Jobs and Growth

Debbie Abrahams Excerpts

Thursday 17th May 2012 Commons Chamber

[Ian Swales (Redcar) (LD)]

The key to jobs and growth is wealth creation. We create wealth by digging it up, growing it or making things. Everything else is just moving it around. That is why I welcome the Government’s focus on real wealth creation, especially manufacturing.

Labour has been highly critical of almost everything done by the Government, but it is hard to discern what its programme or vision would be. I suppose we can tell a lot about its vision from what it did when it had its hands on the levers for 13 years. It had 13 long years in which to create the society it wanted, so what did it look like in the end? It loosened bank regulation, and further to help its friends in the City it scrapped the public interest test on takeovers in 2002, meaning that many of our cash-generative businesses are now foreign owned, especially in utilities and infrastructure.

Labour decimated manufacturing, taking it from 22% to 11% of the economy, which had knock-on effects for many other sectors, such as logistics. It left Hartlepool, Middlesbrough and Redcar and Cleveland in the weakest 10 of the 324 local economic areas. It widened the gap between the north and the south and the rich and the poor, and widened health inequalities. It created a benefits culture in which work did not pay for many people and having children became almost a career option in towns such as Redcar.

What about the tax system? Today, we again heard from the Opposition the mantra, “Tax cuts for millionaires.” I do not think that friends or even enemies of the right hon. Member for Wokingham (Mr Redwood) would describe him as left-wing, yet in his alternative Queen’s Speech the other day he called for a return to the former Prime Minister’s favoured tax levels—a top rate of income tax of 40% and capital gains tax at 18%. So how did millionaires fare under Labour? They had a 40% top tax rate until the last month of its 13 years. After the recent cut, it stands at 45%. It levied an 18% rate on capital gains—a lower rate than their cleaners and drivers would pay on their income. This Government have lifted that to 28%.

Under Labour, millionaires could put £250,000 a year into a pension scheme and get tax relief. The cut to £50,000 by this Government has raised £4 billion from the rich. They received child benefit and paid 2.5% less tax on their spending. They could get unlimited taxpayer support for gifts to charities, including family- controlled trusts, public schools such as Eton and, as in the case of Andrew Lloyd Webber, a huge art collection, some of which he rents back cheaply to his own house. Add to that numerous loopholes, and millionaires must want Labour back as fast as possible. Meanwhile, people on the minimum wage were paying £700 a year in tax.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Will the hon. Gentleman remind me who introduced the minimum wage?

[Ian Swales]

It was one of Labour’s great achievements and one I totally support, but I do not support a tax level of £700 a year on the minimum wage, which was in place when the previous Government left office.

What do all these failures in Labour’s vision have in common? Apart from the takeover test, they are all being tackled by the Government. Of course we are doing a lot more than that to stimulate jobs and growth. We are dealing with Labour’s shocking education legacy, as a result of which employers, even in high unemployment areas such as mine, say they cannot find the people they need. We are starting from the bottom. The pupil premium is proving such a help to children in deprived areas. We are encouraging science study in school—it is already up 80%. The National Citizen Service is giving young people confidence in those all-important softer skills. We have made huge investments in apprenticeships, the number of which has more than doubled in my constituency.

We are dealing with Labour’s neglect of manufacturing. We have heard the good news today about Vauxhall and the Business Secretary’s involvement in it. He has also intervened recently in the bioethanol industry, and we will shortly see the restart of a plant in my constituency on which 2,000 jobs depend. We are also pushing green technology. I can look out my office window in Redcar and see 27 giant offshore wind turbines being constructed. Construction is about to start on a £500 million biomass power station at Teesport. The other day I met representatives of the Forewind company, which is starting a massive project on the Dogger bank and wishes to bring power ashore through my constituency. I thoroughly welcome the announcement in the Queen’s Speech of the green investment bank, which will bring more jobs and growth to this vital sector.

The Government are investing in technology and innovation centres, including a centre for process innovation in my constituency. They are investing to improve rail freight infrastructure from Teesport and have created enterprise zones, including three in my constituency at Wilton, Kirkleatham and South Bank. The regional growth fund has already given more help to manufacturing in the Tees valley than we ever saw under the north-east’s regional development agency, and I welcome the extra £1 billion that has been allocated. The work is being co-ordinated by the excellent new local enterprise partnership for the Tees valley.

