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2.41 pm
Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): I welcome the measures set out in the Queen's Speech. There are some useful measures that will serve the country well if they make it on to the statute book. However, I wish mainly to draw a contrast between what is happening today in our country and what happened in the 1980s and 1990s, when we had a Conservative Government.
A good starting point is the recent credit crunch and downturn that we have experienced as part of the worldwide credit problems. There is no doubt that it has been a serious downturn with serious consequences, and we have heard a great deal of statistics relating to it today. However, in 1991, at the height of the last Conservative Government's downturn, unemployment in Knowsley as a whole, including my constituency, stood at 25 per cent. Now, as we start to move gently out of the current downturn, it stands at 8.9 per cent. That is unacceptable, by the way, and I am not for one minute crowing that it is only 8.9 per cent., because it means that a lot of people who want jobs do not have them, but the contrast is nevertheless worth pointing out. Some economists forecast that if the Tory approach to the economy were adopted, in so far as we can work out entirely what it is, it is quite possible that unemployment would reach 5 million. Some reputable economic forecasters have made precisely that point.
My second point is about public services and investment, and the partnership between, in my case, Knowsley council and a Labour Government. Through the Building Schools for the Future programme, every secondary school in the borough has just reopened, or will reopen over the next few months, as a brand-new learning centre at a cost of £150 million. Not only are they in brand-new buildings, they have a completely different education philosophy. It is important to relate the matter back to real young people by saying that even before that, the rate of A* to C GCSE passes increased in the past decade from a pitifully low 17 per cent. to more than 57 per cent. It is still climbing, and there is still room for improvement, but that shows the contrast rather well.
In addition, we can consider the health service. Two weeks ago, my hon. Friend the Member for Halton (Derek Twigg) and I had the privilege of visiting the brand-new hospital in Whiston, which will serve our constituents. It is an astonishingly good building that cost £250 million, and it simply would not have been built without a Labour Government.
To bring the debate back to a human scale, a few weeks ago, a constituent of mine, Dave Ryan, who is a head teacher, went to a local NHS walk-in health centre feeling ill. While he was there, they discovered that he was in the middle of a heart attack. He was then taken to the cardiothoracic centre in Liverpool, of which my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) has had some happy experience. Within hours, Mr. Ryan had had surgery and was back on the road to recovery. Let us contrast that with the hours of waiting on trolleys and months of waiting for an operation, or even an appointment, that were typical of the Conservative Governments of the 1980s and 1990s.
I come now to the "however": Knowsley council, together with Tesco, put together a £400 million investment package-all private sector money-for Kirkby in my constituency. The package received planning permission from the local authority, went through a public inquiry and then sat on the desk of the Secretary of State for Communities and Local Government, who yesterday announced that he had turned down that opportunity. He has turned down £400 million of private sector investment in Kirkby, which, notwithstanding the improvements that I described earlier, and which we have genuinely experienced as a result of having a
Labour Government, is one of the most deprived towns in Britain. I am astonished that the Government can turn away £400 million of investment in a town that desperately needs regeneration. It still needs investment in jobs, of which that package would have produced thousands.
The local authority, many residents and those who support progress are now bitter about the action taken by the Secretary of State. I am calling for the Government to work with me, Knowsley council, Tesco and Everton football club, which is involved in the project too, to consider whether a new application, perhaps slightly scaled down, can be fast-tracked and put before the Secretary of State, so that the regeneration of Kirkby and the necessary number of jobs can be delivered.
One of the reasons why my right hon. Friend turned down the application was the major opposition from Liverpool city council, St. Helens council and West Lancashire district council. The Liverpool city region now has a multi-area agreement and a city region cabinet led by the excellent leader of Knowsley council, Councillor Ron Round. But what good has it done us? What good has all the borough's work on that city-wide layer of government brought us? All it has brought us is opposition and no help from surrounding local authorities.
I spoke to Councillor Round this morning, and I must warn the Government that he is considering whether Knowsley can carry on within the city region cabinet, which he leads and chairs. He might well conclude that he has to withdraw, and if he takes that decision, I will support him.
Finally, there is the question of my support for the Government. I have been in government and out of government, but in more than 20 years of being a Member of Parliament, I have always been a loyal supporter of a Labour Government when we are in power, and of a Labour Opposition when we have been in opposition. However, unless the problem in Kirkby is resolved quickly, the Government cannot continue to rely on my support.
2.50 pm
Mr. Henry Bellingham (North-West Norfolk) (Con): I declare my interests as recorded in the Register of Members' Financial Interests. We have just heard an extraordinary speech, and I think that all hon. Members greatly respect the right hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) for his commitment to his city, his constituency and his constituents. Obviously, whatever course of action he takes, we will admire it because he does it in the interests of his constituency.
