I inform the House that the Speaker has selected the amendment in the name of the Leader of the Opposition.
I beg to move an amendment, at the end of the Question to add:
‘but regrets that whilst the UK economy is in recession, long-term unemployment is at its highest level since 1996 and one million young people are out of work the Gracious Speech contains no measures to address this crisis;
notes that Britain will pay a long-term price for a prolonged period of slow growth and high unemployment;
further notes that France, Germany and the Eurozone as a whole are not in recession while in the USA, where the Government has to date taken a more balanced approach to support economic recovery, the economy is now one per cent bigger than before the global financial crisis, while the UK economy is now 4.3 per cent smaller;
recognises the criticism expressed by business leaders that your Government has not come forward with an adequate plan to boost economic growth;
believes that cutting spending and raising taxes too far and too fast is self-defeating as slow growth and higher unemployment means that your Government is now set to borrow £150 billion more than planned;
and calls on your Government to introduce a fair and balanced deficit plan, with measures to stimulate economic growth and job creation which are essential to get the deficit down, including a tax on bank bonuses to fund a guaranteed job for every young person out of work for more than a year, a temporary cut in VAT, a national insurance holiday for small firms taking on extra workers, and bringing forward infrastructure investment to strengthen the economy for the long-term.’.
It is a great honour to open the final day of this Queen’s Speech debate, and to do so in this very special diamond jubilee year. But I have to say how disappointing it is, with our economy now pushed into recession, the eurozone crisis deepening, and businesses and families up and down the country crying out for a plan for jobs and growth, that we are today debating what is widely regarded to be a disappointing and directionless Queen’s Speech programme from a Tory-led coalition that has, frankly, lost its way.
What a change this is from two years ago. When the Chancellor of the Exchequer spoke in the debate on the Government’s first Queen’s Speech, four weeks after
the general election and two weeks before his first Budget, he was bursting with hubris. He was so sure of himself that, when the then shadow Chancellor, my right hon. Friend Mr Darling, and many other hon. Members on this side of the House asked whether the Chancellor planned to bring forward immediate and deep tax rises and said that spending cuts might choke off the recovery, the Chancellor dismissed those concerns out of hand. He was confident that his plan would
“deal with our debts, set our country on a brighter economic course and show that we are all in this together.”—[Hansard, 8 June 2010; Vol. 511, c. 206.]
What a difference two years makes.
“We are all in this together”: we do not hear that line any more—not from a Chancellor whose Budget decisions have hit middle and lower-income families harder than those on the highest incomes. His Budget decisions have hit women harder than men and families with children harder still. The Institute for Fiscal Studies confirms that his Budgets have been regressive and will see child poverty rise. Last month’s omnishambles of a Budget included decisions to raise taxes on caravans, charity donations, church repairs, pensioners, pasties and petrol, but to have a top-rate tax cut only for the richest—a £3 billion tax cut, which will give 14,000 of the richest people in our society earning over £1 million an average tax cut of £40,000 a year. Millions are paying more in tax to pay for a tax cut for millionaires. No wonder the Chancellor and the Prime Minister can no longer bring themselves to say that “We are all in this together”.
Let me remind the Chancellor of what the chair of the Conservative Association in Harlow said last week:
“The voters are disillusioned with Cameron himself. They don’t like the fact that he did not keep the 50p tax. People feel he is not working for them.”
Apparently, the Chancellor was advised precisely not to cut the top rate by his own Downing street pollster, Mr Andrew Cooper. Let me say to the Chancellor that, in my experience, disregarding the wise advice of someone called Cooper can be a very dangerous course to take.
I do not think that introducing a 75p tax rate in Britain would be the right thing to do at all. That is not our policy, but I do not think that cutting the top rate from 50p to 45p will be good for jobs, growth or fairness either.
I am listening with some perplexity to how the shadow Chancellor referred to the Budget as one for rich people, because I have calculated that in my Watford constituency, nearly 4,000 people have been taken completely out of tax by the increase in the personal allowance. I am sure that the right hon. Gentleman will join me in congratulating the Chancellor on such an excellent measure.
The hon. Gentleman might need to go back to the drawing board because the Institute for Fiscal Studies has shown that last month’s measures will, as a result of cuts to tax credits, mean tax rises for the average family with children in his constituency—and that is even before taking the rise in VAT into account and it does take the personal allowance rises into account. The fact is that taxes have gone up for low-income families, they are going up for the middle classes, and it is only the highest earners in the hon. Gentleman’s constituency that are getting the tax cuts.
I am always a close student of the hon. Gentleman, and I noted that he did not advocate the reversal of the 50p rate as the right thing to do, so I am not sure what his constituents thought about that. I recently read some of his other remarks. In March, for example, the hon. Gentleman said:
“The Chancellor has been consistently advised of the importance of macro-measures to stimulate growth in the private sector. So why are these not being implemented?”
Why, indeed? He continued by saying that the Prime Minister
“needs to wake up and smell the coffee. This is a major setback for the Conservative party.”
That is quite right.
If the hon. Gentleman wants to intervene again, I have plenty more!
I know he has. Now will he answer my question?
The right thing to do after the financial crisis was to do things in a fair way. That is why the 50p tax rate was right at the time. The reason why the Budget has gone down so badly is that lowering the 50p rate was seen as so unfair. The hon. Gentleman was right just a few days ago when he said in his blog that the Government have a communication problem and are over-confident. He said:
“The manner in which Downing Street fires out policies and expects us to agree and applaud without question certainly smacks of a sense of superiority.”
Quite right again—a very interesting remark.
Let me make some more progress; I will allow more interventions in a few moments.
As for the Chancellor’s promise of “a brighter economic future”, it is not just that his economic plan has been so unfair, but that it has failed completely. On the recovery being secured, our economy has not only flatlined for 18 months, but has contracted. As to a private sector-led recovery, confidence is down, business investment has been revised down and since June last year, we have lost
more than 100,000 public sector jobs, but the private sector has created only half that number of private sector jobs. As for the Chancellor’s absurd claim that Britain is a safe haven, we are in recession. What kind of safe haven is that?
The Chancellor will try to claim today that it is the eurozone crisis that has blown him so badly off course. I will return to the eurozone crisis in a moment, but trying to blame that crisis for the UK recession flies in the face of the facts. This is what the Chancellor said in his autumn statement:
“if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK.”—[Hansard, 29 November 2011; Vol. 536, c. 799.]
But it is the eurozone that has avoided recession and the UK that has plunged back into it. [Interruption.] Even The Sun—not known as a big supporter of Labour, but a big supporter of the Chancellor over the last few years—wrote only yesterday—[Interruption.]
While the shadow Chancellor is busy doing down the British economy, will he not equally recognise the fact that in areas like Great Yarmouth, which Labour left as one of the most deprived in the country, we are seeing hundreds of millions of pounds of investment from and in local companies, put in by organisations and countries like Japan, so that the jobs are growing in the enterprise zones?
In the hon. Gentleman’s constituency, youth long-term unemployment is rising, long-term unemployment generally is rising, families’ taxes are rising and only the top-rate taxpayers are seeing a tax cut. Investment was revised down last year and the year before that, and our economy is in recession because of the policies that the hon. Gentleman continues to support. I think he owes his constituents an apology.
What should we make of setting our economy on a brighter economic course and the observation that “We are all in this together.” Even on his claim that he would “deal with our debts”, the Chancellor is failing that test, too. No growth since the spending review and rising long-term unemployment mean that he is now borrowing £150 billion more than he planned. This is more borrowing than in the plans he inherited, and his pledge to balance the books by 2015 is in tatters. At the end of this Parliament, our national debt will not be lower than the level he inherited, but higher than the level he inherited.
The shadow Chancellor has used many quotes in his opening speech, so let us see whether he agrees with this one from Mervyn King, the Governor of the Bank of England, whom Labour appointed. He said that this Government demonstrated a
“textbook response to the situation”—
the economic mess we inherited from the previous Government.
The Governor of the Bank of England was confident two years ago that the Chancellor was making the right calls on the pace of deficit reduction. Unfortunately, it has turned out that the Governor of the Bank of England and the Chancellor of the Exchequer have both got that wrong. We had gone back into recession even before the eurozone crisis. Let us consider recent entries from the website of Andrew Bridgen. They show him “criticising cuts” to “local health centres”, and reveal his wish to “Save Moira Fire Station” and for the “replacement” of local bus services. I am not sure that all that is entirely on message. Yet the Chancellor and the Prime Minister are still clinging to the view that they are right and everyone else is wrong. In his speech today, the Prime Minister seemed to be trying to claim that the choice between austerity and growth was a myth. [Interruption.] I think that the Chancellor should listen to this, because I am about to explain why he has got it so badly wrong. He should listen and learn, Mr Deputy Speaker, listen and learn.
If the Prime Minister meant that we should not choose between policies for growth and policies for deficit reduction, he was right. I agree. In fact, that is exactly what Lord Mandelson and I argued in our joint article in Monday’s Guardian. We argued for action now to boost jobs and growth, alongside tough medium-term deficit reduction plans. But that is not what the Prime Minister was saying today. He and his Chancellor are still clinging to the mistaken and, now, increasingly discredited view that cutting spending and raising taxes faster to cut the deficit is the route to economic growth, when all the evidence is to the contrary. Trying to cut the deficit faster has not boosted growth in recession; it has choked off confidence, unemployment is up, and we are borrowing more than he planned, not less. If the Prime Minister is really claiming that he is on the right course, he is even more complacent and out of touch than I thought.
Does the right hon. Gentleman not agree that economic policy is about credibility? Would he not have more credibility if he told us how he would cost his so-called plan for jobs and growth?
Credibility is about getting things right, not about getting them wrong. We were told that we were out of the danger zone and that the recovery had been secured, but what has happened? Plan A failed in Britain and in the eurozone too, and it is the very plan that the Chancellor has been urging on us. What did he say to The Daily Telegraph in August last year? He said:
“Britain is leading the way out of this crisis”,
“The eurozone must follow our lead and act decisively”.
The Prime Minister is off to the G8 summit this weekend. The only countries in recession that will be represented there are Italy and Britain. How are we leading the way? The fact is that the austerity policies that are failing in Europe are the very same policies that have failed in Britain, and which the British Government have been urging the German Government to urge the eurozone to stick with. That is the reality.
Opposition Members have consistently argued that it will not work for all countries to try to reduce their deficits at the same time, that tough medium-term plans to cut the deficit will work only if Governments also put in place a plan for jobs and growth, and that a time when a global hurricane is brewing is precisely not the time at which to rip out the foundations of the house here in Britain.
I appreciate the compliment from the right hon. Gentleman, who has often demonstrated that he does not have a sound grip on economics. He is continuing to say something that I do not think is correct: he is continuing to compare austerity policies with growth policies. Does he not accept that growth is an outcome, which all policies are intended to achieve, and will he have the honesty to answer the question put to him by my hon. Friend James Morris and cost his plans?
The right course is to take a balanced approach that combines medium-term deficit reduction with getting jobs and growth moving. The problem with austerity is that it chokes off jobs and growth and ends up costing more in spending, more in unemployment and more in borrowing. We have set out a clear alternative. We have said “Repeat the bank bonus tax, and use the money to create jobs.” We have said “Rip up the failed national insurance cut introduced by the Chancellor, and use the money for a tax cut for small businesses.” We have said “Yes, cut VAT by £12 billion for a year to get the economy moving.” We have not said how many shovel-ready infrastructure projects can be launched, because we do not have the details.
The Prime Minister says that you cannot borrow your way out of a debt crisis, but unless you grow, your debts get bigger and your deficits get worse. That is what the Chancellor has proved over the last two years. It is not only the Labour party that is advancing that argument. Only last week, the managing director of the International Monetary Fund said:
“We know that fiscal austerity holds back growth and the effects are worse in downturns... so the right pace is essential”.
Even the head of the European Central Bank is now pressing for a jobs and growth plan.
The Prime Minister and the Chancellor must wake up to the fact that our economy has not grown on their watch for a year and a half. Instead of trying to divert the blame for their failure and using the eurozone as an excuse for Britain's problems, they must admit that they got it wrong—that they gave the eurozone the wrong advice—and start pushing for the right solution to the eurozone crisis. I agree that there should be a proper role for the European Central Bank and a greater emphasis on fiscal burden-sharing, but there should also be a change of course on austerity, because only a balanced plan that puts jobs and growth first will succeed in getting the deficit down. When the International Monetary Fund, the OECD, the European Commission, the European Central Bank and even the United States are urging policies for jobs and growth, this Chancellor and this Prime Minister are looking increasingly isolated and out on a limb.
Since April 2010, in my constituency the number of job vacancies has risen by 316%, the number of apprenticeships has doubled, the number of jobseeker’s allowance claimants has fallen by 12%, and the number of claimants aged between 18 and 24 has fallen by 15%. Those are the facts. I understand why the right hon. Gentleman does not want to give Ministers any credit for that, but will he stop talking down the businesses and entrepreneurs in Portsmouth who have made it possible?
I am sure that the hon. Lady and I can agree on one thing. There has been a 130% rise in long-term youth unemployment—unemployment lasting more than six months—in her constituency over the last year. [Interruption.] It is up by 129% in her constituency, and that is really worrying. Constituencies of Members on both sides of the House saw the damage done by long-term youth unemployment in the 1980s, and we should act to prevent a repeat of that rather than being complacent.
Twice so far in his speech, the right hon. Gentleman has said that the problems in the UK are nothing to do with the eurozone. Will he therefore disown the remarks of the shadow Chief Secretary, Rachel Reeves, who said last week that the eurozone was having a major impact on British businesses and British families?
Calm down. Calm down, or we will start a debate about Remploy.
Of course the eurozone crisis is very serious and very dangerous for our economy and for all economies. That is why our Prime Minister and Chancellor should be at the table leading debates about the solution rather than carping on the sidelines, sitting like a teenager in the front of the car with headphones on while the crisis happens around them.
These are the facts. Last year, eurozone growth was faster than British growth and was revised up. Our growth was slower and was revised down. Last year, it was only the eurozone that prevented the British economy from going into recession earlier. Our domestic economy, excluding exports, was actually in recession for pretty much all of last year. The eurozone economy was
growing when the British economy went into recession. Even today, the eurozone is not in recession and the British economy is.
