Economy and Jobs

Julian Knight Excerpts

Thursday 29th June 2017 Commons Chamber

[John McDonnell]

I will come on to that. Household debt is at a record level. Why? Because wages are so low, yet housing costs, and other costs with inflation rising, are biting hard for working families. It is no wonder that they have to resort to increased levels of debt just to get by. Those are the JAMs—the “just about managing”, who were supposed to be protected in the last Budget.

[Julian Knight (Solihull) (Con)]

Does the shadow Chancellor understand the very basic economic point that the ability to borrow relies on confidence? If the individual institution that is lending someone money has no confidence that they will be able to repay it, the interest rate will go up. If we do not have the correct economic policy in place for the correct borrowing, we will end up with higher interest rates.

[John McDonnell]

I am not sure that that adds to the sum of human knowledge.

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

I congratulate everyone who has made their maiden speech today—we have heard some excellent speeches.

If you will indulge me for a moment, Mr Speaker, I would like to make a brief dedication to my predecessor, John Taylor, who sadly passed away during the campaign. I am sure many Members of the House will have happy memories of John, who was a thoroughly decent man and a very good friend to me.

John and I would often talk about the economy, and about Solihull and the growth we have seen there. That growth is not to be taken for granted. Often, people suggest that Solihull is prosperous so it can afford to pay more in tax, and that sort of thing, but the reality is that Solihull is built on entrepreneurship. Since 2010, we have seen a 60% fall in unemployment, and in 2015 we had a GDP growth rate faster than China’s.

However, about 10 days out from the date of the general election, I started to get calls from local businesses that had become deeply concerned as they saw the polls narrow. The reason for their concern was the uncosted spending plans of the Labour party. Their real concern was that everything in the economy is based on the public finances and that without proper public finances and confidence, interest rates rise, and we end up with credit crunches and repossessions, which really feeds through to the real economy.

We should remember that controlling the public finances is not a left versus right cliché about a generous welfare state against a low-tax economy. Putting our public services on a sustainable financial footing is about making sure they are still here in 20 years’ time and addressing the intergenerational injustices built into our current funding model.

It is well known in policy-making circles that there is a time bomb under the welfare state. Our ageing population means that we will be supporting more and more claimants on the system on the back of a proportionally shrinking working-age population. This is not sustainable. Moreover, we not only continue to finance social spending through debt, heaping fresh burdens on the next generation, but hurt living standards today as interest rates rise and squeeze real incomes. On top of that, the Government have to employ cost-controlling measures such as the public sector pay cap, putting even more pressure on incomes. This is long on pain but short on gain, and no substitute, in the long term, for the substantial reform that has to take place.

This election has been widely touted as one where the young began to make their voice heard. That is a really welcome development, and I am sure that as democrats, Members in all parts of the House welcome this new engagement from the young. However, we as Conservatives must convince them that their best bet is not reckless, regressive giveaways such as scrapping tuition fees, but a party that will deliver jobs, a strong economy, sustainable public services that they can rely on, and a fairer balance of taxation between the generations. Tackling the deficit is absolutely essential to building a country that works for everyone. It makes a real difference to lives out there. If we lose sight of that now, I am afraid that we are lost economically. We have to think now that the decisions we make will not just impact on the next five years but will set a pattern for the decades ahead.