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The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): This has been an interesting and wide-ranging debate--the fourth on small businesses since we were elected. We have heard some excellent speeches this evening. My hon. Friend the Member for Ochil (Mr. O'Neill) rightly referred to the importance to small businesses of a favourable economic environment--the environment that we have created.
My hon. Friend the Member for Crosby (Mrs. Curtis- Thomas), in a most thoughtful analysis, spelled out how inadequate were the compliance cost assessments from the previous Government and how important it is to enact new regulatory reform legislation to strip out some of the old and unnecessary red tape.
My hon. Friend the Member for North-West Norfolk (Dr. Turner) made the important point that we need to promote economic reform in the European Union to create a climate that is favourable for the entrepreneur and for small businesses. I am happy to reassure him that we have indeed placed that issue on the agenda for the forthcoming Lisbon summit.
My hon. Friend the Member for St. Albans (Mr. Pollard), in a most effective job application, stressed again the need for small businesses, in particular, to have a stable macro-economic climate.
The hon. Member for Rutland and Melton (Mr. Duncan) and several other Conservative Members raised specific issues concerning regulation. The hon. Gentleman spoke about IR35, which we have debated extensively in the Chamber and elsewhere. He may not think that there is a tax loophole, but I suggest that he reads at least one of the computing journals which notoriously advised information technology contractors last year to pay themselves a salary of no more than just over £4,000 a year and to draw all the rest of their very substantial fees by way of dividends, thus ensuring that they paid neither income tax nor national insurance contributions.
The IR35 reforms are about a fair tax system that treats employees and the self-employed fairly. The Inland Revenue is working very closely with industry to ensure that there is proper understanding of the self-employment rules. IR35 will have no effect whatever on those who are indeed self-employed, and it will not prohibit in any way the use of personal service companies, but it will remove a tax loophole that clearly distorts the choice between employment and self-employment and leaves employees on modest salaries paying more national insurance contributions than those who are using personal service companies to avoid fair tax responsibilities.
Several Conservative Members spoke about the working families tax credit. Perhaps I can remind them that even in the worst-case scenario--that of a small employer with an employee entitled to the credit, who is doing his own payroll with a manual system--the additional compliance work amounts to about six minutes a week at a cost of about 70p: not, I think, an excessive burden on any small business, especially when the credit is a central part of our strategy to ensure that work pays and to help people to move from dependence on benefits to independence as they earn a living for themselves and their families.
The hon. Member for Mid-Dorset and North Poole (Mr. Fraser) repeated the accusation that we have failed to explain to people claiming the working families tax
credit that they have a choice about how it is paid. That is simply not true. The application form makes it quite clear that before an application is made people need to consider who is to receive the payment: the person at work or a partner at home.
We start from a simple principle: wealth is created not by Government but by business. Our responsibility is to create the conditions in which business can succeed. One might not have thought so to listen to Conservative Members' whingeing, but British businesses are indeed succeeding.
As my right hon. Friend the Secretary of State said, more than 1 million new businesses have started since the general election. More businesses registered for VAT than in the previous five years. We have seen fewer businesses closing than at any time in the past 10 years. Since the Government were elected, we have had 700,000 more people in work than ever before. More people are now in work than ever were under the Conservative Government, most of them in small and medium-sized businesses.
Mr. Geoffrey Clifton-Brown (Cotswold):
While the Minister is crowing about how many new businesses have started up, could she tell us what are the costs of the new burdens that the Government have imposed on those businesses?
Ms Hewitt:
As my right hon. Friend the Secretary of State explained with great care, most of the figures that are bandied around by Opposition Members, and, I am afraid to say, most recently by the British Chambers of Commerce, simply ignore the changes that we have made to the administrative costs--real red tape and compliance costs. They complain about the costs of paying employees fair wages and ensuring that they have paid holidays for the first time.
Most businesses welcome the fact that at last they have a Government who have set fair standards for all employees. Every good business knows that if it wants to get the best people--and it is having good people that every business depends on for its success--it has to treat them properly. Good businesses do not want to go on being undercut by cowboy businesses that exploit their employees and very often break other regulations as well.
Mr. Ian Bruce:
The Minister will know that the British Chambers of Commerce has estimated that every small business has had £5,000 added to its costs by regulations imposed by the Government. Does she agree with that figure and, if not, will she give us the real figure?
Ms Hewitt:
As I have pointed out on other occasions in the Chamber, the British Chambers of Commerce made the unfortunate mistake of taking early estimates of compliance costs before they were changed as we simplified the administrative procedures. I can give the hon. Gentleman an example. We amended the draft national minimum wage regulations to reduce the record-keeping requirements. We did that after listening to businesses and learning from them. By doing that, we reduced the costs to employers by more than £100 million a year. We amended the working time regulations, again to reduce record-keeping requirements, which cut compliance costs by approximately £13 million.
