Budget Resolutions and Economic Situation

Andrew Gwynne Excerpts

Thursday 21st March 2013 Commons Chamber

[Vince Cable]

The hon. Gentleman is right on both counts. I was recently in Nigeria supporting that effort. If we are to have momentum, it must come through small and medium-sized companies. Frankly, the export effort in many emerging markets was neglected for most of the past decade—the relationships are not there and must be built up. He is also right that the employment allowance, which will help 400,000 micro-companies, is a big step forward and a big incentive to them to take on that extra member of staff.

In my concluding section, I shall address some of the big strategic choices made in the Budget. We can argue about temporary changes, but it is important that the country has a sense of direction. First, the industrial strategy gives a sense of direction; secondly, the changes in money and banking policy are fundamental after the crisis; and thirdly, the tax agenda creates a greater level of fairness.

On the industrial strategy, I was teased earlier about the “compelling vision” for the British economy, but we clearly need a vision of the economy that goes beyond one Parliament and Government, and that stretches decades ahead. That is why we have made the commitment to long-term planning and working in partnership with business in those sectors of the economy that need such a framework. We have produced agreements with the aerospace industry, and will do so with the automotive and biological sciences industries, and with the supply chains in renewable and non-renewable energy, which were desperately hollowed out in the years when manufacturing was neglected under the previous Government. We are trying to rebuild those supply chains.

A Back-Bench colleague made the point that we have an extra 70,000 jobs in manufacturing after 1 million were lost in the decade of the Labour Government. Of course, the industrial strategy is not just about manufacturing; it is about key service sectors such as education and higher education, and professional and financial services, which are equally important in driving exports.

[Andrew Gwynne (Denton and Reddish) (Lab)]

In the right hon. Gentleman’s three years as Secretary of State for Business, Innovation and Skills, he has mastered being an apologist for the Conservative-led Government. May I politely remind him that he was elected in 2010 as a Liberal Democrat on the Liberal Democrat manifesto, in which, on page 15, he says:

“If spending is cut too soon, it would undermine the much-needed recovery”?

He was right then, but does he still believe he was right?

[Vince Cable]

I recommend that the hon. Gentleman look at the OBR’s figures to see what has happened to Government consumption in the past three years. In 2010, it grew by 0.5%; in 2011, it grew by 2.6%; and last year, it grew by 0.6%. It is true that aspects of Government spending have been cut in a way that has been damaging. The Chancellor has acknowledged, as I have, that capital spending cuts were a mistake. That was the one bit of fiscal consolidation that the Labour Government launched, and it has had damaging consequences, which is why we are now reversing it.

--- Later in debate ---

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb), whose analysis was wrong on so many levels. That is probably why he was rejected by Plaid Cymru, which, frankly, takes some doing.

It is worth remembering that in his June 2010 Budget, the Chancellor of the Exchequer stood at the Dispatch Box and announced that the growth rate for 2013 would be 2.9%. In his autumn statement, just a few months ago in December 2012, he stood at the same Dispatch Box and announced that the rate would be 1.2%. Yesterday, humiliatingly for the Chancellor, he had to announce to the country that the Office for Budget Responsibility’s own statistics show that the projected growth rate for this year is a miserly 0.6%. It does not get any better, because the 2010 Budget’s projected growth for 2014 was 2.5%, which was downgraded by the autumn statement to 2%, and yesterday the Chancellor said that it would be 1.8%, which is, frankly, optimistic. It is worth remembering that in 2010, actual growth was 1.8%. This is a real humiliation for the Chancellor, because he has had to admit that for the last three years his growth strategy has been a no growth strategy, because there has not been any growth in our economy.

Of course, the Business Secretary admitted to that last year, when he wrote to the Prime Minister and said that his Government lacked a “compelling vision” for growth. He was absolutely right. I was pleased to hear him finally acknowledge from the Dispatch Box today that the Chancellor and the coalition Government got it wrong in 2010 when they cut the investment that this country so desperately needed. I do not recall any apology from the Business Secretary or the Chancellor before today. I might have missed it because I am not an avid reader of the Evening Standard, but I do not think that it was pre-briefed that they have got it wrong for the past three years. It is three years too late for many of our constituents. The Government snuffed out the recovery that was beginning in 2010.

I will refer briefly to some of the local initiatives and challenges in my Denton and Reddish constituency. In the short time I have left, I will then recognise the positive ideas in Lord Heseltine’s “No Stone Unturned” strategy. To be fair to Lord Heseltine, unlike most Members on the Government Benches, he understands what is needed to drive up growth in the English regions. A number of his initiatives should be taken on board.

[Nic Dakin (Scunthorpe) (Lab)]

My hon. Friend is stating things very clearly. Does he believe that this Government will allow Lord Heseltine’s proactive approach to regenerate the regions?

[Andrew Gwynne]

I very much doubt it; we can but hope. There are some good ideas that build on the many regional initiatives that the last Labour Government left in place in May 2010. The strategy almost reinvents the wheel, but I do not care who reinvents the wheel; the fact is that the wheel should never have been smashed up in the first place.

My Denton and Reddish constituency has been badly affected by unemployment. The figures that were released yesterday showed an increase in those claiming jobseeker’s allowance over the past 12 months. There are now 2,642 unemployed claimants in my constituency, which is 6% of the economically active population. The longer-term picture is far worse. The number of those claiming jobseeker’s allowance over the past 12 months has now gone up 32%. The figure has gone up 44% for young people and, staggeringly, for people over 25 claiming jobseeker’s allowance, the figure has gone up 70% in the past year.

