conservative Members may laugh at that because it is an uncomfortable fact. [Interruption.]They do not like it. It is something to do with the fact that most of the idle people representing the Conservative party in the House have less attachment to expertise or background in manufacturing industry than any House of Commons in the past 100 years. They are parasites—people who have never earned a decent living in manufacturing industry in their lives. There are so many solicitors, parasites, stockbrokers—people who have never ever got their hands dirty in British industry. That is why there is an enormous gap. That is why they are so out of touch with what manufacturing production is about——
§ Mr. Sheerman
I shall not give way.
The fact is that the Conservative Benches are the Benches of parasites—people who have done well out of the City and out of the cushy jobs in our society. That is not true of hon. Members on the Opposition Benches. We have more experience of British manufacturing industry.
I tell the Government that, unlike them, we in the Labour party are not totally blinkered by ideology. One of the things of which I am extremely proud is that the Labour party is a learning party. We say that we sometimes make mistakes and get things wrong. We listen to people, industry and the trade unions, and we go back and reform our policies and get them right.
The Minister asked us what we shall put before the electorate. Let me tell him. The Labour party believes in a new and invigorating partnership between Government and industry—a creative relationship. We shall have a very good relationship with manufacturing industry. We shall have a more aggressive or a tougher relationship perhaps with some other areas of British industry. I speak particularly of the City and the banking system. The hon. Member for Yeovil (Mr. Ashdown) made this point, too. We need banks and institutions that invest in all our country—all our people.
In his speech, the hon. Member for Stafford (Mr. Cash) wiped away the futures of many people—whole cities, towns and regions. They do not have to stay there any longer. They are in the wrong place. They set up home, brought up kids and invested their life and future in their houses in areas that are no longer relevant, so let those communities wither and die. Let all those people move down to the rich pastures of the south.
The hon. Gentleman talked much about his constituency. I have looked at the unemployment figures for Stafford, for Rossendale—and for Reading, because of the Whip who was occupying the Front Bench at the time. I recently visited Reading. My constituents believe that everything is all right in the south of England, that it is rich and has full employment. In Reading unemployment is over 11 per cent. That is a place with green field sites in 724 a plush part of the south of England, but even there, despite its proximity to Heathrow and arteries linking it to the rest of the country, unemployment is high.
§ Mr. Cash
The hon. Member for Huddersfield (Mr. Sheerman) has made a number of unsubstantiated remarks. He made a series of general allegations about my speech which in no way reflected what I said. I said that I was deeply concerned about unemployment in my constituency, but that it was lower than the west midlands average, and that the Newcastle university report showed that, of the 70 boom towns in the country, Stafford came 53rd. I said that that proved the enterprise of the Stafford people and, furthermore, that unemployment was reflected in Stafford not by the negative, pessimistic view portrayed by the hon. Gentleman, but by a positive and enterprising attitude. I pay tribute to the people of Stafford for that reason.
§ Mr. Sheerman
The hon. Member for Stafford claims that I made unsubstantiated allegations. I mentioned the figures for the decline in manufacturing industry and GDP since 1979. They are incontrovertible. We sell less abroad than we import. The figures are on the record.
The Labour party understands British industry's needs. We understand the need to build a creative partnership between the public and private sectors better than the blinkered ideologues represented by the leaders of the Conservative party. That has not always been so because ideologues such as the Prime Minister, supported by the Secretary of State for Employment, have not always been there. A creative partnership between the public and private sectors can do a great deal for industry and enterprise. We believe that we can create, at national, regional and local levels, an enterprise infrastructure that can and will build on the emerging developments.
The Minister does not have to tell us that small business and small industry are important employers. We do not deny it. Indeed, wearing our constituency and shadow ministerial hats, we understand it only too well. We are in the business of creating a partnership for enterprise which will truly bring about positive enterprise throughout our country. That means investment in those parts of the country that some Conservative Members, such as the hon. Member for Stirling, have written off. We do not write off the west midlands, areas of Scotland or any part of our country. It is the Government's responsibility to create work and wealth for all our people, not just for those who live in the safe, soft Conservative heartlands. That is what we shall put our hands to after the next general election. We shall throw out many of the parasites in the Conservative party.
§ Mr. Sheerman
The hon. Member for Faversham (Mr. Moate) should have been here earlier if he wanted to hear some vintage waffle from his hon. Friends.
