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Topical Questions

Volume 487: debated on Thursday 5 February 2009

My Department is focused on helping business through the current economic downturn and ensuring that British business is in the best place possible to take advantage of the upturn, when eventually it comes.

A small business in Borough high street in Southwark, which has been trading for 12 years, making a profit and paying all its bills, was recently 12 days late in paying its tax and liabilities. It paid them on 30 and 31 December rather than 19 December. On 31 December, it received a letter from Her Majesty’s Revenue and Customs stating:

“Your case will be referred for enforcement action…if payment is not made immediately.”

Will Ministers talk to their colleagues in the Treasury and the Revenue to ensure that they are understanding of the difficulties when payments in make payments out a bit more difficult?

I am happy to ask HMRC to consider the case that the hon. Gentleman raises. As the Chancellor announced in the pre-Budget report, businesses have the capacity to ask for more time to pay tax during the current period, and some 30,000 businesses have taken advantage of that capacity in recent months. Her Majesty’s Revenue and Customs is aware of the problem and understands the difficulties of business in the current period.

T2. The Minister will be aware that many north-east Members of Parliament are concerned about Nissan and the car industry in general. What is the Department doing to support and encourage Nissan to develop a new generation of cars, which are low energy and low-carbon emitting? (254329)

I thank my hon. Friend for that question. Nissan is an important part of the north-east regional economy, with one of the most efficient plants in the whole of western Europe. Like other car companies, Nissan is going through major problems because of the current lack of demand for cars.

My hon. Friend is right to highlight the importance of the future. Nissan is interested in producing a new generation of electric vehicles and we have been in direct discussions with the company about that. We would like the vehicles to be made in the north-east and we will continue to have dialogue with Nissan about the matter.

T4. Will the Minister confirm whether the Department or Royal Mail have entered into any discussions with a private equity firm about the possible sale of a stake in Royal Mail? (254331)

The process for people expressing an interest in Royal Mail is open and we have not reached any conclusion so far on the prospective partner. We believe that it is in the interests of Royal Mail to partner with an experienced network or postal partner that has gone through the experience of change in a network operation of the sort that Royal Mail runs.

As the theme of these questions has been a series of pronouncements and commitments given by the Government and questions about dithering and failure to deliver, was the Minister surprised to hear the Chancellor of the Exchequer, when giving evidence on Tuesday to the House of Lords, openly debating what form his latest big announcement might take, and whether the Government were switching from insurance of toxic debts in the banks’ balance sheets to a possible bad bank solution? As it is widely known that Baroness Vadera, a colleague in the Minister’s Department, is mainly in charge of the banking packages, will he get across to her the need for urgency, efficiency and some competence in delivery, and stress to her that British business cannot afford further delay and uncertainty before credit is got flowing properly again to businesses of all sizes?

We fully understand the depth of the current crisis, which is why we have been active, first on recapitalising the banks and then on taking a greater share of risk in lending. The whole world is going through the downturn and Governments have to act to try to restore confidence and lending. That is precisely what we are doing.

I have to contrast our actions with the Conservative party’s approach. In the words of Professor Paul Krugman, the Nobel prize winner:

“It’s pure Herbert Hoover… In fact, it reminds me of Andrew Mellon”—

Hoover’s Secretary of the Treasury,

“who said the”

Government

“response to the Depression should be to ‘liquidate labor, liquidate stocks, and liquidate farmers’.”

That is what the Nobel prize-winning economist thinks of the Conservative party’s approach. Ours is much more in tune with the task in hand.

T3. Few of my constituents get an annual bonus and many face pay cuts in the downturn. Given that, will the Minister take a leaf out of Barack Obama’s book and put a cap on the pay and bonuses of people who have run down our banks, which my constituents’ taxes are subsidising? (254330)

I understand the question that my hon. Friend raises. Given the economic circumstances, banks must realise that there are huge public sensitivities about the issue. The public expect restraint. They also expect that if any bonuses are to be paid, they should be paid on the basis of achievement, not past failures.

T5. If the Minister is keen to reassure British workers about their jobs, particularly those in major infrastructure projects, will he publish a list of British companies, and in particular British construction companies, that are undertaking important infrastructure and other projects in other European countries? That information might well reassure some British workers. Will he publish such a list, and if so, the sooner the better? (254332)

Perhaps I can encourage the hon. Gentleman. British Ministers have taken construction companies on a series of international trade missions, helping them to win contracts abroad, not just in European countries, but in Asian countries, Gulf countries and so on. The details of those visits are public—questions have been asked about them—and some of the contracts that have been signed are public as a result. We will continue to work with the construction industry. Indeed, my hon. Friend the Under-Secretary of State has already met the construction industry and he will continue to do so.

T8. The recent interim “Digital Britain” report went on about access being very important, but provision is the important part. Does my hon. Friend agree that social tariffs would be one way of including those who are least well off, who have the lowest uptake, such as the people of Glasgow? If the Government go down the social tariff route, will they also talk to the mobile phone companies, which we also need to get on board? (254335)

I am sure that my noble Friend Lord Carter will listen carefully to my hon. Friend, who raises an important point in general. As we go through this downturn, we must also look to the industries of the future. The communications revolution and good broadband access throughout the country are critical to our country’s economic future. That is why they are such a high priority for the Government.

T6. Are Ministers content with the operation of the Enterprise Act 2002, particularly in respect of pre-pack companies, which can take over companies that have gone into administration, but which often walk away from the obligations to local traders, the work force and even the Revenue? Does that seem a fair way of operating companies? (254333)

It is important to recognise that there has been some recent public concern about the use of pre-pack administrations. We will always keep Government policy under review, and that includes the Enterprise Act 2002. Issues have arisen with some pre-packs, but there are also some advantages to pre-packs in terms of maintaining employment. I understand the comments that the hon. Gentleman makes and we will look at the matter closely.

T7. Further to the question that my hon. Friend the Member for Somerton and Frome (Mr. Heath) asked, will the Minister, in keeping the matter under review, also consider looking at the regulations that govern administration, so that where companies go into receivership, the administrators can ensure that they safeguard the interests of local creditors, which are often struggling small businesses themselves, and the loyal employees of those companies? (254334)

It is the job of administrators to act in the best interests of creditors. It is also the job of the administrator to ensure that where a company can continue as a going concern, it does so. There are some lessons we might want to learn that have arisen from recent administrations. Sometimes the communication between the administrator and trade unions that have approved negotiating rights with companies has not been satisfactory. There have also been some suggestions that in some administrations there has been a rush to move towards liquidation without allowing sufficient time to explore other options. Again, that is something that we are actively looking at.