HC Deb 17 February 1993 vol 219 cc313-5
12. Mr. Simpson

To ask the President of the Board of Trade what plans he has to meet the Federation of Small Businesses to discuss projects for the small business sector; and if he will make a statement.

The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh)

My right hon. Friend the President of the Board of Trade has no plans to meet the Federation of Small Businesses. My noble Friend the Parliamentary Under-Secretary of State for Consumer Affairs and Small Firms has frequent meetings with the federation and with all the major small firms organisations to discuss a range of issues.

Mr. Simpson

Is the Minister aware that in my city of Nottingham small business bankruptcies over the past year have risen by a record 70 per cent? When he extols the growth of new firms, does he realise that of the 4 million that grew last year almost one third–1.25 million—had a turnover of less than £15,000 per annum? Typically, such firms consist of a man with a van and bag of spanners, and they are no substitute for the good firms that the Government have driven into bankruptcy. Does the Minister now accept that this country needs a manufacturing strategy for the growth of small businesses, not the car boot sale that the Government currently offer?

Mr. Leigh

In fact, the number of small firms grows by about 400,000 each year, and has increased by more than two thirds since 1979. That has happened because we have created a culture of enterprise with low interest rates and low inflation. The hon. Gentleman might ask his own Front-Bench spokesmen how small firms would be helped by the tangle of no fewer than 284 quangos that would have overseen every small business in the country and tangled them up in red tape so that audits of the social cost of every business decision would have had to be made. That is Labour party policy, and it would have driven small businesses out of business.

Mrs. Peacock

Is my hon. Friend aware that some small businesses that go into receivership leave individual creditors who are not helped by the receivers? In the case of Acres of Wellswood in Torquay the receiver seems hell bent on protecting those who have gone bankrupt rather than helping the creditors who are about to lose their homes.

Mr. Leigh

My hon. Friend raises an interesting point. The official receivers have adequate powers to investigate company directors and, if there is any evidence of bad conduct, the courts have the power to disqualify directors from serving again. But some companies go out of business for genuine reasons, and once the receivers have investigated their past it is only fair that, in time, the directors should be able to start new companies.

Mr. Malcolm Bruce

Does the Minister accept that if and when the economy comes out of recession small businesses will provide the basic engine room of growth? From 1985 to 1987 small businesses employing fewer than 20 people created a million extra jobs, while large businesses created only 20,000. Does the Minister therefore accept that we now need a strategy to ease the burden on small businesses by cutting uniform business rate, raising the threshold of VAT cash payments, and recognising in numerous other ways that jobs and economic recovery will come from small businesses, because big businesses cannot provide that employment?

Mr. Leigh

The hon. Gentleman is right to emphasise the key role that small businesses play, and will continue to play in the economy. That is why the deregulation initiative by my right hon. Friend the Secretary of State is so important. My hon. Friend the Parliamentary Under-Secretary of State for Corporate Affairs is considering the 7,000 regulations presently imposed on small businesses, and he will examine each and every one of them to ensure that the burdens on small businesses are reduced where possible. We shall continue our drive to reduce the general burdens on small businesses and to ensure that, whether it be in terms of low inflation, low taxation or low interest rates, they operate in a culture of enterprise. That is what we should aim to do.

Mr. Oppenheim

In connection with industrial strategy for businesses of all sizes, does my hon. Friend recollect that about five years ago his Department robustly resisted the entreaties of the boffins, the space buffs and the Opposition, and refused to take a large stake in the European Space Agency's Hermes project, which the then Chancellor of the Duchy of Lancaster described as a frolic in space? Is my hon. Friend aware that that project is now 40 per cent. over cost and running late, and that the Germans are threatening to withdraw? Does not that bear out our decision not to get involved? Is not the project exactly the type of grandiose industrial project into which the Opposition would pour billions of pounds if they ever got the chance again?

Mr. Leigh

My hon. Friend makes a fair point. The Minister then responsible for industry made a correct decision not to get involved in the Hermes project, which is hundreds of millions of pounds over budget. We have concentrated our space resources into earth observation, putting space to work and ensuring that British companies secure the orders and lead the world in environmental and space technology. That, rather than Opposition proposals for grandiose schemes about which they know little, is what is meant by a good industrial strategy.