The Economy

Tom Clarke Excerpts

Tuesday 6th December 2011 Commons Chamber

[Mr Alistair Darling (Edinburgh South West) (Lab)]

I hope that the hon. Member for Skipton and Ripon (Julian Smith) will forgive me for not following him, given the short time I have available.

The real problem we face in this country, in Europe and, to a large extent, in America too, is the lack of growth. The Chancellor opened his remarks by saying that the previous Government had been too optimistic about some of their forecasts. He gave—how shall I put it?—a somewhat incomplete précis of my book. In that connection, I refer the House to my entry in the Register of Members’ Financial Interests. Surely the Chancellor would accept that forecasting is extremely difficult at a time like this. Perhaps when he goes back to No. 11 at night, he will reflect on the fact that he was wildly optimistic about both growth and borrowing. I do not imagine for one minute that he expected to be standing up a week ago to announce that he was borrowing £158 billion more than he thought he would be borrowing in the summer of last year. The reason for that, substantially, is that we have less growth, with fewer people paying tax, more people dependent on benefits and, as the Office for Budget Responsibility set out, incomes being squeezed.

All that was perfectly foreseeable. Many people—Labour Members and many others—said that this would happen. The problem was not just the rate at which public expenditure was being cut, but the fact that the mood music that the Government deliberately set out to orchestrate last year was that everything was full of gloom and doom, so it is not surprising that businesses did not invest and that individuals decided to hold back on their expenditure. That is precisely what is happening in this country and in Europe, to which I shall return shortly. All this was foreseeable.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Following on from my right hon. Friend’s point about cuts, is he particularly worried about the construction industry, not least because so many small businesses are dependent on it?

[Mr Darling]

I am, and I shall come on to that in a minute, but I want to make a further point. If the OBR comes out with another downward revision of its figures at the time of the Budget next March, does it mean that we are going to embark on yet another round of reducing expenditure? It this not the same sort of argument that we had in the 1930s? The prevailing orthodoxy did not work then, and it will not work now. My guess is that this argument is going to dominate politics and economics over the next few months—not just here, as I said, but in Europe.

My right hon. Friend mentioned the construction industry. I welcome some of the measures the Chancellor announced on infrastructure, but with this big caveat. First, if he looks at some of them, particularly the road announcements, he will see that they have been announced by successive Governments over many years. He will no doubt have been told by the Treasury that the problem with these big plans is the huge lag between the time they are announced and the time we see them. I remember opening the M6 expressway and a reporter said, “This must be a great triumph for the Labour Government.” I said, “Indeed, it was. Harold Wilson would have been absolutely delighted to see it built.” That illustrates the point.

Although this is not a transport debate, I am glad that the Government are looking at the issue of aviation, but they cannot escape from the consequences of the decision not to proceed with the expansion at Heathrow. I know this is no longer my party’s policy, but I believe that issue needs to be looked at again for the future prosperity of the country. The High Speed 2 line is no substitute for it.

The Chancellor has, of course, had to change course. He was very much against quantitative easing. When I introduced it, he said it was the last act of a desperate Government, but it now turns out that it is a jolly good thing and we can expect to get even more of it. I suspect we will need more as the economy slows down. As I said, he has also had to introduce the infrastructure projects to try to help—although not enough, in my view. I think he will have to do more, particularly about jobs for young people facing unemployment, which is going to be a real economic problem as well as a real social problem. Many of us here remember the lost generation in the 1980s. Many of those individuals never got over the experience of having no job when they left school, college or university. The Government are going to have to come back to this, no matter what the Chancellor says, because the outlook is such that the Government are going to have to at some stage accept that at a time like this only the Government can take the action necessary to stimulate the economy and restore confidence. That brings me to Europe.

--- Later in debate ---

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I have listened to this debate with interest. My experience is that the problems that my constituents bring forward for me to deal with are a reliable barometer of what is happening in our economy. At present my constituents are getting it tough—very tough. They are not alone. Earlier this month, The Guardian reported that half a million people will be forced off incapacity benefit. Additionally, child poverty, youth unemployment and fuel poverty have increased and are set to rise further. At the same time, fuel and food prices are rising to unprecedented levels.

[Angela Smith]

I wonder whether my right hon. Friend feels insulted that, given the seriousness of the debate, no Minister could be present on the Front Bench.