This Government do not understand industry. They are unsympathetic to industry. Industry has been in decline since the Government took over. Manufacturing industry has declined by one sixth. The Government have done precious little to reverse that trend. They parade their excuses. We are told that local government has pushed up the rates and made local industry uneconomic. There is no basis of fact for that claim. No serious research has been produced to prove that that is the case.
725 The 6 June edition of New Society reports that there is no evidence that decent employment standards deter employers from taking on more staff. Another myth is exploded.
The hon. Member for Stirling gave a wonderful performance. He said that the reason for our economic decline was the terrible stranglehold of the trade union movement, yet he went on to say that the reason for the success of the Italian economy was the terrible stranglehold of Italy's trade union movement. It was a tortuous process by which the hon. Gentleman drew those conclusions.
§ Mr. Sheerman
I shall not give way. I want to give others a chance to speak.
The latest Tory flavour of the month is that we should make our economy like that of another country. The United States and Italy are often mentioned. I am always suspicious of simple, populist solutions to complex problems. The Government specialise in such solutions.
Rebuilding the confidence of British industry will be a difficult task and we shall get nowhere fast by saying, "Deregulation will do it," or, "See how the Americans and the Italians have done it." Societies have different histories and cultural backgrounds and they must work within those constraints.
§ Mr. Ashdown
I have listened with care to the hon. Gentleman's considerable diatribe against the Government on employment matters, but I remind him that the debate is, at least in part, about enterprise and small businesses. Will the hon. Gentleman, therefore, give us some idea of the Labour party's policy for encouraging enterprise and small businesses?
§ Mr. Sheerman
Unless the hon. Gentleman has selective hearing, he must have heard me say that we would take a firm line with the financial institutions and ensure that a creative partnership of private and public enterprise would bring investment in all our regions. I said that finance would be more easily available in the regions and that we shall produce a package for small business which is attractive and more relevant in terms of enterprise allowances and the other initiatives that a Labour Government will produce and build on.
I said that the Labour party is a learning party. I admit that, although there have been problems with the enterprise allowance scheme, it has been a success. The problems include the facts that the scheme does not go far enough and the limits are too low. The£1,000 requirement is too restrictive and the counselling advice and back-up are not good enoughh. We are producing and will produce policies to encourage enterprise and small businesses which will be more successful than the Government's policies.
We shall not restore enterprise by the ideological diatribes that we hear from the Government. A Labour Government will consider the problems and solve them in a way that will set the country free and liberate enterprise.
§ Mr. Trippier
Before hearing the extraordinary speech of the hon. Member for Huddersfield (Mr. Sheerman) and the way in which it was delivered, I would have said that the advantage of having debates on a Friday is that we usually throw more light than heat on our deliberations. 726 If there has been any difficulty in the debate and perhaps on occasion tempers have been frayed, it is principally because Conservative Members are becoming increasingly frustrated by the fact that the Labour party especially does not go into any detail on what its future programme would hold for the small firms sector.
§ Mr. Trippier
I do not know who is in charge of the hon. Gentleman's party, but it is the responsibility of the hon. Gentleman and his right hon. and hon. Friends to get that programme sorted out.
§ Mr. Trippier
I shall show the hon. Gentleman the brief, as he mentioned it.
Let us look at the Labour party manifesto for 1983 "The New Hope for Britain". There is not one mention in it of small businesses, despite what the hon. Member for Huddersfield said. All I want is the simple connection of two words "small businesses" somewhere in that document. It has been double checked, and there is no such reference.
§ Mr. Trippier
I shall refer to the hon. Gentleman shortly. Perhaps he would like to intervene then. I must make my point, and I am sure that the hon. Member for West Bromwich, East (Mr. Snape) would not like to spoil it.
The Labour party manifesto for 1979 was exactly the same, in that there was not a single mention of small businesses. However, we have just heard from the hon. Member for Huddersfield that the Labour party is a learning party. It did not seem to learn between 1979 and 1983. It did not seem to alter its case. It now says that it will come clean and mention small businesses in the next Labour party manifesto. We cannot wait to hear about that.
The hon. Member for Huddersfield and I basically disagree politically, but we get on extremely well outside the House. However, we are both supportive of cooperatives. The hon. Gentleman has made a significant contribution to that movement and I pay tribute to him for doing so. He is in some difficulty with me, because he has found a Conservative Minister who supports cooperatives and believes in the developing and strengthening of the movement. We think that cooperatives are an important part of the small firms sector.
