House of Commons Hansard Debates for 13 Nov 1992

Hansard

House of Commons

Friday 13 November 1992

The House met at half-past Nine o'clock

PRAYERS

[Madam Speaker-- in the Chair ]

PETITION

Greenwich (Education Budget)

9.35 am

Mr. Nick Raynsford (Greenwich) : I present a petition signed by 7, 000 residents of the London borough of Greenwich and parents of children in Greenwich schools. The petition expresses concern and anxiety about the damaging effect of cuts in the education budget on the education of their children. The petition has been prepared by the Campaign Against Cuts in Education in Greenwich. I pay tribute to the campaign's unstinting efforts to ensure that their children can enjoy the high-quality education they deserve.

The petition

sheweth That Government cuts in Local Authority Funding and decisions on Standard Spending Assessment are damaging the way in which Education is provided in the London Borough of Greenwich. Wherefore your Petitioners pray that your Honourable House does everthing in its power to obtain a fair Standard Spending Assessment for the London Borough of Greenwich in order that our children's education as well as other vital services do not suffer further cuts. And your Petitioners, as in duty bound, will ever pray etc. To lie upon the Table.

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Small and Medium-Sized Businesses

9.36 am

Mr. Bernard Jenkin (Colchester, North) : I beg to move, That this House recognises the vital importance of small and medium-sized businesses in the wealth-creating process in this country : welcomes the Government's initiatives in lifting the burdens of excessive taxation and regulation which stifle enterprise ; and strongly endorses the Government's clear commitment to the creation of the right climate for sustainable growth, in which initiative and enterprise can flourish.

As a new Member with a first and somewhat unanticipated opportunity to choose a motion for a whole day's debate on the Floor of the House, it does not fall naturally to me to lead a charge on the big interests or to attack the big issues. Nor do I seek to speak for powerful lobbies or for big corporations, although I declare that I am an adviser to one of them--Legal and General Group plc. It is my role to reflect the concerns found in the high street in North Colchester and in every other constituency. If I am able to reflect the realities facing my constituents, the House should put it down to sheer beginner's luck.

I tabled the motion because, of all the effects that the recession is having, the effect on the lives and well-being of those who own, run or work for small and medium-sized enterprises is greater than the effect on any other group of people, yet it is on those people that eventual economic recovery will depend.

Small and medium-sized enterprises should not be treated as the exception for which a short day's debate and a small division of the Department of Trade and Industry will suffice. Small and medium-sized enterprises are not the exception but the rule. There are thousands more small firms than large ones. They employ 60 per cent. of the private sector work force, if we take small and medium-sized enterprises to mean those with fewer than 200 employees. They account for 60 per cent. of total turnover. Yet it is small firms that feel most under pressure in the recession, most put upon by the banks, most burdened by regulation, and most neglected by Government policy.

Whatever the short-term problems may be, we need to look constantly to the long-term objective, which is that long-term economic growth can be achieved only by nurturing that sector. My small part in all this is that before I came to the House I was a venture capital manager for six years. Before that, I worked in industry, for the Ford motor company, so I do not apologise for my lineage or background.

I want to set out today the problems that many small and medium-sized enterprises in North Colchester appear to be facing ; some suggestions and solutions ; and an explanation of how the role of the Department of Trade and Industry and the small firms unit could be strengthened to take a more active role in the formulation of all Government policy as conducted by all Government Departments as it affects all businesses in the United Kingdom. Government cannot be reminded too often : policies that purport to be good for business must be good for small business ; otherwise they miss most of their market.

In the department for the citizens charter--the Office of Public Service and Science--the citizen now has an undisputed champion in Whitehall to generate creative

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friction among the great Departments of state. Friction creates heat which, in turn, can create light, and better policies. Cannot small and medium-sized businesses have a similar champion? It is a cliche to say that small businesses are the backbone of the United Kingdom economy ; it also understates their importance. They are the economy's flesh and bood. Firms consisting of fewer than 20 employees employ a third of the total private sector work force and, as I have said, small and medium-sized firms employing fewer than 200 people represent 99.5 per cent. of the companies in this country and some 60 per cent. of turnover.

