Jobs and Growth

Richard Fuller Excerpts

Thursday 17th May 2012 Commons Chamber

[Ed Balls]

Credibility is about getting things right, not about getting them wrong. We were told that we were out of the danger zone and that the recovery had been secured, but what has happened? Plan A failed in Britain and in the eurozone too, and it is the very plan that the Chancellor has been urging on us. What did he say to The Daily Telegraph in August last year? He said:

“Britain is leading the way out of this crisis”,

and

“The eurozone must follow our lead and act decisively”.

The Prime Minister is off to the G8 summit this weekend. The only countries in recession that will be represented there are Italy and Britain. How are we leading the way? The fact is that the austerity policies that are failing in Europe are the very same policies that have failed in Britain, and which the British Government have been urging the German Government to urge the eurozone to stick with. That is the reality.

Opposition Members have consistently argued that it will not work for all countries to try to reduce their deficits at the same time, that tough medium-term plans to cut the deficit will work only if Governments also put in place a plan for jobs and growth, and that a time when a global hurricane is brewing is precisely not the time at which to rip out the foundations of the house here in Britain.

[Richard Fuller (Bedford) (Con)]

rose—

[Penny Mordaunt (Portsmouth North) (Con)]

rose—

[Ed Balls]

I will give way first to the hon. Member for Bedford (Richard Fuller). We have nothing in the file for him, because unfortunately we were unable to find anything interesting that he had said during the last two years.

[Richard Fuller]

I appreciate the compliment from the right hon. Gentleman, who has often demonstrated that he does not have a sound grip on economics. He is continuing to say something that I do not think is correct: he is continuing to compare austerity policies with growth policies. Does he not accept that growth is an outcome, which all policies are intended to achieve, and will he have the honesty to answer the question put to him by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) and cost his plans?

[Ed Balls]

The right course is to take a balanced approach that combines medium-term deficit reduction with getting jobs and growth moving. The problem with austerity is that it chokes off jobs and growth and ends up costing more in spending, more in unemployment and more in borrowing. We have set out a clear alternative. We have said “Repeat the bank bonus tax, and use the money to create jobs.” We have said “Rip up the failed national insurance cut introduced by the Chancellor, and use the money for a tax cut for small businesses.” We have said “Yes, cut VAT by £12 billion for a year to get the economy moving.” We have not said how many shovel-ready infrastructure projects can be launched, because we do not have the details.

The Prime Minister says that you cannot borrow your way out of a debt crisis, but unless you grow, your debts get bigger and your deficits get worse. That is what the Chancellor has proved over the last two years. It is not only the Labour party that is advancing that argument. Only last week, the managing director of the International Monetary Fund said:

“We know that fiscal austerity holds back growth and the effects are worse in downturns... so the right pace is essential”.

Even the head of the European Central Bank is now pressing for a jobs and growth plan.

The Prime Minister and the Chancellor must wake up to the fact that our economy has not grown on their watch for a year and a half. Instead of trying to divert the blame for their failure and using the eurozone as an excuse for Britain's problems, they must admit that they got it wrong—that they gave the eurozone the wrong advice—and start pushing for the right solution to the eurozone crisis. I agree that there should be a proper role for the European Central Bank and a greater emphasis on fiscal burden-sharing, but there should also be a change of course on austerity, because only a balanced plan that puts jobs and growth first will succeed in getting the deficit down. When the International Monetary Fund, the OECD, the European Commission, the European Central Bank and even the United States are urging policies for jobs and growth, this Chancellor and this Prime Minister are looking increasingly isolated and out on a limb.

--- Later in debate ---

[Richard Fuller]

On that point, will my right hon. Friend note that last month we had the largest number of new company formations in my constituency of Bedford? One reason for that is that they want stable, low, long-term interest rates, which this coalition’s policies are delivering.

[Mr Osborne]

My hon. Friend is absolutely right. That is precisely what businesses need—a stable economic environment in which we are not exposed to some of the financial problems that some eurozone countries face at the moment. The low interest rates and the credibility that our policy bring help every business, not only in Bedford but around the country.

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[Mr Binley]

I do—they will tell you that, Sir—as you did when you said that there was no money left. We are both honest men.

I wish that the shadow Chancellor would welcome some of the achievements that the people of this country welcome; it is foolish of him not to do so when there are considerable signs of recovery. It simply lowers the esteem in which all politicians are held, and I urge him, and the Opposition Front Bencher who responds to this debate, to take that into account.

There are welcome signs of recovery. The private sector has created more than 500,000 jobs since the general election; the International Monetary Fund forecasts that the UK will grow at twice the speed of Germany and three times that of France; borrowing costs have fallen, investment has been increasing and only yesterday we saw a drop of 45,000 in the number of unemployed people in the first quarter of this year. All those things are welcome, but it would be refreshing to hear Opposition Front Benchers greet them with some enthusiasm—although I doubt that they will.

The truth of the matter is that consumers and businesses are saying, “To hell with it; we’ve got to get on with life,” and that is one reason why we are seeing some of the green shoots of recovery. Now we need to nurture them and ensure that they continue to grow and bear fruit.

