Chuka Umunna MP

Chuka Umunna, MP for the Streatham constituency, made another of his regular visits to local High Streets today.

Chuka visited Streatham Vale businesses including, amongst others, Superchoice newsagents, Covenant Hair & Beauty, Watts Pharmacy, The Village Card Shop, and Gow Gow, a new pet grooming business.

As MP for the area, Mr Umunna considers it vital to keep in touch with how local business owners are doing and what issues they are facing so that he can be of assistance. Among the issues discussed was what action needs to be taken to tackle anti-social behaviour and provide security to business, as well as how important it is to get banks lending.

Mr Umunna makes regular visits to local High Streets and earlier this month visited shops in Greyhound Lane. As Shadow Business Secretary, Mr Umunna is responsible for holding the Government to account for their Business policies, as well as for making sure that the Government do more to secure economic and business growth. High Street Walkabouts in his constituency are a good way for Mr Umunna to make sure local concerns are communicated in Parliament.

Chuka Umunna today visited Greyhound Lane to talk to local business owners and employees about their needs and concerns.

Visiting Greyhound Lane Mr Umunna talked to local business owners and employees, as well as representatives from the Police about problems with anti-social behaviour and street drinking, as well as about concerns raised that not enough has been done by the Government to ensure confidence in our economy, and that this is having a negative impact on local businesses.

As MP for the Streatham constituency, Mr Umunna regularly visits local High Streets to listen to their concerns and see what help he can give as the local MP. In Mr Umunna’s role as Shadow Business Secretary he is responsible for holding the Government to account for their business policies and ensuring the Government does more to enable businesses to grow. High Street Walkabouts are a good way to quickly transfer local concerns to action in Parliament.

For Londoners today’s Autumn Statement means

• Rising travelcard costs and no end in sight for farepayers. Only Ken will cut fares and set a course that ensures a fairer deal for Londoners.

• Tory Mayor Boris Johnson has failed to get a decent settlement for London out of the Autumn Statement. He has been awarded 4 out of 40 projects for the Infrastructure Fund lower than almost every other English region. Of the 4 projects that have been announced, only two are actually funded.

• George Osborne’s remarks about a Silvertown river crossing and a Northern line extension are little more than warm words. There is little or no detail on how the projects would be delivered or funded.

• The Government should take up Labour’s five point plan for growth and jobs – which will give up to 334,000 London firms a tax break to take on more workers, create 11,500 jobs for young Londoners and build 5,000 new homes.

More Tory fare rises

Today’s fares announcement by the Tory Mayor and Tory Chancellor means rising travelcard costs and no end in sight for farepayers:

• This is the fourth consecutive year of inflation-busting fares under the Tory mayor

• Fares in London have risen faster than anywhere else in the country during tough

economic times. Boris Johnson should use the £729 million of surplus money in his TfL budget to keep fares low.

• If Ken is elected Mayor in May 2012, in October 2012 he will cut fares, then freeze them the whole of the following year and ensure that they rise by no more than inflation in the following two years.

London’s economy in worse state

The London economy is in a worse state than it has been for more than 15 years

• 410,000 people are now unemployed in London, almost one in ten of the population. Unemployment in London is now higher than it has been at any other point since 1994. According to the latest estimates from ONS, more than one in four young people in London is unemployed.

• Only 56 affordable homes were built in London in the last 6 months, and the number of housing starts in the last quarter went down by more than 50% on the previous year.

• Between January and September, the number of 18-24 year olds on the dole for more than 6 months has doubled in more than half of London’s boroughs.

• A survey by Travelex yesterday showed that 59% of small and medium sized businesses in London expect to go into a double dip recession.

Infrastructure projects cut

The government is cutting not investing in infrastructure.

• Only 4 out of the 40 infrastructure projects outlined today are in London, less than the 10 in Yorkshire and the Humber, and less than the West Midlands, the North West, the South East and the East of England. This is despite the fact that unemployment is higher in London than anywhere else apart from the North East.