Such firms are the seedings and saplings of British industry : some of them will become the large companies of tomorrow. They have an unrivalled ability to create jobs. Between 1985 and 1989, small companies created 1million new jobs in the United Kingdom. That was the reward for measures that we adopted throughout the 1980s, which led to the rebirth of the enterprise culture.

Between 1963 and 1979, the number of manufacturing firms in the United Kingdom increased by only 30 per week on average, but between 1979 and 1990 the rate of increase was 100 per week. There are now 420,000 more firms than there were in 1979.

Even today, in the teeth of a vicious recession, business starts continue to keep pace with business failures. In 1991, NatWest and Barclays both reported estimates that there had been a total of about 480,000 business starts--the same figure as in 1990. That was made possible by measures introduced by the Government. Taxation has been simplified and personal taxation reduced to improve incentives. Corporation tax has been reduced-- particu-larly for small businesses. Inheritance tax has been reformed, capital transfer tax on lifetime gifts abolished and a comprehensive bad- debt relief scheme introduced. Other welcome measures were mentioned in yesterday's autumn statement--not least a further reduction in interest rates. Other initiatives and programmes include the enterprise allowance scheme : 560,000 people have benefited from the enterprise allowance scheme and two thirds of them are still in business today. The DTI's enterprise initiative brought practical help and strategic management advice to thousands of companies, with financial support for consultancy projects to encourage the use of outside expertise as a regular part of management strategy. We have had business training programmes, the loan guarantee scheme and the business expansion scheme--pump-priming the small firms' equity market, which, in the early 1980s, transformed the expectations of the entire venture capital industry.

The training and enterprise councils probably represent the most significant development so far in the provision of support services for small firms. With the involvement of local business men, the TECs will deliver the Government's training programme locally, tailoring it to local needs. Finally, we are test-marketing the concept of one-stop shops for all DTI services. They will also act as a gateway for more specialised advice and services from the DTI, the TECs, other Government Departments and venture capital companies.

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Mr. Dennis Skinner (Bolsover) : The hon. Gentleman mentioned TECs. I read a report in the Derbyshire and north Nottinghamshire coalfield paper to the effect that, in that area, nine out of 10 of the young men and women who had been on courses finished up without a job. It was as bad as that, and that was before the projected pit closure programme.

Will the hon. Gentleman bear in mind the fact that there are about 20 small businesses employing fewer than 20 employees in each pit village ? If 31 pits close, and 31,000 miners are thrown out of work, the effects will be multiplied in the pit villages. In addition to the miners, about 100 people in each village will be thrown out of work. Most of them will be engaged in small businesses. We have all received letters from small businesses in those areas, many of which were represented at the recent demonstrations. Will the hon. Gentleman agree to support the Opposition in voting against the Government if they prepare to close any of those 31 pits when the review returns ?

Mr. Jenkin : The important point to remember about the tragic closure of pits throughout the country, and the scars that their closure leaves, is that British Coal Enterprise plays an important role in placing people in new jobs. If I recall correctly, BCE has an 86 per cent. success rate in placing British Coal employees.

Mr. D. N. Campbell-Savours (Workington) : Eighty-six per cent?

Mr Jenkin : I may be wrong, but that is the figure I recall. Moreover, I remind the hon. Member for Bolsover (Mr. Skinner) that we were given doom-laden forecasts about steel towns such as Consett and Corby and told that their economies would be devastated, but in those places the culture of enterprise has transformed, and new businesses--which have a future, create wealth, bring revenue and contribute to our economic welfare --have been created.

Mr. Campbell-Savours : The hon. Gentleman is partly right, but he fails to realise that, when Corby and Consett were in difficulty, their local economies were almost isolated from the national economy and unemployment was much lower. That meant that the state and enterprise-- industry, the banks and the private sector--could concentrate resources on developing those areas. Now the whole country is in difficulty and we can no longer isolate areas as effectively. That is the point that my hon. Friend the Member for Bolsover (Mr. Skinner) sought to make.

