Policy for Growth

Jamie Reed Excerpts

Thursday 11th November 2010 Commons Chamber

[Mr Jamie Reed (Copeland) (Lab)]

It is, as usual, an absolute pleasure to follow the hon. Member for Northampton South (Mr Binley). I did not come into the Chamber expecting to agree with so much of a Government Member’s analysis of what we need to do, but he is absolutely right: the banks do need to lend more, the Government do need to make the banks lend more, and in matters of economic policy we do need to take a long-term view. Those are fundamental principles with which I agree.

Whichever side of the House we may be on, we all know the basic Clinton mantra about what secures electoral success and that is an article of faith in which we must all believe in the modern economy: “It’s the economy, stupid.” Those words were not reserved specifically for the Chancellor of the Exchequer, but we know that the economy is fundamentally a moral issue as much as anything else. The effects of economic policy are primarily seen and felt not on a balance sheet, but in our communities up and down the country. I believe that an effective economic policy redistributes wealth and opportunity fairly: it underpins cohesive communities, enables individual ambitions to be fulfilled, and allows families and businesses to flourish.

I commend the right hon. Member for Wokingham (Mr Redwood) on securing the debate, because we need to discuss this subject more. Given that we are experiencing a period of economic transition in this country and, indeed, across the globe, our debates in the House are sometimes mystifying. We need to discuss this subject much, much more.

I sincerely hope that the Government’s economic policies work, because this is our shared interest and, surely, our shared goal, but I have to admit that I doubt that they will. It is undeniable that one of the worst aspects of the manufactured narrative surrounding the Government’s economic policy is the polarisation of the so-called private and public economies. The Conservative and, now, Liberal Democrat mantra is “Private is good, public is bad.” We should reject that flawed view. I say “Public is good, private is good.”

[Mr Gyimah]

I think that what the Government are trying to say is that the state is not the same thing as the economy, and that pumping more money into the state is not the same as driving the economy. If we want the economy to grow, we need to enable the private sector to thrive. That is what the Government’s policy is about.

[Mr Reed]

I entirely agree. This is not just about the state. However, economic policy should not be used in an ideological agenda to try to destroy the state, and we know that that is happening in this instance.

The “public good, private good” mantra is the one that we should adopt. Our national economy is one economy. “Public” and “private” are not segregated in our towns, villages and cities. As an analysis by PricewaterhouseCoopers has shown, it is not possible to cut the public sector without hitting the private sector hard as well.

[Elizabeth Truss (South West Norfolk) (Con)]

Is it not the case that between 1998 and 2009, under the last Government, productivity increased by 20% in the private sector and fell by 4% in the public sector? It is the Government’s management of the public sector that caused the two sectors to diverge during that period.

[Mr Reed]

I do not disagree with those facts, but I do not think that they are germane to the “Public bad, private good” mantra that we are hearing; quite the opposite, in fact.

The findings of the PricewaterhouseCoopers analysis are self-evident. The Chancellor has confirmed that as a result of his choices, the public sector will lose 500,000 jobs. PricewaterhouseCoopers has estimated that that will cost at least a further 500,000 private sector jobs, and the Chartered Institute of Personnel and Development has said that the Government’s plans will cost 1.6 million jobs over the course of this Parliament. All the while, in the face of the facts, the Prime Minister and the Chancellor persist with their economic medicine irrespective of the condition of the patient, like Elizabethan physicians with an absolute belief in the benefits of leeches.

As was mentioned by my hon. Friend the Member for Barnsley East (Michael Dugher), for communities like ours what matters is where the pain is felt. Of course we want to see growth in all sectors throughout the country.

[Andrew Bridgen (North West Leicestershire) (Con)]

Will the hon. Gentleman give way?

[Mr Reed]

If the hon. Gentleman will forgive me, I will not give way again. I have already done so twice.

At present, however, the Government have no growth policy at all for areas such as mine which depend heavily on the public sector.

There are only 650 parliamentary constituencies. It would not be difficult to undertake an impact analysis of the effects of these economic policies and spending cuts on each constituency. That could be done in short order, but it clearly has not been done. Why not? Is it because the analysis would demonstrate the pain and misery these economic policies will cause in areas and communities such as mine? In the absence of such analysis, policy is demonstrably being both produced and prosecuted in ignorance of its likely effects. What kind of policy is that?

The International Monetary Fund has told the Government to develop a plan B. The Government must produce a plan B, and, in the interests and spirit of the new politics, it should be brought before the House and debated so Members of this House can express their views on it.

The likely consequence of Government economic policy is that areas such as mine will suffer more than other parts of the country. Future Labour Governments will have to reverse that decline, but we will never be able to turn the clock back for those whose aspirations went unfulfilled, for those whose dreams were destroyed and for those whose lives were blighted as a result of this Government’s current economic policies. My constituents and this country deserve better, and I ask the Government to think again.

--- Later in debate ---

[David Mowat]

I am about to address infrastructure. We need High Speed 2 to link the north-west as quickly as possible, as we need our rail infrastructure to be linked through to the channel. Yes, I will give credit to the Labour Government for getting the west coast main line done. While I am at it, I shall give them credit for getting the BBC to move outside the M25 and up to the north-west, but that has not been enough, because of the massive disparity in value added per employee that is their legacy.

Like infrastructure, energy matters. I have not heard it mentioned in the debate yet, but energy is a very important component of growth. Broadly speaking, a unit of gross domestic product generated in an English region is more energy-intensive than a unit of GDP generated in London or the south-east, because we have more manufacturing and industry that uses energy. It is therefore very important to our prosperity in the regions for energy to remain competitive. A particular problem that we have inherited is the price of our electricity, which is 30% more expensive than in France. That is a tough issue to start with, but I am concerned that some of the initiatives we are taking will make the problem worse. We need to build more nuclear power more quickly.

[Mr Reed]

The hon. Gentleman is making some terrific points, and I agree with many of his comments so far. He will know that the energy sector is responsible for approximately half of our manufacturing sector, and that we need to get quicker investment in UK manufacturing and industry on stream right now, facilitated by the Government and the private sector, including the global private sector, to meet our energy needs. Does he share my fear that the constant re-evaluation, reinterpretation and reformulation of planning policy is inhibiting that, and will cost the country financially?

[David Mowat]

There is a risk of that, but the nuclear power industry needs to press ahead quickly, which it did not do under the previous Government. I think that the steps being taken by this Government will help in that regard.

Energy is important. The magnificent technical achievement that is the wind farm in Thanet has just come on line, but it will require a subsidy of £1 billion over its life. That subsidy will be paid by industry and in jobs, so we have to be very circumspect about how we do that.

My third point about building the economy in the regions and what we need to do differently concerns skills. The industries that we need to generate the jobs that will make the household names of the next 30 years will be in fields such as advanced manufacturing and biomedical engineering. We need more applied scientists, more engineering graduates and, yes, more apprentices.

One damning statistic relating to the last few decades—not only under the last Government—is the fact that we produced more engineering graduates 30 years ago, when there were only a quarter of the number of people graduating, than we do now. That is not sustainable. We have not yet been punished economically for that, because of the success of the City and, to a large extent, because of the success of North sea oil in bailing out our economy. We will not get away with that again in the next decade or so.

On the regional development agencies, it is true that they did some good things. If we give someone £4 billion a year to spend, some of it will be spent well, but it was not cost-effective. We need to make certain that what replaces the RDAs works well.

Finally, if the coalition Government, too, leave a legacy of such disparity behind them, they should hang their heads in shame—in a way that I hope the Opposition Front-Bench team will think of doing now.