Economic Recovery and Welfare

Part of Opposition Day — [18th Allotted Day] – in the House of Commons at 5:49 pm on 19th October 2009.

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Photo of John Thurso John Thurso Shadow Secretary of State for Business, Innovation and Skills 5:49 pm, 19th October 2009

I, too, welcome this debate, as these are extremely important issues. I particularly welcome the opportunity to discuss unemployment, which is the most pernicious effect of recession.

It is right to discuss not only what should be done in a crisis-what emergency measures are required-but what could and should be done to deal with unemployment in the longer term and what can be done in better times to increase employment. There are two different strands to that. The first and most obvious is to assist in the creation of sustainable jobs, which will be done only by businesses. Businesses, not Government, create jobs, and it is up to Government to assist in that process and not to get in the way. It is equally important to help to increase the employability of those who are unemployed and the productivity of the work force. Liberal Democrat Members have long recognised the need to confront unemployment and its social ills, unlike the Conservatives, who for 18 years felt, as Lord Lamont famously put it, that it was a necessary price to pay; I think that his actual words were "a price worth paying". We have a strong commitment to tackling the scourge of unemployment.

Notwithstanding what I regard as something of a Damascene conversion on the part of the Conservatives, I will support the motion and ask my hon. Friends to do likewise, because it is clearly important to support those who are out of work and, in particular, to ensure that enterprise is encouraged. However, I am not at all certain that the policies advanced by Mr. Clarke would deliver on the sentiments expressed in the motion; in fact, during his speech I almost changed my mind, but I will stick with where I started.

The current rise in unemployment is a direct result of the recession, which was caused by the banking crisis. Returning the economy to growth, restoring faith in the banking system and recreating financial stability are essential precursors to improving the economy and employment. It is impossible to have a debate on employment without alluding to the wider economic problems, as the right hon. and learned Gentleman and the Minister did. The first step was clearly to rescue the banking system. The Government made a reasonable job of that and deserve credit. Nevertheless, when the Minister castigated the right hon. and learned Gentleman for not agreeing on the nationalisation of Northern Rock, I could not help but noting that my hon. Friend Dr. Cable said that that was the correct course of action four months before the Government got round to it. I suggest to the Minister that there was recalcitrance on both sides of the House at that stage.

The real test is how the recovery takes shape, particularly in the financial system. To use the metaphor coined by my hon. Friend the Member for Twickenham, the financial system has had a massive heart attack, has been in intensive care and stabilised, and is now in the recovery room, but whether the patient makes it back on to the streets and returns to a full and active life will very much depend on whether we accept that we should go back to the old model-a course of action that I would not hold with-or have a different model. The old model has clearly failed. It failed to act with reasonable prudence, failed to curb the excesses of lending and remuneration, and failed to distinguish between innovation and speculation. That system cannot be allowed to return; business as usual in the City is simply not an option.