The Economy

Part of Opposition Day — [8th Allotted Day] – in the House of Commons at 5:56 pm on 18th March 2009.

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Photo of Sally Keeble Sally Keeble Labour, Northampton North 5:56 pm, 18th March 2009

The parade showed the huge support in the county and throughout the country for our armed forces. It was a fabulous event.

This afternoon I have listened to pearls of wisdom from Members about what they advised or would have done over the years. I have also had the privilege to sit on the Treasury Committee for the past four years and have heard the evidence of all those involved in the banking crisis. It has been clear throughout that nobody predicted it, gave the warnings or said what action they could have taken at the time that would have prevented it. However much hon. Members might say that they gave warnings at the time, it is clear to those of us who sat through the evidence that people did not recognise the size and scale of the problems until it was very late indeed. The first person to give the public warning about the scale of what was happening was my right hon. Friend the Chancellor, who did so last summer.

The real issue is whether the Government are taking the right approach to the crisis and whether the Conservatives have policies that would make the situation any better. I am clear that, although the Government's policies are risky, difficult and not perfect, they are the most likely to support people during the crisis. I also draw on my experience of previous recessions, which was not as a Member of Parliament making speeches in this place, but outside reporting on them and dealing with the consequences.

For example, in the 1980s recession, I saw the consequences of a Government who did not invest enough in the Department for Health and Social Security, and in particular in social security offices. In Birmingham, when unemployment rose, the offices were overloaded and they shut down. For nine to 10 months people simply did not get any benefits. That is why the Government are right to invest in the Jobcentre Plus offices and to think carefully about how they will support people who need advice and retraining, and, yes, benefits.

During that recession, the Conservative Government were also not prepared to invest in training. As a result, one of the most talented work forces in the world—the car workers of Birmingham—found themselves unemployed with no opportunities to retrain. That is why I particularly applaud the investment that this Labour Government have made in apprenticeships, schools and universities.

During the recession of the '90s, my hon. Friend the Exchequer Secretary and I were both in south London and saw its consequences. The then Government, who had no commitment to tackling inequality, allowed people in London to work on £1.20 an hour when people in Canary Wharf and the City were still making vast amounts of money.

Mr. Redwood was right: what the Government have done is risky. However, it is absolutely right to intervene—and with real force. Last autumn, the recapitalisation was needed to prevent a major bank from collapsing. The asset protection scheme frees up the banks' balance books to enable them to start lending. There is also the quantitative easing; it would, I suspect, have been extraordinarily difficult for the Bank of England to manage both the quantitative easing and banking supervision. The division of responsibility at the Bank was right, although the FSA has clearly had difficulties.

Furthermore, it was right for there to be a fiscal stimulus. It would have been wrong if the stimulus had gone into public sector infrastructure spending at that stage, because that is notoriously slow. I would have preferred the stimulus to have gone through tax credits rather than VAT. It would then have been more targeted at the people who needed it more, and some of the retailers would not have been able to massage the figures.

As we prepare for the upturn, the focus on science, technology, engineering and maths will help rebuild the economy for the future. Young people will get education in the subjects necessary if they are to follow the direction in which the economy needs to go in the future.

In the short time that remains, I have a wish-list to give to the Exchequer Secretary. Some of the items will even find favour with the Conservative party. First, the Government should make sure that when something is announced, it is available. Some of the measures put in place are available, so this is not a criticism of all the Government's schemes. However, there have been real difficulties, particularly with the mortgage rescue scheme. That scheme was announced and people thought that it would be available, but it has taken a couple of months to put in place. Most people—certainly my constituents—are realistic about what happens. They make plans on the basis of what is on offer. If they think that something is on offer, they will plan around it. If, however, they then find that it is not, they get very cross.

On the home ownership front, can the support for mortgage interest be extended so that it is made available to some extent to people on contributions-based jobseeker's allowance—perhaps through a link to the tax credit system? In my constituency, there are one and a half incomes per household, so if one person loses their job the income is still too large to qualify for support for mortgage interest. People might lose their homes, so I ask my hon. Friend the Exchequer Secretary to look at that issue.

In particular, will the Government put pressure on the banks regarding the conditions imposed on recapitalisation? The banks should maintain their 2007 levels of lending, and we should get monthly rather than just annual reports. The banks are obliged to provide that level of lending and there is clear evidence that the money is not getting through. The Northamptonshire chamber of commerce kindly organised a business advice surgery for me at which businesses raised issues, and that was the No. 1 problem.

One of the other problems was that, because of very low interest rates, banks were recouping some of the money that they would otherwise have got by increasing arrangement fees and other hidden charges. I hope that the Government will put real pressure on the banks so that they cannot use other means to make life difficult for small and medium-sized enterprises. If banks are reviewing their loan books, which they obviously have to do, they should not be punitive or trigger problems for fairly sound firms, which are finding their way through current difficulties, by stopping draw-downs on existing loans, for example, which is what HBOS did to one of my constituents, threatening 50 jobs.

I hope that the Government will implement quickly the recommendations of the Turner report. The Government called for it, and it is important to recognise that. In particular, I hope that we will implement the recommendations on credit ratings agencies and on remuneration policies. While there has been much focus on Fred the Shred's pension, we have not heard so much about the fact that bonuses encourage inappropriate risk-taking, which needs to be dealt with.

Finally, please will the Government maintain their outstanding commitment to tackle child poverty and global poverty? In these hard times, it is important that our party and our Government hold fast in the great crusade that has won them credit not just in this country, but around the world. It has been one of the defining policies of this Labour Government.