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Behind this debate is an assumption that a recovery is beginning. However, the Library has placed in the Vote Office the economic indicators for October 2009, a publication that makes worthwhile reading because it contains the Library's figures. They are not partisan figures from a political party or independent commentator, but the Library's figures. The economic indicators for October show that full-time employment has fallen by almost 700,000 over the year. There have never been so few people under 25 in employment in recent times. The UK economy has now been in recession since the third quarter of 2008. Also, the economy contracted in the second quarter of this year, compared to the first quarter,
which was the fifth successive quarter of negative growth. However, the research paper shows that, although we are still in negative growth, France, Germany and Japan have emerged from recession.
The paper also shows that manufacturing output decreased by 12.4 per cent. in the second quarter of this year, compared with the same quarter in 2008. As my right hon. Friend the Member for Wokingham mentioned, manufacturing industry has been getting into a desperate plight year on year. Total business investment decreased by 10.2 per cent. in the second quarter of 2009, compared with the previous quarter, and was 21.8 per cent. lower than in the second quarter of 2008. Productivity across the whole economy, measured by output per head, is estimated to have fallen in 2008, as compared with growth in 2007. In the three months to July 2009, total employment was 600,000 lower than a year earlier.
Mr. Love: May I suggest a little more humility from a member of a Government who oversaw two-I repeat, two-internally generated recessions? We all recognise the current difficulties in the economy, but does the hon. Gentleman accept that action by this Government at least had the consequence of not allowing a recession to develop into a depression?
Tony Baldry: I thank the hon. Gentleman for his intervention because it shows the Labour party's two desperate alibis. When Labour Members get desperate, they say, "Well, you know, it was even worse when there was a Conservative Government," which is a bit like saying to the Liberals, "Things were desperate when Campbell-Bannerman was Prime Minister." That approach just does not wash after 12 years in government. The second alibi is, "If we hadn't intervened, it would've been even worse." The hon. Gentleman has to acknowledge that, as I will demonstrate in a second, the deficit-the black hole that the Government have got us into-is monumental. However, let me first conclude my point about unemployment.
The change in the unemployment rate has hit everyone. A comparison of the period from May to July in 2009 with the same period a year earlier gives an indication of just how desperate the increase in unemployment in this country has become. In the south-west of England, the seasonally adjusted increase in unemployment from the same period in the previous year was 72 per cent. In the west midlands the figure was 71 per cent., and even in the south-east it was 36 per cent.
All that leads us to the fact that the Government have got our public finances into a complete mess. The Library reports that the Treasury forecasts that borrowing will be £175 billion in 2009-10, which is 12.4 per cent. of gross domestic product. Debt is forecast to rise to £1.4 trillion by 2013-14, which is 76.2 per cent. of GDP, excluding the impact of measures to support the banks. Those are truly horrifying statistics and they show why we can have no recovery until we have some fiscal responsibility.
That is why my hon. Friend the shadow Chancellor of the Exchequer is right to make it clear that the Government have borrowed too much and that £1 in every £4 that the state spends now goes straight on the national debt. More of our taxes go on paying the interest on that debt than go on educating our children or ensuring that our armed forces are properly equipped.
It is tragic to see the training of the Territorial Army being cut for the next six months, as many of its young men and women are now serving on the front line. I wonder just how many days' debt interest would be needed to ensure that that commitment could otherwise be met-it would probably be only one or two.
There is no recovery for the Government to secure. They really need to address how to get the public finances back into kilter and where to make the savings in public spending to ensure that that happens. This is clearly an issue that Ministers are unwilling to address. The shadow Chancellor addressed it in Manchester, but the Government are unwilling to do so. They are simply hoping that they can get from now to the first Thursday in May next year without addressing it, and hoping upon hope that if they keep on talking about some mythical recovery, the electors will be lulled into thinking that life can go on just as it is now. The reality is that responsible, serious measures will have to be taken by whoever is elected to Government at the next general election, and that only we are showing the responsibility of measuring up to that task.
Christopher Fraser (South-West Norfolk) (Con): I shall keep my comments brief, as I should like to hear the Minister respond to the perfectly straightforward points that have been made in the debate. As it is due to finish at 1.46 pm, I should like to give him five or 10 minutes in which to do that.
