Enterprise and Competition (Hansard, 10 March 1999)

HL Deb 10 March 1999 vol 598 cc281-94 281

§ 6.32 p.m.

§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
My Lords, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Trade and Industry. Documents referred to in the Statement as being available in the Vote Office are available in the Printed Paper Office. The Statement is as follows:
"Madam Speaker, I wish to make a Statement on enterprise and competition. The Chancellor yesterday delivered a Budget for Britain to succeed in the new knowledge-driven economy and to promote prosperity and fairness. Today, I wish to announce a number of complementary measures which will boost enterprise and competition.
"First, I am publishing a detailed implementation plan for our White Paper on the knowledge-driven economy. For each commitment, we have set a series of targets, a timetable, and the contact details of the officials in my department responsible for delivering these commitments. This unprecedented step demonstrates our belief in open government, our desire to work closely in partnership with business, and our determination to deliver on our commitments.
"I am also publishing today a strategic framework for the DTI, setting out the objectives for my department, and the work we will undertake in pursuit of those objectives. Copies of both documents have been put in the Library and the Vote Office.
"The policies in the White Paper we published before Christmas apply to all sectors—traditional and high-tech, manufacturing and services. Work is well under way on many of the proposals contained in that White Paper. I have established a review of bankruptcy and insolvency law—examining whether 282 we can encourage responsible risk-taking while coming down hard on those who set out to defraud creditors. It will report to me next month.
"Separately, I am reviewing arrangements for business rescues to see if the law should be changed to give businesses in difficulties more chance and more time to turn things round. I shall announce our conclusions in the summer.
"This afternoon I want to announce four new funds to support business. First, we will be providing £20 million to support our target of high quality support for 10, 000 start-ups by 2001. The programme will be launched this summer.
"Secondly, a new enterprise fund will stimulate the availability of finance for the SME sector. I have increased the fund to £160 million. It will lever in £350 million from the private sector ensuring that over half a billion pounds is available to support: loan guarantees for small firms; support for regional venture capital funds aimed at the provision of small scale equity; and a national scheme to support high-tech businesses.
"Thirdly, following the Chancellor's announcement yesterday of a further £20 million for high-tech venture capital investment, we will create a new fund operating across the UK. This will focus on young high-tech firms needing small amounts of equity.
"And finally and fourthly, I can announce today that I have decided to expand the successful 'Smart' scheme. From April of this year, a wider range of individuals and businesses, in particular those in the manufacturing sector, will be able to get help to research or acquire technologies needed to turn good ideas into commercial reality. We shall increase annual spending by over a third and provide almost £100 million over the next three years.
"Science and the commercial exploitation of scientific research have a key role to play in improving Britain's competitive position. That is why we will develop a strategy to improve knowledge transfer, stimulate the flow of scientists and engineers into industry and encourage knowledge-based industries. We will publish our proposals in this key area by the end of the year.
"Following yesterday's Budget we are today publishing four documents on tax changes to stimulate innovation and enterprise especially in smaller companies.
"The introduction of a tax credit for research and development will be a major step on the road to raising the UK's performance, giving real help to those thousands of smaller firms working to introduce new products and processes. It will underwrite almost one-third of R&D costs for small business, giving this sector a boost of some £150 million a year.
"Enterprise management incentives will allow smaller companies to give tax-advantaged equity remuneration.
283 "We will also be publishing today our proposals on corporate venturing and tax reform for intellectual property. Together these papers demonstrate our commitment to a framework in which small business can thrive.
"But small and medium-sized firms need practical help too. I intend to establish a new body—the Small Business Service—specifically designed to meet the needs of smaller businesses. I can announce to the House this afternoon that it will have funds of over £100 million new money to support its important work.
"This body, which will report to me, will be headed by a high profile chief executive and will have two key responsibilities: to act as a strong voice for small business at the heart of government; and also to improve the quality and coherence of delivery of government support programmes for small business and ensure that they address their needs.
"Some of the areas in which I expect the service to be involved include the following: a new payroll service for all new SMEs; supporting the Revenue in providing business support to discuss problems with small businesses; give advice with Customs and Excise for exporters and importers; working with the Revenue on Internet filing of tax returns. Consideration will need to be given regarding the relationship between the service and the newly-established regional development agencies.
"Finally, a modern, effective competition regime is necessary to reward innovation and enterprise, and to bring real benefits to consumers. The Director-General of Fair Trading is already investigating a number of areas, such as cars, supermarkets, and private medical insurance, and he has also referred over-the-counter medicines to the Restrictive Practices Court for examination.
"But I believe more needs to be done. I have therefore decided that I will be exercising the powers I have under Section 12 of the Fair Trading Act to give the director-general directions indicating considerations which he should take into account in determining his priorities, and my power under Section 13 of the Competition Act 1980 to ask the director-general to investigate particular prices.
"In relation to prices, there is widespread concern that prices paid in the UK for goods are higher than in other countries. I have begun today a study on international price comparisons, which will help competition authorities to identify markets which require their attention. It will be made public, so that consumers and others can comment. I will then decide which prices I will ask the director-general to investigate.
"We are also taking action to provide a modern framework for utility regulation. Electricity standing charges are a matter of pressing concern—they account for around 13 per cent. of a typical household bill and can rise to 20 per cent. for low volume users. Figures which I am publishing today show a wide variance in standing charges by region and method of 284 payment. I have today written to the Energy Regulator asking him to look at the issue of standing charges to ensure that pensioners and the poor, in particular, are not disadvantaged.
"I also believe that the time is right to modernise the merger regime. Businesses need stability and confidence that decisions in this important area are not taken for short-term political considerations. I believe the system could be improved if merger decisions were normally taken by independent competition authorities against a competition-based test. A small minority of cases will raise important wider public interest issues, such as those in relation to the defence industries, and Ministers should continue to have a role in this decision-taking process. I intend to publish a consultation document to initiate a full debate.
"To secure real competition we need knowledgeable and well informed consumers. To that end we shall be publishing a consumer strategy White Paper before the summer. But there is one area of particular concern. A mortgage is the largest and most complex financial commitment most people will ever enter into. I have today announced proposals to improve the information available to customers in relation to the marketing of mortgages and other credit. Our proposals will give them access to clear, comparable information about the interest rates on offer.
"I believe the measures announced today show our determination to support enterprise and to succeed in the knowledge-driven economy of the future. They complement the radical proposals set out yesterday by the Chancellor and I commend this Statement to the House. "
My Lords, that concludes the Statement.