The welfare Secretary has made a career of blaming Europe for everything that goes wrong in Britain, but I am afraid that this is a recession made in Downing street.
The Chancellor will also try to claim today—[ Interruption. ] Calm down. The Chancellor will also try to claim today that all this pain will be worth it in the end. However, we are paying a long-term price for the failures that we now see around us—the national debt higher; living standards down; long-term youth unemployment becoming entrenched; more than 24,000 companies out of business since he became Chancellor; investment plans cancelled or diverted overseas; our economy weaker; and capacity lost. I very much fear that when the economy finally recovers, as it eventually will, it will be more prone to inflationary pressures than otherwise, because of the failures of this Chancellor.
The right hon. Gentleman has mentioned exports. Does he not welcome the growth in exports and the new jobs being created at Jaguar Land Rover, Vauxhall, Nissan and Toyota, to mention but a few? Is he not sorry, and should he not say sorry to the British public, that 1.7 million manufacturing jobs were lost in this country on his party’s watch? Companies such as LDV, Peugeot and Rover closed down manufacturing while he was in government.
Of course I welcome the improvements that we have seen in manufacturing, and I think we could have a cross-party consensus that the previous Government’s decision to set up the Automotive Council and provide long-term strategic leadership has made a huge difference to the prospects for car investment in our country. Nissan; Rover—we made great progress. That progress is being continued, and we should all welcome that. However, I have to say, for all the complacency that we just heard in that intervention, is it any wonder that business organisations—[ Interruption. ] Government Members should listen.
Would my right hon. Friend include the car scrappage scheme as well?
I am grateful to the right hon. Gentleman. He seems to be enthused about the car scrappage scheme and what a roaring success it was. Will he therefore explain why Jaguar Land Rover sold about 12 additional cars as a result of that fantastic policy?
We were very proud of the investment that Jaguar Land Rover put into the west midlands as a result of the progress made and the support from Advantage West Midlands.
I think hon. Members will find that businesses in the west midlands will all agree that the abolition of Advantage West Midlands was one of the most stupid and short-sighted decisions made by this Government so far.
Order. You have done very well so far, Mr Jones. Don’t overstep it.
The economy is in recession and they hate it, and so do business organisations up and down the country. Is it any wonder that businesses have been so disappointed and upset by the Queen’s Speech of just two weeks ago? Let me quote the director general of the British Chambers of Commerce:
“There is a big black hole when it comes to aiding business to create enterprise, generate wealth and grow.”
Quite right, Mr Deputy Speaker.
There will be some parts of the Queen’s Speech dealing with Treasury matters which we will support. On banking reform, we will look forward to supporting legislation to strengthen capital ratios and promote competition, although it is now nine months since the final report of the Vickers commission, and we are still waiting for a response from the Chancellor of the Exchequer. However, after 18 months of flatlining, with our economy now in recession and business investment depressed, the question I ask—it is the question British business is asking too—is this. Where is the plan in the Queen’s Speech to restore confidence and promote business investment and jobs in Britain?
With net lending falling month on month—according to the Bank of England it has been down every month for over two years now—where is the action in the Queen’s Speech to promote small business lending? With youth unemployment now at a record high, and with yesterday’s figures confirming that long-term unemployment among young people is still rising, where is the legislation in the Queen’s Speech to get our young people back to work? Where is the legislation to repeat the bank bonus tax to fund a jobs guarantee for young people—or, for that matter, to cut taxes for small businesses hiring new workers, or to help the construction sector with a temporary cut in VAT? Our economy has ground to a halt and our construction sector is in great distress. Where is the plan to support jobs and growth by bringing forward new infrastructure projects? Where is the legislation to make our economy stronger and fairer for the future? Stronger corporate governance; a business investment bank; progress on high-speed rail; reforms in our universities to promote innovation—all are completely absent from this Queen’s Speech.
Does my right hon. Friend agree that young people in Scotland are facing the double whammy of a coalition Government who are complacent and a Scottish National party Government who are cutting further education funding?
I understand my hon. Friend’s concerns at the lack of a youth jobs plan in Scotland. We can understand that from the Conservatives, because they
abolished the future jobs fund, but people will find it hard to understand why the Scottish National party Administration in Scotland have failed so woefully to do anything to tackle the challenge of youth unemployment.
The right hon. Gentleman referred to investment in this country in manufacturing. Does he agree with General Motors, which has specifically thanked the Government for making the UK a great place to invest in manufacturing and business? Indeed, General Motors has announced today that it will be manufacturing the new Vauxhall Astra at Ellesmere Port, very close to my constituency, providing 700 new jobs and securing thousands of jobs in the supply line. Does he welcome that?
I will make some progress.
Is it not the reality that we have an economy in recession and a Queen’s Speech that entirely failed to deliver on growth, jobs and investment? The Chancellor’s economic strategy is now in tatters, but have we had any admission in recent weeks that he got it wrong? We have had none. The Foreign Secretary says that British business needs to work harder, but it is this Chancellor who needs to work harder to get things right.
I will not give way.
Let me say this to the Chancellor. We all know why he has wanted to be a part-time Chancellor: in order to make room for his other role as the Conservative party’s part-time political strategist. But with the Budget botched, the Queen’s Speech a flop, the local elections a disaster for his party, and the economy back in recession, it is now dawning on all of us—I think it is dawning on many Conservative Members too—that he is not a very good Chancellor and not a very good political strategist either. Although should we really be surprised? This is the Chancellor who claimed to his colleagues that hiring Andy Coulson would be a triumph; that taking away child benefit from middle-incomes families would be a masterstroke; that saying that the economy was “out of the danger zone” was smart forecasting; and that cutting the top rate of tax in this Budget would wrong-foot Labour, and outfox his leadership rival Boris Johnson too. With judgment like that, perhaps the Conservative party does not need just a new political strategist; perhaps it needs a new Chancellor too.
No, I will not.
What an eight weeks it has been! The transformation has been startling, with the Chancellor’s long-held dreams turning to dust. He dreamed that his brilliant economic
plan would bring unprecedented growth and finally deliver a Tory majority in 2015, and that a grateful Prime Minister would then stand aside, as he was finally cheered into 10 Downing street. How far away those dreams seem now!
I will not.
Last month YouGov asked 1,800 people whether they thought the Chancellor was very well suited to the job of Prime Minister. How many said yes? Just 1% did—18 people only. The question we must ask is this: who on earth were those 18 people? After that Budget, they must be vegan, health freak, cyclist millionaires who passionately hate cars, pasties and caravan holidays, and think that pensioners get a cushy deal. So, other than Steve Hilton, who are the other 17? Is this not the truth: that the Chancellor’s plan has failed, and he has been exposed not simply as unfair and out of touch, but as incompetent? This part-time Chancellor needs a new economic plan for jobs and growth. This part-time political strategist urgently needs a relaunch for him and for the Prime Minister. This Queen’s Speech delivers neither a new economic plan, nor an urgent relaunch. He and the Prime Minister should go back to the drawing board and think again.
I rise to support this Queen’s Speech, and I will say something about the Treasury Bills on banking and pensions that feature in it. But first I had better address, head on, the complete nonsense we have heard for the past 30 minutes. Given the claim by Ed Balls that the eurozone has had no impact on the economic difficulties in Britain, and his claim that his 13 years in government did nothing to lead to the debt and the deficit that this Government are trying to clear up, it is no wonder that there were some rather long faces on the Opposition Benches—[Hon. Members: “Where?”] Over there.
My hon. Friend the Government’s Treasury Whip has just received a text from a Labour Whip saying, “Please, please come to the Chamber for the start of the final day of the Queen’s Speech debate. Ed Balls is opening for us and really needs his support.”
May I explain to Greg Hands, who is sitting over there, that we have a very different and more effective way of whipping those on our Benches than he clearly has on his? Finally, as with everything to do with the economy, the Chancellor needs to pay more attention to detail, because that was not the right reading of the text. Indeed, it was not accurate, like much else he does.
The Labour party certainly does have a different whipping operation: it sends all its information to the other political parties.
Let us get back to discussing the economy. The central argument that the shadow Chancellor was trying to make, and the argument he makes in the amendment, is that the British economy is not as strong as the German economy—that is what we are all being asked to vote on tonight. He is absolutely right about that. The British economy is not as strong as the German economy, and I will tell hon. Members why. It is because for the past decade, in the good years, Germany fixed the roof when the sun was shining and he did not when he was in government.
I will tell hon. Members what happened when the right hon. Gentleman was in government. Over the decade before the crash, Germany maintained its share of world exports while Britain’s share almost halved; Germany was selling more than £10 billion of goods a year to China while Britain was exporting one fifth of that—indeed we were exporting more to Ireland than to Brazil, India, China and Russia put together; and Germany’s manufacturing sector grew by 34%, whereas our manufacturing sector not only did not grow but halved as a share of our total output, while our over-leveraged banking sector grew by 100%. Germany, after years of sustainable economic growth, entered the financial crisis with a budget surplus. Britain, in the years that he was in charge, led a debt-fuelled consumption that drove an expansion in deficit and in debt. Under Labour we entered the financial crisis with the largest budget deficit in the G7 and left it with the largest in the G20.
Instead of making us more like Germany, the right hon. Gentleman made us more like Greece when he was in the Treasury. Britain’s economy became over-borrowed, unbalanced and unsustainable. The person more responsible for that than anyone else active in politics today, the person who encouraged the borrowing, dismantled the banking regulation and gambled the futures of 60 million people on the City of London, is sitting right over there—the shadow Chancellor. It is the people on this side of the House who are clearing up the mess he left behind.
Does the Chancellor agree that one of the infrastructure failures left by the previous Government was the lack of direct flights from this country to the big, growing cities of China—there are many more flights from German cities to China—and that the Government will put that right in due course?
I certainly think that a lack of airport capacity is a challenge for this country, but one of the good things that may emerge from the bmi merger is that more slots may become available at Heathrow to open up routes to those cities in China. My hon. Friend makes the very good observation that we have to do much more to expand our exports and our links with the Chinas and Indias of this world. One of the good things that has happened in the past few years is that our exports to China and India are up by a third, and we need to see more of that.
In his speech, the shadow Chancellor dismissed the Governor of the Bank of England as plain wrong. Who appointed the Governor? Did the recommendation ever come across the desk of the shadow Chancellor when he was the political adviser in the Treasury? [Interruption.] We will find out. Yesterday the Governor said:
“We have been through…the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart”.
My message to the House today is that addressing those problems is not easy, but nor is it impossible. I will come on to talk about the eurozone, but first we must put our own house in order, and we are making progress on doing so.
Tony Blair says in his memoirs that from 2005 onwards Labour
“was insufficiently vigorous in limiting or eliminating the potential structural deficit”.
Does the Chancellor agree?
One of the difficulties is that some of the cuts that the Government have made are counter-productive in terms of trying to deliver economic growth. The Chancellor referred to this country’s relationship with India. I think that everybody in this House agrees that we need to do more business with Brazil, India, Russia and China. However, if their businessmen find it impossible to get a visa to get into this country or they encounter massive queues when they arrive at Heathrow because of the enormous cuts to the UK Border Force, they are not going to want to do business with this country. Stop cutting off our nose to spite our face.
There have been queues at Heathrow for far too many years, and of course those queues need to be addressed—[Interruption.] There have been queues for years. I agree with the hon. Gentleman that we need a visa regime that offers support to enterprising individuals—entrepreneurs, people who can bring real skills and value to this country—to come here, and that is precisely what the visa changes we have made will allow. But I have to say that we can have a visa regime that allows in the brightest and the best only if we can command public confidence that we are in control of our borders and that we have a cap on immigration numbers. Remarkably, not only has the Labour party set itself against a cap on benefits, which it will come to regret, but it has opposed the cap on immigration, and that is a huge mistake.
Let me discuss the progress we are making. As the Governor of the Bank of England reminded us, we inherited the largest budget deficit in peacetime but two years into this Government, we have cut the deficit by more than a quarter. In 2010, the state consumed 48% of national income in this country. Today, it consumes 43%. We took office when Britain’s market interest rates were the same as Spain’s. Two years later, our market rates are the lowest in our history and Spain’s are more than 6%. That is the practical benefit our fiscal credibility has brought.
When we came to office, manufacturing had been withering for years, but after two years this country is exporting more cars than it imports for the first time since 1976—the last time a Labour Government bankrupted this country and went begging to the IMF. Today—as
Government Members have mentioned, but, strikingly, Opposition Members have not—we hear that when faced with the choice of which plant to invest in General Motors has chosen Ellesmere Port, in the county that I represent, Cheshire, as the site of their future. That is a successful industrial strategy at work, with Ministers, management, employees and employers working together to secure investment.
The chairman of Vauxhall has just said that the Government have put a strategy in place to attract inward investment and support manufacturing, which all helps to make the UK a great place to build cars.
We all applaud the deal at Vauxhall Ellesmere Port and I am glad that the Chancellor managed to get out—almost through gritted teeth—some acknowledgement of the contribution of the work force and the trade unions in achieving that. Does he speak to motor manufacturers? Does he know that what he has said about the great work they are doing being export-led is linked to the problems? Does he know what is happening to commercial vehicles and the problems the motor industry has in that regard? Finally, is he going to do anything about Lola, one of the most successful performance engineering companies in this country, which went into administration this week?
British car companies and their supply chain are doing incredibly well exporting their cars around the world as well as selling them at home. Instead of talking down an industry that is so important to the west midlands and to the rest of the country, the hon. Gentleman should be celebrating not just the decision about Ellesmere Port but the expansion of Nissan in Sunderland and the great news we have had about Jaguar Land Rover in Wolverhampton. Those are real success stories and those companies—Nissan, Jaguar Land Rover and Tata—have choices about where to invest all over the world. They could put that money anywhere but they are choosing to invest in the United Kingdom. We should be celebrating that fact today.