• The Tory-led Government got rid of the London Development Agency as well as agencies to promote tourism and inward investment in London

• And even these 4 are beginning to unravel once the detail emerges:

I. The Northern Line extension is a wish not a commitment. London will get no money from the Government for the Northern Line extension, and no guarantee that it will be allowed to borrow. At the earliest, this project will only begin in mid 2013.(In the Autumn Statement it says “Subject to commitment by April 2013 from a developer to develop the site and make agreed contributions, the Government will consider allowing the Mayor of London and partner authorities to borrow against the Community Infrastructure Levy (CIL) to support this scheme.”)

II. If London receives the same as the other super-connected cities – it will get only £2 million of funding next year – 26p for every citizen

III. There are no commitments on where or when new river crossings will be built or how they will be funded. (In the Autumn Statement it says “the Government will work with the Mayor of London and Transport for London to explore options for proposed additional river crossings, for example at Silvertown.”

Child tax credits cut

As a result of George Osborne’s cuts to tax credits:

• 561,900 families in London will lose out as a result of the changes to the child element of the child tax credit

• 323,600 families in London will lose out as a result of the freeze on the couple and lone parent element of the working tax credit.

In 2008 Boris Johnson axed the childcare affordability programme which had delivered affordable childcare for thousands of London children.

Pay freezes

As a result of George Osborne’s further reductions in public sector pay

• 719,000 public sector workers will experience just 1% pay increases in the two years after a pay freeze ending in 2013. This will impoverish well over a million households in London, who will experience falling real pay every year for the lifetime of the Tory-led government

Labour’s 5 point plan in London would:

1. Create up to 11,500 jobs for young people and build 5,000 homes

2. Bring forward investment projects like new school buildings

3. Temporarily reverse the Tory-led Government’s VAT rise – a £450 boost for families with children

4. Cut VAT on home improvements to 5% for a year

5. Give up to 334,000 small firms a tax break to take on extra workers

Chuka Umunna MP has written to Mary Portas ahead of her Independent Review into the health of Britain’s High Streets.

Chuka, who as MP for the Streatham constituency represents the longest High Street in Europe, along the A23, including Streatham High Road, regularly meets with local business so as to bring their concerns to Parliament.

To find out more click here.

Chuka Umunna MP has written to Mary Portas ahead of her report into the health of Britain’s High Streets and is due to meet with her along with other MPs to advance the case for local business.

Mary Portas, who has showcased her years of retail business experience in hit Channel 4 shows such as ‘Mary Queen of Shops’ and ‘Secret Shopper’ was asked by the government to provide an independent report on what can be done to aid Britain’s High Streets following criticism that enough was being done to foster confidence and support growth.

It is a particularly challenging time for local High Streets which are grappling with the Government’s VAT rise and low consumer spending and confidence. As MP for the Streatham constituency Chuka Umunna represents an area that includes the longest section of High Street in Europe, along the A23, including Streatham High Road.

Chuka Umunna, who is the Shadow Business Secretary, has written, along with fellow Labour MP’s Harriet Harman, Shadow Secretary of State for Culture, Media and Sport and Hilary Benn, Shadow Secretary of State for Communities and Local Government, in order to ensure that concerns about the future of Britain’s High Streets are taken into account.

The MPs are calling for the Government to enact Labour’s four-point to give local retailers the boost they need given the difficult economic situation nationally. They are calling on the Government to introduce a temporary VAT cut from 20% to 17.5%, putting £450 into every family’s pocket; to amend the the Localism Bill to give communities power to develop a strategy for retail growth in their own area; to give Councils the funds to reinvigorate high-streets blighted by empty shops; and to ensure that small business can compete fairly with big business by putting a fair competition test into the planning system.

In their letter the MPs raised their concern that chain betting shops are putting negative pressures on local high streets and exploiting vulnerable people. Gambling machines which can take up to £18,000 an hour are currently in use on London’s High Streets and there are serious concerns that deprived areas and vulnerable people are most at risk from gambling addiction and resultant hardship.