The Government are beating the bushes to generate international trade, and we are beginning to see the fruits of that activity. Exports to non-EU countries are at record levels, and we now have the first net trade surplus on cars since 1976. The north-east region is already in trade surplus, and the figures will soon include the £20 million-worth of steel a week that is being exported to Thailand from the newly reopened Redcar steel works. The first ship left yesterday.

Private sector jobs are being created—there have been about 500,000 since the general election—but unemployment is still way too high, especially in the north- east and especially among the young and the long-term unemployed. My constituency still has the second highest unemployment level among those of Government Members, and that remains a high priority for me. I was therefore delighted to see a drop of another 85 in the figures yesterday.

As we watch the Olympics, the carbon fibre bikes, the Kevlar canoes, the space-age swimsuits, the polyurethane footballs and the Paralympian equipment will be a reminder of the vital role that chemistry and the process industries play, and will play in the recovery. There is optimism in the north-east’s process industries, and the position could be made even stronger by a Teesside carbon capture and storage network. I look forward to the result of the call for bids for that project. Large UK companies are ready to invest billions in it.

Times are tough for the economy as a whole, not least because of the debt burden. The eurozone is in chaos and there is still a lot more to do, but this Queen’s Speech contains more steps in the right direction and I commend it to the House.

--- Later in debate ---

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Last week’s Queen’s Speech was my first as an MP. Although nobody does pomp and pageantry better than we do, I was deeply disappointed with its content: lots of style but no substance.

When this Government came into office two years ago, we were in economic recovery. Since then, we have been bumbling along the bottom with very little growth, and now we are back in recession again. This is not due to the worst global financial crisis since the 1930s; it is due to the mismanagement of the economy by the current Downing street incumbents. Yesterday, the Bank of England yet again had to downgrade forecasts for economic growth, from 1.2% to 0.8%, and the outlook for inflation is well above the 2% target.

Yet this not the experience of every other country. The US, which was at the centre of the global crash in 2008, started to recover, like us, in 2009-10, and it is continuing to recover. Similarly, the rest of the G7 is performing better than we are. Our economic performance is one of the worst in the G7, with Italy coming up just behind us. Brazil has now overtaken us as the sixth largest economy. The austerity measures that this Government have introduced are clearly not working.

The impact on unemployment in the public and private sectors is already being felt. Last year, the public sector lost 276,000 jobs. Some have estimated that the figure will be as high as 700,000 by 2015. In Oldham, £24 million has been cut from next year’s council budget, meaning 400 job losses. That is not the end of it. My local hospital trust, Pennine Acute Hospitals NHS Trust, recently announced a statutory consultation on a further 160 redundancies. It has to find savings of £45 million this year. That comes on top of 600 posts that have already been lost. In spite of the Government’s reassurances that jobs will be created in the private sector, large and small businesses alike are closing, including BAE Systems in Chadderton, Warburtons Bakery in Shaw, Long’s Plumbing and, of course, Remploy.

Although I welcome yesterday’s unemployment figures that show a reduction in the previous quarter, I am afraid that the trend in long-term unemployment is upwards, as we have heard. In Oldham, more than 8,000 people are out of work across the borough, with 11 people chasing every job. The number of women out of work is the highest since 1995. There has been a 25% increase in long-term unemployment among the over-50s. In my constituency, the number of jobseeker’s allowance claimants has increased by 20% since June and doubled since 2006. Young people in my constituency have been particularly badly hit, with a 288% increase in long-term unemployment since last year. Worryingly, young black and Asian men are disproportionately affected, with 56% and 23% respectively being unemployed. Those figures have doubled since 2008, so we should be very worried about that problem.

What was there in the Queen’s Speech for those people? Absolutely nothing. At the Select Committee on Work and Pensions yesterday, I was profoundly disappointed by the apathy and complacency about what is going on and about how it can be addressed. The youth contract is not geared towards focusing on these problems and only quick fixes have been introduced. There are inequalities not only between different population groups, but on a geographical basis. The urban heartlands of Greater Manchester, Liverpool, Newcastle, Glasgow, Cardiff and parts of London are most affected. The Government’s talk about fairness is just that—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I call Mr Mark Spencer.