What do all these failures in Labour’s vision have in common? Apart from the takeover test, they are all being tackled by the Government. Of course we are doing a lot more than that to stimulate jobs and growth. We are dealing with Labour’s shocking education legacy, as a result of which employers, even in high unemployment areas such as mine, say they cannot find the people they need. We are starting from the bottom. The pupil premium is proving such a help to children in deprived areas. We are encouraging science study in school—it is
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already up 80%. The National Citizen Service is giving young people confidence in those all-important softer skills. We have made huge investments in apprenticeships, the number of which has more than doubled in my constituency.
We are dealing with Labour’s neglect of manufacturing. We have heard the good news today about Vauxhall and the Business Secretary’s involvement in it. He has also intervened recently in the bioethanol industry, and we will shortly see the restart of a plant in my constituency on which 2,000 jobs depend. We are also pushing green technology. I can look out my office window in Redcar and see 27 giant offshore wind turbines being constructed. Construction is about to start on a £500 million biomass power station at Teesport. The other day I met representatives of the Forewind company, which is starting a massive project on the Dogger bank and wishes to bring power ashore through my constituency. I thoroughly welcome the announcement in the Queen’s Speech of the green investment bank, which will bring more jobs and growth to this vital sector.
The Government are investing in technology and innovation centres, including a centre for process innovation in my constituency. They are investing to improve rail freight infrastructure from Teesport and have created enterprise zones, including three in my constituency at Wilton, Kirkleatham and South Bank. The regional growth fund has already given more help to manufacturing in the Tees valley than we ever saw under the north-east’s regional development agency, and I welcome the extra £1 billion that has been allocated. The work is being co-ordinated by the excellent new local enterprise partnership for the Tees valley.
The Government are beating the bushes to generate international trade, and we are beginning to see the fruits of that activity. Exports to non-EU countries are at record levels, and we now have the first net trade surplus on cars since 1976. The north-east region is already in trade surplus, and the figures will soon include the £20 million-worth of steel a week that is being exported to Thailand from the newly reopened Redcar steel works. The first ship left yesterday.
Private sector jobs are being created—there have been about 500,000 since the general election—but unemployment is still way too high, especially in the north- east and especially among the young and the long-term unemployed. My constituency still has the second highest unemployment level among those of Government Members, and that remains a high priority for me. I was therefore delighted to see a drop of another 85 in the figures yesterday.
As we watch the Olympics, the carbon fibre bikes, the Kevlar canoes, the space-age swimsuits, the polyurethane footballs and the Paralympian equipment will be a reminder of the vital role that chemistry and the process industries play, and will play in the recovery. There is optimism in the north-east’s process industries, and the position could be made even stronger by a Teesside carbon capture and storage network. I look forward to the result of the call for bids for that project. Large UK companies are ready to invest billions in it.
Times are tough for the economy as a whole, not least because of the debt burden. The eurozone is in chaos and there is still a lot more to do, but this Queen’s Speech contains more steps in the right direction and I commend it to the House.
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2.46 pm
Margaret Hodge (Barking) (Lab): Today’s debate on jobs and growth is of huge importance not only to the constituents of Redcar but to those in Barking and Dagenham in my constituency. All too often, particularly in this Chamber, people believe that London’s streets are paved with gold, and that there is little poverty or joblessness in the capital. All too often, again in this Chamber, people believe that the challenges facing Londoners are concentrated in the inner boroughs. Sadly, and with a strong sense of anger and frustration, I must tell the House that the reality for families in Barking and Dagenham demonstrates that those beliefs are not only misguided but just plain wrong.
Any set of statistics will demonstrate a high level of joblessness in my constituency and, under this Government’s legislative programme, there is little hope for the future. A datablog published by The Guardian shows that Barking and Dagenham is ranked eighth out of 326 local authorities for long-term unemployment, and 11th for child poverty. If we look at the latest unemployment figures, we see that the unemployment rate in my constituency, across all people of working age, is almost double the national average, and that the number of people on jobseeker’s allowance for 12 months or more has doubled in the past year.
Growth and jobs are vital for my constituents, yet they have become the victims of the Government’s stubbornly blinkered and highly ideological approach to the economy. This involves putting tax cuts for the rich before job creation for the poor, putting deficit reduction before poverty reduction and putting the interests of the few before the well-being of the many. Without active Government intervention, my constituents will find it harder than most to find the jobs that they need to pull themselves out of poverty. Almost 60% of 19-year-olds do not have a level 3 qualification, nearly half the people of working age who are out of work have no qualifications at all, and one in four of my constituents work in the public sector. Faced with cuts in public sector jobs, cuts in training and employment opportunities, a failed growth strategy, little business investment and miserable levels of bank lending, the future for them is bleak.
As Chair of the Public Accounts Committee, I also know that when the Government talk about private sector job creation, the reality is something else. Many of the new private sector jobs are simply public sector jobs that have been transferred to the private sector as a result of the Government’s privatisation programme. We have only to look at the Audit Commission, at the privatisation of the Work programme and of prisons, and at private contractors providing health care to NHS patients to see that many of the so-called new private sector jobs are jobs funded by the public purse. That is scarcely a surge in private sector growth.
The Government claim that they are running the biggest-ever welfare-to-work programme with the Work programme. Let us inject a bit of reality into that claim. I shall look at the Work programme both as a constituency MP and as Chair of the Public Accounts Committee. I have always been an optimist, but I have grave concerns about whether this will be an effective value-for-money programme. Ministers claim that it is value for money because it is paid by results, but surely the programme’s purpose is to get people into work, not to cut the
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welfare-to-work budget. If we end up spending less, we will do so by achieving less. A detailed look at the programme shows that one in four of those referred will get a job anyway, with public money being spent both on the attachment fee and on the placement. Unemployment is much higher, so referrals are greater and more money is going to private providers, but with fewer people placed in a job.
Stephen Lloyd (Eastbourne) (LD): The right hon. Lady talks about value for money, but does she not agree that the prime providers of the Work programme will be paid only if, first, they get people into jobs and, secondly, they sustain those people in jobs for two years, which will provide the bulk of the money. That sounds like good value to me. Does she disagree?
Margaret Hodge: I have two points on that. First, it is not good value if people do not get into work, which is the whole purpose of the programme, and, secondly, one in four of those who get into work would have done so anyway without any intervention at all. Given the black box nature of the programme, we will not know whether people have actually been given support. All the indications I have seen suggest that that is highly unlikely. We are beginning to get evidence to show that the more difficult cases are being parked, simply because all the money is focused on those most likely to get into work.
Kate Green: Does my right hon. Friend share my concern that Work programme providers are reporting that when they do succeed in getting people into work, it is usually short term and temporary? If people are cycling round and round the programme, that is certainly not good value for money.
Margaret Hodge: We have been looking into the issue of whether short-term or part-time work is being provided. When I tried to meet prime providers locally, they would not tell me how many people had been referred to them, how many people they had got into work or how long those people had been in work. The Government claim to be committed to transparency, but any decent assessment of the Work programme is greatly inhibited by such lack of transparency.
Finally, I shall speak about Barking and Dagenham as an excellent example of where opportunities exist for the Government to stimulate jobs and growth. We might have lost many Ford jobs over time, but we have massive potential for expansion, with Barking Riverside, Dagenham dock and Barking town centre. The lack of public sector investment in infrastructure and services, however, is the major barrier to achieving growth and jobs. There is potential in Barking Riverside, with planning permission granted by the local council for 11,000 new homes, but at the current rate of building it will take 50 to 60 years before the scheme is completed. If those homes were built, it would stimulate jobs and help to tackle housing need.
We cannot get the school that we need in order to assure families who move into the area that their children will have a school place; we cannot get the transport infrastructure we need through the docklands light railway extension, because there is no money there; and we cannot get the Mayor to do anything to stimulate
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private sector house building. What we need is action, not words. Not a penny of the regional growth fund moneys has come to an area like ours, which needs a huge amount of resources.
I am conscious that many Members want to speak, so let me briefly say in conclusion that although the hon. Member for Redcar (Ian Swales) devoted about half his speech to the previous Government, we are now two years into this Government—and things have got only worse. During the two years on their watch, living standards for hard-working families in Barking and Dagenham have declined. Since they came into office, people’s hopes for a better future—with jobs for their children, homes for their families, and economic growth for their children and grandchildren—have been smashed.
The Queen’s Speech has nothing to say to the people of Barking and Dagenham. It does nothing for a community where needs are great. It fails the hard-working families of my constituents, it fails the businesses in my borough, and it fails to meet the aspirations and needs of future generations who will make Barking and Dagenham their home.
2.55 pm
Paul Uppal (Wolverhampton South West) (Con): The right hon. Member for Barking (Margaret Hodge) used the term “victim”, and also spoke of a lack of hope. That is a theme to which I shall return later. I think that we should be very careful in our choice of words, given how corrosive they may be in the world out there—the real world, not the Westminster bubble.
In difficult economic times, we should not be seeking quick fixes. It is important that we continue to build the foundations that are necessary for economic recovery. The solution to a debt crisis should never be more debt.
John Stevenson (Carlisle) (Con): Does my hon. Friend agree that part of the Government’s problem is the fact that the last Government borrowed in good years, and had borrowed some £40 billion before we even entered the recession?
Paul Uppal: That is an excellent point, and it is not made only by Members of Parliament. Hamish McRae, the acclaimed journalist, made it in The Independent during 2003 and 2004. He regularly asked readers what had happened to those golden economic rules—but that is by the by, and we cannot change it.
I want to raise an issue which I spoke about during the Budget debate. We are right not to allow protectionist rhetoric to creep into our political system, and continually to challenge protectionism abroad. That is crucial to the rebalancing of our economy to change it from an economy that spends on imports to one that earns through exports. I am encouraged to note that British exports rose by £50 billion last year, and that unemployment has fallen by over 45,000 in the first quarter.
I believe that there are two areas in which the Gracious Speech can make a real difference: the creation of the right conditions for private sector investment, and investment in our work force and the work force of tomorrow. Analysts have estimated that UK businesses have cash assets of more than £750 billion, equating to nearly half our GDP, and that investing just £20 billion
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of that in the UK could deliver a 1% increase in growth. We need to ask the difficult question: why are these cash-rich institutions not investing domestically?
The answer begins with the boom that preceded the recession. Unlike booms preceding earlier recessions, that boom was financed by public and private debt, which has continued to depress household borrowing and spending. The IMF’s analysis of advanced economies over the past 30 years concluded that recessions preceded by an unsustainable increase in household debt tended to be more severe and protracted. That is because as long as households pay down debts and increase savings, demand will remain weak.
One explanation for the weakness of private investment is concern among companies about the future availability of bank finance. They are becoming more reticent in their investment strategies, and are using cash as an insurance against a crisis. The situation is not helped by fears of contagion, or by the lack of liquidity in the banking sector. A solution to the problem would be the creation of a banking system that improved lending and the supply of credit. The introduction of a ring fence around retail banking separating retail banking services—such as deposit holdings and lending—from investment would pave the way for a more competitive banking system.
Tellingly, the removal in 1999 of the Glass-Steagall Act, which separated deposit holdings and lending from investment, changed the landscape of banking in America. It allowed larger investment institutions to enter the deposit and loan markets, creating a grab for small banks. In 1999, there were 19 significant large banks in America; today there are four. The picture in the UK is similarly worrying. Although there are smaller banks in the UK and the US, large banks have consolidated their position, creating market dominance. The consolidation of banking on such a scale is bad for businesses and bad for lending. With only a handful of lenders, concern arises about the availability of credit. We often talk about how banks are too big to fail, but rarely do we talk about banks being too big to be effective. Banks can only be described as quasi-public institutions, and will be accountable to the public long after they are sold. They are the engine of any economy, as they provide credit, investment and savings. We need a banking sector that not only serves shareholders, but benefits the wider economy.
I would also like to discuss how investing in the UK should involve our work force today and the work force of tomorrow. On a personal note, I recently held a jobs fair in Wolverhampton. We had more than 1,500 young people attending and more than 30 employers. One conversation I had on that day still sticks in my mind. It was with a young person from Wolverhampton who said, “I want to thank you, Mr Uppal, for organising this. You’ve given me hope.” When the Leader of the Opposition stands up and says that there is no hope in the Budget or the Queen’s Speech, the effect is deeply corrosive. I know that the situation in places such as Wolverhampton is challenging, but to dismiss people and just wipe away their dreams so quickly and flippantly is very damaging. Sometimes politicians in this House need to think carefully about the terminology they use.
