Jobs and Growth

Sheila Gilmore Excerpts

Wednesday 12th October 2011 Commons Chamber

[Michael Fallon (Sevenoaks) (Con)]

I remind the House of my interest recorded in the register.

There is some common ground on both sides of the House. Growth is the key, and although the Government cannot create jobs and businesses, they can set the conditions for sustainable growth through sound money, a fair and competitive tax system, an infrastructure in which businesses can flourish and, above all, keeping control of their side of the economy—the public finances. The previous Government clearly failed to do that. They failed to balance their budget for nine successive years after 2001 and they doubled then redoubled the national debt, leaving us with the largest structural deficit in the G20. Worse still, for the longer term, they left us a rate of growth that simply was not sustainable because it depended on ever-increasing public expenditure—now, I note, more than 50% of GDP for the third year running—on a boom in commercial and residential property prices that simply was not viable in the longer term, and on an over-blown banking and financial sector. We are now dealing with the consequences of the collapse of that sector.

In the end, it was all an illusion. The previous Government created a pyramid of debt and called it investment. They spent all our money on an unreformed public sector without bringing the improvements in productivity that we saw over the same period in the private sector. On the capital side, they spent it on a whole series of expensively engineered, private finance arranged schools, hospitals and the rest. Above all, as was sadly confirmed yet again today, they left us a lost generation of nearly 1 million youngsters under the age of 25 who were under-educated, underskilled and under-equipped for the needs of modern business. That is why I support a Government who are now laying the proper foundations for genuine growth on top of their fiscal consolidation plan by encouraging bank lending, cutting taxes on business and cutting regulation.

I particularly welcome the announcement made by the Chancellor in Manchester, which he repeated today, about reforming the rules regarding employment tribunals, which will make employment easier. That is one reason why I support it—another is because it will reduce the huge cost to business not only of the awards themselves but of the time taken to manage and handle cases that businesses would prefer not to get to tribunal. I also support it because it is fundamentally, as the Chancellor has emphasised this afternoon, a deregulatory measure that recognises the rights of non-workers—those who are currently frozen out of the labour market but would be prepared to work if businesses found it easier to take them on.

[Sheila Gilmore (Edinburgh East) (Lab)]

We are being asked to accept that all small businesses that might take on employees have as their first consideration the possibility of being faced with an industrial tribunal, but, of course, if they are good employers, that is most unlikely to happen. Surely, the fact that they cannot sell their products if there is no demand for them because so many people are unemployed or feel at risk of unemployment, rather than whether they might be faced with an industrial tribunal, is the most important consideration for an employer in deciding whether to take on another employee.

[Michael Fallon]

Employers in my constituency tell me that they will do almost anything to avoid taking on any single additional member of staff. The hon. Lady has to recognise that the number of cases jumped to a quarter of a million in 2009-10. I welcome the change.

I hope that there might be agreement across the House on my next point. The two things that seem to be missing at the moment in our quest for growth are cash and confidence. I fully support what the Government are doing to encourage bank lending. It beggars belief that there was no agreement in place with the banks to stimulate lending to small businesses before the Merlin agreement was concluded this year. I support that agreement, but I also share the scepticism of the Chancellor and the former Chancellor about the stimulus that the first round of quantitative easing may or may not have given to bank lending. The jury seems to be out on that, but what it does seem to have stimulated is inflation. The Bank now admits, I think, that it may have added between 0.75% and 1.5% to consumer price inflation. Two years ago, consumer price inflation was 1.1%, whereas today it is four times that. I hope that the Bank will be mindful, if there is an inflationary effect, that inflation is already higher than we would like. If there is a squeezed middle, inflation is doing quite a bit of the squeezing, and I hope that the Bank will not forget its core task of getting inflation back on target.

In the end, confidence is the key. I hope that the Government will do everything that they can to back the companies that are successful, and to learn from their success.

--- Later in debate ---

[Kerry McCarthy]

No, I do not have time. I was highly sceptical that the pledges would translate into real action if the Conservative party got into Government. Sadly, my scepticism has proved well founded. The IFS warned yesterday that the Government’s tax and benefit changes will push 400,000 children into relative poverty by 2015. The number of children in absolute poverty will rise by 500,000 to 3 million. Instead of us eradicating child poverty by 2020, the Government’s policies mean that 3.3 million children—one in four children in the UK—will be in relative poverty. Labour when in government lifted nearly 1 million children out of poverty; this Government will put another generation of children right back there. It is little wonder that the chief executive of the Child Poverty Action Group described it as a “devastating report”. She said:

“Ministers seem to be in denial that, under current policies, their legacy threatens to be the worst poverty record of any government for a generation.”

[Sheila Gilmore]

Does my hon. Friend agree that on top of the benefit changes, one of the big things that will cause increased child poverty is the increased level of women’s unemployment, particularly because of the huge cuts in the public sector, which will affect women and then affect their children and plunge them into poverty?

[Kerry McCarthy]

My hon. Friend makes a valid point, which is another sign of the devastating impact of the Government’s policies. As I said, everything mounts up together; taken individually, it might not seem that they are doing much harm, but people are beginning to feel the pain and beginning to realise how much more pain is round the corner, not just for them, but for their children.

