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The new coalition Government seem intent on a withdrawal of public funding, and a rolling back of the state and of the work of regional development agencies such as One NorthEast. The coalition blame red tape and not the real culprit: a lack of long-term secure capital specifically set aside for a manufacturing base-it is a base that has historically provided revenues to keep leafy idylls in the south leafy. This ideology condemns my area and my people-the people of Teesside-to a bleak future. This ideological short-termism fails to seize the opportunities that the level of sterling currently offers in building on our manufacturing export markets; money could be reinvested in vital research and development projects. This bleak future undermines market certainty for any prospective private long-term investor in my area.
It has always been necessary for the public sector-or, rather, the Government-to take the initial risk in investment, so that private investment would follow with assured certainty. The new coalition Government see this public spending, on my home town area, as a huge waste. They apply a perfectly rational, liberal, laissez-faire logic-they say that if the market does not invest in the area, it should be left-but where does that leave the people I live alongside, who need jobs and opportunities to feed their families? This monetarist logic is not new; neither is the grim condemnation of my area's people.
Another predecessor of mine waxed lyrical in his maiden speech about the fact that the world-class British TCP site produced 1.5 million tonnes of steel with 25,000 employees and within the period of terminal Tory rule could then produce 2.5 million tonnes of steel with only 5,000 employees. This is a grim logic of no industrial support and a grim Government who defer to an inflated natural level of unemployment. But in this era, the deliberate attack upon jobs in my area is now targeted at the public services, public servants and the voluntary sector. These are all jobs that provide a market for the private sector. Public sector jobs make up the lion's share of employment in my constituency. Prior to the election, both the Lib Dems and the Tories promised to protect front-line services, but we have seen jobs for the young cut, incentives for employers to employ cut, training for the unemployed cut, grants to build housing for people with learning disabilities cut, funding to offer college places to all 16 and 17-year-olds not in employment or education cut, funding for the police cut and free school meals cut. Those are all the real coalition anti-job policies. In addition, if this coalition raises VAT on 22 June, it will hurt the poorest people and the smallest businesses the most. The only VAT rates that should be raised are the current 0% rates on private health care and private education, which only the rich can afford.
So, I come to this House with great regret for my area that Labour is not in power and with great anxiety and fear over what the future under a Tory-led coalition Government will bring. However, as a newly elected representative, I pledge here and now to be vigilant in the face of every threat to the livelihoods of the people of my constituency and never to give up fighting for those who elected me.
Dr Thérèse Coffey (Suffolk Coastal) (Con):
This is the first time that I have spoken in a debate when you have been in the Chair, Mr Deputy Speaker, and I
welcome you to it. I warmly congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop). He has a truly charming constituency-it is perhaps not quite as charming as my own-with a distinctive pioneering heritage. Given the eloquence of his speech, I believe that he will be doughty champion for people in his constituency.
My speech follows a long line of maiden speeches made today. The hon. Member for Barnsley East (Michael Dugher) referred to miners and former miners. He may be aware that the Government Chief Whip was also a miner, so he may add him to his little club. The hon. Member for North West Durham (Pat Glass) also spoke eloquently, as did the hon. Members for Wansbeck (Ian Lavery) and for Bolton West (Julie Hilling), and our friendly doctor, my hon. Friend the Member for Bracknell (Dr Lee), even though his joke was the worst that I have heard in a maiden speech. [Laughter.] I am sure he will thank me for that later.
I was terribly surprised that the first debate called by the Opposition was on Government support for industry, because these are the same people who have just been in government while we witnessed the loss of 1 million jobs in the manufacturing sector. I shall bring my personal experience to this debate, because I worked in manufacturing for 13 years for a company-not as a trade union official, but right in the thick of it. I should have said that I also worked for the BBC for six months and I saw where they filmed-I can assure hon. Members that they were the flashiest offices.
I worked in industry only under a Labour Government, and I am sorry to say that I learned the Labour litany "Regulation, regulation, regulation", "Tax, tax, tax", and "Reporting, reporting, reporting". To sum up, I encountered a lot of bureaucracy and complexity wrapped up in red tape. There has been talk today about capital allowances, refunds and rebates, but for me, as a finance director of one of the subsidiaries of the company that I worked for, all I can say is that it got more and more complex. The only people who truly benefited were the tax accountants from PricewaterhouseCoopers and other firms. They were the people who had to take on the job, if we wanted to do it, of reclaiming the money. Better still, I think, is the attitude that we should stop telling industry how to invest and that we should reduce corporation tax instead. I praise the former Government, because they undertook that during their term of office. That was the right thing to do and I hope we will go further.
I want to share two small examples. I am sure that people will have sampled the excellent produce of Adnams, a company in Southwold in my constituency, which built a special new building that required no equipment to keep the beer cool. Because Adnams did not buy old-fashioned technology, it could not get capital allowances for it. It even pressed the former Prime Minister on this point, but people still cannot get capital allowances for a new building. Adnams has suffered as a consequence.
