Businesses and the Regions

I agree with some of what has just been said by the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso). I recently asked my local chamber of commerce what challenges faced businesses in St. Albans. It listed a wide range of problems, but most of them involved cash flow. Banks in my constituency are aware of the problems facing businesses, but there is a domino effect: when Peter does not pay Paul, no one can pay anyone. That is a big problem, and it will become no easier as time goes by. If other Members have not asked their local chambers of commerce the same question, I can tell them that there is a lot of hurt out there, and people in my constituency are certainly letting me know about it. I listened with interest to the Minister's praise for regional development agencies, but let me redress the balance somewhat by drawing attention to the concerns that exist. It is true that the RDAs' statutory purposes are, among other things, to"““further economic development and regeneration””" and"““to promote business efficiency, investment and competitiveness””." However, in evidence given to the Select Committee on Business, Enterprise and Regulatory Reform in October, the Institute of Directors expressed the rather different view that"““with the exception of the Regional Economic Strategy, this work””" —the work done by the RDAs—"““could have been done just as well by a properly staffed Government Office. From the viewpoint of business in the broader sense of the word, the benefit of the RDAs has been their business focus. Unfortunately as the years have gone by, that focus has diminished in the Region””." That strikes me as quite a worrying comment. The RDAs have proved somewhat controversial and somewhat political, and the criticism has often been made that they are spreading themselves far too thinly without making a concentrated effort to tackle underlying problems. Let me say to the Minister again—and I will continue to say it—that the fact that funds that were to be directed towards business via the RDAs have been pinched to prop up the housing market is yet another problem. There will now be even less money for the RDAs to divert to small businesses, especially in my area, which makes me question whether there is any point to RDAs in general. The RDAs have also been accused of being too political, not just by the Conservatives but by business representatives. In its evidence to the Select Committee, the Institute of Directors also said that Government were"““making the roles of the RDAs less business orientated, and more overtly political””." There are concerns about the operation of the RDAs and about their ever-escalating budget, which has increased steadily since their creation. It stood at £2.44 billion in 2008, but that amount was not divided equally among the regions. Although the east of England is seen as a cash cow by the Government, my area received only £159 million worth of the pie. It could be asked why the Government have chosen to put the money where they are putting it. There are more small business start-ups in the east of England than anywhere else, and we are seen to be giving a huge amount to the Chancellor, which he redistributes to—I would say—his friends elsewhere; yet we receive very small amounts of the budget. That too causes me to question the role of the RDAs. The position seems bizarre to me, and, as I have said, I keep asking the same question. I have been told that the decision to take money from the east of England was painful and reluctant, but I do not think that the Minister has addressed it at all. We receive less than any other region, but £300 million has been taken from the RDAs' budget, and some of that is coming from the east of England. If the decision was indeed painful and reluctant, and if it was made in the knowledge that it would be an issue, may I ask what evaluation was made of the impact on businesses? I should really like an answer to that. It is particularly worrying that we are still feeding the delivery system although our budget has been taken away. As I said at the outset, businesses in my constituency are hurting. There are huge worries about the economy, and about how the area will fare. We are seen as being wealthy in St. Albans. While I dispute that—there are multiple poverty indices in parts of the area—it must also be said that we are not doing too badly. However, a recent survey by Oxford Economics, the commercial wing of Oxford university, placed St. Albans 16th out of 408 areas in the United Kingdom in terms of how badly it would fare as a result of the possible impact of the credit crunch. If the fact that we are the 16th most vulnerable area in the UK does not worry the Minister and other Government officials who tell us that we are wealthy, it ought to. We may be wealthy according to certain indicators, but we are also vulnerable when things start going wrong. Our area is very exposed, and particularly vulnerable in an economic downturn. The average credit card debt among St. Albans residents is £1,871, which makes us, in terms of credit cards, the fourth most indebted area in the country as well as the 16th most vulnerable to a credit crunch. I believe that we need a better form of delivery, enabling investment to go directly to the people who need it most. I was amazed to learn that—as my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) mentioned earlier—the RDAs have cost the taxpayer £13 billion: £600 for every household. We must ask ourselves whether this is the best way of delivering money, not only to small businesses but to local people who are struggling economically. I would happily scrap these bloated quangos. I do not believe that we need a regional solution to local problems. That is not to say that there is no role for regions, but all too often we look to people in a distant place to deliver local solutions, and the businesses in my area feel that they do not always get it right. If we are going to spend so much money on a delivery body, let us make sure that we do get it right. If we believe that this is the right way in which to do things, let us not rob the pot when it is convenient. Surely the money that has been spent in this way could be better spent on reducing small businesses' national insurance contributions, cutting small-company corporation tax, and tackling all the red tape and bureaucracy to which other Members have referred and which is tying my small businesses in knots.