§ 6.43 p.m.

§ Baroness Miller of Hendon
My Lords, I thank the Minister for repeating the Statement on enterprise and competition which, as he said, announces measures complementary to those announced yesterday by the Chancellor.
Of course, as a general principle we support competition and enterprise, and we welcome the initiatives for small and medium businesses. However, I have a few questions for the noble Lord with which I hope he will be able to help us. While we would support changes that would assist business rescues, is the Minister aware that many companies find themselves placed in difficulties by debtors who become bankrupt but who then turn up at the bankruptcy sale or go to the liquidator to buy equipment and start up again under another name?
While we also welcome the new availability of finance for SMEs—although it does seem as though that finance has been announced several times—would not the Minister agree that what SMEs really need is fewer increases in hidden taxes, a diminution of regulation and lower business transport costs? Also, hiking up the national insurance contributions of the self-employed will surely not be particularly helpful. I know the 285 Minister said that he would be exercising his powers under Section 12 of the Fair Trading Act to give the director-general directions, but can he tell the House what directions the Minister is going to give to the director-general?
Can the Minister also tell the House whether there is any significance in the fact that the Statement today refers to prices for goods in the United Kingdom being higher than in other countries, whereas yesterday's Budget Statement said: It is wholly unacceptable that consumer goods can still cost up to twice as much in Britain as in America". Could it have been toned down—because the Chancellor's statement was rather silly, given that VAT in this country is 17.5 per cent. while the state taxes in America vary from anything between 0 per cent. and 7 per cent.? Is the Minister aware that there are also wide variations in prices in this country: for example, the price of petrol in rural areas?
The Minister mentioned modernising the merger regime by setting up an independent competition authority, although that seems to be a way of simply ridding himself of responsibilities for these matters—the "not me, guv" syndrome, similar to the way in which the Government hived off the setting of interest rates to the Bank of England. Would not the setting up of such an authority strip the Secretary of State of the power to rule in high profile takeovers such as the BSkyB bid for Manchester United? Given the Government's excellent spin-doctoring and wooing of the press, is that not one reason why there has been no statement, either now or previously, on the Government's policy on these matters?
Will the Minister please confirm that the Secretary of State will retain his personal powers in the case of newspaper mergers under the Fair Trading Act? Also, why is there nothing in today's Statement about the very important matter mentioned by the Chancellor yesterday, that obstructing investigations into the matter of cartels and restrictive behaviour will become a criminal offence?
Finally, the Chancellor announced yesterday that the Deputy Prime Minister was to review competition at airports. There is no mention of that today. Can the noble Lord say whether that means an investigation into the British Airports Authority's monopoly of London and other airports—because obviously the shareholders will want to know—or whether it will be an investigation into landing slots, in which many carriers consider that British Airways has a monopoly?

