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As for striking off a company by the registrar, I note that the proposal in clause 91 is to reduce the notice period from six months to as little as two months. Given that that will give creditors less time to make their objections, will the Minister please explain his thinking here? On the clause 73 proposal to abolish bearer shares, the notes say that only 900 companies using them are still trading, but getting rid of them will be inconvenient and a cost to business. Why can we not make these proposals retrospective? I also note that British companies that trade their shares in the US financial markets use American depository receipts, which are presumably bearer stocks. Will those also be excluded? Could the Minister please explain?

Madam Deputy Speaker (Dame Dawn Primarolo): Order. I am sorry but there is huge pressure on time and the time limit may have to go down. I call Mr Adrian Bailey.

4.25 pm

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Thank you, Madam Deputy Speaker. The Secretary of State described his 50-minute speech as “Castroesque”, whereas I shall describe my five-minute speech as highly castrated. But, in the limited time available, I wish to concentrate on an issue that has long exercised the Select Committee on Business, Innovation and Skills and its predecessors: pub companies and their regulation. Let me say to the Minister that although I may appear critical, I recognise that, having wavered and gone down the voluntary route, he has tried to rescue this and put regulation on the statute book. That has long been the position of the Committee, but grave flaws remain with the proposals before us.

The Shadow Minister outlined the problems of low incomes among tenants and mentioned the attrition rate of 28 pubs being closed every week. Our basic model of tenant and pub company is not viable and is in long-term decline. Worse still, the low incomes of tenants mean that many have to resort to state benefits to prop up their income. Under the current model, the pub companies take substantial profits from an unfair relationship with the tenants; the number of pubs is declining, with a consequent impact on the community; and many pubs that do survive have tenants on low incomes, which generates personal problems and the taxpayer liability. So that issue needs to be addressed.

Having the statutory code and adjudicator, which the Government are supporting, is a step forward, but it does not address the issue of the free-of-tie option. The Minister said that the Government were not going to introduce that because of the potential impact on the pub industry. It is difficult to see how, in the long term, we are going to affect the balance of risk and reward between the pub companies and the tenants without introducing a mechanism that will strengthen the hand of the pub tenants. The proposals for parallel rent assessments, which would enable the tenant, in certain circumstances, to apply to have a rent assessment, suffer from a number of difficulties, not least that it has to be after a five-year review or after protracted negotiations have failed. In some cases, they can last two or three years and drive the tenant into bankruptcy long before they reach the assessment point. It is difficult to say how such a time-consuming and complex procedure

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can substantially alter this balance of risk and reward. Indeed, under the existing system there is a voluntary arrangement whereby tenants can go to an adjudicator and, although that has addressed certain problems, it certainly has not changed the overall balance of risk and reward in the industry.

The argument against that is that pub companies will abandon their tied tenants and become real estate investment trusts and that others may step in and try to reproduce the model to the detriment of the existing variety of agreements and range of beers. That is a hollow threat, because under real estate investment trust legislation, 95% of rental income must go to shareholders, which would render that impossible for pub companies, and 75% of income must come from rents, which would also be a barrier. Therefore, the threat of an alternative model is hollow.

Greg Mulholland (Leeds North West) (LD): I pay tribute to the hon. Gentleman’s work and the fantastic work of the Select Committee on Business, Innovation and Skills over the years, including the four crucial reports that have finally led us to legislation. Does he share my bewilderment that the Government did not listen properly to the Business, Innovation and Skills Committee and have not introduced the market-rent-only option that he proposed? A clear two thirds—67%—of all respondents to the Government’s consultation said that it was the right way to deal with the problem.

Mr Bailey: I thank the hon. Gentleman for his intervention and pay tribute to his contribution to the ongoing political pressure. I do find it mystifying; at the end of the day, the Government have fudged the issue and have bought some of the pub companies’ arguments. They are being more protective of pub companies than of tenants, which is to the potential detriment of the industry.

The free-of-tie option would lead to considerable changes in the industry, but such changes would be difficult to quantify. The survey by the Federation of Small Businesses found that 75% of tied tenants would take on more staff and increase staff hours, 78% would increase investment, 73% would invest in modernisation and 91% would deal with microbreweries. It therefore seems that the alternative model has the potential to strengthen the industry while the present proposals will only lock it into a long-term, terminal decline.

4.32 pm

Stephen Mosley (City of Chester) (Con): As someone who ran a small business before being elected to Parliament and who is a director of two others, I know that small businesses are the lifeblood of our economy. They account for 99% of all businesses in the UK. They employ over 15 million people and account for half of our GDP. Small businesses play such an important role that if each small business took on just one new employee, we would eliminate unemployment overnight. As our economy moves forwards, grows and evolves, so do small businesses.

In my constituency of Chester, we have recently seen a record number of small businesses starting up—an increase of over 300% over the past two or three years. It is not just in Chester that records are being broken;

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record numbers of new businesses are being created across the country. We want that to continue and the Bill is all about encouraging and allowing that to happen. The Bill will make it easier than ever before to set up a new business, streamlining the process, cutting down on the paperwork required and unleashing ever greater entrepreneurial spirit and an ever greater number of new small businesses. Such businesses have great potential.

Last year, I was delighted to organise and run Chester’s first ever small business awards, which allowed local customers to nominate and vote for their favourite local shops. Local people recognise the difference that such businesses make.

Mark Tami (Alyn and Deeside) (Lab): I am sure that small businesses tell the hon. Gentleman, as they do me, that one of the biggest barriers to growing, expanding and taking on more people is that the banks—regardless of what they tell us—are still reluctant to lend businesses money or constantly change the arrangements placed on them.

Stephen Mosley: I agree and a big section of my speech dealt with that, but as time is very limited I think I might move on and stick to what I want to say, highlighting some of the businesses in Chester that are doing exceedingly well.

In my small business awards, more than 1,000 people nominated more than 150 different businesses, such as G and M Goold funeral directors in Vicars Cross and Monogram dry-cleaners in Newton, which were winners of the awards. Next year we hope to have even more people nominate small businesses and even more people entering and backing those local businesses.

As well as receiving support from the public, more and more small businesses are accessing Government help, advice and funding. Last year, I ran a small business fair in my constituency and I know that small businesses benefit from the advice and funding that is available. More than 100 small businesses and entrepreneurs attended the small business fair at the university of Chester’s Riverside innovation centre. The feedback we received was fantastic. By bringing together the private sector, public sector and third sector bodies we can give these businesses the boost they need.

One scheme that I have been particularly impressed by is the new enterprise allowance. In Chester, more than 100 people have taken advantage of the scheme to set up their own small business. They are not just statistics. They are people like Lois Lee of Kitsch Krafts who, after finding herself unemployed, was determined to get off welfare and back into work. Today, Lois is running a successful, popular and expanding craft boutique. A year after she first set up in a corner of Saltney post office, I was delighted to be able officially to open her new larger premises on Chester street in Saltney. It is another great small business success story, and Kitsch Krafts is not alone. Oil Monster, which started in my constituency, recently received a best start-up business award. It too is growing and that benefits everyone. Indeed, the company has recently taken on three new apprentices, helping young people into work and teaching them vital skills for the future.

As the economy improves and as Bills such as this give more and more support to our small businesses, more and more people will have confidence in our

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long-term economic plan and will want to set up and expand their own small businesses. That is fantastic news, and the Bill shows that the Government welcome that and that we are not complacent. We want to see even more small businesses start up, we want to see more and more jobs and we want to see more and more apprenticeships and training schemes. The measures in the Bill will make it easier than ever to start up a business and for a small business to expand. It will reduce the burden of bureaucracy and red tape on our businesses, allowing them to concentrate on growth and innovation. It will help to ensure that Britain is the best place in the world to start and grow a business.

4.37 pm

Bill Esterson (Sefton Central) (Lab): Many people in my constituency do not see a recovery in the economy and they are yet to experience the benefits of the recovery talked about by the Government. We have more than 15,000 people in work who earn less than a living wage. Many people in work up and down the country are using food banks and many others rely on extortionate payday loans just to survive and get through the month. For my constituents and many others, the reality is falling living standards and rising costs. The Bill contains some welcome measures, which could help address some of the reasons that many people, such as those on zero-hours contract and the minimum wage, are struggling to make ends meet, but I wonder whether they will go far enough.

Others Members have mentioned the care sector. I met the wonderful carers who looked after my mum at weekends before she died earlier this year, and they were paid for 10 hours out of the 25 they worked in a weekend shift. They were not paid for transport or given money for travel costs, but were paid just for the 15 minutes for which they were expected to be with somebody like my mum, who desperately needed their care. That is the scandal of low pay and it is a combination of zero-hours contracts and the minimum wage not being properly enforced. The effective pay rate is way below the minimum wage, let alone the living wage. We need to deal with that scandal in our society if we are to see rising prosperity for many people, not just in the care sector but elsewhere. We all benefit: it is good for the economy, good for businesses, which benefit from prosperity as people spend their money, and good for the taxpayer because there is less need to subsidise low pay from employers.

Like the hon. Member for City of Chester (Stephen Mosley), I used to run a small business and I enthusiastically encourage people to shop locally to support the businesses in my constituency. The hon. Gentleman claimed that it is easy to start up a business, but the rules that the DWP enforce make it difficult at times. The requirements on monthly reporting go way beyond what any established business has to do and create difficulties for new businesses. It is about time that BIS worked more closely with DWP to make it a lot easier for people to start and to grow their small businesses.

As my hon. Friend the Member for Alyn and Deeside (Mark Tami) said, it is getting harder, not easier, for people starting or running a small business to borrow money. That is the case not just for start-ups, but for existing businesses that want to buy equipment or expand. That is where the growth comes from that creates the

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jobs that the hon. Member for City of Chester rightly said will come from the small business sector—4.7 million businesses employ fewer than 10 people. There is significant upside in the opportunity for jobs to come from small businesses.

Late payment is the No. 1 issue cited by the Federation of Small Businesses from a survey of its members, as we have heard. The unequal relationship between large and small business needs attention as we debate the Bill further. Small businesses should not be afraid to take on their large business partners for fear of loss of future business, but that situation is all too common at present.

On borrowing, we need better signposting so that small businesses know where to go if the banks will not lend. I hope the measures on credit scoring that we heard about earlier will help, as few small businesses are aware of the alternatives. On Merseyside we have the Merseyside special investment fund and in the north-west we have the Cumberland building society, which offers a full range of banking services. Those are two examples that I have come across which show that there are good lenders out there, and there is hope. We can learn a lot from them, which is why I hope Labour’s proposals for a proper system of regional banks will come to fruition when we get into government next year. We will then be in a position to support small businesses and make sure that they can borrow the money they need to develop their business, ensure growth and create the jobs that we have been talking about.

4.42 pm

Greg Mulholland (Leeds North West) (LD): In the limited time available to me, I shall, as chair of the all-party save the pub group, restrict my comments to the pubs section of the Bill. That is not to say that there are not many excellent measures in the Bill, but I want to concentrate on those relating to pubs. I am sorry that the Secretary of State is no longer in his place, as I wanted to put on the record my thanks to him for listening, doing what was clearly needed and legislating to deal with the flawed and discredited business model that has done so much damage to the valued institution of the great British pub.

I have said very vocally that BIS and the Government got it badly wrong in 2011 when they decided to go down the self-regulatory route yet again, even though it had clearly failed, as was shown by the Select Committee. I give every credit to my right hon. Friend and to Ministers for looking at the issue again, listening, acknowledging that the problems were still there and in many cases getting worse, and finally acting. I pay tribute to my colleagues in the all-party group and to the Fair Deal for your Local campaign, which was formed in April last year, bringing together the Federation of Small Businesses, the Forum for Private Business, the Guild of Master Victuallers, the GMB, Fair Pint, the Pubs Advisory Service, Licensees Supporting Licensees, Justice for Licensees, the Campaign for Real Ale, and Licensees Unite, part of Unite the union, which represents more than 2 million members and many, many licensees up and down the country as a strong voice for the pub sector.

We in the campaign and the all-party save the pub group warmly welcome the fact that we will have legislation; that we will finally have a statutory code of practice. I

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and the two vice-chairs of the all-party group have written to the Secretary of State—which is a good job because I will not get the chance to outline my position in the limited time available now—to make clear the Bill’s flaws as we see them.