Let me use another example from my personal business experience: car tax. There are a lot of unintended consequences. The health and safety aspects, which I thought were important, meant that we insisted on estate cars for all our field-based employees. We tried to encourage them to buy or lease British-made cars, but the sad reality was that the extra costs of preparing for £600 or £700 of car duty meant that we had to think
through the options of recommending that they no longer buy cars from manufacturers that made cars in Britain or to remove two or three jobs to pay for that. That is the unintended consequence of some of the legislation, which might sound good at the time, but in the real world means that jobs go.
Both sides of the House are united in believing that the private sector will lead the recovery-or, at least, most of us are. Of course, we disagree on how to do it. I see the hon. Member for Wrexham (Ian Lucas) on the Opposition Front Bench; he is a great advocate for businesses in his constituency. I know his constituency quite well, not just because he soundly beat me five years ago when I stood for election there, but because I have cousins who live and work there in Kellogg's and other businesses. For me, it is an example of a one-business town-mining was a big part of it-that has diversified. It needs to broaden its base and I welcome that, but we need to see that more across every region-every county, I should say-in our great country.
The RDAs were one of the flagship policies of the last Government and I am delighted that they are having their sails trimmed-indeed, that they are being scuttled. The hon. Member for Birmingham, Erdington (Jack Dromey), who is not with us at the moment, referred to a report. I am not sure which one he was talking about, but the National Audit Office published its report just three months ago and it was not rosy reading when it came to the effectiveness of the RDAs in helping business. The net cost was £60,000 per job created, which is a hefty introduction fee for trying to get jobs into our economy. The NAO was unable to say that there was value for money and could not conclude that the return for money was optimal. It blamed aspects of poor project analysis, pervasive optimism bias-that is, very rose-tinted spectacles were worn in considering how particular projects would generate benefits-and weak evaluation. Indeed, it made the point that most RDAs were unaware until 2009 of the types of projects that yielded the best and most enduring benefits.
The fact that in a number of cases RDAs struggled to identify market failure and, where an intervention was made, they could not justify why they had done the project, speaks volumes to me. It gives a feel of money being thrown at projects, as my hon. Friend the Member for Loughborough (Nicky Morgan) mentioned, and throwing money does not solve a problem. That might be backed up by the statistic given by the NAO-30% of RDA funds were spent in one month, the last month of the financial year, when RDAs were desperate to get rid of their budget, no matter where.
I shall not cry to see the RDAs go. I am not saying that everything they have done was bad, but for me they are not necessarily the best way to deliver the support that businesses need. The key point that the National Audit Office uncovered was that targeted business support generated the best return. I hope that the new local enterprise partnerships will focus on that and will learn that lesson.
I welcome the amendment to the motion, because it mentions the college places and apprenticeships that are necessary to rebuild the skills needed to get Britain back on its feet. Local businesses of mine, including EDF at Sizewell and BT at Martlesham, already run apprenticeship schemes that are oversubscribed, and I hope we can encourage more to do so. Companies such as Brafe
Engineering in Woodbridge want more technically skilled people coming through-not just people with degrees in any subject, no matter what. We have to do this and it is absolutely imperative to have appropriate Government support and not just the blank, scattergun approach that is the legacy of the previous Government. I support the amendment.
Phil Wilson (Sedgefield) (Lab): First, I thank hon. Members on both sides of the House who have made their maiden speech today, especially my hon. Friends and neighbours the Members for North West Durham (Pat Glass) and for Middlesbrough South and East Cleveland (Tom Blenkinsop). They reminded me that the north-east of England is probably the most beautiful part of the country and that we discovered Australia as well, so we have a lot going for us.
Today's debate is mainly about how we reduce the deficit and how to grow ourselves out of the problems that we have at the moment. My big worry about all the doom and gloom that we are getting from the Government, who are basically talking down the economy and talking down the country, is that we will end up in a spiralling, self-fulfilling prophecy where it is all doom and gloom. It is not just me who says that. On Sunday, a recent business survey by the Centre for Economics and Business Research was on the BBC's online news website. It stated:
"Business confidence among UK firms has seen its biggest drop since 1995 due to the government's rhetoric on spending cuts, a survey suggests...there is a significant risk that the rhetoric has begun to impact on business confidence, and fears of the economic impact of spending cuts may be causing businesses to rein back on growth plans."
Let me say something about employment. Previous Government intervention has meant that even though we are going through what is apparently the worst recession for 60 years, unemployment is nowhere near what it was in the 1980s and 1990s. Today's statistics put the figure for people claiming benefits at about 1.4 million or 1.5 million. In my constituency, the number of people who are out of work has fallen by 600 in the past year and by 140 in the past month. In the 1980s, that figure was 5,500, and 40% of those people had been out of work for 12 months or more.
