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Jobs and Growth

Volume 545: debated on Thursday 17 May 2012

I inform the House that the Speaker has selected the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that, on the last day of the debate on the motion for the Address to Her Majesty, the House may also vote on the second amendment selected by the Speaker. The Speaker has selected the amendment in the name of Angus Robertson for that purpose. The vote on that amendment will take place at the end of the debate, after the amendment in the name of the Leader of the Opposition has been disposed of.

I beg to move an amendment, at the end of the Question to add:

‘but regrets that whilst the UK economy is in recession, long-term unemployment is at its highest level since 1996 and one million young people are out of work the Gracious Speech contains no measures to address this crisis; notes that Britain will pay a long-term price for a prolonged period of slow growth and high unemployment; further notes that France, Germany and the Eurozone as a whole are not in recession while in the USA, where the Government has to date taken a more balanced approach to support economic recovery, the economy is now one per cent bigger than before the global financial crisis, while the UK economy is now 4.3 per cent smaller; recognises the criticism expressed by business leaders that your Government has not come forward with an adequate plan to boost economic growth; believes that cutting spending and raising taxes too far and too fast is self-defeating as slow growth and higher unemployment means that your Government is now set to borrow £150 billion more than planned; and calls on your Government to introduce a fair and balanced deficit plan, with measures to stimulate economic growth and job creation which are essential to get the deficit down, including a tax on bank bonuses to fund a guaranteed job for every young person out of work for more than a year, a temporary cut in VAT, a national insurance holiday for small firms taking on extra workers, and bringing forward infrastructure investment to strengthen the economy for the long-term.’.

It is a great honour to open the final day of this Queen’s Speech debate, and to do so in this very special diamond jubilee year. But I have to say how disappointing it is, with our economy now pushed into recession, the eurozone crisis deepening, and businesses and families up and down the country crying out for a plan for jobs and growth, that we are today debating what is widely regarded to be a disappointing and directionless Queen’s Speech programme from a Tory-led coalition that has, frankly, lost its way.

What a change this is from two years ago. When the Chancellor of the Exchequer spoke in the debate on the Government’s first Queen’s Speech, four weeks after the general election and two weeks before his first Budget, he was bursting with hubris. He was so sure of himself that, when the then shadow Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), and many other hon. Members on this side of the House asked whether the Chancellor planned to bring forward immediate and deep tax rises and said that spending cuts might choke off the recovery, the Chancellor dismissed those concerns out of hand. He was confident that his plan would

“deal with our debts, set our country on a brighter economic course and show that we are all in this together.”—[Official Report, 8 June 2010; Vol. 511, c. 206.]

What a difference two years makes.

“We are all in this together”: we do not hear that line any more—not from a Chancellor whose Budget decisions have hit middle and lower-income families harder than those on the highest incomes. His Budget decisions have hit women harder than men and families with children harder still. The Institute for Fiscal Studies confirms that his Budgets have been regressive and will see child poverty rise. Last month’s omnishambles of a Budget included decisions to raise taxes on caravans, charity donations, church repairs, pensioners, pasties and petrol, but to have a top-rate tax cut only for the richest—a £3 billion tax cut, which will give 14,000 of the richest people in our society earning over £1 million an average tax cut of £40,000 a year. Millions are paying more in tax to pay for a tax cut for millionaires. No wonder the Chancellor and the Prime Minister can no longer bring themselves to say that “We are all in this together”.

Let me remind the Chancellor of what the chair of the Conservative Association in Harlow said last week:

“The voters are disillusioned with Cameron himself. They don’t like the fact that he did not keep the 50p tax. People feel he is not working for them.”

Apparently, the Chancellor was advised precisely not to cut the top rate by his own Downing street pollster, Mr Andrew Cooper. Let me say to the Chancellor that, in my experience, disregarding the wise advice of someone called Cooper can be a very dangerous course to take.

Given the right hon. Gentleman’s closeness to the new French President Mr Hollande and given that the shadow Chancellor mentioned the top rate of tax, does he think that the dash for growth will be enhanced or hindered by the introduction of a 75p top rate?

I do not think that introducing a 75p tax rate in Britain would be the right thing to do at all. That is not our policy, but I do not think that cutting the top rate from 50p to 45p will be good for jobs, growth or fairness either.

I am listening with some perplexity to how the shadow Chancellor referred to the Budget as one for rich people, because I have calculated that in my Watford constituency, nearly 4,000 people have been taken completely out of tax by the increase in the personal allowance. I am sure that the right hon. Gentleman will join me in congratulating the Chancellor on such an excellent measure.