Mr Jenkin : I pay due regard to the hon. Gentleman's point that, in future, it will be more difficult to deal with black spots in the British economy because we are in the depths of recession. But it ill befits Labour Members to give the Government lectures on how to rejuvenate the economy as a whole and unemployment black spots. After all, faced with the same problem in the 1970s, the Labour Government did precisely nothing.

Mr. Iain Duncan-Smith (Chingford) : Does my hon. Friend agree that this matter should be considered against the background of the early 1980s, when the same doom-and-gloom merchants were saying that the creation of small businesses was quite impossible and that only the

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big businesses could do anything? In fact, the opposite proved to be the case : we created 1 million new jobs in areas in which everyone had said that that was impossible.

Mr. Jenkin : I agree with my hon. Friend 100 per cent. I remember hearing the forecasts of the Cambridge Economic Policy Group during the 1970s. We were told that we would have 6 million unemployed by the mid- 1980s. That did not happen because small businesses created jobs and filled the gaps left by the old and dying industries. I should find it more encouraging if Labour Members were interested in Britain's future rather than in the preservation of Britain's past.

Sir Michael Grylls (Surrey, North-West) : The hon. Member for Bolsover (Mr. Skinner) referred to pit closures. In 1991--in the depths of the recession--9,482 jobs were created in the pit closure areas, so it can be done, although I wholeheartedly agree that we need to increase the programme and try harder. The hon. Member for Bolsover should know better than to make silly remarks. He is supposed to know the coal areas. He had better go and learn something from British Coal Enterprise, which has a remarkable record. He should praise what BCE has done and encourage it to do more.

Mr. Jenkin : I agree with my hon. Friend that we might have more respect for the Labour party and the unions if there were an organisation called NUM Enterprises, but there is not.

During my preparations for the debate, I sought input from local businesses in my constituency and from local business organisations. From the submission of the North and Mid-Essex chamber of commerce, it seems that Colchester would benefit from one of the one-stop shops to which I referred earlier. The submission states :

"In Colchester we need more help for exporters. The Chamber has positive indications from its documentation service that exports from this area are on the increase. We should be nurturing and encouraging that. But the nearest dti adviser who is able to visit firms for face to face consultations is based in Norwich. To overcome this weakness, we provided an export clinic, jointly with the dti, last week and it was attended by 40 prospective exporters--but to mount it we had to obtain sponsorship from the private sector".

I ask my hon. Friend the Minister to set up one of his pilot schemes in Colchester with a DTI export executive because that would be good for Britain's balance of payments.

By far the biggest complaint from businesses in my constituency relates to late payment of debt. The Forum of Private Business estimates that nationally £50 billion worth of debt is overdue on the balance sheets of small firms. Of that, £20 billion is owed by big corporations and Government organisations. I have also been told that the national health service and local authorities of whatever party are among the worst offenders. Surely the public sector can be properly regulated to pay up on time.

Public authorities very often pay higher prices, or are able only to tender to fewer suppliers, because of their bad payment record. For private sector defaulters, I would support the three recommendations of the Institute of Directors : there should be easier access to the small claims court ; there should be voluntary codes of good payment drawn up by professional bodies ; and, perhaps most interestingly, the DTI should establish an office to deal with late payment complaints against public bodies, including European institutions and international bodies.

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Dr. Keith Hampson (Leeds, North-West) : Will my hon. Friend consider the converse of that problem? Often there is no cash coming into small firms, but there is a continual demand for cash from them, particularly from the VAT man. There is no cash there, but the computer automatically slaps a large fine on those companies and that only compounds the problem.

Mr. Jenkin : I accept my hon. Friend's point ; and I will comment on VAT later.

The second most common complaint is related to the problem of late payment of debt, which involves rogue directors. My local chamber of commerce complains that

"fraudulent operators are able to circumvent the law, walking away from debts and continuing to trade in the same premises, with the same people in the same line of business but with a slightly different business name."

