Prince's Youth Business Trust

HC Deb 08 March 1995 vol 256 cc249-69

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]

10.4 am

Mr. David Shaw (Dover)

I am grateful to the procedures of the House of Commons for Adjournment debates and for enabling me to obtain this first debate of the morning on the work of the Prince's Youth Business Trust. The trust particularly interests me because I am chairman of the Conservative party's Back-Bench smaller businesses committee, although the comments that I shall make today are not designed to be of a partisan or political nature.

I have also started a small business, and have helped others to start small businesses. For many years, I have passionately believed that this country will succeed not only as a result of large businesses but of enhancing opportunities for people to develop small businesses, which are increasingly being shown to be the future for many people and are, indeed, providing many opportunities for them.

As Members of Parliament, we are privileged to see and learn about many projects designed to help to improve the lives of people in our nation. Some of those projects are not always successful. Indeed, some do not even get off the drawing hoard. Some projects do not always help the people that they are intended to help, and some projects produce short-term benefits and have no lasting long-term impact.

None of those problems applies to the Prince's Youth Business Trust, which has now helped some 25,000 young people to start their own businesses. It has demonstrated success, it has gone from the ideas stage to the achievement stage, and it has shown that its benefits are long-term.

The purpose of my debate is to draw attention to the achievements and success of the Prince's Youth Business Trust, which was started by His Royal Highness the Prince of Wales just over 10 years ago as a youth business initiative. It was his Royal Highness's idea, and he has been a very active president who is frequently seen at meetings and exhibitions associated with the trust.

Some may ask why the Prince's Youth Business Trust is necessary. Youth unemployment in this country exists under all Governments, and no Government have succeeded in avoiding the problem. Although the United Kingdom has one of the lowest levels of youth unemployment in Europe, it is still significant, and I hope that all hon. Members will always consider good, new ideas to deal with the problem. There is also an increasing recognition that young people need help to take their first step up the ladder. They need some form of assistance to show them the difference between a life of education or a life, perhaps, of unemployment, and what work entails. The Prince's Youth Business Trust fulfils that role.

One other significant problem of the 1980s and 1990s is that, with more and more global competition and greater demands on British business to be more efficient and effective in its operations, larger companies are growing in size—not by increasing their staff numbers, but by reducing them to become more efficient. Consequently, the growth of companies today often occurs in the capital of the business and not necessarily in staff.

That is not always bad for Britain. Indeed, it is often good for Britain, because it means that our best companies are internationally efficient and competitive. It also means, however, that more and more young people will not necessarily get work in large companies, they will get work in smaller businesses and even start their own small business. Self-employment, which is some 3 million strong in this country, now offers hope of a good future in employment for many young people.

Rev. Martin Smyth (Belfast, South)

I am delighted that the hon. Gentleman has given way on that very point. Coming from an area where the bulk of people are employed in small businesses, I support him. I pay my own tribute to the Prince's Youth Business Trust, for one of my constituents was one of the national winners this year. I pay tribute to its work in stimulating young people to go forward, when other aids are no longer able to help them.

Mr. Shaw

I am grateful to the hon. Gentleman for making that point so well. I know that many hon. Members will be able to say the same sort of thing about the way in which their constituents have won awards. That is a feature of the scheme that encourages more young people to come on, creating the friendly competitive atmosphere in which the businesses develop.

Mr. Harry Greenway (Ealing, North)

I am listening with great interest to my hon. Friend's important speech on such an important and interesting subject, but will he emphasise the after-care by the Prince's Trust once a business is established, and its unwillingness to prepare a business plan for a young person, so that nobody gets the wrong idea? I believe that that is the point.

Mr. Shaw

As always, my hon. Friend is slightly ahead of the game, and he has raised the very point that I intended to stress. However, it is worth emphasising at every stage in my speech that the after-care and advisory work is a most important feature of the way in which the Prince's Youth Business Trust operates.

I admire tremendously the work of the trust in helping young people to set up their own businesses. The skills that need to be developed to start a business are substantial. Young people also have to face the risks that that involves. Starting a business is not risk-free, and the trust emphasises the risks involved before allowing a young person to proceed with his or her scheme. The entrepreneurial spirit of the country and of those young people who take part is greatly encouraged. The young people also need hard work and dedication, or they will not succeed. At every stage, the trust encourages those qualities to develop. When one goes round the exhibitions and sees many of the young people involved in the trust, one realises that, in a different environment and without the opportunities provided by the trust, those people might not have been able to develop those abilities. I am convinced that some of them have developed a hard-working and dedicated attitude and an entrepreneurial spirit that they did not realise were there within them, which have been released by the work of the trust.

The Prince's Youth Business Trust helps 18 to 29-year-olds who are out of work and disadvantaged—people who, for one of a number of reasons, are finding life tough. Some are living in deprived areas, and in areas where the Government or the European Union provide support in one way or another. Many lack formal education at advanced level, some live in had housing conditions, some come from single-parent families, many have unemployed parents, and others have no family support. The trust makes a special effort to encourage applications from disabled people, from members of ethnic minority communities and from former offenders. The age limit for disabled applicants is 30.

Young people who are to join the trust scheme must all have a viable idea for starting their own business. That is the key—a viable idea. They then have to prepare an acceptable and well worked-through business plan, and must prove that they have the necessary initiative and commitment to make a go of it. As a general rule, they cannot obtain money from other sources, because money is often not available to people in their circumstances—and that is where the trust fills a gap in the financing market.

I shall now go into a little detail for the House, and place on record some of the methods by which the trust operates. First, it operates on sound business principles. There is a tremendous emphasis on sound business practice, and that is a critical aspect of the approach of the trust and its advisers to helping young people.

The trust gives loans of up to about —5,000—although the average loan is as low as £2,000—to people who are setting up or expanding a business, and the money may he used for stock, equipment or working capital. The loans are repayable; money is not written off. For the business, repayment is as follows: for the first six months neither interest nor capital is repaid; in the second six months, there are capital repayments but no interest; in the second year, capital is repaid and interest is charged at 3 per cent; in the third year, full capital and interest at 8 per cent. are paid.

Although most applicants receive loans, the trust sometimes offers grants of up to £1,500 to individuals and up to £3,000 to groups of people who want to start a business. Grants may be used for tools, equipment, transport, fees, insurance or training, but not as working capital or for rent, rates, raw materials or stock.

