Policy for Growth

Part of Bill Presented — European Union Bill – in the House of Commons at 3:30 pm on 11th November 2010.

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Photo of Margot James Margot James Conservative, Stourbridge 3:30 pm, 11th November 2010

It is clear to me that the private sector's unleashing of enterprise and entrepreneurialism is what will produce the real and sustainable growth that is the subject of this debate. If the Government are taking almost 60% of GDP and spending it in ways that do not generate growth, and incurring massive debt in the process, the private sector will be trampled underfoot by the high taxes that automatically follow. The damage done to Britain's economic prospects in the last 13 years has been great. As a country, we are overspent, over-borrowed, overtaxed and over-regulated.

There are 11,000 small businesses in my metropolitan borough of Dudley, and I want to make a few points about Government policies that I believe in but with which I hope we can go further and faster to help those businesses. They have told me how much they welcome the reduction of the small company rate of corporation tax to 20%, the revitalised support for apprenticeships, and the exemption of start-ups from national insurance on the first 10 employees.

The Government have also announced a one-in, one-out rule for introducing any new regulations. I ask the Minister to remember that we are competing with economies like South Korea and China, not Italy and Greece, and we simply cannot afford the massive burden of regulation that encroaches on business every day. One in, one out just keeps us standing still, and that is not good enough. We must be more ambitious in our desire to deregulate.

Another area in my sights for reform is the loving care with which Whitehall implements European Union directives. We should follow the example set by France, and followed by the newer economies of the former eastern bloc out of economic necessity. This week the Business, Innovation and Skills Committee investigated the operation of the enterprise finance guarantee scheme, which I am delighted that the Government have extended. I ask Members to imagine our surprise, however, when we learned that companies could not access this scheme if they were exporters. Under questioning from our Chairman, my fellow black country MP Mr Bailey, the BIS officials before us confirmed that exporting companies were exempt from this excellent policy because of the EU rules regarding state aid to exporters and the potential for distorting trade between member states. Can Members imagine other countries, such as France and Poland, being so deferential to such directives?

As many Members have said, we also need a "big bang" in credit for the small business sector. Since the banking crisis, there has been much talk about the difficulties small businesses have had in accessing capital. That is nothing new. My business experience dates back to the mid-1980s and what I learned from my father's business career dates back even further, to the '60s, and I can tell this House that the banks never wanted to lend small businesses money when we needed it, and always demanded the shirt off our back if they were ever persuaded to do so. So I am not sure quite when those halcyon days of bank lending to small business existed.

What is needed is a greater diversity of loan and equity finance. Last week the Black Country Reinvestment Society issued a report arguing for more finance to be channelled through mutual and co-operative societies. I was pleased to be informed by officials in the Department for Business, Innovation and Skills that such bodies are to be allowed to bid for funding from the regional growth fund. In addition, the enterprise capital fund programme will leverage equity financing. We must also find a way of incentivising high net-worth individuals to invest in start-ups and small and medium-sized enterprises.

Not only must we increase the number of small businesses, but we must get the existing ones into a position where they can grow their business, because only about 20% of small businesses really achieve great growth. The policies that this Government are pursuing now-at last-and many of the ideas we have heard this afternoon, including some in my contribution, will double the number of small businesses that can grow themselves, and in turn provide the growth that this economy needs from the private sector.