§ Question again proposed, That this House do now adjourn.11.56 am
§ Mr. Graham Bright (Luton, South)
I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. King) on initiating this debate, which takes place in remarkable circumstances. A decade or so ago, the debate would have been about the decline of small businesses and the measures needed to reverse that decline. The situation today is very different. Those measures have already been taken and the debate takes place against a background of sustained growth in the small firms sector. There is no doubt about the scale and importance of that process. However one measures the figures, they are significantly better than they were eight or 10 years ago.
The average annual net increase in the number of firms registered for VAT since 1979 has been more than 27,000 and the number of self-employed people in both manufacturing and service industries has grown by more than 500,000. From those figures, produced by the Small Business Research Trust, it has been calculated that between 800,000 and 11 million new jobs have been created by small firms since 1980. That is an incredible figure and it entirely justifies the argument advanced by many of us here today, especially my hon. Friend the Member for Surrey, North-West (Mr. Grylls), that the way to create jobs is through small businesses.
My hon. Friend the Member for Northfield spoke at some length about his business experience and the way in which he started his firm. I have always maintained that one advantage that small firms offer is flexibility. They also offer opportunities for innovation, and, because they are small and flexible, they can deliver on time. That was brought home to me when I began my business in 1970—at the beginning of a Conservative Government, unlike my hon. Friend the Member for Northfield-having been made redundant from a large group of companies. The firm in question was part of the group and was, in effect, thrown out with me. I rapidly became aware that whereas in the past I had had to prepare papers and put arguments for any decision, which then had to go to the main board, a process which took days, weeks or even months, on my first day in command I could simply sit down at my desk and prepare a plan and a budget. As I ate my sandwich at lunch time, it occurred to me that that was it in the afternoon I could simply get on with it and put my plans into action. That really illustrates the flexibility of a small company.
Of course, small companies can innovate very rapidly. My company is still very small, although it is much larger than it was, and we are able to have an idea in the morning and put it into action in the afternoon. Large firms now recognise that. Many large firms buy in goods from small firms and I can speak from experience. In my constituency Vauxhall, which has a massive record of obtaining materials and supplies from this country, is looking at small companies. It recognises that it will get delivery in time and that the quality will be constant. That is good.
The figures I have quoted are impressive. They are the result of the structural changes that the economy has been undergoing and the exciting range of measures that the Government have introduced. Criticism of the Government's record from the Opposition is rather ironic 521 in the light of their record, particularly—I mention this to the hon. Member for Isle of Wight (Mr. Ross) who is alone on the Opposition Benches—the unholy alliance that took place in the 1970s. It was their policies on personal and capital taxation and on borrowing and lending that had to be reversed to bring the crisis for small firms to an end.
It is precisely because income tax has been reduced by 6p in the pound and because the thresholds have risen above the rate of inflation that the small business man has found it possible to prosper. That is what small businesses are all about. If they do not prosper, obviously they go out of business and it is not only the business man who loses his job but many others as well. It is so important that we provide the wherewithal for small firms to prosper.
Because the penal effects of capital transfer tax and capital gains tax have been removed, family businesses have been able to survive, and that is important. I have always argued that. People believe that there is something wrong with a family business. A family business is not just a business. It employs people and if the family, because of taxation, has to sell the company it is not just the family itself that loses out, but many other people as well.
Opposition Members tell us that they will reverse the policies on taxation that we have introduced if they win the general election. However, they also tell us—we have heard it this morning—that they are the friends of small businesses. One of the other may be true but they cannot both be true. The positive measures we have introduced over the past eight years such as the loan guarantee scheme, the business start-up scheme, the expansion scheme, venture capital scheme, enterprise allowance scheme and many more have had to overcome resistance both inside and outside the House. It is to the credit of my hon. Friend the Minister that he has had the courage to persevere and keep those schemes under way. The story is the same for enterprise loans, development corporations, freeports and so on. The defenders of restrictive practices, obsessive planning controls and rigid employment legislation are the enemies of small businesses. There is no doubt about that. That is why one often turns to the United States.
My hon. Friend the Member for Northfield spoke about what has happened in America and how small businesses have prospered because there is a different climate there. I always turn to America to see what it does. It has discovered some interesting facts. The American Government ensure that at least 30 per cent. of their spend goes to small companies. On research and development they found that as they went down the scale from enormous corporations to the medium-sized companies they were getting from the medium-sized companies about four times as many innovations per dollar spent. It is even more remarkable that the small companies, where there are a dozen or so chaps working on research, very often in high technology, were achieving 24 times as many innovations per dollar than the large corporations. That is something that not only the Government but big businesses are learning—that it is important and financialy beneficial to involve small companies.
I know that my constituents normally think of General Motors as being some enormous operation that covers the whole of America. That is not the case. The miracle of new jobs in America has resulted from small businesses, just as it is beginning to occur here. Sixty-six per cent. of all new jobs in America have come from companies employing 522 fewer than 20 people and, importantly, companies that are less than five years old. That points the way that we are beginning to go here.
It is the same in other places such as Canada, Germany and Japan. It is generally thought that one has to be a giant corporation such as Mitsubishi or Toyota to be successful in Japan. Although it may be a useless figure, it is interesting that every sixth Japanese worker is the president of his own company. That shows that Japan is not full of massive corporations. It has many small companies.
I will use the example of car manufacturing, as I come from Luton. The technique of delivery just in time is being developed in Japan because the large companies there do not make motor cars, they assemble them. Small businesses make the brake pipes, grommets and other bits and pieces.
Small firms are more flexible as they do not have the sort of labour problems that large firms have. They are able to deliver goods to the end of the production line. Six or seven companies may all make the same component and deliver them in small vans to the end of the line. Imagine the chaos that would be caused in this country if I turned up in my van and unloaded components at a major factory. The whole place would close down. However, that is how that part of the Japanese economy works, and we have to look at that.
One of the most significant steps we took was the capital allowance for the building of small units. It was first 2,500 sq. ft. and later 1,250 sq. ft. As my hon. Friend the Member for Northfield said, the one thing he could not find when he started his business was a place to start. It was impossible. In the 1970s, people used railway arches or battered, dirty old places that no one else wanted. Small businesses could find no where to start. However, in the country now, and certainly in my constituency, there are small units for nurseries or other businesses to start up in. The small units range from upwards of 400 sq. ft. This has enabled small businesses to become respectable. If a business man was working in a rat-infested place, he was not respectable. However, if he has a nice new developed place, he is respectable. We had to change the attitude that someone working for himself was not second rate. I am sorry to say that that attitude existed, but we have managed to put it on a new plain. The opportunity for small businessesmen to have new small units has inspired businesses.
§ Mr. Bright
I could not agree more with my hon. Friend. Although my small business has very meagre offices, they are like a palace compared with this place.
§ Sir Paul Hawkins (Norfolk, South-West)
I am glad to say that the Services Committee has produced a plan for the entire area from Derby gate to Cannon row. The contract was let on 8 May, and I hope that my successor and my hon. Friend the Member for Luton, South (M r. Bright) will soon have marvellous offices there. At least we shall be able to move more people from this building across the street and allow my hon. Friend to have a good office of his own.
523 My first Adjournment debate in the House dealt with the lack of facilities for Members of Parliament. I remember being told by a former Serjeant at Arms—the present one would never say such a thing—that I could not have a filing cabinet until I had been here for a year. After my Adjournment debate, a filing cabinet was issued to me, but it was placed in the Cloisters, which was then a gentlemen's cloakroom. I was told in no uncertain terms by the former Serjeant at Arms that my secretary could not go to the filing cabinet because it was in the gentlemen's cloakroom, even though it did not have a toilet or wash basin. My hon. Friend is much better off now.
§ Mr. Bright
We are going a little off the track, but I am sure that you will allow me, Mr. Deputy Speaker, to pay tribute to my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins), who has worked hard to improve conditions in the House. I accept that they are much better than they were, but there is still a long way to go. Thanks to his work, we can look forward to much better facilities. It is a great pity that he will not be with us to enjoy them. If I get a new office, I shall think of my hon. Friend.
I was talking about new facilities for small firms. The Government also introduced the small firms counselling service. As I said when I intervened in the speech of my hon. Friend the Member for Northfield, it is all very well to start a business, but what does not happen is that, overnight, a fairy waves a magic wand and someone becomes an entrepreneur. A person may have a skill or some knowledge of the product that he is making, but to be a small business man he must also be a bit of an accountant, a marketing man, an engineer or even a cleaner. He must have many trades under his belt. It is not always possible to do that, and the small firms counselling service has done much to ensure that firms do not run into trouble. Some have criticised it as a nanny operation, but it is an essential operation to advise people who do not always know where they are going. I am a marketing person and when I went into business, my accountant had to give me a piece of paper saying, "You enter it on the left-hand side and put it out on the right-hand side." That was all I knew about book-keeping. Often people need simple advice to enable them to keep their companies going in the right direction.
People are no longer afraid of splitting away and going on their own. I have always admired a company in my constituency called Measurement Technology, because five people who split from a major company and set up on their own—unfortunately, in a rat-infested building—now have a magnificent factory which they built themselves, and employ about 150 people. That is a tribute to them and is the type of thing that we should like to see.
The great silicon valley in America is not dominated only by large companies. Indeed, a company tends not to get too large because, when it attains a staff of 400 or 500 people, it tends to split and the top management goes off to start its own companies. There is nothing wrong with that and we should encourage it.
In this country, we are plugged too much into large operations. We have company cars and pension schemes and, therefore, people do not want to move. All too often, people believe that if one is to have a success mark, one must work, for example, for ICI. They do not believe that 524 it is any use starting up on their own in a small manufacturing company. I am glad to see that we are beginning to push that idea to one side.
