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Responding to the Downturn and Planning the Future Economy

Can I say first what a good idea it is to have this Grand Committee sitting in Yorkshire? It is not only bringing Parliament to the people, but bringing the best of Parliament—the Members for Yorkshire and Humberside—to the best of the people. That is a splendid idea and I congratulate my right hon. Friend the Minister on her speech and on the efforts that she is making to bring investment, jobs and Government spending to Yorkshire. We need that effort, and she is putting a great deal of vigour and concern into it. I congratulate the Government, too, on their stimulus spending. When demand is deficient, there is no alternative, because the market will not do it. There is no alternative to bumping up demand through Government spending. I cannot understand the logic of the Tory party. Its economic thinking is not just pre-Keynesian—it is pre-Cro-Magnon. It is almost prehistoric to say that there should be cuts in spending and less borrowing in a recession when that spending and borrowing is preventing more jobs from going. It is keeping more jobs in existence and more people in work through the recession—a recession that is the fault not of the Government but of the financial institutions. To make cuts would be disastrous. I should think that the Government have saved well over half a million jobs through the stimulus that has gone in. My argument today—the Minister will expect me to argue this—is that the spending could be bigger, because we are an area that needs more Government spending. We are an industrial area, a manufacturing area; it still has one of the highest proportions of manufacturing. It is true that we need the new industries and new developments, but we also need the revival of the basic production industries. They have dominated this area and continue to do so, but are now hard hit because the decline in employment in that sector has been more rapid than in other sectors. As my hon. Friend the Member for Selby said, the recession has hit comparatively lightly in the city, but has hit hard in manufacturing, particularly in this area. We will continue to be a manufacturing area. The country needs manufacturing. The prospects now that the pound is much more competitive—we have, in effect, devalued—are that manufacturing will prosper and rise to the occasion, because its exports will become far more competitive and it will be profitable to produce in this area. It is necessary for the Government to help and support manufacturing to see it through until the opportunity of a much more competitive exchange rate takes hold and boosts it again. It is characteristic that most of the spending that we have done and most of the money that we have put in has gone to the financial sector and the banks. Not only did the financial sector and the banks cause the problem in the first place, but having put in some £1 trillion—that is the latest estimate of what we have put into the banks—we find them going back to their old ways, having big bonuses to stimulate more risk taking and not pumping out the supply of credit and finance that industry and small firms and Yorkshire and Humberside need to invest in local production. We need to redress the balance away from spending on the financial sector and supporting the banks to spending on the manufacturing sector, skills, training, centres such as CATCH—the centre for the assessment of technical competence, Humber—which is our training centre in south Humberside, and an industrial strategy, so that those basic industries that we will need in the future will be there to support the economy and pay our way in the world. As the oil contribution fades away, and as the financial contribution from the City of London is weakened, as it will be by the recession, those industries will have to pay our way. It is necessary to keep skills centres in being, to keep skills in being and to keep clusters of production in being. In such a difficult situation, only Government spending can do that, so the Government are to be congratulated. Their achievement will lesson the recession’s impact. There are things that we can do, and one is to increase spending. I notice that the Obama Administration in the United States has said that projects that can be shovel-ready by a certain date will be financed to go. I put it to the Minister that we had a shovel-ready project: a £150 million development for our institute of higher and further education. It was shovel-ready in January, but was abruptly put on indefinite hold by the incompetence of the Learning and Skills Council. Why should our Government not take up the position that shovel-ready projects will be financed? There will never be such an opportunity again. We need them to make a contribution. Not only that, but we need a bigger contribution in housing. My right hon. Friend the Minister for Housing is doing a marvellous job of beginning to refinance councils to build again. That is the kind of housing that we need in the area, but it needs to be bigger so that we can get the boost going. It was the housing drive of the 1930s that did more to stimulate the economy than rearmament in the later 1930s. We need that kind of stimulus, particularly in Yorkshire and Humberside, where we have been less successful in getting housing allocations than other parts of the country. We are grateful for the stimulus that we have had—we are particularly grateful for the efforts made by my right hon. Friend—but we need a bigger stimulus that gives us a bigger building programme and allows projects that are ready to go to proceed. Our message, if we can give a message to the Cabinet in dialect, is ““Get on wi’ it.””