Orders of the Day — New Clause 2

– in the House of Commons at 10:15 pm on 7th February 1980.

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ADVICE FOR BUSINESSES

(1) The Secretary of State may make provision for the giving of advice (whether free of charge of otherwise) to persons carrying on or proposing to carry on a business.

(2) Any expenditure incurred by the Secretary of State by virtue of this section may be defrayed out of money provided by Parliament.'.—[Mr. David Mitchell.]

Brought up, and read the First time.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I beg to move, That the clause be read a Second time.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

With this, it will be convenient to take the following:

The amendment to the new clause: at end add— '(3) Not later than six months after the end of any financial year in which this power is used the Secretary of State shall prepare and lay before Parliament a report on the exercise during the year of his powers under this section.'.

Government amendment No. 33.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

In accordance with an undertaking given to the Public Accounts Committee in 1932, it is an established principle that the authority of the annual Appropriation Act should not be relied on for a continuing activity. Our legal advice, which was not finally determined until recently, is that statutory authority is now needed for the counselling service that has recently become an established feature of the Department's small firms services.

The new clause does not refer specifically to the small firms service and in principle is not limited to it. This is because any definition of a small firm would be arbitrary and would probably be complex, because it would have to cover new enterprises. It is, however, towards the small firms sector that the Department's advisory services are, and will continue to be, directed. The House will be aware that we regard small businesses as the seed corn from which our future enterprises will grow. We have far too few of them in this country. Those that start we cannot afford to lose.

Too many of those who start fall by the wayside because of a lack of knowledge or skill or expertise in the hands of those who started them. People who have a particular skill may start a business, but they may not have the skill of financial management, of marketing or some other skill. The availability of counselling services has proved to be a greatly effective and cost-effective way in which to help such enterprises. Because we regard them as precious, and because we are anxious to ensure that as many as possible succeed and grow, I have pleasure in commending the clause to the House.

We can accept the amendment. We shall happily furnish to Parliament an annual report on the operations of the service. However, because it is a confidential service between counsellor and client, the report will of necessity be in broad terms of numbers, types of case and cost. It will not be possible to furnish details of individual cases. I hope, therefore, that the House will feel able to accept the clause and the amendment.

Photo of Mr Robert Rhodes James Mr Robert Rhodes James , Cambridge

I shall speak briefly in extremely strong support of the new clause. Hon. Members may remember that my maiden speech was made on this subject three years ago. It may seem longer to some hon. Members. There is a great need for assistance and advice to small businesses, particularly new businesses. The new clause represents a positive contribution and encouragement by the Government. If the advice centres and organisations are to be set up in any city, I recommend at random the city of Cambridge. I therefore welcome the new clause as it represents a positive contribution to the problems of small businesses, particularly new businesses.

Photo of Mr Robert Taylor Mr Robert Taylor , Croydon North West 11:15 pm, 7th February 1980

Only once before, since I came here in 1970, have I been asked to sign a blank cheque, and I have regretted doing so ever since. Right hon. and hon. Members on the Labour side have never let me or my hon. Friends forget that occasion—the passage of the infamous Industry Act of 1972. In the new clause, I am being asked to repeat the exercise.

Whatever my hon. Friend the Under-Secretary says about the limitation of the clause, if my other hon. Friends study it they will realise that it has wide implications. It says:

  1. (1) The Secretary of State may make provision for the giving of advice (whether free of charge or otherwise) to persons carrying on or proposing to carry on a business.
  2. (2) Any expenditure incurred by the Secretary of State by virtue of this section may be defrayed out of money provided by Parliament."
That leaves the door wide open to expenditure over a very wide area. It is in no way limited to the small firms counselling service as my hon. Friend suggested.

My hon. Friend gave no indication of the cost of the service to date. I am a small business man, but I have never found that the clearing banks were unable to give me the advice and information that I required. Certainly, I have never found it necessary to turn to any branch of the Civil Service or any volunteers, such as those who man the small firms counselling service.

