Economic Growth and Employment

Adrian Bailey Excerpts

Wednesday 23rd November 2011 Commons Chamber

[Vince Cable]

I will describe in more detail, as will the Minister for Further Education, Skills and Lifelong Learning, some of the initiatives that we are taking on apprenticeships, for example, which reflect real imagination and real change.

Let me try to respond to some of the points that the hon. Member for Streatham made. First, he wholly misunderstands what is happening with the regional growth fund. More than half the projects are under way in the first wave of the regional growth fund. The factories have been built and the jobs are being created. Because of due diligence, the disbursement—I have had this confirmed—is still taking an average of three to six weeks. I am happy to pursue the individual cases that the hon. Gentleman raised. As I understand it—I may be wrong—the case that he dwelt on at some length is the result of the applicant having radically changed the status of their application, and we will happily look at that. However, I am not going to take lectures on the disbursement of Government money. I do not know whether he is aware of this, but the previous Government set up a £5 billion trade credit insurance scheme which, after two years, has managed to disburse £81,000. The regional growth fund is proceeding as predicted and suggested by Lord Heseltine and his team. We are following those processes. The factories are being built and the jobs are being created, and that is what matters.

The hon. Gentleman challenged me on procurement. I have been to Derby and talked to the people involved. Obviously, we are very concerned about what has happened in that case. The problem with procurement is that for a decade or more the public procurement policies pursued in this country were unbelievably short-sighted and legalistic. In the case of the Thameslink contract, we inherited a contract procedure based principles that did not allow for the wider effects on the British economy. However, that particular decision has been made. I have made it absolutely clear, and my right hon. Friend the Minister for the Cabinet Office made it clear two days ago, that we are going to approach public procurement in a different way. We are going to do it strategically and take account of supply chains. Of course we will operate within the law and will not be protectionist, but a lot can be done through public procurement that we are now going to pursue. My only question is why on earth Labour Members did not do this when they were in office if they care so much about it.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Is the Secretary of State now in a position to give me an answer that he could not give when I questioned his departmental report a couple of weeks ago—namely, exactly how many jobs have been created by the regional growth fund so far?

[Vince Cable]

No, I cannot do that, because the projects are under construction. When they are fully completed and fully staffed and their supply chains are established, it will be possible to come up with a meaningful number.

The third area of criticism and questioning of the hon. Member for Streatham related to the banks. The motion recycles the idea of a bank bonus tax, so let us go over what that involves. The current estimate from the CBI, which has carried out research on this in the City, suggests that the yield from bonuses this year—the bonus pool—is likely to be something in the order of £4.2 billion. Of that £4.2 billion, £2.5 billion goes to Her Majesty’s Revenue and Customs in tax because of high tax rates on bonuses, and rightly so. That leaves £1.7 billion in bonuses paid out, assuming that the projection is correct. The Opposition are suggesting that they will have a £2 billion tax on bank bonuses. Where is this £2 billion going to come from? It is considerably more than the total bonuses paid out. Even if they applied 100% tax, which is implausible, what would happen, obviously, is that pay would be consolidated. They have not thought this through. Perhaps that is why the hon. Gentleman did not bother to raise it. Can he can tell us how it will work?

--- Later in debate ---

[Mr Hayes]

That was the ponderous exaltation of a basic economic fact: when tax yields fall because there is less growth than expected, and welfare payments go up, of course that is a result, but it is not a reason not to have a credible fiscal policy. The hon. Gentleman remains in denial, just as the shadow Chancellor remains in denial, but the OECD—

[Mr Bailey]

rose—

[Mr Hayes]

I am sorry, I will not give way. I usually do but I do not have time.

The OECD says that we have a £37 billion structural deficit and that it is the largest in the G7. It is not just about the Government debt. The hon. Member for Streatham must know that if we look at debt as a whole, we have the largest debt as a proportion of GDP in the developed world, with the exception of Japan.