I wish to move the amendment in the name of the leader of the opposition and several colleagues.
Mr Speaker last week was the first time I have visited the Other Place to listen to Her Majesty read to us the Queen’s Speech.Usually I avoid the crush and stay here to have a chat with the Honourable Member for Bolsover.I have to say that Her Majesty has to be admired for the way in which she delivered this fictional drivel of a Queen’s Speech whilst keeping a straight face.The Queen’s speech before us demonstrates conclusively the massive distance between the Chancellor and the real world.
The Queen’s Speech opened with an extraordinary piece of doublespeak.The government apparently thinks we live in a “strengthening economy”.They seemingly are not paying attention to their own statistics, and their own forecasts.After precipitating the slowest recovery in modern British history, the Chancellor is now presiding over a recovery built on sand.
Business investment has slumped again – by 0.5% in the first quarter, according to this morning’s figures.And the OBR’s most recent forecasts saw downward revisions across the life of this Parliament.Consumer debt is rising at record rates, and is forecast to remain at unprecedented levels.The current account deficit has reached record highs.We are borrowing more than ever before from the rest of the world as a result. We are not, as the Queen’s Speech claimed “living within our means”.
And productivity has slumped under this government. The gap between what the average hour worked in Britain produces, and what the average hour worked in the US, France or Germany produces, is bigger than it has been for a generation. Every hour worked in Germany produces one third more, on average, than it does here. Low productivity is the sign of a weakened, damaged economy. It means lower wages and more insecurity.
The slump in productivity, which has been far worse here under this Chancellor than in any comparable G7 economy, is what caused the Office for Budget Responsibility to revise its future forecasts downwards.
Growth has been revised downwards for every year for the rest of this decade. And when the OBR revised its forecasts downwards, the Chancellor’s entire Budget plan was shot to pieces. He’s been left with a £4.8bn black hole of committed spending with no committed funding.
It is nonsensical to claim, as the Government’s Queen’s Speech did, that the public finances are being placed on a “secure footing” when there are gaping holes in the Budget and the Institute of Fiscal Studies thinks there is only a 50:50 chance of meeting the government’s own fiscal surplus target. This is betting the nation’s finances on the equivalent of tossing a coin. There is nothing responsible. There is nothing “secure” in setting unrealistic and politically-motivated targets for public spending cuts.
And it is useless to preach about the need for a “stronger economy” when, by his actions in office for six years, the Chancellor has methodically undermined the economy. This was his choice. Austerity was a political choice, not an economic necessity. We all now live, and are still living with its consequences. Because it was the wrong choice to make, the Chancellor has failed, and it is the British people who are bearing the cost.
He has piled failure upon failure, but at the centre of it all is the failure to sustain productivity. Productivity is the key to growth in any modern economy. And the surest way to achieve increased productivity is through increased investment. Increased investment means installing new equipment and replacing old infrastructure. Yet business investment remains weak. When business investment is weak, government should step in to make sure vital, world-class infrastructure is there, from high-speed rail to high-speed broadband.
A consensus from the IMF to the OECD, from the CBI to the TUC, is now urging governments across the world to invest in the future. But this government, clinging to its fiscal surplus target, is set to actually cut real-terms government investment over the course of this Parliament. You couldn’t imagine a more perverse and inadequate economic policy.
And behind the failure to invest lies the failure of our economic institutions. Too many of them have been captured by special interests, or place short-term gain ahead of long-term growth. We have major corporations sitting on a cash pile of up to £700bn, paying out salaries to senior executives whilst failing to invest. It’s no wonder that we have seen a series of shareholders revolts at the remuneration packages of some of chief executives.
We have a Department for Business that doesn’t believe in supporting business. And have a department for tax collection that doesn’t believe in collecting taxes – not, at least, from major multinationals. And who can blame them? When they strike a deal with Google which reflects an effective tax rate in the single digits the Chancellor calls it a “major success.” that is why I have written to the Chancellor to make sure that he urgently contacts the French authorities so that they share any information they find from their investigation into Google’s Paris headquarters with us so that we can get a better understanding of Google’s operations in the UK.
After six years, the Chancellor has no-one to blame for his failures but himself.
The Queen’s Speech furnished us with plenty more unreal promises.
The government says it will “support aspiration and promote homeownership”. Tell that to the hundreds of thousands of our young people who now have no serious chance of ever owning a home of their own. Homeownership has fallen to its lowest level in decades under this Chancellor’s watch. Rough sleeping has risen in London by 30% in the last year. The biggest rise since the current reporting were introduced. Nearly 70,000 families were living in temporary accommodation, including Bed and Breakfasts, last year. 9 in 10 under 35’s on modest incomes could be frozen out of home ownership by 2025 according to independent analysis.
Acording to the Queens Speech the government will “spread economic prosperity”. Tell that to the steelworkers, their families and communities, threatened with the destruction of their industry. Especially tell that to the steel workers I visited in Redcar where the government failed even to mothball the plant to save their local futures. Tell that to the BHS workers facing redundancy as their boss, Sir Philip Green, an advisor to government, stripped their business clean.
The government will “continue to support the Northern Powerhouse”. That’s why they’re closing its Sheffield office, and threatening another six offices across the North with closure. That’s why of the top 15 infrastructure projects with most public funding only 1 is in the north.