One company that received advice is being used as an example of how beneficial the service is. In The Birmingham Postof 1 February this year, under the headline Boost to confidence ends in expansion", there appeared the following: At the tender age of 30, Mr. Barry Thomas was a trifle reluctant to approach bank managers when he wanted to expand his forklift truck business. At the age of 30! But the support of a small business service counsellor gave him confidence that he was doing the right thing. We also learn that although Mr. Thomas is now employing only five people he very much hopes that in 12 months' time he will have doubled the total, and we are given the following valuable piece of information, which is an example of the expenditure that we are being asked to approve: Now the counsellor calls about every month to see how the business is progressing. How many counsellors shall we put on the books by approving the clause?

I understand that there will be no Division on the clause—[HON. MEMBERS: "Why not?] Perhaps my hon. Friends will allow me to finish the sentence. I understand that there will be no Division called by Opposition right hon. and hon. Members. I never expected them to divide the House on this issue. It is manna from heaven for them; it is what they stand for. If I can find an hon. Friend to support me, I shall certainly divide the House against this ridiculous measure.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

My hon. Friend the Member for Croydon, North-West (Mr. Taylor) argued his case on the ground of expense and the ridiculous nannying that counsellors would give to robust small business men. Although I much enjoyed what he said, I found it difficult to concentrate on it, because I was shocked at the way in which my hon. Friend the Under-Secretary had advocated the clause. He said that the Tory Party was in favour of small businesses; therefore, any form of counselling, nannying or State support must be in order for small businesses. What difference is there between that and the Labour Party saying We like manufacturing industry and, therefore, any form of State support is in order for manufacturing industry"?

The whole thrust of the Conservative Party's election campaign was that we wished to roll back the power of the State. We were saying not that we wished to make divisions between one interest and another but that we wanted to enhance the role of the individual citizen and to have less counselling, less interference and less of the proposition that the State knows best.

Let us look at the consequences of this counselling. It will be the National Enterprise Board on a tiny scale. In just the same way as the NEB competes with merchant banks, so will this system of counselling compete on a subsidised basis with accountants, management consultants and solicitors. But the individual citizen who has the benefit of this free or subsidised service will not have the right to sue which he has against a professional man. It is the old, old political fiddle. When the advice goes wrong and the chap comes limping away from his bank having borrowed too much money, he will say he has had bad advice. He will go to see his Member of Parliament, who will put a squeeze on the Department of Industry, and so the taxpayer will ultimately have to pick up an even bigger bill.

Let us remember how Rolls-Royce came into the public sector. That was as a consequence of taking bad advice from the Government of the day. The Government later said that they did not agree with the way in which their predecessors had leant upon Rolls-Royce to enter into disadvantageous contracts in America, but they accepted that they were under a moral obligation to support the company. That is the way in which the tentacles of the State go out into our society.

This highly objectionable clause has been introduced without the nation having an opportunity to consider it. It has implications for our professions. It is no coincidence that the chambers of commerce have written a vigorous letter to every Member of Parliament protesting about the clause. The professional associations should have had an opportunity to make representations to the Government about the clause.

When the counselling service has become a substantial bureaucracy in two years' time, and the solicitors, accountants and management consultants are complaining to the Government, the Government will blandly say that they will make charges for the services, and they will say to the professional bodies "Let it be understood, the issue of principle has already been decided by the House of Commons". In that way, the thin end of the wedge is inserted. Let us recognise the situation. In the fashionable term, it is only an acorn, but it will grow into a disagreeable oak if we are not careful.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Industry)

We are a little puzzled about what is going on, but we think that it is called "intervention". I hesitate to say this, but this is almost intervention by quango. We believe that the Minister accepts our amendment in order to ensure a majority in the Lobby. We welcome the new clause. It contains provisions which were never mentioned in Committee. It is an eleventh-hour acceptance, but it is welcome. We also welcome the Government's acceptance of our amendment, which will ensure some accountability for expenditure by Parliament and the country.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I hope that the support for the hon. Member for White-haven (Dr. Cunningham) will not prove too damaging. I have been asked several questions and I shall do my best to answer them.