We covered a lot of these matters in our debate on Monday, in which the Secretary of State for Work and Pension conceded, in response to my intervention, that she had not listened to the debate in full. There was, however, a tacit agreement that she would respond directly to the points made by Opposition Members. I hope that the Minister will give me an assurance today that the genuine points made on a constituency basis by my Conservative colleagues will be addressed directly, by mail-as soon as we can get letters through the post, that is-or via the Letterboard in the next couple of days. That will help us to deal with the problems that we have today, as well as those that we had on Monday, and those that we will have in future.
I want to put a couple of points to the Minister. First, will the Government commit to applying the small business rate relief automatically to firms across the country? This relief is a significant help to companies struggling through the recession and can save small businesses more than £1,000 a year. That might not sound like a lot, but small businesses and enterprises have been the backbone of the economic success of this country for many years, and unless we build from the grass roots up, we will not have the success or the recovery that this debate purports to be about.
Many businesses are not claiming the relief, either because they are not aware that they might be eligible, or because the procedure for claiming it is too burdensome. That just adds another layer of red tape to a small business or enterprise that is trying to do its bit for the recovery. Does the Minister agree that applying rate relief automatically would overcome this problem? Small businesses and enterprises have been an integral part of our success in the past, and we must recognise that for the future.
Recent figures show a discrepancy between the value of loans offered to businesses by banks and the value of loans actually drawn down by them. Does the Minister agree that the two should not be confused? Surely the recovery of the economy can be secured only if Government schemes-many of which were described in our debate earlier this week-are working effectively. If they are not, there is no point in putting out a press release suggesting that they are going to happen. That merely pays lip service to a problem without actually dealing with it.
Mr. Brian Jenkins (Tamworth) (Lab): Mention has been made of apprenticeships. Does the hon. Gentleman fear, as I do, that the recessions of the 1980s and 1990s, and now this recession, might well have pushed a critical mass of employees in manufacturing-and in engineering, in particular-down to a level at which we are no longer able to regenerate and reskill ourselves? Does he agree that it will take direct Government involvement to re-establish our manufacturing base?
Christopher Fraser: At the moment, 1 million 16 to 24-year-olds are out of work. As I said earlier, apprenticeship schemes are an enormously important way of training people to get back into the work force. However, the red tape and bureaucracy that we are now suffering from are stifling companies and preventing them from dealing with their problems. The hon. Gentleman must accept that there are now 2 million fewer jobs in manufacturing in this country. That has happened over the past 12 years, and it is not good news. There has not been the necessary investment by this Government in the backbone of British industry and the manufacturing sector that we rely on now and will rely on in the future.
Thetford, in my constituency, is a great manufacturing and engineering base. The businesses there want to work and to make a contribution, but every time they take a step forward, they have to take two steps back because of the way the Government treat them over employment, bureaucracy and the regulations with which they have to comply in order to get their products into the marketplace. Of course that adds a burden of cost to those businesses and makes them uncompetitive. The Government have not walked up to that problem, and I do not believe that they will do so. We need a change of Government-we need a Government who understand the dynamics of business and how that affects the economy.
If we are going to get out of this recession, businesses need to know that the Government are listening. I do not believe that they are. Businesses are being stifled. I believe that there is now adequate time for the Minister to address these problems. At the end of the day, the people of this nation need to know that they are being listened to. Alas, that did not happen in Monday's debate. The Minister is an honourable and decent man, and I hope that he will address these issues today. If he cannot answer all our questions, because there are not enough officials in the Box to give him the necessary responses, will he, having read Hansard at the end of the day, have the courtesy to come back to us on every point that we have made? These are serious issues that need to be dealt with, constituency by constituency, as a matter of urgency now, and not by another topical debate in a few weeks' time.
We have heard the usual contributions from the two Opposition Front Benchers, as well as speeches by the right hon. Member for Wokingham (Mr. Redwood) and the hon. Members for Banbury (Tony Baldry) and for South-West Norfolk (Christopher Fraser). I did not hear any specific references to his constituency in the speech of the hon. Member for South-West Norfolk, but I will say something in a moment about the automation of small business rate relief.