In the next few weeks Chuka Umunna MP will be continuing his regular walkabouts with local businesses and will continue to work hard to transform their concerns into positive action in Parliament.

Commenting, Chuka Umunna MP said:

“I have written to Mary Portas to make the case for High Streets in my constituency and up and down the country. The Conservative-led Government, through actions such as the ill-advised VAT rise, has created a dangerous lack of confidence that is making life incredibly difficult for hard working local retailers.”

“Our Constituency has so many vibrant local Shops and it is essential that we do all we can to support them. I will be fighting the case for local businesses both in Parliament and on the ground in my constituency”

Britain needs a better capitalism. Not just for its people, but for its businesses too. Just as the 1980s brought a welcome end to the excessive regulation and bossy governmental control of post-war social democracy, so the next decade needs to witness the end of the do-what-you-can and take-what-you-want capitalism that led us to the financial crash. Helping to bring a better capitalism into being to provide an answer to the problems of stagnant growth and falling living standards is the overwhelming political and economic imperative of our time.

This was the crucial message at the heart of Ed Miliband’s address to the Labour Party conference last week. But the idea of a “better capitalism” did not originate in the Leader of the Opposition’s office. Indeed, it did not come from politics of any sort. Instead, it came from business itself.

It evolved from the efforts of Britain’s best companies, very large and small, to grapple with increasing public expectations and challenging economic conditions. The result is clear – a model of better capitalist practice, which is now frequently taught in our leading business schools, even if it has only recently reached our political consciousness now. It does not require that we label each business as “good” or “bad” as critics have crudely demanded; it is more a question of asking what characteristics add value to a company and to our economy at the same time, and what can be done to nurture them.

The model has three essential features:

First it recognises what is emblazoned across Google’s web pages in every country: “people are our most important asset.” Successful firms now recognise that effective worker engagement at all levels is a means of releasing innovation and creativity. When our people are our economy’s greatest asset, we must support the businesses that invest in that asset.

Second, it acknowledges that transformative product innovation is vital for the success of the British economy. It is not enough to rely just on the response to immediate demand. We must learn from the approach in countries like Germany that have seen businesses thrive whilst their counterparts in Britain have lost out.

Third, as GSK’s Andrew Witty has said, Britain’s big companies have allowed themselves to be seen as “being detached from society”. Successful firms increasingly recognise that traditional ways of doing business can place substantial strains on the places in which they are located and the people with whom they come into contact. The new business model acknowledges these tensions and responds to them positively, even drawing local communities into key decision-making processes.

None of these ideas has been driven by government. They have come from companies themselves. To ignore them would be truly anti-business. Only companies themselves can fully appreciate the challenges they face and only they possess the flexibility necessary to respond. Nonetheless, if they are to succeed they will need proper public understanding, stable partners from the state and voluntary sectors, and a supportive regulatory regime. And that is where politics comes in.

Ed Miliband shocked many in Britain’s chattering classes when he presented this vision in Liverpool. Listening to his detractors, it would be easy to imagine that everything was well with the developed world’s businesses. As if there had been no financial crash, no currency crises. As if Britain’s greatest businesses were finding life easy, when in fact the question is more what we can do to help them thrive. Britain needs a better form of capitalism precisely because our best businesses need an economy which works for them if Britain is to grow sustainably in the long run.

“The moment for a new conception of capitalism is now,” Harvard Business School Professors Michael Porter and Mark Kramer argued recently. And they are right. It is time for Westminster to understand that demand and to help to make it happen.

Chuka Umunna MP is Shadow Business Secretary and Labour Member of Parliament for Streatham

Published in The Times, Saturday 8 October 2011

A government claim that over half a million new companies have been created since May 2010 has been exposed as misleading, Shadow Business Minister Chuka Umunna MP has said.

A Conservative Party press release last month claimed that according to August figures from Companies House, 506,000 businesses had been created since the Tory-led government took office. Business Minister Mark Prisk said “up and down the country entrepreneurs are turning their great ideas into the next generation of successful, innovative British firms”.