I do not wish to dwell too much on the past or on the attitudes of Opposition Members. Instead, I wish to turn to the future and to the Government's policies after the election. First, it is essential that my right hon. and hon. Friends continue their tax cutting programme. A reduction of the standard rate of income tax to 25p in the pound in the foreseeable future will assist not only the self-employed and self-traders, it will also remove the divergence with the initial rate for capital gains tax. As long as that discrepancy remains, there is always an incentive for small firms to sell out, and we do not want that to occur.
Secondly, I hope to see a smoother progression in the rate at which small companies pay corporation tax. There is still too sharp a transition between the lower and full rates of that tax. Furthermore, as many of my hon. Friends have urged recently, it should be possible for small companies to make advance payments which can be offset against future research and development, or expansion. Funding such expenditure is still one of the key problems for small firms. I have plugged away for the introduction of graduated corporation tax for many years, as has my hon. Friend the Member for Surrey, North-West (Mr. Grylls). That should be done so that companies are not suddenly penalised. Indeed, I do not see why there should not be a tax holiday. As happens in income tax, a small company should not pay corporation tax on, for example, the first £5,000 or £10,000. That would encourage small businessmen to re-invest their money. It always upsets me that one must pay tax when trying to re-invest in one's company. Then, having paid the tax, one must go to the bank and borrow more money to put into the company. Obviously, the larger the firm the more able it is to manipulate its financial position and it does not necessarily pay that tax. Instead, the small business man is hit.
I have said on several occasions in the House, and I shall do so again now, that the thing that makes me most cross is when a small business man who desperately wants to invest more for the future goes out and buys an enormous desk, which is no use to anyone, simply to beat the tax man, or buys a big car just before the end of the tax year. We do not want him to do that. We want him to have the same flexibility in planning for the future as a big company. We want him to re-invest his own money in that business.
Fortunately, there is now a wider range of financial help available from the clearing banks and other institutions than ever before. I should like to pay tribute to the banks for that. However, they have not yet got it quite right and we must push them still further. I find that whenever I criticise the banks they invite me for lunch. I hope that they do so now because I shall tell them again that they must get their act together even more. We see wonderful advertisements on the television, but the reality is never the same as the golden magic that they pretend exists in the banks. However, it is the City which since 1978 has undergone the most marked transformation of attitudes to small businesses. The fact that banks advertise on television and take full-page advertisements in newspapers, which are aimed at small businesses, suggests that we are getting there.
525 The tragedy is that some local authorities, especially in inner-city areas, are still highly obstructive. They have tried to prevent local services from being put out to tender and have imposed extremely negative tests on potential applicants. Instead of fostering the growth of small retailers and manufacturers, they have raised rates thereby driving existing small businesses out and inhibiting the development of new ones. All the available evidence suggests that small firms, that is those employing fewer than 20 people, are the most effective agents for creating new jobs.
A commitment to open up inner-city areas to small businesses to enable them to find and develop premises without being strangled by red tape or penalised by excessive rates is required urgently. I see no reason why, in the initial four or five years of its life, a new small company in a deprived area, such as Toxteth in Liverpool, should pay any rates. Nor is there any valid reason for confining the repair and restoration of houses in inner-city areas, particularly on some of our bigger estates which are still owned by local authorities, to local authority municipal labour forces or, indeed, to major contractors. We should be prepared to break down contracts to permit small builders, plumbers and, sometimes, even tenants to undertake the work.
We can make most progress at local level. Small businesses are not the enemies of Labour-controlled local authorities; they are the most effective generators of new employment and the most active means of regenerating deprived areas. It is essential that premises are available to them and that the barriers to their establishment are removed.
My right hon. and hon. Friends and I are proud of the record of the past eight years which represents an unparalleled achievement. When I first spoke in the House that was one of my major hopes and I took on the chairmanship of the Conservative small businesses committee to keep that hope alive. Now it has been turned into reality. I am determined that the advances we have made shall not be lost. They must be the springboard for further progress by small businesses. Small businesses know who their supporters are in the House, and I am convinced that they will recognise that next month and give the Government the opportunity to move forward in the years ahead.
§ Sir Paul Hawkins (Norfolk, South-West)
I thank you, Mr. Deputy Speaker, for giving me this last opportunity to speak in the House.
First, I should like to congratulate my hon. Friend the Parliamentary Under-Secretary of State for Employment. We have all paid tribute to him, but the way in which he has managed to maintain pressure for small businesses fills me with amazement. He has terrific energy, yet does not have a bald spot on his head and has only a few grey hairs. He has created a completely different feel throughout the country for self-employed people and small businesses.
The hon. Member for Isle of Wight (Mr. Ross) spoke tremendous good sense. We were both members of the same profession and today we shall both leave the House, for my part sadly. This subject is of the greatest importance to Norfolk and my constituency, but in a different way from that of my hon. Friend the Member for Birmingham, Northfield (Mr. King), whose experience stems from large towns. The whole of Norfolk is an area 526 of small scattered villages and market towns with three large places of employment at the corners of the county. Norwich would not say that it was on a corner, and I suppose Yarmouth will be annoyed if I do not mention it as an employment centre.
Norwich, King's Lynn and Thetford are the three main areas of employment for my constituency. Thousands of people travel 30 or 40 miles to those employment centres. More and more people are becoming fed up with the long travelling times and the immense cost of travelling. They often find that their neighbours who sit at home and do not get on their bicycles or off their backsides to try to find jobs are better off than they are. People who go to seek work in one of these main centres of employment are often asked by their wives if there is any point in getting up an hour earlier and taking an hour to get home and flogging to and from Norwich, King's Lynn or Thetford when they are no better off and will need a new car before long.
One of the great things about small businesses is that many of them are set up in small towns and villages close to where people live. We must go on pressing for that to continue. We have a large number of council houses which used to be occupied by farm workers. In the past, three, four or more workers were required per 100 acres, but nowadays only one man is required for 500 or 600 acres. The people who live in those houses want work close to home. We must go on pressing local authorities to make more use of farm buildings, even though some local authorities are beginning to do that.
In my part of the world farm buildings are very attractive with pantiled roofs. However, they are low buildings which will take farm carts but not large implements. Those buildings and barns are falling down, but in many instances they could be converted into small premises for a three or four-man starter business. They could also be used by a craftsman who wants to work on his own or with an assistant or apprentice either making furniture or carrying on one of the many other trades found in the countryside. I hope that my hon. Friend will go on pressing local authorities to help in this way. Mach has been done and I praise that, but much still remains to be done.
People who want to set up in farming in a small way should be brought into some of the training schemes that are available. It seems totally wrong that while every other type of business can be assisted by business schemes, the small farmer who wants to set up on his own and wants some assistance does not seem able to find any help. Advertising of all the schemes should be carried out in far simpler terms and in local papers. We need fewer and less complicated schemes. The advice service should be as readily available as is humanly possible.
I fear that banks are not as friendly as they are made out to be or perhaps they are more strictly controlled nowadays from remote headquarters than they were in the past. I remember finding some correspondence between a local director of Barclay's bank in King's Lynn and my grandfather. My grandfather had started an auction market and some people will know that if one has a market on Tuesday one pays out the same night. In the old days people did not pay that in until Saturday. But more and more people were paying in more quickly and my grandfather did not get his money in until about 10 days later. The "Mr. Gurney" of those days wrote to my grandfather and said, "It is about time that you reduced your overdraft", which went up alarmingly at certain times 527 of the week. My grandfather wrote back and said, "I have entrusted you with my money, Mr. Gurney, for the past 15 to 20 years; I think you should be able to trust me for the next few years." Mr. Gurney wrote back and said, "Hawkins, you are quite right". To allow the local bank manager a little more leeway, because he knows his customers, would be a good thing. I think that my hon. Friend the Minister can press the banks to be a little more human.
Back-up is needed not only to start a business but to continue it. The worst time that I experienced was when I returned from the war. My business had been running for nearly 100 years, but it was almost bankrupt. I should have been partner at the the beginning of the war, but my father was very ill and my uncle, who had been the other partner, died during the war. Luckily, people were very kind to me and after about two or three years business began to build up, but that was the time when one needed the help and understanding of banks and other people to be able to continue. Firms that have been in business for about three, four or five years come upon a time when their plight is very difficult and that is when they need some help.
I wish that more people would live above their shop or close to their businesses. We find that in towns everybody deserts them and lives about 30 or 40 miles out. I have been lucky because I lived down the yard from my business and I built a house in the old stabling where we used to have horse sales. It can he of great help to live close to the business when one is a small business man. The Government and the Minister have done more for the enterprise of individual people than anyone I have previously known.
I should like to end by thanking the staff and my colleagues, with whom I have had such a happy 22 years, for all the kindnesses that I and the others who are leaving this House have enjoyed.
§ Mr. Bruce George (Walsall, South)
It is a pleasure and an honour to follow a speech such as that which we have just heard from the hon. Member for Norfolk, South-West (Sir P. Hawkins). It must be very sad to be leaving the House, having spent so much of one's life in it. Many speeches have been made by those hon. Members who have chosen to depart. I have not chosen to depart and I hope that this is not my last speech in the House. My majority is 702 and I hope that the good people of Walsall will allow me to serve in the House for at least as long as the hon. Member for Norfolk, South-West.
The end of a Parliament is a useful time to take stock of one's own endeavours, of the future of the country and of one's region and constituency. At the end of the 1974–79 Parliament, I was fortunate to obtain the last Adjournment debate on the state of industry in my constituency. The Minister who replied was the late, lamented Guy Barnett. He had strong links with my constituency. As the Minister responsible for industry, he was seen in my constituency almost as the Minister for the town, such was the assistance that he rendered to Walsall and Darlaston, which I represent.
