Unemployment

David T C Davies Excerpts

Wednesday 14th December 2011 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move,

That this House believes that the Government’s policies of cutting spending and raising taxes too far and too fast have resulted in the UK economy flat-lining for 12 months, well before the recent eurozone crisis; notes that unemployment has reached a 17-year high and over-50s unemployment has risen sharply; further notes that slower growth and higher unemployment makes it harder to get the deficit down and that the Office for Budget Responsibility forecasts a further rise in unemployment to 8.7 per cent., a rise in the benefits bill of £29 billion, and an increase in projected borrowing of £158 billion; agrees with the IMF’s warning that ‘consolidating too quickly will hurt the recovery and worsen job prospects’ and that the Government should ‘have a heightened readiness to respond, particularly if it looks like the economy is headed for a prolonged period of weak growth and high unemployment’; and, in light of the Office for Budget Responsibility forecasts published on 29 November 2011, calls on the Government to reconsider its refusal to adopt the Opposition’s five point plan for jobs which includes creating 100,000 jobs for young people and building 25,000 affordable homes using funds raised from a tax on bank bonuses, bringing forward long-term investment projects, temporarily reversing the January 2011 VAT rise, a one-year cut in VAT to 5 per cent. on home improvements, and a one-year national insurance tax break for every small firm which takes on extra workers.

It is a shame that the Secretary of State for Work and Pensions has chosen not to be present for the third Opposition day debate on unemployment and living standards. We rely, I hope, on the Minister for unemployment to relay back the nature of today’s debate and discussion.

The House meets to debate the motion after more grim news on jobs this morning. Grim news on jobs this month has followed grim news on the Budget last month. Once again we have seen this morning how the Chancellor’s decision to clobber the recovery is clobbering families all over our country. Once again we have heard of families losing their jobs because of this Government’s decision to cut too far and too fast, and once again we see the consequences of this Government’s decision to stand easy while millions of people in our country are now standing idle.

Not even the Minister for unemployment could spin his way through the statistics published this morning—unemployment up by 128,000, employment down, vacancies down and the public sector now losing jobs 13 times faster than the private sector is creating them. We do not have to look very far for the root cause of this unalloyed misery for families 11 days before Christmas. The Chancellor laid it out for us just a fortnight ago. Last year he was boasting about delivering cuts that were £40 billion greater than the cuts planned by Labour. Last year he was boasting about how Britain had suddenly become a safe haven. Last year he was so pleased with himself that he said this country was out of the danger zone. How hollow those words ring today.

The autumn statement laid bare the catastrophic failure of the Chancellor’s policy—growth flat lining for a year, borrowing up £37 billion higher than the plan drawn up by my right hon. Friend the Member for Edinburgh South West (Mr Darling), welfare up by £29 billion, and debt up an extraordinary £158 billion higher than forecast, which is £6,500 more for every house in this country. Borrowing, welfare bills and national debt are all higher, but growth is nowhere to be seen.

[David T. C. Davies (Monmouth) (Con)]

The right hon. Gentleman appears to be criticising the Government for borrowing more money. How much more money would he have borrowed, had he been in government?

[Mr Byrne]

If the hon. Gentleman had been listening carefully, he would have heard me answer that question. The plan that my right hon. Friend the Member for Edinburgh South West and I set out entailed borrowing that was £37 billion lower than that outlined by the Chancellor in his autumn statement a couple of weeks ago. That is of grave concern to the number of people who are now out of work, especially young people in the hon. Gentleman’s constituency, where long-term youth unemployment has gone up by 128% this year, which must surely concern him.

--- Later in debate ---

[David T. C. Davies (Monmouth) (Con)]

The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) and many of his colleagues have basically said that the Government should change course. I listened to them with great interest but did not hear any of them say what their course should be. I heard plenty of criticisms of the Government, but there has been no mention by the right hon. Gentleman of a coherent economic policy.

[Several hon. Members]

rose—

[David T. C. Davies]

I intend to give way once only.

[Mr Byrne]

I am grateful to the hon. Gentleman for giving way. We have set out a clear five-point plan for getting people back into work. The starting point is a sensible and fair tax on bankers’ bonuses. Does he think that his constituents, like mine, would support that?

[David T. C. Davies]

I have heard about this tax on bankers’ bonuses, which has already been spent in myriad different ways. In any case, the Government have already introduced taxes on banks, which are bringing in far more money. I point out to the right hon. Gentleman—I am sure he knows this, given what his last job was—that the financial services industry in this country is contributing about 10% of all the money that we have, or somewhere in the region of £50 billion. At this moment in time, we cannot do anything too much that will damage that.

Let me explain to the House what I think the Opposition party’s economic policy was. Up until October and the Chancellor’s statement, the economic policy of Labour Members was to borrow even more money than we are being forced to borrow at the moment. Since October, everything has changed and suddenly their policy is to borrow less money. Amazingly enough, they are not only going to borrow less money, but spend more money. The Opposition are going to borrow less money but somehow there will be no cuts in Government expenditure and no freezes on pensions and everyone will have a job. It is a totally incoherent economic policy, but completely consistent with what we have come to expect from Labour.

[Albert Owen]

The hon. Gentleman says that we did not outline our plans. If he reads the motion, he will find them there, and he should be speaking to the motion. He said two things that were incorrect. He said that we would be spending more than the Government. In the autumn statement, this Government said that they would spend more than Labour. One tool of employment is taxation. Does he agree that reducing VAT temporarily during the previous recession helped employment and consumers? Would he support something of that nature now?