However, it has emerged that the data refers only to gross numbers of new business registrations and does not take into account de-registration, owing to liquidation or other reasons, over the period. Taking into account de-registrations, in net terms only 108,000 new businesses were created from May 2010 to August 2011, and 99,000 in the year to 1 August 2011.

According to September’s Companies House statistics, the net increase since 9 May 2010 stood at 124,000 – far lower than the 500,000 figure cited by ministers.

The August 2011 Companies House registry statistics, from which the 500,000 figure is taken, are returns from administrative systems and lack the kite mark status of National Statistics. Therefore, their reliability has been questioned and it is unclear whether seasonal variation has been taken into account.

The ‘workload statistics’, from which the 506,000 figure was are used internally to monitor how well Companies House is performing in registering new firms, and are not treated as a measure of the number of new firms created.

The Office of National Statistics (ONS) publishes a range of official data sets on business creation. The first set of post-2010 election ONS figures on business creation, providing a snapshot of UK business numbers, are due to be published on Wednesday October 5th next week. This will be followed by BIS business population estimates and ONS business demography later this year.

Statistics from Equifax on the number of business failures in Q2 2011 show that business failures are up 2.2% on the previous quarter, have increased by 3.4% compared with the previous year. In some regions, such as the North East, the rise in failures is far higher than the national average.

ONS unemployment statistics this month show that while the number of people employed in the public sector fell by 111,000 between March and June of this year, private sector employment increased by 41,000 – a gap of 70,000.

In March, Prime Minister David Cameron said: “We need to see a country where new businesses are starting up on every street, in every town; where entrepreneurs are everywhere.”

Commenting, Shadow Minister for Small Business and Enterprise Chuka Umunna MP said:

“It is shocking that ministers are misleading on the number of businesses being created and are seeking to mask the true picture of the UK economy by using a gross, rather than net, figure from Companies House.

“By cutting too far and too fast, the government has dented confidence and is holding back the creation of new businesses. Tens of thousands more public sector jobs are being lost than those created in the private sector to compensate.”

Ministers have cast doubt on when a new EU directive on late payments will be implemented into UK law in a letter to Shadow Business Minister Chuka Umunna MP.

During a House of Commons debate on late payments earlier this month, BIS Minister Ed Davey MP announced that the government would transpose the EU directive on late payments into UK law in the “first half of 2012, which is earlier than we are required to do. I hope that addresses some of the concerns that colleagues have expressed during the debate”.

However, Mr Umunna, who earlier this year called on the government to implement the directive early to help small businesses, has now received a letter from Mr Davey going back on the promise he made in Parliament.

Seeking to “clarify” the statement made during the debate, his letter says: “the deadline for transposition is 16 March 2013 and the outcome of the consultation will determine the final timetable for the transposition process”.

Statistics released in July by the Federation of Small Businesses show that 73% have been paid late in the past year and for a large majority (77%) this was by other businesses. According to payment industry body Bacs £24 billion is now owed to SMEs across Britain in late payments, with each business being owed on average £27,000 and waiting 39 days longer than stipulated by payment terms.

Increasingly, large businesses are extending payment terms beyond what could be reasonably expected by small and medium sized businesses which often rely on steady cash flow for survival.

The EU directive on late payments will introduce new curbs on commercial contracts setting payment terms longer than 60 days. Under its terms, payment terms beyond 60 days will only be valid if expressly agreed beforehand and in most cases, payment terms beyond 60 days will be deemed ‘grossly unfair’ and hence unlawful. The directive also establishes minimum levels of compensation for late payment.

Commenting, Shadow Minister for Small Business and Enterprise Chuka Umunna MP said:

“We have been calling for the government to bring forward implementation of the EU directive on late payment into UK law, which would help small businesses by clamping down on unfair payment terms.

“Ministers must act to end the chaos and confusion surrounding the late payment directive and give small businesses the certainty they need on this issue.”