We all appreciate that the Opposition have a job to do in holding us to account. However, it is important that we do not respond with knee-jerk reactions, but instead always look at the broader picture of what we are doing
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for the economy and not look to make political capital out of the situation. Investing in the work force of tomorrow means preparing young people for work today. Careers events in schools, inviting local companies to speak at schools, and lessons on interview and presentation skills could all help, and not just in year 11, but early on, when children are starting to think about options and subjects. It is not about getting young people to pick a career early on; it is about them knowing that their options will help them to make the right choices and give them goals for the future. If young people know that maths and science are essential for accessing the type of job they are considering, such subjects will seem more beneficial.
Ensuring a skills base for the future to drive Britain’s industry and manufacturing is evidently important, and recent reports point to a skills gap. It is disappointing to hear companies say that they cannot find the skilled people they need, especially when that is coupled with high unemployment. The west midlands is a great base for manufacturing, and, with the introduction of the i54 site, we can only improve on this. Taking the long-term view on jobs and growth—helping young people to get the best possible start early on—can only be beneficial in preventing them from ending up not in work, training or education.
Let me finish by saying, for the second time in this Chamber, that when it comes to the difficult decisions, at least those of us on the Government Benches are walking the walk, whereas Opposition Members are just talking the talk.
3.2 pm
Ian Mearns (Gateshead) (Lab): If I had been standing in this House a month or even a fortnight ago to speak about the prospects for jobs and growth, I might have expressed the opinion that the entire credibility of the Government now stood at a crossroads. A month on, however, I believe that we are well beyond that point. The Budget, followed by the local government elections and the collection of sideshows that make up the Queen’s Speech, have made it clear that the Government have abdicated any responsibility for trying to generate any real growth in our economy.
As Labour Members warned when the coalition came to power, the policies adopted by the Government were effectively an enormous gamble with the future of our nation’s economy. We also warned that whereas the richest and most privileged in our society would be spared the costs of that gamble, the poorest and most vulnerable would be expected to pay the costs. We predicted that the experiment—the gamble—was doomed to failure. However, heedless of the warnings, and driven by an ideological desire to shrink the state, the Government pressed ahead, determined to use the excuse of the budget deficit to drive through their political agenda, oblivious to the damage to our economy.
David T. C. Davies: Is the hon. Gentleman simply following the mantra that we should have borrowed even further, on top of the £160 billion that we were already borrowing when his colleagues left office?
Ian Mearns: I can tell the hon. Gentleman what I would do: invest to save to grow, and then reap the benefits of that growth through the taxation system.
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We warned that the Government’s policy was wrong, but I do not think any of us predicted just how wrong, just how disastrous its impact would be and just how much more difficult things would become in regions such as the north-east of England. The impacts on the young, as so clearly outlined by my right hon. Friend the Member for South Shields (David Miliband), are much greater in regions such as the north-east, yet Government Members seem completely oblivious to what is happening in these regions.
The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output is said to be behind the contraction, but it is not the only factor. BBC economics editor Stephanie Flanders says that the situation
“adds to the picture that the economy is bumping along the bottom”.
At Prime Minister’s questions, the Prime Minister has said the figures were “very, very disappointing”—that is perhaps the understatement of this Parliament. He went on to say:
“I do not seek to excuse them, I do not seek to try to explain them away…there is no complacency at all in this Government in dealing with what is a very tough situation that, frankly, has just got tougher.”—[Official Report, 25 April 2012; Vol. 543, c. 944.]
He said it was “painstaking, difficult work”, but the Government would stick with their plans and do “everything” that they “can” to generate growth.
I am surprised that the Prime Minister was disappointed —what did he expect? The economic outcome of his policies was completely expected by many commentators. The outcome was highly predictable. The Prime Minister needs to recognise that it is his Government who have caused this recession in Britain and that it is his policy that has taken us back into recession. He needs to accept responsibility, and to accept that cutting deeper and deeper is the problem, not the solution and that to continue blindly will only damage our economic prospects yet further.
The Leader of the Opposition hit the nail on the head when he said the economic figures were “catastrophic”. He said that
“this is a recession made by”—
“and the Chancellor in Downing street.”
He went on to say that it is their
“catastrophic economic policy…that has landed us back in recession”.—[Official Report, 25 April 2012; Vol. 543, c. 944.]
The Office for National Statistics has said that the output of production industries decreased by 0.4%; construction decreased by a full 3%; and output of the services sector, which includes retail, increased by only 0.1%, after falling a month earlier. Those figures are slightly worse than many expected, but the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted.
The UK economy has been bumping along the bottom for more than a year and is struggling to gain any momentum. The preliminary figures from the ONS are consistent with the messages coming from official and private data, which say that the UK was once again relying heavily on services and consumption by households. That suggests that the recovery will continue to be weak. Demand is very weak. UK business is sitting on a cash mountain but will not invest because there is no demand in the domestic market. So we very much welcome
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the growth of exports in the car sector, but the fact that such exports are outstripping the domestic market is not really that great news, because the depression of the domestic market is the real problem. We do not have demand.
The ONS figures also demonstrate clearly that the fall in Government spending has contributed to the particularly large fall in the construction sector. Some Government Members have tried to question the ONS figures and argue that the position is not so bleak, but they are burying their heads in the sand. Joe Grice, chief economic adviser to the ONS, has vigorously defended the figures. He said the construction data were based on a survey of 8,000 companies and had been carefully checked and double-checked.
We are in a very difficult situation. All across Britain and Europe people are rallying to challenge the consensus on austerity, because it is nonsense. The election of the new President in France, who is committed to a policy focused on growth, challenges the failed orthodoxy of austerity; the election and protests in Greece, the protests in Spain and the state elections in North-Rhine Westphalia in Germany last Sunday are shouting to us that a change of direction is absolutely necessary.
The Government could, if they so chose, focus on growth, but they do not do so. The fact that they choose austerity—that they choose destruction rather than investment—is wilful, and it is clearly a political choice. But there is an alternative and I beg them, on behalf of regions such as the north-east and on behalf of my constituents, to change tack—we need growth.
3.9 pm
Chris White (Warwick and Leamington) (Con): I am grateful for the opportunity to speak in this important debate. All too often, when we talk about the economy we speak in terms of GDP figures, confidence indices and the like, and they are very important, but we should always remember that this is about people’s lives and aspirations.
Employment in Warwick and Leamington has held up well over the past few years. In May 2010, 2,002 people were claiming jobseeker’s allowance. In March 2012, that had fallen to 1,646. Warwick and Leamington has climbed nearly 100 places and has gone from having the 414th highest level of unemployment among constituencies in the UK to having the 507th. I believe that that is a tribute to the inventiveness of our local businesses, the hard work of our local jobcentres and the determination of local residents to find work. However, while there is reason for optimism, we must also be aware of the challenges.
The number of those claiming JSA over the past 12 months has risen from 265 to 310 and although that figure has fluctuated, it makes it clear that we need to continue to build an economy that can create long-term and sustainable jobs, particularly for our young people. It will not be surprising to Members to learn that, as the co-chair of the associate parliamentary manufacturing group, I believe that manufacturing is the key to creating that sustainable labour market.
Although we all agree that there needs to be economic growth, we do not wish to achieve that through just any type of growth. We should not think of our situation
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merely as a short-term problem that needs short-term solutions, whether that involves stimulating demand or supporting the supply side.
Manufacturing is best placed to support the objective of increased employment for a number of reasons. First, manufacturing is strongest in those areas where private sector employment has been weakest. In the midlands, the north, Scotland and Wales, manufacturing occupies a bigger part of the economy than in London and the south-east. If we can increase manufacturing growth, it is likely that employment gains will be better spread across the country and we will tackle those parts that have traditionally suffered from structural unemployment.
Secondly, the nature of manufacturing is changing. It requires greater skills and higher levels of education. The UK Commission for Employment and Skills estimates that by 2017 the percentage of manufacturing jobs in high-end occupations—mostly degree-level employment—will rise from 27% today to 37%. That means there will be about as many people in high-end occupations in manufacturing as there will be in low-end occupations.
Thirdly, work within manufacturing is often higher paid than that in services. Average weekly earnings, including bonuses, in the manufacturing sector were £532 compared with £449 in the services sector. Finally, manufacturing jobs have a significant spillover effect into other parts of the economy. They enable the creation of services and other sectors around those jobs and help to provide pillars on which other parts of the economy can build. That increase in manufacturing employment presupposes manufacturing growth, and while I do not have the time to consider that in this speech, it is something to which I hope to return in the near future.
If we want to prepare our work force, and particularly our young people, for work in manufacturing, we need to ensure that we take steps now to support that aim. One of the best ways that we can do that is to support apprenticeships. However, we must ensure that they are the advanced and higher levels of apprenticeships so that we meet the increase in the number of higher level positions. According to the latest data, there were 200,300 apprenticeship achievements in 2010-11. However, only 1,000 were higher level apprenticeships. The number of advanced level apprenticeships completed was around 33% of the total and we need to ensure that, as we increase the total number of apprenticeships, that figure is not diluted.
The best way to support jobs and growth, however, is to give more support to our small and medium-sized manufacturers so that they can take on new employees. More grants should be given to small and medium-sized enterprises and manufacturers to train the new staff they hire, particularly those who have been long-term unemployed or who are aged between 18 and 25. Unlike larger businesses, SMEs often are not able to rely on the economies of scale that can reduce training costs. This presents a significant barrier not only to increasing employment but also to growth. I hope that the Government will look at ways of increasing the support we can give to SMEs in this regard with greater financial incentives for those higher-end qualifications that will become more important in the years ahead.
I believe that any long-term improvement in our economy has to be built on manufacturing if it is to be sustainable and create the kind of jobs we need to
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diversify our labour market. Increasing our manufacturing sector and reskilling our labour force will not be quick or cheap but that does not make it any less necessary. Although we face times of public stringency, we should not defer investment. That will only mean that we have to wait longer for the rebalancing to happen. I am confident that if both sides of the House can work together, support the manufacturing agenda and provide the long-term political buy-in that the industry wants in order to make long-term investment decisions, we can achieve the outcomes that we all want.
3.15 pm
Stephen Timms (East Ham) (Lab): One reason why there has been such a negative reaction to the Queen’s Speech, particularly from business, now that we are again in the midst of recession is the absence of measures to boost growth. There was a particularly exasperated reaction from the director general of the British Chambers of Commerce, which my right hon. Friend the Member for Morley and Outwood (Ed Balls) quoted at the beginning of the debate, straightforwardly accusing the Government of playing short-term politics instead of boosting the economy. A lot of people thought there would be a boost to the economy in this Queen’s Speech, but it simply was not there. The problem is that the Government’s policy has not delivered. We were told after the election that the policy being introduced would deliver a steady and sustained economic recovery with low inflation and falling unemployment. Unfortunately, that simply has not happened. The shadow Chancellor and the former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), warned that the policy put the recovery at risk. They have been proved right and Ministers have been proved wrong.
There are other reasons for the Government’s dramatic loss of popularity, one of which is a sort of policy incoherence across government, with different Departments going in contradictory directions. Let me give an example: people receive tax credits only if they work more than a certain number of hours. The previous Government set the threshold at 16 hours per week, but the Minister who is winding up the debate has announced that when universal credit is introduced in October next year there will be no hours thresholds. Support will be available only for people working very few hours, and the Secretary of State for Work and Pensions has perfectly fairly presented that as one of the virtues of his new system. However, the Chancellor, who opened the debate, has gone in the opposite direction. He has raised the threshold from 16 hours to 24 hours a week and more than 200,000 households have lost out. They cannot both be right, although one of them might be. The announcement from the Department for Work and Pensions goes in the opposite direction to the Treasury’s. No. 10 ought to have spotted that and sorted it out. People see that incoherence across government.
My right hon. Friend the Member for Barking (Margaret Hodge), who chairs the Public Accounts Committee, made some telling observations about the Work programme. We know remarkably little about what is happening in that programme because the Government have banned Work programme providers from publishing any data. When under pressure in January, the Minister with responsibility for employment promised guidance to allow them to publish, which they want to do. When he was pressed again he said that the guidance would
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appear by the end of April, but we are now in the middle of May and it still has not appeared, so providers in the Work programme have no way of comparing their performance with that of others. My right hon. Friend said that she could not find out what was happening in her constituency and every other MP is in the same boat. Jobcentre managers have no idea what is happening in the Work programme in their area, and the effectiveness of the Work programme is being weakened as a result.
This week, a very good charity working with homeless people, St Mungo’s, has resigned from the Work programme. It had three separate contracts with three Work programme prime providers, but in the 11 months since the Work programme started the charity has not had a single individual referred to it by any of those three prime providers.