The hon. Gentleman might need to go back to the drawing board because the Institute for Fiscal Studies has shown that last month’s measures will, as a result of cuts to tax credits, mean tax rises for the average family with children in his constituency—and that is even before taking the rise in VAT into account and it does take the personal allowance rises into account. The fact is that taxes have gone up for low-income families, they are going up for the middle classes, and it is only the highest earners in the hon. Gentleman’s constituency that are getting the tax cuts.

Is it not true—the shadow Chancellor is a straightforward man—that the previous Government set out a trap for this Government, not really wishing for a rise to 50%, but carrying it out just before the last election in a crude attempt to catch this Government out?

I am always a close student of the hon. Gentleman, and I noted that he did not advocate the reversal of the 50p rate as the right thing to do, so I am not sure what his constituents thought about that. I recently read some of his other remarks. In March, for example, the hon. Gentleman said:

“The Chancellor has been consistently advised of the importance of macro-measures to stimulate growth in the private sector. So why are these not being implemented?”

Why, indeed? He continued by saying that the Prime Minister

“needs to wake up and smell the coffee. This is a major setback for the Conservative party.”

That is quite right.

The right thing to do after the financial crisis was to do things in a fair way. That is why the 50p tax rate was right at the time. The reason why the Budget has gone down so badly is that lowering the 50p rate was seen as so unfair. The hon. Gentleman was right just a few days ago when he said in his blog that the Government have a communication problem and are over-confident. He said:

“The manner in which Downing Street fires out policies and expects us to agree and applaud without question certainly smacks of a sense of superiority.”

Quite right again—a very interesting remark.

Let me make some more progress; I will allow more interventions in a few moments.

As for the Chancellor’s promise of “a brighter economic future”, it is not just that his economic plan has been so unfair, but that it has failed completely. On the recovery being secured, our economy has not only flatlined for 18 months, but has contracted. As to a private sector-led recovery, confidence is down, business investment has been revised down and since June last year, we have lost more than 100,000 public sector jobs, but the private sector has created only half that number of private sector jobs. As for the Chancellor’s absurd claim that Britain is a safe haven, we are in recession. What kind of safe haven is that?

The Chancellor will try to claim today that it is the eurozone crisis that has blown him so badly off course. I will return to the eurozone crisis in a moment, but trying to blame that crisis for the UK recession flies in the face of the facts. This is what the Chancellor said in his autumn statement:

“if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK.”—[Official Report, 29 November 2011; Vol. 536, c. 799.]

But it is the eurozone that has avoided recession and the UK that has plunged back into it. [Interruption.] Even The Sun—not known as a big supporter of Labour, but a big supporter of the Chancellor over the last few years—wrote only yesterday—[Interruption.]

Order. Government Front-Bench Members can do a little better by listening to what is being said. I am sure that they will want to listen to the shadow Chancellor in the same way that they will want Members to listen to the Chancellor later.

They should listen to The Sun, Mr Deputy Speaker. It said yesterday:

“George Osborne can no longer blame Eurozone woes for our double-dip recession.”

It is a recession made in Downing street—even The Sun agrees with that.

While the shadow Chancellor is busy doing down the British economy, will he not equally recognise the fact that in areas like Great Yarmouth, which Labour left as one of the most deprived in the country, we are seeing hundreds of millions of pounds of investment from and in local companies, put in by organisations and countries like Japan, so that the jobs are growing in the enterprise zones?

In the hon. Gentleman’s constituency, youth long-term unemployment is rising, long-term unemployment generally is rising, families’ taxes are rising and only the top-rate taxpayers are seeing a tax cut. Investment was revised down last year and the year before that, and our economy is in recession because of the policies that the hon. Gentleman continues to support. I think he owes his constituents an apology.

What should we make of setting our economy on a brighter economic course and the observation that “We are all in this together.” Even on his claim that he would “deal with our debts”, the Chancellor is failing that test, too. No growth since the spending review and rising long-term unemployment mean that he is now borrowing £150 billion more than he planned. This is more borrowing than in the plans he inherited, and his pledge to balance the books by 2015 is in tatters. At the end of this Parliament, our national debt will not be lower than the level he inherited, but higher than the level he inherited.

The shadow Chancellor has used many quotes in his opening speech, so let us see whether he agrees with this one from Mervyn King, the Governor of the Bank of England, whom Labour appointed. He said that this Government demonstrated a

“textbook response to the situation”—

the economic mess we inherited from the previous Government.

