Industry and Exports (Financial Support) Bill

I am grateful for having been called to speak on the Bill, which is important; it adds a significant amount to public expenditure. It is disappointing that there are so few Members on the Government Benches to speak in support of what the Government are doing. I tried to listen intently to the Minister's explanation of what the Bill was all about. I recognise that the Minister, who serves in both the Treasury and the Department for Business, Enterprise and Regulatory Reform, must be very overworked at the moment. However, I feel that what the Bill is actually doing—in contrast to the warm and good intentions about which we often hear from the Government Dispatch Box—is very limited. Exactly what will this extra tranche of money be used for, where can it be spent and who will be the beneficiaries? Given the Government's progress on the schemes that they have already announced to a bewildered public, will the money go into the real economy? There is something of a question mark about those issues. Although the help contained in the Bill is desirable, we clearly need to do more to support our manufacturing and industrial sectors. Conservative Members wish the Bill well, but we wish we knew more about exactly what it was going to do. I hope that the Minister who sums up after the contributions of other Members will be able to give the House more of the detail that we would like to hear. It is horribly true that we face an extremely difficult situation. My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) observed that our trade deficit last year was some £40 billion—an eye-watering figure that is very serious bearing in mind that we started 2008 thinking that we were still in the good old boom years. It is an even more frightening figure when we consider that we are in very depressed economic times. It makes the Government's failure to do something about the gross imbalance that has been developing in our balance of trade figures over the 12 years during which they have been in power all the more remiss and worrying. After all, it is the future that counts, and we have to do something to put these matters right. We all know that it will not be too long before unemployment officially reaches the 2 million level, and there are dire predictions in almost any paper that we care to read that that figure may go up to 3 million within the next year. At the moment, our inflation is clearly under control, except for the fact that it is going in the wrong direction and we might be facing deflation, which is as worrying as high inflation. One can only hope that we avoid the situation described in The Daily Telegraph this morning, whereby we have a deflationary economy in recession in which the position of people who owe money is made even worse by their debts becoming ever more real in purchasing power terms and they get into a very difficult state, as opposed to the position in an inflationary situation, where their debts tend to be wiped out by inflationary price rises. That would be a very difficult situation. None of us, except for the very elderly in our society, can remember the last time that it happened, in the 1930s. In the last quarter that was measured, there was a 1.5 per cent. drop in the UK's economic growth and a 3.3 per cent. drop in manufacturing. The service sector was holding up at that point and helped to make the figure look a little better than it might have been. I suspect that none of us thinks that we will see any better growth figures in the quarter for which growth figures will be announced shortly, which will put us officially into recession. If that were to continue for the whole year, it would put us officially into a depression. We face an extremely serious state of affairs, and the Government need to do what they can to help the business, industrial and manufacturing sectors of the British economy. That is why the Bill is important and why Conservative Members will support it. We have heard about the high-profile cases of bankruptcies such as Woolworths, whose demise has left a big scar on Bromsgrove high street. Wedgwood is also in my area, albeit not in my constituency. We have heard about the big companies that have sadly gone to the wall in this economic environment. Every day the same thing happens to lots of small and medium-sized enterprises, yet none of those is ever heard of. A steady stream of business men have come to my surgery truly at their wits' end because of the state of economic activity. They have well run family businesses that have existed for the past 10 or 20 years, and in the good times they were not dazzled by the amount of money that the banks were trying to lend them. Banks were throwing money at them, saying, "You'd really like new office premises or industrial premises. You'd really like a new car, because you've worked very hard as the managing director. Come on, borrow some money from us. We'll give it to you at these really good rates." They were not tempted by the devil in such ways. They have run a tight balance sheet and done all the right things. However, the general economic environment means that nowadays, they are scraping money together to keep their companies going. I came across a company the other day that sells its products to a very well known DIY store. It is now in the terrible position of not knowing how much to produce, because that store is operating on a sale or return basis. The company has to decide whether to produce a lot of lovely things that would normally fly off the shelves in the good times but stick on the shelves in the bad times. It has employed the people who produce those goods and paid their wages, and it has paid for the raw materials that the goods are made of. It has paid its tax, national insurance, heating and lighting bills and the costs of its building, but its goods will be returned because they have not been sold. The banks are getting edgy about the overdraft limits, because they cannot be sure that the DIY store will pay the bill for the goods that have been sent to it. The situation has therefore become extremely difficult and worrying for all concerned. Sadly, many people in such a situation have been in tears. They run family businesses, and the people who work for them have done so for a very long time and been completely loyal. The workers are prepared to accept a reduction in their salary or employment conditions to help the company survive and to help the boss make things work. Yet the boss does not know what he can offer, because the situation is so desperate that he has no certainty about the future. Measures are therefore needed to bolster the economic environment and people's confidence. We all know that confidence is part of what is needed, but when bad news keeps coming it is hard for anybody to pick themselves up, dust themselves off and hope that things will be any better. I understand from reading the little information that we have been given about what the Bill will do that it will not support the banks—that is something separate—except, I assume, when they offer insurance guarantees using credit that is available to them through the Government scheme. It will not help the banks' balance sheets by helping with their capital requirements, which are an entirely separate matter and involve a good deal more than the £12 billion that is at stake in the Bill. However, I think that I am right in saying that when they provide credit insurance for firms' activities, the Bill will offer them financial support. No one is looking at me at the moment, so I assume that I must be right, because there are people in the Chamber who know a great deal more about the Bill than I do. It is therefore partly about the banks, inasmuch as that provision will form part of the financial assistance package. I make an appeal to the Minister to understand what is happening in the banking sector with regard to support for small firms.