Listening to the Prime Minister last week, it seemed incredible that this was the iron Chancellor who 10 years ago proclaimed prudence and thrift and put in place golden rules. It is also difficult to believe that, at the start of the recession, the Chancellor's Budget in March 2008 included a forecast of public borrowing of £38 billion, or 2.5 per cent. of gross domestic product. He stated then that net debt would remain below 40 per cent. and that it would be at that level till 2013. Fast forward 18 months and the figures are horrendous. The borrowing forecast in the previous Budget was £175 billion- 12.5 per cent. of GDP. That is now likely to go up to £200 billion and beyond. Our national debt is now 60 per cent. of GDP and increasing. It will probably
reach 100 per cent. in a year or so. Public borrowing for last month-October-was 88 times the figure for the previous year. The figure of £200 billion that I just mentioned may therefore seem optimistic. All the time, tax revenues are plummeting.
I am concerned about the interest on our national debt that we are paying now and that we will pay in the years to come. It is currently around 6 per cent. of GDP, but it is likely to reach 10 per cent.-more than £75 billion, which is more than the combined budget for schools and transport. In 1976, national debt as a percentage of GDP was 10 per cent. when the then Chancellor, Denis Healey, went to the International Monetary Fund. Any amount over 10 per cent. means that the debt begins to compound, and most credit rating agencies start to get worried about any figure over 12.5 per cent. because one is then heading into uncharted territory, and there is a genuine problem about funding gilt sales.
There is an assumption that the debt will be bought and that investors will still have the appetite to continue buying it. I wonder whether they will, because the UK Government alone are planning a record issuance of £220 billion of debt this fiscal year and exactly the same amount in each of the next four years. That means that the total worldwide sovereign debt for next year will reach £9.1 trillion, which is an extraordinary figure. I am concerned that, if UK interest rates go up by even a small amount, we will be in real danger of reaching a debt trap. It is therefore essential that the Government-and, indeed, the next Government-can convince the markets that serious action will take place to address the debt crisis.
Mr. Mark Field: In relation to the horrific amount of debt in the global economy, it is not clear where the debt will be mopped up. For example, various sovereign wealth funds in the middle east and the Chinese Government have traditionally been able to take up such debt-but it is estimated that some third to a half of the £9.1 trillion will not be taken up by such areas. In other words, a major problem is likely to arise in the bond markets before the world is too much older.
Mr. Bellingham: My hon. Friend is much more in touch with these issues than I am, but I certainly share his concerns. The position here is looking grimmer than elsewhere because of the state of our economy. Indeed, apart from Greece, we are the only country in the EU that ran a consistent budget deficit rather than a surplus during those boom years, which means that we are singly ill equipped to deal with this financial crisis and recession. That is, of course, an appalling scar on the Government's record.
As my hon. Friend the Member for Tatton (Mr. Osborne) pointed out earlier, the UK's growth between July and September was minus 0.3 per cent. For six consecutive quarters we have been in recession-the longest since records began. That figure for the quarter compares with America's 0.9 per cent. growth and the eurozone's 0.4 per cent. growth. That shows how we are in a very parlous position.
As the Government rebuild public finances, it is going to be very important to impress on the markets our determination to do so, but I feel very strongly that
if we do not take the necessary action and confidence then dissipates, we could be facing a sterling crisis, rising interest rates and perhaps a gilt issuance strike as well.
Her Majesty's Government have to rebuild the public finances without putting the brakes on demand. That is why even though public expenditure is going to have to be cut and whoever gets into office after the election will have to think about tax increases, it has to be done in a way that does not stifle the private sector, but allows it to continue to maximise wealth creation. That means more enterprise, more entrepreneurship and supporting small and medium-sized enterprises. It must mean lower business taxes, lower business rates and better access to credit, and it must also mean substantially less regulation. As my hon. Friend the Member for Tatton said a few moments ago, we need another enterprise revolution.
As I look around my constituency and talk to businesses large and small alike, they tell me that they are not getting access to finance and credit, or the help from the banks that they expected. Indeed, they are not getting the support they need even from the publicly owned banks, the ones owned mainly by UK Financial Investments Ltd. Furthermore, they are very worried about business rates. I received two e-mails over the last couple of days from businesses in my constituency, which explained that the business rates to be paid in the next financial year are going up by 27 per cent.-and that comes on top of a 34 per cent. increase in 2005. The Government must look at the business rate burden on SMEs; they must look at the rate of small firms' corporation tax; and they must look at the regulations being put on business.
If we are to have any serious supply side reform, the Government must row back from their propensity to put more and more burdens on small businesses. That is why, in an intervention an hour or so ago, I asked the Chancellor of the Exchequer about the agency workers directive, which will be a job-destroying directive. Agency workers themselves do not want it and small businesses do not want it, as it is going to add a great deal of cost to small businesses, while those very agency workers that the directive sets out to protect want their independence and flexibility. They do not want a directive. Having said over many months that they would resist that directive and do all they possibly could to stop it going through, the Government are now going to legislate to bring in protection for agency workers to give them the same rights as normal workers. I think that is very bad news indeed.
Lorely Burt (Solihull) (LD) rose-
Mr. Bellingham: I will not give way, because I will not be allowed any more injury time. [Interruption.] I will be allowed it, so I will give way.