§ Mr. Sheerman
The hon. Gentleman is trying to be too kind. He must remember that I have to face re-selection next time. The hon. Gentleman knows as well as I do that the Government have cut the budget of the National Cooperative Development Agency and closed down nearly all the local authorities which were doing most for cooperatives. That is the fact of the funding for co-operatives under this Government.
§ Mr. Trippier
It was my decision whether we should continue the funding of the co-operative development movement to the tune of£200,000 a year for six years. As I have said before in the House—I am anxious not to 727 be deflected on this point—that contribution, contrasted with the£75,000 a year that we give to Business in the Community, is extremely generous. I believe in the cooperative movement and in the growth of co-operatives. However, for goodness sake, let us get things into context. We are talking about just over 1,000 co-operatives, compared with 1.6 million small businesses and 2.5million self-employed. However important co-operatives are, they are only a small proportion of the small firms sector.
The hon. Member for West Bromwich, East and I have one thing in common, in that we both come from the finest county God ever gave to man and I suppose we share a sense of humour because we come from that county. However, I do not want to damage the hon. Gentleman's re-selection chances. He does have a sense of humour, and it is appreciated by me. By jove, he needed a sense of humour to deliver his speech today, and we needed a sense of humour to appreciate it. I have never heard so much tripe. The hon. Gentleman is familiar with that term. We are familiar with tripe in Lancashire as they are in Yorkshire, I understand. The hon. Gentleman's speech was absolutely unbelievable. However he did not explain to the House why, if the Labour party had the recipe for success, unemployment more than doubled when the Labour party was in office. The hon. Gentleman could not explain that and nor could his right hon. and hon. Friends.
It is wrong for Labour Members to suggest that they have a monopoly of concern at the level of unemployment. I heard the excellent speech of my hon. Friend the Member for Sheffield, Hallam (Sir J. Osborn) and the concern that he clearly expressed, which is shared by me and by all Conservative Members. That the Opposition have the temerity to suggest that is diabolical. The funniest thing——
§ Mr. Trippier
No, wait for this. I cannot resist saying this. When the hon. Gentleman said that he thought rates were a marginal cost, I wondered to whom he had been listening. That was very funny. Is he prepared to stand up in West Bromwich and talk to his chamber of commerce and say the same thing? It would need a good sense of humour to listen to that.
§ Mr. Snape
Neither of us is laughing about unemployment. The hon. Gentleman asked me about the Labour Government's record, although this is wearing a bit thin. In the borough of Sandwell. during the last eight months of the last Labour Government's term of office unemployment fell every month. In the period since June 1983, unemployment has risen in 78 out of 83 months. As to rates, the hon. Gentleman asked me from where I had got my idea about the marginal difference. The references to it are on the record. It has been said by the hon. Member for Hayes and Harlington (Mr. Dicks), who I am sure represents the Right-wing of the Conservative party, in debates here in the past few weeks.
§ Mr. Trippier
If the hon. Gentleman is suggesting that rates are of marginal interest to industry, I am suggesting that he is out of touch with industry, because rates have a direct bearing and have a significant impact on small firms. If we are to hear from the Labour party that the increase in rates is only marginal, presumably we shall hear 728 the same thing about the rise in taxes that it would impose as a result of its programme of increased public expenditure. The argument is the same if it feels that it does not matter by what amount rates are increased. The hon. Member for Huddersfield has come clean and said that there will be increases in taxation. Presumably he will next say that the increase will be only a marginal cost, in the same way as the increase in rates. The truth is that rates are an overwhelming burden on the people whom we are seeking to encourage.
§ Sir John Osborn
When my hon. Friend meets the Sheffield chamber of commerce, he will find business men who have been trying to keep business in Sheffield who will admit that because the rate burden for comparable premises within 50 miles of Sheffield is so much lower—for example, in Huddersfield or Halifax—they have left Sheffield. They have to make a decision, and they do not stay in cities such as Sheffield but leave because too heavy a rate burden causes an adverse cash flow that can be detrimental in the long term, let alone the short term.
