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Policy for Growth

When the hon. Gentleman makes his speech, perhaps he will explain the exchange rate mechanism crisis. In 1990 Japan had a debt to GDP ratio of 50%. The Government failed to take the swift action necessary to help the economy recover from recession and the result is that, 20 years later, debt in Japan stands at 190% of GDP. Those are the facts. Concentrate too much on one economic variable and you have an unbalanced economy that fails to achieve your economic objectives. Despite these facts, the Government say again that there is no alternative. Let me offer an alternative programme for growth in which the Government act strategically on the side of business and industry. What would that mean in practice? First, there is a real and pressing need for the UK to be at the forefront of businesses for the future, especially low-carbon industries. To make the most of Britain's potential requires a Government who support businesses. Instead, we had the tragedy of the cancellation of the loan to Sheffield Forgemasters. That company is a UK success story. It is British-owned, high tech and high skill. The owners built the company up from scratch and it has become a leader in its field. The loan—I emphasise that it was a loan and not a grant—was signed off by civil servants in the Treasury and was a product of two years of careful negotiation. Lord Digby Jones said that the loan would have been paid back 100 times over in benefits to the economy. Before the election, the Deputy Prime Minister described the loan as"““just the sort of thing””" we should be doing, and I have to admit that, on this occasion, I agree with Nick. The loan would have created jobs in the low-carbon industry of the future and added greatly to Britain's export capability. However, as we all know, the loan has been cancelled, so instead of exporting civil nuclear components, we are exporting jobs to Japan and South Korea. That is not a strategy for growth, but a strategy for undermining it. The second part of a strategy for growth must include promoting bank lending. The Prime Minister met business people in Watford last week who talked to him about the reluctance of banks to lend and how it was stifling job creation, and the Prime Minister admitted that it was difficult to know which levers to pull to get banks to lend more. His confusion does not surprise me, because I have read the Government's Green Paper on bank lending. I read it once and assumed that I had missed the section on the action the Government plan to take, so I read it again. But it was not me; it was the Green Paper—a very green paper indeed. There was nothing there! The Government are not taking action. The review of the structure of the banking sector is still a year away, and in the meantime businesses are being denied the chance to grow. The third component of a growth strategy is investment in the skills of the future. As the Prime Minister has just led a delegation to China, it is timely to reflect that in China and India last year 8 million people graduated from university. In contrast, on investment in higher education, the Government have reduced the university teaching grant by 80% and are making students bear the full cost of a university education. This is no way to grow the British economy. The fourth component in a strategy for growth must be investment in our regional economies. In my region of Yorkshire, we take huge pride in our industrial heritage, and we want to build a future we are proud of as well. However, while the Leeds local enterprise partnership has been given the chance to go ahead, I have not found a single business leader in Leeds who would not prefer to continue with our successful regional development agency, Yorkshire Forward. A quarter of Yorkshire will not even be covered by a local enterprise partnership, and in the north-east that rises to more than 70%. Support for RDAs is strong not just in Yorkshire. John Cridland, the policy director at the CBI, likened the Government's regional and economic strategy to throwing the baby out with the bathwater. Where does this leave us? Investment in Sheffield Forgemasters will not go ahead, the banks continue to rein in lending, university funding is cut to the bone, and powers are being taken away from our regions to determine their own economic future. We all agree that the budget deficit needs to be cut, but the Government must match their ambitions for cuts with an ambition for growth that British businesses and workers can be proud of. Britain could be a world leader in the jobs and technologies of the future, but only if the Government put in the policies to make this a reality.