Mr Gordon Marsden (Blackpool South) (Lab): I am listening with great interest to my right hon. Friend, not least because I have heard similar things in my constituency, not just about the voluntary sector but about experienced private providers. Does he think it is time that the Government started doing a proper job for the third sector? They want to involve it in the big society, but they are cutting its legs off.
Stephen Timms: My hon. Friend is absolutely right. Step one would be to allow the data to be published. Instead of banning everybody from saying what is happening, the Government should let us have some numbers so that we can see what is going on. That would offer the chance for clarification.
Michael Connarty: I am grateful to my right hon. Friend for making those points about St Mungo’s. I took the trouble to visit the project in Hackney, and I was very impressed by what was being done for people with long-term dissociation from society to give them skills and jobs. It is a tragedy if the charity has decided that the Government have nothing to offer them. The project is wonderful and the Government, given all their rhetoric, should be supporting it wholeheartedly.
Stephen Timms: My hon. Friend is right. Not one person has been referred to St Mungo’s since the Work programme started. If the homeless are not being referred to St Mungo’s, we can be very confident that they are not being helped by anybody, and that is at the heart of what is going wrong. We certainly need guidance so that people can start telling us what is going on in the Work programme.
The hon. Member for Wolverhampton South West (Paul Uppal) is rightly concerned about the challenges of securing investment. I am disappointed that no communications Bill was announced in the Queen’s Speech. A year ago yesterday, the Department for Culture, Media and Sport announced the first stage of what it described as a
“comprehensive period of consultation that will inform a Parliamentary Bill.”
Unfortunately, no such Bill has been announced.
The Communications Act 2003, which I was responsible for, is excellent, but technology has moved on and the regulation needs updating. The problem is clearly highlighted by the failure on 4G mobile services. Capital Economics estimates that a go-ahead for 4G in the UK
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would trigger private sector investment of more than £5 billion and raise gross domestic product by the end of the decade by half a percentage point. It says:
“The UK is off the international pace. The technology has already been deployed commercially by more than 50 operators in over 30 countries.”
In the UK, we still do not know when the spectrum auction, and liberalisation of restrictions on existing spectrum, will go ahead. We cannot afford further delay. The destructive promotion, which we have unfortunately seen, of the narrow interests of individual operators must now give way to the speediest possible implementation, allowing investment to be made. One of the benefits will be viable access to superfast broadband for a significant part of the country where landline services will not be available in any reasonable time scale.
We shall need new legislation and I hope that Ofcom and the DCMS will press ahead to make sure that the changes that are needed—the auction and liberalisation of the existing spectrum—proceed without further delay. We have waited long enough already.
I welcome the inclusion in the legislative programme of the draft Groceries Code Adjudicator Bill, following the initiative of the previous Government.
Jim Shannon (Strangford) (DUP): As the right hon. Gentleman is aware, small firms have suffered at the hands of the giant supermarkets for far too long. The Bill lacks the teeth to allow the ombudsman to fine large supermarkets. Does he agree that the ombudsman needs those enforcement powers?
Stephen Timms: The hon. Gentleman makes a telling point. The legislation will have to be scrutinised closely and we will need to make sure that it delivers on the purpose for which it is being introduced.
I have to express my regret at the lack of a Bill that would put into law the commitment to raise the international development budget to 0.7% of GDP. The Secretary of State for International Development has made that promise and I hope it will come forward.
3.24 pm
Richard Fuller (Bedford) (Con): Mr Speaker, I draw your attention and that of other Members to the fact that I am an adviser to a venture capital fund and also to my other entries in the Register of Members’ Financial Interests.
I support everything in the Queen’s Speech that will deal with improving jobs and achieving growth in our country. I hope that is the only partisan point that I shall make because I would like to talk a little bit about the use of language, and then advise hon. Members about a very practical way that Members of Parliament can play a role in achieving the goals that we all seek in terms of enhancing jobs and creating growth.
Let me start, if I may, with language. It is always important, in trying to solve a problem, to use words in the correct way and in ways that make sense, because if we do not do that, of course we will not solve the problem. Sadly, we have a major problem with the language when it comes to jobs and growth, starting with the word “austerity”, which has been much used today in a number of speeches.
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A dictionary definition of austerity, in its economic context, is:
“An economic policy by which a Government reduces the amount of money it spends by a large amount.”
In popular discourse that is a description of the coalition Government’s economic policies. The trouble is that it is not a correct description of the coalition’s policies. Over the period of this Government, total public spending will increase, not decrease, from £670 billion to £734 billion. If we choose to measure it in terms of public borrowing as a percentage of GDP, the reduction in the UK will be significantly less than that of Greece, Portugal and Ireland. “Austerity” is therefore a good catch-phrase, but it is not an accurate way to describe coalition policies. That is compounded by a false choice that is presented to the public: austerity versus growth. I think that is a false and misleading set of alternatives to present, because growth is an objective that all policies seek to achieve, and a better description of the policy alternatives that are being put forward is, on the one hand, growth based on living within our means, and on the other, growth based on borrowing.
The BBC, if I may say so, is particularly noteworthy in its use of these false comparisons. On 12 May Gavin Hewitt, who is the BBC’s European editor, had a column entitled “Growth versus austerity”. On 4 May, Stephanie Flanders, the BBC’s economics editor, commented:
“It’s not only Labour politicians who say this”.
in the debate about the trade-off between austerity and growth.
Yesterday evening, a debate on BBC’s “Newsnight” featured a huge animated set of scales with “austerity” on one side trying to be balanced with “growth” on the other. That is not the BBC bias of which the Mayor of London has recently spoken, but it is misleading propaganda being put to the British public.
I now turn to a practical idea that all Members of Parliament should consider in their constituencies. I am drawing on some of my experience in Bedford, and on Monday at 3 o’clock I shall be holding a workshop to describe that in more detail to hon. Members. I looked at the comparative advantages that Bedford had in terms of economics. We do not have much. We do not have a university science park, we do not have a lot of inward investment, and we do not have a big employer, but people have a willingness to invest in and grow local businesses. We are in the process of creating a Bedford business enterprise investment scheme fund—a policy introduced by the Labour Government and enhanced by this Government. That is an excellent scheme, to encourage people to invest in local businesses. The idea of the fund is to get people to put money into their local business because they want to see them grow. There is a sense of civic duty that motivates people, and the fact that they have idle balances sitting in the banks, earning very low interest rates, is a very good economic incentive for people to do that.
A Member of Parliament can act as a great initiator, champion and cheerleader for this initiative, drawing together a local advisory board of business people to run the fund, seeking out partners for the fund to help to popularise it in the community, and finding new businesses that the fund can invest in. In Bedford, we have set a target of raising £500,000, and we are well on our way to achieving that.
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I believe that if other hon. Members engage in that sort of action, it will mean that MPs, who are often criticised for lacking real world experience and being out of touch, will be seen in their local communities doing something practical to help people. If we put a network of projects together, we could seek support for this excellent initiative from the regional growth fund so that we have a constellation of local groups across the country where local people come together to support—commercially—the growth of local businesses in their community. If people would like to learn more, I shall be happy to explain on Monday at 3 o’clock in the Thatcher room.
3.30 pm
Austin Mitchell (Great Grimsby) (Lab): To say that the Queen’s Speech was disappointing is not quite to plumb the depths of the inadequacy it demonstrated. Without being able to speak for Her Majesty, I am solidly assured that she would not have made the long and arduous journey from Buckingham palace had it not been for the certainty that I would be taking her photograph as she arrived here. Really, it was not worth her while to come down here for such a rag-bag of petty measures.
The Queen’s Speech was pathetic. It was pathetic because it is now about all the coalition can agree on. The glad confident morning of 2010 has given way to the bleary bickering, downward slope and near break-up of 2012. It was pathetic because it contained nothing about growth, the major problem in our economy, except for the ability to fire people, adding to the unemployment rolls. It was pathetic because it ignored the damage that two years of this Government’s disastrous economic policies have already done. My right hon. Friend the Member for Morley and Outwood (Ed Balls) set that out admirably.
Two years in, here we are in a double-dip recession, with youth unemployment reaching one in four—the rate is higher in Grimsby. The Office for Budget Responsibility is having to spend all its time revising its predictions downwards because they are no longer adequate for this Government’s failures. “I’m walking backwards for Christmas” should be the OBR’s theme song, were it not for the fact that it mentions Christmas—there is no Christmas at the end of this process. The economy has shrunk by 4%, and that is cumulative over the period, so the total shrinkage must be about 10% or more. A much smaller economy is bearing the same burden of debt, so our ability to pay it has shrunk and the standard of living of everyone in this country has shrunk. Hard-working families—non-working families, as well—are facing a burden of cuts and high inflation.
For me, sitting here today is a re-run of 1980-81, watching Conservative Members clutching at any pathetic straw, any pathetic glimmer of hope in the encircling darkness, to cheer themselves up. Margaret Thatcher had the Falklands to rescue her from that dilemma, but I doubt that this Government will have a Falklands to save them, because what they are producing is a decline—a shrinking—of the British economy and of everybody’s standard of living, all in the name of a neo-liberal ideology of rolling back the state. That ideology is plainly inadequate, wrong, prejudiced and damaging, because the only way out of our current situation is growth—economic growth, which increases our ability to pay off debt, as our Government paid off debt between 1997 and 2000. It is growth that revives the
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economy, growth that generates jobs, and growth that the people now want, but we will not get it if we follow this Government’s agenda.
I have done extensive research and can pronounce, with real authority, that the economy now needs three things: first, demand; secondly, demand; and thirdly, demand. Without the prospect of demand, business will not invest; the banks will not lend; closures on the high street and in the productive economy will continue; and firms will not spend their resources. No one will create jobs without demand to ensure the prospect of profit. Lack of demand clouds every prospect in this nation today.
How can we best achieve demand? My right hon. Friend the Member for Morley and Outwood has set out a five-point plan, which I heartily agree with. I would go further by borrowing more and spending more. I would give a two-year national insurance holiday for the employment of young people and for areas of the country in recession. I would boost the regional growth fund, whose achievements are pathetic, particularly in Yorkshire and Humberside, which got only 6,300 jobs, or about the same as the south-west and less than the north-west, both of which have lower unemployment rates than we do.
I would also borrow to build houses. We need a big housing programme of the kind that took us out of recession in the 1930s. The housing report published this week showed the problems and how they are accumulating. We cannot solve them unless we build houses for people who cannot afford to buy, who now make up the great majority of the population. To do that we can raise money through housing loans for councils, or we could take some of the money that is put into the banks through quantitative easing and give it to housing contracts instead, which will then be paid off over a period of time. The message to the Government that I wish the Queen had given is simply, as Bob Dylan put it: “Turn, turn, turn.”
3.36 pm
Stephen Barclay (North East Cambridgeshire) (Con): It is a pleasure to follow my colleague on the Public Accounts Committee, who I always feel puts the “Great” in Great Grimsby.
A number of Members raised the issue of credit for small businesses. The hon. Member for North Ayrshire and Arran (Katy Clark) focused on that, without wanting to give a specific solution, as did her colleague, the hon. Member for Leeds East (Mr Mudie), and, on the Government Benches, my hon. Friend the Member for Northampton South (Mr Binley). But the debate so far has not focused on one of the chief impediments to credit for small businesses: the high capital requirements imposed on banks, which makes it expensive for banks to give credit to small businesses, particularly those deemed to be high risk. To put that in context, at the moment around one quarter of Royal Bank of Scotland’s corporate book is designated as high risk.
It is not just a small sector of the small business and corporate market that is having difficulty accessing credit. The reason for that really goes back to the financial crisis. I think that the right hon. Member for Edinburgh South West (Mr Darling) was correct, following the collapses of 2008, to take a more risk-averse approach to capital requirements, and that led to the requirements we see today. The point I want the House to focus its attention on is whether we can bring greater urgency to
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the resolution mechanisms that apply to banks, including looking at living wills so that purchasers are in place if a bank gets into trouble, enabling others to step in and take the liability on and away from the taxpayer. If we take the liability from the taxpayer and give banks greater security by pooling assets through insurance mechanisms, we can take a less risk-averse approach to capital requirements. That, in turn, means that banks will be under less pressure to call in loans.
One of the consequences of banks calling in loans is the forced sale of assets, with businesses selling at a time not of their choosing and when the price is not right. Currently, when businesses seek credit to expand, often only short-term credit is available. Banks do not want to lend for the long term in case there is a deterioration—the eurozone is the most visible risk—and by lending short term they can churn loans and impose brutal charges. The impediment to businesses that want to expand and take on additional staff—a business’s biggest overhead is usually employing staff—is the lack of capital. Seeking that capital is therefore difficult. Banks do not want to lend because of the costs that they incur, and if they do lend they pass the costs on to small businesses through brutal charges and wide spreads in interest.
