Achieving Economic Growth

Debate between Rachel Reeves and Geraint Davies

Wednesday 18th May 2022 Commons Chamber

[Rachel Reeves]

The sad truth is that the Government used to agree. Introducing an employment Bill was in their manifesto; in fact, they have been promising it for five or six years. Let us have that employment Bill to protect people at work, so that working people do not have to resort to food banks, and so that they have the security and dignity that work should provide.

April’s International Monetary Fund data show that families in Britain are more exposed to the cost of living crisis than countries such as Germany, France and the US because of depleted savings. Savings are declining and household debt is on the rise, not because millions of people can no longer manage a budget, but because millions of people cannot afford a Conservative Government. Working families are increasingly struggling with their budgets because the Chancellor has failed to act in his Budgets. The Food Foundation believes that since January, 2 million people have not eaten food for at least a whole day, because they could not afford to.

[Geraint Davies (Swansea West) (Lab/Co-op)]

rose—

[Kevin Hollinrake]

rose—

[Rachel Reeves]

I give way to my hon. Friend the Member for Swansea West (Geraint Davies).

[Geraint Davies]

My hon. Friend knows that food banks were used by something like 26,000 people in 2010 and are now used by 2.6 million people—100 times as many. Does she agree that the economy’s growth now contrasts dismally with its 40% growth in the 10 years to 2008 under Labour? The Institute for Fiscal Studies has said that if we were on the same growth trend, the average person would be £11,000 better off and could therefore weather the storms that we are suffering because of the Tory Government.

[Rachel Reeves]

My hon. Friend is absolutely right. That is the Tory growth penalty—the effect of the lack of growth in the economy. Average earnings are £11,000 less than if growth had stayed at the same rate as under the last Labour Government.

My hon. Friend mentioned a hundredfold increase in food bank use. This is not normal; it is the consequence of Conservative Governments’ choices. Meanwhile, what have we heard in recent weeks? We have heard suggestions from Ministers about what people can do in their own lives to deal with the cost of living crisis. The Prime Minister thinks that a 77-year-old pensioner who rides on the bus all day to keep warm should be grateful for her discounted fares; the Environment Secretary has lectured people struggling with the cost of food, telling them to “buy own brands”; and the Secretary of State for Levelling Up, Housing and Communities has treated the need for an emergency Budget as if it were an audition for a comedy club. Another out-of-touch Minister has told people, just this week, that if they are struggling financially they should simply work more hours or get another job—as if it were as easy as that. The Chancellor continues to insult the public’s intelligence by suggesting that a compulsory £200 loan—a loan that must be repaid—is somehow not a loan, and now blames a computer system for his decision not to help the least well-off. What planet are they on?

Housing Benefit (Abolition of Social Sector Size Criteria)

Debate between Rachel Reeves and Geraint Davies

Wednesday 17th December 2014 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

Given the predictability of this and the absence of small houses to move to, is it not obvious that the objective was simply to tax the poor for being poor? It has nothing to do with moving to smaller houses; it is about punishing people who are poor because of the bankers’ errors. There is no other rationale.

[Rachel Reeves]

I thank my hon. Friend for that intervention.

This afternoon the amendment signed by the Deputy Prime Minister aims to remove our call on the Government to abolish the bedroom tax immediately, and instead merely “notes” that the Liberal Democrats have come up with some “proposals” to change the way the bedroom tax is implemented. We would not be supporting the amendment, because “noting” the latest Liberal Democrat “proposals” is not going to pay anyone’s rent or keep anyone in their home. What matters in this House is how Members vote, how they use the power entrusted to them by their constituents. What we on the Opposition side and people watching the debate will “note” is where Members took their stand when they had an opportunity to make a difference.

Living Standards

Debate between Rachel Reeves and Geraint Davies

Wednesday 4th September 2013 Commons Chamber

[Rachel Reeves]

She has done fantastic campaigning work on that issue. Labour has said that we would cap the cost of credit, as she has called for.

A one nation Labour Government would be taking action now to secure the recovery and to build a more balanced economy that boosts the living standards not just for the few at the top but for the many. We would act on the recommendations of the IMF to support and secure the recovery by bringing forward £10 billion of infrastructure investment. We would build 400,000 affordable homes, creating more than half a million jobs and making our economy stronger for the long term. We would support house building, encourage private sector investment, and create apprenticeships. A one nation Labour Government would be confronting the scandal of youth and long-term unemployment by introducing a compulsory jobs guarantee.

