Economic Performance and Business debate

Anne Main condemns the Government's decision source funds to prop up the housing market by removing grants to small businesses.

Anne Main (St. Albans) (Con): I am pleased to follow someone else who is in the east of England, but I was amazed at her complacency about some of the things that have affected the east of England. I am no great fan of development agencies or regional assemblies. It is interesting, however, to note that those are the Government's delivery vehicles for grants. We cannot ignore the fact that the Government have decided to take away a substantial amount of money from the grants directly affecting businesses, and have used it to prop up the housing market. Only in August, we were told by the then Exchequer Secretary to the Treasury:

"The East of England is being affected by global uncertainty...so here in the East of England we are determined the government along with regional and local agencies such as EEDA will all work together to ensure that businesses get the support they need."

The Minister for the East of England said:

"In these difficult times we must keep calm and continue to work to our strengths. I am confident that the region's innovative businesses, which are investing so heavily in the skills of their staff, have the right approach. But, more can always be done,"

which is why we will be

"working with the business community to make sure that everyone is equipped to meet the challenges".

That was in August. In October the Government did a big U-turn, pinching a large amount of money- £300 million-from those very businesses, and believe me, Madam Deputy Speaker, they think that that is a problem. As David Kingham, the managing director of Oxford Innovation, one of the country's leading providers of managed work spaces, puts it:

"We have a problem in banking, clearly, and an impact in the housing market. But the last thing we want is the cost of that to start to damage small business investment."

Unfortunately, it already has.

Barry Gardiner: Will the hon. Lady give way?

Anne Main: No, I shall not give way, because other hon. Members have waited a long time to speak.

Walter Herriott, Mr. Kingham's counterpart, said that he had lost public funding from the East of England Development Agency for the first time in 15 years.

"Within the last week, because of...funding of first-time buyers, we have been squeezed by the testicles,"

he said, obviously finding the experience a very painful one.

Needless to say, when the Select Committee on Communities and Local Government looked into the auditing of how things were going in the east of England, I asked the question. I said that small businesses might be finding it difficult. I said that there had been some criticisms from small businesses locally, which have said that money has been taken away from business development through the RDA to prop up the housing market. I asked how that could be justified. What research had been done into the impact on struggling small businesses?

A Mr. McCarthy, an official, said to us:

"ministers took that decision very carefully and with some degree of reluctance. It was a decision taken in consultation with the Prime Minister and with John Hutton as well as by ministers in our Department; it was not a unilateral decision."

He went on to say:

"Therefore a conscious decision was taken to fund an initiative"

to prop up the housing market-my words, not his-

"because that money is all about buying their completed stock as well as helping first time buyers who cannot access a home at the moment. I think that despite it being difficult and painful for ministers, it does something which helps industry and helps first time buyers now."

But the pain and the difficulty is being felt by small businesses.

I asked the Minister in an earlier intervention what he thought about that, but all he said was, "Oh, I'm glad to see that you're all supporting RDAs now," focusing his attention always on the delivery vehicle, not on the grants that are being robbed. The Government have decided to put money towards house building, investing in propping up the housing market, at the expense of small businesses.

Barry Gardiner: Will the hon. Lady give way?

Anne Main: If I am generous enough to give way, the hon. Gentleman will have to be incredibly brief.

Barry Gardiner: I am extremely grateful to the hon. Lady. Does she appreciate that putting money into the housing market is one of the best possible ways of supporting electricians, tilers, plumbers, joiners, roofers, handymen, carpet layers and all the other small businesses that go with housing?

Anne Main: I am very sorry that I took that intervention. The fact that the Government are going ahead with hundreds of thousands of extra houses that are under dispute in our area is more about saving their house building programme.

It cannot possibly be right that small businesses should be used as the whipping boy. They have put up with an awful lot of economic pressures already. They have been regulated to death and now, in their hour of need, they are unfortunately being seen as a ready pot of investment that can be taken away. What is more, the Government are being so quiet about all this. It seems that no matter whom I ask, they all say, "Oh, we're all in favour of regional assemblies and RDAs now, are we?" That is not what we are talking about; that is the delivery mechanism.

I look forward to seeing the Secretary of State come back tonight and tell us whether he has made any calculations of the impact that taking away that future investment will have on small businesses that were looking to receive it from the Government. As far as I know, there have been no such calculations. I have been told nothing other than that the decision was a difficult one. I would love to know what information informed it.

9.9 pm"