Since 1991, the trust has been able to give second loans of not more than £5,000 to people under 30 who have already had one loan or grant. Second loans are purely for expansion; they cannot be used to rescue failing operations, for which different help and advice are available.

The fact that second-loan finance is available is an important factor worth bearing in mind, because in my experience of small businesses, all too often those that can fail are the successful ones, because they get carried away with their own success, extend their debtors and end up in serious financial difficulties. All too often in this country, it is the business that has done reasonably well as a start-up business that over-extends itself and may get into serious difficulties, so it is especially interesting that the trust has now recognised the problem, and can now give second-tier finance for expanding businesses.

Another key feature is the fact that test marketing grants are often given to young people who have a good idea but need to do more market research before the idea can he put into practice, or even before it can he determined whether it is viable. Such market research often results in the trust's giving further support for more work even before the business starts.

Much pre-planning is involved, which is especially good and helpful for young people. Careful planning is an essential ingredient. No loan is given without a business plan, which is checked by the trust's pool of experienced business men and women. Market research is encouraged, required, and tested, if possible.

By now, the House will appreciate that the trust needs both staff and finance to do its work. Its operations now extend to the whole of England, Wales and Northern Ireland, and north of the border there is a separate Prince's Scottish Youth Business Trust. The trust's work is carried on through 38 area boards, to which young people apply for financial support. I hope that many hon. Members are either in contact with or have spoken to their area boards—I am sure that that is true of most Members who are here today.

Most area managers are either seconded or are trust employees whose costs are funded in whole or in part by donations. Local business people, too, are involved in each area hoard, and there is at least one area manager and sometimes more than one. Invaluable support, either voluntary or donated, comes from companies, training and enterprise councils, local authorities, Government Departments and European funds. I am pleased to say that there is even an area office in my constituency, at Whitfield just outside Dover.

If I may be forgiven for doing so, I shall refer briefly to the problems in my area and to the relevance of the trust in my constituency and in east Kent as a whole.

The area that I represent is suffering from a serious change because of the channel tunnel. Obviously, the ferry industry has become more efficient and effective, but it is expecting considerable competition. There has been a change in the labour market. The larger companies in the area have been shedding labour, and in many cases, for reasons that I have already explained, they have passed their peak in their use of labour.

Many young people who had expected to follow careers similar to those of their parents will not be able to do so. People have been slow to realise that small businesses might fill that gap. That is not surprising, as much of the area has not been used to running small businesses in the past. Therefore, there is an opportunity for something like the Prince's Youth Business Trust to help develop the skills of young people.

Some young people in east Kent have developed skills and taken up loans and grants from the trust, and I pay tribute both to the trust and to those young people for showing entrepreneurial and risk-taking skills. I hosted an exhibition for the trust in the House of Commons some four years ago, and it is with slight sadness that I report that one of the businesses at that exhibition which was founded by someone from my constituency is no longer working and employing in my constituency. The business became so successful that it moved closer to its market in London, and it has set up a successful operation in the constituency of my hon. Friend the Member for Medway (Dame P. Fenner).

My hon. Friend is not here today, but she sends her apologies as she is away on House of Commons business in Europe. The trust has been successful in helping young people in my area, and I look forward to more help in the future for the young people who need the benefits which the trust can bring.

The success rate of the trust in helping businesses is considerable. An independent survey of the trust carried out recently on behalf of the Department of Employment showed that two thirds of businesses were still trading after two to three years. That is an incredible achievement, because it is the reverse of what normally happens.

Normally, two thirds of businesses fail within two to three years of their start-up date. It is quite an achievement for many of the young people who have taken advantage of the trust that their businesses have a greater likelihood of success than the national average for small businesses. Starting a business is risky, and it is good to see that level of success.

The trust's strong performance is particularly interesting when one takes into account the age and background of those it has helped. Many of the young people would not normally have been associated with running a successful business, nor would their background have been the sort from which one would have expected success in business to come. The trust has managed to generate within the United Kingdom the skill and ability which, while clearly present, might not have had an opportunity to grow if the trust had not been in existence.

It is not all had news for those businesses which are no longer trading. Half the people involved in such businesses decided that self-employment was not for them and are now working for other people. The skills and the discipline which those people learned from their work were useful for them in getting work elsewhere.

I am not one for political correctness hut, with a lady Minister on the Front Bench, I should refer to International Women's Day. My wife has taken International Women's Day literally, and she is in America on business at the moment. She is celebrating that day by battling for her bit of business, which I hope will bring benefits to Britain as a result.

One interesting feature to mention on International Women's Day is that the trust has discovered that the women it helps into business have been shown to have a slightly better rate of survival in business than men. Women in businesses helped by the trust seem to be more able to face competition than is often imagined. That shows that what helps women is not so much giving them positive discrimination as making sure that the opportunity is there for them.

The report sponsored by the Department of Employment also shows that the trust is cost-effective and very efficient in terms of the way in which helps businesses and helps people to avoid becoming unemployed and claiming benefit.

Businesses do not survive without a solid form of successful experience, which the trust ensures they have. The trust helps young people whether they remain in business or go to work for somebody else's business.

Many people may well ask why the trust's success rate is so good. What is it that especially helps the young people to develop their businesses? What is the trust doing for women in business that they perhaps might not get elsewhere? What is it that helps young people to develop their skills and to take on the risks involved in starting a business?

My hon. Friend the Member for Ealing, North (Mr. Greenway) referred to the careful preparations which a young person must make, and to the advice that is available. That is the key to the whole system. A business plan must he prepared in a disciplined manner. Market research must he carried out carefully by a young person into whether his business will be able to sell its products or services. But the one magic and essential ingredient which we have mentioned is the advisers, and it is worth paying tribute to the advisers who help the trust.

The advisers are business men themselves, and they give ongoing help and advice to every trust-supported business. Each person who starts up a business has his own adviser. That adviser is a volunteer who ideally has started his own business, and he will keep a friendly eye on the entrepreneur for a couple years or more. The adviser can call in other expert help if it is necessary. If an adviser does not have the skills which are relevant to a problem, another adviser can be called on.

