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5.10 pm
Julia Goldsworthy (Falmouth and Camborne) (LD): It is a pleasure to follow the hon. Member for Coventry, North-West (Mr. Robinson). His contribution typified our debate. We had some good, fun, political knockabout from the Front Benches, but others have debated the much wider issues that our economy faces and the impact that the headline figures for unemployment, GDP and growth have on people in our communities. I shall focus on the human impact in my constituency of the economic difficulties that we are having, not least because the national statistics do not effectively capture some of the complexities that are experienced locally. There is a lot going on behind those large figures and my concern is that the difficult experiences of people, even if they are not unemployed, do not get picked up and are not properly addressed. Too many cases have been brought to my attention in which the rash of centralised initiatives that we have seen-in many different areas, including business support, housing and employment support-may have grabbed the headlines, but have not been so good at delivery.
The first example is the small business loans fund. I asked the South West of England Regional Development Agency how many applications it had received since
April, how many were currently under consideration and how many businesses had received funding. I was told that 280 applications had been received, which is not bad. Of those, 80 were still being processed and only nine had received funds, only three of which were in Cornwall. A 3 per cent. success rate is not good enough, especially when the Government's slogan is "Real help now." Perhaps it should be, "Real help in a bit, when we get round to processing the applications." Speed of response is as important as ensuring that the funds are appropriately directed, and it is clear the Government have failed many local businesses in my constituency that are trying hard to keep their head above water.
Another example is a coffee-roasting company that had hoped to expand and buy some capital equipment. It applied for a grant from the business investment fund. It was turned down by the RDA because the wages paid were not high enough at £16,500 a year. In Cornwall, we rely on small businesses and incomes are low. For many people in Cornwall, that is a decent wage, but the RDA finds it difficult to respond to the small scale of support that is needed.
The mortgage rescue scheme was yet another flagship announcement of Government support. Constituents of mine were told this time last year that they would be among the first people to benefit from the buy and rent back scheme that the Government proposed. My constituents had anticipated that when their fixed rate ended they would experience difficulties, and they did everything that they could to avoid that. They had never been in arrears and they told their mortgage company two months in advance. They were very excited by the prospect of some support that would allow them to stay in their home, even if they did not own it. They were told to stop making any contributions towards their mortgage while they were considered for the scheme, and as a result they ended up in arrears and with legal fees. In April, they were told that they were no longer eligible for the scheme, and they are now in a worse position than they would have been if they had not sought help. They are unable to remortgage because they have arrears, they have negative equity, and they are very worried that they are going to lose their house. From their point of view, the Government's intervention has made their circumstances worse, not better. I am disappointed to report that following correspondence with the Minister for Housing, they felt that his Department had failed to accept any responsibility for the role that it played in their current circumstances, which are appalling. I hope that he will consider the case again.
I do not necessarily have a problem with the need for such initiatives, because businesses and home owners need support. Publicising those initiatives has an important impact on perception, but perception matters only if it matches up with experiences on the ground. Unfortunately, the experiences of my constituents are very different from what is highlighted in press releases when the initiatives are announced.
In tackling the current economic situation, speed of response is vital. I am not sure that the Government have accepted that. I would cite not only the example I gave about the small business loan scheme but the support that people are provided with when they are looking for work. This week, I visited Working Links in Redruth, which I found extremely impressive in terms
of the work it was doing to deliver the flexible new deal, providing people with highly individual support that was important in giving them confidence. However, I could not understand why an individual has to be out of work for a year before they stand to benefit from such tailored, individualised support. Nor could I understand another aspect that would be simple to change and would address the fears of many of the people I spoke to during my visit. One of the clients said that they were worried about participating in the scheme because it involved signing off from jobseeker's allowance for two weeks while they did some work-based training and then signing on again, which could result in administrative delays and, in turn, in their being out of pocket. Simply suspending jobseeker's allowance instead of requiring people to come off it and then go back on it again would help to give people confidence that the scheme could help them. I hope that the Government will consider such simple measures.