The company that the Chancellor has missed off the list is, of course, Ford in Bridgend, which has just had new investment. I must point out, however, that that investment was also there under the Labour Government over successive years. On Spain, will the Chancellor explain why in quarter 3 in 2009 to quarter 3 in 2010 growth in the UK was 3.2% and flatlining in Spain, whereas now it is 0.2% in Spain, which is much-maligned for obvious reasons, and we are in recession? What has happened in the first two years of his chancellorship to put us back behind Spain?
For a start, as of today Spain is in recession, so I am not sure that the hon. Gentleman’s point has a huge amount of force. This claim, which I guess is made only by Opposition Members whom I am looking at now, that the Labour party somehow bequeathed the new Government some enormous golden economic legacy and that we were incredibly fortunate to inherit this massive budget deficit and totally unbalanced economy
with no real plan to deal with that debt or deficit—not that we have heard a plan today, either—is absolute nonsense.
We have also had the good news this week, which was of course not mentioned by the shadow Chancellor, that for the second month in a row unemployment has fallen and employment is up. We have 400,000 more people employed than two years ago, and 190,000 fewer people on welfare rolls. Yes, it is an exceptionally difficult economic time and the legacy of debt and disinvestment is a heavy one, but the tough decisions we are making are moving Britain in the right direction.
I too welcome the improvements in the manufacturing sector of the automotive industry. Does my right hon. Friend recognise that in the food and drinks sector, which is also in manufacturing, there have been enormous increases in the number of jobs and of exports?
I certainly do. Part of the work we published last autumn specifically supported what we can do in that sector. We are not ashamed to identify sectors where Britain has a competitive advantage and to see what we can do to enhance it.
Does the Chancellor not recognise that although everyone welcomes an increase in employment, wherever it comes from, this country has a crisis of underemployment and of people seeking full-time hours that they cannot get? It would have major implications for, among other things, the welfare bill, which his right hon. Friend the Secretary of State for Work and Pensions has quite rightly committed to trying to bring down, if we could help people work the hours they wish to work.
Of course we want to help people who are working part time to work full time, if that is what they wish, but four fifths of the people who have taken part-time jobs wanted to work part time. We absolutely must help the fifth who want to turn them into full-time jobs, but I would hope that the hon. Lady, too, welcomes the good news that unemployment has fallen.
As I was explaining, four fifths of those who work part-time are getting the part-time work they want. The right hon. Gentleman should celebrate the fact that 400,000 more people are employed than was the case two years ago. Why not get up and welcome that?
If the Opposition’s argument is that we need to do even more, I agree. In the past six weeks alone, we have opened 24 enterprise zones around the country, cut businesses tax to one of the lowest rates in the world, increased support for small business research and development, reformed employment law in the teeth of Labour opposition to double the period before unfair dismissal claims can be made, reinvigorated the right to buy, launched NewBuy mortgage schemes, awarded ultra-fast broadband grants to 10 of our largest cities, frozen council tax across England, launched a £20 billion
national loan guarantee scheme that is already delivering cheaper loans to hundreds and thousands of businesses, and increased the personal allowance to cut tax for 20 million working people and lift 1 million of the lowest paid out of tax altogether, with another 1 million to come. That is just in the past six weeks.
Yes, the Government must work harder and do more. The world does not owe this country a living. We will do that, but we have done a great deal already.
This is what we have done for small businesses: we have cut the small companies tax rate, which was going to go up under the plans that we inherited and which the Labour party voted for in the previous Parliament; we have got rid of Labour’s jobs tax; and we have frozen the business rates. We will check the record carefully, of course, but I think that in his speech the shadow Chancellor was advocating an increase in national insurance.
When my hon. Friends pressed him to explain how he would pay for his package, he said, “We wanted to see national insurance go up.” If he wants to correct the record, he can tell us whether he wants national insurance to go up to pay for his package.
The Chancellor allocated £500 million for a national insurance tax cut for new firms that were taking on new workers. It has totally flopped and failed, with very little take-up. I said that we should use that £500 million to help existing small firms to take on new employees—a plan that would work, rather than a plan from this Chancellor that is failing. That says it all.
So the short answer is yes, he wants higher national insurance for businesses. How on earth will that help companies in the current economic environment? As I have said, we need to do more. We need to help to get more credit to businesses and to housing and infrastructure. We are going to use Britain’s low interest rates to work for us all and we are going to do more to reform our banking system—the epicentre of what went wrong when he was the City Minister.
Why does the Chancellor not bring some clarity to the debate by telling us how many businesses have actually been helped by his national insurance rebate scheme for small businesses? Was it the hundreds of thousands he promised? Will he give us the actual number?
I can tell the right hon. Gentleman that 15,000 businesses have been helped by that scheme. The economic policies that he has drawn up would hurt millions of businesses. What the Labour party wanted and what he campaigned for was an increase in national insurance for all firms and we stopped that.
On that point, will my right hon. Friend note that last month we had the largest number of new company formations in my constituency of Bedford? One reason for that is that they want stable, low, long-term interest rates, which this coalition’s policies are delivering.
My hon. Friend is absolutely right. That is precisely what businesses need—a stable economic environment in which we are not exposed to some of the financial problems that some eurozone countries face at the moment. The low interest rates and the credibility that our policy bring help every business, not only in Bedford but around the country.
Does my right hon. Friend agree that just as we need to rebalance our economy away from over-reliance on the public sector, we also need to rebalance our exports away from over-reliance on the eurozone at the moment? The latest figures suggest that this is already happening, with UK exports to non-EU countries up by 12% while those to the EU remain flat.
I agree with my hon. Friend that we need to diversify where our exports go, not just because of the problems in the eurozone but because this country should be taking greater advantage of the extraordinary growth in the Asian economies. It remains a staggering fact that we were exporting more to Ireland than we were to Brazil, Russia, India and China put together.
Let me make some progress and then I will take some more interventions. I want to say something about some of the Bills in the Queen’s Speech, as we are debating the Queen’s Speech. I want to talk particularly about the banking reforms—something else that the shadow Chancellor mentioned in only half a sentence, so we have no idea whether he supports the reforms or not. [ Interruption. ] Perhaps he can intervene and tell me when I have made these points.
First, we have the Financial Services Bill, which was carried over from the previous Session. It already seeks to rectify one of the greatest errors of policy making—the decision that the Labour party took in 1997 to remove banking supervision from the Bank of England. The Governor of the Bank commented on that in his lecture on the “Today”programme the other day. That Bill, which is crucial, brings prudential supervision back under the control of the Bank of England, giving it new powers to monitor the build-up of dangerous levels of debt and asset bubbles and to deal with them rather than, as last time, letting disaster strike.
In this Queen’s Speech, we prepare to go further and address the structure of banking itself. We will introduce the Bill that implements the reforms proposed by Sir John Vickers and his Independent Commission on Banking that ring-fences retail banks from the riskier investment banking arms and provides more loss-absorbing capacity so that private investors will bear losses, not the taxpayer. Taken together, those Bills seek to give Britain a safer, more competitive banking system and will allow our country to have successful banks with a global reach while better protecting the taxpayer at home should one of those banks fail. I hope the Bills will command broad support across this House.
I hope that the Bill to reform public service pensions also commands broad support across the House. After all, those reforms are based on the proposals of the Labour former Pensions Secretary, John Hutton. They provide for generous pensions and security in retirement for hard-working public servants that are quite frankly beyond the reach of almost all in the private sector.
Can the Chancellor really justify asking fire brigade workers, who undertake some of the most high-risk tasks in our society, to pay 13% of their income towards their pension?
We have to have public sector pensions that are affordable. The truth is that people are living longer in retirement, which is a good thing, and that if we want to maintain generous pension provision for firefighters and others we have to make reforms that mean the country can afford that. So, the answer to the hon. Gentleman’s question is yes, and we have been in a long and good negotiation with the Fire Brigades Union and others on those reforms. As I have said, we seek to make public sector pensions affordable and it is pretty striking if the tone of interventions from the Opposition is going to be that we do not have support for this far-reaching reform that will put public service pensions on a sustainable footing. Opposition Members are going to have to ask themselves whether they speak in this House for their tax-paying constituents or for the unions that sponsor them.
We look forward to hearing, in the wind-ups, from Mr Byrne, whom we welcome to his place. Perhaps he will tell us what Labour’s attitude to these Bills will be. We are sorry that he has been removed from his role as Labour’s policy chief. He is yet another Labour politician who has found that their career takes a knock when they try to tell their party some hard truths. He did extremely well in his new job of handing notes to the shadow Chancellor as he spoke today, but there was a time when he wrote his own notes rather than just handing them. There was the time when he wrote that note saying, “I’m sorry, there’s no money left”, but his party’s only message is to spend and borrow more. To be fair to him, he is the politician who tried to tell Labour to get serious about welfare reform and about dealing with the deficit. He was famous in my Department for the very precise memo he sent to civil servants on how to prepare his morning cappuccino and his afternoon espresso. How ironic that what did for him was his attempt to get Labour to wake up and smell the coffee. [ Laughter. ] I have to say that it was quite late last night when I thought of that one.
Who replaces the right hon. Gentleman as policy chief? The new policy chief for the Labour party is Jon Cruddas. We did some research on how he might approach the job and we found these illuminating remarks from a few weeks ago:
“What interests me is not policy as such; rather the search for political sentiment, voice and language; of general definition within a national story. Less ‘The Spirit Level’, more ‘What is England’.”
Well, that is clear then. Perhaps when the Opposition find out “What is England” they will let us all have the answer. The striking thing is that there is no policy from the Opposition at a time when tough decisions need to be taken about our country’s future and when far-reaching reforms need to be made to secure its prosperity.
The Chancellor is back on politics, where he is happiest. He got through some parts of the Queen’s Speech in about three paragraphs or sentences, I think. On policy, why will he not listen for once and do what we are saying? Why will he not extend to all small companies taking on new workers the national insurance discount, which is nowhere near being taken up yet, instead of dismissing that suggestion? It is a good idea, so why does he not take it on? Why does he not extend his initial idea and make it effective for once?
First, as I have said, we have used the money available to us in the balanced Budget to cut the small companies tax rate, which the hon. Gentleman wanted to go up. [ Interruption. ] He says, “Additional to that”; Labour’s policy was to increase the small companies tax rate. We have not done that. We have cut national insurance across the board for low and middle-paid employees by getting rid of Labour’s jobs tax—that applies whether they are employed in small or larger companies—and we have frozen business rates for smaller companies. So, we have done all those things, but I completely agree that we need to do more to help smaller companies by reducing the red tape burden on them and by helping to get credit to them. That is what the national loan guarantee scheme that was launched at the end of March is doing right now.
I am a proud Manchester United supporter. The players proudly wear “Aon”—the name of one of the world’s biggest insurers—on their shirts. Can my right hon. Friend tell us why that fantastic international company is closing its headquarters in the USA and moving it to the UK?
I am reminded that the players used to wear “AIG” on their shirts. Perhaps it is a sign of how things are improving that they now wear the name of a major Chicago-based insurer that has chosen to move its headquarters to London. We remember all the stories of companies that moved their international headquarters from Britain a few years ago; now they are coming back.
I want briefly to say something about the eurozone crisis.
In 2006, Lord Turnbull, who was at one stage Tony Blair’s Cabinet Secretary, said that borrowing
“crept up on us in 2005, 2006 and 2007, and we were still expanding public spending…You might have thought that we should be giving priority to getting borrowing under better control, putting money aside in the good years—and it didn’t happen.”
May I take this opportunity to ask my right hon. Friend to pick up on something from the Budget? The Chancellor said that he hoped that the VAT on alterations to listed buildings would not have an impact on listed places of worship. The Churches estimate that the tax will cost them £20 million a year. Would my right hon. Friend be kind enough to update the House on what he is proposing to do to assist listed places of worship?
First, I pay tribute to my hon. Friend for his work as Second Church Estates Commissioner. He has been in discussions with me and the Treasury about how to make sure that we live up to the commitment I gave in the Budget that churches and other places of worship would not be impacted by the introduction of VAT on alterations to listed buildings. Of course, it is already charged on repairs to listed buildings. I have been in discussions with my hon. Friend and with the Bishop of London, whom the Churches asked to lead on that work, and I confirm that we have reached agreement. The Government will provide £30 million of grant to the listed places of worship scheme. That will be 100% compensation, exactly as we promised in the Budget, for the additional cost borne by churches for alterations. It should also go a long way towards helping the situation on repairs and maintenance, where in recent years they have not been able to get 100% compensation. We think it will deliver 100% coverage for repairs and maintenance. I thank my hon. Friend and the Churches for working with us on delivering what we promised in the Budget.
I am grateful to the Chancellor for giving way, and even more grateful to him for his statement. I congratulate him on the way he dug himself out of the hole into which he placed himself. May I use this opportunity not only to draw attention to those outside the House who campaigned on the change, but to the Second Church Estates Commissioner, who played his role in the negotiations superbly?
I certainly pay tribute to the Second Church Estates Commissioner. We were clear in the Budget that we wanted fully to compensate Churches for the impact of the change and I am glad that we have done so.
Now that the Chancellor has dug himself out of that hole, will he turn his attention to another one—the caravan tax? In my area of north Wales, the North Wales tourist board estimates that a 30% drop in sales, on the Chancellor’s figures, will lead to job losses and a reduction in the tourism industry. In the constituencies of my right hon. Friend Alan Johnson, and my hon. Friends the Members for Kingston upon Hull North (Diana Johnson) and for Kingston upon Hull East (Karl Turner), caravan manufacturing will go because of the tax. How will that help the growth economy the Chancellor seeks, and will he review the tax urgently?
As the right hon. Gentleman well knows, there is already VAT on caravans towed by cars, but there is a consultation on the change. It finishes tomorrow. It is partly due to the good work of my hon. Friends the Members for Beverley and Holderness (Mr Stuart) and for Boston and Skegness (Mark Simmonds), who urged longer consultation, that the period was extended. I propose to allow it to finish and then we will set out our response.
I have spent the last 35 minutes explaining how I am digging the country out of the hole that the right hon. Gentleman put us into.
Let me say something about the eurozone crisis. When eurozone central bank governors and Finance Ministers openly speculate on the possibility of Greek exit, the genie is out of the bottle. That and the Greek elections make this a perilous time. We are clear about the three steps the eurozone needs to take if its currency is to function properly.