First, there is no apparent mechanism by which the Government will deliver their clear commitments to fair and lawful dealing and—crucially, to pubs in companies that have 500 pubs or more—to a tied licensee not being worse off than a free-of-tie licensee. It is not clear how the parallel rent assessment can do that or how the adjudicator would enforce that.

Secondly, it is a huge flaw that the enhanced code will apply to companies with 500 tied pubs. That makes no sense at all. This is about market share, as with the beer orders. As we have said clearly and consistently, it must apply to companies with 500 pubs or more of any kind, but within that it must apply only to leased and tenanted or franchised pubs, not tied pubs. That is crucial; otherwise, as we have seen, the large pub companies will simply put people on free-of-tie agreements, or so-called free-of-tie pricing, and put their rent through the roof, even further above market level. Clearly, that will take more money, and the problem will not be solved.

Toby Perkins (Chesterfield) (Lab): I add my congratulations to the hon. Gentleman on the work that he has done on this issue. Does he agree that in some ways what is proposed misses the mark, because not only does it expect too much of the small family brewers, for which we have such high regard, but it expects too little of the pub companies that many of us have considerable concerns about?

Greg Mulholland: The Fair Deal for your Local campaign clearly campaigned for a statutory code to include the all-important market rent only option—the Select Committee solution—for companies with 500 pubs or more. We did not envisage or call for a code for companies smaller than that. It is interesting that we have ended up here because the so-called British Beer and Pub Association, which is the mouthpiece for the pubcos, decided that it was a clever tactic to try to deflect any legislation by saying, “Oh no, we mustn’t have a two-tier system,” which has backfired terribly. Once again, the BBPA has badly let down the family brewers, who should seriously consider whether to continue to remain part of an organisation that lets them down and is increasingly discredited.

Caroline Nokes (Romsey and Southampton North) (Con) rose

Greg Mulholland: I give way to the vice-chair of the all-party save the pub group.

Caroline Nokes: Does my hon. Friend agree that some of the pessimism that we have heard about the market rent only option is unwarranted in the case of family brewers?

Greg Mulholland: Of course, the market rent only option would not apply to family brewers. They would be excluded even in the current proposals, because the

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enhanced code is only for companies with more pubs. But a lot of myths have been circulated and there is a lot of scaremongering. The all-party group has done a good job with other campaign groups in debunking that. We were told that free houses used to close in greater numbers than pubs—absolute nonsense, and we have proved that. We are now being told that somehow this would close breweries. That is complete and utter scaremongering. It is nonsense. Only 14% of Marston’s revenue is even from its tied estate. It makes huge amounts of money—I am glad to say—from selling its beer to supermarkets and to the free trade from its managed pubs. It is scaremongering without evidence, and the Government must deal with that. It is also why the Treasury must finally answer the freedom of information request and tell us what evidence it has been sent. There is no credible evidence to back up the claims of the BBPA and the big pub companies, which are simply trying to defend the indefensible and to prop up what has been a disastrous business model, which made a few people very rich and has destroyed pubs, and is continuing to make perfectly viable pubs close because of the huge debts they are paying.

In the limited time that I have I must challenge the Minister. This will be a conversation that will be had between now and Committee stage when it will be explored. As set out, the adjudicator will deal with breaches of the code, yet the fundamental problem is that the pub companies are taking too much in the form of excessive tie prices and inflated rents from pubs. How will the adjudicator deal with that? How will the parallel rent assessment deliver that? The adjudicator must have the power to impose a new, fair tied rent. That is the only way in which the Government will be able to deliver their commitment, but it is not clear that the adjudicator will have that power.

Also, I can see no specification of the level of fines. The only arrangement that would make any sense would be one that enabled the adjudicator to say, “Yes, you have been considerably overcharged for this period, and the fine will be set at a level that will allow the pub-owning company to pay you back the entire amount by which you were overcharged through unfairly tied prices and excessive rents.”

The Government have not explained why they have not adopted the simple solution. Their current plans will result in a huge work load for the adjudicator, but there is a simple solution. It was put forward by the Select Committee and backed by 10 organisations including the Federation of Small Businesses and the Forum of Private Business, and it is now time to look seriously at improving the situation with a market rent only option.

4.50 pm

Ms Margaret Ritchie (South Down) (SDLP): I welcome the general intention of the Bill to support small businesses, but I worry that it does not go far enough. In Northern Ireland, small businesses form the heart and the backbone of our local economy, and they have faced an extremely challenging economic environment over the past six years. I agree with those right hon. and hon. Members who have said that the unwillingness of banks to lend to individuals has resulted in many of those people’s businesses going to the wall. I recall hearing about conversations between a bank and a local farmer who lost his business, and between a bank and a local shop owner who sadly

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had to close his business. In both cases, this was a result of the banks’ unwillingness to show a level of mercy and compassion.

I hope that the measures in the Bill will go some way towards helping businesses to compete and grow and, in doing so, to create jobs. I know that the Federation of Small Businesses is encouraged by the measures to strengthen the prompt payment code and to force larger businesses to publish their payment terms. Today, however, I would like to take this opportunity to focus on another element of the legislation: the issue of zero-hours contracts contained in part 11 of the Bill.

The Bill at least acknowledges that the wide-scale use of zero-hours contracts can present a problem, but I fear that it will do little seriously to reform the practice. It is predominant in the lower-skilled sectors of the economy and in manual work, but just yesterday I heard reports of a university lecturer post being advertised on a zero-hours basis. The practice has become more and more common, and it represents a gradual erosion of the important connection—and the concept of a fair settlement—between an employer and an employee.

This is not some abstract problem on the fringes of the economy; it is becoming increasingly prevalent. Last year’s excellent “Channel 4 News” report on care home staff showed the reality for people on such contracts. My hon. Friend the Member for Sefton Central (Bill Esterson) has already referred to this issue. Those people have no economic power; they live day to day with little ability to manage their own finances or plan for the future. They have their hours texted to them, often with little notice, and they have no flexibility or rights. They have little possibility of negotiating any form of pay rise because they have minimal employment rights and there is always someone else ready to do their job.

Catherine McKinnell: My hon. Friend is making a powerful speech about the individuals who face those challenges. Is she also aware of constituents like mine who even have trouble accessing housing benefit and other forms of support because their hours fluctuate so much from one week to the next? That makes it very difficult for them to access the state support that should be there for them.

Ms Ritchie: I agree with my hon. Friend’s fine intervention and compelling point. I have had similar instances of people who, because of the fluctuating nature of their contracts and their lack of access to money on a continuous basis, have found themselves outside the housing benefit bracket and in trouble, so to speak. The nature of zero-hours contracts removes any sense of stability from people’s personal or family life, and leaves them on a treadmill with no hope of promotion, a pay rise or progress. How can people be expected to manage a tight family budget on such a basis?

I welcome the fact that the Bill will ban exclusivity clauses for zero-hours contracts, which prevent people from working for another employer even when no work is guaranteed. I issue a caution, however, as that is only a start and does not get at the underlying problem represented by the low-wage, temporary and fragmented nature of large parts of the economy. Retail prices index inflation has tracked above wage growth for five years, and more and more people are being pushed into shadow jobs that offer no security and leave them

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precariously perched on the bottom rung of the employment ladder. Is that correct? Is that proper? Is it fair? More concrete measures must be put in place to change those practices and re-establish the connection and fair agreement between an employer and employee. I hope that progress made during the Bill’s passage through this House will enable that to happen, and that the Minister will provide us with some solace in that regard this evening.

4.56 pm

Sheryll Murray (South East Cornwall) (Con): My constituency was built on small businesses and the ingenuity of those who run them, but I must express some concerns that I discussed with one of my constituents, James Staughton, who owns St Austell brewery, when he invited me to a dinner recently. St Austell brewery has about 170 pubs, and although I welcome the protections afforded in the Bill to hard-working pub tenants, I wish to mention the concerns that James raised.

Smaller organisations would find it more difficult to operate under a new statutory code. There is little doubt that gaming machines are an important revenue source, and not to allow smaller companies that important revenue stream would simply put costs elsewhere—the last thing we want is a rise in rent that those hard-working tenants have to compensate for. Having the fixed cost of a compliance officer is unfair on smaller companies that have a much smaller base to cover the additional burden. The same can be said of the necessity to have a valuer qualified by the Royal Institution of Chartered Surveyors to sign-off rent assessments and a number of other compliance requirements.

It is clear to me that the small businesses that run fewer than 500 pubs need to be excluded from most, if not all, these regulatory changes. After all, I fought the last election on removing Labour’s red tape not adding to it, and I remind the Secretary of State—unfortunately he is not in his place—of his words:

“In order to place the most proportionate burden on business, the Government is proposing that this new regulatory regime should apply to all pub companies with more than 500 pubs.”

There was no mention of these measures applying to smaller pub companies.

Further concerns are short-term agreements and tenancies-at-will, which are often used to assist when a business is in crisis. Because of the short-term nature of those tenancies, I ask the Government to consider the regulations carefully, as short-term emergency measures, by their very nature, need more flexibility than longer-term tenancies. Tied pubs are a tradition. A tenant should not be able to come in and change all the beers, losing the landlord much of the revenue and possibly changing the whole nature of the pub—which, if successful, will go through many tenants in the period of its life.

I welcome the Bill, but I want to ensure that we have got it right. I want to save the British pub, not punish it.

4.59 pm

Simon Danczuk (Rochdale) (Lab): It is a pleasure to follow the hon. Member for South East Cornwall (Sheryll Murray), who made some excellent points, particularly about the pub trade.

As many hon. Members will know, I am a small business owner myself, so I begin my speech by declaring an interest through Danczuk’s Deli in Rochdale. I extend an invitation to hon. Members to pay a visit whenever

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the opportunity arises. It is also important to say that today I was unanimously elected chairman of the all-party group on small shops—a position I am very pleased to be able to take up.

As a Member of Parliament and as a small business owner, I welcome this Bill. Before I discuss it in detail, I want to make a couple of brief but important points. First, we often talk about social mobility, but usually in relation to schools and university. It is my strong view that small business can be a very powerful tool for social mobility and vital in helping individuals to achieve their potential. That is worth remembering.

Toby Perkins: On social mobility and the roles of schools and small businesses, I am sure my hon. Friend will be pleased to know that the Labour party recently announced that we are going to make it easier for small business owners to get involved in being school governors so that they can make sure that schools are turning out people who are work-ready and that schools and business have closer links.

Simon Danczuk: I thank my hon. Friend. I am pleased to hear that, because the link between education and business and enterprise is very important.

Secondly, small business is important to communities. Small businesses have helped to keep Rochdale going during very tough times, and they have formed the building blocks on which the future success of the town will be based. For example, Hanson Springs in Rochdale has developed from being a very small business into a major employer providing secure jobs for local people, creating skilled occupations, and providing many exports for the country.

Let me turn to the Bill. I welcome the commitment to tackling issues such as late payment and procurement. Small businesses, especially new ones, often operate on very tight time scales with very small margins of error. When invoices are not paid on time, that can have a huge impact on a business. It is not simply a case of having to wait for money; it can hold back investment and cause small businesses to lose important contracts. Late payment also has a domino effect that flows along the supply chain, affecting many businesses and harming business relationships. It is shocking that 51% of invoices paid by large businesses are paid late. Something really needs to be done to tackle this. The problem does not relate only to large businesses. We know from research by the Federation of Small Businesses that central Government pay 29% of their invoices late. That is clearly unacceptable. I would hope that the Bill could do more to tackle the issue of Government and large businesses not paying on time.

I recently wrote an article for a new think-tank called The Entrepreneurs Network in which I suggested the idea of a small business kitemark for local government that would assess whether a local authority was fulfilling its obligations to small business and help to share best practice. There are many such ideas that could improve the relationship between Government and small business. I hope that that can be considered as part of the Bill.

That brings me to procurement. According to FSB figures, every £1 spent by local authorities with small local firms generates 63p of economic benefit for the

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local economy. Given that local authorities spend literally billions of pounds on procurement every year, there is a lot of potential benefit for local areas.

On the scope of the Bill, the section that deals with access to finance is mainly limited to late payments and does not deal with the more tricky issue of getting banks lending to businesses again. There are some great companies out there, such as Octopus Investments that are helping innovative new businesses get off the ground, but Government could still do much more. I would like to see—and this is a Labour proposal—more regional investment banks such as those in Germany that are investing in small and medium-sized enterprises and helping them to grow their businesses and to export.