We all know the quote that has been mentioned twice today about the Tory Government of those days saying that unemployment was a price worth paying, but we do not need to go back to those days. We can look at last Thursday's Department for Communities and Local Government questions to find the Government's default position on their programme for cuts. When my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) asked,
"is it not inevitable that those in greatest need will take the biggest cuts?",
"Those in greatest need ultimately bear the burden of paying off the debt".-[ Official Report, 10 June 2010; Vol. 511, c. 450.]
That proves to me where the cuts are going to hit the most-local communities not just in the north-east of England but throughout the country. We have to be prepared for that, and one thing that prepares us for it is the regional development agencies.
I must say that I am more confused now than I was at the beginning of the debate about what the Government's position is on RDAs. "The Coalition: our programme for government" document says on page 10:
"We will support the creation of Local Enterprise Partnerships-joint local authority-business bodies brought forward by local authorities themselves to promote local economic development-to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular."
Let us get some facts right about RDAs. First of all, they have trained more than 400,000 people and created more than 850,000 jobs over the last 10 years. They have helped nearly 60,000 businesses to start up and more than 110,000 businesses have benefited from a free business health check. RDAs brought forward funding of £100 million for regeneration projects, and they have launched transition loans to help businesses access finance. We are talking about a strategy for growth, but RDAs helped to deliver it.
In my constituency, the RDA helped businesses such as Rock Farm Dairy to set up a new bottling facility. The RDA is creating jobs in the north of the constituency. The Printable Electronics Technology Centre-PETEC-is in Sedgefield village, at NETPark, the North East Technology Park. The hon. Member for Bracknell (Dr Lee) was on about space and science. From what I see at NETPark, I know that today's science fiction is tomorrow's reality. That work was being done with the help of the RDA and a Government who invested £12 million to promote it. The research and development facilities at PETEC have helped to protect more than 600 jobs at Thorn Lighting, just over the border in the constituency of my hon. Friend the Member for Bishop Auckland (Helen Goodman). That is creating high-value jobs, making sure that manufacturing jobs stay in this country and do not migrate to the far east or to eastern Europe.
One NorthEast put investment of £10 million into NETPark to help set up headquarters for global science and technology companies, such as Kromek-global headquarters in the north-east of England. We should be proud of the fact that such companies are basing themselves in an area that in the past was used to deprivation and high unemployment. That investment was under a Government who were thinking ahead for the future well-being of local people.
Newton Press is a small company in Newton Aycliffe that has just invested in £100,000-worth of new equipment. It is a family firm, going back over many years, employing 11 or 12 people; I know the owner, Syd Howarth. He had a phone call from One NorthEast to tell him that he could not have the £20,000 grant they were working on to fund a further two jobs, because the Government said that One NorthEast can no longer award grants. That may be only two jobs, but it would be two people off the unemployment total in my constituency. If those
grants are being withdrawn all over the region, how many other people who could be in work will not be in work?
The cuts are undermining growth in areas such as the north-east of England, which has suffered in the past. We should be thinking about the future, and ensuring that there is a future for people in places such as Sedgefield. One person's cut is another person's front line, especially in business where the front line could be the bottom line, too.
What we have learned from the debate is that there is total confusion in the Government. What is their strategy for growth? The Government started the debate by saying that RDAs were safe, then they said that RDAs could be safe, then that they were not and now they are again. We need consistency and clarity from the Government, because the people I represent want certainty.
We are in a bit of a déjà vu situation. Labour Members cry about Tory cuts, yet they forget why the cuts have to take place. They are suffering from collective amnesia and forgetting that for the last 13 years they ran this country and the Government on the proposition that they had abolished boom and bust. The former Prime Minister, when he was Chancellor, openly boasted about that. There was a feeling that money would pour in-that there was an inexhaustible pot of gold to be drawn from. It reminded me of Aladdin, who rubbed the lamp and the genie appeared. Labour seemed to think that the genie would appear, they would ask for money and, magically, it would arrive.
Rachel Reeves: Does the hon. Gentleman remember that the financial crisis happened across the whole world? Does he believe that the Labour Government are responsible for the budget deficits in all those countries?
Kwasi Kwarteng: I remember that very well, but I would point out that, in the five years before the crisis that the hon. Lady speaks of, we were running completely needless deficits. We did not have to run those deficits; we did so because of the concerted attempt by the then Chancellor to expand the state and to keep spending money.
The general Aladdin's lamp approach was shown to be absurd. As the then Government kept rubbing the lamp and the genie came out, they asked for money, but the genie suddenly became rather less giving. At one point, the genie-in form of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)-wrote a letter and said, "There is no money. We have run out of money." The reason why we have done so is simply that we were spending too much.
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