First, countries in the periphery with high deficits and uncompetitive economies need to confront their problems head-on, as Governments in Ireland, Spain and Italy are. We are doing it in Britain too, but the adjustment our country must go through is made easier by loose monetary policy and a flexible exchange rate. The countries of the eurozone do not have that to help them, so the core of the eurozone, and the European Central Bank, need to do more to support demand and share the burden of adjustment.
Of course, ideas such as the project bonds put forward by the new French Government are worthy of serious consideration, but, fundamentally, the German Finance Minister is right when he says that rising wages in his country and increased domestic demand there can play a substantial role.
Secondly, the eurozone needs to follow what I described a year ago as “the remorseless logic” of monetary union that leads to greater fiscal union. As I said in the same interview, forms of collective support and responsibility must be developed. I echoed the view in many eurozone countries when I spoke of the possibility of eurobonds.
Thirdly, all of us in Europe, including the United Kingdom, need to address our continent’s lack of competitiveness. That involves structural reform to welfare, pensions and labour laws, and completing single markets in services and digital. It means all Europeans, including Britons, rediscovering the ambition and the ethic that made our continent the dynamo of the world economy for so many centuries. It is not that dynamo today. As the Prime Minister says in his speech today:
“The eurozone is at a cross-roads. It either has to make up or it is looking at potential break up.”
No one should underestimate the huge risks of the latter, but Britain will be prepared for whatever comes. We are making the necessary contingency plans. We will
take the steps needed to secure our economic stability and protect our financial system. Above all, we will go on with the progress we have made in the last two years on reducing the structural deficit, keeping our credibility in the bond markets and keeping our interest rates low.
The Chancellor seems to be setting out quite a significant shift in the Government’s policy on what should be happening in Europe, in particular urging the German Government to do things in relation to promoting growth that many of us have argued for several months. Interestingly, they are not to apply to this country. Will he confirm that this is a significant shift, and will he add to his list that it is now desperately important that the eurozone looks at the health of some of the banks in Europe? The Spanish started last week. I do not know whether they have the strength to do what is necessary, but unless the banking system is significantly shored up, if the problems spreading from Greece continue—contagion and so on—we could have another major banking crisis on our hands. That would be an utter disaster.
I very much agree with the sentiment that the former Chancellor expresses. In the autumn of last year, and indeed before that, the Prime Minister, myself and others in the Government did consistently say, in public as well as in private, that surplus countries in the core of the eurozone needed to do more; that the European Central Bank needed to do more—I said it in the House and we said it in the ECOFINs and European Councils that we attended.
What has changed this week is that, first, the Greek elections have brought back the fear of contagion that had never really quite abated, despite the action of the European Central Bank over Christmas. Secondly, over the weekend and at the beginning of this week, central bank governors and Finance Ministers in the eurozone itself were openly speculating on Greek exit, and that has, as I said, let the genie out of the bottle. Some of the things that we were happy to say in private we are now also willing to say in public, because the issue is out there—on the agenda. We have not put the issue out there in the public domain, but now it is out there, put there by other people. We have very clear ideas of what the eurozone needs to do to make their currency work.
The Chancellor is actually confirming what I thought. It is good that they are saying these things in public, but it does suggest that perhaps there is an opportunity to change direction in Europe. I know we will not agree about what is necessary in this country, but does the Chancellor agree with me that we need to be explicit now that austerity on its own will not work—we need policies of growth to go with it?
I completely agree that austerity alone is not enough, and that is why I have just been explaining how we have cut business taxes, set up enterprise zones, set up the national loan guarantee scheme and reformed the labour market. We have done all these things so that car companies expand their production and investment in Britain and choose Britain as a place to do business. Of course those countries in Europe need to undertake structural reforms to go alongside their efforts to get
their public finances under control, but we have to ask ourselves this question: if you are running a high budget deficit in a single currency zone, and you do not have the support of loose monetary policy, you do need support from the core of the eurozone but to abandon a commitment to austerity will expose you to even greater pressure on the international money markets than those countries are already exposed to.
First, my hon. Friend is absolutely right that one of the successes that we have had is the apprenticeship scheme, which is now working across all constituencies and supporting many hundreds of thousands of people. We will see what the facts are after the debate, but the information that we have just had says that what the shadow Chancellor was alleging in his intervention on me a few minutes ago is not true. The number of hours worked in this country has actually gone up over the last two years—up by 20 million hours. So on that note, there is a difference—
It is over the last two years. But this points to a greater truth: the right hon. Gentleman had 13 years to prove to the country that he had the right policies to run the British economy, and he delivered the greatest economic disaster in this country’s modern history.
I will finish now by saying this. We are reducing the structural deficit, keeping our credibility in the bond markets and our interest rates low. We are reforming our banks, helping our unemployed, supporting our businesses, and giving back to our country the prosperous future that the Labour party so cruelly snatched from them.
Order. I remind all Members that there is now a six-minute time limit on all contributions to the debate. A great number of Members wish to participate, so the limit does not have to be used in its entirety; that might ensure that more Members get in.
I shall start my remarks by talking about the announcement by General Motors about Vauxhall at Ellesmere Port. I represent many, many people who work there and I pay tribute to that excellent work force and the community around them who support them. Whilst I recognise the commitment of all politicians who have helped back
Ellesmere Port, in Wirral all of us know somebody—a family member or a friend—who has worked incredibly hard for this, and it is those people I am thinking of most and congratulating today.
I would like to make a few remarks about unemployment. Our commentary on employment, I am afraid, often shows the limits of the way we do our politics. The news, and we ourselves, often obsesses about the figures—the monthly movement up and down—and whilst those are important indicators, of course, it is the trend that really matters. We often worry about the weather when we should be thinking about the climate that we are in, and sadly, the unemployment figures are worse than those for this time last year. According to the Library, the number of people claiming jobseeker’s allowance is now 106,000 higher than in April 2011. That is incredibly worrying. The Chancellor mentioned the figures for two years ago. Unemployment plateaued in 2010. It is growing again now and we need to worry about why.
To add to the problem that we have, our understanding of the impact of unemployment and the lack of the necessary jobs in our economy is limited. I recently tabled a parliamentary question, asking the Treasury what assessment the Department had made of the medium and long-term cost to the Exchequer of the current level of unemployment. That matters because unemployment has a wide range of impacts. The Treasury did not give me as full an answer as I would have liked. I would have liked to know how unemployment impacts on the health budget in the form of increased costs; how much funding is being made available for the regeneration that is needed; and the impact of unemployment on crime levels.
In the shadow Chancellor’s speech, he made much of the apparent increase in long-term youth unemployment. Is the hon. Lady aware of the cynical way in which the last Labour Government manipulated the figures for long-term youth unemployment by cynically bringing people in for a one-week training course and then restarting the clock immediately after, to keep the figures down? That was a cynical measure, which this Government have stopped.
I thank the hon. Gentleman for his intervention. I have thought a lot about youth unemployment over the past years. The former Government oversaw radical improvements, such as our intervention in the labour market with things like the new deal. I find it hard to characterise any of that work, which has been recognised around the globe, as cynical. I find that very difficult to believe.
I wanted to agree with my hon. Friend about the important and welcome news about Ellesmere Port, because like her, I have constituents who rely on the work that comes from Ellesmere Port. In her excellent speech, might she comment on the tax cut for millionaires that is paid for by pensioners? Does she agree that if that tax cut were reversed, the money would be better invested in jobs and growth of exactly the kind that she is calling for?
I thank my hon. Friend and Merseyside neighbour for his question. Like my constituents, I cannot understand this Government’s decision to give tax breaks to millionaires.
In light of the earlier intervention, I thought my hon. Friend might be interested to hear figures, provided to the Work and Pensions Committee yesterday by the Department for Work and Pensions, on the issue of people who had apparently been off benefit. In March 2010, there were 18,000 young people who could have been put in that category, and there are now 4,000 in terms of training allowances. That is a difference of 14,000. As I think my hon. Friend would agree, that hardly explains the rise in youth unemployment.
I thank my hon. Friend for that helpful and informative intervention.
When the Chancellor talked about a growing economy, one of my hon. Friends shouted, from a sedentary position, “Not in the north-east.” We need to recognise that worklessness does not impact equally on all communities. That is why when we think about the growth we need, policy needs to be tailored properly to the economy in each and every part of the country, so that the GDP growth we all hope for represents the whole of the UK. I suppose it is entirely possible that the UK will recover, but leave behind heavily blighted areas of our country.
A study of unemployment reveals a key flaw in the Government’s thinking. They have talked about “expansionary fiscal contraction”—in other words, to achieve growth, the Government need to slash their budgets and investment will flow in from foreign shores. I do not believe that that is consistent with the Government’s other stated aim: to rebalance the economy. Finance for those parts of our economy that have strengths in manufacturing but need regeneration is necessarily long term. Government industrial strategy should shelter our industry from global headwinds, not leave us vulnerable.
Fiscal contraction at the pace we have seen has harmed blighted areas that had only recently started to recover from the impact of previous Conservative Governments’ attitude to industry. In my area, I see the impact of the withdrawal of central Government from regeneration and the stopping of regional growth via regional development agencies. The responses built into local government that were designed to target deprivation, which clusters in particular parts of our country, were stripped away in the financial settlement.
In the Budget, the Chancellor introduced measures that took money out of the pockets of people on low and middle incomes in those parts of the country where we want to rebalance. That will not help. Someone in the Treasury has to take responsibility for looking at the macro impact of all the measures that are affecting those places that stand to be the worst affected by this Government. We have had a botched Budget and then a next-to-nothing Queen’s Speech, I am sorry to say. The Government will be judged by the people in Wirral and Merseyside not merely on the GDP figures, but on the actual development we see in our city. We must take account of the differential impacts of Government measures on different parts of the country with different economies; we must not focus only on the national picture.
My question for the Government is: will they meet the test of real economic development? Only that will promote the widespread employment that people want. People will judge this Government on the basis of whether or not they see their friends and family in employment.
We are all aware, of course, that the Government are having to make some very tough and difficult decisions. Some of them may question some of those individual decisions, but let us be in no doubt about why we are in the present situation. In 1997, we handed over an economy with no deficit and a national debt of £350 billion that was being paid off. By 2007, before any banking crisis had taken effect, the debt had risen to £650 billion, because supporters of the previous Government were spending, at a rate of £30 billion to £40 billion a year, money that they simply did not have. We all know what happened then: after the banking crisis, they went on the biggest spending spree in financial history, which left us with a debt of £1 trillion on the books—probably twice that when private finance initiative commitments are included—and a deficit of £160 billion a year.
I am happy to give way to a Labour Member who wants to answer some of those points.
Monmouthshire county council will have a Conservative-led administration, with help from our great friends in the Liberal Democrat party, with whom it is always a pleasure to work. They were not responsible for causing the mess left by Labour.
I want some answers from Labour Members. I want to know why they left us with a debt of £1 trillion and what exactly they intend to do about it. It seems to me that the basis of their economic theory is Enid Blyton’s “The Faraway Tree”, which children climb to find a land where everything is free and nothing has to be paid for. To me, that is a fairytale; to them, it is an economic theory. They think they can just carry on borrowing and borrowing, and put off until tomorrow what needs to be done today.
Can the hon. Gentleman explain why he felt it necessary to write in to his local paper apologising for the incompetence of his Cabinet colleagues? I thought for a moment that he was describing them, not turning his guns on us. Surely it is they who are incompetent—that is what he stated, in black and white.
I would never apologise for doing my job as a Back Bencher, which is to scrutinise and to point out that, on occasions, some Cabinet members have done things or prioritised certain policies with which I disagree. What Opposition Members should do is start to apologise, and not only for the £1 trillion debt. What about selling gold at $200 an ounce—400 tonnes of it? What about the £5 billion raid on private sector pensions, which has plunged people who worked in the private sector into poverty? Only one of them has apologised—Mr Byrne, who left a note saying, “Sorry, we’ve spent all the money.” That is not good enough.
No, I have no more time to give way.
I want to know why Labour Members still maintain that the banks are to blame, when, in all, just £120 billion was given to the banks out of a total debt of £1 trillion, almost 10 times more. They are following the policy of fools, knaves and despots throughout history started by Edward I, who blamed everything on bankers. The reality is that, every year, we are borrowing more from banks than we have given them. We get 10% of our revenue—£50 billion a year—from the banking industry. If Labour Members are allowed to destroy it, they will have to find cuts 10 times greater than the ones that we, unfortunately, have already had to make.
This Government are taking proper and concrete steps and I think that most Members present support almost all those measures. I totally agree with the decision to reform welfare spending, so that people have to go out to work, and at the same time to cap immigration, which has held down wages for the lowest paid, as even Opposition Members have been the first to accept. As one who has experience of trying to run a small business, I am delighted that the Government will do something to reduce the red tape of employment legislation, which makes many businesses reluctant to take people on. It is, of course, a pleasure to read about cuts in corporation tax and, yes, even the cut in tax for top rate taxpayers. We know that that is politically difficult to defend, but there is a strong economic argument for the measure, which is why Labour Members were not prepared to vote against it and will not now say what they would do.
In Wales the public sector is very large, and the Army forms a large part of that sector. I am worried to learn of proposals to amalgamate the Queen’s Dragoon Guards with another regiment. Many Welsh people are employed in the Queen’s Dragoon Guards, which is an excellent regiment. Since the battle of Agincourt, Wales has supplied men and women who have fought loyally for Britain, as I would have been happy to do in the Territorial Army—I saw no active service. I hope that the Chancellor will bear that in mind when the decisions are made.
I hope that the Chancellor will forgive me for expressing the hope that he will also look carefully at the carbon tax. I am one of a growing number of people who worry about the fact that there has been no increase in temperature for the past 12 years. It took me a while to get the figures from the relevant Government Department, but Members should have a look at the Met Office website. I worry about imposing on the manufacturing industry a tax that is not being imposed elsewhere in the world. I am not absolutely certain whether global warming is taking place or not, but I am certain that if we start imposing measures that are not imposed elsewhere, all that will happen is that manufacturers will go elsewhere and there will be no overall decrease in carbon dioxide emissions.