When I reread our speeches of 1979 and contrast the position then with today's, I do not see, unlike other hon. Members, the past eight years as years of almost unparalleled success. They have been the reverse. I do not 528 speak as a partisan politician who sees everything that his party did in a wonderful light and everything done by the other party in pejorative terms. Life is much more complicated than that. But this morning we have heard almost a caricature of reality. This afternoon, I shall host a reception downstairs for a launching of a book on the Falklands called "The Fog of War" by Derryk Mercer. The fog can be natural or deliberately induced. This morning, we have had the deliberately induced meteorological variety, confusing everyone.
Those who are perhaps visiting London and have stumbled into this place to sit in the Strangers Gallery and those who are listening to the debate may have gained the impression that we are on the verge of a Japanese-style industrial revolution. I suggest that people jump on a train at Euston and travel to the midlands or the north where they will see a different pattern which totally belies the euphoric atmosphere that some hon. Members have created, deluding not just the public but constitutents. Conditions are far from euphoric north of London.
Life is full of bewildering elements. How can one argue that there has been a revival when one looks at the midlands, which was the power house of the national economy until perhaps a decade ago? No one could argue with any sense that the industrial decline in the west midlands began in 1979. It was gradual and has been accelerated by the Government's ineptitude.
Unemployment in my constituency was 5 per cent. in 1979. I recall an industry Minister coming to Darlaston in 1978 and being berated by virtually all the trade union convenors. They asked. "How can you stand there and tolerate unemployment in this town of 4.9 per cent.7 Virtually every one of the establishments that they represented is now defunct or has been so truncated as to be but a shadow of its former self.
Manufacturing industry in the west midlands and my constituency has collapsed, although a large number of small enterprises have been created. I very much welcome the establishment of any enterprise of any size. I desperately hope that the small companies will become the ICIs of tomorrow. We should remember a company in my constituency, GKN Bolts and Nuts, which ended its long connection with my constituency. A number of smaller units have been established on that site. I go there and am delighted about the development. I applaud what is being done. One company has gone and 30 are appearing, giving the superficial impression of an enormous increase in employment, but the reverse is true. However, the aggregate of people employed in many of those larger units, which to an extent have supplanted the defunct factories, represents a small percentage of the former work force.
I find the present state of affairs sad. I am a non-ideological, non-partisan politician. The main thing I want to see is jobs created in my constituency in the west midlands and in the rest of the country. If the Conservatives were able to achieve that goal, I would applaud them and I would be prepared to leave aside partisan politics, but I do not see that golden dawn emerging. I believe that the electors are being subjected to a confidence trick of mammoth proportions.
§ Mr. Trippier
I appreciate that the hon. Gentleman started his speech in a non-partisan manner, but now we are getting to the quarrelling stage. I believe that it is a massive con trick on the part of the Labour party to try 529 to convince the country that the larger companies, such as GKN and other household names, will increase their share of the labour market. That is a non-partisan point. It is unlikely that those companies will take on more labour because of the increase in modern technology and higher productivity per man. Such companies are much more likely to shed more labour, even though they will make increased profits. However, all the evidence in this country and abroad shows that there will be a dramatic growth in employment in those companies employing fewer than 20 people.
§ Mr. George
I do not share the Minister's optimism.
One of the engines of recovery, introduced by the Government for the area that I represent is the Black Country urban development corporation. The Order establishing it passed through its parliamentary stages on Tuesday and I was a member of the Committee that waved it into existence. In the debate, the Minister alluded to a document that stated that 17,000 new jobs would be created in Sandwell, and in the Darlaston area of my constituency. There is little to underpin that argument. It appeared almost as though those figures were plucked out of the air.
Earlier I spoke of an attempt to delude the population. Thousands of years ago Plato talked about the "noble lie". If one repeats a noble lie frequently enough, people will believe it. This morning we have heard a line of argument—it will be repeated in the election campaign—that is persuasive but fallacious. The country is told, "We have suffered in the past, but the worst is over. All of the factors are now combining to produce a take-off. You have pulled in your belts; now let us see the virtues of sacrifice and the virtue and wisdom of this Government." That fiction may or may not survive the next month. However, if it does, we shall see the mirage disappear. The anticipated 17,000 jobs will not be created in Sandwell or Darlaston. There is little evidence to support that argument.
We have witnessed the collapse of manufacturing industry. Some 80 years ago, Lloyd George—no relation, but I am not entirely certain—visited the town of Walsall. He described it as a town of 100 trades. On the basis of economic statistics it is possible to extrapolate that we are almost heading towards a town of 100 jobs. I am not arguing that all the blame can be attributed to the Government. However, as a result of the Government's policies, I have seen the progressive elimination of large, medium and small companies in my area. The roll call of dead or dying companies is alarming.
I recall one of my speeches in 1979—I am almost reaching Harold Wilson proportions in recalling my old speeches, and I apologise—in the final debate of that Parliament. I listed those companies in my constituency that were in some difficulty but had good futures. The reason why I said that those companies had good prospects was that I had conducted a survey a few months previously among those companies and they had said, "Yes, we are OK. We see the future in a reasonably clear fashion. We are happy about it."
Of those companies Rubery Owen has almost completely gone from my constituency. I led a deputation to the right hon. Member for Chingford (Mr. Tebbit) when he was at the Department of Trade and Industry I asked him to find a grant to keep the company afloat until something better came along. He turned to his civil servants and they decided on using the derelict land 530 clearance scheme. The site was razed and trees planted so that a new enterprise might be established. Industry is not to take on the site but houses are to be built there.
Eaton Axles, an American company, has gone. F. H. Lloyd deliberately fell on its sword as a result of an appalling deal struck between a number of companies based on a scheme instituted by Lazard. The situation is desperately unhappy. One can list companies such as Charles Richards. They are gone, gone, gone.
There is talk of a revival, but I say that there is no revival. It may be happening in some other areas—I doubt it—but it is certainly not happening in my constituency, which is typical.
The Government have let down the area that I represent. I want to encourage industry to move to my constituency. A few days ago I took a day off, at a busy time for us all, to try to facilitate the move by one small company from a part of the west midlands outside my constituency to my constituency. On Monday I am to have a meeting with the chief executive of Walsall council and hopefully a new company will be set up. However successful the Government's policy, it will only partly fill the vacuum left by history, neglect and their policies.
I have spoken of fiction and of "the fog of war" created by this Government. The unemployment statistics were published yesterday, well timed for the election. They apparently show a fall in unemployment. They are an attempt to stampede people into thinking that all is well. When the Government came to office, just over 1 million people were unemployed, and now the Government claim success as the 3 million barrier is crossed. What kind of success is that? How can one throw one's hands in the air with glee when only eight years ago unemployment was one third of today's 3 million. We know why the figures are coming down. It is only partially because new jobs are being created. It is the result of incredibly sophisticated—but crude in some ways—creative accountancy.
In Walsall 6,500 youngsters are on job creation schemes. I welcome any training programme, but those youngsters have been removed from the unemployment statistics. That 6,500 should be added to the 17,000 official figure. The real figure is well above the 16 per cent. officially attributed to the Walsall travel-to-work area. The real unemployment figure is about 25 per cent. The problem is acute. No amount of massaging of the figures and euphoric speeches will alter the underlying decline in employment in my constituency.
I shall attend a meeting this evening with some business men from Caldmore in my constituency. They are mainly Asian shopkeepers who are worried about crime with which the Government claim to be dealing so effectively. I raise this issue, not because I am making a speech about crime and law and order, but because it shows that there is a link between the growth in crime and the alarm that it has caused among many small business men. In the H division of the west midlands police force—the Walsall area—crime has doubled in the eight years since the Government took office. The number of police officers has risen fractionally, but the amount of overtime worked in the past eight years has fallen to less than half of what it was in 1979. Therefore, there are fewer policemen on the beat and driving around in cars now than there were in 1979 and 1980.
The results are obvious; crime is proliferating. Police officers are doing jobs that they were doing to a much lesser extent seven or eight years ago—for example, 531 dealing with crimes involving drugs. At the present time the police are expending a great deal of their effort on preparing to deal with public order disturbances. The community—business men and ordinary citizens—is literally walking in fear. That is what has happened in the period between 1979 and 1987. Crime is affecting small businesses; theft and vandalism make business men reluctant to establish themselves in parts of town that may be run down. The very parts that require regeneration and resources are in an environment in which business men may be timid about establishing their enterprises.
The picture that has emerged does not inspire me with any great feelings of anticipation or eagerness. The Government have said that they will set up urban development corporations, to which I would give a cautious welcome. It would be remiss of me to turn down any money that came into a deprived part of my constituency, such as Darlaston; I would not want to do that. I welcome the resources that will come—I hope that they will come—but I am sceptical about the method used to bring resources into the town.
I am a great believer in local government, and I have campaigned for a number of years to get the local authority to see its role more in terms of initiating enterprises, sustaining them and creating an environment that would make more employers want to come to the town. The local authority with which I work—Walsall—has done a good job. Its major problem is that of derelict land. Much of my constituency—especially Darlaston—consists of land that has fallen into disuse. Formerly it was industrial land; it is now moribund and useless. It must be brought back into use for industry, for housing and for other purposes, but that can be done only at a high cost.
Regrettably, the amount of money given to authorities such as Walsall to start work on their derelict land has been grossly inadequate. If they had been given adequate resources to reclaim that land, that would have created an environment in which industry would be more prepared to invest. If local authorities had adequate resources to create infrastructure on that derelict land, that would be a further bonus. If the Government had been more prepared to give grants to help companies that were in difficulty, those companies would have been sustained, but they have gone to the wall. I should have thought that local authorities would be the agents for industrial regeneration if they had been given the proper resources.
The great advantage of local authorities becoming more professional, when given proper resources, is that they know their areas; and there are good links between local authorities such as Sandwell, Walsall and Wolverhampton. They could have been the engine of regeneration to supplement other approaches.
