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School Leavers

Volume 408: debated on Thursday 3 July 2003

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What plans she has to provide financial assistance to firms in the small and medium sectors to enable them to engage further workers, with particular reference to school leavers. [123226]

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

Since 1997, more than 2 million small businesses have been established creating 2.3 million more jobs, which is why no direct financial assistance is given. The House will be keen to learn what Plaid Cymru's precise budget is for that.

I congratulate everybody on both sides of the House, in case I leave somebody out.

I am not going to talk about budgets, as I am actually questioning the Minister; I do not think that he is supposed to be questioning me. He will realise that more than 90 per cent. of employees in Wales are engaged in the small and medium sectors, which are a very large part of the Welsh economy—I am sure that the same is true of England and Scotland. What incentives are there to assist those hard-pressed businesses which complain that they are under continued pressure, day in day out, from red tape, paperwork and so on? We need to alleviate the problems experienced in that sector while encouraging those businesses to take on more employees. That was the point of my question and I should like the Minister to answer it.

The hon. Gentleman has shifted from budgets—I think that financial assistance is budgets—to the wider question, which I am happy to answer. When I met the Federation of Small Businesses in Swansea recently, its representatives told me how much they appreciated the raising of the VAT threshold, which has benefited 700,000 small businesses in Wales, England, Scotland and Northern Ireland. A lot more work can be done, however, and I welcome constructive comments from anyone in the House that will help us to achieve that goal. I pay tribute to the small businesses in Wales.

In order to help small businesses expand and employ more people, will my hon. Friend look again at the threshold for accessing level 2 regional selective assistance funding? At present, a business has to invest £500,000 to qualify, which is beyond many small businesses. On the other hand, if they go for level 3 assistance, the pot is small and not worth much. Will my hon. Friend look again at how those funds operate?

My right hon. Friend the Secretary of State has been engaged in one of the most extensive reviews of business support. The aim is to ensure that businesses of all sizes can access both the appropriate financial expertise and mentoring. Of course, we shall take on board what my hon. Friend said; we are keen to ensure that the thresholds are appropriate, but they must also be consistent with European legislation.

As we learned only this morning that the higher national insurance contributions and extra regulations imposed by the Government have destroyed 1,400 jobs at Britain's biggest bank, does the Minister agree that giving financial assistance to small and medium-sized enterprises to encourage them to create jobs will be a complete waste of taxpayers' money unless it is preceded by a cut in the huge burden of extra tax, national insurance contributions, climate change levy and pensions tax and a reversal in the ever-increasing tide of regulation? Unless it was preceded by those moves, we should simply be throwing away good money.

Responsible employers—I understand that they made several billion pounds in profit in the past year, so they are not doing so badly—should appreciate that labour costs in Europe are far higher in the round, as the CBI unreservedly accepts, even after the increase in national insurance. They should also accept that our drive is to invest in the health service to ensure that people who are off work sick or waiting for operations can return to work and play a productive part in the work force. People benefit from the relief of pain—not a moment too soon—and employers also benefit from getting workers back to work more quickly, so it is only fair that both should pay.

I declare an interest as chairman of Solihull Business Enterprise. I invite the Minister to agree that, if in doubt, one of the most benign things that the Government can do to small businesses is to leave them alone.

I could not agree more—except some small businesses ask me for considerable help.