If our Front-Bench team can accelerate some of the special mechanisms that are available through the pooling of risk, through living wills and through identifying purchasers, we will avoid some of the risk that we saw with the Royal Bank of Scotland. Scandalously, for example, after the Treasury undertook 10 months of intensive work, Sir Nicholas Macpherson could not rely on what the balance sheet said the assets were valued at. The scale of the regulatory collapse that we faced and the continued uncertainty of the risks means we now need to put in place those resolution mechanisms if we are to get credit flowing into the small-business sector.
Let me give an example from my own constituency to bring this issue to life. Just this week, a business got in touch, telling me that its site was cramped and that it had borrowed just under £2 million to expand. Its turnover is up, and its profits are up, to £500,000 a year, but it can get only short-term loans on that £2 million. It cannot therefore expand its staff, despite the opportunities its new site offers, because of the spread of interest and the brutal charges attached to that £2 million loan. So I say to our Front-Bench team, let us speed up the resolution mechanisms, reduce the charges from banks lending to high-risk businesses and, as a result, let the credit flow to those businesses so that they can expand and deliver the jobs and growth that Members on both sides of the House seek to achieve.
Mr Deputy Speaker (Mr Nigel Evans): To accommodate more Members, the time limit is being reduced immediately, by one minute to five minutes.
3.42 pm
Shabana Mahmood (Birmingham, Ladywood) (Lab):
Given that the economy is in recession, with the first double dip for 37 years, that long-term unemployment is at its highest since 1996 and that 1 million young people are out of work, it is shocking that the Queen’s
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Speech contains no measures to deal with those problems and, therefore, utterly fails to address the crisis that millions face.
I wish to focus my remarks on unemployment and, in particular, on youth unemployment and the Government’s failure to understand that there is an unemployment emergency in our country. We have had a Budget and a Queen’s Speech that have failed to deliver on jobs and desperately needed economic growth. Not only is that complacent; the Government do not seem to understand that every day they waste in failing to take comprehensive action to get our economy moving again, and our people into work, represents a tragic waste of talent, aspiration and confidence for more and more of our citizens.
My constituency has the highest rate of unemployment in the country, at 21.6%, and youth unemployment is at 11.2%—that is, 2,200 young people looking for work. From March last year to March this year, there was an 84% increase in the number of young jobseeker’s allowance claimants out of work for more than six months, and a shocking 91% increase in the number of unemployed young people out of work for one year or longer. Youth unemployment alone is set to cost Birmingham as a city £400 million in the coming decade.
Behind each statistic is a young person, bruised and battered by their experiences of job hunting under this Government and terrified that they will be part of the lost generation. They tell me that they have worked hard, overcoming difficult social and family circumstances to get qualifications, only to find that none of it matters. It is depressingly normal for young people in my constituency to tell me that they might as well not have bothered, that their effort has been wasted and that they do not know where to turn.
A climate of fear is already brewing among young people still at school, who despair that their chances of getting on have been kicked away by the cuts to education maintenance allowance and the trebling of tuition fees. They watch their older siblings getting into debt and sending off CV after CV with no luck and no hope, and fear that they will end up in the same boat.
Yet the Government do nothing but create more damage. They cut the future jobs fund, which was making a real difference in my constituency, as soon as they came into office, saying that, at £6,500 per job created, it was simply too expensive. Last week, the National Audit Office told us that the Government’s flagship regional growth fund will create 41,000 jobs, not the 500,000 that the Government originally claimed. The NAO also said that most of these jobs would have been created in any event and that each of them will cost us £33,000, with a cost, in some cases, of as much as £106,000 per net additional job. So the Government got rid of something that was making a real difference, saying that it was too expensive, and brought in something that is even more expensive but is not making the difference they said it would. That proves that they are not only out of touch and complacent but incompetent.
Unlike Labour’s proposal for a real jobs guarantee, the Government’s youth contract does not guarantee a job; it is merely a subsidy to an employer who is hiring a young person which covers only half their wages and does not create a new job. Labour’s plan for a real jobs guarantee would go much further, guaranteeing a job after 12 months of unemployment and covering the full wages for the employer.
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In failing to deal with youth unemployment, the Government are storing up problems for the future, because if we allow the young unemployed of today to become a lost generation, they will be the long-term workless of tomorrow. As I have seen in my own constituency, which already suffers from long-term worklessness, getting back into work people who have been out of work for significant periods, or who have never been in work, is a significant challenge that costs huge sums. Problems that have been a generation in the making will take at least that long to fix, so it is far better, on every measure, to stop us getting to that point in the first place.
The young unemployed in my constituency and across our country were looking for a change of course and a sense of hope, but I am afraid that in this Queen’s Speech there is neither change nor hope—just a confirmation that this Government do not listen, do not care, and do not have a clue.
3.47 pm
Guto Bebb (Aberconwy) (Con): I had intended to speak about a number of issues in relation to the Queen’s Speech, but I will concentrate on three specific points because the time limit has been curtailed.
Before I do so, I should like to respond to a comment by the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who said that the changes to public sector pensions would demand of some workers a 13% contribution towards their pensions. I entirely accept that a 13% contribution would be a significant sum of money. It is important to say, however, that our proposed changes to public sector pensions will protect those pensions. Labour Members should contrast the 13% requested in relation to public sector pensions with the equivalent contribution of about 38% that would be required of a private sector worker. I honestly believe that our proposed changes to public sector pensions will be the saviour of the system rather than its enemy, because people working in the private sector—taxpayers working extremely hard to try to pay their way—will feel increasing resentment unless there is an increased level of fairness between those in the public sector and those in the private sector.
On jobs and growth, I want to talk about two issues. First, there is a serious problem in relation to bank lending for small businesses. My constituency in north Wales is extremely dependent on small businesses—more so than on the public sector. There are not many constituencies in Wales where one can say that private sector employment is greater than public sector employment. People from those small businesses come to me time and again complaining that they are not getting support from the banking system. We have a Bill in the Queen’s Speech to deal with banking reform, but it is absolutely crucial that any changes do not make it even more difficult for small businesses to attract finance. Following on from the comments by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), in my experience the problem has been not only a lack of long-term support from the banking system but an unwillingness even to offer short-term support.
I heard the bizarre example recently of a business in the tourism sector that employs more than 40 members of staff and that, despite the recession, has increased its turnover and its profitability by taking important steps to deal with its cost base, and yet its bank expects it to
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renew its overdraft facility monthly. It would be a challenge for anybody running a business that employs 40 people to plan for the future if they had to deal with their bank on the basis of a monthly renewal of their overdraft facility. The bank in that example is 94% owned by the state. I find that situation unacceptable.
When we consider the reform of the banking system, it is therefore imperative that we ensure that support is available for the small business community. In my constituency, growth will come from the small business community or it will not come at all.
Secondly, I will talk about the need to reduce regulation. I take exception to the comments of the hon. Member for Great Grimsby (Austin Mitchell), who complained that there was not enough in the Queen’s Speech. In my view, the important thing for a Government is not to legislate all the time. I assure him that nobody comes into my constituency office saying, “Please, please, we want more legislation.” What they want is for us to enact the promises that we made in the first Queen’s Speech and to deliver on behalf of the country. One thing that we said we would do for the small business community was to deliver on the burden of regulation.
In the Budget, the Chancellor made an effort to deal with some of the VAT anomalies. On the back of the two months that he has enjoyed as a result of some of the proposed changes, he might not want to visit VAT again. However, I say to him that there are anomalies in the VAT system that need to be dealt with, some of which affect the ability of small businesses to grow. The anomaly that I want him to deal with, which would boost growth in constituencies such as mine, is the way in which the VAT threshold damages businesses that aspire to grow. A small business that hits the £76,000 threshold has to get its turnover up to £100,000, otherwise it will be worse off as a result of being successful. If a small business turning over £76,000 decides not to grow because the implications for its bottom line would be bad, it will not employ more people and it will not contribute to economic growth. We need to deal with VAT anomalies, but let us start with one that is a barrier to growth.
3.52 pm
Paul Murphy (Torfaen) (Lab): The hon. Member for Bournemouth East (Mr Ellwood) hinted that the local elections results in May were not bad for the Conservative party. It strikes me that the loss of 1,000 council seats is not a ringing endorsement of the Government’s economic policy. What people were talking about in those polls was, of course, the economy.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con): Will the right hon. Gentleman give way?
Paul Murphy: I will not, because there is not enough time.
People were also talking about unemployment in those polls. Unemployment in my constituency is at 8.2%. That compares with 3% when the Labour Government were in power.
I will address my short remarks to the alternative. The Government have taunted the Opposition, saying that we do not have an alternative. Opposition Members have been arguing the case for an alternative. The
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Labour Government in Wales are giving us an alternative. For the past year, they have been doing the sort of things that are necessary to stimulate the economy and provide jobs.
The hon. Member for Warwick and Leamington (Chris White) talked about small businesses. If he came to Wales, he would see that there is a small and medium-sized enterprises investment fund of £40 million. We have talked about the two-year-old regional growth fund in England, which has spent £200,000 to create just one job. In Wales, there is the £15 million Wales economic growth fund, which has already received 500 applications, including from my constituency, where a leading precision engineering company has invested nearly £800,000 in machinery, of which £250,000 came from the Wales economic growth fund. There is a £40 million stimulus package for young recruits and the skills growth Wales programme. There is capital investment for schools, social housing and energy efficiency. In England, the future jobs fund has been scrapped. In Wales, it continues as the jobs growth Wales fund, which will benefit 4,000 young people a year. Wales has its first ever national infrastructure plan, under which £90 million will be spent on capital projects.
Wales is also encouraging the third sector. In my constituency, the First Minister opened the Marie Curie Cancer Care national support call centre, which has created 140 jobs. This very morning, all Welsh Members of Parliament were invited to a meeting with Welsh university vice-chancellors. The universities in Wales are working with the Welsh Government, the UK Government and local government to create jobs. The contrast is between what the UK Government are not doing and what the Welsh Labour Government are doing. Why on earth cannot the Government here in England have the same sort of schemes we have in Wales to stimulate the economy and growth and ensure more jobs?
The mood is shifting. It shifted in the local government election results in England, Wales and Scotland. It has shifted in the United States, and in Europe with the election of François Hollande. The message that comes loud and clear from those countries and our own people is that we must change. The winds of change, as a Conservative Prime Minister once said, must now be heeded. Unless the Government understand the need for that change, it is simply not credible that any sort of growth will occur in the next few years.
The alternative is there, but the Government are reluctant, stubborn and foolish enough not to accept it. Unless they do, we will go deeper and deeper into recession.
3.56 pm
Mark Pritchard (The Wrekin) (Con): I welcome the measures set out in the Queen’s Speech to address jobs and growth, particularly the banking reform Bill and the enterprise and regulatory reform Bill. I also welcome the rise in employment announced yesterday, and I hope we will see a rise in full-time as well as part-time employment next month.
The Government are doing a lot to address long-term unemployment among the young—a problem that beleaguered and bedevilled the previous Government—but I agree with the right hon. Member for South Shields (David Miliband) that far more needs to be done. The
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Government have done a lot on apprenticeships, which is to be welcomed. I congratulate the Government overall on trying to rebalance the economy. We should have more people in our economy creating wealth rather than spending it, so we need to get the balance right between private sector and public sector employment.
It is questionable whether the current tax regime for business will be sufficient to grow the economy in the way that all hon. Members would like. I welcome the Government’s announcement on corporation tax, but my view is that it might not be enough to create the growth the country needs. Perhaps they need to look again at the corporation tax rate and the timetable for introducing it. I would like to see a 20p corporation tax rate introduced from April next year, and the higher rate—not the alternative rate—to be reduced from 40p to 36p from April next year.
That would affect revenue in the short term—some might say that that will add to the deficit—but in the medium term, and quite quickly, as people are rewarded for their risk, entrepreneurship, creativity and innovation, and as the economy grows on the back of that, revenues for the Exchequer would increase. We need more courage and less timidity in the Government’s tax plans and strategy.
I would like the business rate freeze extended for small businesses and our struggling high streets. I welcome the fact that the Government have extended it again for this year, but we must look again and probably extend it to the following year.