§ Mr. Trippier
My hon. Friend is right. I am convinced that business is driven out of cities, particularly cities where rates are high, and there is no incentive for people who are trying to attract industry nearer or into the city if there is too high a rate burden.
§ Mr. Ashdown
The Minister said that rates are an overwhelming burden on business. While I do not necessarily agree with those precise words, I am closer to his view of this matter than I am to that of the hon. Member for West Bromwich, East (Mr. Snape). If that is the case and they are a considerable burden on businesses, why did the Government take the decision to remove the rate support grant, which meant that in the shire counties, such as mine, rates went up by no less than 20 per cent. without a single penny of expenditure? That was the decision of the Government, not of anybody else.
§ Mr. Trippier
Yes, it was us, but the Government believe in good housekeeping. Several of us in the Chamber have had experience of local authorities, and have even been leaders. We know that it is not only the Government who must have responsibility for good housekeeping, but the local authorities as well.
I shall now try to cover in a less controversial way some of the other points made today.
My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) referred particularly to the American experience. He spoke about the Northern Development Company, and several hon. Members spoke about the partnership between the public and private sectors. I welcome that, because it can unite us.
The hon. Member for Huddersfield may know that I was in Leeds just a week or two ago to launch a new initiative started by the West Yorkshire enterprise board. We did not deregulate that. It was started in partnership with local enterprise agencies from the whole of West Yorkshire. It has come up with a scheme that may appeal to my hon. Friends, in that it provides finance in the form of loans for up to£15,000. That may seem small beer, but we have identified a funding gap at that low level and West Yorkshire has chosen to close that gap. That enterprise board has a political content, and power is undoubtedly in the hands of Labour councillors.
The private enterprise agencies are probably split down the middle, with 50 per cent. being set up in areas where 729 Labour controls the councils and 50 per cent. in Conservative-controlled areas. In some cases the Liberals may be in control, and that means that all the political parties are in this business. That combination will work, and I should like to see it replicated throughout Britain. What pleases me more than anything else is that that initiative started north of Watford. Speaking as a northerner, I am glad that happened because, like many other hon. Members, I get a little fed up from time to time hearing that everything happens in the south. It does not.
I am grateful to the hon. Member for Yeovil (Mr. Ashdown) for his kind remarks. I am pleased that he has played such a significant part in the development of his local enterprise agency. He was kind enough to invite me to open it a short time ago. It is important for me to say that, because the hon. Gentleman well knows that I am anxious to approach local enterprise agencies in a bipartisan way, because without that they will not succeed. It is the same with Sandwell. We need councillors on the board who represent the different political persuasions, because they are the main influences in the community and nothing can happen unless we can get such representation.
I suggest to the hon. Member for Yeovil that all that we are doing for small firms is not a PR exercise. He suggested that that may be the case, and it may well be so in terms of trying to increase awareness about what is on offer to small business men, because there is still confusion about the help available. I have some sympathy for what he said about trying to pull the act together. I suppose that I shall fail today, but I shall keep trying to convince him that we must recognise that the one-stop shop that he spoke about must still he at community level. That is where we part company, because his party keeps pushing the idea of a county structure to pull all the threads together. That might be a slightly different interpretation of the sort of regional government in which the party believes.
Nothing could be worse. I have spent the last three years in government desperately trying to get everything down to community level. A definition of community is virtually constituency size. I have my doubts about the wisdom of taking something to county level, but perhaps I should have a closer look at the hon. Gentleman's pamphlet. I am prepared to do that, as long as I do not have to contribute to the Liberal party. I shall come back to him at the appropriate time.
§ Mr. Ashdown
I shall not read the pamphlet to the Minister, but for his information it is called "Growth From the Grass Roots". I share his view that this needs to be community-based. I am not hung up on the county idea, because this needs to be as close as possible to conforming to the nature of the community. My point is that there is a need for some kind of structure loose enough to allow a thousand flowers to bloom, but tight enough to be able to co-ordinate what is at present for the new business man starting up unhappily something that is full of muddle, confusion and duplication.
§ Mr. Trippier
The hon. Member for Yeovil mentioned Business in the Community and all hon. Members have respect for the work that it has done. The stamp of approval has been placed on the enterprise agencies movement because His Royal Highness the Prince of Wales has agreed to become patron and president of Business in the Community. His Royal Highness would 730 not touch it if it was politically biased one way or the other. Some of us in the Government find that we have to stand to one side because the Prince of Wales is opening new enterprise agencies. This is a welcome development, and I can assure hon. Members that he can speak without notes for a considerable time about development agencies because he knows what he is talking about. That is a recognition of the growth and importance of small firms.