It was also this Government who acted on an important recommendation from the previous Government's deregulation taskforce back in 1995 to merge the Inland
Revenue and the Contributions Agency, so that employers no longer had to deal with two different agencies and report to two different Departments. That was a recommendation that the previous Government had, but never acted upon. [Interruption.] The fact is that businesses in this country--[Interruption.] As some Opposition Members know, I have been speaking in several debates elsewhere this evening, and I apologise for the fact that I seem almost completely to have lost my voice. Happily, I have not lost my conviction. Businesses in this country are doing exceptionally well, in striking contrast to the bankruptcies that took place under the Conservative Government.
Question put, That the original words stand part of the Question:--
The House divided: Ayes 159, Noes 309.
Tellers for the Ayes:
Tellers for the Noes:
Question accordingly negatived.
AYES
Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Baker, Norman
Baldry, Tony
Ballard, Jackie
Beggs, Roy
Beith, Rt Hon A J
Bell, Martin (Tatton)
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia
Brady, Graham
Brake, Tom
Brazier, Julian
Breed, Colin
Brooke, Rt Hon Peter
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Burnett, John
Burns, Simon
Butterfill, John
Campbell, Rt Hon Menzies
(NE Fife)
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Chope, Christopher
Clappison, James
Clarke, Rt Hon Kenneth
(Rushcliffe)
Collins, Tim
Cormack, Sir Patrick
Cotter, Brian
Cran, James
Davey, Edward (Kingston)
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Day, Stephen
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Evans, Nigel
Faber, David
Fabricant, Michael
Fallon, Michael
Fearn, Ronnie
Forth, Rt Hon Eric
Foster, Don (Bath)
Fox, Dr Liam
Fraser, Christopher
Gale, Roger
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gill, Christopher
Gray, James
Green, Damian
Greenway, John
Grieve, Dominic
Gummer, Rt Hon John
Hague, Rt Hon William
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hancock, Mike
Hawkins, Nick
Hayes, John
Heald, Oliver
Heath, David (Somerton & Frome)
Heathcoat-Amory, Rt Hon David
Hogg, Rt Hon Douglas
Horam, John
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jackson, Robert (Wantage)
Jenkin, Bernard
Key, Robert
King, Rt Hon Tom (Bridgwater)
Kirkbride, Miss Julie
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lansley, Andrew
Leigh, Edward
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lidington, David
Lilley, Rt Hon Peter
Lloyd, Rt Hon Sir Peter (Fareham)
Loughton, Tim
Luff, Peter
Lyell, Rt Hon Sir Nicholas
MacGregor, Rt Hon John
McIntosh, Miss Anne
MacKay, Rt Hon Andrew
McLoughlin, Patrick
Malins, Humfrey
Maples, John
Mates, Michael
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa
Michie, Mrs Ray (Argyll & Bute)
Moore, Michael
Nicholls, Patrick
Norman, Archie
O'Brien, Stephen (Eddisbury)
Öpik, Lembit
Ottaway, Richard
Paice, James
Paterson, Owen
Pickles, Eric
Prior, David
Randall, John
Redwood, Rt Hon John
Rendel, David
Robathan, Andrew
Robertson, Laurence
Roe, Mrs Marion (Broxbourne)
Ruffley, David
Russell, Bob (Colchester)
St Aubyn, Nick
Sanders, Adrian
Sayeed, Jonathan
Shepherd, Richard
Smith, Sir Robert (W Ab'd'ns)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spring, Richard
Stanley, Rt Hon Sir John
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, John M (Solihull)
Taylor, Sir Teddy
Townend, John
Trend, Michael
Tyler, Paul
Tyrie, Andrew
Viggers, Peter
Walter, Robert
Waterson, Nigel
Webb, Steve
Wells, Bowen
Whitney, Sir Raymond
Whittingdale, John
Widdecombe, Rt Hon Miss Ann
Wilkinson, John
Willis, Phil
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Young, Rt Hon Sir George
Mr. Keith Simpson and
Mr. Geoffrey Clifton-Brown.