I also want to address business rates, which are still the No. 1 issue among small businesses. The current business rate system is completely out of touch with reality and needs fundamental reform. The British Retail Consortium is looking at the issue and I think we should consider its interesting proposals.

In conclusion, this Bill is a step forward, but it is not a step change. It tinkers where it should transform. It does not show the ambition that our small businesses need and deserve. After this Bill, there will still be much more to do.

5.6 pm

Mr Brian Binley (Northampton South) (Con): I wholeheartedly welcome the Bill. I have been an advocate in this place of small business since I came here, having founded two small businesses that have grown to employ almost 300 people. That underlines the power of small businesses in our business sector. I am vice-chairman of the Business, Innovation and Skills Committee and am proud of the work we have done, particularly in advocating the pub code. I am also the chairman of the second largest all-party group after that on beer, namely the all-party group on small business. It has been one of the major themes I have pursued since I came to this place.

I want to concentrate on clauses relating to the pub code. When the BIS Committee took evidence, we found that many tenants had been attracted to pub tenancies by misleading information given by pubcos—I am excluding small and sizeable family breweries—that turned out to be untrue. The Committee proved that estimated profits were often overstated and that the effect of estimated costs relating to a combination of dry and wet rent was often understated. The result was tenants investing money on a fake premise. They lost that investment over time by supporting an ever-more costly business which eventually failed. What happened then? Similar tenants came in to support a pubco financial model that is heavily laden with debt and that simply does not work without that sort of subsidy—but it is a criminal sort of subsidy, and I say that without fear or favour.

I am for a pub code, but I do not think it goes far enough with regard to those particular pubs and companies. We need to do more. The Federation of Small Businesses survey found that almost 90% of tied tenants would take a free-of-tie option with an independently fair-rent option, and 51% confirmed that the rent paid to a pubco is higher than in the open market—a crazy situation—while 98% would have more confidence in the future of their business if they were free of tie, 78% would invest in pub maintenance and 73% would invest in modernisation. The figures are meaningful.

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Greg Mulholland: My hon. Friend forgot to mention in his long list of titles his elevation earlier this year to president of the save the pub group. It has been a pleasure working with him. As well as the figures he has—

Madam Deputy Speaker (Dame Dawn Primarolo): Order. Sit down. We are really pressed for time and Members need to be disciplined. We did not need the introductory remarks, so you have lost the opportunity to make your point. I call Brian Binley.

Mr Binley: President Brian Binley. [Laughter.] I apologise, Madam Deputy Speaker.

The Bill proposes a mechanism called a parallel rent assessment. From a tenant’s point of view, such a mechanism is time consuming, and it will allow a pubco to run a tied tenant into financial collapse long before they receive an adjudication determination. It is potentially expensive for tenants, requiring them to employ professionals to represent their case, and it is complex. It is also totally unsupported: no organisation, pubco, brewer, tenant or consumer supports the parallel rent assessment mechanism. I am therefore surprised that the Government have recommended a mechanism with so little backing.

I appeal to the Minister to reconsider the proposals on pubcos, especially as they relate to the tie, and to consider the opportunity for a fair rent option without a tie. I am happy that the breweries are excluded from that particular element—the Select Committee in fact asked for that—but pubcos should be willing to face up to their responsibility in relation to encouraging tenants to take their pubs on false pretences. If hon. Members have, like me, seen a woman in their office in tears because she owes £94,000, having taken on a pub on a false premise, or seen a husband trying to comfort his wife because they know they are going bust, having sold their house to invest in a pub—there are many examples of that kind—they would recognise that reality.

Mike Kane (Wythenshawe and Sale East) (Lab): Will the hon. Gentleman join me in congratulating all those organisations and individuals in constituencies up and down the country, such as Paul Naylor of the Legh Arms in my constituency, who campaign tirelessly for community pubs?

Mr Binley: I am delighted to help the hon. Gentleman with his press release. I of course congratulate the gentleman concerned.

Pubs are a social institution of massive worth: their value to our community is as great as almost any other institution that we might name. The pub landlord often acts as an adviser to people on everything from legal matters right through to how to get their car repaired. His wife often helps with the charity work undertaken in pubs, including by creating refreshments for pub teams when they return from playing a game. The whole institution of pubs cannot be overestimated for our local communities.

I want to emphasise that pubs are, however, under serious threat, especially from the large pubcos. I want to ensure that our local and regional breweries, which have brave defenders, are also protected, because they also play an important role.

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Stephen Metcalfe (South Basildon and East Thurrock) (Con): Will my hon. Friend give way?

Mr Binley: I had better not, or Madam Deputy Speaker will have words with me privately later.

I conclude simply by urging the Minister to reconsider the option proposed by the Business, Innovation and Skills Committee in its report. The Secretary of State initially seemed to accept it, but I fear that the Treasury oar then had an impact, smacking him—

Madam Deputy Speaker (Dame Dawn Primarolo): Order.

Mr Binley: Pity.

5.14 pm

Catherine McKinnell (Newcastle upon Tyne North) (Lab): Speaking in my capacity as co-founder and co-chair of the all-party group on anti-corruption, I welcome the proposals in the Bill to create a public register of beneficial owners known as the register of people with significant control. That move will mean that the UK is the first major economy to have a public register providing details of who really owns and controls what are currently anonymous shell companies. That is important because, although businesses play an important role in developing thriving societies around the world, some companies abuse global corporate structures. Secret ownership structures allow wealth to be hidden away. Many companies and individuals avoid or evade tax by keeping their money in a complex network of trusts and shell firms, which are often based in secretive tax havens. That deprives developing countries of much needed tax revenue that could be invested in public services and infrastructure.

It is secret company ownership that makes most cases of large-scale corruption, criminal money laundering and terrorist financing possible. A World Bank review of 213 big corruption cases between 1980 and 2010 found that more than 70% of them relied on anonymous shell entities. Many of the company service providers were registered in the UK or in our Crown dependencies and overseas territories.

The cost of this activity to developing countries is vast. The best recent estimates suggest that between $21 trillion and $31 trillion in private financial assets is held in tax havens, which is greater than the entire global aid budget.

That is why the all-party parliamentary group has been lobbying hard and speaking to Ministers about how we can ensure that the public register does the job that it sets out to do. We want to ensure that a number of issues are taken into consideration. We want to ensure that the information on beneficial ownership is available to the public as open data, that it is machine-readable and that it conforms to the Open Knowledge definition. We want to ensure that the information can be verified and that there is sufficient information to distinguish one individual from another. For example, a date of birth might be necessary. We want to ensure that there is a legal responsibility for companies to acquire and declare information on the identities of beneficial owners, as well as a legal requirement on beneficial owners to declare to companies that they are the ultimate owner. As I said to the Secretary of State, we want to ensure that there are significant penalties for failure to

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comply to ensure that everybody complies with the requirements. People must not think that it is worth while ignoring the requirements and they must not get away with doing so.

I want briefly to raise the concerns of Public Concern at Work about whistleblowing. The proposals go some way towards addressing those concerns, but do not go far enough. There are still concerns about gagging clauses. Many people who receive severance payments believe that they are gagged, but in law they are not. There are concerns about blacklisting and job applications. There is no cause of action in law if somebody who has blown the whistle and has been put on a blacklist is not recruited on that basis. There is currently no protection for armed forces and national security whistleblowers who raise concerns about wrongdoing or malpractice. We need greater protection for individuals who seek advice from trade unions. For example, people who raise concerns but do not take the matter forward still need protection under the law. We all welcome greater support for whistleblowers, so I would be interested to hear the Minister’s views on the concerns that have been raised.

Finally, it would be remiss of me not to touch on the proposals in the Bill on pub company regulation, particularly as I am due to meet members of the Tyneside branch of CAMRA at the Millstone pub in South Gosforth on Friday. Many of the issues have been discussed by hon. Members, but Tyneside CAMRA believes that the Government need to go further in protecting community pubs. Its members are particularly disappointed that the Bill does not include market rent only and guest beer options, because it believes that requiring the big pubcos to provide tied licensees with those options would be the simplest means of ensuring fair play. Those options would support not only community pubs, but microbreweries across the country, such as the excellent Big Lamp brewery in Newburn in my constituency.

Andrew Griffiths (Burton) (Con): Will the hon. Lady give way?

Catherine McKinnell: I will give way.

Madam Deputy Speaker (Dame Dawn Primarolo): No you will not, because your time is up. You just missed it by a second, I am afraid.

5.19 pm

Rebecca Harris (Castle Point) (Con): I rise with some trepidation to speak on Second Reading, because it is such an enormous Bill and contains so many interesting measures. I am well aware that speaking on Second Reading sometimes marks Members out as candidates for the Bill Committee. I envisage that it will be a very long but fascinating Committee. The Bill contains many disparate measures. Some are not eye-catching or glamorous, but they will do a good deal to support small businesses in practical ways. They demonstrate that the Government take their commitment to make life easier for small firms very seriously. I like the Bill so much that I think we should have a small business Bill at the beginning of every parliamentary Session.

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I am especially interested in the new measures on prompt payment, which is a big issue in my constituency—a lot of construction firms in my constituency are often troubled by the late payment of fees. The requirement for certain companies to supply details of payment times and for them to be published is welcome. I have sympathy with the views of the Federation of Small Businesses, which says that records of payments to sub-contractors should be taken into account when companies bid for Government contracts. I would be tempted to go further than that—all of a private company’s businesses arrangements, including how well it pays its suppliers in private business dealings, should be taken into account when it bids for a Government contract—because we need to foster a culture in which not paying promptly results in reputational damage to firms. About £40 billion is owed to SMEs in contract payments. It is not acceptable for firms to enjoy the Government’s prompt payment policy if they do not share it with their supply chains.

It is brilliant that the Government’s mystery shopper scheme is being made statutory. It is a fantastic scheme. I am pleased that about 80% of the cases referred to the mystery shopper scheme have resulted in a positive outcome and improvements to procurement practices to improve small firms’ access to public sector contracts. I am a big fan of that initiative, but it needs to be used more widely. I have been given many examples of SMEs that have gone through the time-consuming process of bidding for a significant public sector contract. They hear that they have submitted the most competitive, best-value bid, only to find that a major firm has secured the contract. The major firm then asks the SME to be its sub-contractor to do the work in any case.

The suspicion is that, often, public sector procurers use excessively high requirements when they are not relevant to the contract—for example, on financial track records—as a means of simplifying their work load and of letting the bigger corporations manage multiple contracts for the public sector. At the same time, the bigger corporations take a sizeable top slice of the cost to the taxpayer. I have found the mystery shopper scheme to be a useful tool in my arsenal to assist businesses that approach me when they are based in my constituency or are seeking to invest in it. However, the scheme needs wider publicity—more businesses need to know about it—and I am encouraged that things are taken forward in the Bill.

Hon. Members on both sides of the House agree with banning exclusivity clauses in zero-hours contracts. Many workers, and especially many women in my constituency with whom I have discussed the matter, say that they like the flexibility, but when things go wrong, and the employer abuses the system, the problems start. They can cause serious hardship. Strictly speaking, banning exclusivity clauses will not entirely end the abuses of zero-hours contracts. The Government clearly recognise that, which is why clause 139 gives scope for further reform.

I praise the Department and the work of UK Trade & Investment on exports. UKTI is undoubtedly the driving force behind some of the measures in this huge Bill. As a member of the Business, Innovation and Skills Committee, I consider it my implicit duty every time I meet a business owner who exports to ask whether

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they are getting support from UKTI and how they rate it. The feedback has recently been 100% positive, from tiny, niche luxury food exporters to big bespoke boat builders such as Blyth Workcats, which manufactures catamarans on Canvey Island. Businesses have great confidence in UKTI and increasingly value its work and approach. I am happy to take this opportunity to say so.

I commend the numerous common-sense measures in the Bill, which will do a great deal to support business growth and small businesses as the engine of our long-term economic plan. I am very proud to commend—

Madam Deputy Speaker (Dame Dawn Primarolo): Order.

5.24 pm

Mr William Bain (Glasgow North East) (Lab): Small business needs a Bill that unlocks new finance to help businesses grow, gives new impetus to business investment, boosts science and research, and provides fairness and clarity on rights at work, while removing the worst abuses of zero-hours contracts. Sadly, judging by the Bill before the House today, the real radicalism of this Government is expended on the frenzy of briefing against each other, rather than on dealing with the underlying problems that affect the sustainability of the recovery and small businesses: a serious skills shortage, a growing trade deficit, still modest business investment, stagnant productivity threatening permanently lower living standards, short-termism on infrastructure, and chronic insecurity at work.