I want to draw the House's attention to one further example from my constituency that highlights the group of people I spoke about at the beginning-those who do not register on the radar in terms of unemployment numbers but are in a very difficult situation. Two of my constituents, Mrs. Blight and Mrs. Bennetts, have worked in a factory in Falmouth for 19 years; they are long-term, full-time employees. Since 6 July this year, the entire work force have been on a three-day week instead of 40 hours a week, and their incomes have nearly halved. They approached me to ask what I could do to help. This is an extract from their e-mail:
"After making several phone calls we find we are not entitled to anything to help people in this situation. The company can continue to keep us on a 3 day week indefinitely; we cannot request redundancy because we work more than half the week, no tax credits because we do not work more than 30 hours and no job seekers allowance because we work more than 16 hours."
They are in a Catch-22 situation. They are low-income workers-basically, on the minimum wage-who are in a stable job and suffering genuine financial hardship. Again, there is no real help now for those people.
I ask the Minister to explain that situation. These people will not appear in unemployment statistics, but they are being hit hard by the current economic climate. They are the kind of people whose experiences need to be understood and properly addressed. Their circumstances are glaringly obvious at a local level, but they get lost as they are passed up the line to central Government, who are unable to respond on the scale that is needed, often on an individual or tailored basis. These people need a response and support that can be put in place quickly, and that is flexible and can change according to different needs on the ground. That can be done much more easily at a local level than from centrally driven Departments.
That is why I find the Queen's Speech so disappointing. Surely now more than ever we should have had further moves on devolving powers and spending to a more local level so that local authorities and other local agencies have the power and resource at hand to provide help where and when it is needed. Instead, we have a Bill with no mention of any localist agenda whatever. My frustration is that at the very time when we need localism to receive support and be driven forward, it has disappeared
off the agenda entirely. That is a great shame and will create great difficulties for many people experiencing financial troubles.
5.20 pm
Mr. David Jones (Clwyd, West) (Con): In the short time available to me, I should like to focus on one sector of the economy that is extremely important in both United Kingdom and Welsh terms, and that is the construction industry. It is a major driver of the British economy, employing some 2 million people in this country and accounting for some 6 per cent. of national economic output, worth more than £120 billion in 2008.
The construction industry is very much one of small enterprises. In fact, there are approximately 1 million construction enterprises in this country, some 85 per cent. of which are sole proprietorships. The industry has been severely affected by the recession. In the 12 months to this June, some 82,000 jobs, or 3.6 per cent. of the construction work force, were lost. While output in the economy as a whole fell by 5.1 per cent. in the third quarter of 2009, output in construction fell by some 13 per cent. It is clear that the construction industry is being affected severely and disproportionately, and the industry sees very little cause for optimism that the position will improve. Last month, the Construction Products Association forecast that construction output would fall by as much as 15 per cent. this year and a further 2 per cent. next year. Indeed, it forecast that we would not arrive back at 2007 levels of output until 2021. Clearly, the construction industry is in a severely worrying condition, and urgent action is needed on the part of the Government.
Frankly, what the industry needs more than anything else is access to cash, because banks are notorious for not lending to construction companies at all at the moment. I hear repeatedly in my constituency the complaint that it is almost impossible to start a new development, because of a lack of access to credit. The Government have put some measures in place, but frankly they are small-scale compared with the level of the problem, and they are somewhat timid. The enterprise finance guarantee scheme, for example, is worth only £1.3 billion in total, which is far too small a figure to make any significant impact on the industry as a whole. The trade credit insurance top-up scheme, according to recent surveys, has been taken up by only 1 per cent. of construction companies. Overall, measures put in place by the Government have done little or nothing to alleviate the plight of the industry. With the pre-Budget report impending, I entreat the Government to give urgent consideration to the Conservative party's proposals for a proper, large-scale, £50 billion national loan guarantee scheme. That is the type of scheme that is required to make any significant impact on the plight of the building industry.
