Living Standards

Ian Mearns Excerpts

Wednesday 30th November 2011 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

I am grateful to be called to speak in the debate. The Government’s failure in economic policy is having a profound effect on our nation, but it is also having a disproportionate impact on regions such as the north-east and the poorest in our society. I have every sympathy for the squeezed middle, and many of my constituents are part of it, but I have much greater sympathy for the people who are the battered base in our economy, the very poorest in our society, who the Government’s policies are attacking the worst.

In March the Government launched their much-heralded “The Plan for Growth”. In the foreword, the Business Secretary and his new friend the Chancellor stated:

“This Plan for Growth is an urgent call for action. Britain has lost ground in the world’s economy, and needs to catch up. If we do not act now, jobs will be lost, our country will become poorer and we will find it difficult to afford the public services we all want. If we do not wake up to the world around us, our standard of living will fall, not rise.”

[Fiona O’Donnell (East Lothian) (Lab)]

Does my hon. Friend agree that one area where we are missing an opportunity for growth is green growth, and that yesterday the Government finally shed any claim to be the greenest Government ever by threatening investment in green technologies and green jobs?

[Ian Mearns]

I am grateful to my hon. Friend for her comments, which are absolutely true. Certainly, companies in the north-east that have invested heavily in plant to develop photovoltaic cells for household generation and microgeneration have had the base of their work cut away by the Government’s slashing of input tariffs, which will have a disastrous effect on them.

The warning from the Business Secretary and his new friend the Chancellor was a call to action—fine words, but we all know that actions speak much louder. In my constituency and in the wider north-east the impact of the Government’s failure has been, and will be, enormous. Even before their economic sabotage, the Local Knowledge public sector employment survey predicted more than 287,000 public sector job losses in the north-east alone. As a consequence of the Chancellor’s statement yesterday, that figure will probably be higher. The Government claim that we are all in this together, but they know, as they knew before embarking on their failed economic experiment, that it will be the poorest and most vulnerable regions and people who will pay the greatest relative cost.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that the spectre of regional pay, which the Government raised yesterday, will be a huge concern for workers in Wales and the north-east, who will end up doing the same jobs for less pay?

[Ian Mearns]

I could not agree more. If we want an economic race to the bottom, that is exactly the sort of policy to follow.

In September 2010 the BBC published a report that demonstrated clearly which regions would suffer most. Spending cuts were “to hit north harder”, it reported. BBC-commissioned research showed that industrial areas in the north-east and the midlands are least resilient to economic shocks. It showed that Middlesbrough is ranked as the most vulnerable, followed by Mansfield in Nottinghamshire, and Stoke-on-Trent. The Experian research suggests how England’s regions may cope or not cope with further public sector cuts. The study looked at the ability of each local authority area to withstand sudden changes in the economy, and a clear north-south divide is evident in the research. Elmbridge and Waverley in Surrey and St Albans in Hertfordshire are the most resilient places, and places such as those I mentioned are the least resilient.

[Jim Shannon (Strangford) (DUP)]

Clearly, the changes in working tax credit and child tax credit will also affect people, and those who are not on the poverty line but are close to it will be pushed towards it. Does the hon. Gentleman believe that the Government’s changes in working tax credit and child tax credit will have a harsh impact on those people who can least afford it?

--- Later in debate ---

[Ian Mearns]

That is exactly the case, and the impact will be felt more greatly in the regions outside the south- east.

The BBC’s research revealed a clear north-south divide, and a number of factors within the categories were analysed, including the number of vulnerable and resilient industries within an area, the life expectancy of residents, the earnings of workers, and the unemployment and crime rates. The Deputy Prime Minister even admitted at the time that Experian’s research showed that a north-south divide was already present in England. He said that large spending cuts to be announced in the following months should be seen as a broader effort to put the economy on to a more sustainable footing. He spoke about the need to “balance the books”, and to redress the balance. From the north-east’s perspective, can I thank the Deputy Prime Minister? I think not.

In the face of clear evidence of the north-east’s vulnerability, what was the Government’s action? In the last financial year, while the 12 least deprived authorities in England have suffered cuts of around £5 per head of population, Gateshead has lost £88 per head, and the 12 authorities in the north-east have lost an average of £84 per head in expenditure, so no one on the Government Bench should dare to come out with the usual mantra of “We’re all in this together.” It is clear that if we are all in this together, some are dipping their toes and some are in up to our necks.

In November 2010, the Office for Budget Responsibility predicted that 410,000 jobs would be lost in the public sector as a result of the coalition’s cuts. However, in October 2011, the Chartered Institute of Personnel and Development said that overall job losses are now expected to be between 600,000 and 750,000 between now and 2015-16. In the north-east already, local authorities have shed well over 10,000 jobs, and 30,000 jobs in the public sector have gone. Some 142,000 people are on the dole in a population of only 2.5 million, and between 12 and 15 people chase each job vacancy in the jobcentres of the north-east. We are not all in it together. There is clearly a divide in the nation.

Where are the jobs in the private sector? Where is the growth that was supposed to replace public sector job losses in the north-east? They simply have not happened, and they will not happen, because the Government’s policies are sucking spending power from the north-east’s economy. Our high streets are suffering, our shops are closing, and our local economy is shedding jobs. If anything, the private sector in the north-east is becoming poorer. Although there is much innovation, cuts in input tariffs are having an impact on green industries. Other industries, such as Allied Bakeries in my constituency have shed jobs, as has Waverley Vintners. The Alcan smelter in the constituency of my hon. Friend the Member for Wansbeck (Ian Lavery) has lost jobs. Things are getting bad up there, and we need a real rebalancing of the economy. Instead of borrowing money to spend on dole and benefit payments, why do we not use that borrowing to invest in our economy, to provide infrastructure growth and create jobs in construction? We are not all in this together, and clearly the Government must wake up to that fact.