The situation is fragile, and no one would say otherwise. Consequently, I urge the Government and the Chancellor to do more. We will not achieve growth with new laws. The previous Government tried that for 13 years, and we saw what happened. This place does not create the growth; it simply sets the atmosphere and ambience for it. So I appeal to the Chancellor to recognise that we need to change the culture regarding entrepreneurialism and the attitude to small businesses, and indeed serious and important recommendations on doing so are coming forward from various parts of the House.

We must also understand the needs of small businesses, because therein lies our best chance of growing jobs and the well-being of this nation.

[Richard Fuller]

Does my hon. Friend agree that there is nothing that a small businessman would like to do more than to employ a young, new worker? What would my hon. Friend suggest to the Chancellor can be done with employment regulations, so that we get our businesses employing people more easily?

[Mr Binley]

I welcome that important point, because I was about to turn to that very area. More can be done, and we do indeed need to reduce the regulatory burden and to strengthen the business environment.

I welcome in the Queen’s Speech the proposed measures to deal with executive pay and employment tribunals, but I still do not understand why the Government are obsessing about maternity and paternity leave, especially for very small businesses. I simply point out that many people meet in the workplace and set up a family life together, and, if a small business employing 10 people loses 20% of its work force for six months, temporary labour cannot be used as a replacement. That simply does not happen.

--- Later in debate ---

[Richard Fuller (Bedford) (Con)]

Mr Speaker, I draw your attention and that of other Members to the fact that I am an adviser to a venture capital fund and also to my other entries in the Register of Members’ Financial Interests.

I support everything in the Queen’s Speech that will deal with improving jobs and achieving growth in our country. I hope that is the only partisan point that I shall make because I would like to talk a little bit about the use of language, and then advise hon. Members about a very practical way that Members of Parliament can play a role in achieving the goals that we all seek in terms of enhancing jobs and creating growth.

Let me start, if I may, with language. It is always important, in trying to solve a problem, to use words in the correct way and in ways that make sense, because if we do not do that, of course we will not solve the problem. Sadly, we have a major problem with the language when it comes to jobs and growth, starting with the word “austerity”, which has been much used today in a number of speeches.

A dictionary definition of austerity, in its economic context, is:

“An economic policy by which a Government reduces the amount of money it spends by a large amount.”

In popular discourse that is a description of the coalition Government’s economic policies. The trouble is that it is not a correct description of the coalition’s policies. Over the period of this Government, total public spending will increase, not decrease, from £670 billion to £734 billion. If we choose to measure it in terms of public borrowing as a percentage of GDP, the reduction in the UK will be significantly less than that of Greece, Portugal and Ireland. “Austerity” is therefore a good catch-phrase, but it is not an accurate way to describe coalition policies. That is compounded by a false choice that is presented to the public: austerity versus growth. I think that is a false and misleading set of alternatives to present, because growth is an objective that all policies seek to achieve, and a better description of the policy alternatives that are being put forward is, on the one hand, growth based on living within our means, and on the other, growth based on borrowing.

The BBC, if I may say so, is particularly noteworthy in its use of these false comparisons. On 12 May Gavin Hewitt, who is the BBC’s European editor, had a column entitled “Growth versus austerity”. On 4 May, Stephanie Flanders, the BBC’s economics editor, commented:

“It’s not only Labour politicians who say this”.

in the debate about the trade-off between austerity and growth.

Yesterday evening, a debate on BBC’s “Newsnight” featured a huge animated set of scales with “austerity” on one side trying to be balanced with “growth” on the other. That is not the BBC bias of which the Mayor of London has recently spoken, but it is misleading propaganda being put to the British public.

I now turn to a practical idea that all Members of Parliament should consider in their constituencies. I am drawing on some of my experience in Bedford, and on Monday at 3 o’clock I shall be holding a workshop to describe that in more detail to hon. Members. I looked at the comparative advantages that Bedford had in terms of economics. We do not have much. We do not have a university science park, we do not have a lot of inward investment, and we do not have a big employer, but people have a willingness to invest in and grow local businesses. We are in the process of creating a Bedford business enterprise investment scheme fund—a policy introduced by the Labour Government and enhanced by this Government. That is an excellent scheme, to encourage people to invest in local businesses. The idea of the fund is to get people to put money into their local business because they want to see them grow. There is a sense of civic duty that motivates people, and the fact that they have idle balances sitting in the banks, earning very low interest rates, is a very good economic incentive for people to do that.

A Member of Parliament can act as a great initiator, champion and cheerleader for this initiative, drawing together a local advisory board of business people to run the fund, seeking out partners for the fund to help to popularise it in the community, and finding new businesses that the fund can invest in. In Bedford, we have set a target of raising £500,000, and we are well on our way to achieving that.

I believe that if other hon. Members engage in that sort of action, it will mean that MPs, who are often criticised for lacking real world experience and being out of touch, will be seen in their local communities doing something practical to help people. If we put a network of projects together, we could seek support for this excellent initiative from the regional growth fund so that we have a constellation of local groups across the country where local people come together to support—commercially—the growth of local businesses in their community. If people would like to learn more, I shall be happy to explain on Monday at 3 o’clock in the Thatcher room.