The Economy

Jackie Doyle-Price Excerpts

Wednesday 22nd June 2011 Commons Chamber

[Jackie Doyle-Price (Thurrock) (Con)]

It is a pleasure to follow the hon. Member for Airdrie and Shotts (Pamela Nash), who spoke with considerable passion about the plight of some of her constituents. However, I am sure she will recognise that the best way of tackling the poverty that she described is by getting our economy working more effectively, incentivising people who want to create wealth and spreading more jobs. That is the way to tackle the problems that she articulated.

On that note, I congratulate the Chancellor of the Exchequer and the Treasury team on sticking with the tough decisions that will rebuild our economy and prevent it from spiralling further into debt, and in so doing lay the foundations for future growth. We must stick with our plan. There is no need for a plan B.

Let us get this correct: we inherited an economy built on credit and public spending. That is not a climate that will encourage wealth creation. We cannot keep taxing private enterprise in order to fund an expanding public sector. We need to incentivise our wealth creators and set the economy free. It is clear from recent economic figures that the economic fundamentals are strengthening. Indeed, John Cridland, the director general of the CBI, said this weekend that we are well into recovery, even though it does not quite feel that way.

[Lilian Greenwood]

I understand what the hon. Lady is saying, but does she not share our concern that although we are supposed to be in recovery, the growth figures keep being downgraded?

[Jackie Doyle-Price]

I was just getting to the explanation for that, which is the one that my right hon. Friend the Chancellor of the Exchequer gave at the Mansion House last week. He dissected the growth figures, which showed that although financial services were contracting, in the rest of the economy we were in a period of growth. We need to rebalance our economy, and to take it away from a large financial services sector and more towards manufacturing and other sectors.

I shall continue, because time is brief and many colleagues want to contribute, by bringing the debate to life with some real-life examples, and by drawing the attention of the House to some areas where we are making considerable progress. First, there is a genuine improvement in manufacturing—the Government amendment mentions an increase in activity of 4.2%. I have the privilege to represent a considerable amount of manufacturing industry, which is situated particularly in the west Thurrock area and in Purfleet. Among the large operations in my constituency is a Unilever plant that manufactures, among other things, Hellmann’s mayonnaise, Flora margarine and other spreads. The company very recently relocated its manufacturing operation for jars of Hellmann’s mayonnaise from the Czech Republic to Purfleet. Why? Because it was more cost effective. Do not let it be said that the UK cannot compete internationally for manufacturing presence.

[Owen Smith (Pontypridd) (Lab)]

The latest manufacturing output numbers show a clear decline, not an increase. There was an increase over the last year, but that was largely because people restocked after running their inventories down during the crisis. Does the hon. Lady concede that manufacturing now is going in the wrong direction?

[Jackie Doyle-Price]

The hon. Gentleman wilfully ignores what I just said. I gave one illustration of inward investment and an improvement in manufacturing in this country. That decision was taken by a thriving company because it is cheaper to produce here than in eastern Europe. He should look at the evidence instead of constantly talking the economy down.

Jobs are increasing. My father has lived all his working life in Sheffield, and many hon. Members are familiar with the economic problems in South Yorkshire. He has spent his entire working life as a builder and labourer. For much of the past decade, he struggled to find work, and has been in and out of work on short-term contracts. When he was laid off last year, he did not hold out much hope of finding more work, given the prevalence of eastern European gangs in that area of work, but last week, the day before his 63rd birthday, he re-entered the world of work, in Sheffield, so it is clear that the economy is indeed moving in the right direction.

[Paul Blomfield (Sheffield Central) (Lab)]

Will the hon. Lady give way?

[Jackie Doyle-Price]

I shall press on, if that is okay.

The Government’s measures will encourage more people to fill newly emerging jobs. I am delighted that in the last Budget, we began to move towards increasing the income level at which income tax is paid, which will make the most difference at the margin. With our welfare reforms, that will incentivise people to get back into work.

There has also been an improvement in investment. The biggest inward investment in the UK is for the London Gateway port, which is being constructed in the borough of Thurrock. That will add to the area’s existing port facilities at Tilbury, which this year celebrates its 125th anniversary—we all wish it many more years of success—and Purfleet, where the roll-on/roll-off container business is again booming. Even before DP World opens, the tonnage landed in Thurrock exceeds that of Dover and Felixstowe. That is a good sign that in my constituency at least, the economy is definitely moving in the right direction.

Having spoken of all that is going well, I would like to tell my colleagues on the Treasury Bench about matters on which the Government need to raise their game, so that we make the most of the economic opportunities that are available to us. First, we need to do more to encourage investment. We need to make investment easy and to ensure that there are no barriers in its way, particularly in the planning system. Some firms have had to pay absolute fortunes to protect species on brownfield sites, and section 106 agreements seem to be used by local authorities, and indeed on occasion by Government Departments, as cash cows to fund projects that go beyond the benefit needed. Our overall objective is to encourage economic growth and job creation, so we need to ensure that those measures do not act as barriers to investment, but encourage it.

On the banking sector, I thoroughly support the objectives behind Project Merlin and agree that there is a need to ensure that our banks lend to people who want to buy their own homes and to businesses. However, we need to bear in mind that businesses are much less risk averse, and that they are looking at other ways of financing investment where possible. We must avoid putting the taxpayer in the position of lender of last resort for projects that are riskier than projects that we should support.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I thank the hon. Lady for giving way before she leaves the subject of Project Merlin. She will have seen the lending figures for the first quarter. To put it mildly, the figures for lending to small and medium-sized business are disappointing. Does she believe, as I do, that the Government need to take firmer action to ensure that the banking sector lives up to its Project Merlin commitments?

[Jackie Doyle-Price]

We should absolutely encourage more lending to sustainable businesses and business propositions, but we should not encourage banks to lend just to meet that target. Lending must be based on real demand, which, as I said, is falling, because firms are finding other ways to fund investment. It must also be based on an appropriate degree of risk, because it is inappropriate for the taxpayer to stand as guarantor of such loans.

In conclusion, there is more realism in the economy. We are building an economy on real wealth creation, not credit or an inflated public sector. There is much to celebrate, despite the best efforts of Opposition Members to talk our economy down. They must consider the impact of their words. Confidence is central to economic growth—confidence is all, and every negative message undermines it. When confidence is undermined, the recovery will slow. This is not about partisan games; it is too important. We all need to recognise the real progress that we are making.