Speech at Rochman Landau LLP by Chuka Umunna MP, Shadow Minister for Small Business & Enterprise, Tuesday 20th September 2011

Let me start by saying how great it is to be speaking here at my old firm. As many of you know, this is where I practiced for a number of years and it is a real pleasure to be back again.

Above all, it is good to be here talking to you all today for another more profound reason.

We face an extremely uncertain and volatile economic climate:

• there is the ongoing crisis in the Eurozone which inevitably will have a major impact on our economy: half of our trade is with other countries in the European Union; our banks have lent billions of pounds to Eurozone countries facing big problems;
• our economy has flatlined with 0.2% GDP growth over the last 3 quarters to June 2011;
• confidence has nose dived following the Chancellor’s comprehensive spending review which has, in turn, hit domestic demand hard;
• last week we learnt that unemployment has surged above 2.5 million.

So it is a difficult economic environment for you to operate your businesses.

We disagree with the government’s economic strategy. It is implementing one of the biggest fiscal consolidations embarked upon by any government in the Western world at this stage in a country’s recovery in the name of deficit reduction. It is a very big gamble.

Reducing the deficit is essential but the Opposition’s view is that you have got to allow the recovery to settle in, otherwise you risk choking recovery off with the result that more people are claiming benefit, fewer people are paying income tax and fewer people are buying your goods.

However, where we do agree is in a belief that growth, which we hope will return, should be private sector driven. And here, you are obviously crucial – if you as businesses do not flourish and thrive, we as a country will not do so and growth is unlikely to return.

For this more profound reason, I very much welcome the opportunity to exchange views with you this evening because we must do all we can to help foster a sound business environment in which you can trade and do business. Regulation is of course part of the package.

I am going to talk about:

• the function of regulation;
• the principles underpinning our approach to regulation;
• what we did in government;
• what the Conservative led Coalition is doing and our response.

The function of regulation

I know the challenge regulation presents because, as an employment lawyer, providing advice to clients on how to deal with it was my bread and butter when I was here. Day in, day out, I received calls from businesses who wanted to do the right thing but didn’t know how – every fee earner in this firm still receives those calls every single working day.

Before I continue, let me be clear what I’m mean when I say “regulation”. I’m talking about the plethora of laws, rules and procedures you are required to follow when you go about doing your business activities, be they relating to health and safety, licensing or employment. It is a long list collectively referred to as “Red Tape”.

In every major election you will hear politicians of different parties promising to cut Red Tape. But I think business people are fed up of politicians whispering sweet nothings in their ears about their determination to cut Red Tape, when your practical experience often suggests otherwise. The debate over regulation is, in any event, far too crude in my view – it is more complicated than that and we should be honest, up front and say so.

Whilst some regulations may be viewed as obstructive, many are welcomed by business because good regulation underpins fair markets. For example, here at Rochman Landau many clients are small and medium sized enterprises with up to 250 employees or have a turnover of up to £25m – those clients will appreciate the benefits of a competition regime which, in part, exists to ensure that larger businesses cannot squeeze them out as a new entrant to whichever market they are seeking to break into.

People appreciate that regulation can actually create markets too, spurring economic growth and innovation. In government Labour decided that from 2016 new homes would have to be carbon-neutral. This simple measure created entire new markets in architecture, building technology, skills training, renewable energy generation, and building management. The innovation it stimulated has made UK firms in these areas world leaders.

And though regulations to safeguard workers’ rights can often be difficult to circumnavigate, doing away with them is no substitute for a properly thought out growth strategy. The Prime Minister’s director of strategy, Steve Hilton, has reportedly been floating ideas that include abolishing maternity leave – I don’t believe this is something anyone in this room would want for women in their families nor am I convinced that it will promote growth.

Despite all this I do know – after more than half a decade spent dealing with the country’s Employment Tribunals – that regulation does not always meet its purpose. Employment Tribunals were supposed to be more informal than the rest of the Civil Court system and to encourage parties to settle but my experience in practice was that this was not always the case – the way they operate seemed to lead to an inordinate amount of time spent obsessing with procedure as opposed to addressing the substantial issues of a case.