Lorely Burt: I am grateful. On the agency workers directive, I completely understand what the hon. Gentleman is saying about workers such as professional contractors. However, there is an underclass of people who are being exploited, and I believe that we do need to legislate, in the interests of all those people.
Mr. Bellingham:
The hon. Lady makes a perfectly reasonable point, but I simply say to her that we are facing a truly horrendous situation. When the economy starts to grow again and unemployment comes right
down, it might well be sensible to work with SMEs, business and business organisations on bringing in some form of protection for the agency workers that she mentions. She has accepted, however, that the vast majority of agency workers, particularly contractors to the IT industry and to the food industry-a big sector in my constituency-do not want the directive because it will reduce their flexibility.
What else do the Government give us? They give us the Equality Bill. All Conservative Members are in favour of gender equality, but do we need such a thoroughly bureaucratic, over-prescriptive approach, which is bound to put pressure on small and medium-sized enterprises, especially those in my constituency that rely on public sector procurement? They will have to show three years of accounts, and fill in a 42-page form and questionnaire. Lots of businesses will ask whether it is really worth the candle. In my judgment, that will destroy enterprise and wealth creation. Now is not the right time to introduce such a measure.
On the supply side of the economy, we will get more and more regulation from the Government and no attention paid to the crying need to reduce business taxes. The Minister for Business, Innovation and Skills may put my mind at rest in his winding-up speech, but as far as I am aware the Government are not planning any action on business rates. The Opposition, on the other hand, propose action on business rates, a cut to corporation tax and a bonfire of regulations. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) has made it absolutely clear that we will have a one-in, one-out policy. That cannot come a moment too soon, because businesses are crying out for it.
The Government keep saying that they rely on the wealth creators in this country. The wealth creators will get us out of this recession. I entirely accept that there is an argument to be had about the timing of reductions in public expenditure and increases in taxation, because the last thing we want to do is stifle any stuttering growth in the economy that might occur in the next quarter. The Government say that they will rely on the private sector to create jobs and growth, but they must ensure that it is given the right encouragement. I have no confidence that the Government are capable of that. Their record does not stack up well, and business is fast losing confidence in the Government.
We can guarantee such firms their future, and guarantee that enterprise revolution, only through a complete change in policy, and for that a change of Government is needed. The measures in the Queen's Speech do not stack up, and do little for business. When the business community starts to look at the detail, it will be depressed and appalled by the Government's total lack of understanding of its needs.
3.3 pm
Mr. Chris Mullin (Sunderland, South) (Lab):
I start more or less where the hon. Member for North-West Norfolk (Mr. Bellingham) left off, with the agency workers Bill, which I welcome. An insidious development -the growth of outsourcing-has taken place in the past 20 years or so, and with it has grown an underclass of people who no longer qualify for sickness pay, paid holidays, redundancy pay and all the things we quaintly
associated with civilisation during the 20th century. Often such people work alongside others who do have such rights. I hope that the agency workers Bill will do something to put a stop to that ominous trend.
At the heart of the Opposition case on the economy is a dishonesty, which pretends that the public debt has nothing to do with the bankers' crisis and their friends in the City-the derivatives traders, hedge funds and the rest-and that it is all due to the profligacy of the Labour Government. The right hon. and learned Member for Rushcliffe (Mr. Clarke) was engaging in that again last night at an event at the Institute of Directors, which I attended. In his very entertaining 20-minute speech, in which he had a great deal to say about public debt, I did not hear him once concede that any of this-at one point he made a comparison to Mugabe's economic management, and I realise that he was probably pulling our leg a bit-has anything to do with the activities of the banking sector. It does. I think that the Opposition's case would be that much stronger if they stopped referring to "Labour's debt" and "the mess that Labour has got us into"-I think I am quoting from a Conservative party crib sheet, because I have heard those phrases used repeatedly since this year's Conservative party conference-and honestly faced the fact that much of this has to do with the activities of their friends in the City.
I do not know whether you saw it, Madam Deputy Speaker, but at the end of September and the beginning of October there was a three-party series on BBC2 entitled "The Love of Money".
Mr. Kenneth Clarke (Rushcliffe) (Con): I am glad that the hon. Gentleman was paying such close attention to my speech last night. I entirely accept that the hubris of our bankers, along with the complete failure of the regulatory system that our Prime Minister had put in place, was the greatest cause of the deep recession that we went into. Last night I was dealing with why our economy is the slowest in coming out of it, and debt plays a very big part in that. We can agree in criticising bankers, but the hon. Gentleman cannot wave aside-as the Government are trying to-the problem of debt, which is slowing us down in our recovery.
Mr. Mullin: I do not seek to wave aside the problem of debt. I am glad that the right hon. and learned Gentleman has at last conceded-perhaps he will do so again when he winds up the debate for the Opposition-that this crisis, or "Labour's debt" and "the mess that Labour has got us into", as I keep hearing Opposition spokesmen call it, has something to do with the bankers. I am grateful to him for putting that on record, albeit with one or two caveats.
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