My hon. Friend the hon. Member for Croydon, North-West (Mr. Taylor) asked why expenditure was not limited to small firms. The difficulty is one of definition. It is particularly difficult because many people who are thinking of starting a business do not know how to go about it. The total cost of the service is £600,000. The counsellors who give advice are not civil servants but experienced business men who give their advice because they believe that they are providing a valuable service.

If people starting up in business were not able to turn to someone for advice, they would flounder and be lost. We are sure that it is in the national interest that they should be able to continue to grow. There are 110 counsellors. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) was shocked too easily. He has been shocked on a number of other occasions. He said that there had been inadequate time for discussion. The small firms service was started in 1976. There have been several discussions in the House. I am sorry that my hon. Friend was not present when small businesses were discussed.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Why was the new clause not inserted in the Bill at the beginning so that everybody could know what was happening?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

There has been no change, because the system has, until now, been financed out of the appropriation account. An undertaking given in 1932 provides that when a private scheme becomes more permanent it should not go on to the appropriation account. For that reason, we seek to regularise the financial arrangement.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

My hon. Friend has not answered my argument. If all that was known before the Second Reading of the Bill, why was the provision not inserted?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

There was something of an inheritance from Labour Members, who should have recognised the need. We did not recognise the need immediately. It was brought to our attention during the Committee stage. We have brought it to the House at the first opportunity. I hope that the House is pleased.

The question of British chambers of commerce was raised. They believe that they could provide a similar service. When I discussed the matter with them, I discovered that they believed that they could provide the advice centre services but not the counselling service, as chambers are situated only in some parts of the country. There are divided views within the chambers on whether they should give advice to non-members based upon the finance and the contributions and subscriptions of their members.

My hon. Friend the Member for Wolverhampton, South-West said he understood that it was the purpose of the Conservative Government to roll back the power of the State. Yes, so it is. But it is our intention—to use a phrase that you, Mr. Deputy Speaker, coined—to plant acorns from which oaks will grow. We want to ensure that those who come out of, and the resources that are freed from, the State sector are mobilised with new businesses which will grow up.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Industry)

I am trying to help the Minister, in spite of what he thinks. That is the trouble. Does he expect the House to believe that this matter came to light only during the passage of the Bill? If so, why did he say that the previous Administration should have dealt with it? In view of his remarks about the chambers of commerce, would he like to comment on their comment that the powers given are extensive and unfettered by any requirements to be laid before Parliament? Is that why he is accepting our amendment?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

It would have been open to the previous Government to have regularised the position. We regularised it as soon as we had it brought to our attention. I give this assurance. It was brought to our attention only after the Bill had had its Second Reading and was in Committee. [Hon Members: "Who by?"] By our officials within the Department.

It is our intention not to nanny British industry but to help and encourage the birth of more businesses. The sooner they can stand on their own feet, the better. In view of that, I hope that my hon. Friend will be able to accept the assurances

that I gave, together with acceptance of the amendment that will ensure a report to the House. That will mean that he has the opportunity of studying and discussing the matter. On that basis, I hope that the House will be able to accept the amendment.

Question put, That the clause be read a Second time: —

The House divided: Ayes 269, Noes 8.