The trust has about 5,400 advisers, but the current rate of expansion of the businesses which the trust is helping is such that about 2,000 new volunteers are needed every year. One of the big problems is that marketing experts are greatly in demand and, having a father who has been involved in marketing, I am not surprised. One of the UK's weaknesses has been that we have not done enough marketing in the past, and I am delighted that the trust puts an emphasis on encouraging young people to take marketing advice and tries to provide marketing advisers.

The trust is more than just a business trust. It has become the largest business consultancy in the world, but it pays its consultants absolutely nothing. it has been estimated that the trust gives £5 million cf advice free every year to the supported businesses and to the people who created the businesses.

I shall briefly mention some examples of the types of businesses created under the trust. I have visited a number of the regular exhibitions at St James's palace, which the Prince has hosted, at which I have seen a wide variety of businesses. There are often 25 businesses run by young people represented at a typical exhibition, and they cover a wide range of products and services. One common factor which one cannot fail to notice is the tremendous enthusiasm of the young people for businesses which they have created.

The businesses range from fashion concerns to swing-boat operations in fairgrounds, and from those involved in the world of electronics to those who make hand-made pottery. There are a whole host of mobile businesses, including farriers and hairdressers. There have been drystone wall builders and repair firms. There have been businesses dealing with golf clubs, musical instruments, ceramics and gilding. One firm even offers alternative wedding arrangements. There are cake makers and pet food delivery services. The trust proudly claims that it has some unusual businesses, although one wonders what an unusual business is today, which include charcoal burners, sheep pregnancy testing and a firm that tracks underground pipes and cables. There are falconers, a team of high-wire motorcycling experts, and fire-eating jousters. The trust has also supported businesses that teach chess or rock guitar.

The 20,000th young person supported by the Prince's Youth Business Trust was a lady from Sheffield who set up a shiatsu practice. I am looking forward to someone explaining all the details of shiatsu to me. The trust is looking forward to celebrating the 25,000th young recipient of its work, and is well on the way to the 30,000th during the next year or so.

A young man who uses a wheelchair could not find a lightweight and inexpensive model, so he designed his own and started a business. He now has a turnover of £200,000 from selling lightweight, inexpensive wheelchairs.

The businesses have also reached great heights of success and the PYBT has created some millionaires. The first is a Kenyan-born Asian, who is running a garage in Peterborough. His recent turnover approached £750,000 and he has been appointed a member of his area Prince's Youth Business Trust board. His case interests me in particular, because it shows that the trust now has people coming on to its advisory board who have gone through the process and been helped themselves, which means that success is starting to build success. That is one of the key features of getting successful businesses going–one needs the advice and contact with someone who has done it before.

There are numerous award schemes, as the hon. Member for Belfast, South (Rev. Martin Smyth) said in an intervention, which often have prizes and other methods of encouraging young people to develop businesses. They operate in a friendly and competitive way, which encourages young people to build something really worthwhile and to achieve recognition as a result of the award.

The Reader's Digest recently sponsored the award scheme. One of the more successful businesses is Caring Force, which is run by two ladies in Merseyside, provides a professional mobile care assistant service to the community and employs 35 people. Another award winner is a young man in Lancashire who has developed a universal hand control for disabled drivers. Another is a Nottingham metal-cutting business called Esprit Automation, which has just exported 22 cutting machines to the far east. They are very worthy of an award and of the recognition of hon. Members.

One company peels and packs vegetables for restaurants and hotels. Another person runs a surfing business in Cornwall, and another uses recycled materials to make jewellery and bags and employs 33 people. So there are environmentally friendly businesses, too.

Various businesses and inventions have been well marketed and given considerable support. Apparently, one even sells a particularly ingenious type of cuff link known as Cuffas, and another makes solid fuel briquettes from wood shavings—Dobviously another environmentally friendly business.

The markets of the various businesses cover the social spectrum. I gather that one makes hats for society weddings and its hats, and accessories have featured in Vogue and Harpers & Queen magazines. The goods sold by PYBT businesses are on sale around the world and its events department is hard at work organising many exhibitions to promote the products and services. One young engineer—it is nice to hear that manufacturing businesses are being helped as well—has developed a gear invention that is helping to break national and international speed records, although I hope not on our motorways.

The trust has been involved in a successful pilot scheme to help young offenders in custody to prepare and set up businesses when they are released. The first young offenders involved in the scheme are in business–one as a welder and one as a dog groomer–and two ladies who met in prison are running a greetings card business.

The House will by now realise that both conventional and non-conventional businesses are supported. It is also worth noting that minority businesses, people from ethnic minority groups and disabled persons are also given full support. Leaflets for young people wanting to set up businesses have been printed in Urdu, Bengali, Hindi, Punjabi and Gujerati. Considerable emphasis is placed on trying to ensure full equality of opportunity under the PYBT scheme.

About 340 disabled people have been helped to start up in business, which is a substantial percentage compared with those in the economy as a whole. Clearly, that is something that needs support. They have set up a wide variety of businesses and range from landscape gardeners, photographers, remedial therapists, clowns and disability awareness trainers to jewellery designers.

About 95 full and part-time members of staff are paid by the trust. We should pay tribute to their hard work and skills and the effort that they have put in. There are also 49 secondees and 89 funded employees from Government, industry and many large companies. In many instances, the latter have taken a break from their career to support something that they, and the boards of directors of those companies, believe is worth while.

The trust needs to attract at least 40 new secondees a year. I hope that anyone listening to this debate or reading Hansard who is interested will apply to help the trust in its work. It operates under a 95-member advisory council—there is plenty of advice and support.

The PYBT obtains grants and assistance. The Government have given considerable support and the Prince of Wales set up an appeal for about £28 million on his 40th birthday in 1988, which the Government, with all-party support, agreed to match pound for pound. The appeal has depended on donations from the private sector and, despite the problems of the recession, there has been considerable support from that sector because it recognises that the work is worth while.

I understand that the Department of Employment has given about £21 million to the PYBT, which is extremely cost-effective because the Department is paying about £2,500 per person helped. That money is forthcoming only if the young entrepreneur is still trading 15 months after being given the original PYBT loan or grant. A second condition is that the trust must raise funds from other sources. The demands put on the trust by the Employment Department are therefore reasonable and effective, and encourage success. They also encourage the trust to demonstrate that it is succeeding.

