Enterprise Initiative

Part of Prayers – in the House of Commons at 12:49 pm on 4th March 1988.

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Photo of Mr David Nicholson Mr David Nicholson , Taunton 12:49 pm, 4th March 1988

Conservative Members, too, have constituents to look after.

I was interested to hear the speech of my hon. Friend the Member for Walthamstow (Mr. Summerson) and his reflections on the planning system, although I do not necessarily follow him to all his logical conclusions. I have just returned from a parliamentary delegation visit to Saudi Arabia, where planning regulations are somewhat in their infancy. What impressed me, especially in the capital city of Riyadh, which is not in the most delightful of spots—it is in the middle of a desert plateau—was the dignity and splendour of modern buildings that have been put up during the past five years.

It is relevant to our debate on enterprise that we should not consider such matters simply in terms of utilitarian financial incentives. Especially in the inner cities, an immense amount depends on environmental considerations and the type of buildings, public or private, that are erected. Indeed, for the past 10 years, Saudi Arabia has been working on a new industrial city on the shores of the Gulf at Dubai. It is a most impressive achievement.

I contrast those achievements with Britain where we have planning laws to an excess, the Department of the Environment building at No. 2 Marsham street — that great tribute to architectural splendour.

It is a pleasure to take part in a debate with my next door neighbour, the hon. Member for Yeovil (Mr. Ashdown). My sorrow at his flitting from the scene must be counterbalanced by the fact that I shall have to leave in three quarters of an hour and will be unable to hear the hon. Member for Great Grimsby and my hon. Friend the Minister.

The hon. Member for Yeovil made an interesting point about venture capital in the regions, and I hope that it will be picked up, if not in this debate, in the Government's approach to such matters. I do not question the statistics that he mentioned, but my impression is that we are beginning to get substantial new life in the regions, especially in the west midlands and my native north-west, which suffered greatly in the recession. As my hon. Friend the Member for Beverley (Mr. Cran) said, new businesses are being created in the north-east at a rate of 6,000 a year and the number of businesses setting up under the enterprise allowance scheme has increased by an average of 30 per cent. each year since 1983.

Manchester is now the second biggest financial centre outside London, with more than 50 banks located in the city. Last year, Japanese, German and Australian banks set up in Manchester. In the west midlands, which has suffered greatly from the industrial recession, tourism contributes more than £500 million to the economy. Since 1976, employment in that industry has increased threefold to 70,000. One might not think of the west midlands as a typical tourist area, so that is an achievement.

I had some sympathy with the hon. Member for Yeovil when he warned about the new publicity mechanism and the semi-change of name of the Department diverting attention away from its essential tasks. We should not dwell too much on enterprise and lose our essential concern with the rather more mundane matters of trade and industry. The Department of Trade and Industry, or whatever it is called, will be judged by how it assists, encourages and facilitates British industry to export and to regenerate our domestic market.

I inject a note of soberness into our discussion. The latest balance of payments figures from the DTI show, in 1986, a deficit on visible manufactures of £5,307 million, rising in 1987 to £6,542 million. The non-oil visible trade deficit rose from £12,519 million in 1986 to £13,809 million in 1987. Those are large, disturbing figures. The trend, while not savagely upwards, is still upwards. Those are deficits. We must be concerned with those figures.

I mentioned that I have recently returned from Saudi Arabia. Many of the conclusions that I reached on that visit would be the subject of a foreign affairs debate. We visited British expatriates and the embassy's trade offices there. We got the message from those who live, trade and work out there that not enough British companies were showing an interest in that extremely rich market, despite the fall of oil revenue. Saudi Arabia is trying, understandably, to diversify its economy. It is looking for partners in the industrialised world to help in that.

British companies are doing a certain amount, but we were told that more could be done. They wished that more companies would come out—that more smaller and medium-sized businesses would show an interest. They contrasted that with the success of French companies, for example. The point was also made that British companies and perhaps some British expatriates needed to improve their ability to deal with the Arab market. That is an important task for the DTI.

Everyone, including Opposition Members, took them view that Britain has an immense opportunity in a country such as Saudi Arabia at the moment. Last September an offset programme to the substantial Tornado sales from Britain to Saudi Arabia was concluded. That gives British firms a considerable opportunity for joint ventures.

There is another reason why Britain has an immense opportunity in Saudi Arabia. We took on board the impatience of many Saudis with the United States. For many decades, Saudi Arabia has had a close political and economic partnership with the United States, but the people were considerably affronted by the restriction that the United States placed some years ago on the sales of spare parts to aircraft that it had supplied. There was concern in the United States that those planes could be used in Israel. That affront was felt by all the people whom we visited. They are frustrated with the United States' policy on the west bank and the Israeli conflict. They look to what Britain can achieve. That is a matter for a foreign affairs debate, but be not surprised, it gives considerable export opportunities, which can benefit us.