[Barbara Keeley]

Is my hon. Friend as concerned as I am to learn from the OBR forecasts that unemployment has not peaked? It will peak later this year or early next year, so the figures that he and I have quoted will get worse.

[Andrew Gwynne]

My hon. Friend is absolutely right. She may have read the Manchester Evening News research, which showed that Tameside, which is part of my constituency, is the worst place in the north-west of England for young people to access job opportunities. There are real issues here that need to be resolved by Government.

Some good local initiatives are being pushed through by my two local authorities. One is Tameside, a Labour local authority, and the other is Stockport, a Liberal Democrat authority. They are doing their best in very tight circumstances, not least because every man, woman and child in Tameside is losing the equivalent of £163 in central Government grant to the local authority and Stockport is losing £94 per head of population.

We are seeing initiatives such as the introduction of town teams in Denton—I am proud that my office is represented on the Denton town team—and a pooled apprenticeship scheme in Tameside, which enables firms to reduce the risk in taking on apprentices. That initiative has been ably led by the leader of Tameside council, Councillor Kieran Quinn, who set out an ambition to have every young person in work or training by 2020. Tameside council has done a deal with New Charter Housing, the local registered social landlord, to ensure that one affordable house is built per week for the next three years. Stockport has the Stockport Boost initiative, its town centre is a Portas pilot, and there are huge opportunities along the M60 corridor with its close proximity to the airport city enterprise zone and the Grand Central redevelopment. That initiative is being pushed forward by the Greater Manchester combined authority and the Association of Greater Manchester Authorities—a Labour-led, city region initiative.

Lord Heseltine talks about combined authorities and giving more responsibility to local enterprise partnerships, and that is where Greater Manchester takes a lead. He also mentions local leadership, which is a thorny issue. I personally support the idea of a Greater Manchester-wide mayor, and although I realise that others in the city region are not convinced, I at least welcome the debate started by Lord Heseltine in his report.

My final point—which I have already touched on—is about housing, which continues to be a big problem in my constituency. The new homes bonus announced by the Government in 2010 was supposed to unleash growth and help build at least 400,000 additional homes, but it has failed to deliver.

[Mark Lazarowicz]

Will my hon. Friend give way?

[Andrew Gwynne]

I will not as I do not have time. Housing starts fell by 11% last year to below 100,000—fewer than half the number required to meet housing need. The Government’s £10 billion guarantee scheme has yet to deliver a single penny of support for house building. There were a number of small things to be welcomed in the Budget, but there were no answers on growth or for communities such as Denton and Reddish. After three years of failure, it is time for a different approach.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

Last Thursday when I was going home on the train I read in the Evening Standard an article pointing out that our debates on this Budget, the previous Budget and the ones before that are not just a reprise of each other, but a reprise of the 1930s. The argument that the way to cure the country’s economic problems is to cut, cut, cut, took place in the 1930s and was proved wrong, yet here we are again. If MPs from that time were in the Chamber today as ghosts, they would think that they were still alive and taking part in the debate.

That has not all happened by accident, and the Government are following an ideological path. They told us that the public sector is a drag on the economy and that if we did not cut it back the private sector would never spring into growth. In fact, the public sector is a huge customer of the private sector, both institutionally, from the construction works it undertakes right down to the stationery it buys, and individually, because a public sector worker is a private sector consumer. Individual workers contribute to their local economies by buying and furnishing their homes, buying new bikes and cars and spending on all sorts of other consumer durables. Cutting all that directly affects the private sector, which is exactly what we have seen for the past three years.

[Andrew Gwynne]

Is it not an absolute truth that in 2010 all the economic indicators, including consumer confidence, were heading in the right direction, yet almost immediately at the point that the Government turned off the taps and brought in their austerity Budget, consumer confidence plummeted?

[Sheila Gilmore]

As a result of the stimulus provided by the previous Government, all those measurements were turning in the right direction at that time—[Interruption.] Perhaps the Minister who is laughing ought to look, as I did last weekend, at the OBR report on the June 2010 pre-Budget report. He might not be laughing quite so hard then. The Government fail to analyse the problem correctly, so it is not surprising that they do not arrive at the right decision.

On jobs, it is not surprising that the Chancellor did not want to dwell on unemployment and this week’s increase. All we hear about is the increased number in employment. For once, I will not dwell on the statistics—others have done so, and I mentioned them in an intervention, but I want to highlight what the jobs situation means in the real world.

Last Saturday, I was out knocking on doors in my constituency. Within half an hour, I had met two people who were good examples of what the jobs situation means for them. One man had a 15-hour a week job in a local supermarket. No doubt these flexible short-term jobs are quite useful for the employer in meeting peak demand, and, of course, a person working 15 hours for the minimum wage will be below the national insurance threshold, which is another advantage for the employer. He had asked for more hours because he will be hit by the bedroom tax, but he was told that extra hours were not available.

Even if the hours were available, whom would they be taken from? My constituent might be given more hours, but unless there is a need for extra hours to be done in that job, another employee will get fewer hours, or another person would not get a job. Counting low-hour part-time jobs—we should remember that some so-called full-time jobs involve low hours—and saying, “Aren’t they wonderful?” is to forget that we are talking about real people. What effect does that have on them? The man is working and wants to work. More work in future would be good for his well-being, but he remains in poverty, like so many others.