Small Businesses

Part of Prayers – in the House of Commons at 10:35 am on 15th May 1987.

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Photo of Mr Roger King Mr Roger King , Birmingham, Northfield 10:35 am, 15th May 1987

I thank my hon. Friend for his comments and I take his chastisement. Perhaps I was interpreting commonwealth in the literal sense. As I understand it, Britain exchanged its manufactured goods for raw materials with the old empire that we called the Commonwealth. Of course we still have a Commonwealth of nations and long may it remain, because it has an important role to play in world affairs. Our industrial position in the world has been affected because many of the Commonwealth countries are looking at alternative sources of supply for their finished goods and for the materials that they require and are looking less towards the United Kingdom. We have an opportunity to provide much of what they want.

There is a well-recorded and documented recent incident about the Indian navy which wanted to place an order for a new type of warship. Two yards were suggested, one in Aberdeen I believe, and one in Korea. The Aberdeen yard was more competitive than the one in Korea, but by some sleight of hand somewhere the Koreans were able to reduce the price by about £6 million and the Indian navy gave the contract to the Korean yard.

In the way in which I used to understand the Commonwealth it is not now so much a Commonwealth in terms of tied markets for our goods and their raw materials, because we are very much in competition with the rest of the world. For some time trade unions have been demanding that British industry should improve its productivity and invest heavily. The Labour Government of the 1970s paid only lip service to the role of employment in industry. Initiative was taxed away and it was not worth a candle to speculate by investing heavily in new factory plant and equipment.

A substantial risk is involved in starting up a business. I know that because I went through the process in 1974. I started a business in October of that year on the day that Labour got elected. However, that was not a mistake, because the business prospered and a good portion of it is still there. The attitude of the Labour Government to taxing the individual deterred many new business starts. It is relevant that we should remember Labour's tax on jobs, the national insurance surcharge.

This Government are criticised for not cutting taxation enough, but our critics forget that about £3 billion of taxation, brought about by Labour's terrible surcharge, was placed upon the people who were employed and was nothing more than a tax on jobs. It had a dramatic effect in causing industry to shake out the people that it did not want. Industry was not prepared to take any chances and if people were surplus or even partly surplus to production capacity, industrialists were no longer prepared to pay the penal rates of national insurance, and people were made redundant. That meant that in the dying throes of the Labour Government unemployment doubled. The Labour Government built up a momentum of unemployment that was difficult for us to stop when we came in to clear up the mess that Labour had made.