[Geraint Davies (Swansea West) (Lab/Co-op)]

I am sure that my hon. Friend knows that household lending from banks is at the same sort of level—3% lower than in 2008—but lending to businesses is 30% lower. Is not the real problem that three quarters of new jobs are low-paid because businesses are not being given support by the banks and the Government are not forcing them to act in the interests of high-paid jobs and growth for the future?

[Rachel Reeves]

We have had Project Merlin and the funding for lending scheme, and yet lending to small businesses falls and falls.

A one nation Labour Government would offer guaranteed work for young people and those who have been unemployed for over two years—work that they would have to take. We would cut the welfare bill and help people to gain the skills and experience they need to join the work force for the long term. A one nation Labour Government would reform our banking and energy sectors, improving our infrastructure planning and building a skills system that ensures that everyone can play their part. A one nation Labour Government would make fairer choices to ensure that the benefits of growth are fairly shared. We would reintroduce the 10p tax rate, helping 25 million basic-rate taxpayers; and we would not be cutting income tax or increasing pension tax relief for the very wealthiest while cutting tax credits for hard-pressed families. Different choices, different priorities: this Government and this Prime Minister do not get it.

As the LSE growth commission said earlier this year:

“prosperity is strengthened when everyone has the capacity to participate effectively in the economy and the benefits of growth are widely shared”.

Infrastructure

Debate between Rachel Reeves and Geraint Davies

Tuesday 12th February 2013 Commons Chamber

[Rachel Reeves]

The problem is that this is just a wish list. Those things are not happening—as John Cridland says, the diggers are not on the ground. As I have said, housing investment is down 8% in just one year, and 129,000 jobs have been lost in the construction sector. I look forward to hearing Government Members explaining why they are supporting those policies.

[Geraint Davies (Swansea West) (Lab/Co-op)]

My hon. Friend will be aware that the Chinese have a five-year plan involving $1.5 trillion of investment in strategic new industry and infrastructure, and that their economy has been growing at 10% a year for 10 years. Is it not time that we took some lessons from growth economies such as China, and indeed Brazil, which is investing some $66 billion in its fiscal stimulus? Let us get on with it.

[Rachel Reeves]

The economic and political system in China is a bit different from that of the UK, but what we must learn from other countries is that we need a proper industrial strategy if we are going to create the jobs and growth that we need, and if we are going to excel and win the global race that the Prime Minister has talked about.

Two weeks ago, at Treasury questions, the Chancellor said that I was being “creative” with the facts when I said that he was spending less than Labour planned to on infrastructure investment. He said that I was being misleading on his record on investment. He had to withdraw that slur. Channel 4’s “FactCheck” has looked into his claims. The verdict is in, and I quote from its conclusion:

“Latest figures from the ONS show that Mr Osborne’s claim to have spent more on infrastructure than what Labour had planned is wrong.”

The Chancellor has refused to come to the House to put the record straight, so let us do that now. According to the Office for Budget Responsibility—which the Government set up—the Government are spending £12.8 billion less in capital investment compared with the plans they inherited from the last Labour Government. They are cutting too far and too fast. I am happy to take an intervention on that point.

Infrastructure (Financial Assistance) Bill

Debate between Rachel Reeves and Geraint Davies

Monday 17th September 2012 Commons Chamber

[Rachel Reeves]

The bank bonus tax is being used to do two things: first, to create 100,000 jobs for young people; and secondly, for the construction of 25,000 new affordable homes. The Opposition believe that the priority right now is construction and getting young people back to work. The Government believe that the priority is a tax cut for the bonuses. That just shows how out of touch this coalition Government are.

Nothing better illustrates the long-term costs of this Government’s short-sighted complacency than the shocking shortfall in infrastructure investment. If we want to build a productive, competitive economy for the future, we need to invest in the road and rail systems that keep this country moving; in the energy supplies that power our industries; in the information and communication networks that turn ideas into real innovations. With study after study confirming Keynes’s original insight—that construction projects can maximise the multiplier effects of new investment, creating skilled jobs in the construction sector as well as in engineering and design—there is no better time than now.