§ 6.47 p.m.

§ Lord Razzall
My Lords, I join the noble Baroness in thanking the Minister for repeating the Statement, not only because it raises a number of important matters but also because, certainly in the view of these Benches, it represents a clear account of the new role of the DTI as a proactive enabler and empowerer of the business community. It is very nice to see that the department has clearly abandoned the rather depressing laissez-faire approach of the previous administration.
286 If I were to make an overall comment, it would be that the Statement is long on what the Government are going to do and rather short on what has been done. We have already had two Secretaries of State in the department and are now on the third. It is almost as if we were running a race and had had two false starts, and were starting again for the third time—the Minister smiles.
The Statement is very detailed and I do not want to bore your Lordships by going through every item, but perhaps I could take two of the major issues. The Minister touched upon two major points. The first was "Rip-off Britain!", to coin the phrase used by various newspapers. The Statement refers to the fact that the British consumer is being overcharged in comparison with our foreign competitors. We are, after all, more than halfway through the period between the last election and the next election, and I would welcome the Minister's confirmation that words will be replaced by actions and recommendations in this area. The Government are long on benchmarking and timing, but when will an answer be given to the allegations about "Rip-off Britain"?
The second area which is touched on in the Statement is the regulation of the utilities. How they are regulated is clearly a major issue which the Labour Party in their manifesto were very concerned about. At this point we would like to know when the Government are going to decide finally exactly how the utilities are going to be regulated. Will they be regulated primarily by competition and, if so, what sort of competition will be introduced into the regulations—or is it going to be left to the great regulator in the sky to determine how these issues are going to be resolved?
Perhaps I may make two final points, on which the Statement touches but does not deal in detail. The first relates to mortgages. It is interesting that the Statement refers to a mortgage as being the largest and most complex financial commitment that most people will ever make. It is interesting also that the DTI is now beginning to take an interest in mortgages. I should like the Minister to indicate whether the DTI will go further and whether there is an agenda to try to control this and to move more people into fixed-rate mortgages. There would be an obvious advantage to the Government in doing that with regard to their approach to the decision on the euro. Moving more towards a European model, with more people having a fixed-rate mortgage, would remove the concentration on short-term interest rates. Will the Minister confirm that beyond the agenda of transparency is a further agenda of trying to encourage people to take out fixed-rate mortgages?
I refer secondly to small and medium-sized enterprises. When concentrating on that sector, we often disregard those small and medium-sized listed companies which are not quoted, but which form part of the alternative investment market. Those companies are often ignored in terms of DTI business activity, but they provide a large motor for employment in this country and account for much economic activity. I know that the Treasury and the DTI have both been concerned about the fact that that sector of the stock market has not done as well as the large company sector, with which the 287 Minister is familiar. There are all kinds of technical reasons for that, but the fact is that there is a capital strike at the moment in relation to many institutions providing funding for such companies. In the same way as SMEs have a problem raising money, so do the companies to which I am referring. Can the Minister say whether the DTI intends to come to their assistance also?