The Bill falls short on the challenge of putting optimism back into business in Britain for several key reasons. First, it fails to address the crisis of young people, work and skills identified by the OECD in its study last autumn. Small businesses are struggling to find employees with the required skills in our weakened labour market. In the production sector alone, 25% find the availability of workers with non-management skills worse than the year before. A third of small firms say skill shortages are stifling growth. When four out of five manufacturers in this country say that they are finding it difficult to find employees with the right skill set, and two thirds of those go on to say that that is because of a lack of technical skills, we in this House should listen.

Stephen Metcalfe: Does the hon. Gentleman not accept that the skills shortage cannot possibly have happened in the past four years alone? There must have been a deficit going back to the previous Government for there not to be any skilled employees around now.

Mr Bain: That is an interesting point, but to answer it I advise the hon. Gentleman to listen to what businesses are actually saying, which is that the problem is getting worse on this Government’s watch. What are the Government doing to deal with it and what will the Bill do to deal with it? Precious little.

The Government should be doing more to support small businesses to improve the technical skills of their staff. They should be looking at the idea the Opposition proposed to introduce technical degrees, which would give hundreds of thousands of people the opportunity to get the degree-level skills that small businesses are looking for while they are still in work.

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Secondly, the Bill fails the test of promoting small businesses because of a lack of any substantial measures to improve access to finance. The £1.5 billion direct lending scheme, launched by the Government in autumn 2013, received only 15 inquiries by April 2014; just one firm applied for support under a scheme first announced in the previous year’s autumn statement. The £5 billion export refinancing scheme was launched in July 2012 as part of the Treasury’s UK guarantees scheme. As of April this year, not a single business has been helped by that scheme. As welcome as clause 4 is on the sharing of data on small and medium-sized businesses between challenger banks, the Bill does nothing to create additional competition in the banking system to repair broken financial pipelines that would mean that corporate surpluses can find a home in productive investment in our economy. Just one third of SMEs are using external finance and only a third of applications for first-time loans are being accepted.

Thirdly, on access to broadband, the Bill fails to remove some of the practical barriers many firms suffer from, particularly in remote areas, and fails to promote competition in ways recommended by the recent report on broadband by the Federation of Small Businesses.

Fourthly, on zero-hours contracts, as many as 1.4 million people, plus those who work in agencies, will still have insecure working hours despite the provisions in the Bill. There is no commitment that people who have been consistently employed for a year or more will receive guaranteed hours at work. I recently met a constituent in Blackhill in my constituency who has worked for 15 months with the same employer. He can see his weekly hours fluctuate from zero to as many as 74 hours via text and with minimal notice. The provisions in this Bill will not help him. They are weak and easy to evade.

Some of the faces on the Treasury Bench may be different, but it appears that the mindset of this Government remains closed to new ideas. There may be new voices at the Dispatch Box, but on policy this is a no-change Government, dominated by the same old Tories. For a lasting recovery that will genuinely benefit ordinary people and small businesses alike, next May’s general election and a Labour Government cannot come soon enough.

5.30 pm

Caroline Dinenage (Gosport) (Con): It is a great pleasure to take part in this debate and I warmly welcome the Bill.

Like many other Members who have spoken today, I come from a small business background. I started my own company at the age of 19—it is still going, which is good news—so I understand very well that small businesses are indeed the engine of our economy. The unemployment figures that we have seen in Gosport and other parts of the country this week are testament to the incredible role of small businesses in driving employment and growth. Small businesses make up more than half of the UK’s jobs and GDP. They are absolutely essentially to the UK economy and it is important that we do not fail them. That is why I am so pleased that we have a Government who actually get it and are firmly backing small business, with the first ever Bill that genuinely reflects the role that small businesses play in our economy.

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I like to think of small businesses as the ideal romantic partner. They are quite low maintenance and do not really expect grand gestures from Government. What they really want is to be allowed to keep their heads down and focus on the job of running their businesses, generating growth and jobs. However, there are a few things that the Government need to put in place to allow small businesses to flourish and grow, and they certainly should not put obstacles in their way. Some of those things are covered in this Bill, which is why I welcome it.

The skills issue is incredibly important. We are all aware of the OECD report that showed that under the last Government, 16 to 24-year-olds in this country were likely to have lower skills than their grandparents, and we are the only country in the developed world to which that applies.

Mr Binley: I have already said that I founded two companies, which now employ 300 people. Labour Members have to recognise that one of the problems is that their policy on literacy and numeracy education in schools has been a total disaster, with many young people seeking jobs who cannot properly express themselves and certainly cannot add up properly. Does my hon. Friend think that that is one of the problems with skills training now?

Caroline Dinenage: I am pleased that the whole issue of adult literacy and numeracy will come before us on the Business, Innovation and Skills Committee shortly. I feel that we are in a global race. Every era has its valuable commodities and the most valuable commodity of this era is an educated work force. It is what our international competitors most understand. The measures in the Bill to provide us with a deeper understanding of the impact of education choices on labour market outcomes are therefore welcome.

Neil Carmichael (Stroud) (Con): I want to emphasise my support for the Government’s measures to ensure that outcomes from the education system are properly tracked into business and employment, because that is the essence of our training and school reforms.

Caroline Dinenage: My hon. Friend is absolutely right. For too long under the last Government we saw a proliferation of courses that were not valued by employers, and young people paid the price. Better information will help to cut out courses that employers do not value, making sure that our young people get the skills they need.

Another important pillar for business is of course access to finance, which is also covered in this Bill. There were more new businesses last year than ever, but businesses still identify access to finance as a problem for them. The measures in the Bill will help business to get the funding they need, as well as helping to ease the problem of late payments, which has been the downfall—in fact, sometimes the death knell—of so many fledgling companies.

Another big issue is red tape and bureaucracy, which is covered widely in the Bill. Any business owner will tell you, Madam Deputy Speaker, of the burden of pointless

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regulation and paperwork, which spiralled out of control under the last Labour Government. Important steps have already been taken to address that, including the red tape challenge, which has seen at least 3,000 regulations scrapped so far, and the one-in, two-out rule.

There is still so much to do, however. I sent a survey to SMEs in my constituency, and over half of those that responded said that, despite the Government’s efforts, regulation was still a problem for their business. So measures that will help reduce the costs of company registration and make Companies House more efficient, along with the introduction of e-registration, are all really welcome. I welcome, too, the five-year review of secondary legislation, including laws that come from the EU. It is important to review laws after a reasonable amount of time, but could we not go further and apply this provision retrospectively to existing legislation?

Access to markets is, of course, absolutely fundamental to business, both domestic and overseas. The public procurement market is worth £230 billion, and I welcome the Government’s commitment to simplify Government contracts, giving small businesses better access to this marketplace. This must go hand in hand with a Government approach that sees us as early adopters of innovation. Too often we see our great British invention and innovation adopted first by overseas Governments, particularly the US and Germany. Where the marketplace goes, the jobs and prosperity follow. I would like to see all Government Departments encouraged to welcome British innovation and to adopt it early.

On overseas opportunities, it is estimated that if SMEs could raise their export performance to the EU average—if the one in five British SMEs that exports could now be raised to one in four—it would wipe out the trade deficit overnight. We have seen steady growth in this area, with our exports to Brazil, India and China rising faster than those of our competitors, but we still have a lot of catching up to do, so I am pleased that the measures in the Bill will make it easier for small businesses to expand overseas.

The challenge now is twofold: making sure that businesses are fully aware of all the support that is available, so that they can get maximum use out of it; and making sure that UK Export Finance has the resources to deliver this wide range of support. In addition, we need to make sure that support is tailored to the needs of individual businesses. Exporting can be a daunting prospect for a small business, so first-time exporters should be given both up-to-the minute information about emerging markets, and as much assistance as possible in finding new customers.

Tomorrow, I welcome the business woman Karren Brady to a school in my Gosport constituency, where a programme of events will be run to help inspire the entrepreneurs, business people and innovators of the future. These young people hold the key to our nation’s future economic prosperity. It is up to the Government to deliver them an environment that ensures that they can work in the most competitive, business-friendly country in the world. All in all, I feel that this Bill is another step in the right direction from a Government who have consistently backed small businesses to deliver that.

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5.37 pm

Chris Evans (Islwyn) (Lab/Co-op): It is indeed a pleasure to follow the hon. Member for Gosport (Caroline Dinenage). It is a great thing that we are debating small businesses, which are at the heart of British life. From the cornershop to the village pub, business and free enterprise are at the heart of the British way of life. From the Marks & Spencer penny bazaar, we have seen so many businesses grow from small roots. I am concerned, however, that there are still several anti-small business practices and broken markets where an active Government taking the side of small business could make a real difference and a real change.

If I were to open up my postbag and draw out the top three things that small businesses write to me about, the first would be procurement. Smaller firms find it difficult to procure larger contracts that could be vital to the future of their business. The second and perhaps the most important and the most dangerous is tackling the scourge of late payments. Finally, many of my constituents love their pub and are afraid that it is disappearing off the high street.

Speaking as someone who comes from the betting industry, I can say that we have seen the decimation of small, independent betting shops. They were once a common sight on the high streets of Britain, but they have all but disappeared as a result of massive change. I am fearful that the same thing is happening to the pubs. There is no sadder sight than seeing boarded up a pub in which people enjoyed their youth and perhaps their first pint, or where they joined their first football or pool team. It is sad when such a pub has no future. We must address this real problem now. Some 27 pubs a week have been closed since 2010. Many people are not interested in the big pub companies, but they like their local, along with their local landlord or landlady. These are the ones that keep the sports teams going, whether it be pool, darts, football, rubgy or cricket. They are often places where people meet, discuss tactics and enjoy a pint afterwards.

I am not going to make sweeping statements about pubcos. That is sometimes a problem with us politicians: we have a habit of making sweeping statements. However, I am deeply concerned about the position of pubs. Many industry stakeholders are not profiteering from the opportunities made available by the terms of tied pub contracts, and I welcome the introduction of regulation in principle as a platform for meaningful and material reforms. However, I have grave concerns about the weakness of the Government’s proposals. I fear that they will cause further detriment to the nation’s pubs by encouraging pub companies to accelerate what many consider to be their asset-stripping programme of disposal of pubs for alternative use.

The fundamental problem faced by tenants is the charging of excessiverents that do not reflect the over-inflated prices of tied products. I urge the Government to accept that, if we are to have meaningful reforms, a market-rent-only option would offer a genuine remedy should a pub-owning company act inappropriately, and a clear, tangible power for the adjudicator for whom the Bill provides would render unfair lease or tenancy provisions unenforceable.

I also want to say something about late payments in the short time that is available to me. The Bill empowers the Secretary of State to require businesses to publish

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their payment records in order to increase transparency, but gives no indication of when that will be done. It does nothing to shift the burden from small businesses which have to complain about their large-scale customers. The Bill also provides for action to make public sector bodies pay more quickly. I welcome that, but, according to statistics that I have seen, 77% of members of the Federation of Small Businesses have said that private sector organisations are more likely to make late payments. Late payments are a moral issue. What is lacking is an unambiguous statement from the Government that this is an anti-business practice which must be stamped out. I call on them to take strict action.

I should have liked to develop my argument further, but perhaps I talked about pubs too much. Let me end by drawing attention to the difficulty that small businesses experience with procurement. Many complain to me that the process is unfair, time-consuming and costly. I think that there should be a way of simplifying it so that businesses can compete for both Government and private sector procurement contracts.

As I have said, I should have liked to develop my argument further, but I look forward to the Government’s response.

5.42 pm

Mr Marcus Jones (Nuneaton) (Con): I welcome the Bill. I think it significant that we are debating a small business Bill, because I know that, for far too long, many people who run small businesses and many of the organisations that represent them have felt that they are “out of the tent” when the Government make decisions and produce legislation that affect businesses. They feel that they are the Cinderella of the business world when it comes to Government engagement.

