Achieving Economic Growth — House of Commons, 2022-05-18
Topic: Macroeconomics
Stephen Nathan Kinnock (Labour, Centre-left): In the recent local elections, the Conservatives lost almost 500 council seats across Britain as the public delivered their verdict on the Conservative Government’s performance at Westminster. Voters expressed their dismay at the Chancellor’s refusal to get a grip on rising inflation or offer families support through the cost of living crisis. This Gracious Speech provided the Conservatives with an opportunity to reset by introducing legislation to meet three major challenges: tackling rising household bills, starting to grow our economy again and building into our economy the all-important resilience that we require at a time when hostile foreign states such as Russia and China are on the rise The Conservative Government have offered none of those things, so the entire Gracious Speech has fallen utterly and spectacularly flat. Despite the Government’s promise in the opening sentence to "help ease the cost of living for families", there was nothing of the sort to be found in the speech. With household energy bills rising by £700 a year and inflation outstripping wages, we needed a Government who were ready to tackle this crisis head-on. Instead, the Conservatives are raising taxes on working people, and in this they are an outlier: no other Government are responding to the cost of living crisis by hammering working people with more taxes The Labour party has a clear plan. First, we would scrap the national insurance rise. Then we would reduce energy bills by as much as £600 per household per year, expand the warm home discount, and support the businesses that are hardest hit. That would be paid for by a windfall tax on the spiralling profits of oil and gas giants which, by the admission of BP bosses themselves, have "more cash than we know what to do with" and are effectively "a cash machine". However, we would also look to the long term. As well as taking those immediate crisis management measures, we would fix the foundations of Britain’s economic model. Despite the Government’s latest attempts to shift the blame, it is clear that the roots of this cost of living crisis are not global but national. The reality is that the Chancellor is presiding over a high-tax economy, and that is because, for more than a decade, the Conservatives have presided over a low-growth economy, based on insecure work and chronic underinvestment, driving a productivity crisis. Indeed, Britain has a 20% productivity gap with other leading nations. There has been chronic underinvestment by consecutive Conservative Governments in research and development, but the impact of that has been a real shortfall in investment by the private sector in the UK, compared with Europe. Figures from the OECD show that Britain’s private sector investment as a share of GDP is the lowest among the 36 members assessed At the heart of the decline in productivity has been the decline in our manufacturing sector. Since 2015 alone, the Government have lost more than 230,000 manufacturing jobs. The result has been an increasingly unbalanced economy, in favour of London and the south-east, and proof that the Conservatives are not levelling up, but levelling down. Communities across Britain’s proud industrial heartlands in the midlands, northern England and South Wales—home of my Aberavon constituency and our Port Talbot steelworks, of which we are immensely proud—are struggling to get a look in What we need is a modern manufacturing renaissance. It is far easier to drive productivity gains in the manufacturing sector than to do so in services, but this is not manufacturing based on the old industries of the past; it is modern, it is green, and it is in the high-tech industries of the future. Those are the industries that deliver the good, meaningful, productive, well-paid jobs on which people can raise a family on, and they are the jobs that will get our economy firing on all cylinders, throughout the UK. We need to get Britain making and exporting at levels that reflect our true potential That is why the shadow Chancellor’s "make, buy and sell more in Britain" policy is so important. A Labour Government would change procurement laws so that the British Government must buy British by default. A Labour Government would introduce a green steel deal, creating a world-leading steel industry to power us through the century ahead. A Labour Government would back 100,000 businesses with start-up loans to boost British small and medium-sized enterprises. Labour’s plan is to build a better post-covid economy, to drive growth and truly get our economy firing on all cylinders, with good jobs at its heart Let us contrast our approach to work and good jobs on which people can raise a family with the Conservatives’ axing of the long-promised employment Bill, which was expected to outlaw the type of dreadful business practice that we saw when 800 P&O Ferries workers were sacked and replaced by foreign workers paid less than the minimum wage. Labour would outlaw that practice immediately, across the board A modern manufacturing renaissance will not only help to boost growth and help us to build a vibrant, modern economy for the future; it will also help us to build that resilient economy for the future—a Britain that can stand more firmly on its own two feet. By backing British manufacturing, we can reduce supply chain pressures caused by the behaviour of authoritarian states such as Russia and China, and by the covid-19 pandemic. In that regard, an energy security plan is also crucial. Frankly, it is staggering that China owns 33% of the Hinkley Point nuclear power station There is too little in the UK Government’s new agenda that actually gets to the core, underlying issues that underpin this cost of living crisis. A wasted decade of low growth has left us with a weak and insecure economy that is ill-prepared for the challenges and turbulence of an uncertain world. Building that economy is the job of Government. Politicians are not bystanders in this. The Chancellor is not a victim. The Tories have become the party of high taxes and low pay because they are the party of low growth and insecurity. We believe that Britain deserves better. A Labour Government would help workers and families through this cost of living crisis and deliver the resilient, growing, sustainable economy that will get our country fit for the future.