Small Businesses

Part of Prayers – in the House of Commons at 11:34 am on 15th May 1987.

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Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight 11:34 am, 15th May 1987

I have listened for nearly an hour to the hon. Member for Birmingham, Northfield (Mr. King) and have enjoyed at least some parts of his speech. On occasion, he was somewhat too party political and euphoric, because nobody in his right mind wants to discourage small businesses, which are the wealth of the nation and from which big businesses grow. My party and, I am sure, the Labour party want to encourage small businesses.

The hon. Member for Northfield had a tilt at the Labour party in the early part of his speech, saying that when the Labour party was in office it took no notice of small businesses. That is not true. Mr. Bob Cryer was a good Minister for small businesses. At the time of the Lib-Lab pact we persuaded the Prime Minister to make Lord Lever the Minister responsible in the Cabinet for small businesses. So efforts were made. It was not easy, because the country had been in a financial crisis.

I had a rant on this subject, as the Minister well knows, only three or four weeks ago. I do not want to bore him or the House by repeating myself. I have been involved with small businesses during the past 10 to 12 years, and I have tried to build up a few of them. I own a china shop and my wife has a bookshop. I own premises that I lease out to a man who makes furniture and to a person who makes double glazing. I have a bakery which my son helps to run; it has been bankrupt twice, but it is now making money. I also have tenants involved with hairdressing and children's clothes. I also try to sell Isle of Wight products, which is the biggest mistake that I ever made. I try to sell Isle of Wight wine and biscuits, but nobody seems to want to buy them.

I speak as one who has borrowed freely from banks over the years. High interest rates still prevail. I know that they have come down, but far too often they still cripple small businesses. Inflation is levelling off at 4 per cent. and may fall slightly, but interest rates are still extremely high. Anything that we can do to get interest rates down will help small businesses more than anything else.

I shall have a go at the banks. I am grateful to them for helping me, but they seem to clap on all sorts of charges. I recently found another one on my bank statement a security charge for holding deeds of £9 or £10. That idea comes from the Americans. The banks charge arrangement fees and about 50p every time that we cash a cheque. Given that the National Westminster Bank has just made profits of more than £1 billion, the banks could be more helpful than they are.

I want to talk about the role of the Development Commission, and I know that the Minister will share my views on this. I pay tribute to the Minister, who has done a good job in the time that he has been in charge of small businesses. He has achieved a great deal. At one time, the Development Commission was under threat from the Government, but fortunately it survived and has an enormous role to play in rural areas such as my constituency. It has done much for us int the way of building nursery units, and it has recently spent just under £1 million on converting a boat yard into units in Cowes, which I hope will be let. However, the problem is that the commission's wings may well he clipped in future, and if we must look only to the private sector for the provision of such facilities, that simply cannot be done in the Isle of Wight, the west of England or in many other parts of the country. The private sector will not receive the return that it requires from the lettings—about £5 per foot in a constituency such as mine. The maximum will be about £2·50, which is not a feasible proposition for the private sector.

When seeking outside developers to build factory units, possibly for a small high-tech park, which is what my development board has in mind, the only way to do that is to allow them to build 100,000 sq ft of retail warehousing. That is crippling to the in-town retailers, but outside contractors require that incentive. There has been some glee on the Conservative Benches about the fact that we have just lost control of Medina borough council, but that was due not so much to a swing to the Conservative party but to the problems of planning and the question whether the island should have another Tesco superstore, which will go to Newport now. Consequently, we retained all the seats in Newport and lost them all in Ryde. Ryde thinks that it will lose out because the superstore is going to Newport. Now we are trying to build some factory units just outside Ryde, and the only way to do that is by putting up another 100,000 sq ft building of the B & Q superstore type. That will cripple the town centres. Planning decisions should not be taken under pressure of that kind.

The Development Commission is the body to which we must continue to look to supply the factory units that we need and that are rapidly taken up. They are subsidised, and I believe that that subsidy must be met by central funds.

I criticise the Development Commission to some extent because it is a little bureaucratic, through the Council for Small Industries in Rural Areas, its subsidiary. It is occasionally probably too slow in reaching decisions. Sometimes it is very slow in bringing in accountancy advice. Apart from that, I have nothing but praise for the commission and its chairman. We owe it a great deal in my part of the world, as is the case elsewhere, I am sure.

The local authority can also play a vital role. I am a great believer in local government. It has had one hell of a time over the past few years with central Government withdrawing funds. Nevertheless, the local authority is always the body to which the smaller or bigger firm comes when it needs help. The hon. Member for Northfield talked about tourism. I could not agree with him more. About 8 million people visit the Isle of Wight every year, which is far more than the number of people who visit the Channel Islands. It is a bit below Devon and Blackpool. If the local authority is interested in encouraging tourism, it can do so by providing small amounts of funds and helping in other ways such as the provision of facilities. That is desperately needed because tourism has had a rough ride since 1979.

