Jobs and Growth

Charlie Elphicke Excerpts

Wednesday 12th October 2011 Commons Chamber

[Ed Balls]

The hon. Gentleman will have to convince his constituents because, despite the fact that we were told a year ago that the recovery would be on track, growth has flatlined for a year and unemployment is rising right across the country, which means that borrowing will be higher, not lower.

[Charlie Elphicke (Dover) (Con)]

The shadow Chancellor responds to questions about his failing to convince his shadow Cabinet colleagues and former Cabinet colleagues by talking about convincing constituents, so why have his poll ratings for economic credibility fallen among his constituents and my constituents and across the whole country?

[Ed Balls]

I would be happy to have a debate with the hon. Gentleman on economic credibility. He said in June this year:

“Employment has gone up in my constituency and unemployment has been falling, which is welcome.”—[Official Report, 22 June 2011; Vol. 530, c. 426.]

The figures show that unemployment in his constituency has gone up by 456 in the past year. Perhaps he should apologise to his constituents for getting it wrong.

--- Later in debate ---

[Harriett Baldwin (West Worcestershire) (Con)]

rose—

[Charlie Elphicke]

rose—

[Ed Balls]

I will make a little more progress, but I will take interventions from people who have not intervened. Good grief, I have given the hon. Member for Dover (Charlie Elphicke) enough of the wrong type of publicity already and do not want to do his career any more damage.

There is a credible alternative. Why will the Chancellor not act? He used to be so confident that his plan was working. It is patently not working. He and his cheerleaders on the Government Benches claim that however bad things get, he is trapped by the financial markets. He cannot take the advice of the IMF and the OECD and change course because it would lead to higher interest rates and recession. However, the IMF has said that we cannot have credibility without growth.

The markets know that rising unemployment and zero growth are undermining the Chancellor’s deficit reduction plan. One chief economist in the City at Baring Asset Management said last week:

“Growth is essential if the UK is to be able to finance new debt, repay old debt and convince the markets and credit rating agencies there is a modicum of competency in policymaking. The longer we pursue current policies, the more likely it becomes that the UK will be the next target”.

That is the real market view. We know that the credit rating agencies put out their press releases, but the real view, as the IMF has told us, is that having a flatlining economy and rising unemployment is the wrong way to get the deficit down. As I said, even the Chancellor’s friend at the IMF has said that

“growth is necessary for fiscal credibility”.

Britain has no growth. That is why our Chancellor is losing credibility.

--- Later in debate ---

[Kerry McCarthy (Bristol East) (Lab)]

May I say what a pleasure it was to work with the shadow Chancellor and the rest of the shadow Treasury team over the past year? Although I have moved on to pastures new, I am very happy to speak in support of their motion today.

As we have heard, in the past nine months, the UK economy has not grown at all. Forecasts have had to be revised downwards, and the future prospects for growth are bleak, given the scale of Government cuts and the Chancellor’s failure to acknowledge that in fragile economic times a slash-and-burn policy, far from stimulating growth and bringing down the deficit, will cause growth to flatline. It will actually cost us more as a result of decreasing tax receipts, increasing benefit payments, people having less money to spend, and the Government having to borrow £46 billion more than they thought they would.

As the head of the International Monetary Fund, Christine Lagarde, warned that slamming on the brakes too quickly will hurt the recovery and worsen job prospects, yet the Chancellor is failing to heed the warning signs. Economic indicators such as today’s unemployment figures, which are devastating for people in areas such as my constituency, tell the Chancellor that not only is he going too fast, but he is on completely the wrong road. We do need to reduce the deficit, but at a pace that does not harm economic growth. Labour’s plan for growth involves bringing forward long-term investment projects for schools, roads and transport, building 25,000 more affordable homes, and creating 100,000 jobs for young people, funded by a £2-billion tax on bankers’ bonuses. That is what my constituents want a Government to do.

In my constituency, I see the impact of Government policies mounting up in a multitude of individually small but cumulatively large ways. For example, there is the public sector worker who has had a pay freeze, is paying 2.5% more VAT, has had their child care tax credits cut from 80% to 70%, and will soon have to contribute 3% more to their pension. That is not to mention the rise in inflation, how much more it costs to fill a tank with petrol, ever-rising fuel bills, or the extra pounds that the weekly food shopping costs. There are also the local services that people now have to pay for, and that used not to come at a cost.

This week, we have heard a stark warning from the Institute for Fiscal Studies and the Joseph Rowntree Foundation about the impact that the Government’s policies are having on child poverty. I was there, in the previous Parliament, when all the party leaders and MPs from all parties rushed to sign up to the child poverty pledge to commit to abolishing child poverty within a generation. There was a cosy air of cross-party consensus. As one of the MPs who had been working closely with the End Child Poverty coalition, I did not want to say or do anything to derail that, but I was quietly highly sceptical. There were warm words and MPs posing with marker pens as they signed the pledge as part of a photo opportunity, so that they would appear in their local papers.

[Charlie Elphicke]

Will the hon. Lady give way?

[Kerry McCarthy]

No, I do not have time. I was highly sceptical that the pledges would translate into real action if the Conservative party got into Government. Sadly, my scepticism has proved well founded. The IFS warned yesterday that the Government’s tax and benefit changes will push 400,000 children into relative poverty by 2015. The number of children in absolute poverty will rise by 500,000 to 3 million. Instead of us eradicating child poverty by 2020, the Government’s policies mean that 3.3 million children—one in four children in the UK—will be in relative poverty. Labour when in government lifted nearly 1 million children out of poverty; this Government will put another generation of children right back there. It is little wonder that the chief executive of the Child Poverty Action Group described it as a “devastating report”. She said:

“Ministers seem to be in denial that, under current policies, their legacy threatens to be the worst poverty record of any government for a generation.”