The Economy and Living Standards

Stewart Hosie Excerpts

Thursday 12th June 2014 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

The Queen’s Speech said that the stated objective of this legislative programme was to build a stronger economy. It said that it was to strengthen the economy. The Prime Minister used many of the same phrases in his speech last week, and spoke again, as the Chancellor did today, about this fabled long-term economic plan, which is a bit like a fabled unicorn: everybody knows what is meant, but no one has ever seen one. This long-term economic plan is much the same. Anyone with any common sense would assume that a long-term economic plan was predicated on substantial above-trend growth, yet the word “growth” did not appear once in the Queen’s Speech. Indeed, the Prime Minister only uttered it twice: once to chide the leader of the Labour party, not unreasonably, and another time in response to an intervention from his own side. Why the coyness? Where is the plan for real growth in the economy? When one looks at what is proposed in this legislative programme and at what has come before, particularly in the Budget, one can see that, at its heart, this is still an austerity Government. Yes, there are some helpful Bills, such as the national insurance contributions Bill and, potentially, the small business, enterprise and employment Bill, but there is nothing that anyone can point to and say, “That will make a real difference in delivering growth in the economy.” Perhaps the Government think that mining tunnels under people’s homes without permission to carry fracked gas qualifies as a growth measure.

Why are the Government so coy? Why are they giving us this convoluted formulation of words about long-term plans and a focus on a very narrow, although helpful, policy about national insurance? It is because they have failed and they know it. Nothing the Government said last week or this week changes the underlying direction of travel or the underlying shape of the economy as described to us in the Red Book only a few months ago.

[Dr Thérèse Coffey]

I am really interested in the hon. Gentleman’s contribution. The International Monetary Fund has confirmed that we are the fastest growing country in the G7. We have seen growth in all sectors of the economy in the past year. That must be welcomed. There is no unicorn. The only unicorn is the Scottish National party’s claims that Scotland will be better off out of the UK.

[Stewart Hosie]

That is because we would be. Although I welcome the limited growth that we have had, the actions taken by this Government since the last election stifled and strangled the recovery for some years, and that is the underlying problem with their plan.

Let me take Scotland as an example. What the Government are proposing—this was before the Budget—is an 11% fiscal expenditure cut, a 27% cut in capital and a real terms 9.9% cut in the overall budget. This year’s Budget made that position worse, and that applies to spending Departments throughout the UK. Nothing in the Queen’s Speech changes that. Nor does it change the fact that the Chancellor told us that for 2013-14, the current account deficit would be down to 2.3% of GDP, borrowing would be reduced to £60 billion and the net debt would be at 70% of GDP. He was forced to tell us this year that the current account deficit was higher, borrowing was actually £95.5 billion and the net debt was 75% of GDP. The short-term metrics were wrong.

What about the big targets the Chancellor set for himself? They were that the debt would begin to fall as a share of GDP by this year, that the current account would be in balance next year and that the same year borrowing would be down to £20 billion. Presumably, that is what the Prime Minister meant by financial security. Of course, as we know—nothing in the Queen’s Speech changes this—the debt will not fall until 2016-17, two years late. The current account will not be back in the black until 2017-18, two years late. Public sector net borrowing in 2015-16 will not be £20 billion but £68 billion, three and a half times higher.

Although the limited recovery we have seen in the past year is of course to be welcomed—this directly answers the question asked by the hon. Member for Suffolk Coastal (Dr Coffey)—not a single one of the Chancellor’s key targets has been met and his actions, as this is an austerity Government, stifled growth and delayed recovery year on year. No amount of convoluted formulations or warm words about long-term economic plans can change that.

What are the Government planning? It is there in black and white in the Red Book, on page 20 for anybody who wants to have a look. There will be a discretionary consolidation—that is cuts, and tax rises—next year to the tune of £126 billion. That is £2,000 per person in tax rises and cuts. That is what they are planning and that is what they have signed up to.

[Ann McKechin (Glasgow North) (Lab)]

I am interested in the hon. Gentleman’s comments on achieving growth. Presumably the skill base would need to be increased, so I take it that he agrees that cutting the college budget by £50 million would not be the way to achieve sustainable growth.

[Stewart Hosie]

When it comes to improving education, having a record number of Scots in full-time college places is excellent; having 25,000 to 26,000 Scots starting apprenticeships every year is first class; having 32,000 Scots start university this year is the way to proceed; and having all the school exam results improve in the way they have is probably a really good start. If the hon. Lady is saying that we can do more and can do better, of course we can—any Government can—but let us not talk down success, particularly when we are trying to hold this Government to account.

The point that I was making is that what we have is not a long-term economic plan. It is certainly not sustainable and it is certainly not a recipe for the growth the economy needs. It is just more Liberal and Tory austerity. It is the same plan that has seen this Government fail on their short-term and long-term targets so far and that will fail again. If it is about financial security, there is no evidence that it will succeed. If it is about growth, the Government are not even talking about that. If it is about delivering on the needs and ambitions of the people, it is woefully inadequate. As the discretionary consolidation laid out in black and white in the Red Book is predicated on a ratio of cuts to tax rises of 4:1, we do not have a long-term economic plan but a Tory Government who seem determined once again to try to balance the books on the backs of the poor. That is not a long-term economic plan; that is a disgrace.