Jobs and Growth

Michael Connarty Excerpts

Thursday 17th May 2012 Commons Chamber

[Mr Osborne]

Let me make some progress and then I will take some more interventions. I want to say something about some of the Bills in the Queen’s Speech, as we are debating the Queen’s Speech. I want to talk particularly about the banking reforms—something else that the shadow Chancellor mentioned in only half a sentence, so we have no idea whether he supports the reforms or not. [Interruption.] Perhaps he can intervene and tell me when I have made these points.

First, we have the Financial Services Bill, which was carried over from the previous Session. It already seeks to rectify one of the greatest errors of policy making—the decision that the Labour party took in 1997 to remove banking supervision from the Bank of England. The Governor of the Bank commented on that in his lecture on the “Today” programme the other day. That Bill, which is crucial, brings prudential supervision back under the control of the Bank of England, giving it new powers to monitor the build-up of dangerous levels of debt and asset bubbles and to deal with them rather than, as last time, letting disaster strike.

In this Queen’s Speech, we prepare to go further and address the structure of banking itself. We will introduce the Bill that implements the reforms proposed by Sir John Vickers and his Independent Commission on Banking that ring-fences retail banks from the riskier investment banking arms and provides more loss-absorbing capacity so that private investors will bear losses, not the taxpayer. Taken together, those Bills seek to give Britain a safer, more competitive banking system and will allow our country to have successful banks with a global reach while better protecting the taxpayer at home should one of those banks fail. I hope the Bills will command broad support across this House.

I hope that the Bill to reform public service pensions also commands broad support across the House. After all, those reforms are based on the proposals of the Labour former Pensions Secretary, John Hutton. They provide for generous pensions and security in retirement for hard-working public servants that are quite frankly beyond the reach of almost all in the private sector.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Can the Chancellor really justify asking fire brigade workers, who undertake some of the most high-risk tasks in our society, to pay 13% of their income towards their pension?

[Mr Osborne]

We have to have public sector pensions that are affordable. The truth is that people are living longer in retirement, which is a good thing, and that if we want to maintain generous pension provision for firefighters and others we have to make reforms that mean the country can afford that. So, the answer to the hon. Gentleman’s question is yes, and we have been in a long and good negotiation with the Fire Brigades Union and others on those reforms. As I have said, we seek to make public sector pensions affordable and it is pretty striking if the tone of interventions from the Opposition is going to be that we do not have support for this far-reaching reform that will put public service pensions on a sustainable footing. Opposition Members are going to have to ask themselves whether they speak in this House for their tax-paying constituents or for the unions that sponsor them.

We look forward to hearing, in the wind-ups, from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom we welcome to his place. Perhaps he will tell us what Labour’s attitude to these Bills will be. We are sorry that he has been removed from his role as Labour’s policy chief. He is yet another Labour politician who has found that their career takes a knock when they try to tell their party some hard truths. He did extremely well in his new job of handing notes to the shadow Chancellor as he spoke today, but there was a time when he wrote his own notes rather than just handing them. There was the time when he wrote that note saying, “I’m sorry, there’s no money left”, but his party’s only message is to spend and borrow more. To be fair to him, he is the politician who tried to tell Labour to get serious about welfare reform and about dealing with the deficit. He was famous in my Department for the very precise memo he sent to civil servants on how to prepare his morning cappuccino and his afternoon espresso. How ironic that what did for him was his attempt to get Labour to wake up and smell the coffee. [Laughter.] I have to say that it was quite late last night when I thought of that one.

Who replaces the right hon. Gentleman as policy chief? The new policy chief for the Labour party is the hon. Member for Dagenham and Rainham (Jon Cruddas). We did some research on how he might approach the job and we found these illuminating remarks from a few weeks ago:

“What interests me is not policy as such; rather the search for political sentiment, voice and language; of general definition within a national story. Less ‘The Spirit Level’, more ‘What is England’.”

Well, that is clear then. Perhaps when the Opposition find out “What is England” they will let us all have the answer. The striking thing is that there is no policy from the Opposition at a time when tough decisions need to be taken about our country’s future and when far-reaching reforms need to be made to secure its prosperity.

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[Stephen Timms]

My hon. Friend is absolutely right. Step one would be to allow the data to be published. Instead of banning everybody from saying what is happening, the Government should let us have some numbers so that we can see what is going on. That would offer the chance for clarification.

[Michael Connarty]

I am grateful to my right hon. Friend for making those points about St Mungo’s. I took the trouble to visit the project in Hackney, and I was very impressed by what was being done for people with long-term dissociation from society to give them skills and jobs. It is a tragedy if the charity has decided that the Government have nothing to offer them. The project is wonderful and the Government, given all their rhetoric, should be supporting it wholeheartedly.

[Stephen Timms]

My hon. Friend is right. Not one person has been referred to St Mungo’s since the Work programme started. If the homeless are not being referred to St Mungo’s, we can be very confident that they are not being helped by anybody, and that is at the heart of what is going wrong. We certainly need guidance so that people can start telling us what is going on in the Work programme.

