Industry (Government Support)

David Anderson Excerpts

Wednesday 16th June 2010 Commons Chamber

[Sajid Javid (Bromsgrove) (Con)]

I congratulate Members who have made their maiden speech today—my hon. Friend the Member for Bracknell (Dr Lee) and the hon. Members for Bolton West (Julie Hilling) and for Wansbeck (Ian Lavery). I am glad I made my maiden speech last week, because they have raised the bar even higher. I wish them all the very best in their future careers in the House.

I am glad to be speaking in this debate on the best way for the Government to support industry. There is one thing on which I think all Members will agree, and it is the most important factor—that the recovery of our industrial sector is linked to the recovery of every other part of our economy. That will repair the broken economy bequeathed to us by the former Administration.

To help industry, before considering anything else, we have to fix the fundamentals of the economy. Britain’s prosperity has traditionally been built on the foundations of sound public finances, low and simple taxation and light, flexible regulation. Over the past 13 years, Labour progressively shredded each of those principles. The previous Government saddled our country with a budget deficit of more than 12% of gross domestic product—the largest in Europe—and a national debt approaching £900 billion, a staggering increase of more than 160% in 13 years.

As a result, we have no choice but to make cuts in both public borrowing and public spending. If we do not, we shall no longer be able to sell enough Government bonds to fund the deficit, resulting in a catastrophic economic crisis. It really is that simple. At this point, we cannot even plan to reduce our total debt stock; at best, we can only hope to add to it less fast.

Let us be clear: these are Labour’s cuts. As we make them, we must of course make sure that we protect the most vulnerable in society.

[Mr David Anderson (Blaydon) (Lab)]

The hon. Gentleman makes the point that the cuts are Labour’s. Earlier this year, the OECD said that only the action of the previous Government prevented a recession from becoming a depression. Does he disagree?

[Sajid Javid]

A few weeks ago, the OECD, the G7 and the International Monetary Fund said that we had no choice but to make the cuts, so I think they would agree with what I have just said.

We cannot rely on a benign global economic outlook as we approach the cuts. I believe that the international financial markets are at their most fragile since the collapse of Lehman Brothers in 2008; the euro’s troubles are only just beginning; the largest emerging economies in the world are about to raise interest rates, so demand will fall, which will affect global demand; and investor appetite for sovereign debt, including our own, is rapidly diminishing.

If we are to get our economy moving again we have no time to lose, so I look forward to the emergency Budget statement that my right hon. Friend the Chancellor will make next week.

To help industry, we need to get the banks lending again. I have met many people in Bromsgrove who tell me that it has never been so difficult to get a loan. Drawing on my 19 years’ experience of working in the City, I believe that bank lending will not recover until the banks are forced to admit the true state of their balance sheets. Right now, the markets just do not believe that our banks are being truthful about the problems that they face. In turn, the banks are not getting the capital that they need, so they are instead squeezing existing customers, as well as not lending.

As well as a thorough review of financial regulation and regulators, we need an independent audit or a stress test of each British bank, eventually leading to a private sector recapitalisation of weaker institutions that are identified. In that regard, the report that was recently issued by the Future of Banking Commission—of which, I believe, my right hon. Friend the Secretary of State for Business, Innovation and Skills was a member—has made some worthy suggestions.

Also to help industry, we need a dramatically different approach to business regulation, as many of my hon. Friends have said today—an approach that is radically different from that of the previous Government. Many business men and women say that the sheer cumulative volume of regulation makes their lives so difficult. People who need to be dealing with customers and products are instead too busy complying with regulators, and many regulations are simply not necessary to keep businesses honest and safe.

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[Kwasi Kwarteng]

The hon. Lady is being quite clever and fixing the measuring rod.

Gordon Brown, the former Prime Minister, openly boasted of abolishing boom and bust. That was the central claim that he made. He predicated his entire policy on that premise. The premise was wrong. As we all know, and as hon. Members have commented, we went into a recession and we were faced with a huge deficit. That was a huge bust, which the former Prime Minister, in his wisdom, failed to see. That is why we were saddled with the deficit, and why we have had to make some of the tough adjustments to which Opposition Members have alluded.

That context is important. I know that there will be difficult times. I know that up and down the country Opposition Members will bemoan and complain about Tory cuts, but the context demonstrates why the adjustments have had to be made. They were forced upon us by the international environment. My hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) mentioned that investors would not buy British Government debt. As a consequence, we have to rein in our spending. That is common sense. It is wrong for Opposition Members to say that we are trying to strangle the baby in its cot and that we are savage and uncaring. It is a matter of practical policy. Without that, we have a bleak future.

[Mr Anderson]

The hon. Gentleman spoke about fairy tales and Bible stories. Some of us lived the reality. Some of us in this country were starved for 18 years, while others became fat cats. We know that his party is taking us back there.

[Kwasi Kwarteng]

I am not talking about the 18 years from 1979 to 1997. I am talking about the 13 years in which we lived under Labour.

To finish my contribution, I want to talk about the private sector and the public sector. Someone described trying to grow an economy by focusing on the public sector as a man sitting in a bucket trying to lift himself up by pulling the handle. It does not work. The only way we can have a viable public sector is if we can have revenues coming in from a buoyant private sector. As my hon. Friends have reiterated time and again, it is only by having a prosperous private sector that we can grow our way out of the recession. The message about a strong private sector is clear. It wants less regulation, less red tape and bureaucracy and a clear tax system, and it generally supports the coalition Government and the Government programme. For these clear and simple reasons, I support the Government amendment.