§ 6.51 p.m.

§ Lord Simon of Highbury
My Lords, I thank both the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Razzall, for their general welcome of the direction of the Statement. I think that we are in general agreement. I sense from their responses that we all recognise that we now need a better deal for enterprise and small business in this country. That is a fundamental part of improving productivity, of better applying new technology, and of stimulating employment. I think that we all agree that, in the small and medium-sized enterprise sector, attention, the right encouragement and the right policies will bring dividends.
Given that we all agree broadly on the principle that, through a more competitive marketplace, we can encourage enterprise, innovation and particularly the development of small businesses, perhaps I may comment, as did both speakers, on certain elements of that in policy terms.
I very much agree with the noble Baroness that the key issues for the smaller business community are lower taxes, less regulation and lower running costs. We have certainly done what we can in terms of lower taxes, with a lower rate of 20 per cent. and a lowest rate of 10 per cent. being introduced for small businesses. That will benefit all businesses up to a £50, 000 profit level. As the noble Baroness will know, that will help very many small businesses. In terms of regulation, we are certainly not aiming to achieve the high levels of regulation achieved by the previous government. We are trying to avoid that, but we must have a balance between a sensible structure and fairness within the community.
We are also trying to ensure better research and development funding possibilities for small businesses by giving rebates and tax credits against their R&D spend. We hope that that will mean that such businesses are better able to use R&D early in their lives. A tax credit is a most effective way of achieving that because many such businesses do not make great profits on which to carry forward such expenditure. A tax credit would therefore be a big advantage to them. We very much want to encourage the small end of the market by recognising that we need a low tax base, the least regulatory structure that we can achieve while maintaining fairness in competitive terms for small businesses, and a better application of R&D and new technology early in the life of a business.
In that context and while thinking about small businesses and how best to help them, perhaps I may comment now on the noble Lord's helpful intervention about the role of the DTI. The role of the DTI is not 288 to leave small businesses in a laissez-faire marketplace because one in three such businesses—if not one in two—fail within the first three years. Clearly, that is not attractive in terms of creating a growing sector. Therefore, we do not agree with the laissez-faire approach, but, on the other hand, we do not want a nanny DTI which sees its job as handing out subsidies to whoever asks for one when starting up a business. That is why we have a discriminating series of policies to target government funds, in the best way possible, in partnership with business. That means a lot of consultation. That is why we have set up a new service for small businesses which seeks to deliver funds in the most targeted way. I believe that those in the business community will find most helpful the new organisation and the new strategy for small businesses, which is clearly laid out in the new documents which have been placed in the Library. That strategy and those documents focus on the department's approach to this problem and on the way in which we want to deliver services.
Both the noble Baroness and the noble Lord referred to prices, as did the Statement. That was because there is much concern about the potential relationship of prices internationally. As the noble Baroness pointed out, this matter does not involve only the USA. Although we know that selective goods are priced much more cheaply in the USA, we are thinking also about the European context. There is much hearsay and interesting publicity on this, but there is not enough good, current information about comparative international pricing. We shall be conducting more work on this matter, building on the work carried out by the European Commission, in order to establish a good database. If we are asking the Director-General of Fair Trading to look more carefully at what can be done about pricing, it is important that we work from a sensible database. Achieving that is our first intention.
I was also asked about the utilities. It is clear that the regulators must look more carefully at the competitive pricing structure in certain sectors. I am sure that that will receive the support of the House.
I was also asked about mortgages and the attempt to provide more transparency not only in the mortgage market, but also in other lending markets, for the benefit of consumers. The noble Lord, Lord Razzall, made a good point in referring to fixed-rate, as opposed to variable-rate, mortgages. I would say that the marketplace is making the decision easier for the customer. More fixed-rate mortgages are now being taken out because we have a low interest rate regime and a Budget which gives people hope that that regime will be sustainable. That is one of the most important things that the Budget has attempted to lock in; that is, sound and sustainable low inflation and low interest rates. We will always let the customer and the market-place decide what choice consumers make about their mortgages. The outcome the noble Lord is seeking—a higher, fixed rate proportion—is likely to be the outcome of the sound budgetary policies that we are continuing to pursue.
289 In summary, this is a Statement for innovation, enterprise, better competition, particularly for small businesses which we need to see become more successful if we want sustainable growth and higher employment in this economy.