Today, we should welcome the fact that small business has a voice. Organisations such as the Federation of Small Businesses certainly have a voice: many of their recommendations appear in the Bill. We should listen to those organisations, because small businesses are extremely important. They have created 2 million private sector jobs in the last four years, 2,000 of them in my constituency, and have driven down the unemployment rate. Unemployment has fallen by 26% in my constituency in the last 12 months, and youth unemployment has fallen by 38% during the same period. We need to engage with small businesses and listen to what they say in order to find out what they want us to do to enable them to create the jobs that we need.

The Bill comes off the back of a number of other measures that the Government have taken to help small business. They have, for instance, extended small business rate relief, introduced the employment allowance, frozen fuel duty, cut beer duty, and reduced corporation tax to the lowest rate in the G20.

In the short time that I have, I want to say a few words about specific parts of the Bill. Many businesses come to me with problems caused by late payments, which are dealt with in part 1. In the last week alone two people who run small businesses in my constituency have mentioned the issue of late payment to me. It is extremely important at the moment when a lot of businesses are expanding. Often when businesses try to expand after a recession, they hit cash flow issues, and the Bill’s measures on late payment will be extremely important in assisting them.

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Turning to part 3 on public sector procurement, many of my constituents would probably also like to see something in the Bill about prequalification questionnaires and reducing the burden of them for small businesses. It would be a good signal from Government if there were something in the Bill about late payment from Government organisations and local authorities, too. When I was a local authority leader in the depths of the great Labour recession in 2008-09, we made our payment terms 10 days and many local small businesses benefited from that.

Many of my pub landlords who are pubco lessees will welcome part 4, but we need to be careful to avoid unintended consequences, particularly in terms of the effect on family brewers and their cost base. We must also properly recognise the role of franchises, which now seem to be coming to the fore. I have at least one pub in my constituency that is owned by Marston’s and is franchised, and it is important that that is recognised as well in this Bill.

Finally, I want to talk about part 9 of the Bill. Many small businesses in my constituency have fallen foul of rogue directors, some of whom seem to have the habit of setting up businesses, failing them and abandoning all their creditors, and then starting up businesses again very soon afterwards. We need to have a culture where we do not think it is completely awful to fail, and we need to make sure our entrepreneurs feel that they can fail at times. However, people who habitually cause major distress in this way to other businesses—many of them small businesses, some of which then go out of business—need to be dealt with, and I hope the provisions in part 9 will go some way towards doing that.

I am pleased with this Bill. I am extremely pleased that it is a Bill for small business, and I am very enthusiastic about seeing it pass through the House. I hope I will be able to say a little more on Report.

5.47 pm

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Small businesses are the powerhouse of the economy, contributing 46% of the UK’s annual income in the private sector. If we are to have a sustained economic recovery, it will be built on the backs of small businesses. I support the principles of the Bill, although it has been late in coming, but I have some concerns about the detail.

I want to refer in particular to the late payments provisions. As has been mentioned, I have had a campaign on this, stemming from a local issue, for the last three years. A local haulier came to me and said his business was going out of business as a result of late payments. That opened a whole can of worms. Small businesses do not want to go public about late payments because of the possibility of retribution. This all culminated in a Radio 5 Live phone-in programme on late payments last November, which had the highest ever recorded response.

That shows the scale of the issue, and it is hardly surprising. We know from BACS—bankers automated clearing services—data that £46.1 billion is currently owed in late payments. That affects not only productivity—158 million hours have been spent chasing overdue bills—but also access to finance and the terms of that

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finance. The Forum of Private Business estimates that in 2012 it put out of business 124,000 businesses, so it is a huge issue, not just in the private sector, although it is more predominant there, but in the public sector, as was reported on the “File on 4” programme last week.

My hon. Friend the Member for Streatham (Mr Umunna) mentioned the inquiry I held last year, involving people from across the House. Its fundamental finding was that late payments reflect the culture of a company, which is ultimately down to the company’s leadership. Late payments are a form of corporate bullying, because large companies are able to exert their power over small companies.

Chris Evans: I am listening to what my hon. Friend has to say, because she speaks from a position of great knowledge. What advice would she give small companies that find themselves in an unequal position where they cannot get the payment out of a larger company, which can bully them? What would she say to them?

Debbie Abrahams: I would say that the measures in the Bill are not enough. There is a power imbalance between the large companies and the small companies, and late payment needs to be seen as unacceptable as tax evasion.

The Government’s proposals to remedy the situation are disappointing. They have taken up a number of recommendations from my inquiry, but those have been very watered down. For example, clause 1 fails to describe how the prompt payment code will be updated. As we have heard, the code is already being abused by a number of prominent large companies, so, without that detail, it is legless. Similarly, the Government have reneged on their promise made last December to introduce 30-day payment terms throughout the public procurement supply chain. Instead, clause 3 states that regulations “may” be introduced to require large companies regularly to publish information about their payment practices. That is very disappointing indeed.

Another example is the Government’s failure to reform the pre-qualification procedures for public sector contracts, which have been estimated to cost the construction industry alone more than £1 billion annually. One of my recommendations on the pre-qualification questionnaire was that there should be regular updates on the past payment performance of such companies, but such a provision has been omitted. Article 7 of the EU directive on late payment, which protects small businesses and allows them to maintain their anonymity when challenging grossly unfair practices, has still not been implemented. The mystery shopper scheme in clause 34, which allows small businesses to complain about poor practices, including late payments, does nothing to address the climate of fear in reporting these events. This is not good enough; it really does not go far enough. The fundamental point I made earlier about the bullying culture and the power imbalance has not been addressed at all in the Bill.

Toby Perkins: I wish to place on the record my admiration for the work that my hon. Friend has done on late payments, but may I assure her that—

Mr Mark Prisk (Hertford and Stortford) (Con): On a point of order, Madam Deputy Speaker. The Opposition Front-Bench team have intervened on four separate

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occasions on Back Benchers. Is it in order for the Front-Bench team, who are about to have 10 minutes at the end of the debate, to intervene on four separate occasions, meaning that colleagues are having their chance even to speak limited?

Madam Deputy Speaker (Mrs Eleanor Laing): It is, of course, in order, because the person who has the Floor can take an intervention whenever she wishes to do so. But one would expect discretion from the Front Benchers. Now, we were halfway through a very short intervention—

Toby Perkins: I am willing to show discretion.

Debbie Abrahams: I am grateful to my hon. Friend for what he said. The Bill does not go far enough on addressing the cultural issue that underpins and drives late payment, and we need to make sure that it does. The Bill fails to stand up to powerful vested interests on behalf of small businesses and the people they employ. The business associations I have spoken to see the Bill as a “massive disappointment” on late payments, and I will be tabling amendments to address these issues.

5.54 pm

Justin Tomlinson (North Swindon) (Con): It is a pleasure to rise to support the Bill today. We are unashamedly pro-business. We have already created 1.8 million jobs and 400,000 new businesses, and business is delivering jobs, growth and opportunity. I want to cheer up the hon. Member for Glasgow North East (Mr Bain), who was scrabbling around looking for doom. Unemployment has fallen by 45% in my constituency. Apprenticeships have increased by 66%, equipping apprentices with the real-life, tangible skills that our growing economy needs. We saw the terrible OECD reports about young people not being equipped with basic skills, but I know from my 10 years running my own business and employing people that we are making important education reforms to ensure that every young person is not robbed of opportunities and is equipped to make a positive contribution in their lives and to the economy.

In the brief time available, I want to comment on a few parts of the Bill. The first part is about access to finance and I welcome the measures to improve opportunities for businesses to access different types of finance, because it is vital that we recognise that the world is changing, technology is becoming far more important and businesses are increasingly operating 24/7. We should do all that we can to encourage innovation to match that. Long gone are the days when business owners would wait several days and put on a suit for an appointment with a bank manager who does not understand their business. The world is changing and we should encourage new technologies to ensure that businesses can access finance as quickly as possible and recognise new opportunities.

I attended a business lunch organised by Total Politics and the Asset Based Finance Association at which different types of finance were mentioned. A clear message was that many businesses, which are often too busy to sit down and study the things that we deem to be important in Parliament, are not aware of the available options. I appeal that we should include in the annual business rates mailer, for which the taxpayer has already

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paid, helpful information to update busy businesses about such opportunities. I would also encourage teaching business students, whether in school or university, about the different types of finance now available beyond core banking.

On regulatory reform, I welcome the fact that we now recognise micro-businesses, which, as we should always remember, are significantly different from small businesses. Too many speeches often call for further regulation, forgetting that micro-businesses simply do not have the time to conform.

The most popular subject today seems to be the important issue of the pubs code. My constituency has 1,400 connected to the industry. I supported much of what my hon. Friend the Member for South East Cornwall (Sheryll Murray) said, because we must be careful about what we ask for. There is a massive difference between pub companies with over 500 pubs and traditional family brewers, including Arkell’s in my constituency, which has just over 100. Piling extra regulation on such brewers would be a major problem and would impact on their ability to employ people and to support our local economy. I am probably in a minority here, but the idea of a guest beer is crazy. It would be like going to McDonald’s and saying, “Okay McDonald’s franchisee, you are allowed to host one Burger King burger or one KFC sandwich.” The Society of Independent Brewers is also totally opposed to the proposal. We do, however, need to go further to ensure that the terms that tenants sign up to are absolutely crystal clear, so that they understand, as should be the case for any business signing up to something, exactly what it is that they are signing. We should also do more to train the future generation of landlords, because companies tell us about a real shortage of people. A lot more could be tied in with hospitality management courses, particularly now that food has become so important in many pubs.

On education evaluation, I welcome the fact that further information will be provided about what happens after students leave school, which will encourage education facilities to arrange partnerships, involve mentors and even embrace the opportunities of Young Enterprise. Schools should encourage their students to sign up to schemes such as the National Citizen Service or the Duke of Edinburgh’s award, which can build up CVs and improve the chances of getting work.

Finally, on employment, I am a big advocate of pushing hard on enforcing the minimum wage. It is unfair on the staff who are exploited, often akin to slave labour, and on the competition which cannot compete on price, and it encourages the economy to become a race to the bottom.

5.59 pm

Stephen Metcalfe (South Basildon and East Thurrock) (Con): I shall try to keep my remarks as brief as I can.

My hon. Friend the Member for City of Chester (Stephen Mosley) laid out much of what I wanted to say about the importance of small businesses as a sector. We ignore them at our peril as they are, as we have heard, the backbone of our economy and have, I think, played a vital part in driving down the claimant count in my constituency by nearly 36%, driving youth unemployment down by nearly 45% and upping the

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number of apprenticeships by nearly 60%. They play an important part and we must do all we can to support them.

Although perhaps not everything we have done as a Government has been helpful to small businesses, I truly believe that the Bill is helpful. It takes steps towards helping secure their future and addressing the challenges they face. We could go one step further, perhaps, by creating a US-style small business administration unit within the heart of Government to ensure that the impact on small businesses of every piece of legislation that goes through this House is taken into account.

There is one issue in particular that I want to speak about that might not be covered elsewhere, and that is clause 117. It relates to the Government’s proposal to create a reserve power to prohibit pre-pack administration sales to connected parties if certain criteria are not met. I want to talk about that in the context of the printing industry. I should declare an interest and refer people to my entry in the Register of Members’ Financial Interests, where they will find that I am a shareholder in a small family printing business.

The printing industry is particularly vulnerable to the impact of pre-packaged sales in administration. Printing is an over-capacity industry dominated by small companies. Consequently, the incidence of pre-pack administrations in the industry has been relatively high and the damage caused to creditors and competitors alike has been significant. Those controversial business rescue arrangements enable the debts of previous owners to be written off and have attracted criticism from creditors and competitors. When there is a connected party—that is, when the owners of the new company are the same as those who ran the old company—creditors are aggrieved because they have lost money owed to them and competitors are aggrieved because they face a rival who now has an unfair trading advantage.

The British Printing Industries Federation believes that an insolvency practitioner, or IP, who has previously provided advice to a company on the potential for a pre-packaged sale in administration has an inherent conflict of interest should they later accept a formal appointment as administrator with a view subsequently to execute a pre-pack sale. The BPIF therefore considers that an IP advising a company prior to a pre-pack sale should be precluded from becoming the administrator for the company concerned, to curb the incidence of cases where an IP attempts to secure new business by inviting distressed businesses to enter a pre-pack before other options, such as seeking an alternative operator for the business or a potential sale, are properly explored.