Division No. 164]AYES[11.33 pm
Adley, RobertFaith, Mrs SheilaLawson, Nigel
Aitken, JonathanFarr, JohnLee, John
Alexander, RichardFenner, Mrs PeggyLe Marchant, Spencer
Alton, DavidFinsberg, GeoffreyLennox-Boyd, Hon Mark
Ancram, MichaelFisher, Sir NigelLester, Jim (Beeston)
Arnold, TomFletcher, Alexander (Edinburgh N)Lewis, Kenneth (Rutland)
Aspinwall, JackFletcher-Cooke, CharlesLloyd, Peter (Fareham)
Atkins, Rt Hon H. (Spelthorne)Fookes, Miss JanetLoveridge, John
Atkinson, David (B'mouth, East)Forman, NigelLuce, Richard
Baker, Kenneth (St. Marylebone)Fox, MarcusLyell, Nicholas
Beaumont-Dark, AnthonyFraser, Rt Hon H. (Stafford & St)Macfarlane, Neil
Beith, A. J.Fraser, Peter (South Angus)MacGregor, John
Bell, Sir RonaldFry, PeterMacKay, John (Argyll)
Bendall, VivianGalbraith, Hon T. G. D.McNair-Wilson, Michael (Newbury)
Benyon, Thomas (Abingdon)Gardiner George (Reigate)McNair-Wilson, Patrick (New Forest)
Benyon, W. (Buckingham)Gardner, Edward (South Fylde)McQuarrie, Albert
Berry, Hon AnthonyGarel-Jones, TristanMadel, David
Best, KeithGlyn, Dr AlanMajor, John
Bevan, David GilroyGoodhart, PhilipMarland, Paul
Biffen, Rt Hon JohnGorst, JohnMarshall, Michael (Arundel)
Biggs-Davison, JohnGow, IanMarten, Neil (Banbury)
Blaker, PeterGower, Sir RaymondMather, Carol
Bonsor, Sir NicholasGreenway, HarryMaude, Rt Hon Angus
Bottomley, Peter (Woolwich West)Grieve, PercyMawby, Ray
Bowden, AndrewGriffiths, Eldon (Bury St Edmunds)Mawhinney, Dr Brian
Boyson, Dr RhodesGriffiths, Peter (Portsmouth N)Maxwell-Hyslop, Robin
Braine, Sir BernardGrist, IanMayhew, Patrick
Bright, GrahamGrylls, MichaelMellor, David
Brinton, TimGummer, John SelwynMeyer, Sir Anthony
Brittan, LeonHamilton, Hon Archie (Eps'm&Ew'll)Miller, Hal (Bromsgrove & Redditch)
Brocklebank-Fowler, ChristopherHamilton, Michael (Salisbury)Mills, Iain (Meriden)
Brooke, Hon PeterHampson, Dr KeithMills, Peter (West Devon)
Browne, John (Winchester)Hannam, JohnMiscampbell, Norman
Bryan, Sir PaulHaselhurst, AlanMitchell, David (Basingstoke)
Buchanan-Smith, Hon AlickHavers, Rt Hon Sir MichaelMoate, Roger
Buck, AntonyHeddle, JohnMonro, Hector
Bulmer, EsmondHenderson, BarryMontgomery, Fergus
Butcher, JohnHeseltine, Rt Hon MichaelMoore, John
Butler, Hon AdamHicks, RobertMorgan, Geraint
Cadbury, JocelynHiggins, Rt Hon Terence L.Morris, Michael (Northampton, Sth)
Carlisle, Kenneth (Lincoln)Hill, JamesMorrison, Hon Charles (Devizes)
Carlisle, Rt Hon Mark (Runcorn)Hogg, Hon Douglas (Grantham)Mudd, David
Chalker, Mrs. LyndaHooson, TomNeale, Gerrard
Channon, PaulHordern, PeterNeedham, Richard
Clark, Hon Alan (Plymouth, Sutton)Howell, Rt Hon David (Guildford)Nelson, Anthony
Clark, Sir William (Croydon South)Howell, Ralph (North Norfolk)Neubert, Michael
Clarke, Kenneth (Rushcliffe)Howells, GeraintNewton, Tony
Cockeram, EricHunt, David (Wirral)Normanton, Tom
Colvin, MichaelHunt, John (Ravensbourne)Page, John (Harrow, West)
Cope, JohnHurd, Hon DouglasPage, Rt Hon Sir R. Graham
Costain, A. P.Irving, Charles (Cheltenham)Page, Richard (SW Hertfordshire)