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[Mr David Anderson (Blaydon) (Lab)]

It is a great privilege to speak before you, Mr Deputy Speaker, and I congratulate you on your new role. I congratulate all hon. Members who have made their maiden speeches today, in particular my hon. Friend the Member for Wansbeck (Ian Lavery), who has taken my title, which I never wanted, of the last miner to enter the House. I hope he does not keep that title either, because this House would be stronger and better if more people from the mining industry came here, as my hon. Friend the Member for Barnsley East (Michael Dugher) said.

It is from my history of working in the mines that I have formed my view today. The truth is that there are two nations—one nation split by geography as well as history. In my history, markets have failed our part of the world, as they have failed places such as Yorkshire and the east midlands. In the years between the wars, this is what happened in areas such as mine: we saw 1,000 miners killed every year—one man every six hours—in the coal mines of Britain. Why? Because the markets would not put the money in to invest in health and safety and machinery. We had a very poor industry that was let down.

There was public intervention after the war. The industry was taken over and nationalised and what did we see? Within a few years, health and safety legislation—the Mines and Quarries Act 1954—was passed through this House. We went from killing 1,000 men a year in the 1930s, to killing fewer than 20 men a year in the 1960s. That is the difference. That is what happens when we have red tape and health and safety legislation to take care of people. That is what happens when the public and the state stand up for people and do not let the market dictate.

We saw the same thing in the 1980s. What happened? The markets intervened. We did away with the most productive, cleanest, the most technologically advanced and the safest coal industry in the world. What are we left with now? A rump of a coal industry, in which more people are being killed pro rata than for the past 50 years. Only a few pits are left, but we have seen a fourfold increase in deaths in coal mines.

We saw the utilities taken into private ownership in the 1980s. What are we left with? There are problems with security of supply, the national grid is not fit for purpose, and there is a skills gap, because the companies have been more interested in looking after their profit margins than in developing a skilled work force for the future. But what else have we got? We have got all the utilities companies with their hands out, saying, “Give us some money from the public purse so we can develop carbon capture and storage. If you don’t give us it, we’ll turn our backs on the clean coal strategy and just have the dirty gas industry.” Effectively, they are putting this country over a barrel, which is what they will always do, because they put themselves first.

In the past 13 years, regions such as mine have had input from public bodies such as RDAs, which have been a success, because there has been a genuine partnership not only with the Government, but with local government and colleges, and particularly with private businesses, which have welcomed the fact that at long last, there has been stability, support and a way forward, particularly in the case of Nissan. At Christmas 2008, Nissan was going down the plughole, and 1,200 men were being put on the dole. Nissan worked with people from the House, and local councillors and colleges, to put together a scheme that kept people in work and training. When Nissan then got the contract for the batteries, those people went back to work, and the work force are doing better than ever. I would imagine that they will now be getting worried about where things are going.

It has been said that nobody in the Opposition has any alternatives for dealing with the deficit, but I will give the House some. The Government should go and work with the trade unions, the civil service and the TUC on tax evasion. In a report before the election, they pointed out that 20,000 tax collectors lost their jobs in the past few years, for a saving of £100 million, but that is at a time when this country has a tax gap of evasion and avoidance—this has been admitted by the leaderships of both main parties—of at least £40 billion, and that the TUC report says is £120 billion. The Government should go and close that gap before doing anything else.

[Chris Heaton-Harris]

Will the hon. Gentleman give way?

[Mr Anderson]

No, I do not have time—I have to finish soon.

[Chris Heaton-Harris]

You’ll get extra time.

[Mr Anderson]

No, I won’t—I’ll tell you the orders, right?

The Robin Hood tax—a tax on banks’ international financial transactions—was rubbished by Government Members, but it would take care of a big chunk of expenditure on public services. Public sector workers are asking me, “Why should we pay Dave? Why should we carry the can for the failures of the banks? Why should we have to lose our jobs? Why should we have to stop looking after people we want to look after, when people who have robbed this country blind are getting away with more robbery?” Everyone in this House should agree with that.

I will say it: we should put the national insurance contribution charges on employers as well as on the work force. Why should it be the work force alone who carry the can? If the Liberal Democrats have a voice in this place, I would like to ask them what they would do to pay for the £17 billion of tax cuts. I am all for giving tax cuts to the low paid, but why should people at the level of pay we get also benefit from those tax cuts, when we will be shutting hospitals and schools and sacking home care workers? We keep hearing that we are all in this together. It is like a vuvuzela sounded every week by George Osborne, or a rattle in the background. No one in the working class believes that we are all in this together—nobody who works in school meals or hospitals. They know that those with money will be looked after and those without will go to the wall. That is the way that it has always been in this country. Saying something often and loudly does not make it any truer.

Should my party say sorry? No, it should not, because it stopped this country going into depression as a result of the failures of global finance and capitalism. We stopped that being any worse. The G20 said clearly that the actions we took brought the country into recovery more quickly than would otherwise have been the case.

The most ludicrous suggestion is one in, one out for regulation. That is daft. Who decides which regulation should be done away with to bring in another one? It is nonsense and it should be abandoned now.