The Economy

Sheila Gilmore Excerpts

Wednesday 26th November 2014 Commons Chamber

[The Exchequer Secretary to the Treasury (Priti Patel)]

Today the Opposition have reminded us why Labour can never be trusted with the economy again. So appalling is its reputation on all matters economic that even its former Chancellor, and now we hear its former Prime Minister, are seeking to join the exodus from the parliamentary Labour party, belatedly fleeing the scene of the economic carnage they helped to create. The hon. Member for Nottingham East (Chris Leslie) spoke about the 2010 autumn statement. Back then the former shadow Chancellor, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), forecast that there would be a “jobless recovery”. Since then Labour has become a broken record, and over the past four years it has been proved wrong about the economy and sought to mislead and frighten the public at every opportunity. Instead of presenting a sustainable economic plan to the House today, Labour Members come here and use this very rare debate on the economy to talk down the economy, and sneer at those who want to work hard and to get on in life, which is why I would like to start by bringing the House’s attention to a few basic economic facts about their track record.

With a record peacetime deficit, increased unemployment and a welfare system that was broken, Labour left Britain’s economy in a mess. On top of that they doubled income tax for the poorest, and insulted pensioners with derisory levels of state pensions, not to mention the mean-spirited 75p increase in state pension; that is how the Labour party rewards our pensioners after a lifetime of work. Labour also oversaw a doubling of council tax, increased the rate of fuel duty 12 times, and failed to support parents with child care costs, yet Labour Members have the audacity to come here today and lecture us about child care costs. The Government are reforming child care through tax-free child care and sustainably helping hard-working and hard-pressed families up and down the country.

[Sheila Gilmore (Edinburgh East) (Lab)]

Surely the biggest mistaken forecast was that of the current Chancellor when he came to this House in 2010 and told us the deficit would be eliminated during the course of this Parliament.

[Priti Patel]

This Government have cut the deficit by over a third, so we will not take any lectures from the Opposition or the hon. Lady about that—notwithstanding the fact that when in office Labour failed to prepare our young to compete against the brightest and the best when it came to skills, jobs and education, and that was just the tip of the iceberg.

Since 2010, this Government have worked hard to turn this situation around. By working to our long-term economic plan, we have seen the deficit cut by over a third, income tax cut for over 25 million people, benefits capped to reward work, and 1.7 million more people in employment, while over 2 million more private sector jobs have been created and employment is the highest on record. We have created 1 million apprenticeships. The state pension has increased. More children are in good and outstanding schools. Over 50,000 families now have a home thanks to our Help to Buy policy. This is a good start, but we are the first to recognise that the job is far from finished.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

I rather suspect that the few people who may be listening to this debate will feel that it is running a similar course to previous debates. Sometimes it feels as if we are talking about different countries and different experiences, but I genuinely think that we all want and support many of the same things. I take exception to some of the portrayals of Labour party policy and politicians as not wanting to see people in work or not supporting people in employment. That is simply not the case and never has been.

Some 350,000 single parents alone were enabled to work as a result of the introduction of tax credits in the early part of this century. All were grateful to a Government who enabled them to take jobs that they had previously been unable to do.

[Nick de Bois]

Notwithstanding the good intentions behind tax credits, is not the reality that that Labour party policy is encouraging and funding corporations to pay less in the full knowledge that the state will pick up their employment bill?

[Sheila Gilmore]

If I have time I will come back to some of those important issues.

The point I was making was that the policy of the last Labour Government focused on getting people into employment and making work pay, not on encouraging people not to work as is so often alleged. We do not get the chance to challenge some of the statements and generalisations that have been made as much as we want. Earlier in this debate, the hon. Member for Ipswich (Ben Gummer) said—and perhaps he misspoke—that unemployment is now the lowest in our history. That is slightly astonishing, given that unemployment was lower than it is now, by some considerable margin, in all years between 1998 and 2008, when the recession struck, and of course the 1950s and 1960s saw considerably lower unemployment rates. There is no need to exaggerate the position.

Nor is it true that long-term unemployment was much worse during the years of the Labour Government. I am glad to hear that in 2013-14, the last financial year, long-term unemployment—people unemployed for more than two years—fell for the first time since 2003. But in 2008, as the recession was striking, that level of long-term unemployment was 200,000. It peaked at 460,000 in 2013, and this is the first fall since then. That is a considerable increase in the number of people unemployed long-term for many years during the period of this Government.

We hear a lot about the fall in jobseeker’s allowance payments in various constituencies, and coalition Members are happy to throw those figures back at every Opposition Member who speaks. But not every reduction in jobseeker’s allowance translates into someone being back in employment—and certainly not back in full-time employment. Many people cease to be entitled to jobseeker’s allowance because they come to the end of their entitlement, not necessarily because they are in a job or eligible for any other benefit.