I also know that:
• government can rush to regulate without considering other ways of achieving behavourial change;
• consideration of enforcement after implantation is frequently just an afterthought; and,
• regulation often overlaps creating further complexity.

So of course we should look to reduce the regulatory burden where we can, but our priority should be to move towards smarter regulation – this goes further than simply looking at the quantity of regulation – it looks at its quality too and how it might be used more intelligently to shape markets.

Approach to smart regulation

So what underpins our approach to smart regulation?

First, we should view regulation as a last resort which we seek to implement to correct market failure, address a social inequality or safeguard people’s personal safety and security.

To illustrate this point, consider mobile telephone roaming charges whilst travelling abroad. According to some reports, mobile network operators are making profits of 200% on calls made in Europe and a staggering 400% on calls received whilst roaming.

Consequently from July this year the EU introduced regulations setting the maximum permitted charge at 32p per minute, excluding VAT, for calls made while abroad and no more than 10p per minute for calls received while roaming in EU countries. Clearly the market was not functioning correctly and we, the consumers, were being ripped off – everyone will have welcomed the EU’s intervention in this instance.

Secondly, regulation should be outcome focused and guard against unintended consequences.

In October 2004 we, in government, introduced the work place statutory dispute resolution procedures. We introduced them with the intention of reducing the number of disputes that ended up in the Employment Tribunals. The opposite in fact turned out to be the affect – both parties, the employer and employee, found themselves confronted with a very prescriptive procedure for resolving workplace disputes with heavy sanctions for failure to comply. The procedures of course evolved through case law as they were subject to interpretation, which created more uncertainty and complexity for all involved. They did not achieve what we wanted them to which was why they were repealed and replaced with a more flexible regime in April 2009.

Thirdly, regulation should be as easy to understand as possible and should do what it says on the tin. This will add to business certainty and improve perceptions of regulation which sometimes do not marry with the reality of the affect of a rule.

Part of the solution lies in drawing regulation up with the small guy in mind – the small business owner or firm that does not have the resource to employ an army of compliance and risk consultants to work out how to comply and do the right thing.

Finally, we must always ask whether the regulation is proportionate, consistent, transparent and targeted.

There is a feeling out in the country that those who want to do the right thing and ensure they comply are burdened more heavily than those who don’t care and are determined not to.

This is why it is crucial policy makers like me talk to you as we develop and scrutinise regulation, to ensure we get it right.

Labour in Government

What did we do in government? I don’t pretend we got everything right when we were in power. However, according to the World Bank, when we were gently eased out of office by the British people our economy topped Europe for ‘ease of doing business’ and the OECD found that barriers to entrepreneurship were lower here than in any other member country. This helped foster an environment from 1997 to 2010 in which 1.1 million new enterprises were created and the turnover of small and medium enterprises grew by over a third.

In our quest to put in place a better regulatory regime, in 2005 we set up the Better Regulation Executive. This was set up primarily to implement the recommendations of the Hampton Review into regulation. The BRE’s remit was to work with departments and regulators to:

• improve the design of new regulations and how they are communicated;
• simplify and modernise existing regulations; and,
• change attitudes and approaches to regulation to become more risk-based.

It had some considerable success, helping to deliver well over £3 billion a year of savings for business due to the simplifications made to regulations which followed. The Coalition has retained the BRE and now describes it as being instrumental in putting their strategy in place on reducing regulation.

We set up the Regulatory Policy Committee. We tasked the RPC with providing, for the first time in the UK, independent scrutiny of proposed regulatory measures put forward by Government. Its purpose is to challenge where proposals are not supported by robust evidence and analysis. Put simply, it produces opinions on the quality of the impact assessments produced to support regulatory proposals, covering issues from nuclear energy, equality legislation and migration limits, to the 2012 Olympic Games.