Cranborne, ViscountJenkin, Rt Hon PatrickParris, Matthew
Critchley, JulianJessel, TobyPatten, Christopher (Bath)
Crouch, DavidJohnson Smith, GeoffreyPatten, John (Oxford)
Oean, Paul (North Somerset)Johnston, Russell (Inverness)Pawsey, James
Dickens, GeoffreyJopling, Rt Hon MichaelPenhaligon, David
Dorrell, StephenJoseph, Rt Hon Sir KeithPercival, Sir Ian
du Cann, Rt Hon EdwardKaberry, Sir DonaldPink, R. Bonner
Dunn, Robert (Dartford)Kellett-Bowman, Mrs ElainePorter, George
Durant, TonyKershaw, AnthonyPrice, David (Eastleigh)
Edwards, Rt Hon N. (Pembroke)Kimball, MarcusPym, Rt Hon Francis
Eggar, TimothyKing, Rt Hon TomRaison, Timothy
Elliott, Sir WilliamKnight, Mrs JillRathbone, Tim
Emery, PeterKnox, DavidRees, Peter (Dover and Deal)
Eyre, ReginaldLang, IanRees-Davies, W. R.
Fairbairn, NicholasLatham, MichaelRenton, Tim
Rhodes James, RobertSpicer, Michael (S Worcestershire)Viggers, Peter
Rhys Williams, Sir BrandonSproat, lainWaddington, David
Ridley, Hon NicholasSquire, RobinWakeham, John
Rifkind, MalcolmStainton, KeithWaldegrave, Hon William
Roberts, Wyn (Conway)Stanbrook, IvorWalker, Rt Hon Peter (Worcester)
Ross, Stephen (Isle of Wight)Stanley, JohnWalker, Bill (Perth & E Perthshire)
Rost, PeterSteel, Rt Hon DavidWalker-Smith, Rt Hon Sir Derek
Royle, Sir AnthonySteen, AnthonyWaller, Gary
Sainsbury, Hon TimothyStevens, MartinWalters, Dennis
St. John-Stevas, Rt Hon NormanStewart, Ian (Hitchin)Warren, Kenneth
Scott, NicholasStewart, John (East Renfrewshire)Watson, John
Shaw, Giles (Pudsey)Stokes, JohnWells, Bowen (Hert'rd & Stev'nage)
Shaw, Michael (Scarborough)Stradling Thomas, J.Whitelaw, Rt Hon William
Shelton, William (Streatham)Tapsell, PeterWhitney, Raymond
Shepherd, Colin (Hereford)Tebbit, NormanWickenden, Keith
Shepherd, Richard (Aldridge-Br'hills)Temple-Morris, PeterWiggin, Jerry
Shersby, MichaelThatcher, Rt Hon Mrs MargaretWilliams, Delwyn (Montgomery)
Silvester, FredThomas, Rt Hon Peter (Hendon S)Wilson, Gordon (Dundee East)
Sims, RogerThompson, DonaldWolfson, Mark
Skeet, T. H. H.Thorne, Nell (llford South)Young, Sir George (Acton)
Smith, Cyril (Rochdale)Thornton, George
Speed, KeithTownsend, Cyril D. (Bexleyheath)TELLERS FOR THE AYES:
Speller, TonyTrippier, DavidLord James Douglas-Hamilton and Mr. Peter Morrison.
Spence, Johnvan Straubenzee, W. R.
Spicer, Jim (West Dorset)Vaughan, Dr Gerard
NOES
Body, RichardCarlisle, John (Luton West)TELLERS FOR THE NOES
Brotherton, MichaelProctor, K. HarveyMr. Robert Taylor and Mr. Clement Freud.
Brown, Michael (Brigg & Sc'thorpe)Townend, John (Bridlington)
Budgen, NickWinterton, Nicholas

Question accordingly agreed to.

Clause read a Second time.

Amendment made to the clause: at end add— (3) Not later than six months after the end of any financial year in which this power is used the Secretary of State shall prepare and lay before Parliament a report on the exercise during the year of his powers under this section."—[Dr. John Cunningham.]

Clause, as amended, added to the Bill.