Industry (Government Support)

Kwasi Kwarteng Excerpts

Wednesday 16th June 2010 Commons Chamber

[Kwasi Kwarteng (Spelthorne) (Con)]

This is the first time I have had the privilege of speaking while you are in the Chair, Mr Deputy Speaker, so I congratulate you on your appointment.

We are in a bit of a déjà vu situation. Labour Members cry about Tory cuts, yet they forget why the cuts have to take place. They are suffering from collective amnesia and forgetting that for the last 13 years they ran this country and the Government on the proposition that they had abolished boom and bust. The former Prime Minister, when he was Chancellor, openly boasted about that. There was a feeling that money would pour in—that there was an inexhaustible pot of gold to be drawn from. It reminded me of Aladdin, who rubbed the lamp and the genie appeared. Labour seemed to think that the genie would appear, they would ask for money and, magically, it would arrive.

[Rachel Reeves]

Does the hon. Gentleman remember that the financial crisis happened across the whole world? Does he believe that the Labour Government are responsible for the budget deficits in all those countries?

[Kwasi Kwarteng]

I remember that very well, but I would point out that, in the five years before the crisis that the hon. Lady speaks of, we were running completely needless deficits. We did not have to run those deficits; we did so because of the concerted attempt by the then Chancellor to expand the state and to keep spending money.

[Rachel Reeves]

Can the hon. Gentleman give us an example of when the Conservative party opposed our spending plans?

[Kwasi Kwarteng]

During the 2005 election, we were—[Interruption]. If I may continue.

The general Aladdin’s lamp approach was shown to be absurd. As the then Government kept rubbing the lamp and the genie came out, they asked for money, but the genie suddenly became rather less giving. At one point, the genie—in form of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—wrote a letter and said, “There is no money. We have run out of money.” The reason why we have done so is simply that we were spending too much.

I have a Methodist background. My mother is a Methodist lay preacher, and she would tell the Sunday school, which I attended, about the seven fat years and the seven lean years. Those hon. Members who know the Old Testament will remember that Joseph had a dream in which he dreamt of seven fat cows and then the seven lean cows. [Interruption.] This is not very complicated; it is quite simple actually, so please bear with me. I know that Labour Members have concentration problems sometimes. I am sorry—it was a long time ago. The pharaoh had the dream and he spoke to Joseph. [Interruption.] This is very important and interesting. He asked, “What does this mean?” and Joseph said very simply, “You will have seven fat years and seven lean years.” The whole point is that we are meant to save money in the fat years, so that we can spend it in the lean years. The Labour Government comprehensively failed to do that. They thought that the fat years would run indefinitely. They thought that they had abolished boom and bust.

The point of telling that simple story is to show comprehensively the reason for the cuts mentioned by the hon. Gentleman—I forget his constituency. [Hon. Members: “Sedgefield.”] I apologise; I was perhaps confusing him with another Member for Sedgefield. The hon. Member for Sedgefield (Phil Wilson) referred to them as Tory cuts, but the simple story of Labour’s failure to rein in Government spending in the boom is why we must make these cuts. They are not coming out of the blue or from savageness.

[Phil Wilson]

I was pointing out that, because of Government intervention, we were creating jobs, especially in the north-east of England, through the regional development agencies. We were not creating poverty; we were creating growth and prosperity. We took action when we were in government before the last election, and 500,000 fewer people are out of work than if we had not done so.

[Kwasi Kwarteng]

With respect, the idea that, somehow, our wealth was purely predicated on Government spending is exactly the principle that Conservative Members have problems with.

[Matthew Hancock]

Is my hon. Friend aware that Great Britain went into the recession with the largest budget deficit in the developed world and that that was nothing to do with the banking crisis but was solely due to the management of the economy by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)?

[Kwasi Kwarteng]

I am fully aware of those facts. The figures show that the ratio of our debt to GDP is 12%. That is higher than any other country in the west. [Interruption.] I am sorry; I stand corrected. The deficit-to-GDP ratio is the highest of any other country in western Europe and, indeed, in the western developed world.

