t: 020 7219 8155 e: fieldm@parliament.uk

Small Firms

July 13, 2001

Small Firms

To follow on from the remarks of my hon. Friend the Member for Taunton (Mr. Flook), this is very much a debate full of maiden speeches. It is perhaps relevant that yesterday I was playing cricket and making my debut for the Lords and Commons team. We had to rush back for a couple of votes. My sartorial elegance, or otherwise, consisted of cricket whites and a blazer. Knowing that you are the Chairman of the all-party cricket group, Mr. Deputy Speaker, I suspect that you may have approved rather more than the Whips, who rightly ticked me off for not wearing the normal attire.

It has been an interesting debate and we have heard some thoughtful maiden speeches. I speak as a member of the new intake, who is making only his second speech in the House. The hon. Members for West Bromwich, East (Mr. Watson) and for Workington (Tony Cunningham) both made impassioned pleas about their constituencies and the importance of developing business in them. Likewise the two Scottish Members who made their maiden speeches, the hon. Members for Perth (Annabelle Ewing) and for Edinburgh, West (John Barrett), said some interesting things about Scottish issues. Unfortunately, the hon. Member for Birmingham, Perry Barr (Mr. Mahmood) is no longer in his place. He said a few words about his late father. Five weeks ago, when I was elected as a Member, my first thoughts too were with my late father, who passed away about 10 years ago. At such moments, these family links mean so much to many of us in this place.

Like many of the new boys and girls who have come to the House, it is a frightening realisation that we know so little about virtually everything that goes on in the House – or perhaps I speak only for myself. This week we have discussed such issues as Northern Ireland election fraud and statementing in schools for young children. I confess that before the debates took place – I suspect that it is a confession that will terrify many of my constituents – I reckoned that on either subject I could write on the back of one rather small envelope all that I knew about the issues. However, I can profess to be a comparative expert on small business, because I have spent the past seven or eight years running a business full-time and my business background goes back to my university days when I set up a publishing concern. My firm, which I run with a fellow director, now has 12 employees and turns over more than £2 million a year. I shall return to that subject later in my speech.

My constituency of Cities of London and Westminster is best known for its larger businesses. All the leading international investment banks are based in the City of London and a significant number of large companies that play on the global stage are based in Westminster. However, it would be wrong to imagine that the constituency has only large businesses – it has a thriving small business sector.

The congestion charge is at the forefront of people’s minds in London this week, because the Mayor of London has made it clear that he will impose such a charge on people coming into central London. Understandably, the focus has been on the effect that the charge will have on motorists and other commuters and it was initially promised that we would see a distinct improvement in public transport before it was introduced. However, the real sufferers from the charge will be those small businesses – often sole traders or small family businesses – based in central London, which will find that the 15 to 20 per cent. projected reduction in the number of commuters will make a big dent in their turnover and profits. That is one reason why we should think again about what will be a controversial subject in the years ahead.

We have had an interesting debate this morning. In the past, small business matters tended to be seen as the preserve of Conservative Members, but it is clear that the sector is increasingly important to the Government. I agreed with much of what the Minister said, but red tape is of concern to small business. The political battleground lies in what we would call red tape and the Government and various unions would describe as employee rights. Our aim is to ensure that small business does not suffer from the debate on the opposite sides of the same coin.

Many of the Government’s actions are to be welcomed. For example, the Chancellor has made some great changes in the capital gains tax regime. I support many of those changes, but he has made the regime more complicated than it needs to be. We must also recognise the importance of a low tax economy. We live in a global economy, whether we like it or not, and that applies to small business as much as to the largest companies. We therefore need low income tax and a low capital gains tax regime to ensure that entrepreneurs are not persuaded to leave these shores in a brain drain.

As I have mentioned, I run my own business, which I set up some eight years ago. Others who have set up their own businesses will know that there is nothing more exciting. My business partner and I started in a small room with a couple of telephones and a fax machine. We had to lick the stamps for the first letters to our prospective clients, and it was a more exciting experience even than getting into Parliament. We have tried to develop the business and we now have a dozen staff, but I am concerned that red tape and bureaucracy disproportionately affect small business. Large companies have payroll departments, human resources departments and office managers, and they can cope with the demands. Even in my own business, which is now 12 people strong, that administrative burden falls heavily on me and my fellow director, as we cannot pass it on elsewhere. I beseech the Government to consider the matter carefully before gold-plating any directives from Europe and to ensure that in their own legislation new red tape is kept to a minimum. As has been mentioned from all parts of the House, the small business sector will be the vehicle for growth of employment opportunities in this country in the years ahead.

We heard from the hon. Member for Dagenham (Jon Cruddas). What is happening in his constituency is a tragedy, with the largest employer for the past half century making many people redundant. In future, international companies will not offer great numbers of jobs. There is a risk that all those companies will downsize, and with the push to keep costs, particularly labour costs, at a minimum, more and more skilled and semi-skilled jobs will go to third-world countries.

We must ensure that we do not strangle small business in Britain. My principal worry is that we will discourage small businesses that employ 10 or 12 people from becoming businesses employing 25 people, simply because we will not have a light regulatory regime in place. I look forward to working closely with my hon. Friends and, I hope, with Ministers to begin to build a regime that ensures that there are no such constraints on the growth of smaller firms.

The extension of maternity and paternity leave, which applies beyond the small business sector, is seen as a family friendly right. It is easy for freelance journalists and others who work on a piecemeal basis to extol the virtues of part-time working, but that creates difficulties for small businesses. In my own business, two of our dozen employees were on maternity leave in the early part of this year. That made matters extremely difficult. Jobs had to be left open and we did not know whether to take on part-time staff. The burden should not be underestimated, especially in businesses that are trying to employ young people, graduates and people in their 20s. We should consider whether smaller businesses could be exempted from some of that regulatory burden.

It has been a pleasure to contribute to the debate on a key sector of our economy, which will be the great vehicle for employment growth in the next decade or so.