HC Deb 29 October 1998 vol 318 cc449-51
5. Mr. Brian White (Milton Keynes, North-East)

If he will make a statement on his Department's work in supporting high-technology small and medium enterprises. [55055]

The Secretary of State for Trade and Industry (Mr. Peter Mandelson)

High-technology SMEs are crucial to Britain's economic success and the enterprise and innovation which are needed to generate them will be at the heart of the forthcoming competitiveness White Paper. The Department's current support for high-technology SMEs includes grants for research and technology transfer through schemes such as the small firms merit award for research and technology—SMART—improving their financial management and marketing skills through advice and support from the business links network, and advising on how to access private finance and working with the financial community to improve the quality of appropriate finance available. We aim to extend and improve that support and we shall do so.

Mr. White

I thank my right hon. Friend for that reply. Does he agree that one of the key problems for many small high-tech companies is the gap between coming up with the idea and the innovation and being ready to go to the market to get venture capital? There is a difficulty with securing funds. Does my right hon. Friend recognise that many small companies face the barrier that financial institutions and civil servants are ultra-cautious? Will he ensure that those barriers are addressed in the forthcoming White Paper on competitiveness?

Mr. Mandelson

We shall certainly address all those issues in the White Paper. I entirely agree with my hon. Friend's comments about the paramount importance of providing finance for small and medium enterprises. We certainly need more technology banking in the United Kingdom, and if we were better able to have our banks acting as investors, perhaps in a more competitive banking sector, we might be able to achieve an altogether better service.

I also agree that we need well-performing capital markets and mechanisms to provide finance through successive stages of enterprise growth. I welcome the positive and practical proposals made in that context by the British Venture Capital Association. We shall follow up those proposals, and others, in the forthcoming White Paper.

Mr. Peter Brooke (Cities of London and Westminster)

Will the Secretary of State have a word with his opposite number at the Department for Education and Employment about the perhaps excessively complicated overseas labour section rules on overseas work permits? They are cumbersome and difficult for small high-tech companies, in which the acquisition of an overseas employee may frequently be crucial to growth.

Mr. Mandelson

That is an extremely good point, and it is well taken. On my recent visit to the United States, I spoke with entrepreneurs who managed new high-tech businesses in Silicon valley, and I was struck by how many of those enterprises got off the ground using people who had gone to the USA from around the world and who had the skills and entrepreneurial flair necessary for the success of such enterprises. If there are blockages in the system, in relation to either the Department for Education and Employment or the Home Office, they will be closely scrutinised by my Department.

Mr. Ian Pearson (Dudley, South)

May I welcome those comments? Does my right hon. Friend agree that, in comparison with the position in the United States, too few companies spin off from United Kingdom university sites and engineering bases? Will he talk to his colleagues at the Department for Education and Employment about ensuring that academics in British universities are encouraged to work more with business so that there are more academic entrepreneurs and more entrepreneurial universities?

Mr. Mandelson

I entirely agree with my hon. Friend. One of the key objectives of the Government, and of my Department, is to turn universities from ivory towers into business partners. That practice has been successfully followed in the United States, and we could do with more of it here. My hon. Friend will not be disappointed by the measures that we shall propose in the White Paper.

Mr. Brian Cotter (Weston-super-Mare)

Is the Secretary of State aware that, by 16 October, only 194 people had been trained as millennium bug busters? The Prime Minister suggested that we would have 20,000 by April 1999, but at that rate we shall not have that number until 2050. Would the Secretary of State care to comment?

Mr. Mandelson

If the previous Administration had recognised the problem of the millennium bug and had done more to prepare by carrying out measures that were needed long before we were able to begin on them, we would be in a better position. The Government have moved with alacrity to put necessary measures in place. I recently met Mr. Don Cruickshank, who is directing Action 2000, and if the Government need to take any further steps to ensure that we are properly prepared to overcome the problem, we shall certainly do so.

Mr. John Redwood (Wokingham)

I welcome the Secretary of State to his first departmental Question Time, although the fact that it is his first shows how little accountability the Government have. High-tech businesses are already being sandbagged by higher taxes, higher interest rates, an erratic sterling and a massive increase in regulation introduced by the Government. Will the Secretary of State tell us whether high-tech businesses will be in for a pounding from his predecessor's proposals on trade union reform, or whether he will water down those proposals in the light of strong business opinion against them? I have read stories in the press both ways. Some newspapers of a leftward inclination say that the right hon. Gentleman is standing by every dot and comma of his predecessor's proposals to suit the left of his party; others say that he will water them down because business does not want them. The Secretary of State has said, "No more spin, honest." Will he now, loud and clear, tell us whether he is standing by every word or watering them down? Honesty is the best policy—in all things.

Mr. Mandelson

I am tempted to say that that is rich coming from the right hon. Gentleman. I reassure him, and anyone else who is interested in the fairness at work proposals in the White Paper, that they are designed to encourage partnership in industry and at places of work. We want to encourage in all those employed in firms and companies a commitment to their success and profitability. That is what the proposals were designed to do. I am sure that, in translating those measures into the Bill that will be published by the end of the year, we will be faithful to the tenets and principles set out in the White Paper and, as a result enjoy considerable support and good will from all parts of the business community.

Mr. Ken Purchase (Wolverhampton, North-East)

Will the forthcoming measures recognise the credibility gap that exists—certainly in the west midlands—between his Department's assessment and administration of grants and the great length of time that it often takes for companies to benefit from them? If the gap is recognised, what measures will the Secretary of State take to overcome it?

Mr. Mandelson

I am glrateful to my hon. Friend for drawing that to my attention. If he has any specific cases in his inside pocket, or anywhere else about his person, I hope that he will draw them to my attention. It is no part of the Government's responsibility, in making much-needed financial and other assistance available to companies, to let it be held up by poor administration.