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Small And Medium-Sized Enterprises

Volume 404: debated on Thursday 1 May 2003

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What efforts her Department is making to improve productivity growth rates among small and medium-sized enterprises.[110639]

The Parliamentary Under-Secretary of State for Trade and Industry
(Nigel Griffiths)

Improving productivity is central to the Government's economic strategy. We have overtaken Japan and narrowed the gap with Germany to 4 per cent., our research and development tax credits are helping an estimated 3,000 firms to keep ahead of our competition and, last year, more than 1,000 of our brightest businesses were offered SMARTs—small firms merit awards for research and technology—of £47 million to help develop their products in the marketplace.

I am grateful to the Minister for those proud statements, but, despite all that, the truth is that under this Government productivity growth has halved. That has happened not least because of the fact that the Government impose 15 regulations every working day. Two years ago, as I am sure you will recall, Mr. Speaker, the Government passed the Regulatory Reform Act. We were promised that there would be 50 new regulatory reform orders immediately. Yet, two years later, only 12 orders have been enacted. What happened to the other 38? Will the Minister explain why his Department has managed to pass just one regulatory reform order in 24 months?

I can tell the hon. Gentleman that that was one more order than the Conservative Government ever got to grips with in their time. Indeed, who was it who said that 28 licences, certificates and regulations were needed just to start a business? John Major made that comment at the 1992 Tory party conference. It now takes a day to set up a business, it costs less than £85 and there is no longer a need for 28 licences, so we will not take lectures about bureaucracy from the Conservatives.

We take productivity very seriously, which is why we have introduced tax credits to support innovative SMEs with cash support worth up to 24 per cent. of their research and development and why SMEs' productivity as a proportion of large firms' productivity is increasing—it is up 1 per cent. in the most recent recorded figures to 93 per cent., and some SMEs are more efficient than large firms. We have taken the measures to increase productivity, and I noticed that the hon. Gentleman admitted in his supplementary question that productivity was improving.

Is the Minister aware that the Select Committee on Regulatory Reform has dealt with a large number of reforms this year? Is it not regrettable that Conservative Members very rarely turn up at that Committee?

I am not here to get involved in party politics, but I am sure that the House and a wider audience will have noticed the excellent point made by my hon. Friend.

Surely, if productivity was really improving that much, major plants would not be leaving the UK. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) mentioned a number of plants that were moving out of the UK, but he did not mention Vauxhall, Dr. Martens, Wilkinson Sword and Coats Viyella. That is straightforward outward investment. Surely, we need improvements in productivity. How many more UK plants need to leave for the far east before the Government recognise that there is a crisis in manufacturing? Or will they rely on the SARS epidemic to save British industry?

I know a little bit about the far east because I have just returned from a trade mission there. One of the facts that the Opposition choose to ignore is that, for instance, more than 70 per cent. of Taiwan's inward investment in Europe comes to Britain. In Japan, 43 per cent. of inward investment to Europe comes to Britain. I mentioned Honda in answering another question. What about Ford and those other big manufacturers that choose to invest in Britain? They do so because we have made Britain the preferred choice for the world for inward investment to Europe.