The Economy

Debate between Ben Gummer and Tom Blenkinsop

Wednesday 22nd June 2011 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

It is encouraging to see so many Members wearing “Yes to High-Speed Rail” badges. That is a much-needed programme to encourage growth, but it absolutely flies in the face of the argument that the Chancellor has made today. The campaign is contrary to his supposed economic growth strategy because it supports a public finance-led project that aims to encourage follow-up investment by private sector capital. There are very few examples of that now, unlike under the previous Administration, when public sector capital was used to encourage and attract private sector investment.

We have heard today that, 12 months after the decision to cut further and faster than any other major economy, the recovery has been choked off, with zero growth over the past six months. The VAT rise has helped push inflation up to more than double the target rate, consumer confidence has fallen and both manufacturing output and retail sales fell last month. There was a welcome fall in unemployment in the last two months, mainly in part-time working, which the Government have started to refer to as “mini-jobs”. Vacancies are down, job creation has slowed in the six months since the spending review and unemployment is set to increase over the coming years to 200,000 higher than was expected in the past few months.

[Ben Gummer]

Will the hon. Gentleman state the precise source of the 200,000 figure that he has given for the increase in unemployment?

--- Later in debate ---

[Tom Blenkinsop]

The estimate will be from the OBR, so it is from a Government-sponsored body that assesses the Government’s own figures.

[Ben Gummer]

Will the hon. Gentleman give way?

[Tom Blenkinsop]

I am sorry, but I want to continue. I will give way to someone else later.

The Tories are creating a vicious circle in our economy by cutting too far and too fast, hitting families and costing jobs. In fact, they are set to borrow £46 billion more than they had planned last autumn because of slower growth, higher inflation and higher unemployment, which are the consequences of the decision, announced in the Chancellor’s first Budget, to cut too far and too fast.

In the 12 months since the emergency Budget, all the key economic forecasts have worsened. On borrowing, for example, the OBR has steadily increased its forecasts for Government borrowing over the next five years, which means that the Chancellor is now forecast to borrow £46 billion more than he expected to last November.