Jobs and Growth

James Morris Excerpts

Thursday 17th May 2012 Commons Chamber

[Ed Balls]

The Governor of the Bank of England was confident two years ago that the Chancellor was making the right calls on the pace of deficit reduction. Unfortunately, it has turned out that the Governor of the Bank of England and the Chancellor of the Exchequer have both got that wrong. We had gone back into recession even before the eurozone crisis. Let us consider recent entries from the website of the hon. Member for North West Leicestershire (Andrew Bridgen). They show him “criticising cuts” to “local health centres”, and reveal his wish to “Save Moira Fire Station” and for the “replacement” of local bus services. I am not sure that all that is entirely on message. Yet the Chancellor and the Prime Minister are still clinging to the view that they are right and everyone else is wrong. In his speech today, the Prime Minister seemed to be trying to claim that the choice between austerity and growth was a myth. [Interruption.] I think that the Chancellor should listen to this, because I am about to explain why he has got it so badly wrong. He should listen and learn, Mr Deputy Speaker, listen and learn.

If the Prime Minister meant that we should not choose between policies for growth and policies for deficit reduction, he was right. I agree. In fact, that is exactly what Lord Mandelson and I argued in our joint article in Monday’s Guardian. We argued for action now to boost jobs and growth, alongside tough medium-term deficit reduction plans. But that is not what the Prime Minister was saying today. He and his Chancellor are still clinging to the mistaken and, now, increasingly discredited view that cutting spending and raising taxes faster to cut the deficit is the route to economic growth, when all the evidence is to the contrary. Trying to cut the deficit faster has not boosted growth in recession; it has choked off confidence, unemployment is up, and we are borrowing more than he planned, not less. If the Prime Minister is really claiming that he is on the right course, he is even more complacent and out of touch than I thought.

[James Morris (Halesowen and Rowley Regis) (Con)]

Does the right hon. Gentleman not agree that economic policy is about credibility? Would he not have more credibility if he told us how he would cost his so-called plan for jobs and growth?

[Ed Balls]

Credibility is about getting things right, not about getting them wrong. We were told that we were out of the danger zone and that the recovery had been secured, but what has happened? Plan A failed in Britain and in the eurozone too, and it is the very plan that the Chancellor has been urging on us. What did he say to The Daily Telegraph in August last year? He said:

“Britain is leading the way out of this crisis”,

and

“The eurozone must follow our lead and act decisively”.

The Prime Minister is off to the G8 summit this weekend. The only countries in recession that will be represented there are Italy and Britain. How are we leading the way? The fact is that the austerity policies that are failing in Europe are the very same policies that have failed in Britain, and which the British Government have been urging the German Government to urge the eurozone to stick with. That is the reality.

Opposition Members have consistently argued that it will not work for all countries to try to reduce their deficits at the same time, that tough medium-term plans to cut the deficit will work only if Governments also put in place a plan for jobs and growth, and that a time when a global hurricane is brewing is precisely not the time at which to rip out the foundations of the house here in Britain.