In north Wales, the industry is of considerable importance. Indeed, it is traditionally the most important industry in the region. In the whole of Wales, some 45,000 people are employed in construction. I therefore wish to touch on the importance of the coherent development of building regulations. It is a matter of great concern that at this difficult time for the construction industry the Welsh Assembly Government have seen fit to make an application to the UK Government for a transfer of functions order to enable them to have
control of the building regulations system in Wales. That has caused immense concern in the Welsh building industry, principally because it, like the rest of the UK building industry, is now aiming to achieve the UK Government's target of zero carbon emissions by 2016, which in itself is a highly ambitious target.
The Welsh Assembly Government, however, are seeking to bring the target forward to 2013. The response that I have had from constituents of mine engaged in construction is that, if that happens, it will have a devastating effect on the north Wales construction industry. North Wales builders will simply hit the A55 an hour earlier and start constructing in the north of England, and there will be a migration of skills out of north Wales. I entreat the Minister to confirm in his response that he will have words with the Welsh Assembly Government and put pressure on them to ensure that the new building regulations are adopted coherently and contemporaneously.
5.25 pm
Mr. Philip Dunne (Ludlow) (Con): I am grateful for this opportunity to come in at the end of our response to the Gracious Speech. I would like to concentrate on two features. First, it seems incredible that the Queen's Speech was virtually devoid of any mention of the state of the public finances. I appreciate that the pre-Budget report is only two weeks away, but there was precious little mention of the finances, with the exception of the suggestion of a fiscal responsibility Bill. However, I give as little credence to that measure as do the professional commentators who have chosen to speak on the subject.
In a press release this month, the Institute for Fiscal Studies stated that
"it is far from clear why investors and voters should be any more impressed by this [the Fiscal Responsibility Act] than they were by the Code for Fiscal Stability, which was enshrined in statute with much fanfare in 1998... Yet by early 2007, well before the current crisis-the Financial Times' annual survey of City and academic economists found that 'almost none use the Chancellor's fiscal rules any more as an indication of the health of the public finances.'".
That was before the public finances got into today's dire state.
We find ourselves in an economy in which £1 in every £4 spent by the Government is borrowed, and I suspect that we will establish in two weeks that the Government's estimates for borrowing have been massively overshot. The Government told us at the time of the Budget-hon. Members have referred to this figure-that we will be borrowing £175 billion in the current year. Last week, however, on the back of the announcement of the September monthly borrowing figures, the IFS indicated that public debt could exceed that figure by a further £42 billion this year. We could be looking, therefore, at a figure of £217 billion of public debt. The figures are almost incomprehensible and impossible for us to get our mind around, yet the Government seem to be oblivious to the fact that it is happening. All they have said is, "Well, we'll set up a law to prevent it from happening again," without introducing any credible measures for doing so.
It is not just people on the Opposition Benches and external economists commenting on such matters in this country who are saying those things. Other significant figures around the world are concerned about that
approach to the deficit. I shall give one more quote. This is someone quoted in The Times on 18 November:
"I think it is important though to recognise that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the...economy in a way that could actually lead to a double-dip recession".
That was President Obama speaking about the US economy, which has already started to emerge from recession, unlike our own.
President Obama is right to point to those concerns. However, they are particularly pertinent in the case of our economy because we are faced with the worst underlying, structural debt of any of the major OECD economies. As my hon. Friend the shadow Chancellor said earlier, that is giving rise to serious questions about whether the Government can maintain our credit rating, which is so fundamental to future projections for servicing this monumental debt with which we are now saddled. Some credit rating agencies have warned that we are starting to appear on their watch lists. The Government need to be immensely careful about that.
In the remaining minute before the winding-up speeches, I want to refer to one of the burdens that the Government are imposing on small businesses, which will be the engine of our economic recovery. It is the revaluation of business rates, which is due to come into force next April. By picking a revaluation at the peak of commercial rental valuations in April 2008, the Government, if they proceed with the revaluation-I sincerely hope that they will think again and follow the example of the Northern Ireland Executive and scrap it, as we have urged them to do-will lock businesses into historic high rating valuation methods for the next five years.