The Chancellor rightly mentioned the eurozone—I am moving away from my notes, which is quite dangerous. I have spoken out before on the International Monetary Fund. Whatever has been said, there is absolutely no doubt that some IMF contributions have been used as a back-door bail-out for the euro. Why do I say that? What is the evidence? Three eurozone countries have received bilateral loans from the IMF because their economies are failing, and they are failing in part because of their membership of the euro. A one-size-fits-all monetary policy for the whole of Europe was always a political project. It cannot be right to apply an interest rate in Germany reflecting the unique circumstances of the German economy to the unique and particular circumstances of, for example, the Portuguese economy or—perhaps more on our minds today—the Greek economy. That is the fundamental point. The euro is a political project that has gone horribly wrong, as many people warned that it would. We have heard a lot about new, bigger firewalls, but those will not deal with the underlying structural problems of a lack of competitiveness in Europe and the failed political dream—or, some might say, nightmare—that is the euro.
Finally, the European Investment Bank, although an important institution, should not be used as a new, indirect bail-out mechanism for a failing euro or eurozone. We are one of the four largest contributors to the EIB. Yes, it is important, but it should not be used as a back-door mechanism to save a failing euro. We want the euro to succeed. At the moment, we need to address the underlying problem.
4.1 pm
Mr Michael Meacher (Oldham West and Royton) (Lab):
The Government now appear to have two central objectives only. The first, as stated at the start of the
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Queen’s Speech, is to achieve economic stability, and the other, of course, is their own survival. It is all the more astonishing, therefore, that they seem fixated on pursuing a path that is wholly opposed to both those objectives. Virtually no one among UK economic commentators or in the EU, IMF or US Administration believes that the Chancellor’s oxymoronic expansionary fiscal contraction will work or that prolonged austerity will lead to growth. Exactly these policies have been tried twice in the past 100 years in this country—with the Geddes axe in the 1920s and the May committee of businessmen in the 1930s. And what happened? Exactly what is happening today: a decade of anaemic growth and a rather little cut to the overall level of national debt.
The Chancellor has only three defences of his policy. The first is that, even at this stage, he can still use fiscal manipulation. Of course, that is what he said in last year’s growth Budget, and it led straight to this double-dip recession. In this Budget, the only growth provision was his cutting of workers’ protection against unfair dismissal—as though making it easier for employers to sack their workers will somehow stimulate growth. Now we see, from the press, that he is surrounded by the Tory think-tanks, all of which are telling him to cut taxes as a way to growth. Well, the fact is, as I have said already, that the big corporations are sitting on a mountain of cash. They already have the cash; they do not need cuts in taxation to produce more funding. The problem is the lack of aggregate demand.
The Chancellor’s second defence is quantitative easing, which he seems still to think will keep the funds going to business and produce the pick-up that the country needs. It has not. We have already put £325 billion into QE, but industry is still not stimulated. Indeed, the M4 money supply to business is still obdurately negative, because the banks have overwhelmingly used it to consolidate their own balance sheets, rather than to lend and get the economy going. The primary purpose of QE is to assist Governments with low long-term interest rates—that is very sensible—and debt repayment pressures, but it has no direct stimulus on the level of demand. That is why it will not work.
The Chancellor’s third and rather plaintive defence of his policy in the House has always been that were he to borrow to invest, he would be punished in the bond markets. I think that if he came to the House with a serious, plausible growth plan, the markets would be deeply relieved and very supportive.
Even if we leave that aside, as I would, there is one other source of funding that has not been tapped and that does not involve any increase in public borrowing. That is the taxation of the seriously rich. According to the latest edition of The Sunday Tim
es rich list, which was published three weeks ago, the gains of the wealthiest 1,000 persons—who represent 0.003% of the population; an absolutely tiny proportion—amounted to no less than £155 billion over the past three years. That is actually rather bigger than the entire UK budget deficit. If that were taxed at the capital gains tax rate of 28%—I am not suggesting that it should be done just like that—it would raise more than £40 billion. That would be enough to create 1.5 million jobs through public investment in house building and national infrastructure. So why will the Government not do that? It is because the Chancellor and his Government have a deep ideological
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prejudice against any role for the public sector in driving the economy. This is a Government who believe—if they believe in anything at all—in the privatisation of anything that moves. That is a deeply reactionary idea, however, because when the private sector is flat on its back, as it is at present, there is no other way to provide an effective stimulus to the economy than through public investment.
4.6 pm
Mr Marcus Jones (Nuneaton) (Con): It is an absolute pleasure to follow the right hon. Member for Oldham West and Royton (Mr Meacher). I must admit that I did not really agree with much of what he said, but I did agree with his comment about low interest rates. It has not been acknowledged enough that, without low interest rates over the past four or five years, the economy would be in a far poorer state than it is today. In the light of that, we need to be careful. At the moment those low interest rates are a foundation on which we can build. I acknowledge that we are going through difficult times, but I am convinced that the Government must stick to their guns, use some gumption and keep making the tough decisions to reduce the deficit. It is good news that we have already reduced it by 25%, but we must keep showing the world that we are serious about getting on top of our debts, reducing the deficit and dealing with the mountain of debt left by Labour. I have listened to some Labour Members’ speeches today, and they still seem to think that we can borrow and spend our way out of recession. If it were that easy, we would be doing that—[ Interruption. ] We are not taking the easy route, and that is not for ideological reasons. It is because we want to protect those people with mortgages and business loans, and keep as many jobs as possible.
Mr David Anderson (Blaydon) (Lab) rose —
Mr Jones: I am not going to give way, because I do not have much time.
It is tempting to change course, but the low interest rates vindicate the Government’s strategy to date. The problem is that, while we are laying that foundation, the next area that we need to build on is being greatly restricted, owing to extremely low levels of confidence among the business community and consumers. Most people in this country are caught in the headlights of the oncoming eurozone crisis. We can all see it coming, and at the moment we are holding back. We desperately need a resolution to that crisis. It is going to be difficult but, one way or another, we need the certainty of knowing what is going to happen when we go into it and come out the other side. Only when we get over the problems that are undoubtedly coming down the track will confidence levels really start to shift.
In the meantime, the Government are working hard to create growth domestically, but that cannot afford to be based on short-termism. It must be based on long-term sustainability, and we need to rebalance the economy. We cannot simply rely on the service and retail sectors. They are massively important to the UK, but they have been completely sustained by private debt and Government spending. I know that the Opposition still think that that is a sustainable option, but we certainly do not.
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We need to concentrate on sectors that can create real wealth within the economy so that it can be distributed and we can create jobs from it. We need to concentrate on sectors such as agriculture and manufacturing. I welcome the inclusion in the Queen’s Speech of the proposal for the Groceries Code Adjudicators Bill, which I hope will make the farming industry more sustainable as we go forward.
We need to build on what the Government have done for industry by reducing corporation tax and introducing an extension of above-the-line research and development tax credits. The regional growth fund and enterprise zones are starting to build on the resurgence of British manufacturing, and we are starting to see a real build in R and D investment in our manufacturing companies, which was previously lacking. We now have that factor working in our favour. We also have far better management than we have ever had in our motor manufacturing companies, while we also have far more moderate unions than we had in the past.
Those three factors help to explain why we are seeing this resurgence and are now in a positive surplus with our car manufacturing exports, which has not been achieved since 1976. Back in 1976, as many Members will know, we were absolutely blighted: we were blighted by difficult industrial relations; we were blighted by poor management; and we were blighted by a real lack of investment in R and D. In the short time available, I urge the Government to try to maintain this resurgence in British car manufacturing industry, so that we can see the west midlands go from strength to strength, while supporting jobs in the retail and wider service sector as we go forward.
4.11 pm
Steve Rotheram (Liverpool, Walton) (Lab): I was supposed to attend an event hosted by Her Majesty this afternoon on her visit to Liverpool to celebrate her diamond jubilee, but I thought this debate was too important to miss—even for the Queen. I suspect that she was as unimpressed as were Labour Members on having to deliver a speech last week that was more to do with renewing coalition vows than it was about restoring the economic future of her country, which she serves so dutifully.
Liverpool Walton has seen a 165% rise in youth unemployment in the last 12 months, while total unemployment in the constituency has risen to more than 5,000, making the unemployment count the fifth highest in the country. I know that thousands of people in Walton, and millions around the country, are having conversations about their own lives. What are they thinking? They are thinking: “Do we have enough money for the weekly shop?”; “Do we have enough money to put petrol in the tank?”; “Who is going to tell the kids that they can’t do extra-curricular activities any more becausewe can’t afford the weekly subs?”. Some are even having to explain why their gas and electricity have been cut off.
The Government are simply wrong when what they do results in tearing families apart, providing tax breaks for the very rich and hitting the poorest families hardest. That is the human cost of Tory-Lib Dem policies. In Parliament, however, the Lib Dems still blindly walk through the voting Lobby with their Tory masters.
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In the short time available, I would like to challenge a particular Tory-Lib Dem myth—the one suggesting that the only economic factor that relates to improvement in the living standards of lower-paid workers is raising the income tax threshold. Let me make it absolutely clear that that is not a bad ideal in itself, but here are the facts. I will paint an upbeat picture based on average earnings of £30,000, to which many of my constituents could only ever aspire. For the current financial year, 2012-13, the personal allowance is £8,105. That means that that anyone earning up to £30,000 will be £186 better off this year, making people better off by the grand total of an extra £15.50 in their pockets each month. In the next financial year, the personal allowance will rise to £9,205. That means people will be £346 a year better off, working out at a whopping £28.83 a month in people’s pockets.
That sounds great, and nobody is arguing that putting more money in pockets of the lower-paid is not a good thing. But—and there is a big “but”—there is a snag. The Liberal Democrats allowed the Tories to raise VAT to 20%, despite their manifesto pledge and the “VAT bombshell” posters that all Opposition Members probably remember. That 2.5% rise is estimated to cost each household with children an average of £450 a year.
The Institute for Fiscal Studies has estimated that by 2015—even if the tax income threshold has been lifted to £10,000—the Government’s tax and benefit reforms, as a package, will result in an average 4.2% reduction in the incomes of families with children during the current Parliament, which means that a couple with children will be £1,250 a year worse off by 2015. That is simply not acceptable, and it is not the full story. An extra £28 a month is clearly no recompense for such a disproportionate hit on families and their living standards.
The sober eye of history will view this Queen’s Speech more for what was not in it than for what was in it. There was nothing for the young unemployed, nothing for families struggling to get by, and nothing for the record number of women who are waiting and wanting to work. There was not even a single mention of the word “jobs”.
4.16 pm
Jackie Doyle-Price (Thurrock) (Con): Let me begin by emphasising that the priority that the Government are making of dealing with the deficit remains definitely the right one. Some of my hon. Friends have drawn attention to the emerging view that there is a choice between pursuing growth on one hand and pursuing austerity and dealing with the deficit on the other. The simple fact is that deficit reduction and the pursuit of growth are not mutually exclusive; indeed, we lay the foundations for lasting growth when we go back to living within our means.
Jobs and growth rely on investment by individuals and businesses, not on Government spending. We must not be complacent about the economic challenges that face the country, which, as many Members have recognised, are being exacerbated by the uncertainty and lack of confidence prompted by the eurozone crisis, but the need to hold our nerve and pursue measures that will strengthen our competitiveness is more important than ever at this time of economic turbulence.
Let us look at the realities of what is happening in the economy. Of course unemployment remains a great challenge. It is currently too high, and we need to do
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much more to ensure that everyone who wishes to work can find a job. However, it is also true that employment is on the rise and new jobs are being created. Many thousands of jobs are appearing on the horizon in my constituency. The Lakeside shopping centre is to be expanded, which will create new retail jobs. The new London Gateway port will create many thousands of new jobs, and is beginning to recruit for them. It is one of the largest inward investments in the country. The existing port of Tilbury, which has just celebrated its 125th anniversary, is also being expanded, with the promise of a further 10,000 jobs. Despite the global challenges, there is good news in our economy.
I was struck by the comments of the right hon. Member for Barking (Margaret Hodge), whose constituency is next door but one to mine. We are linked by the A13 and the c2c rail link. A 15-minute journey for her constituents will give them access to the new jobs that are being created on my patch. Let me say to all Members that when times are difficult, it is our role as leaders to inspire and encourage, not to tell our constituents that there is no hope.
In order to maximise the opportunities afforded by investment, the Government must remain vigilant in playing their part in building a competitive economy. Ministers must not be complacent about the growth that we are experiencing; additional measures are still needed to enable us to maximise the potential of that growth. That applies in two specific areas: we need to continue to invest in skills to ensure that our work force has the skills that employers need and want, and we need to ensure that our infrastructure is fit for purpose.