Ostensibly, the Government are anti-quango. When the Conservative party was in opposition, there was an enormous campaign against quangos. The Conservatives said how repugnant they were and that they must be abolished. What did the Conservative Government do? They abandoned the democratic principle by allowing the local authorities to provide regeneration in rundown areas, and they set up the quangos to achieve that.
A couple of weeks ago I attended the first meeting of the Darlaston local committee in Darlaston town hall. It was an initiative by the local authority to bring local people into the planning process. People were given the 532 opportunity to get problems off their chest and to settle scores with councillors for not having done the jobs that they asked them to do. It was the nucleus of genuine input by the public, so that planners would not pursue a policy and then find that it ran counter to local wishes. Such local committees exist throughout the town. They can be used for grievances and settling scores. If handled properly, they can be a great opportunity for public participation. "Public participation" is not an empty expression, but the public can genuinely participate.
The Black Country urban development corporation, a quango that is on some form of pedestal, will have money to put in. We shall lose the democratic input. I hope very much that there are discussions between the local authorities and the development corporations to try to achieve a proper working relationship. I do not want to see duplication of planning between Walsall council and the urban development corporation. I want to see a harmonious relationship. I hope that the development corporation will work with the local authority to cut down bureaucracy and achieve a common objective. In 12 months perhaps we shall see the extent to which the development corporation has achieved its objective of bringing industry to the town—not by funding it, which is not its responsibility, but by creating an environment in which industry is prepared to operate. I hope that that will be successful, but I believe that some of the hype to which we have been subjected in recent weeks is over-optimistic.
We are reaching a critical phase in our national and industrial development, which may be a turning point in British political and industrial history. We always talk about each election being an epoch-making or watershed election. Perhaps this one will be. If the Conservative party is successful, perhaps we shall see an economy which in many ways will be a negation of the economy that we have worked for collectively for four decades or more. I do not like to see such a society, with the get-rich quick approach where the wealthy are doing pretty well and the unemployed and those at the bottom end of the economic and social scale are the victims of other people's success.
The task facing Britain and other industrialised nations is to create sustained growth in employment and to raise living standards, but that will come about through a proper industrial strategy dedicated to securing our economic future. It will be done by rebuilding industry. Much as I want to see small industry prosper, I do not want us to go overboard and see the future of Britain as consisting of the small industrial sector, when we lose one after another of our industrial giants, with one taken over by another foreign company. I do not want our economy to be sustained largely by the service sector.
I do not want the west midlands to be a grand tourist centre, with tourism being a substitute for other industries. We want manufacturing industry to return, and that can come about not through the approach taken by the Government, but through an alternative approach. We want sustainable growth of output and employment, and that requires a steady improvement in our trade performance in manufacturing.
The Government have retarded economic recovery. What we shall do to help small and large businesses is introduce an emergency programme to cut unemployment by 1 million in two years. This must be just part of a longer term aim of giving more people an opportunity to work. The objective is to create real jobs. I believe that we shall 533 devise and implement a policy that will ensure that the industrial base of my constituency is not diminished and that the unemployment queue will not grow longer.
In the next few weeks, a genuine choice has to be made between whether or not one wants to see a continuation of the Government's policies. In my constituency and many others, those policies have led to the industrial base being truncated and hope being eliminated from the hearts of many people. An example of such people is the young man I met a couple of weeks ago who, at the age of 22, apart from a short spell on a job creation scheme, has been unemployed since he left school at 16.
This morning we have heard a great deal about how wonderful is the small sector of industry. I applaud that sector, but I want a healthy private sector operating alongside a healthy public sector. The aim must be to create viable jobs that will be sustained in a difficult world where international competition is becoming more and more intense. I hope that people will not be conned by the lie that we have heard over the past few weeks and that we shall hear more and more over the next few weeks. The economy is not entering a period of sustained growth. The continuation of this Government's policies will result inevitably in the further decline of manufacturing industry.
§ 1.1 pm
§ Sir John Page (Harrow, West)
It is a pleasure, Mr. Deputy Speaker, on the last occasion that I shall speak in the House, to be called by a Deputy Speaker who is such an old friend of mine. I remember many occasions when you were a Minister at the Ministry of Labour, and I was chairman of the Conservative party labour committee and we used to cross swords, but always in the most friendly way.
This is a friendly occasion, but I felt that the hon. Member for Walsall, South (Mr. George) tried to damp some of the enthusiasm in order to further his election chances. I do not agree with his final words of deprecation of the future because, as someone who has spent all his life since 1948 in manufacturing industry, I believe that there is new hope for our industries. There has been an uncomfortable time and some slimming down, but now the chances, in both new technology and in the application of new technology to old industries, are exciting.
My hon. Friend the Minister has done a great deal in getting around to many small businesses of all kinds during the time that he has been responsible for them. I congratulate him on the amount of travel he has done, the time he has spent, and the deep understanding that he has shown. Whether he continues in his present position after the general election or becomes Foreign Secretary or Secretary of State for Trade and Industry, which, would be well deserved, I ask him to continue to take an interest in small businesses and see whether bureaucracy can be reduced still further. Small business men still tell me about the number of forms, such as those for VAT, which they have to fill in, which make life difficult.
It is difficult for the corner shop to survive in the days of the supermarket. However, those that remain provide a service that cannot be given by the supermarkets, and they will survive and grow.
I will give a couple of examples. In the village where I live, there were two bakeries 30 years ago, but 15 years ago they vanished and for 10 years the shops sold Mother's Pride homebake and the like which seemed to be provided 534 by the manufacturers of cotton wool rather than bread. Now, however, I am pleased to say that we once again have two bakeries. Another example of a highly successful small business is the shop near the Terrace in this building which must have a bigger turnover per sq ft than any other retail outlet in the country. The queues there at Christmas time and, indeed, when I went along there 10 minutes ago show what an excellent service it provides.
I hope that I shall not be out of order in using that last example as a bridge to my next remarks. It is the quality of service that Members of Parliament receive from all the staff that makes the House of Commons such a marvellous place to work in and I have been very moved by that experience. We have the ultimate elite of Clerks, all of whom know so much more than the Members who come to them for advice but deal with us very gently. Then there are the Hansard Reporters. I do not know how they manage, especially when a Member such as my hon. Friend the Member for Southend, East (Mr. Taylor) is speaking. There are also the people in the Library and the research department and in the Refreshment Department. There are the Badge Messengers and the police. All of them make our lives here so happy. Not once in 27 years has any member of staff ever been the faintest bit rude or discourteous to me, to any of my guests or to any of my constituents who have sometimes come in their hundreds as my constituency is so near London. I hope that over the years this marvellous standard of service will continue in the greatest Parliament in the world.
§ 1.7 pm
§ Mr. Andrew Rowe (Mid-Kent)
It is an enormous pleasure and privilege to follow in the debate my hon. Friend the Member for Harrow, West (Sir J. Page), who has been a friend of mine since I was very green and wet behind the ears in Conservative politics. My hon. Friend has always been most generous in allowing me to expose his constituents to my tyro attempts at boring them to death—I have become much better at that lately—and I am very sorry that he will not be with us in the next Parliament. He and others who have spoken today have given a great deal to this place, and as one who came into the House at the last general election I know how much we owe to older Members who have been here for a long time. I am honoured to follow my hon. Friend in the debates today.
I am sorry that the hon. Member for Walsall, South (Mr. George) has temporarily left the Chamber, as I was somewhat dismayed by his contribution and would like to take up one or two points that he made. For a child, one of the most exciting moments at the pantomime is when the dry ice is activated and the auditorium begins to till with smoke from below, and as it fills up all kinds of magical things happen behind the smoke. As the hon. Member for Walsall, South was speaking, I could not help visualising those engines of fog in the wings. Fortunately, dry ice smoke evaporates very rapidly and I hope that by making one or two observations I shall accelerate the process a little.
I suspect that the hon. Member for Walsall, South felt a desire to show that he conforms with Labour party policy. In these hard times it must be gratifying to find an hon. Member in the Labour party who does conform with the party line. He was talking about the unemployment figures and the way in which they appear to say one thing 535 whereas in reality they say another. Most of the comments from Opposition Members in the House about the unemployment figures are hypocritical. For example, many people in the Labour party believe that it would be appropriate to reduce the age of male retirement to 62½ and some go down as far as 60 years to have parity with women. Were they to succeed they would remove a considerable number from the labour market at a stroke. I wonder whether they would continue to count 62½year-olds and 63-year-olds as unemployed. If they did not, would that not be massaging the figures in the same way as they accuse us of doing? If people are in the employment market looking for jobs and cannot find them, they are unemployed. If they are in a category which, for whatever reason, is not looking for work, they are not unemployed. The sooner the public understand that all the talk about massaging the unemployment figures is a lot of my eye and Betty Martin the better.
The hon. Member for Walsall, South also talked about the history of the west midlands. He argued that it was somehow the Government's fault that the west midlands was in decline and that no amount of small business regeneration could possibly replace the prosperity that has disappeared.
When I first took an interest in small businesses about 11 years ago and I and the then hon. Member for Basingstoke, now my hon. Friend the Member for Hampshire, North-West (Mr. Mitchell), established a small business bureau—the first and only pressure group within a political party in this country aimed explicitly at assisting small firms—the first major campaign we ran was against the legislative monstrosity called the West Midlands County Council Bill. It was an extraordinary piece of dirigiste legislation aimed at enabling that great county council, which has long since died, to set up small businesses for itself. It was to be able to set up florists, hairdressers, travel agencies and a whole host of small firms on the basis that, with its large bureaucratic organisation and what the hon. Member for Walsall, South calls its close understanding of the local community, it would be able to run the small firms with far greater effect than entrepreneurs for whom such firms would be their only livelihood. I am glad to say that the first and great success of the small business bureau was to assist in the destruction of that piece of legislation.