That particular item is the highest priority concern of the members of the Forum of Private Business, with 75 per cent. of respondents highlighting it as a concern--perhaps the other 25 per cent. were the problem. Is the Insolvency Act 1986 working as effectively as it should to ban directors who have been trading fraudulently? The third complaint is that business men find pay-as-you-earn and the national insurance administration more complicated than appears necessary. How much does it cost a small business to employ someone at, say, £150 a week and how much does that man take home? The Library has kindly provided me with the figures. After employer's national insurance charges of £12.90 and notional additions to costs to allow for statutory sick pay, holiday pay and additional administration, the total cost of the employee is between £170 and £200 a week. Furthermore, the employee will pay his own tax and NIC, so he takes home only £121.30. Therefore, the take-home pay amounts to little more than 60 per cent. of the costs to the employer. If tax and NIC could be rationalised, we could ameliorate the problem.

Mr. James Couchman (Gillingham) : May I point out to my hon. Friend that the happy way in which we introduced the 20p in the pound tax rate added hugely to the burdens of those of us who still prepare a manual payroll?

Mr. Jenkin : My hon. Friend has made an interesting and illuminating point which I am sure my hon. Friend the Minister has taken on board.

I want now to consider the VAT regime. The year-on-year increases in the VAT threshold have been very welcome and have enabled 50,000 businesses to stay out of paying VAT. I also welcome the fact that Customs and Excise is presently conducting a wide-ranging review of the VAT civil penalty regime, and I am pleased that the serious misdeclaration penalty was changed in the last Budget to remove 75 per cent. of cases from payment of the penalty. However, would not my hon. Friend the Minister welcome a discretionary penalty regime which reflected the scale of the sin, intention and ability to pay the penalty?

Moreover, will my hon. Friend the Minister ask his colleagues at the Treasury to look again at the changes to be implemented on 1 January in advance of the single market? The changes will represent a considerable additional administrative burden and they are causing widespread concern.

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My constituents are also calling for less regulation. The Forum for Private Business's third priority of concern is for regulations to be simplified.

May I be forgiven for pointing out that it was Lord Young who, way back in the mid-1980s, first talked of a "bonfire of controls". However, it seems that we have not seen much smoke yet.

The Institute of Directors has pointed out to me that someone wishing to start a new limited company employing two people would have to read 26 documents totalling 269,200 words taking 24 hours and 27 minutes to read. In August, the IOD published a list of 50 licences which could be scrapped. There is also the vexed issue of EC directives.

In an Adjournment debate a week or two ago my hon. Friend the Member for Woodspring (Dr. Fox) ably exposed the Ministry of Agriculture, Fisheries and Food as the source of excessive regulation on abattoirs rather than the EC directive upon which pretext the regulation was based. Similarly, the IOD has attacked the Department of the Environment for an excessive interpretation of an EC directive on the energy efficiency of boilers. Surely those are all causes where the DTI small firms division should step in to sanitise some of the enthusiasm of other Departments.

The final area of complaint that I must report to the House concerns the role of the high street banks. First, I must say how grateful I am that they have taken such trouble to ensure that I am fully informed on the subject--no less gentle or persuasive than my Whip last week. I stress that the House must understand that they are facing difficulties every bit as severe as those faced by many small businesses.

On a personal level, it cannot be much fun being a bank manager in the current climate and being faced with the choice half a dozen times a day of extending the risk on a particular loan or of calling it a day. The banks are facing huge challenges--deregulation ; increased competition ; technological change ; overcapacity ; erosion of profits ; capital adequacy ; scandals like BCCI and Blue Arrow ; and the effects of the recession whose fallout ends up on the banks' balance sheets at the end of the day.

The banks recognise that the survival of small businesses is as much in their interests as in the interests of the economy as a whole. Their actions are louder than my words and it is something of a relief that they appear to be responding to public concern.