[David T. C. Davies]

The hon. Gentleman ought to know that I will always support any kind of tax cut if it is affordable and I welcome his conversion to that idea. I recall him talking about what happened when Labour got in, but he forgot one or two important facts. He forgot to tell us that when Labour got in in 1997, the national debt was some £350 billion. By 2007, before the economic crash, the national debt had risen to £650 billion. Yes, the Labour Government had been paying off the national debt for two years but when the election started to loom, all of a sudden off went the spending taps and they were spending at a rate of £30 billion or so on average more than they were earning. That meant that by 2007 they already had a problem, yet they let the spending rip and we ended up with a national debt of £1 trillion and a deficit of £160 billion. Their response was to say up until October that we should borrow even more money—now, they suggest we borrow even less.

What the hon. Ladies and Gentlemen on the Opposition Benches do not understand is that it is very easy to create a little employment in the short-term by borrowing money that one does not actually have, but the problem is that that will always lead to greater unemployment in the longer term because at some point—they do not realise this—that money must be paid back. In the meantime, the interest on it, which is about £30 billion a year at the moment, has to be paid. The only way that money can be paid back is by raising taxes, which destroys jobs, or cutting public spending. That is a basic economic fact that Labour Governments throughout history have failed to comprehend.

Of course, there are more things that this Government can do. We have taken the brave decision as a coalition to get rid of the deficit as quickly as we can. It might take until 2017—[Interruption.] Yes, I accept it is not going to be an easy task, given what we have inherited. It will take a number of years, but we will stay the course and do it, and we will do more, besides.

We must consider immigration. It cannot possibly be right that 250,000 people are coming into this country at a time of recession if we have to find them all jobs, too. My wife is one of them and my sister-in-law, who is from Asia, is another. I am not in any way against those who come here; I welcome the fact that people have come here and are making a contribution, but we must consider whether that is sustainable in the long term.

We must also consider the attitude of some British people—that has to be said. Neither of my sister-in-laws had problems coming over here from Asia and eastern Europe and getting jobs, but there is unfortunately a small minority of younger British people who would prefer to stay on the dole than go out and get a job. It is a harsh fact but it needs saying and it is something that this Government will actively tackle.

We need to look at the attitudes and training of those who come out of our schools, ensuring that they can add up and have basic English and social skills, as it is often people’s attitude that gets them a job. We must consider what our universities are teaching people, because it is no good if everybody comes out with a degree in media studies. There will always be some jobs for some people in the media, but not for all those who want them.

I have spoken to a number of people working in companies that are contributing a lot to this country—gas and oil companies and so on—and they say that they have had to go abroad to find people because there are not enough with the necessary practical skills in this country. By that I mean people who do not mind getting their hands a bit dirty. I spent four or five years getting my hands a bit dirty, as did many people on the Opposition Benches. I have no problem with that whatsoever. Unfortunately, some young people in this country at the moment do.

[Grahame M. Morris (Easington) (Lab)]

I am grateful to the hon. Gentleman for giving way, but may I urge him to focus on the issue of joblessness rather than worklessness? I think that was an offensive remark, although I am sure that he made it unintentionally. We have Office for National Statistics data giving the numbers of vacancies and the numbers of people who are unemployed, particularly young people. In neighbouring constituencies, such as Hartlepool, which is just to the south of me—

[Madam Deputy Speaker (Dawn Primarolo)]

Briefly.

[David T. C. Davies]

I take the hon. Gentleman’s point. I am focusing on the fact that there are jobs out there for some people and that there are some people who will not take jobs. I accept that there are not enough jobs and we would all like to see more.

One thing the Government can do—I think they are considering this—is look at the red tape imposed on small businesses. When I ran a small family business, I was reticent to take people on because if we took on a contract to move goods from A to B that lasted for nine or 12 months and took on some extra drivers to do that, we were stuck if we suddenly lost the contract because we found it very difficult to get rid of people. We ought to look at lifting the red tape so that companies can take a risk by taking somebody on. If that does not work out, sadly, they might have to let them go but a lot of companies would hang on to people if they could. It is not the public sector out there—things are a lot harsher. The hon. Member for Stretford and Urmston (Kate Green) is laughing, but I wonder whether she has ever tried to run a small business. We are also, I am glad to say, looking at the green taxes that have been levied on the big industries, because there is absolutely no point in hitting big manufacturing companies with carbon and environmental taxes if they are simply going to relocate to the other side of the world and make their goods over there, taking jobs with them and probably creating even more carbon as they ship back whatever it was they were making.

I have only 45 seconds left, but I must mention the right hon. Member for Birmingham, Hodge Hill, who was going to give way to me, but failed to do so, when he mentioned Clement Attlee. We all supported the grandiose schemes of—not Clement Attlee, sorry, Bevin, who was supported by Winston Churchill at the time, the Conservative leader—[Hon. Members: “Beveridge!”] Beveridge, sorry. Not Bevin, no, I accept that.

The right hon. Gentleman will know, however, that Beveridge’s plans were built on the back of a war loan from the United States, which had to be paid off for decades afterwards; that Callaghan’s Government ended in failure; that Wilson had to devalue the pound; and that his own, previous, Government were responsible for the biggest boom and bust in financial history—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.