The hon. Member for Wolverhampton South West (Paul Uppal) is rightly concerned about the challenges of securing investment. I am disappointed that no communications Bill was announced in the Queen’s Speech. A year ago yesterday, the Department for Culture, Media and Sport announced the first stage of what it described as a

“comprehensive period of consultation that will inform a Parliamentary Bill.”

Unfortunately, no such Bill has been announced.

The Communications Act 2003, which I was responsible for, is excellent, but technology has moved on and the regulation needs updating. The problem is clearly highlighted by the failure on 4G mobile services. Capital Economics estimates that a go-ahead for 4G in the UK would trigger private sector investment of more than £5 billion and raise gross domestic product by the end of the decade by half a percentage point. It says:

“The UK is off the international pace. The technology has already been deployed commercially by more than 50 operators in over 30 countries.”

In the UK, we still do not know when the spectrum auction, and liberalisation of restrictions on existing spectrum, will go ahead. We cannot afford further delay. The destructive promotion, which we have unfortunately seen, of the narrow interests of individual operators must now give way to the speediest possible implementation, allowing investment to be made. One of the benefits will be viable access to superfast broadband for a significant part of the country where landline services will not be available in any reasonable time scale.

We shall need new legislation and I hope that Ofcom and the DCMS will press ahead to make sure that the changes that are needed—the auction and liberalisation of the existing spectrum—proceed without further delay. We have waited long enough already.

I welcome the inclusion in the legislative programme of the draft Groceries Code Adjudicator Bill, following the initiative of the previous Government.

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[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

This Queen’s Speech can be summed up by the Prime Minister wandering around the country saying that he is not for turning. I remind him and his party that the last person who said that—Lady Thatcher—was tossed out by the country when people found out that they were getting uncaring Conservatism once again. [Interruption.] Yes, she was, of course, tossed out by her own party.

This is a Government who continue to attack, with ingrained unfairness, the personal income of all apart from those in the super-rich bracket. They boast of attacking citizens’ and workers’ rights. With 100,000 public sector job cuts, it is good to see the Secretary of State for Work and Pensions in his place. How many of the present employees of Remploy will, to his shame, end up on the unemployment list? Only 50% of the jobs have been replaced by the private sector, and many of them are part-time and temporary jobs. Of 16 to 24-year-olds, 21% are in part-time jobs, while analysis suggests that 40% are on temporary contracts.

The national debt is higher, not lower, and the UK is in a double-dip recession for the first time in 30 years. Of course I welcome investment in car manufacturing from US companies. Their choosing a UK work force in a flexible trade union environment and our being near the EU market has nothing to do with the Government, and it follows the investment of Japanese and other international companies that invested under the Labour Government.

I am an economics graduate, so I know that economic growth is based on confidence in business and in consumers. The Chancellor is a one-trick pony, with low interest rates. His stated aim is that interest rates are being held low for the sake of the Government’s bond sales, but this has the effect, for example, of attacking the disposable income of pension funds and investment funds, thus hitting the mainly frugal elderly. Quantitative easing has also hit their income and made them poorer. This signals to UK businesses that the Government believe that the economy has to be held in check, as it is fundamentally too fragile to grow without creating threatening levels of inflation. This is caused by a failure to expand the resource base of the economy so that growth can be inflation-proofed for the future.

I looked at the “Prospects for inflation” chapter of the inflation report of May 2012, which states:

“Output has barely grown since the middle of 2010, and is estimated to have contracted slightly in each of the past two quarters.”

That is what this Government have delivered through their policies. Human resource expansion is required to deal, for example, with training and skills shortages. The ageing population needs to be replaced in industries with which I am involved. There is OPITO—the Offshore Petroleum Industry Training Organisation, which deals with offshore oil, and the subsea employers association—talk about 44% of its vacancies being in non-graduate technical jobs, with an additional 20% in technical graduate jobs. The Chemical Industries Association says that it fishes in the same pond for staff, and it demands science education in schools to provide a base of people who can be skilled up for growth. Mike Mack, the world president of Syngenta, says that he fears he cannot sustain his investment in this country because of the shortage of skilled labour. He steals from other companies, and they steal from him. We need technical apprenticeships. Forget the boasts about the number of apprenticeships that have been started; how many have been concluded? How many newly qualified technicians have we got? The SNP Government falsify the statistics. They say that there are 25,000, and write to companies asking them to include people who are doing part-time work as apprentices in order to supplement the figure.

Business investment is 6% lower than the target set by the Chancellor. There is £950 billion in company accounts that is not being invested. Companies are holding on to it: they are afraid to invest, because the signals are all wrong. The Chancellor has gone for corporation tax reductions, but they are a blunt instrument. VAT increases hit the supply chain for customers, for business and for personal consumption, whereas VAT reductions—a targeted programme such as the one that the French use, reducing VAT—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman’s time is up.