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The Economy

No, I will crack on, if my hon. Friend does not mind. The roots of the current crisis lie in the 1980s and 1990s, but their effect is only now hitting home. We all remember, from reading learned newspapers, smart talk of "post-Fordism", of how we were moving into a post-industrial age, and how the provision of services was the way forward and the production of things something from the past. We were told that Britain was in a uniquely strong position in this new economic order because of the history, experience and international reputation of the City of London, and that the City, and all that it brought with it, would be the golden goose for the economy. This is clearly not true. Like the industrial revolution, the financial revolution has affected us in every corner of our lives. Let us take our attitude to housing. A home is now a speculative investment, a source of access to greater credit or a piece of equity that can be realised at some point. Housing has become a national obsession, and that has severely distorted the economy. I saw some figures suggesting that, at its peak, the buy-to-let revolution "contributed"—I use inverted commas—four times more to the UK economy than the motor industry. To pick up on the comments of the hon. Member for Aldershot, I believe our economy is dangerously unbalanced and needs adjusting. What situation are we in today? Is this merely a re-run of the 1980s? I would argue that it is a re-run of the 1930s. There is evidence of a 1930s-style downturn. The current decline in financial markets has continued for 17 months to match the rate of decline after 1929, which is the most severe recorded. The decline has not yet carried on for as long, but it is following the same path. I was going to look at the effects on the real economy. The latest figures released by the Organisation for Economic Co-operation and Development for world trade up to December 2008 stand out. They suggest that the economic downturn is set to be the worst since 1929. We have heard from my right hon. Friend the Member for Oldham, West and Royton about the huge sums of money that have been put into the banking system. It is now clear that the banks should be nationalised, and they should be driven in their investment policies by social need, not the need for profit. I was also clear—I warned the Chancellor about this some time ago; not that he listens to me—that the bankers would take the money and put two fingers up at us. That is precisely what has happened. I am glad that the Treasury Committee Chairman has effectively called for the nationalisation of the banks. In conclusion, this is a political crisis. I started off by discussing Ronald Reagan, and I shall now draw on something that Roosevelt said in 1931:""What is the State? It is the duly constituted representative of an organized society of human beings, created by them for their mutual protection and well-being. ‘The state’ or ‘The Government’ is but the machinery through which such mutual aid and protection are achieved."" I hope that new Labour can inject some of that into its backbone.