In the limited time available to me, I shall talk about unemployment, which in my constituency has risen by almost a quarter in the past year. Bristol was fortunate to be chosen as the site for one of the Government’s new enterprise zones. Unlike the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), I can just about remember what they are called. The council says that that has the potential to create 17,000 new jobs, which is good, but that is over a 25-year period. We need jobs now.

A report by the Work Foundation concluded that

“evidence suggests that Enterprise Zones…are likely to be ineffective at stimulating sustainable economic growth in depressed areas.”

A Centre for Cities report found that the cost of each new job created in enterprise zones over 10 years would be £26,000, which compares with £6,500 to creating a job for a young person under the future jobs fund and just £3,500 for the new deal for young people.

I left school in the 1980s and nearly all my friends spent years on the dole, their prospects of employment bleak, with long spells of unemployment interspersed with the occasional futile training scheme that did nothing to land them a job at the end of it. They thought they would never work, never own their own homes, never be able to afford to have a family. This Government seem intent on recreating that Thatcherite nightmare, with nearly 1 million young people now unemployed. We cannot consign another generation to the scrapheap. Labour’s plans to create 100,000 jobs for young people are what is needed now. That is why I support the motion.

--- Later in debate ---

[The Chief Secretary to the Treasury (Danny Alexander)]

This has been a very good debate in which we have heard 31 contributions from Back-Bench colleagues on both sides of the House. The right hon. Member for Edinburgh South West (Mr Darling) made clear his continuing support for paying our subscriptions to the IMF. We heard particularly passionate speeches by the hon. Member for Islwyn (Chris Evans) and my hon. Friend the Member for South Staffordshire (Gavin Williamson), who made strong pitches on behalf of their constituents, as did many other hon. Members.

Let me take this opportunity to congratulate the shadow Chief Secretary to the Treasury on her appointment. The hon. Member for Bassetlaw (John Mann) made a pitch for her job, but I think she is quite safe. She has a tough job to do in controlling the free-spending instincts of many of her colleagues. The Chancellor referred to the £11 billion cost of a commitment made in amendments that she tabled to the Pensions Bill on her last day as shadow Pensions Minister, and I hope that others will not follow her example.

The shadow Chief Secretary will have to think carefully about whom she asks for advice. Perhaps she could ask the shadow Chancellor, or perhaps not. Perhaps she could ask my predecessor but one, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who left a message for my predecessor saying that there was no money left. That is not the only message that he has left recently. [Interruption.] Calm down. My hon. Friend the Member for Portsmouth North (Penny Mordaunt) received a message yesterday on her answering machine from the right hon. Member for Birmingham, Hodge Hill saying, “Could you put in to speak tomorrow? The shadow Chancellor needs all the help he can get.” It is to be assumed that he had confused my hon. Friend the Member for Portsmouth North with the hon. Member for Newport East (Jessica Morden), who is next to her in the House of Commons telephone directory. Perhaps the shadow Chief Secretary could turn for advice to her former boss, the Governor of the Bank of England, who last year backed this Government’s strong and powerful deficit reduction plan, and who last week reiterated that this Government have a credible plan to repay our debts. In the end, the test for her and her party will be whether they have plans that are in any way credible. On today’s evidence, the answer is no.

I will answer a couple of the questions that have been asked about Labour’s plans. It has set out plans today for the Pensions Bill that would cost an additional £31 billion of debt. Somebody asked what the interest on that would cost. It would cost £1.2 billion a year or £3.2 million a day. That is just on the spending commitments that Labour has made this week.

Likewise, the shadow Chancellor seems somewhat confused about his own policy on the switch from RPI to CPI. As I understand it, he will support the switch, for which I am grateful, for three years. That means that he will seek to reverse it in 2014-15. That would cost an extra £6 billion at the end of this Parliament. The shadow Chief Secretary has her work cut out with the shadow Chancellor, as well as with everyone else. That is why I say that only the Liberal Democrats and the Conservatives have a credible economic plan.

As many speakers in this debate have recognised, when we came into government we inherited the largest peacetime deficit this country has ever faced. We were borrowing one pound for every four that we spent. We were on a completely unsustainable trajectory, which compelled Standard & Poor’s to put the UK’s triple A rating on negative watch. We had to take the difficult and sometimes unpopular decisions to pull the country out of that hole. We are taking action not because it is easy, but because it is the right thing to do in the national interest. We are already seeing the benefits from our plan.

[Sheila Gilmore]

I wonder whether the right hon. Gentleman will apologise to all the people who voted Liberal Democrat having heard his party say in the election campaign that to cut too fast would be detrimental to the economy.

[Danny Alexander]

No, I will not because our plan for deficit reduction is necessary to restore the credibility of this country’s finances. If there is any apologising to be done, it is from Opposition Members.

As I was saying, we are already seeing the benefits from our plan. Standard & Poor’s took the UK’s rating off negative watch and reaffirmed our rating in its latest report.