Business and the Economy

Robert Syms Excerpts

Monday 14th May 2012 Commons Chamber

[Mr Robert Syms (Poole) (Con)]

I support the Queen’s Speech, which I thought was very good. I have an advantage over many Members, in that I came into the House in 1997. Within a matter of hours, the then Labour Government decided to make the Bank of England independent. They also changed the regulatory regime for the whole banking system from its historic basis in which the Bank of England presided over the banks. Without consulting the Governor of the Bank of England, they created the Financial Services Authority and a whole new system. It is somewhat ironic that, a decade later, that decision played a major role in what happened during the financial collapse, because our regulatory regime was not fit for purpose.

This Government, in contrast, have produced a draft Bill that has been widely consulted on. It has been carried over and will become legislation after hours of debate. The Bill will give back much of the regulation to the Bank of England. The proposal will have maximum transparency and scrutiny. The Queen’s Speech also contains a banking reform Bill, which is to be welcomed. We are starting to put back together a decent regulatory regime for the financial sector.

In 2010, we formed a coalition for the simple reason that this country faced a real crisis and the biggest peacetime deficit in its history. It takes quite a lot to get Liberal Democrats and Conservatives to work together, but the previous Government managed to achieve that through their financial irresponsibility. We have faced difficulties ever since; the financial crisis has continued because of what has happened in the eurozone and worldwide. This is not an easy environment for the Government to thrive in, but they have set out a clear long-term plan. They have kept interest rates low and allowed the Bank of England £325 billion of quantitative easing, which is substantially more than would be possible if we were spending public money to try to push the economy. Against that background, they have created an environment in which we should be able to export more, as markets improve, and rebalance the economy. That will take time, however, and it will not be an easy role to play. Clearly, the debate for this Chamber is that if Opposition Members are right, they will win in 2015; and if we Government Members are right, the coalition parties will benefit in 2015. That, essentially, is the narrative about how things will pan out.

The Government are doing substantial and good things in the realms of education in creating apprenticeships. The Queen’s Speech also referred to legislation on enterprise and regulatory reform. We all know that that is necessary to lighten to the burden on businesses where we can, so that they can recover.

The right hon. Member for Birkenhead (Mr Field) put his finger on an important point. We have a balance-sheet recession, as banks are shrinking their balance sheets, while companies have a lot of money which they are not spending, and individuals are trying to rebalance their individual financial circumstances. The recovery will be bumpy, therefore, and confidence is very important to it. In the world of 24/7 news, when one can switch on Sky or the BBC to find out about crisis talks in the Greek cabinet or what is happening elsewhere, it is difficult to engender confidence. If we hold to our proposals and our strategy, however, I think that things will eventually sort themselves out, and we will see success with higher investment, more jobs and a more prosperous economy.

I support what the Government are doing. They are setting the environment for more growth and a more enterprising country. We should not forget that our recent Budget included a £2.5 billion tax cut for the lowest-paid workers. There is a strategy behind what the Government are doing: on the one hand, we are reforming welfare with the universal credit and a welfare cap; on the other, we are taking many of the lowest-paid workers out of the tax system. That is intended to increase incentives to work. The crucial test of us as a country is whether we can make work attractive and get more people back into it over the next few years.

I believe that the Government are on the right track. I support what they are doing in a difficult world environment in which confidence is in short supply. It is interesting that our long-term interest rates are low and that in the current crisis, sterling is now starting to rise as this country is seen as a relatively safe haven in a very turbulent world. I am sure that if the Government stick to the course, this country will get the reward it deserves and that we all want—a prosperous and more dynamic country.