If the hon. Member for Walsall, South was in the Chamber I would tell him that small firms thrive in places where they are respected and valued. It may be that little by little and grudgingly some Opposition Members are beginning to feel attracted to small firms because they see them, however unwillingly, as generators of employment. The attitude that scums through is one of the grudging acceptance of them, not of the joyful championing of them.
It is not the slightest use Labour Members preaching that they support small firms while they are struggling but continue to berate successful business men as being cancerous parasites on the body politic. They say that anybody who makes a success of his business, takes home a profit, increases employment and does well is to be despised, but that if he is not doing very well he is desirable. The characteristics of a business man are the same from beginning to end. If the only contribution of Labour Members is to find ways of increasing taxation 536 and of destroying business incentives, it is scarcely surprising that small business men who wish to set out on this rocky path go to areas where they know that, if they succeed, they will be as welcome as they were when they began.
The Minister has been astonishingly patient, as he always is, with the long speeches that have been made today. I should like to make only one or two brief comments. First, when the Government came to power in 1979 we had the most densely concentrated economy in western Europe. The 100 largest firms in Britain occupied a larger share of the gross national product than the 100 largest firms in any other country in the industrialised world. That was a dangerous position to be in. In 1979 it looked as if that position would continue with accelerating speed. That made us vulnerable to the industrial action of trade unions and to changing features in the international business scene. It made us vulnerable because large firms find it difficult to adjust rapidly to changing circumstances, as my hon. Friend the Member for Luton, South (Mr. Bright) pointed out. That position has begun to change quite rapidly. The concentration of wealth and employment in the country is now far more widespread, which is a good thing.
As my hon. Friend the Member for Norfolk, South-West (Sir P. Hawkins) said, in 1979 business men had nowhere to start. I wrote a pamphlet called "Somewhere to start". The evidence of the hostility of many local authorities to small firms, particularly if they wanted to use disused agricultural buildings, was overwhelming. since the Government came to power in 1979 that has been changing. In those days what I call "The Archers" syndrome was dominant. That was the wonderful attitude of people who had lived and worked on the outskirts of large towns and who had moved to the country in their retirement with the wonderful vision of birds, butterflies and the quiet of the countryside. The moment that business men decided that they would like to start a small business in their area, those people instantly objected with a passion that only somebody who did not understand the countryside could arouse.
The countryside and country villages can survive only if there is employment for the people who live there, and the development of small firms in the countryside is an important element which the Government have understood well. They have given great support to COSIRA and to the Development Commission, where Lord Vinson is doing a remarkable job. The light has largely dawned, and I believe that that is another admirable example of the way in which skilful Government support in small doses can have a remarkable effect.
As we enter a general election, I say to my great party—some of my hon. Friends do not agree with me on this—that the remarkable revival of small businesses under this Government is an example of skilfully employed Government intervention. There is a place in a Conservative Government for the skilful use of intervention to enable people who have been labouring under enormous disadvantages to throw off those disadvantages until they are capable of saying to nanny, "Goodbye. Thank you very much. We have done very well."
In 1979, small firms were dying in droves, partly because they had been encouraged to borrow too much and were clobbered by high interest rates. The Conservative Government have cut tax, so more money 537 remains in the business. We have also cut interest rates, so debts are cheaper to service. One of the most remarkable developments of the past 11 years has been the creation of a vigorous venture capital industry which is making an enormous impact on the provision of money for small firms. That is another tribute to the stability of the economy under the Conservative Government.
I must declare an interest in that I have been asked whether I would assist the British Franchise Association in its operations. I pay tribute to the franchising industry. During the past few years, there has been a tremendous growth in franchising, and the latest report suggests that the business itself—apart from the firms that benefit from its existence—has created more than 113,000 jobs. Last year, its annual sales were worth more than £2 billion. Franchising is the easiest way for a certain type of small business man to start because he has the advantage of the franchisor providing him with financial backing, marketing skills, other back-up and a proven product. Franchisees are doing extremely well. The industry does not seek Government interference, but it will continue to look for Government support and encouragement. Rocky times are ahead, not least because some people who call themselves franchisors are not that at all and are easily confused in the public eye with people who run genuine franchise operations.
I shall make two more points and then shut up. Small firms can make an enormous contribution not only to employment but to training. I am a member of the Select Committee on Employment. We have established the fact that the British Government spend as much on training our work force as almost any of our competitors, but that our employers spend very much less. How can we get businesses to see training not as an overhead cost but as an investment? I fear that a change of attitude is required but that it will be difficult to engender.
The next Conservative Government must seriously consider whether to offer incentives for training personnel to a company, or whether to offer tax incentives to the employees so that they will improve their own training. Perhaps a company could offset the costs of that training against its taxation charges.
We have heard the detail of many points relating to small businesses, but today we have not discussed the political effects of the great changes that we have seen under this Government. Encouraging small firms enables one to fragment power. If there are concentrations of power at the centre, there is always the temptation to autocratic government. Breaking up the concentration of large firms and creating small ones enormously assists the decentralisation of power, which is an essential part of Conservative philosophy.
I am interested in the Small Businesses Bureau, which is a founding member of the European Medium and Small Business Union. There may be hon. Members in the House—there are not many to choose from at the moment—who have not heard of the European Medium and Small Business Union. It is a group of right-of-centre European political parties and is interested in small businesses. At the moment 14 countries are members, and I have no doubt that we shall have more. What is interesting about EMSU is that when we have meetings we talk a good deal about hard matters of practice, such as restrictions on cross-frontier trade, taxation policies, protection policies, discriminatory discounting and all sorts of things that 538 worry small firms. However, we also talk about the political conditions that are needed to enable small firms to thrive and to allow people to be more independent and free-standing because that makes them independent and free-standing in politics and is an essential part of this great resurgence in small companies.
One thing that EMSU shows us is the tremendous importance of chambers of commerce in many of the countries that are friendly to us. I hope that my hon. Friend and his ministerial colleagues will reconsider the position of our chambers of commerce which are greatly under-resourced. In other countries they derive huge assistance from the fact that, as each company is formed, it becomes a member of its chamber of commerce, and pays a small subscription. Those subscriptions provide the resources that enable chambers of commerce in, for example, Germany to be one of the great engines for training. The apprenticeship system in Germany, where examinations are created and moderated by the chambers of commerce, has proved to be one of the ways by which the German work force has a far higher standard of training than we have. Perhaps we should consider that.
Another matter on our agenda should be the question of bankruptcy. In the United States it is commonplace for successful business men to have been bankrupted twice or even three times before they take that experience into a successful business. In this country, we have been rightly anxious to catch the real crooks, who go into business to build up debts and go bankrupt to avoid paying them, so bankruptcy has become a slur on honest but unfortunate business men. We should consider that.
Since 1979 the business scene in the United Kingdom has been wholly transformed. Year in year out the Government have used their succession of energetic, hard working and highly intelligent small business Ministers to change the whole climate of operation. It is no longer regarded as second best to go into business on one's own; as an untenable proposition for school children to leave school, gain experience and start their own business; or as some sort of has-been operation when one cannot get a job in a big business. That is to say, it is no longer so regarded by Conservative Members. Naturally, Opposition Members regard any change as for the worse and there is still no sign that they value small businesses, have any intention to help them grow or that a Labour Government would avoid penalising them with crippling taxation if they were successful.
For those reasons, at this election small business men have absolutely no alternative but to vote Conservative.
§ Mr. Colin Moynihan (Lewisham, East)
I congratulate my hon. Friend the Parliamentary Under-Secretary of State for Employment on his birthday. He has come to the Chamber on his birthday to reply to the last debate of this parliamentary Session and all hon. Members present and. indeed, some outside the House will wish to join me in congratulating him on reaching the fine age of 41. They will also join me in congratulating him on an outstanding tenure of office.
§ Mr. Rowe
My hon. Friend congratulates the Minister on coming to the Chamber on various auspicious occasions and, indeed, our experience is of the Minister coming to the Chamber on an endless succession of occasions when he has been either adding to his family or 539 celebrating his birthday. It is an unkind fate that pushes him into these situations. If either the Minister or his parliamentary private secretary could give me a list of important family events in the Minister's life, I shall know when we are likely to have debates on small businesses.
§ Mr. Moynihan
I am grateful for that suggestion and, indeed, am about to write to hon. Members. I shall give due consideration to the possibility of producing a small catalogue of forthcoming events in the Minister's diary so that they can be well briefed to contribute, as my hon. Friend did so eloquently today, in other important debates which coincide with engagements in the Minister's social calendar.
I congratulate my hon. Friend the Minister on his outstanding contribution in assisting small businesses and developing small firms. He brought expertise and skill to the Department of the Environment from other Departments, which are unmentionable when one considers the tremendously strong team at the Department of Employment. With his knowledge he has also brought success for small businesses and I wish to concentrate on some of those successes.
Although reference has been made to some Government initiatives to help small businesses, not enough consideration has gone into the extent to which small businesses contribute to the economy. About 2.5 million people are self-employed, an increase of 750,000 since 1979. That is extremely important because in Britain small firms now account for an estimated 96 per cent. of all firms. They make a contribution of 20 per cent. to our gross national product and employ 25 per cent. of the total workforce.
It is commendable that the Government have tackled many of the problems facing small firms. That excellent booklet called "Cutting Red Tape" and produced by the Department of Employment has assisted many small firms to overcome the major problem of bureaucracy. It has eased the difficulty of endless form filling and cut the hours that were required to submit the tremendous amount of detail and data required by officials and by Government. Small firms can now spend less time on those things and can concentrate more on the important job of creating wealth, profits and jobs.
The Minister has served the small business sector well in that respect and deserves to be congratulated by all hon. Members on the work that he has done.