There are many people to be helped out there, and, as limits on resources enable the trust to help only about 5,000 a year, there is probably a need for additional finance, but I stress to my hon. Friend the Minister that the purpose of my debate was not to press for more funds. We did not feel that that was appropriate today, although I am sure that my hon. Friend will have inferred from what I have said that I would certainly not be unhappy if the Ministry delivered more funds or resources in this instance. As a chartered accountant and member of the Conservative finance committee, I do not like to see money wasted in the public sector.

Without making a strong demand for more funds from the Government, one can say that considerable evidence shows that the trust is an effective way of helping young people. It is effective in terms of both cost and quality of output.

By emphasising the value for money that the trust is producing, the large number of young people who are helped, the many benefits to members in a wide variety of constituencies, and the future opportunities for young people, I hope that I have given the House a flavour of the real benefits which the scheme brings to the country. Many young people will be better off as a result of the trust, and many other people will benefit as a result of the solid business base that is being developed from work that it carries out.

10.40 am

Mr. Simon Hughes (Southwark and Bermondsey)

I am grateful for the opportunity to speak in this debate and pay tribute to the hon. Member for Dover (Mr. Shaw) for raising this subject. My researcher tells me that we have never had a debate on the Prince's Youth Business Trust and that it has been mentioned only once in a written question. That is odd and sad, but I hope that we shall correct it today.

May I say at the outset that hon. Members are united by the fact that your immediate predecessor, Madam Speaker, since stepping down from his job as Speaker of this House, has become involved in the trust. The House, and especially hon. Members in the Chamber today, therefore can all feel associated with the initiative.

The hon. Member for Dover raised this topic not to ask for something but to tell the House how extremely good the scheme is. I want to share that main message with him, although at the end of my brief speech I shall express my real concern about the trust's ability to do as it wants in south London, given the circumstances in that area.

I am glad to have an opportunity to speak for two reasons: first, because in my parliamentary party's team I am responsible for looking after the interests of young people, urban and looking after urban issues; and, secondly, because my constituency has one of the highest unemployment rates in the United Kingdom.

It is no pleasure to have a constituency with the fourth highest rate of unemployment in Great Britain and the fifth highest in the UK—west Belfast has a higher unemployment rate—with 7,500 people unemployed. According to the latest figures, male unemployment is 28.5 per cent.; female unemployment is 12.8 per cent.; and the average rate is 28.1 per cent.

So anyone who gives unemployed people, particularly the young, an opportunity to be employed, engaged, resourceful and independent is extremely welcome and hugely necessary. About 1 million young people in the age group which we are discussing are currently registered unemployed, so the potential for helping people who need such initiatives is huge.

The hon. Member for Dover gave some figures, and I shall try not to repeat much of what he said. But the figures he gave are extraordinary: the trust has helped some 23,000 people in 18,000 newly formed businesses, two thirds of which are still trading. Compared with the normal fall-out rate among small businesses, that figure is exceptional, if not unique.

I agree with the hon. Gentleman that the fact that the money is given in loans or grants, and that advice is given free of charge by experienced business people—advice is given at the beginning and advisers remain available to the young people—appears to make the trust the biggest business consultancy of its type in the world. The fact that the aid and assistance is free is extraordinary.

I am sure that the trust would not mind if the debate served to tell a few people out there who might he interested in being advisors to come and join it, so I am happy to plug for more advisers: please contact the main office. In a second, I shall be as crude about telling people how to contact the trust, because we are here to promote a good thing.

I am much more "wised up" on the trust than I was a year ago, not because I was not aware of the trust before, but because the trust has recently made a particular effort to communicate to hon. Members. Initiatives have been made here and in another place.

I was among hon. Members from both sides of the House invited to Buckingham Palace in December by the Prince of Wales to be briefed on his trusts' work. That briefing helped to explain the complication that there is a family of prince's trusts, of which the youth business trust is only one. It is important to clarify that point. The trust that we are discussing, which is for business start-up, covers England, Wales and Northern Ireland, and a similar trust exists for Scotland.

I pay tribute to the fact that the Prince of Wales has taken initiatives to set up organisations that reach out to and work with those in the community for whom extra help, support, advice and finance can make all the difference. May I list the whole family of prince's trusts so that it is clearly on the record? It comprises the Prince's Trust and Royal Jubilee Trusts; the Prince of Wales's Advisory Group on Disability; the Prince's Trust Volunteers; the Prince's Scottish Youth Business Trust, which is the sister organisation to the Prince's Youth Business Trust; the Prince of Wales Business Leaders Forum; Business in the Community; Scottish Business in the Community; and the Prince of Wales's Committee.

I shall now make a crude plug for the Prince's Youth Business Trust. People can express their interest to area boards, but the trust's address is 5, Cleveland place, London SW1. The telephone and minicom number is 0171 925 2900, and the fax number is 071 839 6494. Cleveland place is at the back of St. James's square. If anyone thinks that that is a posh address, as it is, the area board addresses are often much less posh. In any case, people have only to telephone. Another interesting statistic is that the third of businesses which are not still trading have not necessarily failed. Half of those involved in them have decided to opt for self-employment, and the trust has therefore acted as a stepping stone. Another good aspect is that the trust operates as a last resort. That may not happen in every case, as it is not perfect, but it seeks to help when people have been turned down by banks and cannot get going with help from elsewhere.

It is a bit like going to the European Court, in that one must exhaust the domestic remedies first. People must have exhausted their normal financial possibilities first. The trust also sets the precondition that beneficiaries are not from well-off backgrounds, and that resources, buildings and training schemes would not normally be available to potential beneficiaries.

The figures relating to beneficiaries are telling. A pie chart in the last report shows that 9 per cent. of those helped were young offenders; 10 per cent. were from ethnic minority backgrounds; and 5 per cent. were young disabled people. Those are all above-average percentages.

The chart also shows that 41 per cent. of those helped were female. Although not half, that figure is good, given how often such schemes are skewed in favour of males. Moreover, no area of the country gets much less than 5 per cent. of the money—Northern Ireland gets 4.8 per cent. The area that received most was the north-west, so funds are not metropolis-centred either.

Interestingly, in passing, we are talking about what the hon. Member for Dover rightly says is the main area of business in our society. I gather that 90 per cent. of businesses in our country–as the Minister must know better than I–employ fewer than 10 people, and 70 per cent. employ fewer than five people. Small businesses are what Britain is about. For whatever reason, the age of coal mines and docks is past.

