Policy for Growth

Austin Mitchell Excerpts

Thursday 11th November 2010 Commons Chamber

[Austin Mitchell (Great Grimsby) (Lab)]

I warmly welcome this important debate—the first of its kind I can remember in my long years of service in Parliament—because it is a vital issue. Unfortunately, however, we have to compress our wit and wisdom into five minutes, and to do that I will concentrate on four basic points crucial to growth. The first is that the Government seem to see the public and private sectors as competing—if we cut back the public sector, the private sector with flourish and grow, or, as one Conservative Member put it, will be unleashed. That is just not true. The two are complementary. If we cut back the public sector in the way that is now being done, we will damage growth, jobs and demand for the products of British business. The two must march together in a complementary process.

Secondly, growth depends on a competitive exchange rate of a kind we have never had in this country. A competitive exchange rate reduces the price of our exports, increases the price of imports in this market and cuts our cost level in foreign currency terms, which we have to do because our cost levels have been too high. Every growing and developing country has started out with a low exchange rate and built a powerful exporting base from that. We have never done that, because of fear of inflation and the power of the City, which likes a high and stable exchange rate to serve its own interests. We now have the opportunity presented by the 25% devaluation. We have to seize that and keep the exchange rate down, so as to benefit manufacturing industry and encourage exports. Otherwise, manufacturing industry has to cut costs, and throw overboard research, design, development, the labour force and everything that makes for improvement, just to survive. A competitive exchange rate is vital.

Thirdly, we need an industrial policy. The Government do not seem likely to evolve one, but it is essential, to decide priorities, to help channel investment and to remove bottlenecks, whether in transport, ports or, indeed, in planning. It sometimes seems that in planning arrangements on the south bank of the Humber, the birds are more important than jobs. We need a national development strategy, because the market and banks are not capable of doing the job.

Fourthly, we need to shift the balance from the City and finance to industry, production and investment in our industrial base. We should look at the contrast between Britain and Germany. Germany has continuously improved and invested in its powerful manufacturing sector. It has maintained and defended a powerful Mittelstand, which has vanished in this country, which means that we cannot compete. The result is that Germany can now export powerfully, whereas our position is different.

What has been important to British companies is shareholder value. There has been an obsession with shareholder value and creative accounting, where the auditors are in collusion with the executives, and an obsession with executive rewards, which have been helped by creative accounting and bonuses for irresponsible gambling. The City makes a better living from fees for takeovers and dismembering British industry than it does from supporting it. Indeed, the City has never supported British industry and investment in this country on the scale that has been necessary. We have been badly let down in this country by our banks and by the City, and by their investment strategies. They have failed the country.

Government management of the economy and giving some definition to our industrial policy is crucial in all this. We shall not get the growth that we need if their policy is simply to cut, cut, cut and to wait for growth to spring fully armed from the head of a Chancellor who has no higher wisdom than to cut.