Mr. Anthony Steen (South Hams) : Is my hon. Friend aware that many small banks in rural areas charge excessive interest to small enterprises ? They have absolutely no right to charge 5 or even 8 per cent. over base rate and they tend to cripple those who are most likely to go under.

Mr. Jenkin : My hon. Friend has made an interesting and valid point.

It is something of a relief that the banks appear to be responding to public pressure to alter their minimum lending rate policies. The National Westminster bank and Barclays have announced revisions to their policies so that they can continue to pass on the full benefit of base rate cuts to their small business borrowers. No doubt others will be following.

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But there seems to be a cultural problem about institutional lending to smaller enterprises, and it is probably exacerbated by the recession. Perhaps we could learn from the German experience. There is also the perceived equity funding gap. We could certainly look at further reform of capital gains tax to try to stimulate that sector. Forty per cent. is a punitive rate for an entrepreneur to pay after he has taken all the risk and put in all the work to build up a small business.

I have had discussions with one of my former employers, the venture capital provider, 3i, on this subject. I do not know what else the Government can do to plug the equity gap. I note my noble Friend Baroness Denton's comment in her speech in the other place on Wednesday that perhaps we should seek an institution

"rather like 3i in its early days"--[ Official Report, House of Lords, 11 November 1992 ; Vol. 540, c. 216.]

to lend and finance at the very small end. 3i sets a good example in Birmingham in that respect, as my noble Friend pointed out, where it is working with the community. We need to look to community-based institutions at local level to achieve what we want.

Earlier this year I was working on a study with the Business in the Community organisation on just such proposals. The final document, called "Investing in Community Enterprise", is well worth reading and I commend it to my noble Friend and my hon. Friend the Minister. The importance of small and medium-sized enterprises cannot be overestimated. Much of great value has been achieved, but there is much more to be done ; or, in the case of the Government, much that they should stop doing.

I return to the central point. The small firms unit of the DTI is responsible for 99.5 per cent. of businesses in this country. That is my right hon. Friend the President of the Board of Trade's biggest responsibility. Let his Department take the lead over others in the protection and promotion of the interests of small and medium-sized enterprises. It is his responsibility to intervene before breakfast, lunch and tea in the affairs of other Departments as they affect small and medium -sized enterprises. We should adopt a new way of thinking. The DTI should be the small firms department. My right hon. Friend the President of the Board of Trade is no less than the small firms Minister sitting at the Cabinet table.

10.1 am

Mr. Dennis Skinner (Bolsolver) : During the past several weeks, I have been inundated with complaints from firms, mainly small businesses, in my constituency and elsewhere about the effect of the threatened pit closure programme on their ability to survive. I have been a Member of this House for 22 years. Generally speaking, I have not had too many contacts with business people, but in the past few weeks I have received more than 500 letters, many of them from small business men and women from all parts of Britain, saying that they will never vote Tory again. Their names and addresses are available for anybody to inspect. In their cry from the heart, they say that they are in the depths of a recession. They went through a recession in 1981 and managed to survive when others did not, and now they are going through a second tranche.

In my constituency, a business--Hirst--was set up recently in a little village called Creswell, where a pit had been closed some time before. That firm wrote to me and said, "We have just heard the bad news. In view of the

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difficulties that we faced before and the closure of Creswell colliery, we have had to lay off five people. We have to tell you, Mr. Skinner, that if the 31 pits close, and many of them are within a radius of about 20 miles of the village--approximately 14 pits--we will have to close the whole operation." That is typical of the letters I have received.

I have heard today in the interventions and cross-talk that, somehow or other, British Coal Enterprise Ltd. has been doing a sterling job in areas where pit closures took place. British Coal Enterprise Ltd. claimed credit for jobs that other people have managed to get. In Scotland, Wales and other parts of regional development areas, development agencies managed to get a few jobs in the areas, and British Coal Enterprise Ltd. claimed credit for the lot. That is one of the biggest confidence tricks ever carried out by any agency. We must bear it in mind that the agencies were set up in 1984-85 in the middle of the last pit strike. My hon. Friends who hear talk about British Coal Enterprise Ltd. jobs must remember that it double-counted jobs that were due to somebody else's efforts--local authorities, development agencies and so on.

