Industrial Strategy — House of Commons, 2018-04-18
Topic: Macroeconomics
Rebecca Long-Bailey (Labour, Centre-left): According to the Government’s own declaration, the industrial strategy sets out their plan to create an economy that will boost productivity and earning power throughout the United Kingdom. The Secretary of State has just presented a very rosy picture of his Department’s industrial strategy, but I am afraid those spectacles he is wearing may be a little bit rose-tinted. The key questions that must be asked today are whether the strategy is working and whether it addresses the huge problems that our economy is facing. The first of those problems is productivity. I agree with the Secretary of State’s comments about investing in the foundations of productivity, but we have just seen the productivity figures for 2017, and they are not good. Two negative quarters were followed by two positive quarters of growth. The two quarters of growth were caused by GDP growth slowing, but hours worked slowing even further. In other words, productivity has increased through the worst possible means. Even incorporating the 2017 figures, the productivity growth that has taken place over the 10 years since the crash has been the worst since 1820, just after the Napoleonic wars The second problem is GDP stagnation. For the 60 years preceding the financial crash, rising GDP meant broadly rising living standards. When GDP rose, unemployment came down and wages went up. However, over the course of 2017, UK GDP growth was weaker than GDP growth in any other G7 nation, standing at 1.4% compared to a G7 average of 2.4%. The figures were 2.9% in Germany and 2.5% in France. The situation is not forecast to improve: yesterday the International Monetary Fund forecast that we would be the slowest in the G7 bar Italy over the next two years, and the OECD predicts that we will grow more slowly than France, Germany and the United States in both 2018 and 2019. Worse still, among major advanced economies since the crash, Britain is the only one to have grown slightly while real wages have fallen The third problem is wage stagnation. In real terms, average weekly earnings are lower now than they were in 2007, 10 years ago. Working people, particularly those on low to middle incomes, have suffered the worst decade for a generation in terms of living standards. That is unprecedented since at least the end of the second world war. The quality of work is also an issue, as we have heard from some of my hon. Friends. The Secretary of State lauded employment figures in his opening remarks, but he must acknowledge that insecure employment is rife. According to the TUC, there are 3.2 million people in insecure work—about one in 10—and the number has risen sharply over the last half-decade, by 27% The Government tried to paper over those bleak realities with rhetoric in their recent response to the Taylor review, but I am not as optimistic or as excited as the Secretary of State was when he responded to comments earlier. Launching four consultations, merely considering proposals, failing really to act on the review’s recommendations, and tweaking the law here and there is simply not good enough The fourth problem is uncertainty. Britain is facing an uncertain future—we are about to leave the European Union, and businesses are craving a deal that will put the economy and jobs first, with as much access to Europe as possible—but Europe aside, parts of our economic framework do not encourage certainty. Our takeover regime leaves many companies deeply uncertain about their future and prey to predatory and hostile takeovers. We have already heard about GKN today. Under our takeover laws, that fantastic manufacturing company was bought up by Melrose. It was clear that our takeover regime needed more teeth and more clarity, but I must add that even in that case the Government had grounds to intervene on matters of defence and still failed to act. As the Financial Times suggested recently, the failure to equip our takeover regime adequately may be partly why a great company such as Unilever decided to make its legal home the Netherlands. How many other companies will follow The fifth and final problem is inequality. Sadly, the UK is one of the most unequal countries in Europe in terms of household income. As the Resolution Foundation recently revealed, inequality is projected to increase after 2016-17. On some measures, it is projected to rise to record highs by 2023. Furthermore, there are clear inequalities between our regions and nations. The Institute for Public Policy Research Commission on Economic Justice has found that Britain is the most regionally imbalanced country in Europe All these problems are not just abstract, general issues; they have recently manifested themselves in concrete examples—a barometer of the health and efficacy of the Government’s industrial strategy going forward. We started this year with the insolvency of Carillion, but that is not an isolated example. Our retail sector shows signs of strain: Toys R Us has collapsed; Maplin has gone into administration; New Look is fighting to avoid it; and Carpetright is planning a company voluntary arrangement. Workers have also felt the pain of a stalling economy: in the last week alone, literally thousands of workers have been threatened with job losses at Jaguar Land Rover and Shop Direct, yet we have received no statement whatsoever from the Government on what they are doing to protect those jobs, so perhaps the Minister will outline in his summing-up speech the action he is taking.