This year we had the special Olympics in the Isle of Wight. A great deal of work was done by the local authority. Sponsorship was given and some of the people who visited us from all parts of Europe and England were privately accommodated on the island. Nevertheless, the county council did most of the spadework. A little later this year we shall have a festival of the arts. I am staggered that it has come off. When it was suggested by a PR consultant who works in the House, I poured cold water on the idea. I thought that we would lose a lot of money. We lost money on a song contest. I did not think that, the festival would get off the ground. In fact, it has, and I am pleased to say that the Minister for the Arts, if he is still in office, will visit us. Sadler's Wells ballet, symphony orchestras, and so on are coming. It is amazing. The sponsorship has also surprised me. It has taken us a year and a half to build up the festival, but it will last for three to four weeks. We are using the grounds of Osborne house for the ballet and other events.

That would not have started if the present leader of the county council had not said, "We'll put £20,000 into the kitty so that Mr. Kevin West can be appointed to organise the festival." Mr. West has been extremely successful as the organiser, but basically the process started with the local authority. That is why I come back to the role that the local authority has and must continue to play. It is well known that the Minister is a great supporter of enterprise agencies. We established our enterprise agency through the local authority, although most of the money came from other sources. Through the local authority we have moved up a step to the development board, which is chaired by our former lord lieutenant.

I should like to make one plea to the Minister. We have kept our enterprise agency going because, through his efforts, he has persuaded the Chancellor of the Exchequer to encourage enterprise agencies by putting aside money that can be given to them if other funding comes from local sources. It doubled the amount. That was a good idea. It was floated for some time, and it has now come to fruition.

I should like to put this point to the Minister's boss, the Secretary of State for Employment, who was on the island recently. He should see whether the scheme can be made more flexible. We should like to merge our enterprise agency with our development board, but we cannot do it because we need the extra cash. That is why we shall hang on. I accept that there are some development boards that the Government suspect are not run on the lines that they would like. It is only right that the structure should be investigated, but if it comes up trumps I ask the Secretary of State to be a little more flexible. It would help us, and I believe that it would help others.

The development board has managed to bring together all political views. It has managed to get the three authorities on the island to agree on how we should proceed. It is doing very good work. I pay tribute to Sir John Nicholson, who has moved into areas in which I could not have operated. He does not mess about going through junior bank managers. He rings up the chairman himself and things begin to move. That is his ability.

The boards and enterprise agencies are there to help occassionally with finance. The hon. Member for Northfield talked about some sort of Government funding, perhaps at subsidised rates of interest. We on the Liberal Benches have promoted that idea for a long time. It will be in our manifesto, and is highly desirable. When I was leader of the county council, we had a budget of about £150,000. We were able to lend to small firms that had a bit of crisis, perhaps over a machine, and could not get the money from the bank. They were stretched too far. Small firms might have had a problem with marketing, so they received help with publicity. They were helped with all sorts of things, such as stands at shows on the mainland, and even in Germany and other countries. Those are areas where a little money can help enormously. It is not always forthcoming from banks—not by a long shot. I used to always ring up the bank managers, to find out why a firm was not being helped. We always had it double checked by the treasurer. We used to proceed through the enterprise agency. Such matters are now dealt with directly by the development board. I cannot remember one instance when we fell down. On the whole, that little stimulus helped enormously.

The role of accountants is vital. As the hon. Member for Northfield said, it is in the second or third year that one gets into difficulty. He mentioned Peat Marwick McLintock. Accountants should do a little more, if possible—even the local firms—to help small businesses, perhaps by not charging too big a fee to start with. They should keep a watchful eye on small businesses because things tend to go over the top. They get excited, orders come in, they can overstretch themselves and then they are in difficulty. The accountants can keep them on the strait and narrow. Such things can happen—for example, in the bakery to which I referred.

I should like to fly my kite, in that I am a great believer in the elected mayoral system. Birmingham should have a chief who is directly elected and who can make decisions. Incidentally, it would take one hell of a load off the backs of Members of Parliament. We would not be involved in matters that should rightly be subject to local decision. We would be able to do the work that we wanted to get on with. We are constantly being called to write to the local authorities or make pleas on behalf of constituents on matters that should not be our concern. I believe that the leaders should be well paid and should have a team—of professional advisers. The Government would then have to listen when the mayor of Birmingham arrived. I should like the Lord Mayor of London to be a real Lord Mayor. I should have liked to be elected the mayor of the Isle of Wight. Then I could have done things that I have not been able to do in my 13 years in the House. But I have not managed to get that into our manifesto. I nearly won that battle, but not quite.