I regret the use of the phrase small business man. Why do we need to be so "heightist" when it is the size of the business that we are talking about. I am not a tall person, but it is rather sad that the derogatory title "small" has to be used about business men. I hope that some of the inner London boroughs and the Inner London education authority will take note of my comments about "heightism" and that the Minister will consider finding an alternative title. Perhaps we should speak about business men who employ a certain number of people or choose some other appropriate title rather than use this discriminatory heightist slur.
Many business men, both large and small, have entered the market. So many of them are now contributing to the economy that there is no doubt whatever that small businesses are a vital part of the economy, not least because they employ one quarter of the total work force.
540 Conservatives believe that no section of industry or commerce is more representative of the entrepreneurial spirit of this country than small business men, and that is because of the contribution that they make. We believe that everything possible should be done to assist that sector of the economy to develop and to grow and contribute. To do that we need to concentrate on training, and it is significant that 30,000 hours of training material have been made available on a whole range of subjects in order to assist business men coming into the market or to assist people setting up in business for the first time. That training gives people some of the life skills which in other countries are part and parcel of the education system.
We are working towards such an education system, but we have not quite got there. I shall give an example. The technical and vocational education initiative is excellent. It encourages young people at school to develop what I call life skills, such as basic accounting, how to incorporate a company and about setting up in business. It provides an educational framework so that if young people have entrepreneurial flair and skill they can use that basic education in business to set up their own businesses and to develop from that point to contribute to the economy.
I say that we have not quite got there because I deeply regret that ILEA is not actively supporting that initiative. It is selling short a generation of our young entrepreneurs by not accepting the Government money that is available to train young people. That money could be used to provide educational skills that would enable young people to contribute as small business men and as business men generally and it would help them later in their careers. I understand that we are now in negotiation with ILEA to persuade it to take this scheme on board. I hope that it will rapidly accept Government encouragement and finance to assist our youngsters in the inner London area.
§ Mr. Rowe
Does my hon. Friend agree that one of the reasons why it has been reluctant to do this is that it has so few resources? After all, it spends rather less than double the average on each secondary school child. I am sure that it feels that until it is spending at least double the national average on each school child it cannot possibly contribute even £1 towards improving education for business.
§ Mr. Moynihan
I take on board my hon. Friend's comments with regard to the spending of the Inner London Education Authority. That is directly relevant to the debate because it is a tax burden through the rates on businesses in London. I hope that the newspaper rumours of the last couple of days that we may read in the Conservative party manifesto that action will be taken to allow schools or perhaps boroughs to opt out of ILEA are true. If that is not in the manifesto, I hope that it will be Conservative party policy in the future because that would ease the considerable burden on the ratepayers and the business ratepayers of London. That can lead to more entrepreneurialism and growth in the small business sector, which I hope we will see. If that happens, I believe that in inner London we will get substantial cuts in the business rate following the reorganisation of the rating system, which will lead to even more cuts, so it is not just the business rates that will be assisted but a substantial proportion of the domestic ratepayers will benefit from the community charge if we go ahead with that scheme.
I hope that the matter which was so accurately pinpointed by my hon. Friend the Member for Mid-Kent 541 (Mr. Rowe) as being central to this debate with regard to the development of youngsters is recognised as being important for the ratepayers and the business rate.
For the first time we have an education authority whose cost per pupil is greater than the average cost to the taxpayer for sending his child to a private school at primary or secondary level. That is now the remarkable position in inner London. The Government have an opportunity to take dramatic action to change the funding of education authorities and shift to the parents the emphasis for running the schools and for choice. I hope that the capitation system will go through. In this sector we can get more initiatives from the parents on training to provide the small business men of tomorrow.
The health of small businesses is vital to the future of the economy and the growth of new jobs. It is essential that small businesses are innovative and flexible. If they are, they can provide the customer with a far wider choice, which is a fundamental Conservative principle.
Undoubtedly the contribution of the hon. Member for Isle of Wight (Mr. Ross) to the small business sector in his non-political capacity has been substantial on the Isle of Wight. He made an extremely useful contribution to the debate and one that does him credit as a Member of Parliament. He has won the respect and affection of hon. Members on both sides of the House. He highlighted the opportunity in the small business climate to develop new and a wider spread of initiatives and therefore more choice to the consumer.
The record of the Government on small businesses is second to none. I regret that we hear little from the Opposition about small businesses. It is unusual to read anything in print that the Opposition wish to do to encourage the entrepreneurial climate in which small businesses will flourish. It is characteristic of the way that the Opposition treat this subject that the Opposition Benches are completely deserted for this debate. This matter is fundamental to their constituents and it should be important during the coining election campaign.
I hope that it will be noted that so few of the Opposition have contributed to the debate and, more important, for the first time that I can remember, not one member of the Opposition—not even a Whip—is present to hear what, no doubt, will be an outstanding contribution by my hon. Friend the Minister. I have never known precedent in this regard to be broken. I have never known my hon. Friend not to make an outstanding contribution on this subject in the House or outside.
Between 1982 and 1984, under the Government, self-employment and small firms employing fewer than 20 people created 1 million jobs. That shows how serious the issue is. Through the growth of small businesses, we have managed to create 1 million new jobs which have been able to respond to the demands of a rapidly changing technological world. A quick response to service industries is important and it can be made only with the entrepeneurial flair of individuals and small businesses. There is no better example than the development of the Isle of Dogs and the growth in the City, resulting in a need for a range of small business activities to provide support services. Some hon. Members would have seen only last weekend on the television the detailed assessment of the many small businesses that have taken the opportunity provided by Government assistance to speak to constructive local authorities or the London Docklands Development Corporation, which has been very helpful, 542 about providing back-up services, from flower arranging to shoe cleaning. Opposition Members, if they were here, might not consider those services to be important, but they employ a large number of people and have been highly profitable. Twenty seven companies have been set up to provide those services. They have earned a lot of money in the City in the post-big bang era.
§ Mr. Rowe
Can my hon. Friend help me a little'? He may know more about this than I do. It seems to me that one reason why there is a great debate about manufacturing industry is definition. Am I right in believing that there are two principal considerations? First, if a large company allows its transport manager to start a transport company, it ceases to be defined as "manufacturing", although it was so described while it was in-house. Secondly, many large manufacturing companies use small sub-contractors, so are there not probably as many people engaged in some elements of manufacturing now as before? Those people are engaged in very small companies on which statistics are much harder to collect.
§ Mr. Moynihan
My hon. Friend is right. He has pre-empted my next point. That is rather sad but, in a sense, is for the benefit of the House because my hon. Friend has put it much more eloquently than I could have done. This matter very much concerns my hon. Friend the Minister. I am grateful to my hon. Friend the Member for Mid-Kent because it is a key issue and it is important that it should be placed on the record.
Since 1979, the Government and their predecessor have helped small businesses in many ways. I shall concentrate on a few because it is important to put them on the record. The cutting of the burden of capital gains tax and the reform of capital transfer tax to abolish the tax on lifetime giving were significant moves. Equally important were the abolition of the national insurance surcharge and the reduction in the small company rate of corporation tax. That last point has been taken up by many small businesses in my constituency. Many facts have been put through the mail bag to me and, via me, to the Government to support that important incentive for the growth of the entrepreneurial class that works in small businesses.
The introduction of the business expansion scheme is also important and I am glad that hon. Members touched upon that in their speeches today. It gives tax relief to investors in new business—that is relevant to this debate—and I hope that due consideration will be given to going further down that path in the future. That is an extremely important start and that initiative that should be welcomed by both sides of the House. The introduction of the loan guarantee scheme, which makes it easier to borrow money to start up a business, is also important. Once again I congratulate my hon. Friend the Minister for the important assistance that he has given to small businesses.
The employment measures that the Government have concentrated upon have given people the opportunity to start up in business. In that respect the enterprise allowance scheme has been of great significance. It has received a tremendous amount of support from people entering into bsiness for the first time. Many of my constituents have benefited from that scheme.
In the past few years I have noted a change in the ethos towards small businesses and the entrepreneurial classes. 543 Many people are attracted to go down to the jobcentre to receive advice. They are faced with a whole range of options and initiatives to enable them to set up in small business. It is praiseworthy that the Front Bench spokesmen from the Department of Employment, through their wisdom, have managed to achieve the growth in new business that we have seen up and down the country.
Between 1980 and 1985 there has been an average net increase of some 500 new firms every week. That is the sort of excellent result that we have seen and it is an excellent platform on which to go to the country. It shows the electorate that the Conservatives are not only committed to growth, to more employment and to ensure the growth of new firms, but that 1 million jobs have been created in the new business sector. That is a significant fact and one that is welcomed by those 1 million people who have entered the labour market.
When the Minister replies I hope that he will concentrate on tourism. Tourism comes under the umbrella of his duties and it is a significant area of economic growth. If my memory serves me right, tourism is expected to create 30,000 new jobs a year. Indeed, I understand that that figure has risen.
§ Mr. Moynihan
That is good news. Tourism is a most important industry and it is most important that it is encouraged by the many initiatives that I mentioned earlier.
I believe that there is good evidence to show that tourism is one of the fastest growing industries in the country. It is an industry that has brought job opportunities, training opportunities and new skills to many people who would not otherwise have those opportunities. I am grateful to my hon. Friend for ensuring that the tourist sector has gone from strength to strength during his time of responsibility.
In conclusion, I would like to say something about skill shortages and expand on the intervention that my hon. Friend the Member for Birmingham, Northfield (Mr. King) made about TVEI—the technical and vocational education initiative. I hope that we will continue to concentrate in preparing young people, through the range of available Government schemes, to enable them to be ready to set up a small business and to contribute to the economy. I believe that the youth training scheme and the job training scheme are exceptionally relevant in that respect, not least because they have been extremely successful. For the one-year YTS there have been 1 million entrants and 60 per cent. of the leavers went into jobs, many of them in small businesses. That is a tremendous result when one considers the unemployment problems throughout the country.