I am coming to the end of my little piece. I want to assure the Chancellor that we are his most loyal supporters, even if we occasionally quibble on certain issues. We are determined to face down the forces of financial chaos on the Opposition Benches. We know that every Labour Government have ended in utter financial catastrophe,
whether because of Attlee using war loans to build the NHS on the back of American credit, Harold Wilson devaluing the pound and telling us it would stay the same, Jim Callaghan having to go cap in hand to the International Monetary Fund, as the Greeks are now doing, or the previous Prime Minister, himself a former Chancellor, who told us that he had ended boom and bust and then created one of the biggest booms in history, on the back of lax lending regulations and lax immigration controls, and then the biggest bust in history, which we now have to sort out.
We know, as do most people in this country, that, whether one is a nation, a company or an individual, it is impossible to go on spending more money than one earns. That is why Government Members will be loyally supporting the Government on the Queen’s Speech and making sure that we can build a better Britain, built on real growth, not debts that our children will have to pay off at some point in the future.
I want to make two points in this debate. The first is about youth unemployment. I will present some figures showing the rising cost of the Government’s economic failure. The second is that the neglect in respect of youth unemployment is mirrored by a misguided response to the storms in the eurozone.
I do not think that we need to debate whether youth unemployment is a big problem; it is a massive problem. As the Chancellor and others have said in previous debates, long-term youth unemployment is the greatest danger to not only our economic future, but our social future. Today, according to the Government’s own figures, 260,000 young people have been unemployed for more than a year, which means long-term unemployment. Another 200,000 have been unemployed for more than six months. The interesting, depressing and worrying thing is that the situation is getting worse. As recently as 2008, 6,000 18 to 24-year-olds had been claiming jobseeker’s allowance for a year. By April last year that figure had tripled. Over the past year—just 12 months—it has tripled again, to 55,000. In my constituency, this time last year there were 15 18 to 24-year-olds who had been claiming jobseeker’s allowance for over a year, but now the number is 250, which is a 1,500% increase. The total figure for youth unemployment is 1.3 million or 1.4 million, which comes from the labour force survey, but these are JSA claimants, because that is a claimant count figure.
As for the costs, in February this year I chaired the Association of Chief Executives of Voluntary Organisations commission on youth unemployment. We costed the levels of youth unemployment on the basis of the figures for the first quarter of 2011, which showed a net present value cost of some £28 billion. I asked the university of Bristol to rerun the figures for the last quarter of 2011, which it has done, and the calculation now stands at £30 billion. In the space of 2011, the net present value cost has gone up by £2 billion. That seems to me to be 2 billion reasons for a greater degree of urgency and effectiveness in Government policy.
The Minister responsible for employment says that we should be pleased with stability, but stability in this policy field means that the problem is festering and getting worse. The deputy leader of the Lib Dems, Simon Hughes, said we should celebrate the “huge
success” of Government policy. The wage subsidy that was introduced in April is at best unproven. The majority of jobs under the apprenticeship drive are the result of jobs for the over-25s being rebadged, not new apprenticeships for the under-25s. The expertise in the voluntary sector is being squeezed out by the Work programme. Some 20% of voluntary sector providers have stopped providing under the Work programme. There is a gaping hole in Government policy on transport costs for people to get to interviews, never mind getting to work.
I make no apology for repeating this very basic fact: the Work programme, which is the Government’s flagship programme, helps one in 10 of the youth unemployed. Its success rate is 20%, according to the Government’s own figures. That means that one in 50 of the young unemployed are getting a job as a result of Government interventions. I say to the Chancellor—I am grateful that he has stayed for the debate—that there are three steps that he could take now. First, he could require all public contracts over £1 million to offer apprenticeships to young people. In his autumn statement last year he announced infrastructure expenditure, which is a good thing, but where are the apprenticeships to go with it? Secondly, he could bring forward from 2014 money to raise the size of the wage subsidy or the number of young people helped. In 1995, when his predecessor, Mr Clarke, tried a wage subsidy, it helped only 6,000 young people. He will have to boost the effort to get take-up. Thirdly, he should bite the bullet and recognise that every study anywhere in the world has shown that for the long-term unemployed only a part-time job guarantee can ensure that one year’s unemployment does not become three, four or five years’ unemployment.
The right hon. Gentleman is making a compelling case, and I know that he has worked very hard on this matter in the past, but surely he recognises that the best way to solve this is to increase the number of apprenticeships, which the Government are doing, and that his Government encouraged young people to try to aspire to university and many of them, when they did not meet that aspiration, found that deflating.
I am grateful to the hon. Gentleman, who makes a perfectly intelligent point. It seems to me to be a good thing to raise university participation levels up to international standards, which is between 45% and 50%, but it is crucial for those who do not go to university that we have high-quality options for them. High-quality apprenticeships are an important part of that.
Will the right hon. Gentleman clarify what he means by international standards?
The leading countries of the world for higher education are, first, the United States, which has a 55% participation rate, and, secondly, France, which most people would recognise as having an outstanding higher education system. It has 48% participation. Korea, one of the new countries growing up in the world, has 80% participation in higher education. By the way, Scotland already has over 50% participation in higher education, so I do not believe that somehow English or UK young people are unable to benefit from higher education in the way that people in other countries can.
The Robbins report of 1963 said that higher education should be open to anyone with the ability to benefit, and that seems to me to be the right test. For the 50% who do not go on to higher education, we of course need high-quality apprenticeships, but I say to Mr Spencer that he should work with us to raise the quality of apprenticeships, because too many apprenticeships are at too low a level and are not leading to the kinds of life chances that we want to see.
It is true that our levels of youth unemployment are not the levels of Spain and Greece—thank God for that —but in 600 wards in this country one in three young people are not in education, employment or training. It is not the 50% or 55% of the Greeks or the Spanish, but one in three. I do not believe that Europe should be the benchmark for levels of youth unemployment.
I also say to the Chancellor that Europe cannot be the alibi for the collapse of our economy at home over the past 18 months. If we look at the growth measures since his first spending review in the autumn of 2010, we will see that we are actually doing worse than comparator countries, and I do not just mean Germany. In the 18 months since the 2010 spending review, we have had worse growth than France, Poland, Sweden, Austria and Slovakia. I will compute the Spanish figures announced today, but until those figures were announced we even had lower growth than Spain. Our growth was worse than the EU 27 average, the eurozone average and the G7 average.
The Chancellor’s claim about the problem that the eurozone mess is causing for our economy is actually undermining his own promise to rotate our economy from domestic demand to external demand. The question is: what should we do about that? He says that the lesson is to stay the course. I say that when the external environment changes, we should change course. The storm in Europe is not a reason for us to stick to plan A; it is a reason to shift to plan B. There is a warning in the travails of the eurozone, but not the one that the Government claim there is. Debts are rising today in Spain, Portugal, Italy and Ireland because fiscal policy is exacerbating the downturn in the economic cycle. The Prime Minister said in his speech today that we are “on track”, but Conservative austerity is not working at home and collective austerity is not working in Europe.
I believe that our absolute requirement in the light of the real and serious risks we face is to pitch policy—fiscal policy, monetary policy, industrial policy and banking policy—against the tide of the economic cycle. We need to argue for that abroad and at home. We heard a shift today from the Chancellor about what should happen abroad. We should be embracing President Hollande, not snubbing him. We should be anti-austerity and pro-reform. That is the right position for Europe and the right position for Britain, because there are no islands in the modern economy. It is not ideology; it is maths. And judging by the Gracious Address, it is time for the Government to go back to the classroom.
I welcome the overall thrust of this Queen’s Speech and, in particular, the fact that it concentrates on the need for growth, more jobs and private-sector, wealth-producing buoyancy,
which we did not see for a very long time under the watch of the previous Government. I must say that, yes, I do my best to be honest with the people I represent—
I do—they will tell you that, Sir—as you did when you said that there was no money left. We are both honest men.
I wish that the shadow Chancellor would welcome some of the achievements that the people of this country welcome; it is foolish of him not to do so when there are considerable signs of recovery. It simply lowers the esteem in which all politicians are held, and I urge him, and the Opposition Front Bencher who responds to this debate, to take that into account.
There are welcome signs of recovery. The private sector has created more than 500,000 jobs since the general election; the International Monetary Fund forecasts that the UK will grow at twice the speed of Germany and three times that of France; borrowing costs have fallen, investment has been increasing and only yesterday we saw a drop of 45,000 in the number of unemployed people in the first quarter of this year. All those things are welcome, but it would be refreshing to hear Opposition Front Benchers greet them with some enthusiasm—although I doubt that they will.
The truth of the matter is that consumers and businesses are saying, “To hell with it; we’ve got to get on with life,” and that is one reason why we are seeing some of the green shoots of recovery. Now we need to nurture them and ensure that they continue to grow and bear fruit.
The situation is fragile, and no one would say otherwise. Consequently, I urge the Government and the Chancellor to do more. We will not achieve growth with new laws. The previous Government tried that for 13 years, and we saw what happened. This place does not create the growth; it simply sets the atmosphere and ambience for it. So I appeal to the Chancellor to recognise that we need to change the culture regarding entrepreneurialism and the attitude to small businesses, and indeed serious and important recommendations on doing so are coming forward from various parts of the House.
We must also understand the needs of small businesses, because therein lies our best chance of growing jobs and the well-being of this nation.
Does my hon. Friend agree that there is nothing that a small businessman would like to do more than to employ a young, new worker? What would my hon. Friend suggest to the Chancellor can be done with employment regulations, so that we get our businesses employing people more easily?
I welcome that important point, because I was about to turn to that very area. More can be done, and we do indeed need to reduce the regulatory burden and to strengthen the business environment.
I welcome in the Queen’s Speech the proposed measures to deal with executive pay and employment tribunals, but I still do not understand why the Government are obsessing about maternity and paternity leave, especially for very small businesses. I simply point out that many
people meet in the workplace and set up a family life together, and, if a small business employing 10 people loses 20% of its work force for six months, temporary labour cannot be used as a replacement. That simply does not happen.
One trend in the employment figures over recent months has been that female unemployment has risen faster than male unemployment, and that it is decreasing less quickly. Detaching women from the labour market, as the hon. Gentleman seems to suggest we do by weakening maternity rights, will surely make the situation worse.
I do not suggest that at all. What I suggest is that we understand the real needs of small businesses. If we want them to grow and create jobs for both men and women, we need to ensure that they are released from much of the burden that they face at the moment. I ask the hon. Lady to consider that burden, because it is a considerable one for small businesses—I have worked in the sector pretty much all my life and founded two such businesses. We need to release small businesses from that burden, so I would particularly welcome their being excluded from the sort of burdens that paternity leave suggests. The Opposition need to get real in that respect.
I turn to the attitude of the banks and financial services.
No, I am not going to give way. I have given way twice, so the hon. Gentleman will respect the fact that time is of the essence.
Small businesses have not had the support and understanding of the financial services sector. Again and again the banks tell us that 85% of applications for money are met, and of course that is true.
My time is running out; I know the hon. Gentleman understands.
Yes, 85% of those applications that are finally made are met, but many people go along to the bank and are told before they reach the application stage that they are not going to get the money, so they never apply. The figures are twisted, and we need to understand that.
On regulation, I welcome the Government’s attitude to one-in, one-out, but they could do much more for small businesses by recognising that they would be the great engine of growth if they were only released. They could be excluded from many of the regulations that apply to business generally, and I urge the Chancellor to press that point in Cabinet.
Members will not be surprised that I now turn to my constituency. We are trying to create a new approach to jobs and development by establishing Northampton Alive, a project involving 15 major developments, part of which is the enterprise zone that, thank God, this Government allowed us to create in Northampton—the largest in the country. We have also introduced, however, a forum for the leading 60 to 80 people in the town, so that every six months of this major project, which lasts
for 15 years, they get the opportunity to provide their input and to take ownership of their town, the new developments affecting it and the new job opportunities that will ensue.
Finally, local measures matter. We can do more locally, and I encourage the Chancellor to urge local authorities and local people to take up that challenge.
Before I begin my remarks on the Queen’s Speech, I should like to compliment my right hon. Friend David Miliband on his very good speech. We all have opinions, but to put the facts in such a clear fashion that cannot be argued with proves why he is a loss sitting on the Back Benches. I am not a natural supporter of his, as he knows, but the Front Bench is his place, not the Back Benches—[ Interruption. ] It is a shame; that is absolutely right.
This Queen’s Speech is almost a re-run of the Budget speech. There are three financial Bills: the pensions Bill, the banking reform Bill, and the enterprise and regulatory reform Bill. This last has parts that may be acceptable, although they will have to be teased out and looked at, but other parts are worrying. Of the remaining Bills, some are good or desirable in their own fashion. In the context of the dangers and difficult problems facing the British economy and the need to get growth and a rebalancing of the economy, the Queen’s Speech offers very little. That is very disappointing, and it will make the public, who are worrying about their families, their homes, their futures and their children’s futures, wonder about how out of touch the House of Commons is with their worries.
The Queen’s Speech projects our spending the majority of our time on a Bill to reform the House of Lords. How sensible will that seem to the families out there who are treading water financially? We must remember that 80% of the public sector cuts are still to come, so we are not at the worst stage; we have almost not even started. Yet this Bill, on which there is no consensus in the House and which is fiercely opposed by Members from all parties, will take up a lot of time here and in the House of Lords. One wonders why we are doing it. The public will ask, “Have they nothing better to do?” As a result, we will not have a social care Bill in this Session—that is a disgrace—and nor will we have a higher education Bill, which would be crucial to the growth strategy. No one can say that the Government have got their priorities right.
My right hon. Friend Mr Darling got something that Labour Members have long wanted—an acceptance from the Chancellor that growth is necessary to run alongside the cuts. That was quite an achievement and quite good news. The sad news, however, is that when the Chancellor read out all the measures that he felt would deal with growth, they were all on the supply side, not the demand side. It is clear that the big corporates are flush with money and could invest today and tomorrow, but they are not doing so because they have no confidence in the economy and there is no demand in the economy. The sooner that confidence is brought back, and the sooner the Chancellor understands that he has to put demand into the economy to get people into jobs with money and the confidence to spend, the better.
