The Economy — House of Commons, 2015-11-18
Topic: Macroeconomics
William Roffen Esterson (Labour, Centre-left): Thank you, Madam Deputy Speaker As I was saying, the Government have presided over the slowest recovery on record. Tax receipts are an indicator of the health and productivity of the economy, and they fell as a result of the financial crisis. In the United States, Germany, France and Canada, they had returned to pre-crisis levels by 2013, while in the United Kingdom they remained 15% below those levels Meanwhile, the Tories have claimed that the financial crisis was the result of public spending—the result of recruiting nurses and doctors, and building new schools and hospitals. In fact, spending in this country was below the average among similar advanced western economies. The crisis was caused by an actual financial crisis, not by Government spending. The fact that the current Chancellor supported Labour spending plans before the crisis says what needs to be said about the claims that have been made ever since. Conservative Members know that the crisis was a financial one, not a Government one. They also know that the Chancellor was calling for less regulation of the banks, not more, in the run-up to that same crisis The fact is that in 2010 we had half the level of unemployment, half the number of home repossessions, and half the number of business bankruptcies that we saw during the Tory recessions of the 1980s and 1990s, precisely because the Labour Government intervened to support and protect people, businesses and jobs. The economy was recovering strongly in 2010 as a result of the stimulus injected by that Government, but it came to a juddering halt with the emergency Budget of June 2010, when investment in capital infrastructure projects was stopped. In 2010, other countries continued their stimulus package for far longer, and businesses, jobs and the wider economies of those countries saw the benefits So what should happen now? Let us look at what businesses say. They say that they want to see investment in infrastructure, energy, transport, broadband and, especially, skills. They say that they need those skills so that they can grow and pay good wages. That is what the CBI says, it is what the EEF says, and it is what the Federation of Small Businesses says. When businesses want to grow, they invest. They understand the need to invest in new equipment, property and skills. They develop a business plan. They invest capital and pay it back from the proceeds of growth. Households do something similar, whether through student loans to invest in skills or borrowing money to buy a house; they invest for the future. We take out a mortgage typically over about 25 years and the bank or building society works out whether we can afford the interest payments and the capital repayment over the term of the mortgage. Government should invest in the future, just as business does, and just as homeowners do The lack of an industrial strategy is clear in how the steel industry has been abandoned. The Government do not seem to believe in having a business plan for the economy at all. They do not believe in investing for the long term or in following the good practice of businesses in seeking a return on investment in the form of growth and increased tax receipts as the way to higher living standards and deficit reduction. The Government say that they will not borrow money at all and won a vote in this House to confirm their view. The Chancellor used to say that fiscal responsibility charters were the mark of a lack of confidence in a Government’s own policies; not any more, however, because they forced that through the House. The "fiscal irresponsibility charter", as it is better known, is the equivalent of the Government saying that if they were a householder they would not take out a mortgage to buy a home and they would have to buy a house out of their annual salary. If this Government ran a business, they would not take out a loan to buy a new van or a new piece of machinery The Government have signed deals with the Chinese Government to build and run our new nuclear industry. They are happy for foreign Governments to invest in this country, but not for our own to do so. That is a strange way to do business, because in the end these sums of money will have to be repaid, it seems, through much higher energy prices paid by those very same people the Government say they worry about in terms of the deficit. This is a Chinese form of private finance initiative by any other name Let us have a debate about borrowing, the best value for money and the best way of investing in the future of this country. Let us not rely on a charter that is economically illiterate and undermines economic success and prosperity.