Debate on the Address

Geoffrey Cox Excerpts

Wednesday 9th May 2012 Commons Chamber

[Geraint Davies]

I am not talking about whether the hon. Gentleman and others referenced growth, but whether they took any notice at all of the fact that across Europe we are seeing these fundamental changes. The economic orthodoxy wants to ignore the wishes of people who are being downtrodden by these austerity measures, and we are facing a real challenge as regards the future of democracy in parts of Europe, the future of the euro, and the future of the European Community. In this year of her diamond jubilee, the Queen should have been given the opportunity to demonstrate that the Government are showing greater leadership by example in developing a proper, coherent strategy for delivering growth instead of cuts to get the deficit down. Instead, we have had the same old medicine with the familiar side effects of less money being spent in the public sector, leading to less money in the private sector and a downward spiral of unemployment and poverty. We have seen that across Europe.

What we need in the UK and Europe is a combination of fiscal stimulus and co-ordinated investment. The party with the best record on growth is of course the Labour party. Between 1997 and 2008 there was unprecedented and continuous growth that we had not seen since the war. In 2008, of course, we faced the financial tsunami, and to the credit of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Barack Obama, the introduction of the fiscal stimulus enabled the world to avoid depression and deliver shallow growth into 2010. Then the Conservatives took over a deficit that was two-thirds caused by financial institutions and one-third caused by the Labour party investing beyond earnings to continue growth. Their immediate response was to announce half a million job cuts, which deflated consumer demand and led to negative growth. Indeed, the deficit projection is up by £150 billion.

[Mr Geoffrey Cox (Torridge and West Devon) (Con)]

Does the hon. Gentleman think an 11% annual budget deficit was sustainable?

[Geraint Davies]

No, of course not. The question is what is the most effective way of reducing the deficit is and what the balance should be between growth and cuts. By way of a simple example, I spoke to a business person in Uplands in Swansea, and he said, “I run a business. If I were to make a loss and I sold my tools and laid off all my workers, I’d have no business. I need to tighten up my costs and focus on developing more products and selling them in the marketplace”. The idea that we can solve the deficit just through making cuts is barmy. The focus should be on balancing the books through jobs and growth.

Let us examine the situation in Greece. Given the draconian cuts to pensions and jobs, it is no surprise that people cannot see any obvious upside. The money that is being put into Greece is being used to pay down the debt rather than to invest in productive infrastructure that can generate growth. I am not saying that there should be extra money for Greece, but we must consider the balance between the two.

The EU could invest in solar forests in Greece to generate energy for the rest of Europe, in connectivity such as railways and roads to boost the holiday industry, in infrastructure in the holiday industry, or in broadband across Greece. At the moment, the £13 billion a year that the EU spends on research and innovation is all spent in the north of Europe. The centres of excellence in Germany, at Oxford and Cambridge and the like get the money, and Greece is regarded as having under-developed academic resources. Such policies need changing, because we are a community, not just a market. The way through for Greece is to negotiate a settlement in which debt reduction is balanced by investment in productive infrastructure that can deliver growth and help Greece pay its way. It is not for the EU simply to say, “You are poor, you’ve spent too much, we’ll make you poorer”.

Britain should take a lead and invest in growth in our own backyard and in team GB. We should work together to provide coherence about economic growth. In my area, I am instrumental in bringing together stakeholders from the Swansea bay city region. Swansea council, Neath Port Talbot council, which is next door, and Pembrokeshire and Carmarthenshire have made a joint submission to the Welsh Government saying that they want to work together within a city region of some 750,000 people rather than operate independently. They want to have joint marketing and inward investment strategies and put more pressure on the Government to provide the infrastructure to deliver growth.

The right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) mentioned that if Wales had the £1.9 billion that is equivalent to what is being spent on High Speed 2, it could invest in, for example, the electrification of the railway to Swansea or reducing the toll on the Severn bridge, as the Government have done on the Humber bridge. That would stimulate trade coming into south Wales and enable a coherent, joined-up approach to economic development, working in tandem with industry and academia to move economic growth forward. Alongside a fiscal stimulus, such joining up of the economic capabilities of councils across Britain, targeting emerging consumer markets, is the basis of a coherent growth plan that can move us forward. That is better than the Conservative party’s preoccupation with savage cuts affecting the most vulnerable, which are also happening in Greece.

I hope that there is a golden future for the Swansea bay city region. Increasingly, people will realise that it is a great location to go to. It has environmental beauty, and the roll-out of broadband means that people can move out there. The costs of setting up a business are much lower than in London, and I hope that Swansea’s premier division status—it has the premier football team in Wales—will help us move forward. I say that with no disrespect to Cardiff, who I know did not get into the premier league, so there is just one premier league team in Wales.

The region is a cultural centre. It was the birthplace of Dylan Thomas, whose centenary will be acclaimed in 2014. It is a centre for tourism and for sport, so there is a package of activity that makes people want to visit the Swansea bay city region, invest in it and move there. The future is bright. We ask the Government for a bit more support for infrastructure, as part of a growth plan, so that we can work together to create jobs and wealth. That is the only real solution to getting the deficit down, rather than simply cutting again and again.

What we need now is to follow the example given in 2008 by Obama and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath, who averted a depression. We must have a co-ordinated approach across Europe so that we can move forward together before it is too late. We all know the adage: give a man a fish—I should say give a person a fish, or in this case give Greece a fish—and he can eat for a day, but give him a rod and he can eat for a year. Now, we are cutting the fish in half so that he is hungry by lunchtime. We need to get the balance right between investment in infrastructure and cuts. I would have liked at the centre of the Queen’s Speech bold new initiatives for Britain that could provide leadership for Europe and help us move forward in the world.