Instead, we have had from this Government countless speeches, statements and strategy documents. People are asking, “Where is the delivery?” As the CBI is asking, where are the diggers on the ground? When are we going to start turning blueprints into bricks and mortar? It was the Prime Minister who said,

“This autumn, the government is on an all-out mission to unblock the system and get projects underway”.

That sounds promising—until we realise that he said this a year ago. Since then, what have we seen? None of the road building projects in the autumn statement package have begun construction. The number of housing starts is down on 2011. Planning applications are taking longer to approve. I agreed with the Prime Minister when he said:

“In terms of job creation today, getting construction projects off the ground is critical.”

But in the year since he told us that barely one in 10 of the projects listed in the Government’s construction pipeline have moved forward to procurement or construction, and almost as many of them have moved backwards. Total UK construction output is down by more than 10% and last week’s jobs figures showed that the number of jobs in the construction sector has fallen by 89,000, bringing the total number of construction jobs lost since this Government came to power to 120,000.

The Deputy Prime Minister has promised that support for infrastructure and other private sector projects from the regional growth fund would offer a

“boost to business, which will jump start growth and create jobs that last in the places that really need it.”

That sounds like just what we need, but that was said a year ago. We know that since then just £60 million of the promised £1.4 billion has been released to businesses, creating barely 5% of the 37,000 jobs promised.

The Chancellor of the Exchequer announced £20 billion in new infrastructure investment to be funded by the pension funds—that was a year ago. We now know that this scheme will be launched next year, with funds amounting to only a tenth of what was promised back then. As the failure of this Government’s promises increases, their rhetorical displays have become ever more strident. Two weeks ago, in response to questions from my right hon. Friend the Leader of the Opposition, the Prime Minister said:

“If we look at what is planned by this Government, we see that between 2010 and 2015 we will be investing £250 billion in infrastructure.”—[Official Report, 5 September 2012; Vol. 549, c. 230.]

It is true that the national infrastructure plan sets out £250 billion-worth of projects— would government not be easy if you were judged only on what you had planned? If we look instead at what has been delivered, we see that the picture is rather different. The Office for National Statistics shows that new infrastructure orders since the second quarter of 2010 average less than £2 billion a quarter. At this rate, it will take not five years but more than 30 years for the Government’s grand plan to be delivered. The latest construction output figures released last week show that progress is slowing, not accelerating. It is no wonder that the director general of the British Chambers of Commerce has described the national infrastructure plan as

“hot air, a complete fiction”.

[Geraint Davies]

My hon. Friend will know that the Prime Minister boasts of an extra 1 million jobs in the private sector. Does she agree that many of those jobs are where people are moving into part-time work having lost full-time work? It is wrong that the Government penalise people who are now working less than 24 hours but used to do more, by cutting their working tax credits by £3,750. The Government are saying, “Get some more work” but these people have just come down from full-time employment.

[Rachel Reeves]

I thank my hon. Friend for that intervention. He will know that there are 1.42 million people working part time who wish that they were working full time. As of April, about 200,000 families lost support through working tax credits because they could not find the additional hours that they need to still be eligible for that extra support to help them when they are in work; that support helps them to avoid poverty.

It is no wonder that people are asking whether they can have faith in anything the Government are saying, given that in every area we see dither and delay. In communications, the Government have put back the 2012 broadband target to 2015 and may not meet that new deadline. In house building, recent statistics show that new housing starts are down by 24% on a year ago. In waste management, the plan promised for spring this year will now not be delivered until the end of 2013. In energy, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been

“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.

In transport, we still await the long-promised national policy statement on transport networks and aviation, and tough decisions on airport capacity have been kicked into the long grass. Instead of the drive, decisiveness and clarity of vision that businesses are crying out for, what do we get in sector after sector? We get dither and delay; we get initiatives and announcements driven by the desire to hit headlines rather than to deliver results.

The Bill—the Government’s latest scheme—is a strange piece of legislation. It is being fast-tracked through Parliament, with the justification that the situation is immediate and urgent. However, given this need for speed, we are bound to ask whether legislation is necessary, particularly given that, as the House of Commons Library note explains, such commitments

“do not typically require…legislation”.