Jobclubs are very successful. They give people skills so that they can join small businesses. Eighteen months ago there were only three or four jobclubs. Now there are over 1,000 and, if necessary, there will be 2,000 by September. That is an illustration of the importance attached to jobclubs. Jobclubs help the long-term unemployed who need help and advice, and 60 per cent. of those who have attended jobclubs now have jobs.
It is disgraceful for the Opposition Front Bench to suggest that they represent only tea and sympathy or that the scheme is a "skivvy". It is disgraceful that they should 544 have the nerve, inside or outside the House, to accuse the Government of introducing a tea and sympathy scheme when that scheme has helped into employment 60 per cent. of those interviewed and taken through the course.
The electorate will decide how to respond to an Opposition who repeatedly attack the unemployment figures and yet publicly announce that if elected again—on some dim and distant day—they will use the same figures that they so regularly criticise.
Time and again the Opposition attack the Government for introducing a range of measures which have resulted in steadily declining unemployment. The Opposition say that they will get rid of the schemes that have assisted people back to employment, that have assisted the young and the long-term unemployed with guidance and advice, job opportunities and training. The Opposition would put in their place schemes linked to local authorities or the public sector, yet they cannot fill the £20,000 council jobs in the Brent education and race relations department. My opponent in the forthcoming election has the nerve to say that we should get rid of the schemes introduced by the Government to help the unemployed.
The Opposition have no better point to make about the growth in employment than to turn their backs on this Government's success in introducing a range of initiatives, such as job training, job release, voluntary programmes and community schemes, and in creating an economic climate in which small businesses can flourish.
I hope that when we go to the polls on 11 June we shall have had the opportunity to concentrate on the opportunities that we have made for people to gain employment. We have created 1 million new jobs since 1983—more than have been created by all the western European countries together. That is our record of success. We have given opportunities to young people. We have initiated schemes such as the technical and vocational education initiative which is so important to young people in helping them join the entrepreneurial work force. We have provided the resources for schools to produce the right skills and training.
The only barrier has been the Labour party, which has opposed our initiatives ideologically. The Labour party on the Inner London Education Authority has said, "No, we will not allow young people to learn those life skills." I hope that the electorate will judge that disgraceful attitude for what it is worth and praise my hon. Friend, the Minister, and his colleagues for facing the incredibly delicate, important and serious problem of creating jobs, creating growth in the economy and creating opportunities in small businesses.
I praise my hon. Friend for the outstanding contribution that he has made during his tenure of office as the Minister responsible for this area, and I congratulate him not only on his verbal contribution, but much more on the facts that he can put to the country to show that what he has done has been highly successful.
§ 2.1 pm
§ The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)
I am grateful to my hon. Friend the Member for Lewisham, East (Mr. Moynihan) for mentioning the fact that today is my birthday. I am trying to forget about it. As my hon. Friend the Member for Mid-Kent (Mr. Rowe) pointed out, it is quite amazing that every time there is a small firms debate, an incredible event has occurred that affects me or my 545 family. Last time, it was the christening in the crypt of my youngest son, and I recall that the time before that I received a note, which unnerved me considerably, announcing the birth of my second son, who was some six weeks premature. All those things have happened when we were having debates on small firms. It must have something to do with the enterprising side of the family. My hon. Friend the Member for Fareham (Mr. Lloyd) will forgive me if I blame the Whip's Office for not paying enough attention to these milestones in my family life. It is only because of the demob—happy frame of mind in which we meet today—the last day of this Parliament—that one can say such things.
I must pay a warm tribute to those who have assisted me during the period in which I have been privileged to be the Minister responsible for small firms. I want to thank my right hon. and noble Friend the Secretary of State for Employment and my right hon. and learned Friend the Paymaster General for the enormous support they have given to me and to the sector in general. I also thank my hon. Friend the Member for Lewisham, East, who is a distinguished parliamentary private secretary in our Department, for all the help he has given me in recent years. I also wish to pay a warm tribute to the chairman of the small business bureau, my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who has made a significant contribution over many years—not only in this Parliament, but long before it—and to my hon. Friend the Member for Mid-Kent, who was the founder of the SB bureau, together with one of my predecessors, who was the first Minister responsible for small firms in the present Government. My hon. Friend the Member for Luton, South (Mr. Bright) has been a distinguished chairman of the Back Bench small firms committee, which has been enormously supportive of what we have trying to do, and which has come forward with constructive suggestons upon which we have tried, wherever possible, to act. We are all in this together—especially all Conservative Members.
I am grateful to my hon. Friend the Member for Lewisham, East for pointing out that, once again, even as I speak, the Opposition Benches are absolutely vacant. That is a disgrace. I can hardly castigate the Liberal party, however, because I agree that the contribution made by the hon. Member for Isle of Wight (Mr. Ross) was a good one. Unfortunately, he has had to leave, but he kindly apologised to me for having to return to the Isle of Wight. It is important to pay a warm tribute to him because he is retiring from the House today. I know that he has made a significant contribution to his local enterprise agency and has done much for small firms in his area.
I am also glad of the opportunity to pay a warm tribute to my hon. Friends the Members for Harrow, West (Sir J. Page) and for Norfolk, South-West (Sir P. Hawkins), both of whom made superb contributions to the debate and are leaving this distinguished House today.
I must congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. King). Before I do so, it is significant and appropriate that you, Mr. Speaker, are now sitting in the Speaker's Chair. On this, the last day of the present Parliament, it is appropriate that you should be in your Chair in this debate, because I am conscious that this is the last day of your first, highly successful term as Mr. Speaker. It is appropriate because small businesses were your speciality when you were on the Back Benches, Mr. Speaker, and you still play an active part in the local 546 enterprise agency in Croydon. Congratulations have been flying about today. I am determined that you will not be left out, Mr. Speaker. Once again, thanks are recorded for all that you have done for the small firms sector.
We should congratulate my hon. Friend the Member for Northfield on his excellent contribution. I mean that. It was a first-class speech. Today we are talking about one of the most important subjects that we could ever discuss in the House. I am proud to say that since 1979 there have been dramatic changes affecting people running small businesses and those who might want to do so. Under the Government there has been a fundamental alteration in the climate for enterprise. That was the most important point that my hon. Friend made. The climate is the most important thing. It creates the conditions in which new and exiling businesses can grow.
Peoples' attitudes have changed, so that wealth creation is now recognised as the vital process that it is, with profit as the proper reward for risk taking—the point made by my hon. Friend the Member for Mid-Kent. There has been a substantial strenthening all round of the small firms sector.
Those changes have been achieved by overturning the high taxation, anti-industry approach that characterised much of the 1960s and 1970s especially the most recent Labour Administration. Small businesses have now been recognised as a source of innovation, vitality, wealth creation and job creation. The Government have been committed to ensuring that small businesses have a better chance of succeeding. However, that has not been achieved by the Government alone. It has needed the efforts of many other contributors to economic development—those who provide finance, advice and markets, and above all the individuals who provide the inspiration and drive that are necessary for business success.
The single most important factor contributing to the resurgence of small businesses has been the creation of the right macro-economic conditions. That has been the principal part of the Government's economic approach. Conditions of low inflation, sustained growth and lower taxation have given the certainty that industry needs. There is now encouragement for entrepreneurs to seize the opporuntities that are available to them and there are incentives for investors to take the risks involved in making finance available for those projects. Of course, those economic conditions benefit not just small businesses. They have encouraged industry as a whole and have brought about a position in which United Kingdom industry is expanding on a broad front.
Another aspect of the Government's policy that has benefited large and small firms alike has been the removal of red tape and regulation that has discouraged and stifled others. Last week we published a progress report entitled "Encouraging Enterprise", as well as a glossy version, "Lightening the Load", which I hope is a darn sight easier to understand. This is the third chapter in what will be a long-running novel. We have now had two White Papers. The first was "Lifting the Burden" and the second was "Building Businesses … Not Barriers". It is important that we should not lose the momentum of the deregulation initiative. I welcome the fact that my hon. Friend the Member for Harrow, West made this very point. There is still too much bureaucracy, which is acting as a brake on the enterprise of the people whom we are seeking to encourage.
547 Another aspect of the Government's policy, which is important and has been touched on by other of my hon. Friends, is the consultation process that we have introduced since we have been in power. We have been involved in many consultations with business, listening to what business considers to be the biggest problems that it faces. We have been in consultation with the European Community, where special action is being taken to create a favourable environment for businesses, including the control and reduction of administrative burdens on business. It is important to say to my hon. Friends that we started that initiative in Europe because we started the deregulation and simplification initiative over here. Europe has now started to follow our example. It is not only a case of looking at what is going on the statute book over here that might be creating problems downstream for the important people whom we are trying to encourage, but there are problems with legislation that might be coming over the water—from Brussels and the European Commission. Such things might creep up on us and create problems downstream for those important people, the small business men and women in this country.
It is important that we should get across the message about what we have done about planning. My hon. Friend the Member for Mid-Kent made an important point concerning trying to convert premises in rural areas. He has taken a special interest in this, and he knows full well that he has my support. It is important that we should change the regulations for use planning orders. They have been brought up to date and many other changes have been made or are under discussion. There has been a major review of VAT policy towards small businesses. In the Budget statement, my right hon. Friend the Chancellor announced measures to ease the burden that VAT places on small businesses. These may include a system of cash accounting, annual VAT returns and simplified procedures for registration and deregistration.
Individual entrepreneurs play an important part in our history, a point made effectively by my hon. Friends the Members for Northfield and Mid-Kent. Over a long time, the role of the entrepreneur and the importance of entrepreneurial attitudes have been lost sight of, and that is what was going on in the 1960s and 1970s. As a result of the Government's policy of creating opportunities and giving the freedom to take advantage of those opportunities there has been a change of attitude in the United Kingdom. There has been a realisation that wealth creation is crucial to the achievement of the social objectives that we have set ourselves.