§ 7 p.m.

§ Lord Clinton-Davis
My Lords, I welcome the Statement that has been repeated by my noble friend. However, yesterday, my right honourable friend the Chancellor announced in his Budget speech an employee shares-for-all scheme as part of the quest for generating greater enterprise in our economy. Nothing was said about that in this Statement. Will my noble friend indicate what steps the Government propose to take to give further details to the House and to the country about the scheme? Is it to be subject to further consultation? If so, who is to be consulted? What is to be the scope of that consultation? And within what period is it to take place?
Finally, will my noble friend agree that this ambitious but necessary scheme requires to be assisted by giving incentives to employers to provide shares for their employees? Failing which, it is difficult to see how it will be implemented successfully.

§ Lord Simon of Highbury
My Lords, in response to the factual questions from my noble friend, the position is as follows: the Statement today did not mention share ownership because clearly that is a Treasury matter and this was a DTI Statement. However, my noble friend can be absolutely sure that the DTI, following his own good works in office last year, totally supports the Treasury plan to expand employee share ownership. It is a fundamental part of improving productivity across the firm as a whole and in getting the entire workforce committed to improved performance. We are therefore extremely supportive of it.
As to the scope of the scheme, the Revenue has laid documentation in the Library today and the scheme is now a public proposal. It will be developed by a group of tax practitioners and experts who will be looking at the proposals. It is our intention to have draft clauses published as part of the pre-Budget report package and the new scheme is intended to be in the Finance Bill 2000.
My noble friend's final question was whether there would be stimulation for employers as well as for employees. The intention is that in the matching scheme there will be advantages for employers as well as employees in terms of encouragement to participate in the scheme. At the same time I should like to mention, because it gives another facet to share ownership, the enterprise management incentives scheme which is being introduced in the Budget. That will seek to stimulate new people and experienced executives coming into ownership in small businesses via a more attractive ownership option for shares and a tax regime which gives them more option to grow capital quickly at less cost to them, vis à vis the Revenue, in their taking a new post.

The Earl of Dartmouth
My Lords, what the Minister has said is all very well, but when it is all added 290 up it makes nothing like sufficient contribution to putting right the damaging and harmful effects on small and medium-sized enterprises caused by the working time directive introduced as a direct consequence of the Government's signing up to the European Social Chapter.
The working time directive imposes onerous record-keeping on small businesses and restricts the number of hours employees of all businesses can work. Frankly, in that context, what the Minister has just said is a complete nonsense. The damaging effect of the enterprise-destroying monstrosity that is the working time directive, is exacerbated and made much worse by the total shambles in the Minister's department which cannot produce a straightforward explanatory pamphlet on the working time directive even at the third attempt.

§ Lord Simon of Highbury
My Lords, I did not actually get the question.

The Earl of Dartmouth
My Lords, that does not say much for the noble Lord's intellect; I made myself abundantly clear.

§ Lord Simon of Highbury
My Lords, I did not get the question, but I certainly noticed the lack of hyperbole!
I felt I had just given a reasonably sensible answer on the issues of share ownership to my noble friend, who seemed interested in the way the workforce, the owners and managers in our society build a better partnership. What the noble Earl fails to recognise in the working time directive is that it is a basis for fairness which is usually worked out in agreement between the owners, the managers, the shareholders and the workforce. In my past experience in my own company those were matters that were handled by agreement between the workforce and the management. There is nothing surprisingly new about it, therefore, for many companies.