Because Business in the Community has a regional presence and regional directors, which it did not have some 18 months ago, it now has at least a regional presence. We would prefer them to he co-ordinators at regional level. I hope that we do not introduce another tier between the regions and the community. I still believe that that is the direction that we should take
In a robust speech, my hon. Friend the Member of Stirling (Mr. Forsyth) mentioned what I said about additional Government spending and how successive Governments have manifestly failed to create lasting jobs. The Labour party is obsessed with large companies. It is over-paranoic about them. That is its greatest weakness.
My hon. Friend also talked about developing the enterprise culture. Athough I can agree with everything that he said about that, I do not want to get overenthusiastic about Italy. This might be a surprise to hon. Members, but I spent some time in Italy studying small business programmes and schemes available there.
§ Mr. Trippier
I have no doubt that that is an enterprise in itself, and probably an expanding one.
While I was in Italy, I found it extremely difficult to distinguish between firms which were in the white economy and those which were in the black economy. There seemed to be an enormous number of firms in the black economy which would go out of business one day and open up again the next, probably leaving a trail of debts in their wake.
I am aware of the argument which my hon. Friend advanced about deregulation and the suggestion that firms with fewer than a certain number of employees should not have to complete all of the forms. When I went round various Government Departments and visited small firms lobby groups in Italy, they all said quite strongly that the bureaucracy was still extremely heavy. Their bureaucracy remains far heavier than ours. I believe that we have more to learn from the United States.
§ Mr. Michael Forsyth
I am grateful to my hon. Friend for giving way. I am sure that what he said about bureaucracy and the black economy in Italy is quite true. Was he impressed, however, that there were so many new enterprises with fewer than 15 employees which seemed to demonstrate considerable incentive in avoiding the burden of regulation? It was in that context that I was emphasising the Italian experience.
§ Mr. Trippier
To be honest, I was not as impressed as my hon. Friend clearly was. I was more deeply impressed, as my hon. Friend suggested earlier, by the growing number of self-employed people. I was also impressed by the changing attitude towards enterprise generally.
I do not want to deal with the speech of the hon. Member for Islington, North (Mr. Corbyn) because I do not believe that that man understands anything about enterprise.
731 I consider my hon. Friend the Member for Stafford (Mr. Cash) to be something of an expert on deregulation. I am grateful to him for the support that he has given me and my right hon. and hon. Friends on this issue during the past two years. I am glad that he took this opportunity to pay a warm tribute to Paul Twyman, the head of the enterprise and deregulation unit, and the civil servants who work in that department. Contrary to some suggestions across the Floor of the House, they do not operate as a police force. The thought of Paul Twyman marching around in Gestapo-type uniform stretches credulity to breaking point. They are responsible and work extremely hard on a very technical subject.
I am sure that the hon. Member for Yeovil will have discovered that there are hardly any small firms lobby groups which can devote time to studying what should and should not be deregulated. We owe the Department a warm tribute. I am glad to take this opportunity to praise civil servants. It is something that my colleagues in the Government should do more frequently.
It is clear from the debate that the Opposition prefer to tell businesses what to do and what not to do, and to tell employees what is good for them, regardless of the employees' views, or even of whether controls would deprive them of their jobs. For example, Labour Members oppose changes in the rules of wages councils, which means that they would prefer young people to be unemployed than to let them price themselves into jobs at wages that business can afford to pay.
The Opposition talk of a national minimum wage, but they do not tell us what it should be. We want to pin them down so that they have to tell us in detail what the new national minimum wage is to be. I tell the Opposition that they will frighten the pants off small business men, because they would have to lay off many people. They would certainly not be able to expand their work forces, and many businesses would go to the wall.
It has been an interesting and, as far as possible, enjoyable debate. The Government will do all that they can to emancipate the entrepreneurs to whom so many Conservative Members have referred. We believe that it is only with the spirit of enterprise that we can continue to increase the number of people in employment, as we have been doing for the past seven years. We are anxious to free the air to allow them the chance to breathe and to play a significant and growing part in this country's future success.
§ Motion, by leave, withdrawn.