It is good that we produce vibrant earners and vibrant survivors. It is important to ensure that young men and women–I pay particular tribute to the latter on International Women's Day–have the skills to be part of the work force, to earn for themselves and to earn for Britain.

The Government have been helpful. They have, I think, said that they are paying £2,500 a person, up to a total of £10 million, for three years, starting this year, but only if the person continues to trade after 15 months, and there must be matching funds. I hope that that will be sustained and never reduced. As the hon. Member for Dover said, more money would be welcome.

I do not think that the hon. Member for Dover mentioned that another good deal was recently secured with the clearing banks—the "Banks Directory". They will match other funds for the hest businesses, on preferential interest rates. That means that those businesses may be moved to the support of the banks, releasing Prince's Youth Business trust moneys to work with other people. That is very good news.

I have witnessed the work on the ground, as others have. I visited, like Jeremy White, chief executive of the trust, the firm that features pictorially in the most recent annual report. That firm is imaginatively called Michenuels, named after the three lads who are the partners—Miguel, Henroy and Michael, whom we met. They are furniture makers and restorers. They had done some work; they were unemployed; they had come together and were now restoring furniture.

They were in a little estate business start-up unit on the borders of my constituency, on the Deptford-Bermondsey border. They seek more premises. They want to obtain premises on the main road, so that they can sell their wares. They are enthusiastic, vibrant, go-ahead and ready to storm the world. If anyone has any furniture that they need restoring, they should go to Michenuels, because they will do a good job. That is exactly the type of business that we should be interested in.

I shall now mention local circumstances and make my specific request to the Minister. In south London, 40 per cent. of new businesses are started by members of the ethnic minority community, and I am told that 33 new businesses have been set up in or near my constituency by the Prince's Youth Business trust. I am told that south London will receive £62,000 from the trust this year in grants and £250,000 in loans. Good money is entering an area with one of the highest unemployment rates in Britain.

Madam Speaker, you know as well as anyone that one should never write off a district simply because it has traditionally suffered from high unemployment. People living in such districts are not less skilled or less talented. By contrast, one probably needs to be more streetwise, bright, sharp-eyed and bushy-tailed if one lives in a grotty estate in the middle of south London, or Liverpool, Leeds or Bradford, than if one lives on the white cliffs of Dover, looking out over lovely views. If the success rate in south London is that more than 80 per cent. of PYBT businesses continue to trade after three months, and more than 60 per cent. are still going after three years, that is good news indeed.

The Prince's Youth Business trust relies heavily on business start-up schemes, and business start-up courses run by the local enterprise agencies are the precondition to that working. Young people, when they are in the scheme, also need the enterprise allowance money—that is the way in which they fund themselves, so that they are supported for what is now six months and was 12 months.

There is a significant worry that enterprise allowance might be removed—I flag that up. If it is, it will pull the rug from under the scheme altogether. I say to the Minister: please may we have a guarantee today, or will she speak to her colleagues and give a guarantee later, that, as long as the present Government are in office, the enterprise allowance will not be removed?

The immediate additional problem is that, since the South Thames training and enterprise council went into liquidation at the end of December 1994, no one can claim enterprise allowance in the South Thames TEC area, and there are no business start-up courses. Suddenly, because the TEC was the servicing agency, there is a closed door. There is no way in, and that is unacceptable. It is unacceptable that the Prince's Youth Business trust, the door to opportunity for many people, is closed as a result of the way in which Government and the TEC have been sorting out their business.

I initiated, and we have had, an Adjournment debate, thanks to you, Madam Speaker, about the South Thames TEC, but that matter must be sorted out soon. The people knocking at the PYBT door in south London are now not receiving an answer, because the TEC is not there. My last general request to the Minister is, will she please not only sort that out so that we may get into the slipstream again, but also put money back into TECs? Cutting TEC funding–—137 million was cut last year—is bad news, because it reduces enterprise allowance and reduces business start-up schemes. I repeat my specific request to the Minister; will she please not leave south London as the one area of the country that, because our TEC has folded, is unable to benefit?

I end with a quote from the boss, which he wrote in the forward to this year's annual report. The Prince of Wales said:

Helping just one person to start their own business, thus taking them off unemployment benefit, saves the country thousands of pounds each year. But the benefits of our work go far beyond the merely financial. As I often see, starting a business not only restores the self-confidence of the individual, but can also play a part in helping to shore up the fabric of the community in which they live and work. I hope that we can all say amen to that.

I say to the hon. Member for Dover, the debate is welcome. I hope that the whole country gets the message, and that many more young people hear about the scheme as a result of his initiative and, Madam Speaker, your choice today.

10.55 am

Mr. Peter Ainsworth (Surrey, East)

It is a pleasure to he able to contribute to the debate. I congratulate my hon. Friend the Member for Dover (Mr. Shaw) on securing a debate on such an important and interesting subject.

I know that my hon. Friend the Member for Dover takes a keen interest in small businesses, and especially venture capital activities. As has been mentioned, he will be well aware that few venture capital businesses in the traditional sense can boast a success rate approaching that of the Prince's Youth Business trust. Of course, traditional venture capitalists charge enormously high rates of return on their investments, and the charity that we are talking about does it for nothing. There is a tremendous lesson to be learned from that alone.

We have in the Prince's Youth Business trust an excellent example of what can be done to stimulate economic activity, to create jobs and to give people a sense of purpose. I know that all Members who will contribute to the debate will echo what my hon. Friend the Member for Dover said.

It is not simply an economic benefit, although the economic benefit is important, that the trust helps to achieve. My hon. Friend the Member for Dover has said–this was echoed by the hon. Member for Southwark and Bermondsey (Mr. Hughes)–that small businesses are the backbone of economic activity in the country. Anything we can do to stimulate the creation and development of smaller businesses must be good news for the economy and for jobs.

We have a lower rate of unemployment for people between the ages of 18 and 25 in this country than is the case in many other countries in the European Community, but at 14 per cent. it is still too high. I have no doubt that one of the reasons why we have a lower rate than, for example, Spain, where the rate is 38 per cent., is the existence of schemes such as the one that we are discussing—imaginative schemes, designed to tackle the problem specifically and creatively.

