HC Deb 08 November 2001 vol 374 cc352-4
2. Mr. Tim Boswell (Daventry)

What recent steps he has taken to promote business activity in the UK. [11327]

3. Adam Price (East Carmarthen and Dinefwr)

What additional steps he plans to take to increase output in the manufacturing sector. [11328]

The Chief Secretary to the Treasury (Mr. Andrew Smith)

The Government are committed to creating and maintaining the right climate for businesses to flourish, to invest and to grow. Of course, no country can insulate itself from world economic events, but the UK is now much better placed than in the past to weather the global situation. The Government will continue to steer a course of stability with low inflation, sound public finances and measures for investment, skills and research and development, which are so crucial for manufacturing industry in particular.

Mr. Boswell

In the light of that reply, will the Chief Secretary tell the House whether he is concerned that last year the Government collectively introduced a record 3,865 new regulations? Does the right hon. Gentleman agree with the director general of the Confederation of British Industry, who was reported in the press on Tuesday, when he stated: You are a regulatory Government. For the sake of businesses large and small who are worried about their cost structure and their competitiveness, will the right hon. Gentleman tell the House when it will all stop?

Mr. Smith

Of course it is important that we cut and minimise the regulatory burden on business. That is why we raised the threshold on statutory audit for small businesses, which benefited more than 100,000 small businesses. It is why, as we announced in the Budget, we are consulting on aligning the tax treatment of firms with the accounts that they prepare for statutory purposes, thereby cutting the paper trail. We are simplifying VAT administration, including raising the threshold for the flat-rate scheme and the qualification for annual accounting.

The greatest burdens that we have taken off business are the 10 per cent. level of inflation, the 15 per cent. interest rates for more than a year and the ballooning national debt, which Conservative Members imposed on British business when they were in government.

Adam Price

The Chief Secretary will know that there have been a further 70,000 job losses in UK manufacturing over the summer period alone. Will he not recognise that the most important factor in the problems of manufacturing over the past five years has been the persistent overvaluation of the pound? Will the Government not use the policy tool at their disposal to bring about a more competitive exchange rate by intervening in currency markets? That is called sterilised intervention, which sounds a little painful, but it is a good deal less painful than what is currently happening to manufacturing communities.

Mr. Smith

Most painful for manufacturing industry in Wales and for business throughout Britain would be a return to the instability that we have seen in the past. What we do for business is maintain conditions of economic stability, low interest rates and low inflation while introducing measures to stimulate investment. We have already cut corporate taxes on large and small businesses. We have introduced the research and development tax credit to help small businesses, and we are consulting on extending that measure to larger businesses. That is something that would be greatly welcomed by manufacturing industry in Wales and elsewhere. We have also cut the capital gains tax regime to stimulate more investment.

Even in the current difficult circumstances, which manufacturing of course faces, manufacturing investment for the second quarter of this year compared with the same quarter last year was increasing. The Government stand behind manufacturing industry with policies for economic stability, investment and skills to improve competitiveness. At the end of the day, it is competitiveness that ensures the future of business and the jobs that depend on it, along with measures such as the new deal. The hon. Gentleman might have congratulated us on the contribution that the new deal has made to cutting unemployment in Wales.

Kali Mountford (Colne Valley)

I ask my right hon. Friend not to take any lessons from the Conservative party, whose policies of instability and lack of investment cost millions of manufacturing jobs.

Does my right hon. Friend agree that the manufacturing sector is moving at different paces even within itself, and that those companies that do well are investing? What does he intend to do to ensure that those that are not investing are incentivised so that the plant and machinery of the previous century is not the basis of the UK's economic future?

Mr. Smith

I have already referred to the improvements that we have made in the capital gains tax regime to bring forward extra investment. I have referred also to the research and development tax credit, which is stimulating new investment in small businesses. As my hon. Friend will be aware, we have also set up the regional development agencies, and we are establishing regional development venture capital funds to bring new investment forward. With the establishment of the manufacturing advisory service and the setting up of manufacturing centres of excellence in every region, including my hon. Friend's, there will be liaison with the businesses that she is concerned about. There is evident proof that the Government are committed to manufacturing and securing investment for the future, and to delivering on those commitments.

Mrs. Louise Ellman (Liverpool, Riverside)

What action is my right hon. Friend considering in relation to the future of the electronics industry, with particular reference to the future of the Marconi site in Liverpool?

Mr. Smith

As I have said, we have already introduced a research and development tax credit. We are consulting on the extension of that measure to larger firms. That has been warmly applauded by business. I refer my hon. Friend to the initiatives that we are taking, through the regional development agencies, to ensure that where there are special regional areas of strength, such as the one that she has identified, we build on the research that takes place at a very high level in our academic and other research institutions so that "discovered in Britain" is translated into "manufactured in Britain".

Mr. Michael Howard (Folkestone and Hythe)

The Chief Secretary is right to emphasise the importance of stability. Does he agree that a stable legislative framework is important for business activity?

Was the Chancellor, the Chief Secretary or anyone else in the Treasury aware that the Secretary of State for Transport, Local Government and the Regions was to threaten the rail regulator with emergency legislation to prevent him exercising his existing powers?

Mr. Smith

My right hon. Friend the Secretary of State has made his position clear on a number of occasions. His statement on Monday was followed by the statement of my right hon. Friend the Prime Minister yesterday during Prime Minister's questions. I have nothing to add to what has been said.

Mr. Howard

Is it not the case that Treasury officials were present at all the meetings of the Secretary of State? Is it not the case also that the Chancellor and the Treasury were well aware of what was going on? Is not the only reason for the Chief Secretary's prevarication this morning the fact that he knows and the Chancellor knows that what the right hon. Gentleman did was absolutely utterly indefensible?

Mr. Smith

If the right hon. and learned Gentleman thinks that giving Railtrack a blank cheque was the right thing to do, he does not have the support or the confidence of the people of this country. As I have said, these are questions properly for my right hon. Friend the Secretary of State for Transport, Local Government and the Regions. [Interruption.] He has answered them on the basis of the decision that he took— [Interruption.]

Mr. Speaker

Order. Let the Chief Secretary answer the question.