Although there will be some winners, there will be many significant losers. What it means to people in rural areas such as the one that I represent is shown in a message that I received from the proprietor of a filling station with the only general store in my local village. He is faced with a rating bill increase from £4,650 to £26,000 a year-a 459 per cent. increase. It takes him over the threshold for transitional relief and he therefore has no prospect of any relief on that. I urge the Minister to think again carefully about introducing the rating revaluation at such a critical time for the British economy.
5.31 pm
Mr. Kenneth Clarke (Rushcliffe) (Con): My hon. Friend the Member for Cities of London and Westminster (Mr. Field) described the fag end of a Parliament that we are undoubtedly in at the moment. As we all know, we have reached the stage whereby the Government are pointlessly going into a last six months because they cannot call an election with any confidence of winning at the time that they normally would. We therefore have to fill the time, and in this particular Parliament, that is not a pretty sight.
The death of a Government is never a pretty sight and the Government have decided that they are near death, but they are desperately trying to find some good political lines in the Queen's Speech that might give them a last chance and hope. That is bad for a political system that is in disarray and discredited, and appallingly bad when we are in the deepest economic crisis that anyone living in this country has ever experienced and when it is urgently necessary to have some leadership and decisions. That is a sad background to the debate.
It has happened before. We have had fag-end Parliaments and doomed Governments; I have been in them, seen them-going, going, gone-but we have never had one behave in this way. When the Wilson Government were coming to their end in 1970, the dafter members of that Government thought that Roy Jenkins should introduce a giveaway, reckless Budget to save them, but he did not. He gave an extremely responsible Budget, which won the plaudits of history if not the thanks of all his colleagues at the time. The Callaghan Government, coming to their inevitable end in 1979, continued with the public spending cuts that were necessary to get out of the last very deep fiscal crisis that we experienced, which had caused them to go to the IMF. I did not think that we had much chance of electoral success when we faced the prospect of the 1997 election, but my last Budget was responsible-there were no poisoned pills in it. Indeed, the then Opposition supported and adopted my fiscal judgments. So straightforward were they that the Blair Government, keeping their promise to stick to my figures for three years, took us on to growth with low inflation and, eventually, a budget surplus, showing that it was possible for the political system to rise to great events.
What a contrast with the current Prime Minister and Government. We have a concoction of Bills-I suspect that all the responsible Ministers hope that they will not get on to the statute book to embarrass any future Government-and an extraordinary attempt to try to find some dividing lines on which to fight the election politically. We had Tory cuts v. Labour investment, but that has been modified. We ought to have a serious debate about the relationship between the prospects for growth and those for getting over the problem of debt. It is not a choice between going for growth and tackling the debt. Tackling the debt is a precondition of getting back to growth at any sensible or normal level. The Prime Minister's attempts to drive us apart on that are absurd.
It has always been, I think, the holy grail of economic policy in Britain to go for growth with low inflation. Nowadays we should make that sustainable growth with low inflation, which we did for a period in the '90s and the early part of this century. Of course that remains the objective on this side; we are putting forward what we are putting forward because we realise that growth is the way back to prosperity and that growth will eventually put this country back on its feet. Our policies give a greater promise that the flickering level of growth, which the Chancellor thinks we might see at the end of this year, can within a reasonable time-after some tough and necessary measures-be turned into normal growth and get us back to a prospect whereby trend growth of 2.5 per cent. starts looking like the likely basis for sustainable growth again.
We are in the longest and deepest recession we can recall. The hon. Member for Sunderland, South (Mr. Mullin) reminded me of its origins, which are now behind us, and many of those origins were here in this country and governed by his Government. He is quite right, however, that the hubris of bankers in the City of London rivalled that in Wall street. Our particular regulatory system, devised by the present Prime Minister, turned out to be completely and utterly useless, and this was the major cause of the depth of the recession here.
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