This excellent trust does a huge amount of work to bring hope and purpose and to offer opportunity to those whose talents would frequently otherwise be wasted. I notice also that it is an efficient organisation, and that the Department for Employment last year gave the trust the accolade of saying that it was the most cost-effective job creation programme in the country. The trust can he proud of that.

The trust is also an excellent example of partnership in action. My hon. Friend the Member for Dover mentioned the various agencies—the local authorities, the training and enterprise councils, Government Departments of course, and the the European Union—which co-operate with the private sector to make it all happen. Obviously, central Government funding has been vital and welcome. I think I am right in saying that £20 million of central Government funding has been applied to the trust since its inception, and, as we know, a new arrangement has been put in place for the next three years, which will add another £10 million to what has been spent.

The success of the scheme depends crucially on the commitment of people and companies in the private sector, who are prepared to lend their time and expertise and give willingly to help young people to set up in business. My hon. Friend the Member for Dover pointed out that it is estimated that that assistance alone is worth about £5 million per year.

Three years ago, Robert Darrell started a business under the scheme with a £5,000 loan. His business now turns over £2.4 million per year and he believes:

The advisers provided by the Trust are as valuable as the loan". I think that that is absolutely correct.

The scheme has caught the imagination of businesses in Surrey to such an extent that the clarion call by the hon. Member for Southwark and Bermondsey to the private sector to become involved in the scheme is somewhat otiose. Until recently, a superfluity of business people wished to offer their help for free, but unfortunately their number was not matched by people wishing to participate in the scheme.

The hon. Gentleman, who spoke eloquently about the problems in his constituency, smiles wryly. It is true that, thankfully, Surrey does not suffer the same sorts of problems as his constituency. However, that is not to say that individuals do not need help. I hope that they will come forward and take advantage of the scheme.

It is in keeping with the spirit of the trust that, faced with the situation chat I have described in Surrey, instead of sitting around and doing nothing, advisers have gone into the community to encourage people to come forward with ideas for developing their businesses. To that end, a roadshow will be held in Caterham in my constituency this Friday. I look forward to attending it, and I hope that it is enormously successful.

Mr. Simon Hughes

If there are spare advisers in Surrey, they could travel to areas where there are not enough advisers to talk to the people there. They will be more than welcome in south London.

Mr. Ainsworth

I will certainly convey the hon. Gentleman's message to the advisers in Surrey. Bermondsey is not that far away, and I hope that something will come of his suggestion. Every hon. Member has his or her favourite scheme, and a few from the Surrey area have caught my imagination. One involves a young man with cerebral palsy, who, with the help of the trust, has established a business duplicating musical cassettes. I am assured that that is not a breach of copyright, and that it is perfectly legal. That business is extremely successful, and it has given that young man access to a whole new field of activity, which would otherwise have remained closed to him.

Perhaps a more spectacular example is that of the young man from Kingston who, four years ago, visited his mother in hospital. He found that, like many people who are in hospital for any length of time, she was becoming very bored, and he brought a television to the hospital for her to use. That gave him an idea, and, with the help of the trust, he set up a company called Hospital Entertainment, which rents televisions to hospitals. The company has done extremely well, and it now turns over £750,000 per year. It recently acquired a subsidiary of Thorn EMI, which specialises in similar activities.

Less well known is the growing success of the trust abroad. Through Youth Enterprise Service International, the Prince's Youth Business Trust is exporting its expertise and its ideas to several countries, notably India and Hungary. I am happy to say that that enterprise is backed by the Foreign Office with money from the Overseas Development Administration programme.

The trust's activities are not only good news economically and socially—they fulfil an important social function which was perhaps the original idea behind the trust—but also an example of a great British idea which is being applied successfully overseas. I think that we should all be proud of that.

It is hard to think of a better idea. The trust is not the biggest charity in Britain, but it is targeted very carefully. It is difficult to think of any charity—particularly one associated with the unemployed—which has such a rewarding and beneficial effect on those who become involved with it. The trust's advantages are summed up by a member of the Surrey Prince's Youth Business Trust board, who said:

The Trust does so much to get young people doing things for themselves; and even if their businesses just potter along and they don't do much with them and eventually move on, they have so much more to offer prospective employers as a result of their experience". The beneficiaries of the trust, the people they employ subsequently and every hon. Member have cause to be grateful to His Royal Highness the Prince of Wales for having the idea in the first place, and to all those who give of their time, energy and effort to ensure that the scheme is a success. I thank my hon. Friend the Member for Dover for giving the House the opportunity to put on record its appreciation for the tremendous work of the Prince's Youth Business Trust. I wish the trust every success in the future.

11.5 am

Mr. Kevin Barron (Rother Valley)

I also congratulate the hon. Member for Dover (Mr. Shaw) on his success in the ballot, and on introducing this morning's debate on the Prince's Youth Business Trust. I think that everyone agrees that the trust has done very valuable work over the years in helping young unemployed people into self-employment. Most of the people the trust supports are in their twenties and have been unemployed for a considerable time.

The hon. Member for Dover referred to a survey conducted by the Department of Employment to gauge the trust's success rate. It found that more than two thirds of businesses created under the scheme are still operating three years later. That is a better success rate than that of most of the high street banks, which in most cases turned down those ideas in the first place. It makes one wonder about the ability of those who are running our banking system to gauge individuals' potential to contribute to economic growth.

Some 3,000 young people have benefited from the scheme in the last 12 months. As it is International Women's Day, I point out that 40 per cent. of that number were women, and I am pleased to say that that includes some of my constituents. About 24,000 people have taken advantage of the trust since its inception. That figure relates roughly to the number of long-term young unemployed people in Yorkshire, Humberside and the east Midlands. That gives us some idea of how much assistance the trust has provided.

The average cost to the Prince's Youth Business Trust of creating a job is £2,500, which is less than a third of the cost of keeping one unemployed person for a year. Clearly, in that context the trust is a major success. That cost pales into insignificance when compared with the cost of inward investment through regional selective assistance, and it shows how the country has benefited from that type of scheme.

I visited the Prince's Youth Business Trust exhibition marquee at the Rotherham show last year as a guest of the South Yorkshire region, and I was greatly impressed by the types of products on display.