The introduction of a requirement for a different IP to accept appointment as administrator would improve confidence that pre-packs are used only in appropriate circumstances by ensuring that conflicts of interest were avoided. That would enhance the confidence of creditors in the insolvency practitioner’s handling of the administration. I realise that this is a technical issue, but it is a big issue for the printing industry and, I suspect, other industries, too. I have no pecuniary interest in the business any more as I am no longer a director and no longer receive any payment from it. I would like the Minister to look hard at this issue and ensure that

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we have covered every option in the clause to ensure that it works the way we think that it does.

I would have liked to have said much more, Madam Deputy Speaker, but I am sure that it will all be covered elsewhere or can wait until another day.

6.3 pm

Mr Mark Prisk (Hertford and Stortford) (Con): I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I welcome both the intention behind the Bill and much of its content. Over the past four years, we have been able to foster a genuine entrepreneurial spirit across the country and, in particular, we have seen participation rates among women and young people rise year on year. There are now 15% more women-led businesses than there were just four years ago. I am proud to have been the Minister who began the reform of support for SMEs, put in play the 27,000 mentors for start-ups, and enabled the entrepreneurship growth that we are seeing on our university and colleges campuses, but there is more to be done. That is why I think the Bill is excellent in seeking to support the extension of export finance support to companies, not just to individual transactions. The Germans have done this for years, and I am glad we are catching up. I am also pleased, although I am a keen supporter of flexible labour markets, to see that the Government are looking to get rid of exclusivity clauses within certain contracts. They are right to do so and have my strong support.

In the time I have, I want to touch on two topics—deregulation and the long-term challenges in the employment market. On deregulation, good progress has been made. We have seen, for example, the annual flow of new regulations fall by 70%, and the stock of existing regulations cut by £250 million. That has been achieved principally by making the process of regulation more difficult for officials—making it the last resort for Whitehall, rather than the default first option. But the measures in the Bill need to be strengthened and I hope Ministers will respond to these points.

First, the Bill allows the Ministers of the day to define what is in scope and what is not, what is measured and what is not measured. All Government burdens on SMEs should be measured and the costs published. I have no problem if the Chancellor of the day wishes to count, shall we say, the administrative costs of the tax system separately from other regulatory burdens. Fine, but they should be measured and they should be published. The Bill currently fails to commit to this.

Secondly, we need a truly independent overseer. Clause 22(5) states that an independent body means

“a body which, in the opinion of the Secretary of State, is independent of the Secretary of State.”

That is not good enough. What the House will look for is an open process whereby we can see an independent body established and its membership chosen.

Thirdly, as has been mentioned, the Government should commit—I hope those on both Front Benches will think about this—to an annual debate in Government time on progress in reducing the burden.

My second issue revolves around longer-term changes in the world of work. Since 2000 here and in the United States we have seen a 38% and a 50% rise in self-employment, but conventional jobs have risen by

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percentages in just single figures. So this is not a cyclical change. It is a long-term structural change in the labour market. Over the next 20 years the concept of a conventional job as we now understand it will be just one form of work for most people. Young people coming into the workplace now will be in and out of employment, self-employment and contracts right the way through their careers, yet we in politics still argue about the previous century’s form of labour markets and terminology. We use terms that do not relate to the lives of many people.

So what is to be done? First, I hope Ministers will think carefully about getting the right information and terminology. We should instruct the statistics authorities, including the Office for National Statistics, to overhaul how we measure what we call work—both the way in which those definitions are made and the way in which the data are collected. At present they are incomplete and out of date.

Secondly, we need to make sure that our taxation and our employment law are overhauled. What we currently call IR35, or what I like to think of as a complete mess, is one example that we need to change. It is an example of the past. What is needed instead is a system that is clear to the individual, consistent for the working individual, and above all neutral as to how people earn their living. At present we are obsessed with which particular box to put them in. That is a mistake and it is out of date.

I welcome the Bill, which makes important contributions to an important issue, but I hope that in the long term we will get these issues right for all of us.

6.9 pm

Andrew Griffiths (Burton) (Con): It is a delight to take part in the debate, albeit with a shortened contribution, and to follow my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who did such a fantastic job when he was a Minister.

I wholeheartedly support the Bill, which will be welcomed by businesses in my constituency. They will benefit from the red tape that is to be cut, the help to export, the support that they will be given to access finance, and the ability to be paid more quickly. It will be welcomed by the workers who are on the minimum wage, who will see that enforced, and by those on zero-hours contracts, who as a result of the safeguards will no longer be victimised.

Obviously, as the Member of Parliament for the home of British brewing, and the chairman of the all-party parliamentary beer group, I want to speak on the issues that relate to pubcos. I can honestly say that this is the most pub and beer friendly Government that we have seen in generations. It was this Government who scrapped Labour’s hated beer duty escalator, which saw beer duty increase by 48%. It was this Government who had the historic two successive cuts in beer duty, which have seen a growth in our beer market—two successive quarters of beer growth for the first time in 10 years and sales up in our pubs.

I had concerns about the consultation, but I strongly believe that this is a good compromise and a workable solution to draw a line in this long-running sore that we have seen for too long in the debate over the tie. It works because it introduces a tough statutory code that clearly demonstrates how pubcos and breweries should operate,

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and offers proper protection to tenants. They can see in this code the help that they deserve and the requirements on those pubcos. With an adjudicator with real teeth they will have protection. They will have somewhere to go quickly to get proper redress. The adjudicator can say if a tenant is paying too much in rent or for their beer, and can fine those pubcos if they act irresponsibly. That is the perfect protection.

Intervening in the marketplace, such as scrapping the tie, would have had disastrous effects. No one today has mentioned the BIS report by London Economics, which showed that 1,600 pubs would close almost overnight if the tie was scrapped. No one wants to see that. We need evolution. We need this to work for our tenants and for our pubs.

There are things that we can do. I draw attention to a number of speeches, such as that of my hon. Friend the Member for North Swindon (Justin Tomlinson) in particular, and the issue of the smaller family brewers—the 500 mark. No one is suggesting that they have acted irresponsibly. No one is suggesting that the legislation is to catch them. One solution would be to move some of the more prescriptive and expensive regulatory issues from the basic code to the enhanced code—things such as the RICS requirements and the need for a compliance officer. Those sorts of things could be moved into the enhanced code, freeing up the smaller family brewers from being dealt with by the legislation.

There is a need to look at the tenancies at will, which are covered by the legislation. They are basically quick tenancies. If a pub is closing, if a tenant leaves or dies, the pubcos have two choices. Either they close the pub, board it up and wait until they have a tenant to take over or they have a tenancy at will. The suggestion of a tenancy at will not being encompassed in the legislation, up to a point of say 12 months, would allow that flexibility in the marketplace.

I urge the Minister to consider the franchise issue. Marston’s in my constituency has a number of franchise pubs. Franchises are very different from tenancies. There is no rent review or wet rent. They are covered by the British Franchise Association code of ethics. There is an argument that they should not be covered. I am glad that we do not have free of tie in relation to the guest beer. The Society of Independent Brewers, which one would think would be most in favour of this, has warned that it would be damaging, and we would just see foreign fizzy lagers, not British cask ale.

I commend the Government on the Bill. It offers help to our pubs and I hope it works.

6.14 pm

Grahame M. Morris (Easington) (Lab): I want to follow on from some of the issues that have been raised, not least by the hon. Member for Burton (Andrew Griffiths), although I take a rather different view. I am speaking not for the brewers, but rather for my own union, Unite, and for Save the Pub, CAMRA and Fair Pint. I want to make a couple of brief points, having listened to some of the earlier contributions, particularly in relation to the levels of unemployment and the triumphalist claims from Government Members about how wonderful the situation is. I emphasise that the recovery—such as it is—is uneven, and there are huge regional disparities. I advise the Minister and Government

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Members that in my region unemployment is 129,000, and rose by 5,000 between last December and May this year. That needs addressing, and I was hoping for rather more practical measures to deal with those problems.

The main point I want to raise is about pubs, and I pay tribute to the hon. Members for Leeds North West (Greg Mulholland) and for Romsey and Southampton North (Caroline Nokes), who are also officers of the all-party save the pub group. Pubs, and indeed working men’s clubs, are vital community hubs, but they are closing at an alarming rate—10,000 pubs in 10 years, which is 26 a week. I fear that the measures in the Bill will not adequately address the problems faced by our pubs.

I welcome the introduction of a statutory code of practice for large pub owning companies, and we have already rehearsed the arguments about the difference between those large pub companies and smaller regional brewers. Such a code is long overdue and much needed to address the fundamental problems created by pubcos, which I believe have done so much damage to pubs.

I do not believe that the current problems properly address that matter, and neither do they deliver on the Government’s commitment to the two core principles that the Secretary of State told us about in his opening remarks: a fair and lawful deal to ensure that the tied licensee is not worse off than the free-of-tie licensee. We know how many pubs are closing—26 a week—and for too long, large pub company chains have been giving landlords a raw deal. It is clear that large companies take too much profit from pubs—profit that would go into expanding those small businesses, employing more staff, offering longer hours, and boosting the local economy. That fundamental problem is acknowledged by the industry, and I hope that the Government will address it in Committee.

The Government have said that they will not introduce the market rents only option, and instead they have the principle that no landlord should be worse off than if they were free of tie. The reforms in the Bill aim to ensure that the tied licensee is not worse off than the free-of-tie licensee, but as the hon. Member for Leeds North West indicated, there is no effective mechanism to deliver that.

There is a strong economic argument to end the abuse by pubcos which unfairly exploit tied tenants, and there is lots of survey evidence that 90% of tied tenants would take a free-of-tie option with an independently assessed—that is important—fair rent, if that were on offer. More than half confirm that the rent they pay to pub owning companies is higher than the open market rent. I find it strange when some hon. Members say that such a measure would be a backward step and lead to wholesale pub closures, as I do not think that is the case. I have indicated where I think the extra profit would go in terms of additional staff, and under the proposed scheme licensees would be granted the right to ask their pubco to show them how much their rent would be under a free-of-tie scheme. Those calculations would be made by the pubcos, however, which obviously have an interest in providing the highest possible estimates. There are some problems with the Bill, and I hope we can explore them in more detail in Committee.

Several hon. Members rose

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Madam Deputy Speaker (Mrs Eleanor Laing): Order. Since all Members have taken the full five minutes, and some longer because of interventions, I must reduce the time limit to four minutes to allow everybody the chance to speak.

6.19 pm

Chris White (Warwick and Leamington) (Con): Is that for speakers after me, Madam Deputy Speaker?

Madam Deputy Speaker (Mrs Eleanor Laing): No, sir.

Chris White: Thank you, Madam Deputy Speaker.

I am sure that hon. Members will be relieved to know that my speech is not about pubs, which were very well covered by the previous two speakers. My hon. Friend the Member for Burton (Andrew Griffiths) put the case very well.

I thank small businesses in my constituency for their role in reducing unemployment and jobseeker’s allowance claimants by 63.5% since 2010. One of the biggest issues that businesses face is the financial hurdles they come across. In giving better access to finance and improving cash flow for small businesses, the Bill will go a long way towards addressing some of these problems. Small and micro-businesses, in particular, face issues with excessively long payment terms imposed on them by large companies. I am pleased that the Government are going to tackle this head on.

In relation to employment, I particularly welcome the provisions in the Bill to clamp down on employers who are not paying their employees the national minimum wage. I hope that increasing the maximum penalty that can be imposed on employers will be a significant deterrent to those who continue to avoid their obligations. I have supported the campaign to widen the uptake of the living wage, and I hope that encouraging business to do this will also be one of the Government’s top priorities.

The Bill makes important provision regarding procurement. I am particularly interested to see the extension of the Cabinet Office’s mystery shopper scheme, which a number of Members have mentioned. The scheme has been used successfully to monitor the implementation of social value. I have no doubt that giving it additional powers will provide more opportunity for the Government to improve procurement practices.

Small businesses are thriving in my constituency. I particularly commend the Leamington business improvement district for the work it has done to promote business in our area. That is a fantastic example of the results that can be achieved when business is able to work collaboratively to achieve the common goal of regenerating and supporting local business. Nationally, BIDs across the country are generating £100 million per year of investment in town centres. I also pay tribute to the local chamber of commerce and organisations such as Leamington Business Forum, which do so much to support the sector.

Small business is fundamental to our economy. I am pleased that measures in the Bill will free companies from unnecessary burdens and support them to make the day-to-day running of their work more successful and free from regulation.

