General Matters

Part of the debate – in the House of Commons at 7:16 pm on 5th April 2011.

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Photo of Mel Stride Mel Stride Conservative, Central Devon 7:16 pm, 5th April 2011

I welcome the opportunity to participate in this debate and to speak about the importance of supporting businesses in our rural communities. I represent a highly rural constituency. At 550 square miles, it is one of the largest in the country. It is also, I believe, the only constituency in the country with no conurbation with a population in excess of 10,000—my largest town has a population of about 6,000 or 7,000.

Quite often in the House when we debate the economy and business, we implicitly make the assumption that city and city-centre economies, areas with high levels of public sector employment and perhaps our traditional industrial heartlands are particularly vulnerable to economic downturn. However, I am here to argue that rural communities are just as vulnerable, although in different but equally important ways. Much of the economic output in my constituency comes from farming and agriculture, which has its own unique challenges, including the power of supermarkets to control milk prices and the ongoing problems with bovine TB. I and many of my constituents felt that the previous Government did very little to tackle the latter problem, so I am pleased that this Government are taking a more positive approach.

In my constituency, as in many rural constituencies, small and medium-sized enterprises are particularly important. Hon. Members might be aware of a town called Okehampton in my constituency, which, because three SMEs have recently closed their plants, has seen unemployment sky-rocket from about 2% to in excess of 10%. That town and its community are having a difficult time at the moment.

In general, I welcome what the Government have done to support business. First, through the emergency Budget last year, they stabilised the economy, got to grips with the deficit to ensure that we did not lose our credit rating status, and ensured that interest rates did not spike and that we did not end up in the position that Greece is in today. Secondly, they are bearing down on the tax burden on business. In the previous Budget, they removed an extra 1% from corporation tax, so that it will be 23% by April 2014, which will give us the lowest level of corporation tax in the G7.

I have serious concerns, however, about the level of national insurance taxation. I know that the Government headed off some of the more onerous elements that Labour had planned, but this is a tax on jobs, and it is very unwelcome. I ask Ministers to consider bringing it down as soon as possible. I received an e-mail just this afternoon from an important business in Bovey Tracey, the House of Marbles, pointing out just how onerous that tax will be on the future of the business.

I welcome the fact that we are going to tackle regulation, that Lord Young’s proposals are to be implemented and that domestic regulation on businesses that employ fewer than 10 people and on genuine new start-ups will be removed or not applied for three years. Those are all positive steps forward.

Specifically for rural communities, it is very important that the Government should keep a close eye on fuel costs. Very little happens in Central Devon in a business sense that is not affected by the price of fuel. Transporting a 25-tonne feed lorry from East Anglia to Devon costs some £400 in fuel alone. These are huge amounts, and they affect all businesses that use distribution. For example, Gregory's, a large haulage company in North Tawton in my constituency which transports milk in particular, operates right across the south-west and beyond. To the extent that fuel prices go up, the company’s prices go up too, and at the end of the day farmers’ margins are squeezed even harder.

I want to raise one other important issue: the VAT rates applicable to tourist accommodation. We are unusual in the European Union, in that we are one of only five countries of the 27 member states to apply the same VAT rate to tourist accommodation as to other VAT-able items. That is a mistake. We should look seriously at lowering the rate. Germany has a VAT rate of 19%, but applies only a 9% rate to tourist accommodation. In Portugal, the figures are 20% for the general VAT rate, as here, but only 5% for tourist accommodation. Some 20% of our fellow countrymen and women take their holidays here in the United Kingdom, which is well below the 28% average across Europe, so we should really look at changing the rate.

The final element that I would like to mention is the importance of getting broadband rolled out in our rural communities. Some 33% of households in Central Devon do not have access to broadband at 2 megabytes a second, which hampers business. The national figure is just 18.1%. I hope that Ministers will listen to the points that I have made and recognise that when it comes to business, rural communities are as important as those in our towns and cities.