Jobs and Growth

Alison McGovern Excerpts

Thursday 17th May 2012 Commons Chamber

[Alison McGovern (Wirral South) (Lab)]

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.

[Andrew Bridgen]

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.

[Alison McGovern]

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.

[Bill Esterson (Sefton Central) (Lab)]

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?

[Alison McGovern]

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.

[Sheila Gilmore (Edinburgh East) (Lab)]

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.

[Alison McGovern]

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.