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6.22 pm

Richard Fuller (Bedford) (Con): People who start or run their own small businesses are heroes. Every day, they take the risks, they work the extra hours, they manage the anxieties, and they go the extra mile to create employment and wealth in constituencies across the country. They are people like Amy Taylor and Zak Resinato. Amy Taylor started her beauty business very early in her teenage years and is now at the stage of putting it on a solid and sound foundation for future growth. Zak Resinato is a person I see every week who is not only inspiring in running his own business but inspiring others who work with him to have the vision that they too can start their own business. Beth and Mahmood, through their dedication and hard work, have created a café that is working in a location where it never worked before—an environment that local people want to spend time in. Maria has battled a council that does not understand the role of business rates in suppressing entrepreneurship. Year after year, she carries on in business because that is the core of her passion.

We live in the age of the entrepreneurs, and those people in my constituency are some of the leaders in that age. They look to this Bill and this Government for inspiration. There is indeed much in the Bill that can inspire them, but, alas, too much in the way of intervention and regulation. It is as if the Secretary of State sees himself as a real-world version of Saruman, the character who came down to Middle-earth with the best of intentions but unfortunately took the power to himself and believed that he alone was benign enough and so all-seeing that he could create a wonderful environment in which all would be good. Alas, the Secretary of State has not read his Hayek. He does not understand that it is a far better solution for our country’s economy to leave these decisions and powers in the hands of the entrepreneurs—the people who make these decisions and take these risks every day. The shadow Secretary of State noted that the Secretary of State had Conservative minders. It is important that he has Conservative minders, and I am delighted that the Minister for Business and Enterprise will be a strong, solid Conservative voice in getting this Bill through Parliament.

Part 4 is where some aspects of intervention and regulation fall down. It was never the intention that family-owned breweries would be impacted by the regulations, yet the Bill has measures that will do so. That should not happen in a Bill that is supposed to support small businesses. It also provides for an adjudicator whose role is flawed, and for a publican code that, as many hon. Members have already said, lacks some of the necessary details to be able to support small businesses. The Government’s own impact assessment states that there are additional costs on a brewing and pub industry that is already reeling from the cost competition provided by supermarkets and other places where people can buy alcoholic beverages. Those things should be looked at by the Minister and given a Conservative slant, to make sure that we support not only our publicans who want a fair deal, but our family brewers who also deserve a fair deal.

Let us hope that, through this Bill, people such as Zak, Amy, Beth, Mahmood and Maria can say that the Conservative Government stand, in the age of the entrepreneurs, on the side of our small business leaders.

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6.26 pm

David Rutley (Macclesfield) (Con): It is an honour to follow my hon. Friend the Member for Bedford (Richard Fuller), whose enthusiasm for small business I fully share.

Macclesfield has a great tradition of enterprise, from silk in the Georgian and Victorian days to pharmaceuticals today, with AstraZeneca producing 1% of UK exports, which is an incredible statistic. I welcome the Secretary of State’s announcement today that he will tighten up the takeover rules and ensure that any entity wanting to make a major acquisition in the UK makes stronger commitments and that penalties are enforceable. The company is a national asset that is vital to our local economy and science base.

I want to focus primarily on not just the major businesses in Macclesfield and north-east Cheshire, but the many small and micro-businesses that are the lifeblood of our community—those entrepreneurs who are helping to continue our rich tradition of enterprise. The Minister for Business and Enterprise is doing a tremendous job in taking the Bill forward and initiating all the work that it pulls together. Small business makes a big impact and the Bill acknowledges just how big that impact is. The Government have a long-term economic plan that is working—Government Members often mention it—and Ministers are right to use the Bill to roll out further measures in support of that plan. It is absolutely critical that we take away the barriers to success, create a level playing field for small businesses, promote exports and help employment growth. This is an unashamedly pro-small business Bill, which is what we would expect from this Government.

I am passionate that what we do in this place has to help the four Es of sustainable economic success: entrepreneurs, employers, exporters and, of course, employees. The vital measures in the Bill will help all of them. Part 1 will lower the cost of access to finance, which is absolutely critical not just to existing businesses, but to businesses that people hope to set up—Government Members are passionate about helping people who want to set up businesses. We are going to ensure an increase in competition in that marketplace as well. Clause 4 in particular will encourage new entrants by removing the barriers to knowledge. The situation has been too imperfect for too long. That knowledge has been available only to big lenders, so now it will be shared with a wider group of potential lenders.

Part 3 will make more available in terms of public procurement. A £250 billion market of public expenditure will be made available to smaller businesses. That will help to break down the tangible and psychological barriers that are holding too many businesses back from getting started in the first place.

It is incredible. We have received feedback from different outside enterprises and organisations and they are heralding the Bill. The Federation of Small Businesses, for example, has called it a landmark Bill, and it is—it is both symbolically and actually important for small businesses.

We need to help first-time employers in their work. We have done so with the employment allowance, but we can now go further. We must make sure that we can de-risk by enhancing what goes on in the tribunal system and by taking deregulation to a higher and more statutory level, which will ensure that such businesses

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are supported over the lifetime of the next Parliament. I wholeheartedly support the vital steps that are being taken, as I hope all hon. Members will this evening.

6.30 pm

Mr Robin Walker (Worcester) (Con): Like my hon. Friend the Member for Castle Point (Rebecca Harris), I hope that this debate sets a precedent for more discussions and legislation on supporting small businesses, but like my hon. Friend the Member for Bedford (Richard Fuller), I hope that we will free entrepreneurs from the shackles of intervention, rather than encourage more of it.

The Bill’s aim is to make the UK the best place in the world to start, finance and grow a small business. The Government are already helping to achieve that admirable aim by backing small businesses through scrapping the jobs tax, extending small business rate relief, introducing the employment allowance, cutting fuel duty and reducing the rate of corporation tax for small businesses, which, under the previous Government, was higher than the rate paid by some large corporations.

That is why employment has risen by 250,000 in a single quarter, with new business creations at record levels. In Worcester, I have seen how start-up loans and the new enterprise allowance have helped new entrepreneurs to come into the market, and how youth unemployment has been halved since the general election, while apprenticeships have more than doubled. Like the FSB, the CBI and the British Chambers of Commerce, I support a Bill that will extend that progress.

The Secretary of State said that the Bill is complex, and it certainly is. There is far too much to address in a four-minute speech, but I want to speak about a few of the things it gets right and about one big omission. The Bill is right to address access to finance, which is clearly a concern for all small businesses in our constituencies. Data sharing is a very important way of doing that—for example, organisations such as Impetus, which helps many businesses in my neck of the woods, should get access to a list of businesses that have been refused finance by banks and get more of the data that the banks at the moment keep to themselves.

Supporting small businesses and exporting is great. We are all in favour of that, and I agree with the many hon. Members who have praised UKTI’s work and the extension of UK Export Finance to more small businesses. However, I want to sound one note of caution. A business in my constituency that exports to more than 20 countries has contacted me to say that it has lost access to passport to export funding, because that has been refocused on larger employers. I hope that we can support small businesses to get bigger as well as support bigger and more established businesses.

The Bill is right to extend the red tape challenge, which has already saved more than £1 billion, and to replace one in, one out with one in, two out. It is also right to help small and medium-sized enterprises to access more Government procurement. In my view, it is much better to do so by removing barriers and simplifying the application process than by some kind of central business administration, as the FSB has suggested. We need to learn from the US model. The Government

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have increased small business procurement from 6.5% to 10.5%, but there is still a long way to go to reach the target of 25%. I hope that the Bill will help us to reach it.

It is right to address the pubs code and to create an adjudicator, but I share some of the concerns of my colleagues on the Select Committee on Business, Innovation and Skills in that the Bill could go further and that more could be done to protect some of the smaller family brewers.

As my hon. Friend the Member for Gosport (Caroline Dinenage) said, the Bill will do important work on the skills agenda, including by improving access to destination and training data. It was great that the Minister for Business and Enterprise recently visited Worcestershire Business Central in my constituency, which is linking employers and schools in Worcestershire. However, I agree with the hon. Member for Rochdale (Simon Danczuk), who said that a fundamental reform of business rates is missing from the Bill. When the Select Committee looked at the future of the high street and the retail sector, it recognised that there is a need to reform the business rates system to make it deliver for small businesses that are growing, to remove some of the shelves in the system and to update it for the 21st century. That will be a challenge for all the parties in their manifestos for the next general election.

I commend the Bill. It is great to see the Government really striving to help small business.

Madam Deputy Speaker (Mrs Eleanor Laing): Today’s prize for patience goes to Anne Marie Morris.

6.34 pm

Anne Marie Morris (Newton Abbot) (Con): I congratulate the Government on the Bill, which is an excellent piece of work. Having been a champion of small businesses and particularly micro-businesses for many years, I am very pleased to see it making its way on to the statute book. Small businesses represent 96% of businesses as a whole, and they provide 50% of the jobs in this country and 30% of private sector turnover. In my four minutes, I clearly cannot deal with the whole content of the Bill, but given that so much has already been said, I will make a few comments.

On late payment, the Government’s suggestion of a reporting requirement on payment performance is a good first step. However, we all feel a little frustrated and feel that there needs to be a bit more stick. The prompt payment code has inevitably had a very good start. The challenge is that, because compliance is not mandated, it has not delivered all the results that we want. Perhaps listed companies—whether fully listed or listed on the alternative investment market—could be required to comply.

We might also consider having an adjudicator, as with the pubs. If there is a persistent defaulter who breaches the prompt payment code five or six times, that could be brought to the attention of the adjudicator. An adjudicator could also look at the public sector. Although central Government have done a good job of reducing payment periods, local government has not been quite so good. An adjudicator might be able to improve that situation.

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The Government have done a grand job on regulatory reform. One-click incorporation is being pushed forward. I suggest that, although incorporation is the goal for many organisations, limited liability is often what they seek. We should consider having limited liability for sole traders. That has been looked at before, but I suspect that the people who were consulted were those with, might I say, a prejudicial interest.

The defining of micro-businesses and small businesses is long overdue. I commend the Government for doing that, but would issue a note of caution. In my view, the EU definition is not the right definition. The all-party parliamentary group for micro-businesses produced a report in 2012 that showed that research from America, Australia and other parts of Europe suggested that many countries had moved the definition of micros from 10 or fewer employees to five or fewer. That must be reviewed carefully.

The steps that the Government are taking on public procurement are first-class. However, the problem has not been fully addressed. The problem for small businesses, on top of the administrative burden and the red tape, is that those who are seeking to procure often look for an organisation that can supply five, six or 10 different products. Many small businesses provide only one product, which shuts them out of the opportunity altogether. That needs to be looked at.

I will not comment on the pub code, because the Government have done a first-class job with their proposals. Many of the proposals on employment law are also well drafted, particularly the changes to zero-hours contracts.

I would like to know where we have got to with the Enterprise and Regulatory Reform Act 2013, which also looked at tribunals. It tried to minimise the number of people who go through the tribunal system by requiring people who want to go to tribunal to talk to ACAS as a first step or say that they are not interested. It also introduced settlement agreements. We must ask how successful those have been, because this is the last opportunity for the Government to fix anything that has not quite worked in that piece of legislation.

This is an excellent Bill and I commend it to the House. As a champion of all micro-businesses, I am sure that they will be very pleased about what the Government are endeavouring to do.

6.37 pm

Toby Perkins (Chesterfield) (Lab): Some of my colleagues are at the memorial service for Paul Goggins and so are unable to be here, even though they contributed to the debate. I ask for the forbearance of the House for that.

We have had a fascinating and excellent debate that has demonstrated the passion that the House has for small businesses. In the four years since my right hon. Friend the Member for Doncaster North (Edward Miliband) first set out his determination to make his one nation Labour party the party of small business, there has been a welcome change across the political spectrum in the recognition of the importance of small businesses.

Like my hon. Friends the Members for Sefton Central (Bill Esterson) and for Rochdale (Simon Danczuk) and the hon. Members for City of Chester (Stephen Mosley) and for North Swindon (Justin Tomlinson), I am a former small business owner. We were described as

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heroes by the hon. Member for Bedford (Richard Fuller). I therefore know that although the Government’s words have been warm and welcoming, they have not always materialised into action for small businesses. Small business Saturday, which is a significant cross-party initiative, originated with my hon. Friend the Member for Streatham (Mr Umunna).

Matthew Hancock: It was Barack Obama!