I thank my hon. Friend—a fellow former Lawside RC academy pupil and Dundonian—for giving way. From 2005 to 2010, I never had any business people coming to my surgery. Since 2010, an ever-increasing number of have been coming to tell me that they are not getting a fair deal from the banks. Does my hon. Friend share that experience?
As a member of the Treasury Committee, I can tell my hon. Friend that we argue every month with the Governor of the Bank of England and appeal to him to do something about the banks, which are not lending to small businesses at the level that they promised and have been allowed to get away with it without any complaint from the Government.
If Government Members think that it is partisan to say that there is no plan for growth and no understanding of growth, let me read out what the Secretary of State for Business, Innovation and Skills said in a letter to the Prime Minister regarding industrial policy. He wrote:
“I sense however that there is still something…missing—a compelling vision of where the country is heading beyond sorting out the fiscal mess; and a clear and confident message about how we will earn our living in future.”
He clearly and comprehensively set out five areas where there should be investment, the final one being investment in the construction of houses, which he said would get people into work and have an effect on the supply chain. None of those issues appears in the Queen’s Speech or was addressed in the Budget. If the Government cannot trust and listen to their own Business Secretary about how to get an industrial policy for growth, what chance do the people of this country have?
It is a pleasure to participate in the final day of the Queen’s Speech debate, where we focus on the economy. Occurring as it is just after the May elections, there is a tendency not only to look at the new policies that have come forward but to take stock of the Government’s performance to date.
An important match took place at the weekend—the Chancellor may have taken an interest as his constituency is not far away—which determined the outcome of the premier league. If we had taken the half time score to be the final outcome, we would have drawn very much the wrong conclusions. The same can be said of the economy. We must work towards a full programme across the Parliament, and at the moment we are halfway through that political cycle. Let us be fair: the
Does my hon. Friend agree that it is important that the Government are taking long-term decisions and looking at the long-term interests of UK plc?
I am grateful for that intervention.
Labour Members may be rejoicing in their election results, but before they start measuring the curtains for No. 10 it is worth noting that they fell well below the
magic number of 40%. That suggests that those results were more about sending a message to the Government of the day than voting for an alternative. Of course people are worried about jobs, the cost of living, rising fuel prices and generally making ends meet, and we must not lose sight of that. The results therefore reflect a backlash against the establishment which is having to implement these very difficult decisions.
Three observations can be drawn from the results. First, such backlashes are often witnessed. Back in the days of Margaret Thatcher, she went down to 24% in the polls but then continued to win general elections. Likewise, in 2000 the Tories managed to get 40% only to lose the general election in 2001. Secondly, the electorate should be cautious about listening to Labour’s alternative economic strategy of spending more, because it is that sort of irresponsible stewardship that got us into the financial crisis in the first place. Thirdly, the Government need to listen and must not be distracted by less important issues. They must focus on the priorities of the economy, education, welfare, reducing crime, and the NHS.
My hon. Friend is making a compelling case. I know that he has a great interest in tourism and leisure. Does he agree that it is imperative that the Government make a decision soon on airport capacity in the United Kingdom, in particular in the south-east, to drive economic growth, jobs and the renaissance of our economy over the coming years?
My hon. Friend makes an important point. This is a busy year for tourism in Britain and we must get those aspects right. This is not the first time that those points have been mentioned in this debate, and I think that the Chancellor has taken them on board.
The other thing I would like to point out about the local elections—this will be the same in future elections—is the deluge of news that has been thrown at us by the 24-hour news industry. We must think about how the message is managed, not just about the message itself. The Budget is remembered more for Labour’s sensationalist catchphrases, which have been heard again today, than for its game-changing announcements, such as the increase in the personal allowance, which will affect 24 million people; the largest single rise in pensions ever; and the cuts in corporation tax, which make us the most competitive country in the G8.
The latest phrase that Labour is peddling, which has leaked into the media, is “double-dip recession”. If I took my son, Alex, to the fairground and we went on a rollercoaster called “The Double Dip”, he would be pretty disappointed—even at the age of three—if the second dip was eight times smaller than the first. Labour is being disingenuous with the figures and undermines our economy by constantly peddling that phrase. [ Interruption. ] I hear Labour Members grumbling, so perhaps we should look at the figures. The Q1 results for 2012 were better than the GDP growth results for 2011, which suggests that the graph is going in the right direction.
The hon. Gentleman is certainly making a case. Will he tell us the cash value of the decline in GDP in the last quarter? How much did it cost our country in lost production?
I remind the right hon. Gentleman that the recession that lasted for five quarters, for which he was directly responsible, gave us a GDP growth figure of minus 2.3%. The figures that we are dealing with now are minus 0.3% and minus 0.2%. That means that we are heading in the right direction. It might technically be a recession of two quarters, but Labour is talking down the economy, which is not what the British electorate want to hear.
It is thanks to the measures that this Government are implementing that our economy is growing faster than that of the eurozone, twice as fast as Germany’s and three times as fast as that of France. Our borrowing costs have fallen to record lows, and thanks to the management of the deficit, we are able to retain our triple A rating. And yet, Labour are keen to peddle the idea that there is no plan for a recovery. That argument has just been put forward by Mr Mudie.
I will give some examples of what the plan is. I have mentioned how we are managing the deficit so that borrowing costs are low. We are also creating one of the most competitive business tax systems in the developed world; cutting red tape by scrapping unnecessary and out-of-date regulations, which are costing UK businesses more than £350 million; and creating one of the most educated and flexible work forces in Europe by creating apprenticeship schemes and energising our schools system through the academy programme. Of course, we are also boosting investment and exports to rebalance the economy by setting up enterprise zones across the country, developing regional growth funds and replacing the regional development agencies with the more effective local enterprise partnerships. I certainly welcome the one that has just been launched in Dorset, which is already starting to release faster broadband and upgrade the county’s infrastructure.
Again, the hon. Gentleman is repeating a point that has been made by Labour and that the Chancellor has already heard.
To be fair to other Members who want to get in, I will conclude by saying that we need to remain firm on our plan. We need to focus on where we want to be in 2015. It was courageous of the Government to set out a plan for growth and I commend it to the House.
It is a great pleasure to speak in this debate, which is definitely the most important debate on the Queen’s Speech as far as my constituents—and, I suspect, all of our constituents—are concerned.
The constituency where I live is considered to be in the top 10 unemployment blackspots in the country. In north Ayrshire, there are currently 5,555 claimants chasing 313 jobs. The position that my constituents face is similar to that faced by the constituents of many hon. Members, irrespective of which part of the country they live in, but if we listened to Government Members we might think we are living in a very different economic situation. Yet again, they have used the occasion to show
their complacency on the economic situation and how out of touch they are with many of their constituents, who they well know are struggling.
I am disappointed by the Queen’s Speech. Like many, I was underwhelmed when I listened to the announcements by the lack of proposals for legislative measures to try to address the serious problems that our country faces. Many of the speeches have repeated the speeches on the Budget we heard not so long ago. The Government had an opportunity to offer a grand vision of how they will move us forward, but they have failed yet again to make any significant proposals that will help to get us out of this dire economic situation. My hon. Friend Mr Mudie has already quoted the Business, Innovation and Skills Secretary, but I agree with the latter that something important is missing, namely a “compelling vision” of where the country is heading.
I shall not necessarily talk about specific proposals in the Bills included in the Queen’s Speech, because the point I am making is on the lack of necessary measures. Mr Binley, with whom I sit on the Business, Innovation and Skills Committee, spoke about the concerns of businesses and the banks’ failure to lend to small businesses. Yet again, there are no significant measures in the Queen’s Speech to force banks to lend to small businesses. Small businesses come to MPs’ surgeries because they are having difficulty getting loans from banks, but some no longer see the point of contacting politicians because they have done so many times, and the Government’s attempts to get banks to lend, such as Operation Merlin, have completely failed.
There was a lengthy debate yesterday on the decrease in living standards up and down the country, the collapse in wages and the Government’s failure to address the problems that our constituents face. In almost every area of Government policy, there is a failure to focus policy to help businesses to survive and develop.
On green jobs, the Proven wind turbine factory, which operated until last autumn, was a success story for Ayrshire. There were technical problems with one of the wind turbines that the company operated, but the company was one of the first in that field and very much a success story for Scotland. However, its future is uncertain. It had to fold—an Irish company has taken it over, but it will not continue as substantially as before. Those who set up and ran Proven say that the problem that led to its demise was the failure to get funding from the banks, because the banks failed to accept that there was a long-term future for the business because of the Government’s feed-in tariff policy and their approach to solar power.
The Government need to do better. They need to come forward in every area of policy with a plan that will get this country on its feet again.
The key to jobs and growth is wealth creation. We create wealth by digging it up, growing it or making things. Everything else is just moving it around. That is why I welcome the Government’s focus on real wealth creation, especially manufacturing.
Labour has been highly critical of almost everything done by the Government, but it is hard to discern what its programme or vision would be. I suppose we can tell
a lot about its vision from what it did when it had its hands on the levers for 13 years. It had 13 long years in which to create the society it wanted, so what did it look like in the end? It loosened bank regulation, and further to help its friends in the City it scrapped the public interest test on takeovers in 2002, meaning that many of our cash-generative businesses are now foreign owned, especially in utilities and infrastructure.
Labour decimated manufacturing, taking it from 22% to 11% of the economy, which had knock-on effects for many other sectors, such as logistics. It left Hartlepool, Middlesbrough and Redcar and Cleveland in the weakest 10 of the 324 local economic areas. It widened the gap between the north and the south and the rich and the poor, and widened health inequalities. It created a benefits culture in which work did not pay for many people and having children became almost a career option in towns such as Redcar.
What about the tax system? Today, we again heard from the Opposition the mantra, “Tax cuts for millionaires.” I do not think that friends or even enemies of Mr Redwood would describe him as left-wing, yet in his alternative Queen’s Speech the other day he called for a return to the former Prime Minister’s favoured tax levels—a top rate of income tax of 40% and capital gains tax at 18%. So how did millionaires fare under Labour? They had a 40% top tax rate until the last month of its 13 years. After the recent cut, it stands at 45%. It levied an 18% rate on capital gains—a lower rate than their cleaners and drivers would pay on their income. This Government have lifted that to 28%.
Under Labour, millionaires could put £250,000 a year into a pension scheme and get tax relief. The cut to £50,000 by this Government has raised £4 billion from the rich. They received child benefit and paid 2.5% less tax on their spending. They could get unlimited taxpayer support for gifts to charities, including family- controlled trusts, public schools such as Eton and, as in the case of Andrew Lloyd Webber, a huge art collection, some of which he rents back cheaply to his own house. Add to that numerous loopholes, and millionaires must want Labour back as fast as possible. Meanwhile, people on the minimum wage were paying £700 a year in tax.
Will the hon. Gentleman remind me who introduced the minimum wage?
It was one of Labour’s great achievements and one I totally support, but I do not support a tax level of £700 a year on the minimum wage, which was in place when the previous Government left office.
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
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.
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
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.
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?
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.
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.
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
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 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.
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.
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?
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
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
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.
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.
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?
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.
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 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”.
“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.”—[Hansard, 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”—
the Prime Minister—
“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”.—[Hansard, 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
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.
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
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
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.
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 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 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 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
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.
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.
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.
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.
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.
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
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.
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?
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.
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.
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
“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.
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.
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 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
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.”
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. Katy Clark focused on that, without wanting to give a specific solution, as did her colleague, Mr Mudie, and, on the Government Benches, my hon. Friend 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 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
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.
To accommodate more Members, the time limit is being reduced immediately, by one minute to five minutes.
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
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.
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.
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 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 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
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 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.
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.
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
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.
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.
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 David Miliband that far more needs to be done. The
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.
The Government now appear to have two central objectives only. The first, as stated at the start of the
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
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.
It is an absolute pleasure to follow 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.
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.
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.
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.
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”.
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
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 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 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.
Order. To enable more Members to contribute to this debate, the time limit is now four minutes.
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, 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
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.
I thank 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
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.
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 Shabana Mahmood referred earlier to the
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.
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
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.
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 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
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.
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
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.
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
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.
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
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.
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.
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.
I am grateful to follow 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.
I would love to, but I have less than three minutes. I am sorry.
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.
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.
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
with the Scottish Government. I have written to the Secretary of State for Work and Pensions—
—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.
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
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 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.
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
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—
Order. I call Mr Mark Spencer.
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.
The Government have done little to promote jobs and growth for towns such as Blackpool. They scrapped the regional development agency, which helped us to renew our tramway and our key visitor attractions, including the
tower and the Winter Gardens. They also scrapped the area-based grants that targeted our pockets of severe deprivation.
The Government seem incapable of understanding the challenges faced by Blackpool and other second-tier towns, particularly in seaside and coastal areas. They have done no strategic targeting of the regional growth fund by industrial sector, which was highlighted by David Marlow, who has said:
“Blackpool has not yet had a distinctive RGF success despite benefit and public sector ratios 80% and 60% above national averages, and private sector ratios at about 65% and 25% below average.”
Any narrow focus on city regions risks ignoring surrounding areas. We suffer from imbalances not only between regions, but within them. We need growth in second-tier towns and cities, seaside and coastal towns, and suburban areas.
Just what are the Government delivering on the ground for young people in terms of jobs and growth? I have seen first hand the positive impact the education maintenance allowance had in encouraging young people in Blackpool to go to colleges, where we have struggled to improve our skills levels. Given our pockets of extreme deprivation, that assistance was vital, but it is now gone, along with opportunities for thousands of young people from my sixth-form college and Blackpool and the Fylde college, which were jeopardised at one stroke of a pen in the Department for Education, the same Department that cut off the dedicated money—£200 million—available to schools for careers advice.
Yesterday’s unemployment figures also illustrate that that problem is not budging. In my constituency, one in 10 of the active population is out of work, including more than one in five young people, which is 8% higher than this time last year. Those figures disguise the work shortfall for young people and key groups such as women, a point strongly made by my hon. Friend Bridget Phillipson earlier in the week. Thirty-four thousand women nationally gave up work altogether in the last quarter.
