PARLIAMENTARY DEBATES - United Kingdom Parliament

51 Debate on the Address
9 MAY 2012
Debate on the Address
52
[Mr Iain Wright]
betrayed. That is the scale of the challenge that the hon.
Gentleman’s party faces with regard to reinvigorating
the trust of the people.
Almost the first words that Her Majesty said in her
speech today were:
“My Ministers’ first priority will be to reduce the deficit and
restore economic stability.”
Those words were almost identical to the ones that the
Queen uttered in the first Session of this Parliament,
two years ago, when she stated:
“The first priority is to reduce the deficit and restore economic
growth.”
In the intervening two years, the Government have
done little that they set themselves on both counts. They
have had to borrow about £150 billion more than they
originally forecast back in 2010, and they have failed to
deal effectively with the deficit and to restore economic
growth, because they have focused exclusively—some
might say almost obsessively—on the former, reducing
the deficit, instead of giving sufficient priority to the
latter, economic growth. It should not be an either/or
game. Tax revenues are lower because of weak demand
and reduced consumer spending, while expenditure is
rising because of the need to pay out more in unemployment
benefits. The British economy is now in a more perilous
state than when the Government took office two years ago.
The Prime Minister and the Chancellor will trot out
the excuse of the difficulties experienced in the eurozone,
and there is some truth in that, but they cannot escape
the fact that the retreat into recession has been caused
almost directly by their actions and policies. We are
experiencing this country’s longest downturn since the
1920s. Britain is emerging from the deep global recession
of 2008-09 more slowly than from previous recessions and,
crucially, more slowly than our main economic competitors,
meaning that our rivals in the global marketplace are
stealing a march on us. The actions of this Government
today are compromising our competitiveness in the
global economy of tomorrow.
The US economy grew by 3% in the last quarter of
2011 and by 2.2% in the first quarter of this year.
Alongside Greece and Italy, Spain is generally—almost
universally—acknowledged to be one of the economic
basket cases of the eurozone, but even the Spanish
economy grew more in 2011 than Britain’s. Today’s
publication of UK retail figures, which show a 3.3% fall
year on year—the largest fall in more than a year—
demonstrates the general weakness of the economy, the
lack of demand and the fragility of consumer confidence.
Mel Stride (Central Devon) (Con): Will the hon.
Gentleman congratulate the Government on maintaining
our triple A credit rating status and acknowledge the
fact that we have among the lowest long-term interest
rates in the world at the moment? That is a major
achievement.
Mr Wright: We do have those things, but we have no
growth. I fear that the rehashing of phrases in the
Gracious Speech today—often word-for-word repeats
of what was said in 2010—will mean that the Government
will continue to insist on economic policies that consign
the country to a decade of stagnation, anaemic growth,
mass unemployment and rising social division.
Dr Andrew Murrison (South West Wiltshire) (Con):
Will the hon. Gentleman explain how high interest rates
will stimulate growth?
Mr Wright: High interest rates do not stimulate growth,
but, equally, low interest rates indicate that there is no
economic stimulus whatever. We need a rounder, more
holistic approach to economic policy that focuses not
solely on reducing the deficit, but on making sure that
we can stimulate the economy to embark on jobs and
growth.
Meg Hillier (Hackney South and Shoreditch) (Lab/
Co-op): Does my hon. Friend agree that one of the
challenges is the issue of businesses not being able to get
loans? The Prime Minister spoke with enthusiasm about
Project Merlin and the loan guarantee scheme, but that
is not delivering to businesses. There is no contradiction
between cutting a deficit and getting banks to lend. It is
in the Government’s power to do so, but they are not
acting.
Mr Wright: I absolutely agree. Later, I want to mention
that we need more investment and to unlock investor
confidence and provide more business investment. That
is at terminally low rates at the moment.
Emphasis should have been given to a new finance
Bill with measures to boost demand in the economy
and put more money in the pockets of millions, rather
than prioritising tax cuts for millionaires and tax rises
for pensioners. Communities such as mine in Hartlepool
and the wider north-east see a Government presiding
over unprecedented cuts to income, living standards
and public services, huge rises in unemployment and
matters being made worse by Government measures
such as the rise in VAT, hikes in student fees, cuts to tax
credits and increased taxes for pensioners.
At the same time, the Chancellor is insisting that the
country can afford to give those earning more than
£150,000 a year a tax cut and that, in the current
climate, millionaires should be given priority and pay
about £40,000 a year less in tax. A new finance Bill
could have set about repairing some of the damage
from the previous Finance Bill, which has been carried
over into this Session; it could have put us on the path
to economic recovery, jobs and growth.
Andrea Leadsom (South Northamptonshire) (Con)
rose—
Mr Wright: I hope that the hon. Lady will agree.
Andrea Leadsom: It seems rather astonishing that the
hon. Gentleman should be suggesting that the Government
should be spending more money. Does he run a household
budget as I do? When people are trying to feed a family,
it is clear that if they borrow lots of money and pay
extremely high interest rates—because their intention is
to borrow even more money—that will not get them
into any position to balance their budget or move on
from the parlous state in which they find themselves. Is
the hon. Gentleman not aware that we are already
paying £200 million a day in interest, just to service the
debt that his Government incurred?
Mr Wright: What I am suggesting is that if the
Government were serious about economic growth and
promoting the conditions for competitiveness and enterprise,