The Economy

Debate between Andrew Griffiths and Ben Gummer

Wednesday 22nd June 2011 Commons Chamber

[Ben Gummer]

The hon. Lady makes a perfectly reasonable point, but it is not one that she has conveyed to Opposition Front Benchers, because they chose as the subject of the motion, “The economy one year since the Government’s first Budget”. I am merely commenting on that, not on the rather crass detail in the motion. So far, we have growth in manufacturing, growth in retail sales and growth in the economy. Let us go on to the next thing that they are talking about.

The motion refers to

“a welcome recent fall in unemployment”.

The Opposition concede that. It was not just welcome; it was the largest fall in unemployment for 10 years—88,000—and larger than that achieved at any point when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), whose Parliamentary Private Secretary questioned me a moment ago, was Prime Minister.

[Andrew Griffiths]

Returning to the point about manufacturing, is my hon. Friend aware that under the premiership of Tony Blair and Gordon Brown, we saw a sharp—

[Andrew Griffiths]

Does my hon. Friend agree that manufacturing declined more sharply under the previous Government than it did under the premiership of Margaret Thatcher? Under the Labour Government, we saw an unprecedented decline in manufacturing.

[Ben Gummer]

My hon. Friend is entirely right. In my constituency manufacturing fell more quickly in the 1970s than it did in the 1980s. The last bit that was left in the 1980s was stolen by Robert Maxwell, a previous Member of Parliament for the Labour party, though happily not in my constituency.

Let us move on and go through the motion, which says that

“the Office for Budget Responsibility predicts that future unemployment will be up”

by 200,000. The Opposition Front-Bench team fail to be able to read a fan chart. That is the upper part of the forecast, but there is also a 200,000 dip at the bottom end of the fan chart. The OBR has said that unemployment is performing much as it had predicted. The forecasts are not changing and unemployment is going down more quickly than the OBR estimated in March.

A series of suggestions from the Opposition Front-Bench team follows. I wonder if I can prompt an intervention from the shadow Minister, the hon. Member for Wallasey (Ms Eagle). The announcement on VAT mentioned in the motion was mentioned to her before it was mentioned to the shadow Cabinet or to the London School of Economics. She tuts me away. It is, according to the Financial Times, the biggest change in Opposition economic policy since the general election. I wondered whether the hon. Lady could comment on when it was announced to her colleagues, so we must take it that it was not.

We then come to the gravamen of the motion. It refers to the

“long-term damage to the economy”

caused by the Government’s policies. Let us look at underlying trends, which are probably the best indication of how the economy is performing. The savings ratio is higher now than it was at any point, apart from one quarter, in the whole of the previous Government’s time in office. The investment intention of the private sector from the CBI industrial trend survey is also higher than at any point in the 13 years of the previous Government. It reached that level previously only in the first quarter of 1997. Export orders are at a 15-year high, and CPIY—underlying inflation, excluding tax rises—is within the Bank of England remit.

We know that tax increases are coming through into inflation, and that there was a massive injection of cash into the economy through quantitative easing by the previous Chancellor of the Exchequer. It is the combination of those and the necessary tax increases to deal with the appalling deficit which is causing the unfortunate inflation figures now, but the underlying figure is at about 2.4% or 2.5%, and I hope that in time it will return to that, as the OBR predicts.

The last part of the increasingly risible motion refers to

“temporarily cutting VAT to 17.5 per cent.”

When VAT was put up in the emergency Budget, I remember hearing from those on the Opposition Front Bench that that was an iniquitous rise that should never happen, but now it is to be temporary. Can the shadow Minister tell us why she is proposing a temporary cut rather than a permanent one, as she was proposing this time last year?

The motion mentions the bank bonus tax, a canard put out constantly by the Opposition. The bank bonus tax raised £2.4 billion on the best estimate, but £2.6 billion has been raised by our bank levy, which will be set every year in this Parliament, unlike the bonus tax which, by the previous Chancellor’s own admission, was a one-off event.

Finally, we come to the two most egregious statements in the entire motion. First, there is the reference to the need for “25,000 affordable homes” from the party that built fewer affordable homes in every single one of its years in office than were built in every single year of the Major and Thatcher Governments—but Labour does not admit to that shocking record in its motion. Secondly, we return to the issue of jobs. The motion calls for the creation of

“100,000 jobs for young people”

just days after we have heard of the greatest fall in youth unemployment in 10 years.

So the Opposition have come to this House with a motion judging the Government on the economy one year after our first Budget, yet they cannot choose one single figure by which to judge the Government’s record, and in the end they put forward a series of disingenuous statements by which their own record would look very poor.