Jobs and Business

Mark Tami Excerpts

Friday 10th May 2013 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I am delighted to be able to introduce the section of the debate on the Queen’s Speech that relates to economic matters, particularly jobs and business. We will be talking primarily about Bills dealing with national insurance reductions for companies, consumer protection, and the protection of intellectual property, particularly design, as well as some of the carry-over Bills that will have significant implications in relation to banking, workplace change and reform, and shared parental leave and flexible working, which still have to be legislated for. We will also discuss some of the important social measures that have major economic implications, particularly the reforms of pensions and social care, about which my colleague the Secretary of State for Work and Pensions will speak. Of course, these are social changes, but they will have major economic consequences, notably incentivising saving and thereby contributing to long-term economic growth.

It is perhaps useful to focus on some of the comments that business groups made about this agenda. The Federation of Small Businesses responded by saying that it welcomes

“the focus on a stronger economy and measures to help small businesses to create jobs.”

The British Chambers of Commerce said:

“On balance, businesses will welcome the limited package of legislation announced in the Queen’s Speech.”

The CBI was more critical, but made this perfectly valid point, which will be at the heart of the debate:

“You cannot legislate your way to economic growth”.

Indeed, and that is why, in essence, this debate will be about economic policy rather than legislation.

We need to start with the basic economic context in which we operate. When we are writing the economic history of the past two decades, the story will be one of a spectacular boom and a spectacular bust—15 years of remarkable continued economic growth followed by the worst crash since after the first world war, the two things being intimately connected. The first requirement in approaching this subject is a certain degree of humility. We are in unprecedented conditions, and it is important to acknowledge that there is no simple or easy answer to many of the difficult issues that we have to grapple with. Risks are associated with fiscal consolidation that is too fast and risks are associated with fiscal consolidation that is too slow. There are genuine debates about the best mix of monetary and fiscal policy. There are also serious debates on how we deal with the banks in such a way that they rediscover their appetite for risk but do not do so in a way that destabilises the banking system as before. I hope that everybody in this debate, particularly the Opposition, will approach these very tricky issues recognising the very difficult context in which we operate.

Let me address a few of the questions that the Leader of the Opposition asked in his response to the Queen’s Speech. He asked about jobs, the link between jobs and wages, the very emotive but important issue of migration, and the banking system, which is at the heart of the problems we are dealing with. I will start with jobs.

We have unemployment of about 7.8% or 7.9%. That is about a third of what it was in the great depression of the 1930s, a rather comparable period in our history, but none the less worryingly high. It is useful, however, to make some apt comparisons. In the United States, which has recovered from the crisis much better than any other western country, except possibly Australia, the unemployment rate is slightly less, at about 7.6%. In France, which has had the benefit, if such it is, of a socialist Government, the unemployment rate is 10.6%. In Sweden, which is an interesting case—it is not in any sense shackled by the eurozone and it has had probably the most enlightened welfare and labour market policies of any European country—unemployment is significantly higher than in the UK, at about 8.8%.

Under this Government—perhaps even in the rather partisan atmosphere in which we debate things in this House, we should get a little credit for this—we have seen the creation of 1.2 million private sector jobs; the expansion of manufacturing employment, now at 82,000 after a period of Labour Government in which it collapsed from 4 million to 2.5 million; and private sector employment increasing six times as fast as public sector employment declined.

[Mark Tami (Alyn and Deeside) (Lab)]

The Government talk a lot about the growth in private sector jobs. If jobs are being created, why is the economy showing no signs of growth and just bumping along the bottom? Surely we should be producing more and the economy should be growing.

[Vince Cable]

That is an extraordinarily naive question in the wake of the phenomenal financial crash that we have had. I do not know whether the hon. Gentleman is familiar with the economic literature, but the econometric data suggest that after the banking crash that Britain experienced we should have lost about 50% of our GDP. We have done well to avert that. We face a difficult set of circumstances. It is a remarkable success story that in an economy that is still recovering from such a long economic heart attack, we are generating significant private sector employment growth. That is positive. Alongside that, we have seen the growth of about 250,000 new businesses, which will be the source of employment growth.