The RPC too has been continued by the Coalition and put at the centre of the new regulatory regime they are seeking to put in place.

In addition to this we introduced the Primary Authority Scheme to simplify the rules faced by businesses acting across a number of local authority areas. The scheme allows a business to agree its approach to compliance with one local authority and be assured that the advice they receive will be respected by the other local authority areas they operate in. There has been significant take up of this scheme and the government is now looking to expand it.

Finally, we set up a Cabinet sub-committee on Better Regulation which brought together ministers to scrutinise the impact on business of planned and proposed regulations. This focused the attention of government ministers on the issue. Again, the Coalition has taken this forward through the establishment of their Reducing Regulation Committee of Cabinet.

So we laid good, solid foundations upon which the new government has sought to build. Rest assured: getting regulation right was a serious concern of ours in power – that has not changed. We may not be in government but we have an important function as Her Majesty’s Official Opposition in holding the government to account and ensuring they get it right whilst their hands are on the levers.

The Conservative-led Government

I have already mentioned some of the things they are doing but what’s new? There are two flagship policies that have been introduced to great fanfare.

One In One Out
One is the introduction of the One-in, One-out rule. This means that no new primary or secondary legislation that imposes a cost on business or civil society organisations, can be brought in without the identification of existing regulations with an equivalent value that can be removed. It is part of the government’s Red Tape Challenge.

The motivation behind the policy is understandable but I fear the government risks overpromising and under delivering for a number of reasons.

First, the Government estimates that around 50% of UK legislation with a significant economic impact originates from EU legislation. Yet, regulation that is required to implement EU obligations does not fall within the scope of the One-in, One-out framework.

Second, it is quite easy for Government departments to get around the framework by massaging the figures – attributing a higher cost, say, to regulation disposed of, and a lower cost to new ones introduced. Presumably any judgement they make in assessing cost and benefit will be based on departmental impact assessments – the RPC currently tells us that 31% of central government impact assessments are not fit for purpose.

And third, the framework fails to take account of the particular circumstances of individual departments – it is applied to every department and applies over the course on a year. But take the Department for Energy & Climate Change – much of its work will surely involve a cost to business, certainly in the short term. How is a department like DeCC going to be able to operate within this framework?

We support the intention which lies behind the One In One Out framework but the government should not make promises it cannot deliver – as it is currently configured, there is a real risk that is what they are doing here.

Moratorium for micro firms
The other flagship policy, announced in the long delayed Plan for Growth published in March, was the commitment to introduce a moratorium on all new regulation of domestic origin for firms with fewer than 10 employees from 1 April 2011.

I have already mentioned just how much legislation the government estimates finds its origins in Europe – this moratorium, like the One In One Out framework, only applies to domestic law.

Business lobby groups have expressed dismay that none of the regulations that came into force last April were subject to the moratorium. In particular they have said to me that they take exception to the fact that some significant regulations for business were implemented after 1 April 2011 – additional paternity leave and pay and the abolition of the default retirement age for exmple. It is right to say that we support the these measures but, then again, we have not committed to put in place this moratorium; the government has.

There is of course the risk too that this moratorium will disincentivise businesses to grow at a time when we need businesses to expand and create jobs.

Again, over promising and under delivering calls into question your credibility. That is why I will not do it as the Shadow Business Minister with responsibility for regulation on the Opposition front bench.

Next steps
There are a number of policy developments likely this autumn.

The government has just finished consulting on reforming the way regulation is enforced. They have set out some principles but we await the detail. The consultation closed last Friday and a White Paper is due. Likewise, in tandem with this the government has been consulting on extending the benefits of the primary authority scheme I mentioned and on the future of the local better regulation office, the delivery vehicle for that scheme. The consultation on this closed last Friday too and I would expect any proposals to feature in the same White Paper.

It may be that the Government is planning to incorporate the proposals that flow from these consultations in the second instalment of their Plan for Growth expected this November.