§ Lord Jacobs
My Lords, I thank the Minister for his Statement and I welcome it. If it is permitted to be wildly enthusiastic in this House about any part of a Statement, then I must express my own wild enthusiasm for the decision to investigate internationally competitive pricing. As one who has spent the past four years studying prices both in the United States and Europe, and comparing them with the UK in four areas—pharmaceuticals, cars, supermarkets and electrical goods—I have become aware that we may not be paying twice what they are paying in the United States, but we are certainly paying 30 to 40 per cent. more net of VAT. The people of this country would see a vast improvement in their standard of living if there was as little as a 7 per cent. reduction in the cost of living. Therefore I welcome what the Government plan to do.
My question is this: if, as is planned, these various industries or retailing areas are sent, for example, to the OFT for investigation and if, as I believe, in most cases—not necessarily all—it is found that nothing illegal is being done; nobody has breached any rules and everybody has behaved according to the regulations that 291 exist, will the Government then consider entering into negotiations with various suppliers and manufacturers to discuss ways and means by which they could get them to bring down their prices to the levels consumers are charged in other countries? Most of those companies are international companies. If the Government will consider such an approach after the OFT and so forth have done their work, we could make a lot more progress.

§ Lord Simon of Highbury
My Lords, I welcome the noble Lord's support for the attention given to international price comparisons and I know from answering in this House that he has a great knowledge of the subject. He has been tireless in trying to bring the more difficult areas to our attention.
On the question of how we can ensure that competition is realistic in situations where there is no problem in legal terms, there are probably two relatively simple ways of ensuring improvement. First, there is very much in our minds the issue of an educated and active consumer. That seems to me to be the best test of competitive capacity in the pricing sector. As I pointed out, we want to bring forward a consumer White Paper, and no doubt we will be thinking in terms of exactly the sort of issue that the noble Lord raised when considering such challenges.
The second means is to use the pressure of the supply chain in business itself. When you have information of this nature, it seems to me from my past experience that the best people to ensure that prices are moving in the right direction are the peer group of companies and those in a supply chain which are involved with the particular product. I see it less as a bureaucratic process of government forcing people to move prices in particular ways—that is to say, a sort of governor's raised eyebrows or a headmaster's little rap over the hands. In the long run, it is best to educate your consumers and have an extremely vocal and vibrant consumer sector, while activating your supply chains in the business peer group.

§ Lord Berkeley
My Lords, I welcome the Statement and have two quick questions for my noble friend the Minister. The first relates to utilities. My noble friend said that he was going to ask the regulators to look at prices more closely. However, does that cover the regulators of all utilities? Further, would that include rail regulators? I suppose that the latter is a question that I would ask, but it would be most interesting to hear my noble friend's reply.
Secondly, and more generally, the Government recently announced similar measures in several areas—for example, in the competitiveness White Paper, in the Budget and in today's Statement—such as supporting SMEs, science and technology and research. Is there a danger that, in particular, SMEs may be getting indigestion? Will my noble friend assure the House that he will try to keep the bureaucracy attached to all these measures as minimal as possible in accordance with 292 good government, so as to ensure that there is no conflict between the different documents that have been produced and the announcements that have been made?

§ Lord Simon of Highbury
My Lords, my noble friend's first question concerned which utility regulators are likely to be looking closely at prices. When delivering the Statement in the other place today, my right honourable friend specifically raised the question of electricity charges. I am not aware of the same question having been raised in terms of the rail regulator. However, as a result of my noble friend's question, I shall certainly make it my business to inquire into the position.
As regards the apparent duplication of the Government's attention to issues concerning small businesses, funding and science, I can confirm that we are well aware that we may be complicating life for the individual small business. In a sense, that is the purpose of setting up the small business service within the DTI, which will focus on clarifying the delivery of these services to small businesses.
My noble friend also raised another important issue which deserves a response. When we are talking about increasing competitiveness, increasing capabilities across the business community and increasing collaboration between government and businesses, we know that we have to indulge in a great deal of co-operation between government departments. This is not a single department issue. The Department for Education and Employment is deeply involved in the issue of capabilities and the Department of the Environment, Transport and the Regions is greatly involved with the services to small businesses out in the regions. It is very important that all government departments should be aware of the application of micro-economic policy. That is what we are really talking about; in other words, the balance between macro-and micro-economic policy which, if I may say so, has failed so often in the past in our economy. We need to bring together many departments and ensure that the priorities are understood across government, while still providing a focus of delivery for particular services.
If we take together the Pre-Budget Report, the Competitiveness White Paper, the Public Services Agreements—public sector agreements which are most important in getting departments to focus on their priorities and their capacity to deliver policy—we see joined-up government. I do not like using that phrase, but it is an apposite one because these are very complex issues which need pulling together.

