Jobs and Growth

Austin Mitchell Excerpts

Thursday 17th May 2012 Commons Chamber

[Austin Mitchell (Great Grimsby) (Lab)]

To say that the Queen’s Speech was disappointing is not quite to plumb the depths of the inadequacy it demonstrated. Without being able to speak for Her Majesty, I am solidly assured that she would not have made the long and arduous journey from Buckingham palace had it not been for the certainty that I would be taking her photograph as she arrived here. Really, it was not worth her while to come down here for such a rag-bag of petty measures.

The Queen’s Speech was pathetic. It was pathetic because it is now about all the coalition can agree on. The glad confident morning of 2010 has given way to the bleary bickering, downward slope and near break-up of 2012. It was pathetic because it contained nothing about growth, the major problem in our economy, except for the ability to fire people, adding to the unemployment rolls. It was pathetic because it ignored the damage that two years of this Government’s disastrous economic policies have already done. My right hon. Friend the Member for Morley and Outwood (Ed Balls) set that out admirably.

Two years in, here we are in a double-dip recession, with youth unemployment reaching one in four—the rate is higher in Grimsby. The Office for Budget Responsibility is having to spend all its time revising its predictions downwards because they are no longer adequate for this Government’s failures. “I’m walking backwards for Christmas” should be the OBR’s theme song, were it not for the fact that it mentions Christmas—there is no Christmas at the end of this process. The economy has shrunk by 4%, and that is cumulative over the period, so the total shrinkage must be about 10% or more. A much smaller economy is bearing the same burden of debt, so our ability to pay it has shrunk and the standard of living of everyone in this country has shrunk. Hard-working families—non-working families, as well—are facing a burden of cuts and high inflation.

For me, sitting here today is a re-run of 1980-81, watching Conservative Members clutching at any pathetic straw, any pathetic glimmer of hope in the encircling darkness, to cheer themselves up. Margaret Thatcher had the Falklands to rescue her from that dilemma, but I doubt that this Government will have a Falklands to save them, because what they are producing is a decline—a shrinking—of the British economy and of everybody’s standard of living, all in the name of a neo-liberal ideology of rolling back the state. That ideology is plainly inadequate, wrong, prejudiced and damaging, because the only way out of our current situation is growth—economic growth, which increases our ability to pay off debt, as our Government paid off debt between 1997 and 2000. It is growth that revives the economy, growth that generates jobs, and growth that the people now want, but we will not get it if we follow this Government’s agenda.

I have done extensive research and can pronounce, with real authority, that the economy now needs three things: first, demand; secondly, demand; and thirdly, demand. Without the prospect of demand, business will not invest; the banks will not lend; closures on the high street and in the productive economy will continue; and firms will not spend their resources. No one will create jobs without demand to ensure the prospect of profit. Lack of demand clouds every prospect in this nation today.

How can we best achieve demand? My right hon. Friend the Member for Morley and Outwood has set out a five-point plan, which I heartily agree with. I would go further by borrowing more and spending more. I would give a two-year national insurance holiday for the employment of young people and for areas of the country in recession. I would boost the regional growth fund, whose achievements are pathetic, particularly in Yorkshire and Humberside, which got only 6,300 jobs, or about the same as the south-west and less than the north-west, both of which have lower unemployment rates than we do.

I would also borrow to build houses. We need a big housing programme of the kind that took us out of recession in the 1930s. The housing report published this week showed the problems and how they are accumulating. We cannot solve them unless we build houses for people who cannot afford to buy, who now make up the great majority of the population. To do that we can raise money through housing loans for councils, or we could take some of the money that is put into the banks through quantitative easing and give it to housing contracts instead, which will then be paid off over a period of time. The message to the Government that I wish the Queen had given is simply, as Bob Dylan put it: “Turn, turn, turn.”

--- Later in debate ---

[Mr David Anderson (Blaydon) (Lab)]

rose—

[Austin Mitchell]

rose—

[Mr Jones]

I am not going to give way, because I do not have much time.

It is tempting to change course, but the low interest rates vindicate the Government’s strategy to date. The problem is that, while we are laying that foundation, the next area that we need to build on is being greatly restricted, owing to extremely low levels of confidence among the business community and consumers. Most people in this country are caught in the headlights of the oncoming eurozone crisis. We can all see it coming, and at the moment we are holding back. We desperately need a resolution to that crisis. It is going to be difficult but, one way or another, we need the certainty of knowing what is going to happen when we go into it and come out the other side. Only when we get over the problems that are undoubtedly coming down the track will confidence levels really start to shift.

In the meantime, the Government are working hard to create growth domestically, but that cannot afford to be based on short-termism. It must be based on long-term sustainability, and we need to rebalance the economy. We cannot simply rely on the service and retail sectors. They are massively important to the UK, but they have been completely sustained by private debt and Government spending. I know that the Opposition still think that that is a sustainable option, but we certainly do not.

We need to concentrate on sectors that can create real wealth within the economy so that it can be distributed and we can create jobs from it. We need to concentrate on sectors such as agriculture and manufacturing. I welcome the inclusion in the Queen’s Speech of the proposal for the Groceries Code Adjudicators Bill, which I hope will make the farming industry more sustainable as we go forward.

We need to build on what the Government have done for industry by reducing corporation tax and introducing an extension of above-the-line research and development tax credits. The regional growth fund and enterprise zones are starting to build on the resurgence of British manufacturing, and we are starting to see a real build in R and D investment in our manufacturing companies, which was previously lacking. We now have that factor working in our favour. We also have far better management than we have ever had in our motor manufacturing companies, while we also have far more moderate unions than we had in the past.

Those three factors help to explain why we are seeing this resurgence and are now in a positive surplus with our car manufacturing exports, which has not been achieved since 1976. Back in 1976, as many Members will know, we were absolutely blighted: we were blighted by difficult industrial relations; we were blighted by poor management; and we were blighted by a real lack of investment in R and D. In the short time available, I urge the Government to try to maintain this resurgence in British car manufacturing industry, so that we can see the west midlands go from strength to strength, while supporting jobs in the retail and wider service sector as we go forward.