Jobs and Business

Debate between Liam Byrne and Mark Hendrick

Friday 10th May 2013 Commons Chamber

[Mr Byrne]

My hon. Friend makes a good point. Looking at the Queen’s Speech, perhaps it is not a surprise that so few people in the Government party are prepared to defend it.

I shall start where my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, concluded. After three wasted years, we have this year had a wasted Queen’s Speech. The task on Wednesday was simple—to give us a legislative programme as big as the challenges that face our country. What we got instead was practically nothing. It seems that this Government are incapable of proposing any ideas that they can agree on. They are a weak Government who are out of ideas, and that is why the public want them out of office. They have chosen to fight the biggest economic battle confronting this country for decades by arming themselves only with pea-shooters.

We should be clear about the task that we confront. It was set out brilliantly by my hon. Friend the Member for Streatham. We have an economy that is flatlining. We have growth of just 1.8%. That is a third of the level of growth seen in the United States. Living standards are falling. The wages of our constituents have fallen by £1,700 a year since the election. Our constituents are getting poorer. GDP per capita has fallen by £1,500 since the election. Unemployment is rising and is 90,000 higher than at the election. The consequence of all this is a catastrophe for the public finances. Borrowing is now £245 billion more than forecast. Worst of all, perhaps, is what is happening to the fundamentals of our economy.

The hon. Member for Tamworth (Christopher Pincher) expressed some confidence that the economy is beginning to rebalance. If only. Consumer demand is flat. Business investment is stalled. We had great hopes that economic growth would come from some kind of rebalancing towards exports. As the Business Secretary said in his lengthy but rather good essay in the New Statesman not long ago, there is not necessarily a problem with global demand. The problem is that we in these islands are not tapping into that demand.

Our exchange rate has fallen by roughly 20% since 2007, but exports have grown by 1% or 2%. Once upon a time the OBR forecast that net trade would add 1.2% to GDP. Now it admits that net trade is a drag on growth, not a boost. That is a huge contrast to what we saw in the 1990s, when sterling depreciated by about 20% and exports grew by a third. If our economy is to grow at the level that the OBR forecasts it should between now and 2016-17, we need to grow exports by 45% over and above the level we saw in 2009, but we are simply not on track to deliver that change.

[Mark Hendrick]

I am listening with interest to my right hon. Friend’s comments on growth. Does he think, as some Government Members do, that withdrawing from the European Union is likely to increase jobs and growth in this country?

[Mr Byrne]

My hon. Friend is absolutely right, and that was outlined very well in today’s newspapers by the former Chancellor of the Exchequer. At a time when we are struggling to grow our export base, why on earth would we choose voluntarily to put in jeopardy our membership of the world’s largest free trade zone?

The challenge is not simply that global demand conditions are weak—the Business Secretary said as much in his New Statesman essay—but that our exporters are losing market share. The Prime Minister is fond of telling us that we are in a global race, but the problem is that we have stalled on the starting grid. He is instead locking us into a race to the bottom, with a policy that will deliver nothing better than low growth, low skills and a low-wage future.

Those are the challenges that the Queen’s Speech should have addressed—the investment crisis on the one hand and the jobs crisis on the other—but there were big holes where the Bills on promoting investment and growing jobs should have been. Let us start with the investment crisis. The Breedon review showed some time ago that SMEs in our country confront banks that are deleveraging on a scale unseen anywhere else in Europe. The country’s investment rate is now under 15%. It is flatlining and well below the levels seen elsewhere in Europe. Business investment is £11 billion lower than it was during the peak before the crash, and there is falling investment in the venture capital industry, which is £80 million down on the latest set of figures.

Meanwhile, in corporate bank accounts cash is piling up. It is what the incoming Governor of the Bank of England, Mark Carney, has criticised in Canada as the phenomenon of “dead money”. Dead money is piling up in bank accounts in this country because the business community does not have confidence in the Government’s economic plans, yet all we got in the Queen’s Speech was a carry-over Bill on bank reform. As the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) said, that will probably not unlock the kind of business and banking investment we need. The Chair of the Treasury Committee has criticised the Bill because he found the Government’s arguments insubstantial. We did not get answers to Britain’s investment crisis in the Queen’s Speech, which is why it is such a wasted opportunity.

The wasted opportunity on jobs is perhaps more serious. Unemployment today is 90,000 higher than it was at the general election. There is simply not enough work to go around. Once upon a time we were promised a welfare revolution, and no doubt it was well intentioned, but the Work programme is not delivering for those who need jobs or those on employment and support allowance. I look forward to some reassurance from the Secretary of State when he responds. Universal credit, again, was a good idea, but if its virtues are confined to 300 citizens in Tameside, I am afraid that it will not revolutionise the back-to-work business here in Britain.

Perhaps worst of all, the Secretary of State stands before us today as a man who has failed the test he set himself in Easterhouse. Unemployment on three quarters of our worst estates is going up, not coming down, and long-term unemployment is going up on two thirds of those estates. Three years into this Parliament, that is simply not good enough, and it is not good enough that there was nothing in the Queen’s Speech to fix it.