[Mr Clarke]

The Chancellor likes to hear himself, but I do not see him often when others are speaking.

We are entitled to be extremely worried given that over the past three months unemployment has reached its highest level in 17 years. There are now more women unemployed than at any time since 1988. All of this is a consequence of this Government’s austerity measures—and what improvement has there been as a result of the hardship?

[Mr Bain]

My right hon. Friend has been a champion of equality since being elected to this House in 1982. I wonder whether he has had an opportunity to consider the report issued by the Institute for Fiscal Studies this morning, which says that one of the biggest drivers of the lift in household incomes has been female employment. How does he believe the cuts announced by the Chancellor in the Budget and the autumn statement will contribute to living standards?

[Mr Clarke]

My hon. Friend, as usual, makes an interesting and relevant point. I hope to return to it later if time allows.

The Office for Budget Responsibility has forecast that growth will now be lower this year, and for every year until 2014. Unemployment will rise next year and be higher than previously forecast in every year until 2015. Consequently, Government borrowing, which we have heard so much about, is set to be £158 billion higher than was planned a year ago.

The coalition Government’s economic policy is simply not working. When Labour left office, the economy was growing. In the past 12 months, only Greece, Portugal and Cyprus have grown more slowly than Britain. That is not just because of the eurozone crisis. The British recovery was choked off more than a year ago. In the 12 months since the Government’s spending review the UK economy has grown, but by a mere 0.5%, while the EU has grown by an average of 1.4%. Their policy has starved us of growth.

Britain needs sensible public sector projects that will stimulate our economy, so that it is less dependent on a downward spiral of destructive cuts. Instead, the OBR forecasts more than 700,000 public sector job losses as a result of Government measures, and for anyone who remains, a ceiling of 1% is being put on pay rises for the two years following the spending review period.

Youth unemployment has exceeded the 1 million mark, and long-term unemployment among 18 to 24-year-olds is up by a shocking 83% since the start of 2011. What do the Government do in the face of that crisis? They scrap the future jobs fund and introduce three-year work placement subsidies, which will mean just over 53,000 funded jobs—a far smaller number than the 105,000 starts provided by the future jobs fund between October 2009 and March 2011. Those new placements are not even guaranteed. No wonder our young people feel cheated by society. That message certainly comes over to me in my constituency.

If we are not careful there will again be a lost generation of young people—just as there was in the ’80s, Mrs Thatcher’s time—which will lead to broken homes, broken relationships, dashed hopes and broken dreams. I would not for one second condone the riots that took place in England earlier this year, particularly as I am asking the House to reflect on what youth unemployment actually means. Indeed, I am pleased that they did not extend to Scotland. However, it would be naive in the extreme to think that we can continue with the figures and statistics that are a reality in Scotland and not expect young people to articulate their views.

We were first warned about these matters as long ago as during the war, when Sir William Beveridge wrote:

“If full employment is not won and kept, no liberties are secure, for to many they will not seem worth while.”

So what about the poor and people with disabilities? Since 2010 jobseeker’s allowance claimants have risen in the most deprived areas of my constituency—I underline the word “deprived”—from 26.3% to 28.1%, against a UK average of 3.9%. We are asking what the Government’s response will be, because that is a real problem. Additionally, Mencap has found that one in two families with a disabled child live in poverty. The Chancellor is playing with the lives of those people. As they teeter on the breadline, tax credits are being cut, Sure Start centres are closing at an alarming rate and the number of people able to claim disability benefit is being cut.

[Jim McGovern]

My right hon. Friend may be aware that last Friday, a Spanish wind turbine company called Gamesa abandoned its plans to locate in Dundee, my home city. It is a devastating blow for Dundee and means that a prospective 1,800 jobs will not be created. Does he agree that the UK Government and the Chancellor should work more closely with the devolved Administrations to ensure inward investment throughout the UK?

--- Later in debate ---

[Mr Clarke]

My hon. Friend makes an excellent point, with which I agree.

When it was promised that the coalition Government would protect the most vulnerable from the impact of spending cuts, what part of that commitment did the Chancellor not understand? Instead, the situation of those individuals will only worsen as the Government announce yet more and more cuts to make up for a lack of growth. It does not have to be that way. It should not and need not. The Government could change course and adopt Labour’s plans for jobs, to seek to grow the United Kingdom and take us out of debt. Our people deserve no less.