NOES
Ainger, Nick
Alexander, Douglas
Allen, Graham
Armstrong, Rt Hon Ms Hilary
Ashton, Joe
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Barnes, Harry
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, Rt Hon Mrs Margaret
Begg, Miss Anne
Benn, Hilary (Leeds C)
Benn, Rt Hon Tony (Chesterfield)
Bennett, Andrew F
Benton, Joe
Bermingham, Gerald
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Blunkett, Rt Hon David
Boateng, Rt Hon Paul
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brinton, Mrs Helen
Brown, Rt Hon Nick (Newcastle E)
Brown, Russell (Dumfries)
Browne, Desmond
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Butler, Mrs Christine
Byers, Rt Hon Stephen
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale
Cann, Jamie
Caplin, Ivor
Casale, Roger
Cawsey, Ian
Chapman, Ben (Wirral S)
Chaytor, David
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coffey, Ms Ann
Cohen, Harry
Colman, Tony
Connarty, Michael
Cooper, Yvette
Corbett, Robin
Corbyn, Jeremy
Corston, Jean
Cousins, Jim
Cranston, Ross
Crausby, David
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Jim (Cov'try S)
Curtis-Thomas, Mrs Claire
Darvill, Keith
Davey, Valerie (Bristol W)
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davis, Rt Hon Terry
(B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Dobbin, Jim
Doran, Frank
Dowd, Jim
Drew, David
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Field, Rt Hon Frank
Fisher, Mark
Fitzsimons, Lorna
Flint, Caroline
Flynn, Paul
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Foulkes, George
Fyfe, Maria
Galloway, George
Gardiner, Barry
George, Bruce (Walsall S)
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Mrs Linda
Godsiff, Roger
Goggins, Paul
Golding, Mrs Llin
Gordon, Mrs Eileen
Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grocott, Bruce
Grogan, John
Gunnell, John
Hain, Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, Rt Hon Ms Harriet
Heal, Mrs Sylvia
Healey, John
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Hewitt, Ms Patricia
Hill, Keith
Hinchliffe, David
Hoey, Kate
Hood, Jimmy
Hope, Phil
Hopkins, Kelvin
Howells, Dr Kim
Hoyle, Lindsay
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Iddon, Dr Brian
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Rt Hon Barry (Alyn)
Jones, Helen (Warrington N)
Jones, Ieuan Wyn (Ynys Mon)
Jones, Ms Jenny
(Wolverh'ton SW)
Jones, Dr Lynne (Selly Oak)
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Kemp, Fraser
Khabra, Piara S
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kumar, Dr Ashok
Ladyman, Dr Stephen
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Liddell, Rt Hon Mrs Helen
Linton, Martin
Lloyd, Tony (Manchester C)
Love, Andrew
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McCartney, Rt Hon Ian
(Makerfield)
McDonagh, Siobhain
Macdonald, Calum
McDonnell, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
McNamara, Kevin
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mahon, Mrs Alice
Mallaber, Judy
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Maxton, John
Meacher, Rt Hon Michael
Meale, Alan
Merron, Gillian
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin
Moffatt, Laura
Moonie, Dr Lewis
Morley, Elliot
Morris, Rt Hon Sir John (Aberavon)
Mountford, Kali
Mullin, Chris
Murphy, Denis (Wansbeck)
Murphy, Rt Hon Paul (Torfaen)
Naysmith, Dr Doug
O'Brien, Mike (N Warks)
O'Hara, Eddie
Olner, Bill
O'Neill, Martin
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Perham, Ms Linda
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pollard, Kerry
Pond, Chris
Pope, Greg
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prescott, Rt Hon John
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quinn, Lawrie
Radice, Rt Hon Giles
Rapson, Syd
Raynsford, Nick
Reed, Andrew (Loughborough)
Reid, Rt Hon Dr John (Hamilton N)
Robinson, Geoffrey (Cov'try NW)
Roche, Mrs Barbara
Rooker, Rt Hon Jeff
Rooney, Terry
Ross, Ernie (Dundee W)
Ruddock, Joan
Russell, Ms Christine (Chester)
Ryan, Ms Joan
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Sheerman, Barry
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)
Smith, Jacqui (Redditch)
Smith, Llew (Blaenau Gwent)
Snape, Peter
Soley, Clive
Southworth, Ms Helen
Spellar, John
Squire, Ms Rachel
Steinberg, Gerry
Stevenson, George
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Taylor, Rt Hon Mrs Ann
(Dewsbury)
Taylor, David (NW Leics)
Temple-Morris, Peter
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Thomas, Simon (Ceredigion)
Timms, Stephen
Todd, Mark
Touhig, Don
Trickett, Jon
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tynan, Bill
Vis, Dr Rudi
Ward, Ms Claire
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Rt Hon Alan
(Swansea W)
Williams, Alan W (E Carmarthen)
Wills, Michael
Wilson, Brian
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wise, Audrey
Woodward, Shaun
Woolas, Phil
Worthington, Tony
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Wyatt, Derek
Mr. Gerry Sutcliffe and
Mr. Robert Ainsworth.
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