In my constituency there are villages in which pit closures have taken place. Because of voluntary redundancies, some miners had a chance to go to another pit village. The same is true in the constituency of Mr. Deputy Speaker, my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse). Male unemployment in some villages is between 30 and 40 per cent. That is hard to believe, but it is true, because, generally speaking, pit villages are very self-contained. They rely on their pit and on the ancillary industries that are directly or indirectly related to the colliery. When a pit closes, one can guarantee that about another dozen or 20 firms will go down the pan.

We have been led to believe that, after the pits have been closed, a magic wand will be waved by British Coal Enterprise Ltd and various other agencies. We have been given the impression that jobs have been created by small businesses, big businesses and so on. That ain't true. In Langwith, in my constituency, where a pit closed in the late 1970s, early 1980s, male unemployment is more than 40 per cent. I have referred to the prospects of young men and women seeking jobs. About four or five weeks ago, before the announcement of the 31 pits to be closed, I read in the Worksop Guardian that local training and enterprise councils had conducted a survey and found that nine out of 10 young men and women on TEC courses have not been found a job. That was before the announcement. Can hon. Members imagine what life in coalfield areas will be like if those pits close?

It is high time that we examined what is really happening in Britain. Not only have we had a recession followed by a deep slump, but some measures announced yesterday showed that the Government will not do a great deal to solve the problem. [Interruption.] Somebody is moaning on the Conservative Back Benches. I can understand why. I must tell Conservative Members who waved their Order Papers yesterday that some of the prospects for job creation that were put forward by the Chancellor will not reach fruition in many areas of Britain. There was mention of local authorities being allowed to use a very small proportion of their capital receipts based on the number of council houses that are sold next financial year. That will not make much difference. It

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would be very helpful for small businesses if some building firms in pit villages and elsewhere were able to start employing young men and women, some of whom have been employed in the mining industry. They would love to be able to do it.

When I left school, I had the opportunity to work for a firm building houses. That was in the late 1940s and early 1950s, under the Labour Government who started the massive house building programme. I had the choice of working for about 20 different building companies and I could have worked for other small businesses making pipes, and all the other things associated with building the welfare state. I had a choice in life. It was not the greatest choice of all time--I did not go straight into Standard Chartered bank, like some Conservative Members, after being turned down as a bus driver ; I went down the pit. But I had a choice. We are living in a society where young men and women do not have a choice. My choice was meagre, and for some people it was better in those years.

Conservatives talk about unemployment as if the Labour Government left 3 million out of work. Even though I often opposed that Government vociferously, the number of people out of work then was never more than about 1.25 million, which was the total when we left office in 1979. For the greater part of Labour's time in office it was much lower. I did not agree with the public expenditure cuts and I helped to defeat the Government on one of those ill-fated nights in 1976, and on other occasions.

However, let us put things in perspective. Many small businesses were thriving then. Now, for every week that passes they are falling by the wayside. The latest figure is 76 failures every working day--three every hour. Between us, the hon. Member for Colchester, North (Mr. Jenkin) and I have been on our feet for about 40 minutes, so two firms have gone bankrupt while we have been speaking ; and the chances are that many more will do so before the day is out.

Mr. Alan Duncan (Rutland and Melton) : Does the hon. Gentleman agree that one of the main sources of opportunity for the young people that he has described to set up businesses and contribute to their community and their future would arise if the county council, which he so wantonly supports, contracted out far more of its work ? He should forget about the sort of Stalinist economic structure that he likes.

Mr. Skinner : I do not take lectures from Tories who are not content with one job but moonlight and take others. Many people on the Conservative Benches--I could name them if I wanted--not only pick up £30,000 as Members of Parliament, but pick up money on the side, working in the banks and law courts.

Mr. Campbell-Savours : Like the hon. Gentleman who moved the motion.

