The Economy

George Kerevan Excerpts

Wednesday 18th November 2015 Commons Chamber

[The Economic Secretary to the Treasury (Harriett Baldwin)]

I start by associating myself with the sentiments expressed by the hon. Member for Hayes and Harlington (John McDonnell) about the French atrocities and the importance of our security forces. I and other Treasury Ministers yesterday signed the book of condolence at the French embassy.

The economic policy of Her Majesty’s Opposition is now represented by a man who wants to overthrow capitalism, nationalise businesses without compensation, and who answers to Len McCluskey. He is a man who thinks that printing money, and triggering the inflation that hurts the poor and the elderly the most, is a good thing. He thinks that a budget surplus is “barmy”, and that we can balance the books by avoiding “any cuts whatsoever”. He is a high-tax, high-inflation, high-unemployment socialist who draws his economic inspiration from the Venezuelan economy and Syriza in Greece. The Government will not take economic lectures from him on how to run our policies, and we will do everything in our power to keep him in opposition.

[George Kerevan (East Lothian) (SNP)]

Will the Minister remind the House how many pound notes the Bank of England has printed through quantitative easing?

[Harriett Baldwin]

Monetary policy has been run by the Bank of England independently, and I am sure that the Scottish National party will continue to support the Bank’s independence against the inflationary tendencies of the hon. Member for Hayes and Harlington. I am pleased to have the opportunity to remind the House once again of how this Government’s long-term economic plan is delivering for the working people of the United Kingdom.

--- Later in debate ---

[George Kerevan (East Lothian) (SNP)]

Where does growth come from? Government Members have made much of their claim to fame of having delivered growth, but if we want growth to be sustainable, where does it come from? Does it come from investment? There has been only a slight uptake in investment in the UK in the past 18 months. It will certainly not be the driver of growth, looking to the future. Does growth come from trade? Many speakers have said that trade has not added to growth since 2010, if not since 2008, when the recession began. In fact, trade in goods and services has been a negative—a drawback on growth—because imports have increased faster than exports. The Office for Budget Responsibility predicts that that will continue through the spending period to 2020. We have not rebalanced the economy—the Chancellor’s claim in his emergency Budget in 2010 and at the beginning of this year—towards manufacturing exports. That has not happened and will not happen until, if we are lucky, the mid-2020s. That is the Government’s palpable failure.

So where has growth come from? It has come from shifting public debt on to private debt, and from a growth in consumer spending, which is unsustainable because, the moment interest rates go up, it will turn into a huge negative as consumer debt piles up and consumers stop spending. The Government have created growth, but it is short term and unsustainable. The moment America starts to put up interest rates, we are in trouble.

Let us contrast that with the response to the previous recession in 1992. We had a devaluation in 1992, which boosted trade. We do not have that now. We need a real, not a paper focus—not rhetoric—on economic development, industrial investment and boosting our trade pattern. We should not cut science spending, which has happened, or subsidy and support for industrial investment. We need a real industrial plan and we do not have that. I predict that we will come back in a few years when interest rates start to go up and the drive from consumers that underpins growth goes, and the Government will be smiling on the other side of their face.