Economic Growth

Baroness Beckett Excerpts

Wednesday 15th May 2013 Commons Chamber

[Margaret Beckett (Derby South) (Lab)]

The best that can be said about this Queen’s Speech is that it is inadequate on the economy. A pattern is emerging in the way the Government weigh the national interests on the one hand against the interests of the Conservative party on the other. From the outset, the Chancellor claimed that we had to cut faster and deeper than Labour had proposed, because only that level of austerity would reduce the deficit. It was clear then that the speed and depth of the proposed cuts were dictated by a political goal—a massive early deficit reduction speedily followed by economic success well before the next election.

The Chancellor was warned then that the scale and pace of that austerity risked the fragile growth re-established before the election, but for potential political gain he was ready to take a huge gamble with our economy. To that gamble he added self-inflicted wounds. He constantly told the British people, again for political reasons, that we were on the brink of bankruptcy, and so almost destroyed confidence. He made a fetish of our triple A credit rating, and then he lost it. He has hit our economy with a double whammy—greater austerity and, as a direct result, higher, not lower, borrowing.

There are three ways to cut the deficit: growth, taxation and spending cuts. The Chancellor made it clear from the beginning that he preferred spending cuts to tax increases, though his VAT increase hit everyone. Now he talks only about either tax or spending; he never mentions growth, because he does not have any. Meanwhile, other developed countries that have not followed his lead are growing while we are not.

The Chancellor is neglecting the opportunity of green growth. Potential first-mover advantages in green technologies are, just, still to be had, and with them new high-skill, high-value-added jobs, but unless the Treasury allows more ambition, those jobs will be elsewhere, not in this country. Meanwhile, his cuts increasingly come at the expense of the most vulnerable, justified by the rhetoric of scroungers and strivers. He justifies the bedroom tax as encouraging people to downsize, but the Government must have known that for many people there is nowhere to downsize to, so it is just a cut. If we cannot afford not to cut that benefit, as he alleges, we cannot afford to cut taxes for millionaires in the same week.

With the EU referendum omnishambles, what began as a gamble with our economy in the interests of the Conservative party has become the disregard of our economic interests. The Conservative party claims to be the party of business, but a key hate of business is prolonged economic uncertainty. Now we are telling inward investors, “We might leave the EU, but we’ll let you know in four years’ time.” Japanese, American and European inward investors all make it clear that they are in the UK because the UK is in the EU. Millions of jobs are at stake. A semi-detached status, such as that of Switzerland and Norway, means being bound by EU decisions without having a voice. The voice we have now is continually being weakened by the continued uncertainty about our membership and whether the Government even support it.

It is crystal clear to everyone, in this country and outside, that that disregard of our national interest has nothing to do with cool calculation of how that interest is to be served and everything to do with the interests of the Conservative party. The Prime Minister and the Chancellor are running scared—scared of the UK Independence party and scared of their own Back Benchers. As has been said already today, they are in office but not in power.