HC Deb 06 May 1999 vol 330 cc1076-7
8. Mr. Brian White (Milton Keynes, North-East)

What assessment he has made of the economic impact of (a) clusters and (b) networks of high-technology, research-oriented small and medium-sized enterprises. [82365]

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

Firms often perform better when they come together in networks and clusters. The Government are working in partnership with all types of business to encourage collaboration, innovation, and the sharing of best practice.

Mr. White

I thank my hon. Friend for that reply. Many high-tech firms would not exist if they were not allowed to develop in clusters. Does he agree that the planning policy guidance issued by the Government needs to be amended to encourage clustering? Does he accept that, in other countries where clustering has been successful, it has happened because a partnership between the Government and private industry has provided the infrastructure? And does he accept that that is what is needed in this country?

Mr. Wills

I thank my hon. Friend for that. I recognise the great authority with which he speaks, gained particularly from his long experience of the IT industry. We are reviewing how the planning system can best promote the needs of clusters and the review is due to report in August.

Of course we recognise the importance of partnerships between the public and private sectors. We are doing a great deal to promote them across the board. We recognise the importance of building the right infrastructure, particularly the right electronic infrastructure. We in this Government are building the electronic future in a number of ways. I will publish shortly an important consultation document about making spectrum available for broad band wireless networks which, as my hon. Friend will recognise, will be a crucial part of that electronic infrastructure.

Mr. Colin Breed (South-East Cornwall)

Is the Minister aware of the deep concern in the knowledge-based industries at the potentially damaging effect of IR35—a rather hastily introduced and badly designed anti-tax avoidance measure? Will he undertake to speak to the Treasury on behalf of the industry?

Mr. Wills

The proposed new rules to which the hon. Gentleman refers are designed to remove the scope for the avoidance of tax. Rather than criticise the measure, I would have hoped that he would welcome anything that enables those who are due to pay tax to pay it.

The rules will not target the IT sector in particular. The vast majority of businesses do not avoid tax and national insurance, and will not be affected by the new rules. I am slightly baffled by the intensity of the hon. Gentleman's concern. The Inland Revenue is working with representative bodies on the details of the new rules.

I hope that it will offer the hon. Gentleman some comfort if I say briefly that the information from the Inland Revenue to all those concerned deals with three matters: the new rules will not prevent individuals from setting up service companies; they will not prevent agency working; and they will not prevent workers and clients from arranging engagements through service companies, agencies or similar intermediaries.