One way in which the DTI can help is mentioned in the White Paper, which states in paragraph 9: One possibility is to make more use of Chambers of Commerce and other regional bodies to deliver services to exporters where they can offer a network of contacts which is close to small and medium-sized businesses with the potential to export. Perhaps I should declare an interest because I am a parliamentary consultant to the British chambers of commerce. They are discussing with the DTI the use of chambers of commerce to identify firms in the £1 million to £10 million turnover bracket, which could export more but do not, and to help to lead them to the point of entry in export markets.

Moving away from the export side of the discussion, that paragraph in the White Paper went on: One other possibility is to use outside agencies such as Local Enterprise Agencies, Chambers of Commerce and firms of management consultants to provide an information and signposting service for the business development initiatives. The advantage of operating in this way would be to extend the range of DTI contacts with industry at a relatively small cost and to use wider networks of contacts with small and medium-sized businesses than is possible even through the extended Regional Office network. My hon. Friend the Member for Welwyn Hatfield (Mr. Evans) welcomed the extension of DTI offices but said that it was important that there should be an entrepreneurial flavour to them. I hope that by using the premises and personnel of chambers of commerce and local enterprise agencies the entrepreneurial element will come in. I am happy to say that a number of chambers of commerce are involved in housing DTI personnel. They include Norwich, south-east Hampshire, Coventry—the Minister will be pleased to hear that; I am sure he played a major part in achieving it — north Staffordshire, Sheffield, central and west Lancashire, Chesterfield, Derby and Nottinghamshire. We hope that there will be more.

My hon. Friend the Member for Harrow, East (Mr. Dykes) referred to the opportunities for enterprise resulting from the privatisation of major industries. I do not want to enter a great argument now about the rights and wrongs of privatisation and what it achieves. But constituents have told me that merely transferring a major enterprise or utility from the public to the private sector does not, on the whole, change the people who work— as managers, or whatever—in that organisation. Many of them, it is said, still maintain the attitudes of the nationalised industry in which they worked before and in which their careers developed. I put that point to my right hon. Friend the Secretary of State for Energy at a meeting last night. I know that, in the privatisation of electricity, he intends to encourage the input of entrepreneurs from outside. It is important not to lose sight of that opportunity in the discussions and developments that ensue from the White Paper.

In view of the time of year I want to give the House one or two reflections on the Budget of my right hon. Friend the Chancellor. It should help to encourage certain activities that are relevant to enterprise—for example, increasing companies' training and R and D activities, and providing incentives to smaller and medium-sized firms to contribute to collaborative research through research associations. The possibility of contributions by local industry to specific non-profit making bodies charged with undertaking activity beneficial to the local community would also be helpful.

There is a consensus among Conservative Members that the high rates of personal taxation need to come down. The figure generally mentioned is 50 per cent. and I go along with that. The coming Budget is a good opportunity to achieve it. Last week I read in The Times—the Treasury sometimes allows these options to emerge in the public domain to test reaction—that the higher rates might come down to 35 or 40 per cent. We should approach that with care. We are not Saudi Arabia, and cannot afford no income tax or a return to 1939 rates of tax. We still have considerable difficulties and we must consider the political and social realities and pressures in society. I have substantial reservations about that course of action. I urge my right hon. Friend the Chancellor of the Exchequer to try to do much more to make it worthwhile to work at the lowest end of the income scale.

We have done a certain amount about the poverty or unemployment trap through benefits and we got into some trouble over that with regard to housing benefit and other matters. We are approaching the end of that road. We can significantly help and give incentives to those on lower incomes by expanding an idea initiated by my right hon. and noble Friend the Secretary of State for Trade and Industry three or four years ago — a lower employee national insurance deduction for those on low incomes. We should do that rather than assist through a reduced rate tax band. The advantage is that that national insurance reduction would not need to be transferred right up the line. It is a relatively cheap way to help a specific group of people. Employers and chambers of commerce have made that point over many years and I reiterate it today.

My right hon. Friend the Chancellor should also consider giving more incentives to middle management and younger professionals — and I am referring not to the yuppies in the City, but to the professionals in the private and public sectors who pay very high marginal rates of tax. The rise from the present 27 per cent. basic rate to 40 per cent. is extremely steep. I hope that the Chancellor will make that an objective when he presents his Budget.

I hope that the Budget will reinforce and encourage the enterprise initiative that my hon. Friend the Member for Carshalton and Wallington has so fortunately brought to our attention. That enterprise initiative must be related to the important tasks performed by the Department of Trade and Industry, dating back many decades to the days when it was the Board of Trade, to help Britain's trade and industry.