Economic Growth

Debate between Emily Thornberry and Henry Smith

Wednesday 15th May 2013 Commons Chamber

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I should like to begin by belatedly congratulating the hon. Member for Eastleigh (Mike Thornton) on his election to the House. I also congratulate him on his constant optimism. For the sake of the record in Hansard, I must point out how very lonely he must be on the Liberal Democrat Benches. He is largely by himself over there.

So, here we are after three years of the coalition Government. The early growth that they inherited has been strangled, and the economy is flatlining. We have terrible rates of unemployment, particularly among the young, for whom long-term unemployment continues to increase. Many of those youngsters have no hope. Living standards are being squeezed, and it is more and more difficult for people to make ends meet. Business confidence is dying, and investment is declining as a result.

The country is crying out for a change and for the Government to do something. People were looking forward to a Queen’s Speech that would show that the Government were prepared to do something, but Her Majesty might as well have stayed at home. The measures in it do not address our economic crisis at all. I am not saying that there is nothing in it for us to welcome. Reform of the Independent Police Complaints Commission is long overdue. We have yet to see what it will involve, but I hope that the commission will be improved. I also hope that a proposal for a register of struck-off police officers will be included in the legislation. I even welcome some of the changes to the Dangerous Dogs Act 1991.

Apart from that, it is hard to see how this Queen’s Speech will help the country. We need a new plan to tackle the lack of jobs and growth, but it offers us nothing. Do the Government really believe that the draft deregulation Bill will get the economy going again? Do they believe that by snipping away at red tape they will encourage the private sector to rise up like the Incredible Hulk and get the economy working? I do not think that they really believe that. They cannot believe that that is going to save the economy. Surely they do not believe that they can just sit back and do nothing. In circumstances such as these, it is surely the responsibility of the Government to take a lead, but I am afraid that the Chancellor of the Exchequer gives every sign of being a man who has decided that he cannot afford the loss of face that would inevitably accompany a change of course. He cannot afford to expend so much political capital on doing something new, and we are all paying the price as a result.

[Henry Smith (Crawley) (Con)]

I take it that the hon. Lady is suggesting some sort of plan B, as offered by her party. Does she feel that the socialist model that has been pursued by President Hollande in France over the past year has led to success in that economy, given that it has now entered a triple-dip recession, compared with the growth in the UK economy?

[Emily Thornberry]

The difficulty is that, by carrying on regardless, this Government are killing the economy. I do not have time to go through my bundle of suggestions put forward by various economists, but Paul Krugman has said that the Government’s austerity plan is “fundamentally mad”. I was hoping to have time to read out more such views, but there is not time.

I would like, however, to use the few minutes that I have to give the Government some advice. They might listen—you never know! How about looking into housing? For example, £30 billion spent on infrastructure investment in housing—particularly affordable housing and social housing for rent—would represent 2% of GDP. The International Monetary Fund has said that the fiscal multiplier resulting from such investment could be between 0.9% and 1.7%, which could boost growth by 2.6% of GDP. That would be a short-term boost, but the TUC recently commissioned the National Institute of Economic and Social Research to look at the effect of such investment over the longer term. That research showed that such investment would continue, three to four years on, to have a positive effect on debt and GDP.

This is not just about the economy; it is also about fairness. We know that there is not enough housing. We know that people need jobs and training, and that our youngsters need something to do. They need hope. Investment in housing would provide all those things. This Government are building the smallest amount of housing of any Government; they have the worst peacetime record of doing that of any Government since the 1920s. Council house waiting lists continue to grow. If the Government continue at this rate, it will take until 2129 to build enough housing to meet the current need.

Of course, we know that the Government want to cut back on the benefit bill. They say it is wise to introduce a blanket cap without thinking about how some areas that have a desperate housing crisis will have much higher housing costs. My constituency provides a very good example. If a family of five is living in a three-bedroom house in the private sector in my constituency and someone is unlucky enough to become unemployed, the rent would be £400 a week. The question I wanted to ask the Chancellor earlier—unfortunately, he did not allow me to intervene—was this. If the rent is £400 a week and the cap is £500, what does such a family of five do? Does it live on £100 a week or not pay the rent instead? If the rent is not paid, does that mean the family is intentionally homeless, and if it does, does the council have to re-house the family? If the council does have to re-house them, but there is not enough social housing, where does the family go? Where would the Government suggest these people go? Perhaps they would go to Dover or to some of the marginal seats in outer London. Unfortunately, the Government have no idea of where these people should go. The tragedy of the debate so far is that there has not been enough emphasis on fairness.