§ Lord Pearson of Rannoch
My Lords, I trust that the Minister will forgive me if I treat him a little more delicately than the noble Earl, Lord Dartmouth, who, I regret to see, has now left the Chamber. Nevertheless, I suggest to him that it is pure Alice in Wonderland for the Government to pretend that they are promoting enterprise and small businesses while they remain so enthusiastic about the European single market and our adherence to the Treaty of Rome.
If the Minister thinks that I am being unfair to him, perhaps he can tell the House how the contents of this Statement will do anything to fend off all the 293 over-regulation from Brussels which led our Federation of Small Businesses to vote to leave the EU some three years ago and which continues to cause such deep unrest among our medium and small businesses, as the Minister may have noticed in the weekend press reports? Further, does the Statement give any assurance that the red tape coming from Brussels and elsewhere will be reduced? When answering that question, the Minister will of course bear in mind the system of qualified majority voting under the treaty.
Moreover, and in the same vein, can the Minister specifically justify the Government's claim that they intend to modernise our merger regime? If his claim is honourable, I assume that the Minister can assure the House that this proposed takeover directive is dead and buried. As the noble Lord knows, this directive proposes to submit the findings of our excellent Takeover Panel to the interminable delays of the Luxembourg Court and thus threaten our mergers and acquisitions industry in the City of London, and elsewhere. Can the Minister assure us that this threat has indeed been removed?

§ Lord Simon of Highbury
My Lords, as regards the question of red tape from Brussels, I do not think that the Statement was intended to comment on the amount of legislation that is likely to be imported in the future. All I note is that there is a great deal less regulation currently coming from Brussels under this presidency than there has been under any previous presidency. Rather like our Government who have managed, I think, to reduce by one-third the number of regulations that the previous government put in place, we are all trying to deregulate, simplify regulation and make the environment easier for small businesses.
On the issue of the takeovers directive, as I believe the noble Lord is aware from my last answers to such questions, we are still discussing such matters. There is no agreement yet in Brussels as to any change of regime. Indeed, the matter is still under discussion.

§ Lord Wade of Chorlton
My Lords, I have three questions for the Minister. However, I should begin by welcoming the Statement and its support for small businesses and especially the proposal to review the bankruptcy laws, which I believe will be an essential element in stimulating the economy. First, can the Minister give us his views on the importance of business incubation units to develop the businesses which have been referred to—that is to say, the 10, 000 new businesses—in a short period of time?
Secondly, will the Minister consider the value of setting up either a national or regional trust which would act as a support mechanism for seedcorn capital, which is very important for the development of small businesses but which, nonetheless, is a difficult structure to develop without the right support? If the Minister indicates that he is interested, I shall be most happy to write to him with a more detailed proposal.
Thirdly, will the Minister refer again to the issue raised earlier by my noble friend Lady Miller; namely, that in order to stimulate competition and bring forward new businesses you must reduce the cost of entry into business. Is he satisfied that the Government are looking 294 closely enough at the regulatory regime? Could we not find methods to make it easier for companies to start up in business?

§ Lord Simon of Highbury
My Lords, I welcome the noble Lord's encouraging comments as regards the first two issues that he raised. As regards a venture capital trust, as the noble Lord is probably aware we are putting in place at the regional level regional development agencies. As regards the £50 million fund for venture capital for the regions, that will probably end up, after discussion between the Small Business Service and the regional development agencies, as a fund which is structured and deployed very much as the regions would wish. The concept of local trusts is not inappropriate at all as regards this kind of operation. I should be grateful to receive any ideas that the noble Lord may have about how that could work at the regional level. I would pass that information to the appropriate sections of the department. As regards reducing start up costs for business, that is a difficult matter but it is an objective. However, I agree with what the noble Lord, Lord Wade, and the noble Baroness have said; namely, that we have to tackle the matter.