The UK guarantee scheme at the centre of the Bill was first announced by the Prime Minister in a speech in May. It was re-announced by the Chancellor in a speech in June. The press release came from the Treasury in July. It is therefore hard to resist the conclusion that the Bill is designed more to create the impression of activity and delivery than to get real results in the quickest way possible.

However, the Opposition’s biggest concern with the Bill is that it is simply inadequate to meet the challenge we face. Many in industry are sceptical that it will make any difference. Even where it is taken up, the tight criteria of economic and commercial viability may mean that it amounts to only a deadweight subsidy, aiding projects that would have gone ahead in any case. The best anyone has been able to say for it is that it might help some schemes at the margin, but that is hardly commensurate with the challenge we face.

The schemes that have been most frequently mentioned as strong candidates for assistance are those the Government have announced are going ahead several times already. Let me cite one example, which the Chief Secretary mentioned in his speech. Earlier this month, he said:

“Detailed discussions are already taking place with the Mersey Bridge Gateway project”.

We certainly welcome progress, but many may experience a strange sense of déjà vu, given that a year ago the same project was announced by the then Transport Secretary, who noted that although some transport plans are long term, this one could be

“implemented more quickly…creating jobs when they are needed most.”

What happened in the past year? It is no wonder the Government are gaining a reputation for more talk than action. As the director general of the CBI said today,

“firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.”

--- Later in debate ---

[Rachel Reeves]

Olivier Blanchard and the International Monetary Fund have been saying for a year that if growth does not materialise the Government should think again. How much longer do we need to be in recession? How much longer must we have rising youth unemployment and rising long-term unemployment before the Government act? The IMF now forecasts that the economy will shrink this year and will barely grow at all next year. That is evidence that the Government need to rethink their strategy, and it is a shame that they have not heeded the advice of the IMF.

[Geraint Davies]

Does my hon. Friend agree that the reason consumer demand is so awful is that the Chancellor announced that 700,000 people in the public sector would lose their jobs? People in the public sector do not know whether it will be them or their neighbour, or whether it will be this year or next year, so they are saving not spending. That is why there is no growth.

[Rachel Reeves]

I thank my hon. Friend for that intervention. It is not just people in the public sector; people in the private sector, particularly in construction, which has shed 120,000 jobs since the Government came to power, are also worried about their jobs and futures and about how they will get the money to feed and house their families. There is real concern and a real lack of confidence among households and businesses.

This summer showed that things could be done differently. The Olympics showed what can be achieved with an inspiring vision—the right combination of public, private and social enterprise, with the nation united behind it. We delivered on time and on budget, and it was a perfect platform for Britain at its best. Let us hope that the Olympics provided a much-needed boost for our economy, but the lesson to learn is not that we can now rest; if we really want to seize the economic opportunities before us and build a better future, we need to repeat that effort on a much bigger scale, with a nationwide plan for jobs and growth. Let that be the lesson for today and let us get to work on laying the foundations of the economy we need to build for the next generation. Let us have a Government who follow up their rhetoric with real action.

Regional Pay

Debate between Rachel Reeves and Geraint Davies

Wednesday 20th June 2012 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for that intervention. As a result of that confusion, many people who are in work are worried about spending money, because they are not sure what is going to happen to their pay, and that uncertainty is also making economic recovery harder to secure.

Comparing rates of pay in the public and private sectors involves a notoriously complex and controversial analysis. It is difficult to be sure that one is comparing like with like, because the jobs done by teachers, police officers or emergency workers have so few private sector equivalents.

[Geraint Davies (Swansea West) (Lab/Co-op)]

My hon. Friend may be interested to know that inward investors to whom I have spoken are concerned to have decently funded public services in education and health; they do not want a GP in Swansea, for instance, to up sticks and go to Bristol. Does she agree that in many instances that analysis, concluding that different pay for the same job throughout the country will help the private sector, undermines the confidence of inward investors and is counter-productive?

[Rachel Reeves]

My hon. Friend speaks powerfully on behalf of his constituents in Swansea. In my area, many people commute from Bradford to work in Leeds and the other way round. Would their pay be determined by where they work or where they live? If the Government say that their starting point is these differentials, they cannot blame people for concluding that their ultimate aim is a reduction of 10% or more in the relative pay of public service workers in some parts of the country.