[Rachel Reeves]

I am sorry to correct the hon. Gentleman again. He is right to correct himself—the deficit, not the debt, ratio is 12%—but is he aware that the deficit figure in Greece stands at 14%? Greece is, I believe, in the western world. Is he also aware that we went into the crisis with the second lowest debt-to-GDP ratio in the G7?

--- Later in debate ---

[Kwasi Kwarteng]

The hon. Lady is being quite clever and fixing the measuring rod.

Gordon Brown, the former Prime Minister, openly boasted of abolishing boom and bust. That was the central claim that he made. He predicated his entire policy on that premise. The premise was wrong. As we all know, and as hon. Members have commented, we went into a recession and we were faced with a huge deficit. That was a huge bust, which the former Prime Minister, in his wisdom, failed to see. That is why we were saddled with the deficit, and why we have had to make some of the tough adjustments to which Opposition Members have alluded.

That context is important. I know that there will be difficult times. I know that up and down the country Opposition Members will bemoan and complain about Tory cuts, but the context demonstrates why the adjustments have had to be made. They were forced upon us by the international environment. My hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) mentioned that investors would not buy British Government debt. As a consequence, we have to rein in our spending. That is common sense. It is wrong for Opposition Members to say that we are trying to strangle the baby in its cot and that we are savage and uncaring. It is a matter of practical policy. Without that, we have a bleak future.

[Mr Anderson]

The hon. Gentleman spoke about fairy tales and Bible stories. Some of us lived the reality. Some of us in this country were starved for 18 years, while others became fat cats. We know that his party is taking us back there.

[Kwasi Kwarteng]

I am not talking about the 18 years from 1979 to 1997. I am talking about the 13 years in which we lived under Labour.

To finish my contribution, I want to talk about the private sector and the public sector. Someone described trying to grow an economy by focusing on the public sector as a man sitting in a bucket trying to lift himself up by pulling the handle. It does not work. The only way we can have a viable public sector is if we can have revenues coming in from a buoyant private sector. As my hon. Friends have reiterated time and again, it is only by having a prosperous private sector that we can grow our way out of the recession. The message about a strong private sector is clear. It wants less regulation, less red tape and bureaucracy and a clear tax system, and it generally supports the coalition Government and the Government programme. For these clear and simple reasons, I support the Government amendment.

[Mr Deputy Speaker]

Order. Under the power I have to vary the time limit, I am changing it to 10 minutes.

[Mr Alan Campbell (Tynemouth) (Lab)]

I welcome you to your new post, Mr Deputy Speaker.

I am not sure about the Aladdin analogy. I am, however, convinced that with the Prime Minister and the Deputy Prime Minister, we are now in the age of the brothers Grimm.

Before I get to that, however, may I congratulate everyone who made their maiden speech today? They spoke with passion, commitment and humour, and all bring something special to this very special place. I want to mention in particular the contribution of my new hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), who spoke superbly about his predecessor, Ashok Kumar, who was both a colleague and a friend to those of us who were elected before 2010.

I congratulate the Government and, in particular, the Prime Minister. They got the decision on the £21 million for Nissan absolutely right, confirming the investment made by the Labour Government. It offers welcome reassurance to the highly skilled work force, some of whom live in my constituency, to the companies in the supply chain, and to the region as a whole. If the Government insist on revisiting all the spending commitments that were made in the preceding months before the election, I hope that when they do so, they will follow the model that they have developed in looking at the Nissan grant. It is important that they get on with it, because if they do not, they risk sapping the confidence of business in the region.

I want to make it absolutely clear, as did the shadow Secretary of State, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), that we accept the need for deficit reduction, but we also accept that there needs to be a strategy for growth alongside it.

[Kwasi Kwarteng]

The hon. Gentleman said that he accepts the need for cuts—for the deficit to be dealt with. Where does he, as a representative of his party, see those cuts falling?

