HC Deb 23 November 1995 vol 267 cc780-1
1. Mr. Duncan Smith

To ask the Chancellor of the Exchequer what priority he gives to start-ups of small businesses as an economic indicator. [690]

The Economic Secretary to the Treasury (Mrs. Angela Knight)

The major banks estimate that business starts are running at around 400,000 a year. Start-up figures are one of a number of important economic indicators.

Mr. Duncan Smith

I am grateful to my hon. Friend for those statistics. Does she agree that a key factor in encouraging business start-ups is a benign tax structure which lowers the burden on businesses in their initial stages? Will my hon. Friend and her Department examine the issue of the three-year point at which a number of companies find it difficult to continue in business? Does she agree that regulation—the sort of thing that would be imposed via the social chapter and the minimum wage—is the wrong way to go?

Mrs. Knight

My hon. Friend makes an excellent point. I assure him that we are doing what we can to support small businesses through proposals such as venture capital trusts, the loan guarantee scheme and the enterprise investment scheme. We shall continue to oppose the social chapter and the minimum working wage as we want businesses to survive and not die as would occur under Labour's proposals.

Ms Primarolo

Does not the Minister recognise that she must also take account of the companies that are not succeeding? Is she aware of the staggering increase in the number of company failures in the past two quarters? Does she realise that that is linked to the extra income tax burden of 7p in the pound imposed by her Government as a result of their economic failure?

Mrs. Knight

The hon. Lady had better look at her figures again. [Interruption.] Wait for it. It is estimated that the survival rate of businesses is improving and not worsening, as the hon. Lady implied in her question. I assure her that the best way to ensure the survival of businesses and industry in this country is to have low taxation, low inflation and interest rates as low as possible. We have that at the moment and the situation is much better than it was when the Labour party was in power.

Mr. Riddick

Does my hon. Friend agree that consumer confidence is an important factor in the success of small businesses? Does she also agree that there is a very strong economic case for reducing taxation next week by between £5 billion and £10 billion so as to give a boost to consumer confidence and to the moral case for allowing people to keep more of the money that they earn?

Mrs. Knight

I thank my hon. Friend for his Budget representation; he must wait until next week for any further comment. However, I assure him that the survival and well-being of businesses is a very high priority for the Government. We have pledged to assist business by ensuring that the economy continues to grow and that interest rates and inflation remain as low as possible.

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