We heard today that our economy continues to grow and we know that there is currently the greatest number of businesses in the UK on record—around 400,000 more than at the general election. We have supported that by reversing the previous Government’s increase in the small companies tax, undoing their jobs tax, cutting red tape, freezing fuel duty, taking the smallest firms out of business rates and helping the high street, and in a few months’ time, we will have our employment allowance, a £2,000 cashback on jobs, which will take almost half a million small firms out of employer national insurance altogether. Unlike others, we are unabashedly pro-business.
Small businesses recognise the supportive economic framework that the Chancellor has set out, such as reductions in corporation tax, national insurance and business rates, among many others, by recruiting more people than ever before. Will the Chancellor reassure me that he will not follow any advice from the shadow Chancellor, who called for a plan B and predicted a double and even a triple-dip recession?
There is no danger of that. In the last few days, even the Labour Ministers who served with the shadow Chancellor are not prepared to follow his advice. The important point here is that we have supported a private sector recovery, small businesses are absolutely at the centre of that, and the Prime Minister yesterday, at the Federation of Small Businesses, reinforced the point that we are there to do more to help small businesses and we encourage them to come forward with ideas for the Budget.
Town centre businesses in Alton, Bordon and Petersfield will welcome the Government’s package of help for high streets. As many young people rely on local shops and cafés for their first job, will my right hon. Friend update the House on what he is doing to make it easier to employ those young people and give them the key skills that they need to get on in life?
This year, there is the help for the high street and the £1,000 support for business rates for our high street shops, cafés and pubs. We are also introducing the employment allowance, which will take many small businesses out of employer national insurance altogether. Next year, we have the removal of the jobs tax altogether when someone under the age of 21 is employed. That is what we are doing to help the many businesses that my hon. Friend so ably represents in Parliament.
There have been 3,000 new business start-ups in my borough of Dudley since 2010, many of which will benefit from increased research and development tax allowances, the national insurance rebate and the business rates cap. Does my right hon. Friend agree that while the fiscal measures he has introduced make a vital difference, the 2.8% growth in the economy announced today is sure-fire proof that his economic plan is working and that those small and medium-sized enterprises are now on a far better growth trajectory as a result?
I am delighted to hear about the success of businesses in the Dudley borough area and in my hon. Friend’s constituency. The Government made a choice that we were going to back a private sector recovery and that, in a time of limited resources, we would put our efforts into helping small businesses grow by cutting their business and employment taxes. That is what we have done, and we are beginning to see the fruits in the growth of jobs in the west midlands and across the whole country.
In the past 20 months, unemployment in my constituency of Harrogate and Knaresborough has halved. It is now has one of the lowest levels of unemployment in the country, particularly for young people. Much of that growth has come from our strong small business sector. What assessment has my right hon. Friend made of the impact that the employment allowance will have on improving the situation further, and does he agree that the anti-business rhetoric and measures proposed by some would destroy that progress?
The employment allowance will help many small firms that want to invest or take on a new member of staff. I saw that for myself when I visited a small business in Enfield that, as a result of the employment allowance, will take on an extra member of staff. That is the support we can give. It is up to those in this House who promote anti-business rhetoric to get up and explain how that could possibly help our economy. The truth is that by being anti-business, they are anti-recovery, anti-jobs, anti-investment and anti-the British people.
The latest figures show that net lending by banks to businesses has dropped by nearly £56 billion since 2010. The Chancellor is on record as supporting lending to small businesses, so what action is he taking to address the problem?
Credit conditions for small businesses have been one of the huge challenges since the banking crash. The better news is that conditions are starting to ease, as the most recent surveys show, but I am the first to say that the job is not done. That is why we are shifting the focus of the funding for lending scheme with the Bank of England onto small business lending and why we have introduced the British business bank, which did not exist before. We are doing all those things to support credit, including for small businesses.
The British business bank is lending to intermediaries that support non-bank lending to small firms. [Hon. Members: “How many?”] There was no British business bank before. The only bank that the Opposition helped to take into public ownership was the Royal Bank of Scotland, because they completely failed to regulate it.