I agree with what the hon. Member for Northfield said about the problems of late payment. That matter has been discussed much in this Parliament. Surely the problem is that the big firms do not pay the small firms promptly. That happens on too many occasions, and sub-contractors suffer enormously when their bills are paid late. It could work the other way, and the hon. Gentleman is right to point that out.

We would like national insurance contributions to be cut by about 25 per cent. in assisted areas and unemployment black spots. That would help small businesses.

I do not agree with assisted areas, and I believe that the Secretary of State does not either. We should help small firms, wherever they are. If someone has a good idea, I say, for goodness sake, help to get that bloke off the ground. This country cannot afford to lose such people. People still have bright, fantastic ideas. Japanese products seem to be based on ideas that started here, although I agree that the Japanese are now giving some back to us. People come to my office with all sorts of amazing ideas recently even a cat trap. I must say that I did not see a future for that!

Those people should be helped, not necessarily just in assisted areas. I have bleated about that many times. Unemployment is at about 17 per cent. in the Isle of Wight and is more than that in winter. One feels bitter when one loses a firm to an assisted area. We have lost one or two, notably Desmond Norman. I feel strongly about all these matters.

Many niggling factors do not help small firms. I have great battles with our county surveyor because he tends to go around putting double yellow lines everywhere, often unnecessarily. It can hurt a small business, if, when it has just got going, suddenly yellow lines are painted along its road. People cannot park outside, so they tend to go elsewhere. Road repairs and unnecessary closures are another problem. We have had roads closed for weeks on end, and that can be damaging for a business's cash flow. Valuation officers should deal more quickly with rating reviews. Often they take a year and will not give an inch, even if a road has been closed for some weeks, or a redevelopment is going on opposite and affecting business.

There is too much fussiness about bill boards. Small firms up hack alleyways or in secondary trading positions, and suffering as a result, want to make themselves known. They put up decently decorated boards and the surveyors' department comes along and takes them away. It tells greengrocers that they are coming out on the pavement too much and should move back. Two greengrocers opened on the Broadway in Totland bay and they were served with such a notice. However, anyone who would open a greengrocers there in the middle of winter deserves a medal, because there is virtually nobody to serve. The department is crackers to behave like that. Such niggling factors tend to come from authorities run by people who have never had their own business and know nothing of such problems as a weekly letter from the bank manager.

One major factor has risen recently about which I had no knowledge, although perhaps I should have realised what was going on. It results from the sort of regulations that we often pass in the House without debate. We recently passed one concerning the carrying of chemicals on roads and ferries, and quite rightly because many dangerous chemicals are being carried in this way but have not been declared.

However, many chemicals are desperately needed by firms in my constituency such as Plessey Truecast—a firm that the hon. Member for Northfield will know—which makes castings for the motor trade and racing cars, and paint makers, all of which are finding that the chemicals cannot come on the ferries because all the ferries take both passengers and lorries; there are no goods-only ferries. There is some dispensation when there are only 25 passengers on board, but ferries will almost always carry more than 25 passengers.

All this will cause problems and add to the firms' overheads. I have met with the Minister with responsibility for shipping, who happens to have a house on the island and so is aware of the problem, which is not an easy one to overcome. The cost of the Solent crossing is always a complaint, because it can add hundreds of pounds to a firm's costs, and there will now be the additional problems over these essential chemicals. Even the water authority is having trouble. I am not sure how we shall get over this difficult problem.

The House never debated the regulations, but perhaps it should have done and insisted on some dispensation for a longer period. I know that, as a result of the Zeebrugge disaster, the problem of carrying chemicals is in everybody's mind and it is right that something should be done about it. However, the result has been another problem for small businesses in my constituency, some of which will move if the problem cannot be solved. Having gone through the traumas with Westland, Plessey and the recent Williams bid for Temperature, which is a company employing nearly 300 people in my constituency and having survived all those, we are now coming up against the problem of the chemicals. It is a good job that I am leaving the House, because I do not think that I could take very much more of this.

Finally, we want greater loyalty about buying British goods. I wish to goodness that people were a hit more loyal to their country. When I opened my business selling china, I determined that I would sell only British and Irish porcelain and glass, so I sell Wedgwood, Coalport, Waterford glass and so on. A salesman came in the other day and asked us to purchase some Czechoslovak glass and my manageress said, "Oh no, we sell only British Glass." He looked at some Caithness glass and said, "Well, that was made in France anyway." I checked with Lord MacKay, who was chairman of Caithness glass at the time, and asked whether the company got any glass from France. He said, "Of course we do. It is much cheaper. Then we inscribe it." One cannot win. We should try to encourage greater loyalty to buying British and buying locally. Perhaps we could persuade the public to do a bit more of that.

I am grateful to the House for putting up with me and for listening to this rant, and I am grateful to you, Mr. Speaker, for allowing me to make my last speech to the House.