The previous Government had imaginative schemes such as the future jobs fund, through which Blackpool football club, which will battle for premier league status again at Wembley this Saturday, gave young people real opportunities. The Deputy Prime Minister’s belated youth contract promised to create half a million new job opportunities for young people, but we have seen no indication of it in Blackpool yet. If his figures are as reliable as the ones so recently demolished by the National Audit Office, I will not hold my breath.
This story is not just about statistics, but about individuals’ blocked hopes and frustrations. Wherever I talked to young people—not just in Blackpool, but in places such as Crawley, Reading and Milton Keynes, which I visited during the local election campaigns—I have found that they are in “it” together: they are in the mire, north and south, thanks to our Chancellor.
What about our small businesses, which are critical to our economic recovery and prevalent in my constituency? The Government have talked a good game, but my case work shows that many small businesses are being let down by the banks. When will the Government tell the banks to give support rather than telling people to stop whingeing?
We need proper activity on VAT, but we are not getting it, not on tourism and regeneration, or on repairs and renewals. The Government believe not in active and intelligent government but in scapegoat Britain. They scapegoat everybody except themselves, but their growth and jobs policies have failed.
Today’s criticisms seem to be based on a familiar litany of three core ingredients: first, that the Queen’s Speech should have been the length of a speech by Fidel Castro at his peak; secondly, that it should have launched lots of new initiatives; and thirdly, that the Labour years represented a paradise lost. We have heard many of those points made today, and I commend to the Opposition the damning obituary given by Mr Blunkett in one of his earlier books. He wrote that a day without a new initiative was a day wasted for new Labour. We do not need lots of new initiatives day after day; we need a series of cool, strategic policies that are well implemented.
All of us and our constituents have to win our jobs. Last year, I encouraged EDF energy, whose operational headquarters are in my constituency, to create 10 new apprenticeships there. One of them was won by an 18-year-old who came from Sheffield to Gloucester. He was interviewed, he moved down, he left his comfort zone and went for it, and now he is thriving in one of the most successful companies in our country. What he did is a great example to all our young people, not only in Gloucester but elsewhere in the country. We should learn from his determination to go and win a job.
In our city there are many new apprenticeship opportunities. In 2010-11, businesses in our city created 1,050 new apprenticeships. For the first half of 2011-12, we are up 20% and on target to create 2,200 new apprenticeship starts over the whole year. I visit two companies a week to see what the opportunities are, to encourage them to create new apprenticeships and to see whether those who have never done so are taking advantage of the Government scheme incentivising small companies with £1,500. I do a jobs fair every three months, on average, and I try to link our youth groups to trainers and the opportunities they can access with companies.
All of us can do our bit in our constituencies to help the policies along. I want to discuss the core policies on which we should be focusing. How many businesses have had loans from the national loan guarantee scheme, which is 80% guaranteed by the Government? Have they applied for this source of capital, which could help them to expand? How many of them have signed up to the youth contract and are offering Work programme work experience to our young people coming out of schools and colleges? How many of our manufacturers have applied to the regional growth fund manufacturing fund, which is available to them? Under the previous Government, manufacturing’s share of GDP was halved while benefits doubled, but in my constituency manufacturing is still 20% of our output. We have lots of good, thriving, small and medium-sized engineering companies, but they need help to access capital, and I need to help them to access the opportunities the Government have made available.
Today’s youth have the skills—or lack of them—that they gained predominantly under the previous Government. One secondary school in my constituency had the second-worst GCSE results in the country. Today, under the new Gloucester academy, those results have improved from 11% to 33% and, this year, to 40% of pupils achieving target grades. This type of long-term planning for improved opportunities will provide the young in my constituency with better opportunities and jobs in the future.
Like thousands of my constituents, I am deeply disappointed that after taking us back into recession this Government have failed to come forward with a substantive plan in the Queen’s Speech to get the economy back on track. In the fourth quarter of 2011, growth dropped to minus 0.3%, and to minus 0.2% in the first quarter of this year. Long-term youth unemployment has risen by a shocking 264% in the last year alone. What might be described as an embarrassment by the Chancellor is a tragedy for families up and down the country. Nothing announced by the Government in the Chancellor’s Budget and certainly nothing in the Queen’s Speech will address the problems that hard-working families face across the country.
We all know that business lending is a vital part of any healthy economy. That is why the Opposition wanted the Government to tackle what the Business Secretary himself described as a “yawning mismatch” between the demands of small business for finance and the banks’ reluctance to lend. Instead, we got a small sticking plaster to cover a massive business funding gap that is estimated to reach £150 billion by 2016.
We have a coalition Government who have completely the wrong priorities. They are more interested in papering over coalition cracks than getting Britain back into work. Instead of helping hard-pressed families and small business owners, the Government decided in the Budget to give a tax cut to those earning more than five times the average salary.
I was disappointed not to see any mention in the Budget or the Queen’s Speech of families struggling with the rising cost of child care, which is higher in Scotland than anywhere else in the UK. It is no surprise that 10% more women are in employment in countries such as Norway and Denmark, where parents have access to affordable child care, than in the UK.
I was even more disappointed to see nothing in the Budget about supporting disabled people into work, following the Government’s shocking decision to close the majority of Remploy factories. According to the Government’s own figures, about 500,000 disabled people will lose their benefit entitlement when the disability living allowance is replaced by the new personal independence payment. Case studies conducted under the Government’s consultation on the PIP suggest that blind and visually impaired people who are judged to have adapted to their disability will not qualify for the higher rate. That ignores the reality that the difficulties, the barriers and, most importantly, the costs continue regardless of the length of time a person has lived with sight loss.
I urge the Prime Minister to look for inspiration to my home city of Glasgow, where the Labour council that was re-elected last week with a commanding majority —a feat that is almost impossible under a proportional representation voting system—has managed to lower unemployment in the past year in the face of this Government’s economic failures and the Scottish Government’s swingeing cuts. In Glasgow, people voted for a manifesto that put investment in jobs, growth and education first. They voted for the £25 million investment in the Glasgow guarantee, a programme that will use the Commonwealth jobs fund, the Commonwealth apprenticeship scheme and the Commonwealth graduate fund to create a lasting legacy of employment from Glasgow’s proud hosting of the Commonwealth games in 2014.
The people of Glasgow rejected the scorched earth policy of mass austerity and the imagined magic wand of separation in favour of investment to create jobs—investment such as that proposed by my right hon. Friend the shadow Chancellor in our five-point plan. We want to see the establishment of a state-owned British investment bank, similar to the bank for small and medium-sized enterprises that John Longworth, the director general of the British Chambers of Commerce, has been calling for, to help businesses to create the jobs that our country needs. We also want to see a jobs Bill that would ensure that money raised from a tax on bank bonuses was used to provide real jobs, with real wages and responsibilities, for more than 100,000 young people aged 18 to 24.
We have an out-of-touch Government at Westminster who are repeating the mistakes of the 1980s and a distracted Government at Holyrood who are concerned more about a separation referendum than about the real issues affecting the lives of ordinary Scots, and people up and down the country can see right through them. That is why we saw the elections results that we did last week.
When I speak as a representative of Islington South and Finsbury, I feel that I always have to begin by dispelling myths. People know about our cappuccino bars and our Georgian squares, but they do not necessarily know that 44% of my constituents live in social housing, or that my constituency has the second worst child poverty rate in the country. The very rich and the very poor live in Islington. We live cheek by jowl, and we like it that way. The recession has affected all of us, but some much more than others.
One thing unites people, however, no matter what their background. I have spoken to women, including aspirant Somali mothers, a middle-class mother whose child has just left Oxbridge, and a woman whose child has just left school, and we are all really scared for the next generation. Although we have brought up our children as best we can and put everything into equipping them for the world as perfectly as we can, we are really scared that, when we push them out into the world, the world will say, “No, sorry. We don’t need you. We might be interested in your little brother or sister one day, but you have entered the world of work at the wrong time. Come back in four or five years’ time.” What will happen to those kids in the meantime if we do nothing about unemployment among young people?
In Islington, we have had a massive increase in long-term unemployment among 18 to 24-year-olds, and I know that that has been replicated across the country. In Islington, it has gone up by 88% in the past year. I hear Government Members say, “Well, of course it is because they haven’t got the right qualifications”, or “It’s because the Labour Government didn’t educate them well enough”, but it does not matter what qualifications a young person has now; they simply cannot get a job. There is a generation now who are finding it exceedingly difficult. Richard Graham shakes his head, but if he were to advertise for an unpaid internship in his office, I suspect he would get at least 300 applicants from youngsters desperate to get employment. The problem is nothing to do with young people not being sufficiently educated; it is because the recession, which hits all of us, hits our children, teenagers and those in their early 20s the hardest. The older generation and Members here who represent our communities have a duty to do something about it. Frankly, the complacency of Government Members, to which I have had to listen over the past five and a half hours, is quite astounding.
I see in his place the Secretary of State for Work and Pensions, and I hope he will listen to what I have to say about other groups of people. I know the Conservatives say they are on the side of those who work hard and do the right thing. I know they want to change this country so that once again it rewards people who work hard, want to get on and play by the rules. The Conservatives want to represent the strivers, the builders, the family raisers, the community builders. Good, so would Conservative Members please consider the working poor in my constituency, who are being adversely affected by cuts to working tax credits, the housing benefit cap and universal credit? I hope the Secretary of State understands that they are badly affected by the price of housing and the extraordinary price they have to pay for rent. We must do something about that. Unless and until that is done, it will be impossible to have a mixed community in which people will be able to work at all levels.
This Queen’s Speech can be summed up by the Prime Minister wandering around the country saying that he is not for turning. I remind him and his party that the last person who said that—Lady Thatcher—was tossed out by the country when people found out that they were getting uncaring Conservatism once again. [Interruption.] Yes, she was, of course, tossed out by her own party.
This is a Government who continue to attack, with ingrained unfairness, the personal income of all apart from those in the super-rich bracket. They boast of attacking citizens’ and workers’ rights. With 100,000 public sector job cuts, it is good to see the Secretary of State for Work and Pensions in his place. How many of the present employees of Remploy will, to his shame, end up on the unemployment list? Only 50% of the jobs have been replaced by the private sector, and many of them are part-time and temporary jobs. Of 16 to 24-year-olds, 21% are in part-time jobs, while analysis suggests that 40% are on temporary contracts.
The national debt is higher, not lower, and the UK is in a double-dip recession for the first time in 30 years. Of course I welcome investment in car manufacturing from US companies. Their choosing a UK work force in
a flexible trade union environment and our being near the EU market has nothing to do with the Government, and it follows the investment of Japanese and other international companies that invested under the Labour Government.
I am an economics graduate, so I know that economic growth is based on confidence in business and in consumers. The Chancellor is a one-trick pony, with low interest rates. His stated aim is that interest rates are being held low for the sake of the Government’s bond sales, but this has the effect, for example, of attacking the disposable income of pension funds and investment funds, thus hitting the mainly frugal elderly. Quantitative easing has also hit their income and made them poorer. This signals to UK businesses that the Government believe that the economy has to be held in check, as it is fundamentally too fragile to grow without creating threatening levels of inflation. This is caused by a failure to expand the resource base of the economy so that growth can be inflation-proofed for the future.
I looked at the “Prospects for inflation” chapter of the inflation report of May 2012, which states:
“Output has barely grown since the middle of 2010, and is estimated to have contracted slightly in each of the past two quarters.”
That is what this Government have delivered through their policies. Human resource expansion is required to deal, for example, with training and skills shortages. The ageing population needs to be replaced in industries with which I am involved. There is OPITO—the Offshore Petroleum Industry Training Organisation, which deals with offshore oil, and the subsea employers association—talk about 44% of its vacancies being in non-graduate technical jobs, with an additional 20% in technical graduate jobs. The Chemical Industries Association says that it fishes in the same pond for staff, and it demands science education in schools to provide a base of people who can be skilled up for growth. Mike Mack, the world president of Syngenta, says that he fears he cannot sustain his investment in this country because of the shortage of skilled labour. He steals from other companies, and they steal from him. We need technical apprenticeships. Forget the boasts about the number of apprenticeships that have been started; how many have been concluded? How many newly qualified technicians have we got? The SNP Government falsify the statistics. They say that there are 25,000, and write to companies asking them to include people who are doing part-time work as apprentices in order to supplement the figure.
Business investment is 6% lower than the target set by the Chancellor. There is £950 billion in company accounts that is not being invested. Companies are holding on to it: they are afraid to invest, because the signals are all wrong. The Chancellor has gone for corporation tax reductions, but they are a blunt instrument. VAT increases hit the supply chain for customers, for business and for personal consumption, whereas VAT reductions—a targeted programme such as the one that the French use, reducing VAT—
Order. The hon. Gentleman’s time is up.
I shall make only a few brief points.
I thought that the Queen’s Speech was extraordinarily flimsy, given that it emanated from a party that is in its second year in government and has been out of power for 13 years. When we compare it with the greatest Queen’s Speeches of the Labour Government in their second year and, indeed, those of the Thatcher Government in their second year, it is apparent to us that the present Government are running out of steam after only two years.
There was nothing about jobs in the Queen’s Speech. As my right hon. Friend David Miliband demonstrated so eloquently in his speech, the Work programme is entirely unsatisfactory. It cannot possibly deal with the youth unemployment crisis. The Queen’s Speech should have been seen as an opportunity to put right the mistakes that the Chancellor had made in his Budget. I am glad that he has dug himself out of the hole of the churches tax, but I wish he would dig himself out of the hole of the pasty tax and the caravan tax, and, indeed, his £40,000 giveaway. I believe that the Prime Minister’s former speechwriter Ian Birrell described it as
“a missile into six years of Tory modernisation.”
I could not have put it better myself.
Unemployment in Leicester South has increased over the past 12 months. Although I welcome the drops in unemployment announced yesterday, I must tell Ministers that in Leicester South it fell not by 1%, but by one. If the Government do not produce measures to deal with the youth unemployment crisis soon, I fear for the future of many of the communities we represent.
The Chancellor expected growth of 2.5% this year, but we are now in a double-dip recession. Some of the contributions from Government Members were rather complacent on that front. Many people warned the Chancellor that a fiscal consolidation of this scale and pace, along with a collapse in demand and consumption, would lead to a recession. Indeed, the Business Secretary, when he was in opposition, gave him that very warning before the general election.