The government intends to not to tackle “poverty and deprivation” but to redefine it. The chancellor’s shameful response to the one million people using our food banks every year is to introduce “new indicators for measuring life chances”. The Chancellor’s failed austerity programme has a human cost: 500,000 more children have been forced into poverty, Nearly 13 million people are now living in poverty, And over half of those living in poverty are in work. This Queens Speech offers no solutions to those who have barely enough to feed their families or who can’t pay to heat their houses. Instead this government will make sure they are counting their misery properly.
The reality is that after six years of desperate efforts to impose cuts on this economy, against the best available advice from the economics profession itself, the Chancellor is staring an entirely predictable failure in the face. He started out with such high flown promises.
There was going to be a “march of the makers”. Yet today manufacturing is still smaller than it was in 2008. There was going to be a “rebalancing” of the economy. Yet today we see that for every three jobs created in London, just one is created in the North. There was going to be a modernised tax service. But as the National Audit Office found in a damning report earlier this week, the quality of service at HMRC has “collapsed” in the last year as a result of staffing cuts.
The Chancellor has promised increased investment, but cut government investment spending – and now plans to cut it into the future. He forecast, in 2010, the fastest recovery in living memory. He has delivered the slowest recovery in modern British history.
He and his government have, perhaps understandably, clung to the job creation figures. Every month they are greeted with rare enthusiasm by this government’s ministers. The reality is that over half of those in poverty, nearly 7m people, are also in families where someone works. We have seen jobs created since 2010, but too many have been poorly-paid and insecure. 800,000 people now on zero hours contracts. Insecurity at work made worse by the undermining of employment rights by this government. There was no need for this.
It is the direct result of a failure to invest. Too many businesses have substituted cheap labour for expensive investment. They can’t be blamed: the government has set the lead, cutting its own investment spending. But low investment and weak productivity have real world consequences. It means wasted talents and opportunities lost. On one side, some are stretched to breaking point to make ends meet. Others are left to languish, desperately searching for extra hours.
On wages that even the government’s own forecasters don’t expect to recover before 2020. Millions of people now self-employed, but their average earnings have fallen by 22% since the Rt Hon Member for Tatton became Chancellor.
The Queen’s Speech tells us that the government plans to create an economy “where work is rewarded”. Nothing could be further from the truth. Those who work hardest are punished with cuts to tax credits. But tax-dodgers and the super-rich are rewarded with tax cuts.
This government has failed and will continue to fail on every measure it set itself. It has failed in its target to reduce the debt. It has failed in its welfare cap target. It is failing to achieve its target on closing the deficit.
This is a government that has lost its way. Gone is the pretence of being the new “workers party”, trumpeted so loudly last summer. That disappeared when they started cutting in work benefits. The government wanders around, from crisis to crisis, looking for another U-turn to make. The cuts to Personal Independence Payments were scrapped. Forced academisation is being scrapped. The tampon tax and cuts to renewables subsidies both abandoned.
There is only one policy directive that seems to hold this sorry excuse for a government administration together. This is the policy, in defiance of all sound economic advice, to impose spending cuts of a viciousness not seen in this country for generations.
There is a consensus across this House that a strong economy is the foundation on which all else can be built. This government has not created a strong economy. Strong on rhetoric, perhaps. Strong on creative accounting, as the last Budget revealed. But the Chancellor’s economy is a jerry-built structure, resting on a recovery built on sand. The Rt Hon Member for Tatton has had plenty of opportunities to, as he so memorably put it in happier times, “fix the roof when the sun was shining”. But he has simply failed.
It would have meant taking quite a different approach. We all hope that once the referendum is out of the way, the economy will pick up. But without change the trajectory is clear. We are trapped in a low-wage, low-skill, low-investment, low-productivity economy.
We need a government that adopts a sensible and credible fiscal rule enabling long term patient investment in our economy. We need a government that uses record low interest rates to invest in the future. At a minimum, the government should now invest in the infrastructure, skills and technology that can help transform how this economy operates.
We need a government that actually clamps down on tax avoidance. It could go further, and overhaul a tax system that is manifestly failing to levy fair rates on those who can pay the most.
We need a government with an industrial policy. A government that backs the steel industry, works with our European partners to clamp down on the flooding of markets with cheap subsidised Chinese steel.
And it could seek to transform the institutions that govern our economy, from the Treasury to the great corporations, unlocking the potential that is otherwise wasted when vested interests dominate decision-making.
The Queen’s Speech was an opportunity for the Government to accept austerity has failed and to change course. It was not taken. If this government cannot write a speech for Her Majesty that can undo the damage it has inflicted, and set out a confident course for this country’s economy, it is clearly time for Labour to lead the way.
Labour rejects the failed and cruel austerity programme adopted by this government. Instead, working in partnership with businesses, entrepreneurs and workers Labour would create an entrepreneurial state to support innovation, create wealth and drive growth. And we would share the proceeds of that growth fairly.
By investing in our economy Labour would lay the foundations of a new society that is radically fairer, more equal, and more democratic. An alternative based upon a prosperous economy which is economically sound, environmentally sustainable and where that prosperity is shared by all.
I beg to move