---

The Economy

It is a great pleasure to follow my hon. Friend the Member for Poole (Mr. Syms), who made a powerful speech about the issues that affect people. I was particularly taken by his remarks about the pound. The pound has gone down from $2.11 to $1.35, which represents other countries’ views of how bad our economy is. However, we are talking about a market mechanism that has worked well, because it means that our exports are now cheaper in America. American imports are more expensive in this country, which is also the market working. However, as my hon. Friend said, that would not have happened if we had been in the eurozone. I refer Members to my entry in the Register of Members’ Interests, and particularly to the fact that I am a fellow of the Institute of Chartered Accountants in England and Wales. I want to say from the beginning that I do not think that auditors have come out of this series of events with great credit. I have learned a lot from sitting here for several hours today. The speeches from both sides of the House have been useful, new ideas have come up, and things that I had not thought of have been mentioned. I find it disappointing, however—I say this with sadness—that the Chancellor was not here today. It is also particularly disappointing that we have not had a debate on the economy in Government time. All these billions of pounds have been spent without the issue being discussed in detail in the Chamber. I want to say to the junior Minister that I think it unfortunate that the Chancellor was unable to attend. I notice that he was here for Prime Minister questions, but I am sure that he had a pressing engagement in a television studio somewhere in the country afterwards. I am making a serious point about what I see as a discourtesy to Parliament. I want to turn first to unemployment. I have run a manufacturing company and a service company, and the most difficult thing that I ever had to do in business was to tell people who had worked for me for years that they no longer had a job. I had sleepless nights beforehand, and sleepless nights afterwards. It was the worst thing that I ever had to do in business, so it gives me no pleasure at all to read out these figures. In February 1997, there were 2,063 people unemployed and claiming jobseeker’s allowance in Wellingborough. Unfortunately, the figure today is 3,098. That represents a 50 per cent. increase since 1997. I recall that the Conservatives were thrown out of power in 1997 on a landslide, partly because of what had happened in the economy. I think that we have now reached a desperate situation in my constituency, and I say that with no satisfaction. We face a real problem. Thinking back to that rather nice little tune, "Things can only get better", I can tell hon. Members that they certainly have not done so in Wellingborough. We are significantly worse off than we were in 1997, and I fear that that situation is spreading across the rest of the country. I recently received a phone call from the managing director of a large employer in my constituency. I will not mention the name of the company for obvious reasons. It is a very good, well-established company that employs a lot of people, but, like everyone else, its orders have gone down because of the downturn in the economy. So what did one of the banks that we now own do? It went along to that company and said, "By the way, because your level of interest to turnover has fallen below a figure that we don’t like, we are going to increase the interest on your borrowings by 2.5 per cent., or £750,000, a year." That could force this very good company either to lay off staff or to go under. That cannot be—I know that it is not—what the Government intended the banks to do, but that is what is happening in Wellingborough now, and it worries me greatly. One of the reasons that that is happening, in general terms, is that the banks had two options. One was to lend money to companies; the other was to get their capital ratios up by reducing such lending. The banks have gone for the latter incentive to improve their capital ratios. There is a strong argument for the Government giving a lead in the other direction on this. We cannot ask the banks to do both; it has to be one or the other, and they need some direction. I shall come back to the banks later if I have time. I want to talk about the business of bringing forward capital projects to increase employment. I see that as a very good idea. If capital projects could be brought forward, we would get the benefit of employment as well as a capital asset at the end of the day, which seems perfectly reasonable to me. In Wellingborough, however, we have a very strange situation. The further education college was given the go-ahead for a major redevelopment and it spent £1 million just getting it all arranged. Unfortunately, this major redevelopment also means knocking down the existing premises, moving on to a car park and allowing for the whole redevelopment of the town centre in Wellingborough. The go-ahead was supposed to be given on 17 December, but when 17 December came, no go-ahead was given. It was supposed to come last week, but the same thing happened again. We are told that the reason for the delay is that a Government quango had said to too many colleges that they could expand, so they have been left without the funds. Well, if now is not the time to bring forward funding for FE colleges, I do not know when is. I ask the Minister to address that. The Government said, quite logically, that something was going to happen, but it has certainly not happened in my patch—indeed, just the reverse. On the theme of bringing forward capital projects, it does not seem to be happening in the NHS. My constituency is seeing the closure of an out-patient facility. In fact, a quarter of the people in Rushden wrote to me to complain about the closure, but the replacement facility, which is in another constituency, is not going ahead; there is a delay. That new facility could go ahead in my constituency right now; the land and plans are available, so why is it not being done? Let me deal with an issue where I think the Government have made a complete mess of investment in the banks. They have gone into the mode of saying, "We must do something; we must do something. We must get a press release out; it does not matter what it is, but we must get a press release out." I do not expect the Minister to nod in agreement, but I am sure that some wise heads in the Treasury were saying that the schemes must not be announced until they are place. However, I also bet that some spin doctors were saying, "We must get it out; we must get it out". I think that is what has happened. On the wider front, all this started with a mere £37 billion investment into a few banks. I know that it has ballooned into billions and billions more, but if we go back to that initial £37 billion, the share subscription documents that the Government drew up must have been drawn up on the back of an envelope. They produced preference shares and we were led to believe that that was how this would go forward—with a 12 per cent. coupon, non-cumulative, that was going to be redeemable after five years. That was impossible; that was never going to happen. Those preference shares have now been converted into ordinary shares. In my view, this Government have had no strategic policy and no confidence building; they have been running around like headless chickens.