I spoke to a man named Frank White, who started a business called Busy Bees in May 1991 after having been unemployed for 10 years. The business, which is run from the Westfield road craft park in Rotherham, makes garden ornaments. What I found most amazing about the company is that between 60 and 80 per cent. of its output, depending on the season, is exported to the United States of America.

Mr. White exports garden ornaments in the guise of alligators to America. They are constructed in three sections and are most impressive, although I would not want to have one in my garden. Mr. White is a success not only for himself, but also for the country and the local economy, because he employs two people in his business.

Since its inception in South Yorkshire, more than 700 people have benefited from the trust's work. In 1994, the trust helped 16 young people to start up 13 businesses in my constituency. Those businesses range from a mobile beauty therapist to tachograph services, and from a manufacturer of jewellery to a delicatessen in the village of Thurcroft. In the latter two cases, the individuals concerned had been out of work for 18 months, so that shows how successful the trust has been in combatting long-term youth unemployment in the area.

I welcome the fact that the Department of Employment now matches the donations that the trust receives from private sources. It is my understanding that, if private funding is raised, the money from the Government now represents about 20 per cent. of the trust's total funding. Echoing what has been said by all hon. Members this morning, I very much hope that the Government's commitment will continue after the current end date of 1996.

I should also mention that the Government are a taker as well as a giver, for they have removed an important method of potential support for participants in the Prince's Youth Business Trust in recent months. I refer to the business start-up allowance that was mentioned by the hon. Member for Southwark and Bermondsey. That problem has not arisen in his constituency, simply because the South London TEC has gone into liquidation. The Government have moved money away from supporting self-employment for the previously unemployed by that method.

When the business start-up allowance replaced the enterprise allowance scheme, a large number of unemployed people were dropped from the system, despite the fact that the "£1,000 of own capital" rule was removed.

In 1984, more than a quarter of those receiving the enterprise allowance had been out of work for a year or more and all were unemployed. By the first year of business start-up, just one in 10 of those receiving the allowance had been long-term unemployed, and a quarter of the people on the scheme were not classified as unemployed.

The withdrawal of the business start-up scheme as a nationally available measure is a distinct threat to the ability of the Prince's Youth Business Trust to perform effectively. That is not an idle remark. In South Yorkshire, for example, the effects of losing the business start-up allowance are already being felt.

In the past, applicants had been able to claim a business start-up allowance of £35 a week for the first year of trading. The South Yorkshire area manager, Mr. David Houghton, wrote to me recently:

We have been informed by the TECs in south Yorkshire that the allowance

is now being withdrawn this month and not being replaced. Our information is that enterprise allowance is disappearing nationally except for a couple of areas in the North East.". He continued:

In my view I believe that the removal of the … allowance will dramatically affect the number of people we help and we are already seeing signs of this in South Yorkshire. Throughout the last year the South Yorkshire Board have considered between 12 and 16 businesses each month, but in February 1995 only eight businesses were helped and this month possibly only five or six are being put forward.". The impact of the Government's ending of the start-up allowance is giving some early warning signs to the South Yorkshire manager of the Prince's Youth Business Trust. If that is a reflection of the future, we shall have to reconsider the position.

A great percentage of the people the trust helps have been unemployed for six months or more, and have no collateral, so the guaranteed business start-up allowance of £35 a week was vital to them. It made the difference between taking the risk of trying to improve their standard of living and continuing to live on state benefits.

I know that there is common agreement about state benefits. Certainly, people with young children find it difficult to get into any work, let alone self-employment. The experience of the Prince's Youth Business Trust is that, in the first few months of trading, the businesses rely on the £35 a week while they build up sales and a customer base.

My local area manager continued in his letter:

If these unemployed young people lose their initiative due to the curtailment of the allowance they will miss the opportunity the Trust gives them at a relatively low cost to become self-employed and will possibly remain unemployed at a yearly cost of thousands of pounds to the state.". That cannot be right. The Government must put in place some alternative business encouragement measures to replace what we are about to lose or are losing.

The bottom line is that there is there is no real money on the table to encourage young unemployed people to start their own businesses. There is plenty of advice and training, but no hard cash. The cushion provided by the business start-up allowance has gone and the allowance itself has been subsumed into the general funds of the single regeneration budget.

My own borough, Rotherham, was successful in its bid for the single regeneration budget. I was looking at the submission and the outcome only yesterday. However, the only thing on offer under the single regeneration budget in Rotherham is advice to people who are already getting that advice through the Prince's Youth Business Trust. Under the circumstances, it seems that the allowance is being withdrawn without being replaced.

We have to ensure that such a cavalier attitude does not damage the operation of the Prince's Youth Business Trust. It is vital for the growth of local economies, and I hope that the Government will look hard at the possible consequences of the withdrawal of the business start-up allowance.

My own borough has only half the national average for self-employed people—the figure is only 4 per cent. I am clear in my mind that there is a great deal of scope for the growth of self-employment as a means of getting rid of long-term unemployed in my constituency, but it will not happen if people cannot get the assistance they have had in the past.

In the next few weeks, I hope that the Government will look hard at the results from the Prince's Youth Business Trust about how many start-ups are occurring, and if the withdrawal of business start-up allowance from long-term unemployed people has created a problem for the trust, I hope that the Government take measures to remedy it. Like everybody else, I am sure that they would like the trust to go from strength to strength in its work for our young people in the economy.

11.17 am

The Minister of State, Department of Employment (Miss Ann Widdecombe)

I add my congratulations to my hon. Friend the Member for Dover (Mr. Shaw) on obtaining the debate, and on raising the important matters that we have been discussing. He was quite right to draw attention to his own track record of support for small businesses which is well recognised in the House, and on which he also deserves to be congratulated.

I was interested to hear from the hon. Member for Southwark and Bermondsey (Mr. Hughes) that today is an unique occasion, and that we have not discussed the Prince's Youth Business Trust before. I hope that we will not leave it quite so long in future before we return to such an important subject. I think that the interest caused by the business trust was exemplified by the number of hon. Members who have been present in the Chamber during the debate. I mention in particular the hon. Member for Belfast South (Rev. Martin Smyth), my hon. Friends the Member for Ealing, North (Mr. Greenway), for Rutland and Melton (Mr. Duncan), for Surrey, East (Mr. Ainsworth) and for Ribble Valley (Mr. Evans), and the hon. Member for Jarrow (Mr. Dixon). I now see my hon. Friends the Members for Finchley (Mr. Booth) and for Sutton and Cheam (Lady Olga Maitland). It is a tribute to the Prince's Youth Business Trust that so many hon. Members are present this morning to hear about its excellent work and to pay their own tributes to it.