Toby Perkins: The Minister is not the first to confuse the two.

We welcome the fact that this is the first of the Government’s Bills to have small business in its title, and it contains a number of measures that we will support. Indeed, on pub companies, late payments, zero-hours contracts and takeovers, the Bill demonstrates the extent to which the Labour party has set the political agenda. However, in the final analysis, the Bill is a metaphor for the entire Government. They know that there are important things to do, they hear what some of the key issues are, but they cannot agree on what to do, so they deliver a Bill that fails fully to grasp the nature of the challenge that faces Britain if we are genuinely to rebalance the country’s economy, support more small business growth, and create an economy that works for the many and not just the few. Members on both sides of the House are pleased that there is a small business Bill, but the sense of a missed opportunity was widely articulated by them.

On access to finance, we are four years into this Government, but net lending is still falling year on year. The right hon. Member for Hazel Grove (Sir Andrew Stunell) said that banks have sucked up Government money and reduced lending to small firms. That view was also articulated by the hon. Member for South Down (Ms Ritchie) and my hon. Friend the Member for Alyn and Deeside (Mark Tami). Labour’s plans for local lending, a beefed-up British investment bank and support for alternative sources of finances have the potential to be truly transformative for Britain’s small businesses, which have been struggling for access to finance for far too long.

On pub companies, Labour Members have argued on Opposition days and in Back-Bench debates since 2011 that the Government were wrong not to introduce an independent adjudicator, and not to put the pub code on a statutory footing. We welcome the fact that they are doing so today. On three occasions, they voted against the measures they now propose. However, the parallel rent assessment process lacks credibility, as was reflected in the comments of the hon. Member for Northampton South (Mr Binley) and my hon. Friend the Member for Easington (Grahame M. Morris). The impact on small family brewers—no one suggests that they are the cause of the problems facing the industry—was mentioned by the hon. Members for Bedford, for South East Cornwall (Sheryll Murray) and for North Swindon. The measure means that those family brewers face costly and incoherent plans that could be damaging for them.

Unless strengthened, the Bill will not deliver the change we need for Britain’s pubs. It was hard to find an hon. Member who was fully in favour of the proposals. My hon. Friend the Member for West Bromwich West (Mr Bailey), who has done fantastic work on the issue

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through the Business, Innovation and Skills Committee, said that the pub company model had failed. He gave the Committee’s support for a mandatory rent-only option. The hon. Member for Leeds North West (Greg Mulholland) is bewildered as to why the Government did not follow the recommendation of the Committee or of Her Majesty’s Opposition. To demonstrate the extent to which the Bill falls short of expectation, it was welcomed by the hon. Member for Burton (Andrew Griffiths). If there is a clearer definition of why the Bill fails to stand up to the test we should set for it, I do not know what it is.

The Government are taking sensible steps on strengthening late payments provisions down the line with respect to public procurement, but they are leaving the onus on the public sector and small businesses to avail themselves of data to discover whether or not they are likely to be ripped off if they sell to a company. Action on public sector late payment is fine, but it does not tackle the lion’s share of the problem. Seventy-five per cent. of businesses that cite late payment as a problem are talking about corporate late payment. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), who has a fantastic pedigree on the issue, spoke powerfully on the importance of tackling private sector late payment as well as public sector late payment. My hon. Friend the Member for Rochdale described the measure as a step forward and not a step change, which was a neat way of putting it. My hon. Friend the Member for Islwyn (Chris Evans) said that we need action on corporate late payers. My hon. Friends will be pleased to know that Labour will propose serious steps during the passage of the Bill that will shift the burden of responsibility off small firms that wait and on to the large firms that pay late. We will truly stand up for small businesses. Those small firms want an end to being used as a cash cow by their large counterparts.

On zero-hours contracts, the Government have done the least they possibly could. I suspect the Secretary of State recognises that the steps in the Bill offer little to employees who face a choice between the insecurity of zero-hours contracts or going back on the dole. As my hon. Friend the Member for Streatham laid out, Labour will take serious steps to recognise that the benefits of a flexible work force should not come at the expense of basic security for long-term employees.

We recognise that there will always be a need for temporary work. There will always be seasonal variations. Any sensible regime will allow for that, but the Government’s policy is all about political presentation—they want to be seen to be doing something about an issue they recognise is toxic on the doorsteps—and is not serious action to end the misery of life on zero-hours contracts for workers in Cameron’s Britain. Those whose working day is spent picking vegetables, working in a call centre, caring for the elderly or plucking a chicken deserve the right to be represented by this House. The House will speak up for them on zero-hours contracts.

The measures on public sector exit payments, as my hon. Friend the Member for Streatham said, are a bit rich coming from the Government who, in the biggest ever NHS reorganisation, sacked hundreds of senior managers, paid them off, and then discovered that they

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still needed them to do their jobs. I think the sense of frustration was felt on both sides of the House. The hon. Member for Bedford, who I have to say was in mid-season form and speaking very well—it is clear why he was not promoted; he is far too sensible—asked why there are no steps towards legislation on the living wage. That is a valid point, which was not properly answered.

The hon. Member for Eastbourne (Stephen Lloyd) exposed the fact that Government proposals on minimum wage fines will not deliver for workers, as the money will simply go back to the Government. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said that the Secretary of State did not understand what life was like for people in her constituency struggling to get by on low incomes. My hon. Friend the Member for Glasgow North East (Mr Bain) said that the Government were closed to new ideas.

There were contributions from the hon. Members for Castle Point (Rebecca Harris) and for Nuneaton (Mr Jones). The hon. Member for Gosport (Caroline Dinenage) criticised Labour’s record on education. It was almost as though she did not represent a party that sacked their Education Secretary yesterday. The hon. Member for Macclesfield (David Rutley) welcomed the takeover plan, which, I have to say, on first hearing sounded very much like what my hon. Friend the Member for Streatham and my right hon. Friend the Member for Doncaster North proposed just a few months ago.

What is clear is that small businesses are very important, and they are respected and admired by Members across the House. However, this is a Bill that misses an opportunity to take some of the steps that really could make a very significant difference. I welcome some measures, but we feel that the Bill demonstrates a series of compromises from a Government who have run out of ideas. They have lost a sense of central purpose and are trapped in their own contradictions. They are frightened to ask the electorate for their verdict and so they stagger on unloved even by those who are in it. It is time for a Government with a fresh agenda. A Labour small business Bill would have delivered real opportunity. This is a Bill that speaks of a Government who are approaching the end. We will give Members the opportunity in Committee to turn it into a Bill that really means something: a Bill that delivers for workers on zero-hours contracts, a Bill that protects publicans, pubs and family brewers, a Bill that empowers small businesses waiting for money they are owed, that boosts our world-class insolvency regime and protects Britain’s manufacturing pedigree. That is what the Bill should be about and that is what the Bill still can be about. Let us strengthen it so that it really delivers, or admit that this Government never will deliver and let us have a general election.

6.47 pm

The Minister for Business and Enterprise (Matthew Hancock): It is a huge privilege to respond to this debate on the Small Business, Enterprise and Employment Bill. This is the first ever small business Bill and it demonstrates the wholehearted, full-throated and determined support of this Government for business. We give this support for a reason. We are building a recovery in which all can share, where the principle of fair exchange builds prosperity and creates jobs, with the financial security and peace of mind that they bring. Business is a force for good in society and we will

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do everything we can to support it. In the passion my hon. Friend, the Member for Northampton South (Mr Binley) showed in his remarks, and in the service he has given in support of business in his time in this House, he demonstrated what it means to say, “We support small businesses and we will help them to expand and grow.”

We welcome the broad support for the Bill from the Opposition. I had an inkling, from the suggestion that they want to improve it in Committee, that they will not vote against the Bill on Second Reading. I would welcome that. They made some constructive remarks, but occasionally I thought we heard a tone that was just a little bit shrill and did not quite make up for 13 years of failure to support small businesses and of burdening them with more borrowing, more regulation and more taxation. The small business men and women of this country will not forget how much more difficult it got to do business under Labour. They will not forget that every Labour Government have left office with unemployment higher than when they started. This Bill is part of our long-term economic plan and it takes steps to help to put that right.

Let me go through the parts of the Bill in turn. Many Members contributed to the discussion on access to finance. The hon. Members for Alyn and Deeside (Mark Tami), for South Down (Ms Ritchie), for Islwyn (Chris Evans)—he called late payment a moral issue and he is right—and for Oldham East and Saddleworth (Debbie Abrahams) all contributed, alongside Government Members, supporting the progress being made on access to finance in the Bill. Of course, recovering from the biggest banking crash in the history of this country takes time and is difficult. This Bill contains measures that will help us to travel further on that journey.

Many supported the proposal on regulatory reform, and I welcome the support from the hon. Member for Streatham (Mr Umunna) for putting the one-in, two-out rule into law. Underneath the bluster, I think the Opposition supported the proposal on public sector procurement—I am not quite sure—but ending the revolving door of pay-outs in the public sector will certainly help.

There was a huge amount of discussion about pubcos and strong support for that part of the Bill. The crucial action we are trying to take is to bring the balance—[Interruption.] The hon. Gentleman says, “Three years,” but Labour did nothing in 13 years. The key is to balance the need for changes and the need not to undermine the tied model as a whole, because we do not want the unintended consequence of large-scale closures. We will work to ensure we get the details right. I pay particular tribute to my hon. Friend the Member for Burton (Andrew Griffiths), who is surely the strongest supporter of pubs and beer that this Parliament has known—and my goodness, that is an accolade. The hon. Member for Leeds North West (Greg Mulholland) has rarely risen in this House to speak of anything but the need for action on pubcos. We also heard from my hon. Friend the Member for South East Cornwall (Sheryll Murray), the hon. Member for West Bromwich West (Mr Bailey), my hon. Friend the Member for Northampton South—or should we call him President Binley?—and the hon. Member for Easington (Grahame M. Morris).

Several points of detail need to be addressed. The first is the issue of smaller pubs. There are, of course, two levels to the pub code, but it is important to make

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sure it works for smaller pub companies and the smaller brewers, as well as the big pubcos. On the issue of franchises, most also have ties, particularly for the beer arrangements, and that is why we have included them. Several Members asked for more details. We are consulting on the level of the fines and will bring forward more details in due course.

Another important part of the Bill concerns child care—and improvements to ease access to it—and schools. Then there is the issue of education data, in part 6. Those provisions will have one of the biggest impacts on the long-term efficacy of our education system, because if we can see what earnings people take home several years later, we can know which courses work. My hon. Friends the Members for North Swindon (Justin Tomlinson) and for Worcester (Mr Walker) spoke passionately in support of that.

Company transparency is an issue that the Prime Minister has pushed hard in the G8. We heard cautionary words from my hon. Friend the Member for Huntingdon (Mr Djanogly), as well as strong and passionate support from the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). There are important measures on company filing and one-click—I will mention that now because nobody else did—that will make it easier to start a business. There was broad support on director disqualification. On the insolvency measures, I thought my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) made a strong speech about his personal experience in the printing industry and the importance of ensuring that pre-pack works properly and is not abused.

Finally, let me turn to the part of the Bill that deals with employment law. There was strong support, particularly from the Opposition Front Bench, as well as from my hon. Friends the Members for Warwick and Leamington (Chris White) and for North Swindon, for the measures to ensure that the national minimum wage works properly, with proper penalties for those who breach it. I am a strong supporter of the national minimum wage, and this Government support it strongly. We are putting it up in relation to average earnings. The hon. Member for Streatham mentioned the policy of putting it up relative to average earnings, but it is at record highs relative to average earnings and has gone up relative to average earnings under this Government, so I do not know what exactly he is looking for.

Many Members mentioned employment, particularly youth employment. One reason why we love small businesses so much is that they create so much employment. We heard, however, an unfortunately partisan tone from a couple of Opposition Members. The hon. Member for Sefton Central (Bill Esterson) launched into an argument about how things were not getting better in his constituency, but youth unemployment in Sefton has fallen by 52% over the last year. In Easington, it is down by more than a third, so I think that the complaints from the hon. Member for Easington were overdone. In Glasgow North East, youth unemployment is down by 42%, and in Newcastle upon Tyne North—I see that the hon. Member for Newcastle upon Tyne North has just left—it is down by 37%. The same issue was raised by my hon. Friend the Member for Warwick and Leamington (Chris White), where youth unemployment is down by 63% over last year, which is extraordinary.