I have talked about the massive growth in the port facilities in my constituency. Within this decade, more cargo will be landed in Thurrock than anywhere else in the country. However, in order for that cargo to go where it needs to be—and, equally, to move the new manufacturing products that we will be exporting—we will need sufficient capacity in the road network to enable those items to be moved around the country. With that in mind, I welcome the recent announcement by the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) that we are finally looking at designing and working up proposals to improve junction 30 of the M25. That single project alone will unlock so much economic capacity in south Essex and will be a big tool in sustaining future growth. However, having made the announcement, my hon. Friend must do absolutely everything he can to ensure that the solution is fit for purpose. We cannot afford a sticking plaster; it has to deliver additional capacity. To be frank, the measure is a long time coming. It should have been done by the last Government when they widened the M25, but as usual when it came to infrastructure, they were very short-sighted.
The second issue I would like to address is that of skills, particularly for the younger unemployed, who remain a significant challenge for us. I welcome the expansion of apprenticeships that we have witnessed—they have doubled in Thurrock, from 400 to 830 this year—but we also need to consider self-employed apprenticeships.
Mr Deputy Speaker (Mr Nigel Evans): Order. To enable more Members to contribute to this debate, the time limit is now four minutes.
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4.21 pm
Kate Green (Stretford and Urmston) (Lab): I want to make a few remarks about unemployment. Despite the modest fall in unemployment yesterday, we still have the highest rate of long-term unemployment since 1996, with 650,000 people in part-time work because they cannot get full-time work and 2.625 million people unemployed.
I want to highlight two groups of losers in the labour market for whom there were absolutely no policies in the Queen’s Speech. The first group are women. Whereas male joblessness increased by 5.4% over the past year, the increase in female joblessness was nearly double that, at 9%. The second group are people from ethnic minorities. White British women and men are more likely to be employed than those from any ethnic minority. A report by Elevation Networks in March revealed that more than half of young black men are unemployed and that the youth unemployment rate for black people has increased at nearly twice the rate among white 16 to 24-year-olds. There was nothing in the Queen’s Speech to deal with those inequalities.
When I asked the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling) in February what steps were being taken to address black youth unemployment, he answered that “Get Britain Working measures” operated “irrespective of ethnicity”. There was nothing in the Queen’s Speech to address the structural drivers of black youth unemployment; no attention paid to, for example, guaranteed jobs for long-term unemployed young people, as recommended by the Riots Communities and Victims Panel; no ethnic monitoring of the Work programme or apprenticeships; no targets for black unemployment; and no mentoring of young black people. Indeed, despite the Prime Minister promising before the general election that there would be a massive programme of mentoring, nothing has materialised.
As for women, the Government have, I am pleased to say, recognised the importance of affordable and reliable child care, although I am alarmed by reports in the Daily Mail this week that Ministers think that the way to boost child care supply is to strip back regulation. Reducing bureaucracy is all very well, but deregulation that dilutes quality and compromises children’s well-being is simply unacceptable. The Netherlands saw a steady deterioration in the quality of child care as a result of introducing measures similar to those that we understand the Government might be contemplating. Indeed, the Dutch Government have now decided to reverse their deregulation policy.
Finally, let me talk about something that actually was mentioned in the Queen’s Speech, albeit only cursorily: the Government’s proposal to introduce measures to promote flexible parental leave. We have yet to see the details of exactly what will be on offer, but I warn Ministers to be cautious. An alliance of organisations, including Maternity Action, the Royal College of Midwives, the Royal College of Obstetricians and Gynaecologists, the National Childbirth Trust, Bliss, the Child Poverty Action Group and Citizens Advice, have warned of the need to protect adequate leave for women to secure the health and well-being of new mothers and their babies, and to select measures that actually ensure that a share of parental leave is taken up by fathers. Policies that have been shown to be effective in doing that include the
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meaningful replacement of a father’s lost income, and protecting leave for fathers, rather than eating into mothers’ leave. We need to ensure that the modern workplaces consultation proposals, which seem not to address those kinds of concerns, are carefully re-thought.
I am grateful for the opportunity to contribute to this debate. There is much more that I would like to say, but I will pass on to colleagues.
4.25 pm
Jessica Lee (Erewash) (Con): I thank the hon. Member for Stretford and Urmston (Kate Green) for her contribution. Although we do not perhaps agree on policy points, I always find her contributions in this Chamber thoughtful and well researched.
Having a broader view about how we tackle the issue of jobs and growth in this country for the longer term is crucial in getting this country back on its feet and continuing to do well. We need to weave together a number of different policy areas, and have a long-term vision and a commitment by the Government to achieve that. Various themes are involved: infrastructure, apprenticeships and training, and help at a very local level for small and medium-sized enterprises. All that has to be achieved against a backdrop of a strong deficit reduction programme, which the Government must stick to .
I see infrastructure as an important theme in allowing and helping people to be mobile, to reach new job opportunities and to reach their goals, be it through training or work. In my constituency we have a long-term project, which is now being considered by the Secretary of State for Transport, to reopen the train station in Ilkeston. We are pleased that the Government are considering the project in great depth, because Ilkeston used to have three stations until the 1960s, and it now has none. We are trying to get one reopened, which will give many young people many more job opportunities, as they will be able to get to Derby, Nottingham and further afield. In many ways, my constituency is well placed. It is right in the heart of the country, with the M1 running through it and the East Midlands airport nearby. However, it is the smaller projects that add to and feed into the wider infrastructure of the country that will really help.
I was able to participate in national apprenticeship week, as I am sure many hon. Members did. The personal experience of meeting young apprentices, such as Martin at Derwent Analytics, means that we see how young people are progressing and benefiting from such schemes, but I am not being complacent. Nobody in this House is being complacent about the challenges involved in tackling long-term youth unemployment. We must support those young people who are making progress. I applaud what the Government are doing on apprenticeships: 177,000 new places in the past year is no mean feat. My area has a proud, long history of apprenticeships, and as the local MP I will continue to champion their worth.
I also wish to discuss—briefly, given the time—local help for small and medium-sized enterprises. Although I welcome the changes in the local planning regulations, this is also about local enterprise partnerships. Erewash is lucky because its partnership is extremely strong. It
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particularly supports start-up businesses and helps with training and mentoring. Let me provide other examples. Prostart, in my constituency, also helps young people with training and with the encouragement and support they need to move on in the world. Women entrepreneurs are also doing well in my constituency: I was delighted to be there when Kirith Richards recently opened her photography suite and I wish her well for the future.
Time is against me so I will leave it there.
4.29 pm
Mr David Anderson (Blaydon) (Lab): We are two years in: two years since the rose garden, two years of failure, two years of intransigence and two years of incompetence. Over those two years, the public have seen that the coalition parties are, quite simply, not up to the job that the nation has given them. The last eight weeks have seen them exposed: the reverse Robin Hood budget, the devastation at the polls and the dampest of damp squibs disguised as a Queen’s Speech. Surely somebody should apologise to Her Majesty for wasting her time.
This country is going backwards, for three reasons: the joint incompetence of the coalition, the simpering connivance of the Liberal Democrats and the ignorance and arrogance of the leadership of the parties on the Government Benches. They were going to sort out the mess that they blame us for and, yes, there is no doubt that the country was in a bad state, as were many others, but that was because of the failure of the global capitalist system. It needed repairing, but, sadly, the Government’s remedy is worse than the disease. The real sadness is that it was so predictable because the Tory boys use exactly the same methods as their predecessors in the 1930s, 1980s and 1990s. They, like those who went before them, decided to make the workers, the poor, the old, the young, the sick, the disabled and the vulnerable pay for the failures of the rich, the wealthy, the billionaires, the bankers, the tax evaders and avoiders, the market traders and the money movers who believe that they are entitled to live in a different universe from the rest of us.
How else can we explain why workers are being made redundant, having their pay frozen and their pensions cut, and being made to work longer and harder for less, while the chief executives of the FTSE 100 companies have seen an average 11% rise in the past year alone? While ordinary folk struggle to make ends meet, the masters of the universe receive an average of £3.65 million a year—an annual increase in the past year of more than £1,000 a day. That is not pay at £1,000 a day, but a rise of £1,000 a day. All in this together? If only.
That all comes only weeks after we were told that the richest 1,000 people in this country own £414 billion, but of course the leaders of the coalition believe that the fairest way to get our country back into balance is to give those rich folk even more money by giving them a tax handout while freezing pensioners’ tax allowances.
The facts are there to be seen. Under the previous Government, we saw a genuine mixed economy in which the public and private sectors worked together in partnership to the benefit of all concerned. Nowhere was that more marked than in the north-east of England, where we had a decade of growth led by our regional development agency. What do we have now? The regional growth fund. My hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) referred earlier to the
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damning report on that subject and she said exactly what a mess the RGF has been. We should remember that the RGF is supposed to make up for the 710,000 public servants whom the Government have decided to get rid of to pay for their policy. What a farce. What a mess they are in.
For their next trick? Let us make it easier to sack people, make it harder for people without money to seek justice in the workplace and cut so-called red tape around health and safety. Where does that leave us? It leaves us as a nation with mass unemployment, with 1 million or more kids on the dole, with a work force facing insecurity, pay cuts, worse pensions and unsafe conditions, with an economy that has gone from stagnation to recession and a Government who have no strategy. They have been in government for too long and they have been flushed out. It is time for them to go, and to go now.
4.33 pm
Alok Sharma (Reading West) (Con): In the lead up to the general election, I spent a lot of time talking to business owners and managers in my constituency and their verdict, after 13 years of Labour government, was that they felt that business was over-taxed, overburdened by regulation and overstretched by ever-growing tax legislation. Many businesses felt that the previous Government were on their backs, not on their side, stifling their growth, not encouraging it and limiting their job creation, not expanding it. In contrast, we have seen from the coalition a raft of policies that are laying firm foundations for sustainable future growth, cutting corporation tax to the lowest level in the G7, cutting red tape and simplifying our tax system. New Bills, such as the enterprise and regulatory reform Bill, will go further in reducing burdens on business by repealing unnecessary legislation.
I want to focus on exports and inward investment. Economic uncertainty in the eurozone will undoubtedly impact on our exports, but as many hon. Members have pointed out, our exports outside Europe have recently been growing. That is where our export opportunities lie in the short, medium and long term: exports to new growth markets such as India and China.
A few weeks ago in departmental questions, I asked the Business Secretary about our bilateral trade with India. He informed the House that he would shortly be leaving to take a delegation of small and medium-sized enterprises to India, pointing out that this was his third trip to India since May 2010. That caused some amusement among Opposition Members, suggesting, I assume, that they thought the Secretary of State was off on some sort of jaunt. That is exactly the sort of attitude that demonstrates why the Labour party does not get business and does not understand what is needed to grow our exports. Business is not won by sitting and whingeing from the Opposition Benches. In a global marketplace, if one is fighting for global contracts against global competitors one needs to sell and market across the world. I am rather pleased that we have Ministers across many Departments getting on planes and batting for British business abroad.
According to statistics from the Library, in 2000 the UK was the third-largest source of imports for India. By 2010, after 10 years of Labour government, that ranking had dropped to 22nd. The absolute level of
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bilateral trade has gone up, but not fast enough. Given our shared democratic values, history, language and cultural and family ties, there is much to suggest that we should have been doing a lot better on bilateral trade. I am very pleased that the UK aims to double bilateral trade with India by 2015, but given the slow-down elsewhere we might need to be even more ambitious. We are making progress and the Indian companies that I speak to see the UK as being open for business with a Government who welcome inward investment. British jobs are being created by inward investment from Indian companies, whether household names such as Tata or Infosys or less well-known but no less important companies such as Mastek, which has its UK headquarters in Reading and supplies IT solutions to the public and private sectors. Time is short, but I want to mention education, which is a huge growth area in India. British universities are highly respected, which again presents a great export opportunity.
Finally, I note that UK Trade & Investment has been doing an absolutely fantastic job and has really upped its game. Its contribution is appreciated by British exporters and companies in my constituency. We often talk about special relationships with other countries but in future we also need to talk about essential trade relations with certain nations. I hope that our bilateral trade will grow.
4.37 pm
Huw Irranca-Davies (Ogmore) (Lab): This Queen’s Speech, like previous Budgets, was an opportunity for the coalition to promote growth, but the scale of the jobs and growth challenge facing the UK is matched—thanks to this Chancellor directly and to this Government—only by the scale of paralysis and inaction. Over the previous six quarters, four of which, including the past two, have been negative, the UK economy has contracted by 0.2%. This is a double-dip of the Chancellor’s own making. He has told us that he was acting in our best interests and that, “We’re all in this together; honest Guv’nor, I share your pain.” He told us that he was pursuing his austerity policies to prevent us from becoming like Greece, which was sheer baloney. Instead, he has made our growth more like that of Spain, which has just followed us into recession. Just to illustrate this point further and to show that there was and remains an alternative, I point out that under the Labour chancellorship of my right hon. Friend the Member for Edinburgh South West (Mr Darling), the UK economy grew by 3.2% between quarter 3 of 2009 and quarter 3 of 2010. Under the current Chancellor, the Bank of England’s forecast for growth has again been slashed to 0.8% from 1.25% in 2012 and reduced further for the following year, and many economists are saying that even that is wildly over-optimistic.
