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The Economy

Consumer confidence is one of the most important aspects of this recession and where it is going. I agree with the hon. Member for Elmet (Colin Burgon) that when we look at the problems of the 1930s and what President Roosevelt did, we find that consumer confidence was right at the heart of what he was trying to achieve with the new deal. The aim was to rebuild consumer confidence after the crash, and he largely succeeded, although I should say that a lot of the myths about the new deal are wrong, as my right hon. Friend the Member for Haltemprice and Howden (David Davis) made clear. The Americans did not have many shovel-ready schemes—to use the jargon of the time—which meant that they were not able to put as many people to work as quickly on those great schemes as they had hoped; in fact, it was five years before the main schemes were working. The key effect of the new deal and the way in which President Roosevelt announced it and pressed it forward was to build consumer confidence; people felt that there was a plan and a way forward—a definite approach. That certainty of approach led to the rebuilding of confidence; companies started to take on labour, and projects that were nothing to do with the Government started to be undertaken and commerce started to revive. The steady hand on the tiller was as important as those new deal schemes. What worries me about the current situation—the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) made this point—is that it has not been clear to many people exactly where we are with this recession, as it gradually seems to get worse with every piece of news that we get. I was talking to some American officials at the embassy last week, and they were describing their shock at the fourth quarter unemployment figures in America. They said that to lose 651,000 jobs in one month was shocking; in fact, President Obama called the set of figures "astounding". Standard & Poor’s had been expecting a relatively modest recession in terms of the number of job losses, and its chief economist, David Wyss, said:""Up until the third quarter, we thought we were on track for a relatively moderate recession, but then in the fourth quarter, everything fell apart"." That makes the point quite well. This country is in danger of underestimating what we are dealing with. Yesterday, I was surprised to read in the Evening Standard that the Secretary of State for Work and Pensions was saying proudly that unemployment was rising more slowly than in the previous recession; it was as if he could be sure about that. Yet, today we were given the worst figures ever for a rise in unemployment—the 0.5 per cent. increase was higher than the previous record, in March 1991. The Government need to bear in mind the effect that unemployment has on consumer confidence. Someone who has just lost their job, whose home is on the line and who is worried about a repossession is not going to go out and spend money. My goodness, such a person would be careful; they would try to repay debt and so on. The Government are working against a moving picture—every month’s delay at the moment means another 70,000 people unemployed and looking for work. It is an urgent problem that needs tackling, but the Government’s schemes for jobs and homes seem to take for ever to put in place. Sometimes we just have to act. The Conservatives have been saying for months that you—I am sorry, I mean the Government. I am getting over-excited—