The Minister suggested that the last Government did not do much for older people, but pensioner poverty was slashed during that time. During this welcome—although slow—recovery, we are seeing some alarming issues for people attempting to work. The number of people who are self-employed is much higher than it has ever been—it was 15% in 2014—and indeed two thirds of the increase in the total number of workers between 2008 and 2014 has been among the self-employed. The problem is that a lot of that self-employment is not generating a high level of income. We have to ask what is happening. When those figures for the high level of self-employment are given, the assumption is that we are talking about thrusting entrepreneurs who are doing very well, but the average earnings of the self-employed have fallen. They are now getting £200 and some a week, which is less than half that of employees.

A lot of self-employed people are struggling, either because their businesses are very new or, possibly, because they have been encouraged to become self-employed as an alternative to unemployment, but find that their earnings and family income are very low. That is an important point to consider, as is much other low-paid employment, when we look at the tax take. The deficit will rise this year—having come down by one third, which was not the total reduction we were promised—and that has a lot to do with reduced tax take. We argue that that has a lot to do with the underemployment that people are suffering and self-employment on very low earnings.

People are in self-employment of a very dubious kind. I met a constituent last Friday. He is in his 50s and he has always been a construction worker. He cannot get permanent employment in that area, even in a city such as Edinburgh where unemployment is relatively low. He has signed up with an agency. Periodically, it phones up to offer him work—four days here or five days there, with gaps in between. Recently, he was phoned up at about lunchtime and asked if he could get down to a building site that afternoon. “How long will the job be?” he asked. “Oh, just today and tomorrow.” So that was one afternoon and one day’s work for someone who is a skilled tradesman and has worked all his life. That is having a devastating effect on his ability to pay his rent, remain in his home and hold his head up as a valued worker. If that is the kind of employment we are encouraging, we must do something about it.

[Gordon Birtwistle (Burnley) (LD)]

The performance of the economy is a great debate for today. As a brief history of the problems that we face, we all accept that in 2009 the country suffered a catastrophic heart attack in its economy. We can blame the collapse of the banks or the incompetence of the previous Government—I think that both were responsible for the problem. But that is past. What we have to do now is repair the economy.

My belief is that the economy can be repaired only by prosperity. We have to create prosperity, but Governments do not create prosperity—they create the environment for prosperity. Prosperity is created by the thousands of companies that are creating jobs and the millions of people working in those jobs. There has been more prosperity created in a nanosecond outside than there has been in the Chamber since this debate started. Prosperity needs investment by companies. The Government do not invest, but they do provide the environment and the confidence for companies to invest. That is what has been happening over the last four and a half years.

Four and a half years ago, the country was basically bankrupt. We cannot turn that round in four and half years—it will take longer. As long as we create the environment to ensure that the turnaround takes place, I am confident that it will happen. Look at my constituency. When I became the MP in Burnley—[Interruption.] The shadow Minister may think this is funny, but I think it is very serious. I really hope that the Government create the environment for the prosperity that we all need.

Four and a half years ago, unemployment in Burnley was approaching 9%. It is now 3.5%. There has been massive investment by the Government and the private sector. Almost £100 million has been invested in the small town of Burnley. The hon. Ladies in the Chamber might know Boohoo, an online ladies fashion company. Boohoo came to Burnley in 2009 with 46 people. It now employs more than 700 people and is investing £20 million in a brand-new factory. Hopefully, it will have 1,500 people by this time next year. It is so confident in the Government’s economic plan that it realises it can afford to invest £20 million of its own money, while giving the whole work force a 15% increase. It is investing for the future. [Interruption.] It may well not be happening in the shadow Minister’s constituency, but I can only say what is happening in Burnley.

The Government, thanks to the Business Secretary, are managing to rebalance the economy. It was way of out of sync when the coalition came to power, relying on the banking and service sectors while forgetting about manufacturing. What have we done? We have backed the aerospace industry with vast sums of money. It is the most successful industry in the country, creating hundreds of thousands of jobs.

[Sheila Gilmore]

Earlier, the hon. Gentleman said that in his view Governments do not create jobs, but he has just given an example of where Government investment has enabled jobs to be created.

[Gordon Birtwistle]

I did not say that Governments do not create jobs; I said that Governments do not create prosperity. Prosperity is delivered by the people who are working outside this building.

We have rebalanced the economy. We have backed aerospace and there are now hundreds of thousands of people working in the aerospace industry. In Burnley, we have invested more than £20 million in the old Michelin tyre factory, which is now serving an advanced aerospace supply chain. Lots of new American and British companies have come in and created high skills jobs with higher salaries. We backed the automotive industry. As was said earlier, we now export more cars than ever before. In fact, we are plus on exports—we used to import more cars than we exported, but we now export more than we import.