The recession is now stretching out to historic proportions, trying to match the extent of the great depression, which lasted for more than 12 quarters. The facts are stark: output is now 4.3% below the level at the beginning of the recession in 2008 and the UK’s position on the world stage has contributed to that, because it has been pitiful. In the UK, it was made clear that everything must be sacrificed to the god of deficit reduction—jobs, growth, and creating confidence in the economy. The process continues, somewhat inevitably now, as the Prime Minister and the Chancellor daily
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talk up the chances of meltdown in Greece and across the EU in order to show how helpless little old UK can do nothing in the face of those events.
The crisis in Greece and the eurozone has become the stock excuse for this Government to do nothing. “Sorry Miss, the big black dog ran off with my homework” is now “Sorry Miss, the big black Greek storm clouds ran off with my jobs and my growth strategy. It wasn’t my fault.” That is not good enough. The Prime Minister and the Chancellor have to listen. They have to take lessons. They must do better.
It is true that the solutions lie at international level, but that is a reason for taking action, not for hiding from the storm. For the last two years, instead of sitting on the sidelines like Johnny no mates, we should have been leading by example, encouraging policies of growth as well as policies of deficit reduction. What is tragic is that the UK, which has previously been in so many ways a progressive force in the EU and globally, has now become a showcase for austerity and zero growth.
Let us be clear: if Labour had won the election, we would have had to deal with the deficit, but we would have done it in a more measured way, promoting growth, not just pain. We could not have escaped the pain, but it would have been distributed more fairly, not dumped on the backs of children, the disabled, women, the poor and hard-pressed middle-income families. Because our approach would have prioritised growth, we would even have got the deficit down, rather than increasing it as the coalition Government have done.
The Government do not get it. They are way out of touch. They never really believed we were all in it together—certainly not bankers and Cabinet Ministers. In areas where jobs could have been created, deficit reduction has blinded them to all sense. The Queen’s Speech has done nothing to change that. This is government for the privileged and the very wealthy few, not for the hard-pressed and the wealth-creating many.
4.41 pm
John Hemming (Birmingham, Yardley) (LD): In a hurricane, even turkeys can fly, and I will come to that later.
Rather than talking about growth, I like to talk about the national cake. The country bakes the national cake. Some shares of the cake are taken by the Government in tax and given to those without any cake. Other people work on baking their own parts of the cake. Then we have the deficit. That is where we make a time machine and snaffle a few slices of the cake baked by our children in years to come to eat today.
When 40% of GDP is being spent on public services, it is about two fifths of the national cake. That, which is the objective at the end of this Parliament, is higher than under the first two Blair Governments. Anyone who wishes to argue that the coalition Government are an extreme right-wing anti-public services Government has to explain why the Blair Government were more anti-public services than the current Government on that measure.
The growth we search for is the first differential with respect to time of the size of the national cake. The question to look at is the one about what the ingredients are. One ingredient that does not get sufficient attention
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is the energy used to cook the cake. It is possible to compare different countries’ national cakes and the amount of energy required to bake them. Using as the denominator the total energy supply in million tonnes of oil equivalent—not a ton as in a ton of bricks—we see that from 2006 to 2010, the UK’s energy intensity of GDP in 2005 dollars was 1.58, 1.64, 1.62, 1.66 and 1.74. That was a gradual improvement in energy efficiency in terms of bucks for bangs. The OECD average is 1.06, Switzerland has an amazing 4.74 and South Korea a low 0.45, while the US runs at 0.89.
Although the stock market is unreliable at predicting a recession, a spike in oil prices does cause a recession. A recession causes a drop in energy usage: total OECD energy usage dropped from 5,553 through 5,481 to 5,238 between 2007 and 2009, and then went up again to 5,413 in 2010. According to the International Energy Agency oil market report, OECD demand for crude oil peaked in 2007 at 49.09 million barrels of oil a day, then went through 47.5, 45.84, 46.17 to 45.63 in 2011. Brent bottomed out at just over $40 in December 2008 and has increased since. More recently, it peaked at just over $126 and today has come below $110. In the Budget, it was forecast at $110, so it has risen above Budget figures. To that extent, therefore, one would expect to have a constraint on growth in 2011 and early 2012, as oil prices have increased. Lo and behold, we have it: 10 of the 17 eurozone countries contracted in the last quarter of 2011. The lack of certainty does not help, but energy costs are part of this. The USA has the advantage that West Texas Intermediate has been cheaper than Brent.
Politicians are not all-powerful. We are affected by the global energy picture as well as the eurozone crisis. When the business climate is good, it is easier for bad managers to produce a good return—hence the US saying, “In a hurricane, even turkeys fly.” However, in difficult circumstances, such as those that we face today, the outcome can still be disappointing even though the policy choices are the right ones. The time we could have changed policy without paying was between 2005 and 2008, when Government spending was accelerated at exactly the wrong time, as was noted by Tony Blair and Lord Turnbull. It remains the case, however, that if we are to find ways forward we need to increase our energy-intensity of GDP and find more ways of having economic activity that uses less resources. A lot of all this is already being done, but there is a greater need for the future, as the old certainties of continual growth and resource consumption no longer apply.
4.45 pm
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Diolch, Mr Deputy Speaker.
I shall focus my comments on some very technical points, due to the lack of time. In relation to jobs and growth, Wales suffers from having no control over the major economic levers, as well as from a lack of information about our economy. There is no Welsh equivalent of GERS—the annual Government Expenditure and Revenue Scotland report. The Welsh Government, therefore, are fighting blindfolded and with one hand tied behind their back.
As the Chief Secretary to the Treasury informed me in a written response prior to Prorogation, Wales only has an annual update on the gross value added for each
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of the nine English regions and the other nations. The most recent update was made in December 2011 and covered the 2010 calendar year. Those results for the NUTS 1 regions were published at the same time as the more detailed breakdown for the NUTS 3 regions for 2009—figures which showed that the GVA per head in west central London is 10 times that in the Gwent valleys of south Wales. The gap between the richest and everybody else is growing, both regionally and individually, no matter the colour of the ruling clan here in Westminster.
That time lag means, of course, that information on which to base our economic decisions in Wales is retrospective. We are not getting the up-to-date information that is needed for accurate Government economic intervention. Equally, that can be seen in the index of production and construction and the Welsh index of market services, which the Office for National Statistics provides to the Welsh Government. Whereas the UK-wide GDP first-quarter figures were released midway through April, the Welsh figures for the same time frame will not be provided to the Welsh Government until the end of July 2012, when the Assembly will be in recess and the third quarter of 2012 will be well under way.
If the Welsh Government are responsible for economic development, as claimed by the Treasury, they need the up-to-date information on which they can make economic decisions, as well as key economic levers and tools in the form of fiscal powers. For good economic governance we need that data for Wales in good time, so that the Welsh Government can make proper, accountable decisions with the best available information. I would like to ask the UK Government to request that the ONS make that data available within the same time frame as applies for the UK-wide GDP figures, so that Welsh Government decisions are not made at a disadvantage.
During the opening years of this economic crisis, the Oxford Economic Forecasting think-tank estimated that London and the south-east would return to its pre-slump situation by around 2012, but that Wales would not do so until 2025 at the earliest. Given the continuing stagnation of the UK economy, those timetables might have slipped. The Welsh economy needs an end to the proposed cuts of public sector jobs and regional pay, a stimulus through a series of infrastructure investments and support for the private sector to develop and nurture our own small businesses. We need control over job creation levers such as income tax and corporation tax and we need accurate data, allowing us to see the effect of Government policy and broader economic shifts upon the Welsh economy immediately, so that we can change course when required. Diolch yn fawr.
4.48 pm
Oliver Colvile (Plymouth, Sutton and Devonport) (Con): Thank you for allowing me to speak, Mr Deputy Speaker. This is an important debate in relation to my constituency, which has a low-skills, low-wage economy. Before I go any further, I declare an interest. I still retain interests, although I no longer have an executive role, in a public relations communications company that I set up some 10 to 15 years ago. That company deals with community consultation and encouraging inward investment into inner cities and job creation.
As I said, Plymouth is a low-skills, low-wage economy, and 38% of the people who work in the city do so in the public sector. In my opinion, in their 13 years, the
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Labour Government created unsustainable public sector employment, which crowded out the private sector. It is difficult for a private sector business to compete for workers with good skills, because it cannot match the funds and wages available in the public sector. That is a very big problem. Unfortunately, from as early as 2001, the Labour Government were creating a structural budget deficit, which became increasingly apparent.
I am delighted that we in Plymouth have the third largest university in the country. It has established a really good reputation for marine science engineering. Earlier this week, upstairs, people might have seen the public exhibition run by Plymouth Marine Laboratory demonstrating exactly how our reputation for marine science engineering will be able to create jobs, as we need to do. As a country and as communities, we need to develop a clusterisation approach—that is, work to our strengths—but we must also develop our skills base. I pay tribute to two organisations: Plymouth university of course, but also Plymouth City college, which is doing an enormous amount of work in apprenticeships. A business that wants to set up and go into new areas needs the right skills base to sell its products.
We must stop looking only at Europe and the continent and start to look at the wider world—India, Brazil and, of course, China, but also the Commonwealth, with which we have great historical ties and where there are enormous opportunities. We need to concentrate on trade. We need to be like Muhammad Ali, who, as the House will remember, floated like a butterfly and stung like a bee.
4.52 pm
Ann McKechin (Glasgow North) (Lab): Last week, I travelled with the Business, Innovation and Skills Committee to Brazil, as part of our new inquiry into our export trade with that developing nation. I wish to put on the record our appreciation of the work of the UK Trade & Investment team in Brazil and the efforts they are making to meet the Government’s ambitious targets. What struck me time and again, however, was that we were visiting a country that had a clear and unambiguous industrial strategy. That is not to say it is perfect—in fact, in terms of ease of doing business, our countries are poles apart: the UK is fourth and Brazil 121st on the list—but everyone I spoke with appreciated the ability to work within a political environment that is firmly focused on job creation and growth. I noticed a sense of purpose and momentum that is totally absent here at home.
The previous Labour Government recognised—later than they should, but with unequivocal passion from our last Business Secretary, Lord Mandelson—the need to form a convincing industrial strategy, with a relentless focus and wholehearted support from Government at all levels. The result was developments such as High Speed 2, carbon capture and offshore wind, with science and innovation at their heart and a recognition that we must take risks if we want to be leaders in new industries. Two years on from the election, we are still waiting for the coalition’s strategy. HS2 has been kicked into the sidings of potential oblivion; there is yet more equivocation about airport capacity, as planes stack up waiting to get into our major airports; carbon capture has been put back several years at least; and offshore wind receives only cursory support.
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Where are the big ideas? Where is the narrative that allows industry and finance to make the necessary commitments? Where is the financial support to allow us to enter those new industries? The establishment of the Green investment bank is welcome, but as one leading figure in the renewable energy sector told me this week, it must not be the bank of last resort. It needs to lead the way, not take the cast-offs that no one else wants to touch. It needs to be big enough to meet the challenges and opportunities we face. Instead, we have had a painfully slow start. The original concept has been watered down and now the bank will not have full borrowing powers until 2016. It is not fast enough or deep enough to do the job.
Our international competitors will not be sitting idly by. We need to learn the lessons of why we lost out on onshore wind production and ensure that that is not repeated. Since 2010 the UK has dropped from third to seventh in the world ranking for green growth investment. Our competitors know that investors need a stable environment, not the farce we witnessed over feed-in tariffs earlier this year. We also need to address the lack of capital grants, which are vital in forming the new supply chains of the future. Cuts in corporation tax are the wrong priority at this time.
As the Business Secretary correctly pointed out in his leaked letter to No. 10, we need to address the lack of confidence in the business sector. UK companies have some of the largest cash reserve ratios of any advanced economy, but there was nothing in the Budget to encourage the release of those funds. At the same time, we have many companies that are not cash rich, particularly in the SME sector, which cannot find affordable finance. The case for a business investment bank has never been stronger, yet there is more silence.