[Mr Campbell]

I have news for the hon. Gentleman: he is sitting on the Government Benches. It is up to the Government to bring their proposals to this House, and it is for this House to make judgments on them. As my right hon. Friend made clear—

--- Later in debate ---

[Mr Campbell]

I would first mention the battle for savings that every police force has to deliver while protecting front-line services. However, I do not necessarily want to talk about that—I want to talk about the money that was in the budgets under the previous Government for a very good reason.

This debate is not only about BIS but about the whole of Government. I hope that the Minister will have a word with colleagues in other Departments, for the sake of construction workers in my constituency. I hope that we can have a decision on Building Schools for the Future in north Tyneside. Our children deserve the best learning environment, but our construction workers deserve jobs, too. When the last new school in my constituency—Monkseaton high school—was built, more than half the construction jobs went to local people. When the then Leader of the Opposition, now the Prime Minister, went to the school, he praised the building. So let us have some commitment from the Government that gives certainty and ensures that Monkseaton high school was not literally the last new school to be built in my constituency.

There was also money in the regional transport budget, but that budget has been frozen. That has caused me concern, but, more importantly, it has caused concern for local businesses and their representatives. There was £30 million in the budget to improve the A19-A1058 Silverlink roundabout. A driver who turns left at that roundabout goes to the new green technology park on the north bank of the Tyne. If they go straight over, they go to the Cobalt business park—the biggest private business park in the country, which is there because of co-operation between the public and the private sectors in bringing those jobs to the area. If we do not get those improvements, then people who go through the new Tyne tunnel—delivered by the previous Labour Government—will end up in gridlock. A whole host of then shadow Ministers came to look at those roads and made promises to my constituents about what they would do. Well, they are in government now, so they had better start delivering on those promises. If the road network in the north-east is not upgraded, if we are excluded from the rapid rail link, and if the new runway at Heathrow does not take place, squeezing out the regional air links, why would an investor who comes to Great Britain think about putting their money into the north-east given that we do not have a transport network for the future to create future jobs?

I want to concentrate on the regional development agency, which has been mentioned. Before the recession, the north-east had the fastest-growing economy of any region outside London. That did not happen despite Government action, it happened with it, and One NorthEast was part of that story.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mr Campbell]

No. The hon. Gentleman has had his chance.

One NorthEast has been a leading player in the New and Renewable Energy Centre in Blyth and along the north bank of the Tyne, in low-carbon vehicles at Nissan on Wearside, and in the Printable Electronics Technology Centre in County Durham. Every one of those developments had at their heart a level of operation between private investors and the public sector. There may be support for small businesses for local authorities to pick up, but I am concerned that without such strategic action, the big national decisions will go elsewhere. My fear is that that will be bad news for the north-east.

If the Government are getting rid of RDAs in England, as has been suggested, have they spoken to the devolved Administrations in Wales and Scotland about them getting rid of their RDAs? One of the first issues that I took up in 1997 was the case of LG Electronics. That company went to Wales because we in the north-east did not have the money, but the Welsh Development Agency did. LG did not stay there, but Wales pinched the jobs.

Cuts in the RDA budget are already affecting jobs in my constituency: the Seafood Training Centre looks as if it will close its doors. Again, a troop of Conservative spokespersons went to that training agency and said how important it was, but now it is closing its doors, which is another bitter blow for the local fishing industry. That is why the Government need to be much clearer than they have been today about their plans for RDAs.

The Business Secretary said that

“changes depend very much on the reaction of local business and local authorities.”—[Official Report, 3 June 2010; Vol. 510, c. 556.]

I can tell him that One NorthEast has the support of local authorities, five universities, the Northern Business Forum, the CBI, the chamber of commerce, the Federation of Small Businesses and the Engineers Employers Federation, so let us see him get on and back it.

Of course, we know why there is dither: there is disagreement at the heart of the coalition. The Communities and Local Government Secretary—the man with the money—wants the money to go to local enterprise partnerships, but the Business Secretary, who is in charge of the sponsoring Department, favours regional economic enterprise partnerships, rather like RDAs. As my hon. Friend the Member for Sedgefield (Phil Wilson) said, this afternoon we have simply heard confirmation of uncertainty. That adds to confusion, and it is not good for business.