Certainly, the PYBT carries out excellent work in helping disadvantaged young people to enter self-employment and set up their own businesses. Today's debate provides us all with a welcome opportunity to publicise that work.

The trust was founded in 1986. Since then, it has helped some 25,000 young people to set up or expand more than 19.000 businesses. It does that, as we have heard during the debate, through providing grants or loans and in particular through its volunteer network of business advisers. Those advisers are assigned to particular young people and act as mentors, giving help or advice for a couple of years or so.

I find it very heartening that there are currently some 4,500 volunteers, most of whom have themselves started businesses. They therefore know exactly what is involved, and are prepared to give young people the benefit of their time and expertise. More than 2,000 volunteers are needed each year to keep up the momentum, and I understand that the Prince of Wales recently wrote to every existing adviser asking him or her to recruit another volunteer. I wish the trust every success in that campaign.

As has been acknowledged today, we in the Government are extremely supportive of the trust's work. Indeed, we have provided substantial financial help over the years. In November 1988, on his 40th birthday, the Prince of Wales launched an appeal to raise £40 million from the private sector, and the then Secretary of State for Employment, Lord Young, promised to match that pound for pound. So far, we have given some £21 million in accordance with that promise, and our total maximum commitment currently stands at £31 million.

More recently, in March last year, we agreed to provide further funds focused on the more disadvantaged, especially the long-term unemployed and the disabled. Our maximum commitment over the next three years is £10 million, as has already been pointed out. That includes welcome contributions from the Welsh and Northern Ireland Offices.

Our contributions are designed to help the PYBT to maximise the funds it receives front the private sector. Both the schemes, which run alongside each other, are paid only on a matched-fund basis, pound for pound. At the trust's suggestion, the new scheme is also output-related: we pay £2,500 for each young person who is recruited and who survives for 15 months in business, which demonstrates the confidence that both the trust and the Government have in those young people. All that helps the trust to raise substantial private sector contributions to the cost of its work.

Mr. Hartley Booth (Finchley)

My hon. Friend has drawn attention to the interaction between the House of Commons and the trust. Is she aware that, last year, the Prince and his trust helped an all-party project known as "Return Ticket"? Long-term unemployed people were sent 30,000 hooks to give them hope, which has been afforded not least by the success stories emanating from the trust.

Miss Widdecombe

I am grateful both for my hon. Friend's interest in the trust and for his reminder of that important initiative.

The free advice that the trust gives each year is estimated to be worth about £30 million. Because of the leverage that our funds ensure, it hopes to double the number of young people that it supports as a result of the new scheme.

I am delighted to say that our research suggests that the young people who start businesses generally go on to set up thriving concerns: two thirds are still in business after two to three years, and a high proportion of those who sadly cease trading say that their experience with the PYBT has helped significantly to make it easier for them to find employment—or, indeed, to continue in some other form of self-employment.

I pay particular tribute to the work that the trust does in Kent, not least because I was recently privileged to go to a reception for young people who had set up businesses. I particularly remember a young man called Andrew Harsley, who had founded a very successful business making cable ties—perhaps because he was kind enough to give me a bunch of flowers tied up with one of his cable ties. I thought that that was a very nice gesture, and I wanted to put it on record and thank Mr. Harsley today.

The sheer diversity of the trust's businesses is amazing. They include both the more obvious concerns such as fashion, hairdressing and manufacturing, and unusual businesses such as sheep pregnancy testing, pet food delivery services and surfing. Hon. Members on both sides of the House have given many examples of specific initiatives, and paid tribute to them.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) made an important contribution to the debate. He mentioned the fall-out from the circumstances of the South Thames training and enterprise council. As he will know, we are arranging for the TEC's functions to be taken over, but as a result of what he has said today I shall find out what specific arrangements have been made in relation to the PYBT and write to him as soon as I can.

I hope that the hon. Member will take that as an indication of the seriousness with which the Government view the trust, and our awareness of the importance of maintaining continuity. I take the hon. Gentleman's point: continuity is all, especially in the early stages.

The speech of the hon. Member for Rother Valley (Mr. Barron) was unusually emollient, which is in itself a tribute to the trust. It clearly has considerable appeal for all parties in the House. I do not think, however, that the hon. Gentleman's portrayal of our treatment of the business start-up scheme was altogether fair. He implied that it had been withdrawn. Our evaluation in 1991 suggested that some 80 per cent. of PYBT-supported businesses were in receipt of business start-up allowances, which did of course tend to increase unit costs from the Government's perspective. The funds from the business start-up scheme have been transferred to the single regeneration budget, but that does not mean that they have been withdrawn. The budget will directly support some 18,000 new businesses in 1995-96; moreover, all projects supported by it will tend to help new businesses.

Mr. Barron

Is the Minister saying that the transfer of the money to the single regeneration budget will give those who benefit from the trust's work a weekly allowance for the first 12 months of the existence of their businesses?

Miss Widdecombe

I am saying that it is wrong to suggest that the fact that the business start-up scheme now functions as part of the single regeneration budgets means that it has ceased to function at all.

Some £40 million will be available in 1996–97 for the second round of bidding. That will build up to £200 million in the following year. Provision for the single regeneration budget over the next three years accounts for a substantial sum, of which more than £800 million will be provided for new projects.

It is for local partnerships to decide what priority to give to small business support. There is plenty of scope for the PYBT, and for other concerns, to work with local partners, as it is already doing in many parts of the country. I do not share the rather gloomy view of the hon. Member for Rother Valley: The change in procedures does not mean that we are any less committed to looking after small businesses.

Let me again congratulate my hon. Friend the Member for Dover, and also congratulate the trust on the diversity of its work. As the hon. Member for Southwark and Bermondsey pointed out, many women, disabled people and ethnic minorities have benefited from that work. The trust's scope is wide, encompassing both rural and urban areas, and the contribution that it makes, not only to the well-being and the economic prosperity of young people but to the well-being and the economic prosperity of the country is well worthy of the recognition that it has received today.