Mr. Skinner : Yes. The hon. Member for Colchester, North said that he was working for someone else. He is not content with the income he gets here, although 4 million people are out of work.

As for Derbyshire county council, let us put it on the record that when the Labour party was elected in 1981 it said in its manifesto that it would not go in for compulsory redundancies. The council has a proud record of ensuring that it does not add to the dole queue and, as a result, when

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it went back to the Derbyshire electorate in 1985--not to Conservative Members--it was returned with a bigger majority. In 1989, the electorate spoke again. People liked the idea of having the cheapest school meals in Britain, free home helps and all the rest. By and large, small business men and women in Derbyshire joined typical Labour voters to ensure that, despite all the attacks from the Tory -based media, the Labour county council got another majority, so it is still in power. The Labour party still has a fair majority and the people of Derbyshire like what it is doing. The voters have spoken three times in succession, so they do not need any lectures from moonlighting Tory Members of Parliament.

Mr. Jenkin : Is there not a slight irony in what the hon. Gentleman is saying about compulsory redundancies? No one likes the idea, but even the Labour party has to implement compulsory redundancies. Is there not an element of hypocrisy when councils posture in front of their electroates and buy off the consequences of compulsory redundancies, at the expense of the taxpayer, of wealth creation, and ultimately of the jobs and opportunities that he is lamenting?

Mr. Skinner : It is a pity that the hon. Gentleman was not listening earlier. I told him that when Labour was in power I did not support the increase in unemployment. I did not support it when I was a member of the national executive either. He can complain to someone, but he must not complain to me, because my record on such affairs is apparent. He has no need to look into a crystal ball--just read the book.

I was talking about the fact that young men and women want jobs. If we assume that all those pits close, it will be even worse for young people wanting work. In the Bolsover, Chesterfield and Mansfield areas, in South Yorkshire and in the remaining scattered coalfields in south Wales, the north-east and Lancashire--where the last pit is to close--unemployment totals in some travel-to-work areas will be well over 20 per cent., and well over 50 per cent. in some pit villages.

Nothing that happened yesterday offered any hope to young people wanting a job. The mini-Budget launched a spiteful attack on low-paid workers and will mean less purchasing power in the economy to create much-needed growth. Generally speaking, low-paid workers spend all their money, and they spend most of it in small businesses. If we take money away from them, the economy will go down further and further and the growth that the Chancellor talked about will not materialise.

If small businesses are to be given a chance, one measure could be taken that would increase the purchasing power in the economy and take money from people who can best afford it. The result might be a reduction in the unemployment total. In the Thatcher years--in the first 10 years of Tory government--£26.2 billion was given in tax cuts to the richest 1 per cent. of the population. That is a lot of money. Yesterday, the Chancellor should have said, "We're going to take that money back. The country's in a mess. We're not going to call on working class people to carry the burden. We're going to get back the £26.2 billion that was given to the richest 1 per cent. in tax cuts." That would have helped to balance the books.

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The Government could have used some it to narrow the public sector borrowing requirement from £37 billion to £30 billion. The Chancellor could have used some of it to bolster the national health service, which would have created more growth among the small businesses which supply it with goods and services. We could have doubled the amount of money that we give to pensioners, because about 80 per cent. of that would be used to increase spending power and small businesses would reap some of the benefit.

We could have used some of that £26.2 billion to repair schools. There is an estimated £4 billion backlog of school repairs, and most repairs are carried out by small business enterprises. If we launched a campaign to repair those schools, some of which are derelict, and to provide inside toilets for little toddlers who will be skating across the playground in winter, we could start making the economy, and small businesses in particular, boom.

Dr. Hampson : Does the hon. Gentleman agree that the abolition of the Ryrie rules in the Treasury will benefit large projects--many imagine that they relate especially to those projects--and small ones, such as insulation work in hospitals ? The abolition of the rules will enable small projects to be undertaken with private money.

Mr. Skinner : The hon. Gentleman is right about the principle. The trouble is that yesterday not much money was shoved across, so there will not be much of an improvement. If the principle is sound--

Mr. Campbell-Savours : It is Labour party policy.