What are we given in the Queen’s Speech? We are given what appear to be proposals for the further erosion of workers’ rights. I must tell the Chancellor that downward pressure on workers’ rights will not lead to the growth in the economy that he wants. What a turnaround this is for the Business Secretary. He started his career co-authoring “The Red Paper on Scotland” with my right hon. Friend Mr Brown, but it appears that in the twilight of his career he will become the Twickenham strangler of rights at work.
Government Members have talked about trade and exports. I agree that the patterns of international trade are changing. As many Members will know, the city of Leicester, which I represent, has deep and extensive links with India, Bangladesh and Pakistan, and I want us to build on those links and to trade further. Mr Spencer referred to food manufacturing, in which we in Leicester have expertise. We export British Asian food to Europe, to the middle east and, indeed, to India. However, I must tell Government Members that although the reports that I hear of UK Trade & Investment have improved, they are patchy at times.
We need more support for export finance in Leicester. It would be greatly to the advantage of the Business Secretary, when he and the Prime Minister go on trade missions to India, to take with him not the great and the good, but some of the small business people from Leicester who understand how to enter challenging markets in India, Pakistan and Bangladesh.
Let me finish by simply saying that we have a Government who promised us growth and jobs; what they are delivering is recession and unemployment.
It is a privilege to wind up a week of debate and speeches on the Gracious Speech. However, let me start by saying what a disappointment it was to hear not a word of recognition, humility or apology from the Chancellor for a litany of Budgets that have put this country back in recession and given us a Queen’s Speech with nothing to dig us out.
We have, however, had something very significant this afternoon. We have had an admission—a confession, in fact—from the Chancellor. He finally forced himself to say it, in response to the intervention from my right hon. Friend Mr Darling, although he had to choke it out. He said that austerity is not enough. The Chancellor finally said it. However, confession is not enough; redemption will demand a change of course. He has U-turned this afternoon on his policy for Europe; he should now U-turn on his policy here in the UK. Instead, what we got was a lot of jokes. Most people in this country now feel that if he focused more on economics and less on jokes, perhaps the country would not be in quite the mess that it is. The customary advice is: “Don’t give up your day job”, although most of us probably feel that the sooner he gives up his day job, the faster Britain will be back on its feet.
This is the Chancellor who told us a year ago that he was putting fuel in the tank of the British economy. What has happened? Where has the fuel gone? It has somehow been siphoned off into the jerry cans in the Cabinet Office. Instead, what we have got is £150 billion of extra borrowing, 1 million young people out of work, fewer hours worked this year than last, and a fall in our national output in the last quarter of £700 million —a development that Mr Ellwood said was a step in the right direction. This is the first double-dip recession since 1975, the year of “Monty Python and the Holy Grail”, the story of a bunch of incompetent chancers, supposedly running the country, chasing after something that they had somehow misplaced. What an allegory of this Government’s pursuit of growth!
All week we have seen an unedifying witch hunt for the culprits—the people who have somehow misplaced Britain’s growth. This week the Government found someone else. The fault, it now seems, lies with those in the British business community, who just need to be working harder. My advice to them is that they should not take the attack personally. Indeed, they join illustrious company: we have had “the weather”; we have had “the wrong type of snow”; and we have also had the royal wedding. When it comes to their failure, this Government will blame only others.
I will not give way, because there are so many points to respond to.
We know that this recession was not made by British business. It is not down to the weather, the snow or the royal wedding; it is down to the failed policy of this Government. Despite the good news we had on unemployment this week—there was a glimmer of hope—Britain’s jobs crisis has now gone on for too long. We now have more people working part time or becoming self-employed, because they will do anything to make ends meet. Long-term unemployment is surging towards the 1 million mark, the number of people out of work for two years is up to 500,000, 100,000 more people are signing on than last year, redundancies are up by 50,000, and vacancies are down by more than 10,000. Families all over Britain are facing a disaster, because of the failed policies of this Government.
This afternoon we heard those stories from all over Britain. The point was made forcefully by my hon. Friend Steve Rotheram, and it was a story repeated by my hon. Friends the Members for Ogmore (Huw Irranca-Davies), for East Lothian (Fiona O'Donnell), for Blackpool South (Mr Marsden) and for Leicester South (Jonathan Ashworth). We heard in the debate this afternoon that we need growth and demand—a point made by my hon. Friends the Members for Oldham East and Saddleworth (Debbie Abrahams), for Gateshead (Ian Mearns), for Great Grimsby (Austin Mitchell) and for East Lothian. We heard how higher unemployment is hitting some communities and some regions harder than ever—that was the point made by my hon. Friend Alison McGovern. It is hitting ethnic minorities harder than ever—that was the point made by my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Oldham East and Saddleworth. It is now hitting young people harder—that was the message we heard from hon. Members from all parts of the House, and it was a point made with particular force by my hon. Friends the Members for Islington South and Finsbury (Emily Thornberry) and for Birmingham, Ladywood (Shabana Mahmood).
That is why what we needed in the last Budget and in the Queen’s Speech was not excuses, but action. We needed action on bank lending—that was the point made by my hon. Friends the Members for Leeds East (Mr Mudie) and for North Ayrshire and Arran (Katy Clark), and by the hon. Members for North East Cambridgeshire (Stephen Barclay), for Northampton South (Mr Binley) and for Aberconwy (Guto Bebb). We needed action on infrastructure spending, too—that point was made with great force by my right hon. Friend Margaret Hodge, Jessica Lee, and my hon. Friends the Members for Glasgow North (Ann McKechin) and for Glasgow Central (Anas Sarwar). This absence of action is now costing this country a fortune.
Perhaps the hon. Gentleman will tell us just how much the benefits bill is increasing as a result of that failure.
When the right hon. Gentleman wrote his famous note saying that there was “no money” left, what did he think the implications of that were?
The hon. Gentleman speaks for a party that has now put up borrowing by £150 billion more than projected. Does he know why? It is in large part because the benefits bill is not being capped by this Government—the benefits bill is going through the roof. It is set to be £25 billion higher than was projected by the end of this Parliament, with the cost of unemployment benefit set to be up by £5 billion and the cost of housing benefit set to be up by £6 billion by the end of this Parliament. I really do not know how he has the temerity to say what he has just said, given that it is his Government who are putting up debt.
The problem is that this Government have not learned the lesson that the way to bring the benefits bill down is by getting people into jobs—that is where this Government are failing. It is no wonder the people all across Britain are saying that this Prime Minister and this Chancellor have no idea how ordinary people live. The Prime Minister is riding on horses with editors of newspapers who are charged with perverting the course of justice while our young people cannot even afford a bus fare to college. We heard this afternoon just how much that bill has now become in a powerful speech from my right hon. Friend David Miliband. We heard that youth unemployment will cost our country £30 billion over the years to come. When are this Government going to heed that lesson?
When will they look at the hit now being taken by working parents, who are struggling with child care? These parents are now losing £500 this year. No wonder 32,000 women have already had to give up work this year because they cannot afford the child care. We should look at what this Budget means for working parents—a point made with some eloquence by my hon. Friend the Member for Islington South and Finsbury and by my right hon. Friend Stephen Timms. Such is the incompetence and such is the incoherence that families in this country are now better off on benefits than they are in a job—what a catastrophic failure of policy and what a catastrophic failure by this Chancellor.
Look at what these proposals mean for savers—people doing the right thing. Alongside the granny tax, the Government tried to sneak out in the Budget small print another £900 cut for pensioners by getting rid of the savings credit. Look at what the proposals mean for workers with disabilities. Some 11 million people in this country have disabilities. Disability Rights UK says that 25,000 people with disabilities have had to give up work this year because their support and help are being cut away from them. This Secretary of State for Work and Pensions is now administering reform of the incapacity benefit system with all the finesse of border control at Heathrow airport. It is now taking people up to 11 months to get a hearing and then, when they reach that tribunal, half the decisions are being overturned. That is not a result that he can be proud of.
Worst of all is the treatment being handed out to workers at Remploy. These are workers indirectly employed by the Secretary of State himself. Worst of all—worse than anything I have heard over the past few months—are the reported comments that he made to Remploy workers.
Apparently he told them that they “are not doing any work at all. Just making cups of coffee.” That is not compassionate conservatism; it is the conservatism of contempt. The Secretary of State should apologise to those workers this afternoon. When he should have been launching a war on poverty, he has launched a war on decency.
This Government have no idea how these young people, these parents, these working mothers and these workers with disabilities are now living. They are failing on jobs, they are failing on growth, and they are out of touch, out of their depth and out of steam. We need a change of direction and Labour’s amendment today offers that. I commend it to the House.
I welcome Mr Byrne back from a potential sojourn in Birmingham as mayor—his announcement that he wanted to stand was so powerful that Birmingham, on the spot, rejected the whole idea of having a mayor. I have got to know him well over the past couple of years and he has been heavily involved in designing the policy framework for the Opposition. He talked about part-time work and, as a result of his leader’s decision, he will experience it himself. I am sorry about that, because I am sure that he would have done a very good job had he been allowed to continue—I certainly suspect that he would have done better than some of his colleagues.
Today is about the Queen’s Speech, and I want to welcome a number of Bills: the Crime and Courts Bill, the children and families Bill, the draft care and support Bill to modernise the care system, and, importantly, a pensions Bill to provide once and for all a decent single-tier state pension to reward those who save. Let me say a few words about that matter and in tribute to the Minister of State, Department for Work and Pensions, my hon. Friend Steve Webb. He and I have worked very hard together and I hope that when we publish the White Paper both the House and the country will see that we are proposing a genuine and serious reform that should improve the quality of retirement for everybody in the future. We will reform the state pension system, creating a fair, simple and sustainable foundation for private saving. The main benefits of the Bill will be that it will enable individuals to take responsibility for meeting their retirement aspirations in the context of increasing longevity and create an affordable and sustainable pension system for future generations.
Let me respond to a few of the comments made by hon. Members on both sides of the House. David Miliband, who I see in his place, made an elegant speech, as ever, in which he referred to a number of different issues. In particular, he mentioned youth unemployment, and I want to ensure that we establish the baseline on that point. The trouble was that the previous Government gerrymandered the figures on youth unemployment. When somebody had been unemployed for six months, they put them on one of their programmes—the future jobs fund or whatever—and took them off the unemployment register. They were not put back on to
the register until they fell out of that programme—
Members might want to hear this. If we add together the figures, we see that the total number of claimants aged 18 to 24 on jobseeker’s allowance or other forms of temporary support is lower this month than it was in May 2010. Under the previous Government, during a period of growth, youth unemployment rose every year from 2006.
The Secretary of State appears to be unaware of a briefing that his own Department gave to the Select Committee on Work and Pensions yesterday, which exposed the lack of rigidity in the figures. Apparently, the correct figure shows that in March 2010 the number of people who were taken off benefit on a training allowance was 18,000. It has come down to 4,000, but will he accept that that does not explain the rise in youth unemployment?
Labour gerrymandered the figures, and that was a long suicide note about what they tried to do to change those figures. The hon. Lady can try as much as she likes but the truth is that the previous Government set in place every single mechanism to ensure that they did not count young unemployed people.
The figures that the right hon. Gentleman’s Department have put out show that in the past year—under his Government—long-term jobseeker’s allowance claimant figures have gone up threefold to 55,000. How does he explain that?
As I said to the right hon. Gentleman—his point was about youth unemployment—the reality is that the figures I have given today are correct. His Government created a major crisis by putting us into a great big slump. That is what they did. Whatever else he wants to say in an attempt to defend the Labour Government, we are having to dig them out of a hole and we are the ones producing better youth programmes such as the youth contract. Those unemployment figures are very simple. When you add all the details together, you find that unemployment among young people was higher when we took office than it is now.
I want to move on to what other hon. Members said. Mr Mudie said that he wanted to see the right hon. Member for South Shields on the Front Bench. I wonder what role he would see the right hon. Gentleman in if he got him there. I congratulate my hon. Friend Mr Ellwood on his speech. He reminded us that we had some great news the other day because Boris won again in London. That is very good news for all of us. [ Interruption. ] I wonder what Opposition Members are saying. The reality is that their candidate, Ken Livingstone, failed, and I note that a lot of them did not even bother to turn up to support him.
Ian Swales attacked Labour very effectively. I should like to pick up a point made by Margaret Hodge, the Chairman of the Public Accounts Committee, who said that the welfare-to-work programme is unlikely to be good value for money. I differ from her on that. The big difference with the welfare-to-work programme is that we will not pay the providers unless they get someone into work. Under the future jobs fund and
everything else that was going on under the previous Government they threw money at providers ahead of any kind of outcome, caring only to tick the boxes to say that they had done something rather than that they had done something reasonable.
A large number of people spoke in the debate, including my hon. Friend Chris White, Stephen Timms and my hon. Friends the Members for Bedford (Richard Fuller) and for North East Cambridgeshire (Stephen Barclay). Steve Rotheram made an interesting speech. I notice that he wants to put his name forward to be manager of Liverpool. I wish him the best of luck in that endeavour. As a Tottenham supporter, I am looking forward to him running Liverpool next season.
The Opposition approached this debate believing that they had the right to criticise our Government for what they call our failures, yet not once have they ever apologised for putting the economy in the worst possible state—the biggest bust. They try to compare themselves to other countries. It is worth noticing that the US economy is set to fall faster—
claimed to move the closure (Standing Order No. 36 ).
Question put forthwith, That the Question be now put.
Question agreed to.
Question accordingly negatived.
Amendment proposed : at the end of the Question to add:
“but respectfully request that your Government recognise that its programme fails to include any meaningful measures to deliver growth in the economy, which is the most pressing issue facing the UK; and therefore call on your Government to bring forward a plan for growth to include measures designed to increase bank lending to small and medium-sized enterprises, to build confidence in economic recovery, to bring forward a programme of direct capital investment and to tackle unemployment.”—(Stewart Hosie .)
Question put forthwith (
The House divided:
Ayes 213, Noes 311.
Question accordingly agreed to.
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
Address to be presented to Her Majesty by Members of the House who are Privy Counsellors or Members of Her Majesty’s Household.