4.56 pm
Eric Ollerenshaw (Lancaster and Fleetwood) (Con): I am grateful to follow the hon. Member for Glasgow North (Ann McKechin). She mentioned an industrial policy, which we are of course looking at, but the problem she must face is that Lord Mandelson’s industrial policy came far too late. The north-west experienced 13 years in which her Government allowed the gap between north and south to increase, and it increased according to any survey chosen. Ultimately, the only investment that came into the north-west was rapid public sector investment in either construction—the so-called affordable housing that turned out to be one or two-bedroom flats, not real houses for families—or an ever-expanding regional development agency that could do nothing about the expansion of London and the south-east, when compared against the contribution of the north-west or any other region. I am pleased that this Government, through part of the Queen’s Speech, are consolidating the missing links and dealing with the failure to invest in infrastructure over 13 years.
Emily Thornberry (Islington South and Finsbury) (Lab): Will the hon. Gentleman give way?
Eric Ollerenshaw: I would love to, but I have less than three minutes. I am sorry.
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This Government are committed to: an M6 link road around Lancaster, which has been on the stocks since 1948 but nothing was done about it in 13 years of the Labour Government; the northern hub investment, which will improve connectively between the northern cities and enable them to compete; and investment in broadband through Broadband Delivery UK. People talk about superfast broadband, but a third of my constituents do not have access to normal broadband, and that is the failure of real investment over the past 13 years. I believe that the Government are now doing something about that and that things are happening to build that environment and infrastructure so that the north can compete like any other region of the country. Labour Members talk about a lack of vision, but the vision came from the coalition in the very first months. The commitment from my right hon. Friend the Chancellor was that we deal with the deficit but, at the same time, attempt to restructure and rebalance the country not only between sectors, but between regions. That is the vision of the coalition.
Karl Turner: Will the hon. Gentleman give way?
Eric Ollerenshaw: I have no time to give way.
Members have talked about the regional growth fund, which is now committed to making the majority of its spend in the north. That will add to the balancing out through real jobs for real factories. At the same time, while the Government are listening, I suggest that too much of the regional growth fund is still concentrated on metropolitan areas. There is a lot more to the north-west than Greater Manchester and Merseyside, and many businesses need to access the fund, so I hope that it will increase as it develops.
I also look forward to the Local Government Finance Bill returning to the House, because I believe that the freedoms that that will give local authorities through business rate retention will be a truly local way of improving investment and contributing to businesses. I welcome the commitment that the Local Government Association and my county council have made to looking at local government bonds as a way of raising investment for local businesses. The key is to unleash the regions and give them the infrastructure to compete not only on the national stage, but on the international stage, and that means superfast broadband and the ability to use our own money to invest in our own business. I congratulate the Government on what they have done about this so far.
4.59 pm
Fiona O'Donnell (East Lothian) (Lab): This is less a speech, more a postcard from East Lothian, but I am grateful for the opportunity to contribute to the debate, because I want to send Government Members a message from East Lothian about how we create jobs and growth. We rely heavily on the small and medium-sized enterprise sector, and the message from such businesses is clear: they are lukewarm about a lot of last month’s Budget, but they say that what would make a difference is a cut in VAT. I hope, therefore, that Ministers will listen.
I also want to talk about jobs. Many aspects of job creation in Scotland, including in my constituency, are devolved to the Scottish Parliament, and this House and the Government here need to work more closely
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with the Scottish Government. I have written to the Secretary of State for Work and Pensions—
[
Interruption
]
—whose attention I do not appear to have right now—about a constituent of mine. He is a 19-year-old man who finally had the chance of a job in a community bakery in Dunbar, but he was not allowed to apply for it because he was on the Government’s Work programme and the job was funded by the Scottish communities job fund. When a young man has the opportunity of the perfect job in his own community, it is simply inadequate to give him the response, “You cannot have it because of the double funding.” It surely cannot be beyond the wit of this Government and the Government in Holyrood to work together to address the issue. I understand that that is not a problem in England or Wales.
I went to see the providers of the Work programme in East Lothian, and they told me that they would be perfectly happy to consider transferring funding from their stream into the Scottish communities job fund in order to prevent a similar situation happening again, so I hope that Ministers will open discussions with the Scottish Government to address the problem. There is already enough pressure on young people trying to find work in my constituency. Figures last month showed an increase of 467% in youth unemployment, and that simply is not good enough.
Tourism is very important to the East Lothian economy, but unfortunately it is suffering and will suffer further, as I will find tomorrow when I visit the owner of a caravan park in North Berwick. So if the Government want to promote tourism and growth in my constituency, I ask them to look again at the introduction of VAT on static caravans.
I was also disappointed that in the Queen’s Speech we did not see any proposals on offshore gambling. Musselburgh race course recently won its third award this year, as the finest race course in the UK, and it is a driver of growth and innovation in a community that is struggling in so many ways. I am sorry that we did not see the issue addressed, but once I have heard the result of the private Members’ Bill ballot, I might find that I am able to do something about it myself, for my own constituents.
None of the barriers to business, growth and job creation was addressed in the Queen’s Speech and, as many others have said, it has been a missed opportunity. Telling people to work harder is not good enough, when inflation for the poorest 10% is at 41%, and for the richest 10% is at only 3.3%. This is a Government who choose to help that richest 10%, and that says it all.
5.3 pm
Andrew Selous (South West Bedfordshire) (Con): Up until 2007, the Government were running unsustainable deficits and had an escalating level of debt, and that was before the financial crisis hit. Governments have a choice: they can either run their finances sustainably or give up the right to economic self-government, and there are lots of examples of that in Europe at the moment.
In tough times, this Government have created 600,000 new private sector jobs. There are 370,000 more people in work now than there were at the general election and 70,000 fewer people on out-of-work benefits than when we were elected. As from last month, we have the youth contract coming into play, which will also make a difference. Furthermore, we have made progress on the deficit, which we have already cut by a quarter. That has
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led to low interest rates; and we should remember that every 1% increase in interest rates puts £1,000 on an average family mortgage.
Business taxes are coming down to 22%, which will be one of the lowest rates in the G20. With the patent box, we have, in effect, 10% corporation tax rates on patents that are exploited here in the UK.
I am glad to see the Minister of State, Department for Education, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), on the Front Bench. I pay tribute to the work that he is doing to improve school standards. What with his work, the 457,200 extra apprenticeships—an increase of 63%—and the new university technical colleges that are being rolled out, we are well on the way to building up the educated, flexible work force that this country will need for it to be an economic success in future.
People need hope and confidence in tough times, and I, for one, am fed up with the diet of gloom coming from the media about the eurozone. Yes, 48% of our trade is with the European Union, and therefore it matters, but the EU comprises only 19% of the world economy, and we need to remember that the other 81%—Asia, the Americas and Africa—is growing strongly, in some cases by 10%. The world economy is due to triple over the next 30 years, and that provides fantastic opportunities. I pay tribute to the work of UK Trade & Investment and the role of the Foreign Office in helping exporters. Last week, I spoke to people from local businesses in my constituency, and they confirmed that that help is real, practical and available on the ground.
I am well aware of the difficulties that businesses have trying to raise credit to expand. That is why the £20 billion loan guarantee scheme is helpful. I heard only yesterday that Santander will be putting 650 managers back into local branches to take local decisions. That link between the local manager and local business is very important. It has been broken by many banks in the past, and I am glad that that is being dealt with. New methods of raising finance for business, including crowd-financing and websites such as Kickstarter.com, can help as well.
The UK is one of the most entrepreneurial countries in the EU. We have 4.5 million small businesses; in 1989, there were only 2 million. However, if we were as entrepreneurial as the United States of America, there would be another 900,000 small businesses in the UK, and many of the Government’s problems would be over. We need to make the UK an enterprise hub for the whole of Europe. There is evidence that many of the small businesses that are being created naturally end up exporting, which they can do very easily through the power of the internet.
Finally, I pay credit to the Government for focusing on infrastructure funding. As I look at my constituency, I see roads being built for which we have waited years, a new busway coming, a business innovation centre, and a new university technical college.
5.7 pm
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Last week’s Queen’s Speech was my first as an MP. Although nobody does pomp and pageantry better than we do, I was deeply disappointed with its content: lots of style but no substance.
When this Government came into office two years ago, we were in economic recovery. Since then, we have
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been bumbling along the bottom with very little growth, and now we are back in recession again. This is not due to the worst global financial crisis since the 1930s; it is due to the mismanagement of the economy by the current Downing street incumbents. Yesterday, the Bank of England yet again had to downgrade forecasts for economic growth, from 1.2% to 0.8%, and the outlook for inflation is well above the 2% target.
Yet this not the experience of every other country. The US, which was at the centre of the global crash in 2008, started to recover, like us, in 2009-10, and it is continuing to recover. Similarly, the rest of the G7 is performing better than we are. Our economic performance is one of the worst in the G7, with Italy coming up just behind us. Brazil has now overtaken us as the sixth largest economy. The austerity measures that this Government have introduced are clearly not working.
The impact on unemployment in the public and private sectors is already being felt. Last year, the public sector lost 276,000 jobs. Some have estimated that the figure will be as high as 700,000 by 2015. In Oldham, £24 million has been cut from next year’s council budget, meaning 400 job losses. That is not the end of it. My local hospital trust, Pennine Acute Hospitals NHS Trust, recently announced a statutory consultation on a further 160 redundancies. It has to find savings of £45 million this year. That comes on top of 600 posts that have already been lost. In spite of the Government’s reassurances that jobs will be created in the private sector, large and small businesses alike are closing, including BAE Systems in Chadderton, Warburtons Bakery in Shaw, Long’s Plumbing and, of course, Remploy.
Although I welcome yesterday’s unemployment figures that show a reduction in the previous quarter, I am afraid that the trend in long-term unemployment is upwards, as we have heard. In Oldham, more than 8,000 people are out of work across the borough, with 11 people chasing every job. The number of women out of work is the highest since 1995. There has been a 25% increase in long-term unemployment among the over-50s. In my constituency, the number of jobseeker’s allowance claimants has increased by 20% since June and doubled since 2006. Young people in my constituency have been particularly badly hit, with a 288% increase in long-term unemployment since last year. Worryingly, young black and Asian men are disproportionately affected, with 56% and 23% respectively being unemployed. Those figures have doubled since 2008, so we should be very worried about that problem.
What was there in the Queen’s Speech for those people? Absolutely nothing. At the Select Committee on Work and Pensions yesterday, I was profoundly disappointed by the apathy and complacency about what is going on and about how it can be addressed. The youth contract is not geared towards focusing on these problems and only quick fixes have been introduced. There are inequalities not only between different population groups, but on a geographical basis. The urban heartlands of Greater Manchester, Liverpool, Newcastle, Glasgow, Cardiff and parts of London are most affected. The Government’s talk about fairness is just that—
Madam Deputy Speaker (Dawn Primarolo): Order. I call Mr Mark Spencer.
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5.12 pm
Mr Mark Spencer (Sherwood) (Con): I am delighted to be called to speak in this debate. The number of Members who want to speak is an indication of how important it is that the economy runs smoothly and allows the Government to do the exciting and generous things that they want to do in their programme. The economy is fundamental to that process. The same is true in our communities. In Sherwood, the fundamental issue is jobs and how we can create them.
The last Labour Administration created many jobs in the public sector, expanding it to such an enormous degree that we reached the point at the last general election—[ Interruption. ] The shadow Secretary of State for Work and Pensions says that they created jobs in the NHS. That is true—they were people walking around with clipboards who restricted our doctors and nurses. The last Government created jobs within quangos that restricted the private sector. Those jobs became unsustainable, to the extent that when the previous Administration left office, £1 in every £4 that was spent was being borrowed.
This is the fundamental argument. We need growth in our economy, but it must be sustainable for the long term. The Government have grasped that the only way to create sustainable jobs is to have an even-keel economy. That involves having low interest rates. Anybody running a small business in one of our constituencies who has an overdraft or a long-term loan with a variable interest rate understands how important low interest rates are. Once interest rates start to climb, the pressure on one’s cash flow and the pressure to reduce one’s wage bill become unsustainable.
So what have the Government done to create jobs? Our record is pretty good. One of the first things that the Government did was to reduce corporation tax to attract investment from overseas. That is just starting to show fruit, with companies relocating to the UK. We are using the planning system to try to make it easier for companies to establish themselves, and trying to ensure that the system works to create new businesses. For small businesses, we have looked at reducing business rates, which have a crippling effect. Anyone who runs a small shop and pays enormous local business rates will understand how important rate relief is in allowing their business to flourish. Reducing the burden of employment law on such businesses is also very important. Small businesses fear taking on new staff. If we can remove some of that fear, those businesses will be more likely to take on more staff.
What is happening in Sherwood? The good news is that unemployment is slowly coming down, which I welcome. There is still a long way to go, but the good news is we finally have a Government who understand business and how to run the economy. We are on the right course. We need to hold our ground and ensure we keep interest rates at their current level.