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Small Business

I thank the hon. Gentleman for raising a genuine—I know that we always use that word in response to interventions—and important point. I promise that I will speak later about what we might do collectively, as we are all in this together. Part of our task in this place is to ensure that people can create businesses not only to keep us going but to keep going all those services that live off the wealth-producing sector. I will revert to the subject later if the hon. Gentleman is content for me to do that. We keep adding to the social wage, and although this is not the right debate in which to go into the areas of employment law, maternity rights and so forth, I want to mark that up as a factor of which we should be aware. The more we impose on small businesses by way of social wage element, the less easy it is for small businesses in particular to compete. That is not to say that we want to return to the 1890s, when workers’ rights were largely not what they should be—we would all be fighting for better workers’ rights in those circumstances. We need a balanced perspective, however, and we need to ensure that the social wage element burden on small business is in keeping with our ability to compete, by recognising global standards and taking them into account when framing regulation. The burdens barometer of the British Chambers of Commerce shows that the cost of regulation and red tape for British business has increased by £55.6 billion in the period from 1998 to 2006. More importantly, the Association of Chartered Certified Accountants has observed that the cost of complying with red tape can be proportionately 30 times higher for SMEs than for larger firms. That is a massive figure, which we all need to take into account. Let me mention the national minimum wage, which is indeed a burden on business. Although I do not argue against it, I am against the rate of increase. An increase of 34.7 per cent. in the past five years has created problems—it is at least three times the rate of inflation. So I hope that the Government now feel that they have achieved their objective and can settle on increases that are related to inflation. That would be a great relief, particularly for small businesses. Those businesses want to employ people and to grow, but they dare not always take the risk, because of the responsibilities that are placed on them by employing people. What else can we do collectively to ensure that our business sector works well and meets the challenges of the future? There are some big issues, and I shall try briefly to address them. The country’s national insurance system is badly in need of wholesale reform, and I believe that we should set about that reform—I was hoping that more would be done in the Budget. The present system costs businesses £760 million per annum—a figure that rises to £2 billion if all Government payroll demands are taken into account. Perversely, that has a considerably greater relative impact on small businesses than on plcs, and we need to consider that fact. Regulation should be reduced. There was a period when the European Union felt that its only role was to increase regulation on businesses throughout Europe—as though that had no impact on the continent’s ability to compete in a globalised trading system. The cost of regulation to British business should also be reduced, because that too has dramatically increased. I recognise that the increase is not necessarily attributable to the present Government; much of it derives from Europe. However, we need to get a grip on it. I hate to say it, but if that means throwing some regulation back to Europe, let us have the courage to stand up and do that. Somebody needs to do it; somebody needs to stand up to the regulatory burden and say, ““We as Europeans can’t accept it. Our future as Europeans is bound up with the size, rate and burden of inflation emanating from the EU.”” There is one area for which this country is responsible, however: gold-plating. The Foreign Policy Centre found, I believe, that 62.5 per cent. of the EU regulations that they reviewed had been gold-plated. Do we really need to add to the burden on business by imposing yet more regulation at our end? My belief is that we do not. To get rid of the burden of regulation, or at least to increase awareness of its dangers, we should create a network of enterprise champions throughout the civil service. That is not a new concept; champions exist in many different areas of Government. There should be enterprise champions who are committed to the mantra that regulation costs money and reduces our ability to compete in the world. The Public Accounts Committee has observed that there are no official statistics on the national cost of regulation on small businesses, although it acknowledged, as do I, that the Government have recently embarked on a costing exercise in that respect. That is a move forward and I welcome it. I have already said that red tape has a heavier relative impact on small businesses, and I have referred to the need for better skills. I have a whole list of such skills. We need to ensure that skills packages derive from the shop floor and are not imposed downwards by the educational establishment. We need to reach out to businesses with skills and involve them in creating skills packages, and we need to take skills packages to the workplace. The hon. Member for Edmonton (Mr. Love) is right that a sizeable number of small businesses are not being reached because they are expected to seek assistance at a higher level than often is known to them. There should be much more involvement in reaching out to them with training packages that are created by business, as well as by educationists. My own local learning and skills council has17 members, of whom only four are businessmen. I am not saying that that is the Government’s fault; business has a responsibility to help to work in partnership with the Government at all levels to ensure that skills training is much more effective. However, I want to see a change from control by educationists to a situation in which there is much more business input, and I want that to work on the shop floor, in factory sites, in offices and on the ground in business generally. Will that be expensive? Yes, it might be more expensive than at present, but an awful lot of waste in supporting business has been observed. That could be directed to the training activities that I want to happen, and I hope that that gives one possible answer to the point raised by the hon. Member for Edmonton. I have already commented on how poorly equipped this country is in skills and vocational training, and we need better.