There is also recognition that jobs depend not on public sector spending but on soundly based businesses, and this is where I have to quarrel with the hon. Member for Walsall, South (Mr. George). I have to try to convince him—I suspect that I will not today—that, although we regard local authorities as important, we still think that they should be more part of a partnership at community level. If they are in the lead with small businesses, initially those businesses may not be so successful because many of the firms that we are trying to encourage to grow and develop regard Government—national or local—as the unacceptable face of bureacracy.
What we have learnt, and what I hope that the Opposition will learn, is that business men would rather listen to professional advice or advice from those in the 548 industry than to Ministers like me, to my officials in the Civil Service, or, dare I say it, local government officers. If we do not know that by now, we shall never learn anything about the small firms sector. I agree with the hon. Gentleman that local authorities have an important role to play, but I question whether they should be the leading contributors.
The importance of the small firms to the economy is so vital that I do not understand why the Opposition Benches are so sparsely filled. Some 96 per cent. of all firms in the United Kingdom are small by the definition of the Bolton report. More than 80 per cent. of the 1.5 million businesses registered for VAT have a turnover of less than £250,000. However, as my hon. Friend the Member for Lewisham, East said, they employ only 25 per cent. of the total United Kingdom work force.
This is again where I have to quarrel with the hon. Member for Walsall, South, who made comparisons between the United Kingdom and the United States of America, where 50 per cent. of the work force is employed in small businesses. I have to try to convince him that, in times of international recession, when there is a large shake-out of labour—which we have seen as the country cannot be sheltered from an international recession—many large companies shed a tremendous number of jobs. One would have to set up an enormous number of small businesses to compensate in any way for the number of people who have tragically found themselves on the dole queue. There would be no difference between the hon. Gentleman and I on that.
What we have been saying, and my hon. Friends, particularly my hon. Friend the Member for Northfield, have put it well, is that small businesses are less vulnerable to the winds of change that blow during an international recession. As my hon. Friend the Member for Luton, South said, smaller businesses are quicker to adapt to new projects and processes and can change amazingly rapidly. Because of their flexibility, they are better able to withstand the recession, and that is an important point for the future.
It is all very well for Conservatives, including myself, to point out that this is the seventh successive year of growth, but we need fire prevention measures for the future. We do not want a repetition of the fire brigade exercise that was needed to reverse the trend that set in under the Labour Government when this country lost 100,000 self-employed. That is why we are concentrating so much on the small firms sector. In pointing out the specific assistance that has been given to small firms, however, I acknowledge that the Government are not the only player in the area. The Government's role cannot be that of supplier of all that small businesses need. It must be to encourage others to meet the need of small businesses, to fill gaps which otherwise would not be filled, and to withdraw from areas in which others are meeting the needs.
Since 1979, many more people have been given the opportunity to develop their own ideas and to benefit directly from their own hard work. That process has been encouraged by the dramatic reductions in personal taxation and the increased availability of local sources of advice, support and other facilities, as my hon. Friend the Member for Lewisham, East so effectively pointed out. In 1979, 1.9 million people in the United Kingdom were classified as self-employed. By 1986, the figure had risen to 2.7 million and had increased as a proportion of overall 549 employment. That is encouraging evidence of willingness to have a go at running businesses, many of which will succeed.
The motivation to become self-employed is different for different people. For some, it will be the desire to escape the restrictions of a large organisation. For others, it may be the wish to live by their own efforts and to be their own boss. The motivation may be financial, although for the vast majority it will mean in reality long periods of hard work to achieve success. We recognise, too, that self-employment may also be a worthwhile alternative to unemployment. Moreover, it is interesting to note that 40 per cent. of self-employed people employ others and that some 80,000 businesses owned by self-employed people have 25 or more employees. That is a welcome feature of this part of the labour market which can all too easily be overlooked.
The enterprise allowance scheme is the main Government measure designed to help unemployed people to start their own businesses. Since its introduction, more than 234,000 people have taken advantage of its support. The number of places available in 1987–88 will be more than 100,000 and in 1988–89 and subsequent years it will be 110,000. The success of businesses set up under the scheme has been particularly encouraging. Of those that received the full year's allowance. 61 per cent. were still in business at the three-year point. The scheme has also helped unemployed people to create jobs for others. Eighteen months after startup, more than 90 extra jobs had been created per 100 businesses trading.
During 1986, I asked the Manpower Services Commission to concentrate a little more on management training. This point, too, was brought out by my hon. Friend the Member for Lewisham, East. It is important because I am ashamed to acknowledge that only 1 per cent. of those who run and manage small businesses have undertaken any kind of management development training in the past five years. That must be wrong. In some cases we cannot do much about it, although we can try to entice people to become involved in management training courses. With the enterprise allowance scheme, however, we can make it mandatory for people to go on a short course. At this stage, I decided to introduce an awareness day which lasts virtually a full day to point up issues and business concepts which prospective self-employed people need to consider. The awareness days also emphasise the benefits of further management training, advice and counselling to whet people's appetites and to point out that they may be deficient in certain areas and may not he the greatest living experts on financial control, marketing, and so on.
Starter days are provided by a range of organisations including local enterprise agencies, professional training providers and colleges of further education. They will be supplemented by an increased number of follow-up visits from MSC staff. The enterprise allowance scheme has given opportunities to large numbers of unemployed people. It has been extended to meet the growing demand, to allow those whose first venture failed to have another go—I agree with what my hon. Friend the Member for Mid-Kent said about that—and to extend it to other areas where support might usefully be given. The scheme has demonstrated above all just how many people, given the right encouragement and persistence, can make a success of their business.
550 Where does that process start? If one is trying to change the attitudes in the country, should we concentrate on the adults or should we start with people at school? If we were to start by changing the attitudes of people at school—that point was made by my hon. Friend the Member for Northfield—they would have a head start when they left school. That is why I have been particularly enthusiastic to try to help to develop the mini enterprise in schools scheme. That was launched initially by the Department of Trade and Industry when I was part of that Department and, although I have no direct responsibility for it now, I am anxious to support the Department of Trade and Industry's initiative along with its partnership with the National Westminister bank. The aim is to have 7,500 secondary schools with mini enterprise schemes in them by the end of this year. That is quite a target. I think that about 60 per cent. of schools will have either mini enterprises or young enterprises in them. The young enterprise scheme is based on a foundation, and my hon. Friend the Member for Mid-Kent is quite an expert on that. All that is very important.
The Manpower Services Commission scheme, TVEI, referred to by my hon. Friend the Member for Lewisham, East, starts at a much younger age where we are trying to encourage young people to take more work-related subjects. Part of the purpose of TVEI is that people should go through the experience of running a small business and making realistic business decisions. They learn how to put together a business plan and how to read a balance sheet. I was certainly denied that sort of education, as I suspect were most other hon. Members in the Chamber. That must be an advantage; it cannot be a disadvantage.
If we are to encourage more people to follow the entrepreneurial route and become employers of others rather than expect others to employ them, we need to develop TVEI, young enterprise and mini enterprise in schools. In my opinion, we should have been doing that 20 years ago, but, never mind, we are on to it now. We are getting enormous support, not only from the education sector but from organisations such as banks and other large companies which recognise the need to support such initiatives.
My hon. Friend the Member for Mid-Kent spoke about training in general terms. He referred specifically to the fact that many employers in large and medium sized firms, and perhaps even small firms, regard training not as an investment but more as a cost. That is true. We certainly need to concentrate on that in the future with regard to small businesses. I put to him the point I have made in public outside the House on a number of occasions. If one cannot convince the management within small businesses that they have to invest in their own management development, how can one convince them that they have to invest in training for their work force? It must start at the top.
I have learnt a great deal from Sir John Egan, chairman of Jaguar. He is perhaps my constituency's most famous son. He was born and bred there and has risen to dizzy heights. He makes it mandatory for everyone, even on the lowest rungs of the managerial ladder, to take a fortnight out every year for training. If it cannot be done within a compressed fortnight, it can be done through a distance learning course and staggered. That goes from the bottom to the top and includes him. I wonder how many business 551 managers or owners of small businesses are aware of that and know the significant part he has played in turning that company round.
The quality of management is crucial in determining whether a business survives—for the smallest start-up, for the established small business or for a firm growing to 20, 30 or more employees. The failure to manage successfully will lead a business into serious difficulties sooner or later. The owner of a small business needs the ability to combine production management, personnel activities, marketing and finance while all the time attending to the overall health of the business. Therefore, we have been concerned to increase awareness in the value of business training and its take-up. We want managers to recognise that training is an investment, not an unnecessary cost. It is principally through the MSC that the Government make their contribution to supporting business training.
My hon. Friend the Member for Lewisham, East explained what happened in September 1985 when the responsibility for small firms was transferred from the Department of Trade and Industry to the Department of 552 Employment. That was a superb opportunity for us to bolt on to small firms what we want to do in training. As a result, there has been a significant change of direction within the MSC. Only recently I launched what I think could be the answer to the problems of trying to get small businesses more interested in their own management training. It is called the private enterprise programme. It is sufficiently flexible and, I hope, will be attractive to many companies. It will be delivered locally and, I hope, will reduce the failure rate of small firms. Far too often we talk about failure rates when we should talk about success rates.
The fact that we have established so many successful businesses in the past few years is a source of great pride to me. We can never afford to neglect the business sector. The Government have given great encouragement to it and have not been afraid to apply resources to it. We are proud of our record and the significant progress that has been made. I am certain that that success will prove to be a significant factor in the Government being returned to office on 11 June.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-seven minutes past One o'clock till Monday 18 May.