Office for Budget Responsibility

Andrew Love Excerpts

Monday 14th June 2010 Commons Chamber

[Mr Osborne]

My hon. Friend is right—[Interruption.] I see one of the leadership contenders barracking from the Opposition Benches. I do not know whether the right hon. Member for Doncaster North (Edward Miliband) wrote the speech for the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in which he told the Labour party conference in 1996:

“Losing control of public spending doesn’t help the poor”.

That is one area in which I agree with the former Prime Minister.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Does the right hon. Gentleman accept that a major contributor to the reduction in the growth forecasts for next year is the increasingly gloomy situation developing in Europe? Is he at all concerned about the competitive austerity that is breaking out across Europe? Is he also concerned that, if he goes ahead with the programme that he is outlining, we might face a double-dip recession as a consequence?

[Mr Osborne]

I suspect that everyone in the House is concerned about the situation in the eurozone, but let us be clear what has brought that about. It is a result of market concern about the sustainability of public finances in eurozone countries such as Greece. Those countries are having to take action to reassure markets and therefore keep their interest rates lower. I think that interest rates in Greece rose to more than 10% higher than those of other eurozone countries at one point. That is what happens to countries that do not get a grip on their public finances, and I want to ensure that no question mark is ever put against the name of the United Kingdom.

Economic Affairs and Work and Pensions

Andrew Love Excerpts

Tuesday 8th June 2010 Commons Chamber

[Mr Osborne]

Unemployment is rising. We have the highest youth unemployment in Europe. We have the highest proportion of children growing up in workless households of any country on the European continent—that is not a record of which I would be particularly proud if I were a Labour MP. We are going to introduce a comprehensive work programme, and reform welfare to create genuine incentives to make work pay. One of the issues that came up time and again in the general election—for me at least, and perhaps for other Members—was the frustration felt by working people on low incomes who go out to work every single day and find that their next-door neighbour has been sitting on out-of-work benefits for years. That is going to be part of the reform that we introduce in our welfare Bill.

I was discussing the Budget, which needs to address the immediate debt situation that the country faces. However, it will also begin the long-term task of moving an economy based on debt—too much consumer debt, too much banking debt, too much Government debt—to an economy in which we save, invest and export in future. If anyone needs to be reminded why the immediate debt situation we have inherited is so serious, I suggest that they read the report on the UK produced by one of the world’s three credit-rating agencies today, which warns of

“a rise in public debt... faster than any other AAA rated sovereign”

country, and points to

“the largest cyclically-adjusted budget deficit in Europe”.

The rating agency says that the previous Government’s plans to reduce the deficit are “distinctly weak” and lack “credibility”. It says that we are the only European economy set to run a budget deficit above 3% in five years’ time. That is all at a time when, as it points out, the fiscal crisis in Greece and other eurozone countries has caused a major shift in investors’ attitude to sovereign risk.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I thank the right hon. Gentleman for giving way. He spoke earlier about judgment. Is he not concerned about the outbreak of competitive austerity across Europe? Does he not think that that may well lead to European economies all bumping along the bottom because we cannot get international trade up and running again to sort out the difficulties of our economy?

--- Later in debate ---

[Lorely Burt (Solihull) (LD)]

It is a strange feeling to be standing here today—not only am I on this side of the Chamber, but I am speaking on Government proposals that incorporate the vast majority of policies that we, the Liberal Democrat business, innovation and skills team, produced as part of our general election manifesto. I know that many of those policies were in the Conservative manifesto as well, but it would be churlish to quibble about who thought of them first.

Both the Conservatives and the Liberal Democrats see themselves as being the party of business, so it is unsurprising that many of our policies chime together. I want to speak briefly about my hopes for the implementation of some of those policies, but first I want to mention two policies that did not make it into the agreement. Access to capital has been a great problem for business for some time, and with the banks taking a more cautious—ultra-cautious some might say—approach to lending, we thought up a couple of creative ideas to use equity as opposed to capital as a mechanism to fund growth. For start-ups, we devised a policy of local enterprise funds, which would be a tax-efficient way for local companies or individuals to plough capital back into their area in return for equity. They could also have offered added value by offering advice if appropriate.

In order for established companies to fund growth, we looked at the idea of having regional stock exchanges, which would be based on the same principles as national ones, but would be localised and geared up for smaller companies. They could use the regional stock exchanges to get cash for equity without the long-winded and exacting due diligence that would otherwise preclude them from entering the big boys’ national stock exchange league. I hope that the new coalition will still consider those ideas at some point.

There are great things in the agreement that, if properly implemented, will make a huge difference to the ability of business to do what it wants and needs to do, which is get on with the job. On regulation, I am greatly looking forward to seeing a system of one-in one-out, sunset clauses and an enforcement regime that seeks to help business meet regulatory requirements in a speedy and efficient way. I am glad to see that the Government will create a Star Chamber to bring those policies into being. Having been a member of the Select Committee on Regulatory Reform for three years, I know how easy it is for civil servants to focus on the smaller issues, and for the regulators and the regulated to cosy up in mutual congratulation. The star chamber must work on the plank, not the mote, in the regulatory eye.

Other welcome policies are simple but very important to those they affect, such as IR35, which has been an issue for micro-businesses for a long time. We will not let business avoid tax, but we will make the system simpler and more straightforward, and take away the anxiety of someone not knowing whether they are covered by the rules or not. We welcome the automatic rate relief for small businesses, as it will bring relief to the very businesses that will benefit most: those least conversant with the system.

One coalition Government policy—our plan for local enterprise partnerships—has been met with dismay by the regional development agencies, but RDAs that have done a good job can continue to work for enterprise in their regions. However, the policy will mean that we will have a form of organisation that is more accountable to the region that it serves and more flexible to its needs. Obviously, there are cuts in the proposals, but business knows what it means to cope with changing, more difficult circumstances and has been dealing with those since the beginning of the recession. RDAs must now deliver service to business more efficiently than ever before.

[Mr Love]

Is this not simply another fudge by the coalition? The Liberal Democrats wanted to keep RDAs and the Conservatives wanted to get rid of them, and what we have got is a hotch-potch.

[Lorely Burt]

The hon. Gentleman is entirely mistaken. In fact, the policies of the two parties were almost identical. They were so similar, I wondered whether someone had been talking to someone else. We are at one on that.

Procurement is a big issue affecting the ability of businesses to survive and grow, and it was great to hear in the debate on the Humble Address the aspiration to contract 25% of Government procurement to small business. That will take some enforcing, and we must first get the bodies that spend our taxpayers’ money to take account of the size of companies from which they procure. While they are doing that, would it not be great to get them to have a look at whether the people from whom they are procuring look like the people they supply? Are we utilising the rich diversity of supply that we could utilise, including businesses owned by women and ethnic minorities?

I come from the west midlands, which is possibly the UK region that has been hardest hit by the recession. However, we in the west midlands do something special, and we do it well: we make things. We are very clever at making highly technical, high value-added products, many of which we export to the world. Although our car industry has suffered badly, not only do we produce two of the most iconic marques in the world—Jaguar and Land Rover—but they are thriving, both in the export and home markets.

I shall conclude on this point: for far too long, financial services—I understand that they are important—have held the Government in thrall. If I have anything to do with it, that will no longer happen. Despite the fact that manufacturing has been allowed to wither, the UK is still the sixth largest manufacturing country in the world. The time has come to talk manufacturing up, create a climate in which it can thrive, allow it access to finance, which is the lifeblood of business, and create a fair regulatory playing field. Then, we should get off the pitch, and let team Great Britain compete on the world stage.