Meanwhile, we in the Labour Party are in the process of carrying out the biggest overhaul of our policies since Tony Blair became leader in 1994 and we would welcome your input. As part of this, we are undertaking a fundamental fresh look at the role and purpose of regulation.

We must think creatively in doing so and be open minded. I think we should give serious consideration to exploring whether it would be possible to, as far as we can, put in place one Common Commencement Date for new regulation in either April or October instead of the two dates we currently have in April and October. This would potentially create more certainty and less disruption for business.

Conclusion

Let me finish by referring to what the Leader of the Labour Party Ed Miliband has described as the 3 principal challenges facing our country and the role you have to play.

We face a cost of living crisis. Since 2003 middle and lower income earners in this country have faced a squeeze in their living standards as their wages have stagnated and costs have risen. The causes of this are complex and are, in part, attributable to an economy that produces high-skill, high productivity sectors at one end and low-skill and low paid jobs at the other. Simultaneously, economic migration and greater labour market flexibility have increased the pressure faced by them.

At the same time we have seen the erosion of what we call the “British Promise” – the hope and belief people have that the next generation will do better than the last. Less than one in ten people now think life will be easier for their children than it was for them, and seven out of ten think it will be harder.

Moreover, there is this sense too that in different ways, including changing workplaces and working lives, our communities and the strong social institutions and common bonds that hold us together are being eroded.

To meet these challenges our economy and the way it is structured will need to change. We cannot hope to achieve this without you. You have a massive role to play:

• in helping us rebalance our economy;
• in transforming it so it creates the better quality and better paid jobs we need; and,
• above all, in ensuring we pay our way in the world and compete internationally.

You are key pillars of our communities too.

Working with you I know we can meet this challenge. Thank you for all that you do and for listening. Now I am very keen to hear what you have to say.

A Bank of England survey report published today spells out the ongoing difficulties which small and medium sized businesses (SMEs) face in accessing finance, while separate figures from the Bank show that business lending has contracted in ten of the last twelve months.

The Bank of England’s monthly Agents’ Summary of Business Conditions report for September, released today, notes that “small businesses and start-ups still found it difficult to gain access to credit, and where loans were available, fees remained elevated and the applications process was often drawn out.”

According to the Bank of England’s August statistics on lending to UK businesses, the net monthly flow of lending was negative in ten months of the past year – including each of the last three months.

The government’s Project Merlin agreement with the banks to boost lending to businesses has been criticised for setting up gross rather than net targets, which cover facilities made available to businesses rather than actual lending.

Additionally, Merlin does not address the cost of credit and its affordability to businesses. According to a survey of more than 150 SMEs across the country carried out by Labour this summer, almost a third of businesses had experienced an increase in the cost of borrowing, and of these businesses 45% had seen a rise of 3%.

Shadow Minister for Small Business & Enterprise Chuka Umunna MP is writing to Business Minister Mark Prisk to ask whether the government has begun negotiating a new deal with banks for lending in 2012 to replace Project Merlin, and if so, whether it will address the widely-publicised shortcomings of the Merlin deal.

Chancellor George Osborne praised the Project Merlin agreement in answer to a question by My Umunna last week in the House of Commons, saying: “I talk to UKFI all the time, and one of the things I talk about is ensuring that the banks in which we have a public ownership of shares are meeting their Merlin lending targets. I congratulate Lloyds, which has changed its operations and advertising campaigns and has tried to encourage small business lending.

Today’s Agents’ Summary also highlights the lack of confidence in the economy as a factor holding back growth, with “increased nervousness” leading “some firms to scale back investment plans”.

Commenting, Shadow Minister for Small Business & Enterprise Chuka Umunna MP said:

“The statistics today show that on the ground, small and medium sized enterprises are still struggling to access finance to grow their businesses. With the economy flatlining and unemployment high, businesses who are trying to grow are hindered at every turn.

“If the government seeks to replace Project Merlin, the Tory-led Government need to get tough – it is crucial they and the banks learn from the shortcomings of Merlin and provide real support for our SMEs.”