The Economy

Adrian Bailey Excerpts

Wednesday 22nd June 2011 Commons Chamber

[James Morris]

As I said, one year in, following the policies being implemented by the coalition Government, we are beginning to see clear signs that private sector jobs are coming back into the west midlands after 13 years in which, despite quarter after quarter of economic growth, we saw substantial declines in private—

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

rose—

[James Morris]

I will not give way. I will make progress.

The Government faced a considerable challenge when they came to power. With the growth plan that they have begun to implement, in addition to the important steps that they are taking on deficit reduction, we are moving in the right direction. In the west midlands and the broader black country economy, skills is the No. 1 issue that we need to tackle. It is holding business back. We are investing considerably more in high-quality apprenticeships, involving the voluntary sector and other parts of the economy in making sure that we build a proper skill base in the black country and the wider west midlands economy. We are beginning to build better relationships between small and medium-sized enterprises and institutions of further education, such as Halesowen college and Sandwell college. We are beginning the job that the previous Government did not address, and making sure that we match appropriate supply of skills with demand in the local economy.

As “The Plan for Growth” recognises, we also need a more local approach to stimulating economic development. That is why I have been a strong advocate for the black country local enterprise zone. I have been working with its representatives to define the best way to drive economic growth in the black country, and on how to maximise the potential of the Chancellor’s Budget announcement on enterprise zones to stimulate new investment and new jobs and ensure that the local enterprise partnership is able to drive economic development.

--- Later in debate ---

[Margot James]

My hon. Friend makes an extremely good point and I thank him for his intervention.

[Mr Bailey]

rose—

[Margot James]

I will certainly give way to the Chairman of the Business, Innovation and Skills Committee, of which I am a member.

[Mr Bailey]

I thank the hon. Lady, as a fellow black country Member of Parliament, for giving way, particularly as the other black country Member on the Conservative Benches, the hon. Member for Halesowen and Rowley Regis (James Morris), refused to take an intervention from me.

We can talk for a long time about the unemployment statistics in the black country over the past decades. I recognise that the hon. Lady is prepared to acknowledge that this problem started long before the previous Labour Government. She is correct that the local hospital was financed by PFI. Would she prefer not to have had that hospital built or to have had it built out of public expenditure, thereby increasing the national debt?

[Margot James]

I thank the hon. Gentleman for his intervention. Clearly, I would not have wanted the hospital not to be built. However, I think that Labour took a good idea, PFI, which was started by a previous Conservative Government, and ran amok with it, accepting deals on far too generous terms so that our hospitals are stuck with being forced to pay absurd, non-competitive rates for all sorts of services from their PFI partners.

--- Later in debate ---

[Kwasi Kwarteng (Spelthorne) (Con)]

I was not expecting to be called so early in this debate, Mr Deputy Speaker, but I am very grateful.

It is easy in this environment and this highly partisan—[Interruption.] I know exactly what I am going to say, so please hear me out. It is easy to lose sight of the big picture in terms of where we were when we came into government in 2010, and it is easy for Labour Members to forget the huge deficit and the terrible mess they made of the country’s finances.

[Mr Bailey]

The hon. Gentleman talks about the big picture, but will he acknowledge that when the Labour Government came to power in 1997, the national debt as a proportion of GDP was 6% higher than when we left it?

[Kwasi Kwarteng]

I will acknowledge that the budget in 1997 was balanced, in that we took in £315 billion of revenue and spent £315 billion. I also have to acknowledge—I have to be candid—that under the first Labour Administration, between 1997 and 2001, the budget remained in balance. That was the prudent Chancellor whom many in the House will remember. We did not get into fiscal trouble with an increasing deficit until the 2001 to 2005 Parliament, in which, as people will remember, we had sustained growth. However, just at the moment when we were growing sustainably, the naughty, imprudent Chancellor took over. Having been prudent in the first four years of the Labour Government, between 2001 and 2005 he turned on the taps, to speak metaphorically.

[Mr Bailey]

I am following the hon. Gentleman’s argument, but it is somewhat incoherent given that, in 2008 I think, the current Chancellor, then in opposition, said that he would match the Labour Government’s public spending plans.

[Kwasi Kwarteng]

The principal point—if the hon. Gentleman will listen—is that Labour gambled with the country’s economy. It sincerely believed that it had abolished boom and bust, so it made spending commitments on the basis that the economy would grow indefinitely year after year. Unfortunately those spending commitments could not be rescinded when reality dawned—when the economy faltered and the revenues collapsed, leaving us with huge spending commitments and creating this unprecedented peacetime deficit.

It is unfair and wrong for Labour Members to say that it was a global phenomenon. Our deficit was not comparable to Germany’s. As far as I know, Germany operates in the same global space and is a competitor in many of the same markets as us, yet its deficit-to-GDP ratio was 3%. Ours, I believe, was 12.8%—the highest in the OECD and the G20. These facts are known to everybody, including all economists and many journalists—everyone knows them—yet consistently, ever since I have been a Member of Parliament, Labour Members have completely denied any responsibility and have given every reason under the sun for the appalling fiscal position we were left in. It is vital that every single Member bears in mind those big facts. Labour’s stewardship of the public finances was catastrophically negligent.

[Mr Bailey]

Will the hon. Gentleman give way?

[Kwasi Kwarteng]

This is the third time that the hon. Gentleman has tried to intervene, and I am afraid that I must press on. I am willing to take interventions from other colleagues, but he has had his say and I would like to have mine.

We have had a difficult time over the last year, during which time my right hon. Friend the Member for Tatton (Mr Osborne) has been Chancellor of the Exchequer. No one will dispute that: the situation has been tough. However, it would have been far worse if we had followed the policies of the right hon. Member for Morley and Outwood (Ed Balls) and not tackled the deficit in the rather aggressive but timely way in which we decided to. Hon. Members referred earlier to Greece, which has indeed been a Greek tragedy. People are on the streets, the Government are practically insolvent and there is a real risk of some kind of political revolution—I am choosing my words carefully, but the situation is very unstable. The situation facing this country was, I confess, not as bad. However, if we had not been serious about tackling the deficit, there was every likelihood that the international markets would have forced our interest rates up, that our cost of borrowing would have increased and that markets would not have bought gilts in the way that, over the past year, they have. The consequent rise in interest rates would have affected every family in this country, who would have had to pay high interest rates simply because the Government did not have the courage or the conviction to deal with the deficit.