HC Deb 15 July 1999 vol 335 cc552-4
5. Dr. Julian Lewis (New Forest, East)

What assessment he has made of the effect on small businesses of Britain remaining outside the single European currency. [900111]

The Minister for Small Firms, Trade and Industry (Mr. Michael Wills)

The hon. Gentleman will be aware that my right hon. Friend the Chancellor of the Exchequer has set out five economic tests that will have to be met before UK membership of the single European currency will be considered. These tests will assess whether it is in our national economic interest—and hence in the interests of small firms—to join. They will include an assessment of whether joining will promote higher growth, stability and a sustainable increase in jobs. The Government have said that they will make that assessment in the next Parliament.

Dr. Lewis

Is the Minister aware that the chairman of the policy unit of the Federation of Small Businesses, Mr. Brian Prime, has stated that about 94 per cent. of the federation's 127,000 members are implacably opposed to membership of the single currency? Mr. Prime has stated also that membership of the single currency has little to do with economics, but is a political device for political ends. Why does the Minister think the Federation of Small Businesses can see so clearly that to which the Government are evidently blind?

Mr. Wills

What the hon. Gentleman has just revealed is an insight into the attitude to Europe not of the Federation of Small Businesses but of the Conservative party, for which the matter is purely one of politics and ideology. For Conservative Members, the matter does not depend on the national economic interest. However, if they want to say that it does, perhaps they will answer two simple questions.

First, do they think that it could ever be in the national economic interest for this country to join the single currency: yes or no? Secondly, if it could be, would they join: yes or no?

Mr. Ian Bruce (South Dorset)

Is the Minister resigning so that he can answer the question?

Madam Speaker

Order. It is normally for Ministers to answer questions.

Mr. Denis MacShane (Rotherham)

Did the Minister see the remarkable speech by the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude), reported last Monday in the Financial Times, in which he said that the euro ultimately would be a success? Whose side does my hon. Friend think the right hon. Gentleman is on?

With regard to the promotion of small businesses, does my hon. Friend agree that encouraging employee share ownership is a good way to keep businesses alive, because it encourages a commitment to the employees of small businesses to the success of this vital sector?

Mr. Wills

I agree with my hon. Friend's second point. On his first, I can tell him that I did see the shadow Chancellor's remarkable speech, which revealed the Conservative party's attitude to the euro. Even if the currency is a success, the Conservatives will still rule out joining it for 10 years.

Dr. Vincent Cable (Twickenham)

Does not the Minister accept that small firms are much more vulnerable than large firms to currency fluctuations, and that they are much less able to hedge against risk? Does he acknowledge that the present fluctuations of sterling against currencies accounting for more than half our visible trade are seriously damaging to the small firm sector?

Mr. Wills

I accept that every small firm and every business in this country has an interest in the success of the euro. It may be worth recalling that 45 per cent. of small and medium-sized companies in this country have a trading link with Europe. It is crucial that those firms are ready for the euro and to make preparations if this country decides to join.

Mr. Geraint Davies (Croydon, Central)

Does my hon. Friend accept that the majority of small businesses are commercially linked, directly or indirectly, to larger multinational firms that are linked into the euro? In the same way, they are also linked to companies in Japan and China—which my right hon. Friend the Secretary of State visited recently—whose inward investment depends on the belief that Britain will join the single currency when the conditions are right. Does that not suggest that it is in the interests of small business as well as big business to move towards a single currency? What advice has been provided on the medium-term impact on jobs and investment—both internal and inward—that taking up the option of joining would have?

Mr. Wills

I agree that it is in the interests of every small firm—not only those who trade in the euro, but those whose customers or suppliers trade in the eurozone—to be ready for the single currency. The Government are helping them to get ready: we have issued 380,000 national information packs of fact sheets, 100,000 euro planners and a self-help computer programme to help all businesses to prepare.

Mrs. Angela Browning (Tiverton and Honiton)

As the Minister is responsible for small businesses, what calculation has he made of the cost of the single currency to the independent retail sector? Does he expect the sector to absorb the costs, or to pass them on to customers?

Mr. Wills

A number of estimates have been made of the costs of getting ready and of joining the single currency, should we choose to do so. The costs vary.

Miss Julie Kirkbride (Bromsgrove)

How much are they?

Mr. Wills

If Opposition Members will be silent, I shall tell them, and they might learn something. Estimates of costs depend on the methodology used. The estimates vary, and it is too soon to tell what the costs will be. However, as Opposition Members are more eager to peddle their own prejudices than to learn anything about the single currency, I shall explain to them that discussions of costs should also involve benefits. Their unremitting emphasis on costs displays their simplistic attitude towards businesses. What matters to all businesses—small and large—is the bottom line. If Conservative Members would concentrate a little more on the opportunities that the euro may offer the UK and our companies, they might do better for themselves and their constituents.