Mr. Skinner : I appreciate that it was in the Labour party manifesto. It is one of the policies that have been stolen by the Conservatives. Yesterday, the Government grabbed a couple of our policies, but instead of doing something positive, they merely accepted principles.

I return to the issue of local authority housing. There is £5 billion- worth of capital receipts, and, by and large, every local authority in Britain uses small businessesto provide services. If the Government had used the£5 billion-worth of capital receipts in a positive way, a house building programme would have been created that would give many people the chance to have a roof over their heads. Such a programme would bring many small businesses back into operation and thousands of construction workers would come off the dole. When people come off the dole they start to pay tax and insurance, so the Government have less to pay out in dole money. It is costing £30 billion a year to finance the dole queue. The more that we cut into that pile of money and the pile of human misery that is known as the dole queue, the more revenue the Government receive in tax and insurance payments. That creates an upward spiral. For so many years now we have been suffering the consequences of a downward spiral. Although the Government pinched an idea from the Labour party, they did not do a great deal with it.

If we used the £26.2 billion that has been given to the richest 1 per cent. of the population in the way that I have described, we would help small businesses and cut the massive dole queue. We would give young people the chance of work. I do not know how teachers manage to motivate the young men and women who are in our schools. What can they say to them? When I was at school,

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they said, "Pass your exams and better yourself." That is what was said in my area. That was the philosophy that prevailed.

The other week I went to Shirebrook school on its speech day. I spoke to many young lads. Present also were people from various enterprises that are still in the area, including small businesses. I asked how the teachers motivated young men and women to take their exams and to pass this, that and the other when they have brothers and sisters who have never had a job for four or five years. At the same time the Government complain about crime on the streets, for example.

We are creating a society in which new generation after generation is witnessing mass unemployment and no prospect of work. Against that background, the Government talk about helping small businesses.

Mr. Harold Elletson (Blackpool, North) : Before the hon. Gentleman moves on to talk about crime, I wish to take up one of his spending plans. Perhaps he will tell us whether he supported the motion that was passed at this year's Labour party conference that called for a massive increase in pensions, and whether he agrees with the Opposition spokesman on social security, the hon. Member for Glasgow, Garscadden (Mr. Dewar), that the proposed increases would cost taxpayers about £25 billion. How would the hon. Gentleman go about paying for such an increase in pensions? In making that provision for pensioners, how does he imagine that he would be able to produce the sort of help that he is talking about for small businesses?

Mr. Skinner : I talked earlier about clawing back the £26.2 billion that went to the richest 1 per cent. of the population. I would use some of that money to increase pensions. There are other areas in which there is a great deal of public expenditure. For example, I would cancel the Trident project. That would save £10 billion. I would use some of that money to bolster the welfare state, to build more houses, and to give pensioners more money. I would stop the business whereby the top four clearing banks have received £5 billion over the past 10 years in written-off debts. The country is strapped for cash, but I have read in the Library that National Westminster, Barclays, Midland and Lloyds have received £5 billion from the taxpayer to write off debts. It really is fanciful. Yet the Government call upon nurses and other low-paid workers-- those on just over £100 a week--to carry the can for the mess that they have created. It is incredible.

If the hon. Member for Blackpool, North (Mr. Elletson) is worried about where the money would come from, he should understand that there is plenty of money in the country. There must be if some Tory Members have six or seven jobs apiece. I am an anti-marketeer, which means that I am not convinced about Maastricht or anything else. Every family is paying £18 a week to prop up the common agricultural policy and the fraud that is run by the mafia in Italy and elsewhere within the Common Market. I would make a big hole in the money that we give to the Common Market.

I am sure, Mr. Deputy Speaker, that you wish me to ensure that I confine myself to talking about the Economic Community in terms of small business. I have done so because, as was said earlier, most business in Britain is small business. I heard somebody say on the wireless the other day that small business represent about 60 per cent.

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