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The Economy

I ask the House to note my entry in the Register of Members’ Interests. First, I want to congratulate my hon. Friend the Member for Tatton (Mr. Osborne) on a really impressive opening speech on an important motion. Although we are talking about a very complicated area of policy and politics, he expressed how people feel today. He set out how they view the Government’s activity, and how they rate its effectiveness—or, more precisely, its ineffectiveness. I had not intended to make this point, but I want to mention the Chief Secretary to the Treasury’s somewhat smug reply to my hon. Friend’s speech, in which she referred to the early ’90s. I do not know where she was in the early ’90s, but I was there; I know what unemployment looks like, and I know what redundancy looks like. Moreover, I know that it does not help the people who are in the thick of it—in the construction and building materials industry—when those who were not there think that they can preach to others. Those of us who have been through a recession know what is absolutely essential: confidence, stability, the cost of capital and, above all, having capital available. Whether a business person is on the shop floor, out there making the roads or even in the boardroom, what makes the difference when they take their risks and make their decisions is knowing that those things are in place. T he Government of the day were certainly not blameless, and I was critical at the time, but they recognised the issues and helped us to restore and retain jobs. The Chief Secretary to the Treasury—this is why I make the point—could not have sounded more shrill and insulting to the stalwart people who soldiered through that time. I hope that she will reflect seriously on the fact that her comments do not play well with the people whom she claims to represent as a Minister of the Government. One need only look at the current number of housing starts, which are at 5,000 a month. In the very worst of previous recessions, they were about double that, at 10,000 a month. Given today’s unemployment figures, we need to recognise that this recession puts other recessions into the also-ran department. The rate of the rise in one month is sufficient to make most people afraid; it is eye-watering compared with the rates in previous recessions. Let us not for a moment try to pretend, as the Government have done today, that the recession is not deadly serious, and that many people in our country are not frightened. Frankly, they are right to be afraid. We may say the usual knockabout stuff about an apology-free Prime Minister, the "Blame anyone but me" attitude, and the fact that we are now in the Brown bust, despite the Prime Minister’s claim that he would get rid of boom and bust. Many right hon. and hon. Members sought to include those points in their speeches, but let us not forget that in recessions, the victims are people—our constituents. The remedy is to back business, and for people to get back to work in those businesses. I know that this sometimes pains the Government and many Labour Members, but whether they like it or not, when we talk about business, from the shop floor to the boardroom, we are talking about the private sector. Yet again, as in all recessions, it is the private sector that takes a disproportionate share of the pain. Those in the private sector are ultimately the wealth creators, the risk takers, the entrepreneurs and the investors. Now that I am in the public sector, I understand why I was so angry with it when I was in the private sector. It seemed to think that a recession was something that happened to other people, not those in the public sector. In a recession, the national interest is damaged and deeply affected for everybody, but we all depend on the private sector for growth, wealth creation and ultimately the tax revenues that fund all our choices and democratic opportunities, and we must back it. I received an e-mail from Robert Jenrick, who relates a story about Newcastle-under-Lyme, where another good business has fallen victim to the economic crisis—a local engineering firm for over 40 years, and exactly the kind of respected employer of skilled workers that we must ensure survives the recession. Its parent company is Wrekin Construction, a profitable business which recently built Keele university’s science park. The business collapsed after Royal Bank of Scotland, now majority owned by all of us as taxpayers through the Government, demanded repayment of its entire overdraft. A similar thing happened as a result of a demand from Midland Bank in the north-west back in 1979. I should know; it had a big effect on my family. More than 500 jobs may now be lost as a result of the engineering firm’s collapse. That could be unnecessary, provided the banks start lending again. Among all the issues bearing down on this country now are the initial crisis, the banks’ inability to continue lending, and the fact that they had to hunker down and recognise that they had made some serious misjudgments. They had got out of control, they had lost what it was truly to be a banker and had become financial speculators and product innovators while most of those who had supervisory responsibility did not know what those products did. It is vital that we all club together to help in political terms and get the banks lending again. Without lending, we cannot fuel, preferably from the bottom up—from the SMEs up—the necessary business activity. We cannot support bankers who have decided to take public money to support themselves. We are right to be angry and to challenge the intention of those banks to continue to pay bonuses. They say they are contractually bound, but I would have said of those who might have been expecting a bonus, "Let them sue for it." It may have been interesting to see how many of the arguments they advanced to get their entitlement, as they see it, would cut any ice. We must maintain that supply of fuel to business, and at present it is not getting through. The key to success, as we know, is confidence. We start from a poor base. The uncertainties, particularly in relation to corporate tax, mean that most businesses have not been investing in their future, in innovation, in competitiveness and in ensuring that they can capture and retain markets, as they would have done had normal investment taken place in the so-called good times.