Mr. Hands: The topical debate today was chosen by the Leader of the House, presumably in consultation with others on the Government Front Bench. Can the Minister tell us why not a single Labour Member has spoken in support of the debate? Does the recovery simply not matter to his colleagues, or have they just abandoned him to be a one-man show?
Ian Pearson: I just wish that, rather than engaging in juvenile debating points, the Opposition would engage with the real issues. They cannot deny the fact that they called it wrong when it came to bailing out the banks and to the fiscal stimulus, or that, at the moment, they are calling it wrong when it comes to the recovery. People need to understand that the Tories' policies, as they are at the moment, would kill our recovery in this country. They have a dangerous set of policies, and the public need to understand that.
Ian Pearson: Let me respond first to the point about small business rate relief, which was the subject of quite a lot of debate some months ago. There is now a greater understanding among small business organisations about what is in place at the moment. Steps have been taken to make it easier for small businesses to claim rate relief. The systems in Wales and Scotland are not necessarily automated in the way that some of us are led to believe. It is very easy indeed for businesses to get this relief-as I understand it, it is automatically rolled over once they qualify for it. The evidence I have seen suggests that the vast majority of businesses do actually claim the small business rate relief. If I can provide any further information on that issue, I would be happy to do so, as I agree with those who say that small businesses are an important part of the UK economy. It is right that we, the Government, are seen to support them.
I do not have time to go into the detail of all the things that the Government have done over the last 12 years to support small businesses and, indeed, manufacturing, but I would like to have a go at describing at least some of them. The first thing I have to say, however, is that those of us who have a memory-those who actually remember the previous Government-find it very difficult to stomach hearing Conservative Members talk about the importance of manufacturing.
Ian Pearson: I accept what the hon. Member for Banbury said-that we now live in different times-so if the Conservative party has really changed its spots when it comes to wanting to support manufacturing and apprenticeships, I, for one, welcome that. The more we can reach a consensus around the key long-term decisions that need to be taken in the strategic interest of the UK, the better it will be for all of us.
Ian Pearson: I remind the House that we had to rescue apprenticeships; the Conservatives said little or nothing about manufacturing throughout all the period they were in power. People might criticise us for not doing enough to support manufacturing, but we have done a darn sight more than any previous Government.
Mr. Jenkins: Will the Minister please look at the critical mass of skilled engineers now available to us and working in the manufacturing industries to see whether we can regenerate ourselves? However, will he please use Government time and Government money to look at that scheme and perhaps invest in that idea?
Ian Pearson: My hon. Friend is absolutely right to point out that this country needs skilled engineers. There are continuing issues about skills at all levels of the skill range. One of the few points made by the right hon. Member for Wokingham with which I agree was that we need to address skills issues. I agree that we need the right skills and that access to capital is a fundamental issue, as are planning and land issues. These are all important if we are to get it right and ensure that the UK is competitive in the future.
When it comes to access to capital, I hope that the right hon. Gentleman will welcome the lending commitments that the Government have negotiated with the RBS and Lloyds Banking Group as part of the recapitalisation programme. I hope he will welcome the Government's enterprise finance guarantee and the work we have done with the European Investment Bank to ensure that additional loans are available to small and medium-sized businesses in this country. All those are important steps.
Let me update the House on the deferral of business taxes, which, as I said in my opening remarks, is benefiting 150,000 businesses. The latest figures say that £3.8 billion in business taxes has been deferred. To provide clarification for Members who asked about it, this includes corporation tax, VAT and PAYE.
It is also important to recognise that the UK has responded, as have other countries, by introducing a fiscal stimulus. We have had previous debates on whether the VAT cut is working, and I find it surprising that some of the same people who criticised us and said that the VAT cut has not made a difference are now making representations asking us to extend it because they really want it.
People need to accept the fact that government is about making decisions on the basis of good political judgment. Our judgment was that it was right to recapitalise the banks and right to provide a fiscal stimulus-and we believe that it is right now to continue to ensure that we secure the recovery, without undertaking the huge cuts in expenditure that the Conservative party is now advocating. The Conservatives were wrong on the recession and they are wrong now about the recovery. They have a very dangerous set of policies indeed, so I hope the general public will wake up to the fact that they need to exercise their judgment very carefully over the next few months.
That this House has considered the matter of securing economic recovery.
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