One of the ways that the Treasury can help small businesses is by giving them a better chance of winning Government contracts. What is the Chancellor doing to use his Department’s clout across Whitehall to ensure that those contracts are not just snaffled up by the big guys?
That is a huge challenge for any Government and any bureaucracy, but I am pleased to report that under this Government, because we have focused all Departments on trying to increase their procurement from small firms, that has gone up from around 10% to around 20% of Government procurement. That is a big step forward, but I am the first to say that the job is not done. We want more procurement from small firms, not least because they are often the most innovative and entrepreneurial in the country.
Business rates are one of the biggest concerns for employers, yet they are still going up and up under this complacent Chancellor. The autumn statement saw some relief for retailers, but will the Government commit to giving genuine support to all small and medium-sized enterprises, which are the lifeblood of our economy, by matching our pledge to cut and freeze business rates for all small firms—not just those in retail, but manufacturers, high-tech firms and other job creators too?
Business rates rocketed under the last Government. First, we have taken about 400,000 of the smallest businesses out of business rates altogether, a scheme that the Labour Government wanted to bring to an end. Secondly, we have capped the increase at 2%, so we have protected businesses from inflation. Thirdly, we have chosen to provide particular support to our high street stores, and I am very disappointed that the hon. Lady does not support that. It is interesting that another of the Labour spokespeople has got to their feet, but not one of them has yet—20 minutes into Treasury questions—welcomed the good economic news today.
Is my right hon. Friend aware of changes in the VAT export rules that are causing concern among auctioneers, damaging EU trade and putting them at a competitive disadvantage? Will he look into this, and try to ensure that Her Majesty’s Revenue and Customs makes the system manageable?
There is evidence that Ulster bank deliberately bankrupted some viable businesses to make more profit, according to one of the Government’s key advisers, Lawrence Tomlinson. What is the Chancellor going to do about this to protect the small businesses affected by Ulster bank and by RBS?
The revelations by Tomlinson shocked everyone, and the business practices of RBS, including Ulster bank, are now under the microscope. Of course, these revelations would not have come to light if we had not asked Tomlinson to do his work and had not published the Tomlinson report.
We are particularly aware of the challenge in Northern Ireland, with the weakness of the Northern Ireland banking system—affected by what has happened in the Republic and the fact that RBS is such an important player through Ulster bank—and we are in constant discussion with the Northern Ireland authorities. I know that my hon. Friend the Financial Secretary is talking to the Northern Ireland Executive about precisely what we can do to help to protect the Northern Ireland economy, as RBS implements its bad bank plan.
The Prime Minister said yesterday:
“I am a tax-cutting Tory”.
So am I. Does the Chancellor agree that, when resources allow, cuts in tax are the best possible tonic that the Government can provide to small businesses? Does he further agree that the best spur to incentives for small businesses is to cut the marginal rates of corporation and personal tax as soon as he can?
I am a low-tax Conservative as well, and I hope that I am in good company on the Government side of the House. We have made reductions in tax. The small companies tax rate was due to go up to 22% under the Budget plans voted on by the Labour party, but we have reversed that and reduced it to 20%. We are now of course bringing the main headline rate of corporation tax down to 20% as well, and getting rid of the complicated taper. That is all further evidence to support the ambition of reducing marginal tax rates for businesses.
Could the Chancellor and I make a deal that I will start to welcome any measure of improvement in the economy if he stops blaming the whole economic world meltdown on the previous Labour Government?
On small businesses, many people find crowdfunding and crowdsourcing a real way to start businesses and get the finance to do it; women, in particular, are coming through that route. Will he meet an all-party group of MPs to talk about the proposed regulation of crowdfunding so that we do not strangle a rather nice baby at birth?
I am glad that the hon. Gentleman welcomes the better news. Indeed, I think that unemployment in his constituency has fallen by 20%, which is further good news. It is the first time in years that I have heard him try to defend the record of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): since he is not here, the hon. Gentleman has to do it for him.
The point that the hon. Gentleman makes about crowdsourcing is a serious one. We are looking at this new market and at what, if anything, the Government should do to support it. It is of course growing without Government support, but we are actively looking at it, and I would very happily consider any positive suggestions he has on what more we can do to support crowdfunding.