The Governor of the Bank of England was confident two years ago that the Chancellor was making the right calls on the pace of deficit reduction. Unfortunately, it has turned out that the Governor of the Bank of England and the Chancellor of the Exchequer have both got that wrong. We had gone back into recession even before the eurozone crisis. Let us consider recent entries from the website of the hon. Member for North West Leicestershire (Andrew Bridgen). They show him “criticising cuts” to “local health centres”, and reveal his wish to “Save Moira Fire Station” and for the “replacement” of local bus services. I am not sure that all that is entirely on message. Yet the Chancellor and the Prime Minister are still clinging to the view that they are right and everyone else is wrong. In his speech today, the Prime Minister seemed to be trying to claim that the choice between austerity and growth was a myth. [Interruption.] I think that the Chancellor should listen to this, because I am about to explain why he has got it so badly wrong. He should listen and learn, Mr Deputy Speaker, listen and learn.

If the Prime Minister meant that we should not choose between policies for growth and policies for deficit reduction, he was right. I agree. In fact, that is exactly what Lord Mandelson and I argued in our joint article in Monday’s Guardian. We argued for action now to boost jobs and growth, alongside tough medium-term deficit reduction plans. But that is not what the Prime Minister was saying today. He and his Chancellor are still clinging to the mistaken and, now, increasingly discredited view that cutting spending and raising taxes faster to cut the deficit is the route to economic growth, when all the evidence is to the contrary. Trying to cut the deficit faster has not boosted growth in recession; it has choked off confidence, unemployment is up, and we are borrowing more than he planned, not less. If the Prime Minister is really claiming that he is on the right course, he is even more complacent and out of touch than I thought.

Does the right hon. Gentleman not agree that economic policy is about credibility? Would he not have more credibility if he told us how he would cost his so-called plan for jobs and growth?

Credibility is about getting things right, not about getting them wrong. We were told that we were out of the danger zone and that the recovery had been secured, but what has happened? Plan A failed in Britain and in the eurozone too, and it is the very plan that the Chancellor has been urging on us. What did he say to The Daily Telegraph in August last year? He said:

“Britain is leading the way out of this crisis”,


“The eurozone must follow our lead and act decisively”.

The Prime Minister is off to the G8 summit this weekend. The only countries in recession that will be represented there are Italy and Britain. How are we leading the way? The fact is that the austerity policies that are failing in Europe are the very same policies that have failed in Britain, and which the British Government have been urging the German Government to urge the eurozone to stick with. That is the reality.

Opposition Members have consistently argued that it will not work for all countries to try to reduce their deficits at the same time, that tough medium-term plans to cut the deficit will work only if Governments also put in place a plan for jobs and growth, and that a time when a global hurricane is brewing is precisely not the time at which to rip out the foundations of the house here in Britain.

I will give way first to the hon. Member for Bedford (Richard Fuller). We have nothing in the file for him, because unfortunately we were unable to find anything interesting that he had said during the last two years.

I appreciate the compliment from the right hon. Gentleman, who has often demonstrated that he does not have a sound grip on economics. He is continuing to say something that I do not think is correct: he is continuing to compare austerity policies with growth policies. Does he not accept that growth is an outcome, which all policies are intended to achieve, and will he have the honesty to answer the question put to him by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) and cost his plans?

The right course is to take a balanced approach that combines medium-term deficit reduction with getting jobs and growth moving. The problem with austerity is that it chokes off jobs and growth and ends up costing more in spending, more in unemployment and more in borrowing. We have set out a clear alternative. We have said “Repeat the bank bonus tax, and use the money to create jobs.” We have said “Rip up the failed national insurance cut introduced by the Chancellor, and use the money for a tax cut for small businesses.” We have said “Yes, cut VAT by £12 billion for a year to get the economy moving.” We have not said how many shovel-ready infrastructure projects can be launched, because we do not have the details.

The Prime Minister says that you cannot borrow your way out of a debt crisis, but unless you grow, your debts get bigger and your deficits get worse. That is what the Chancellor has proved over the last two years. It is not only the Labour party that is advancing that argument. Only last week, the managing director of the International Monetary Fund said:

“We know that fiscal austerity holds back growth and the effects are worse in downturns... so the right pace is essential”.

Even the head of the European Central Bank is now pressing for a jobs and growth plan.

The Prime Minister and the Chancellor must wake up to the fact that our economy has not grown on their watch for a year and a half. Instead of trying to divert the blame for their failure and using the eurozone as an excuse for Britain's problems, they must admit that they got it wrong—that they gave the eurozone the wrong advice—and start pushing for the right solution to the eurozone crisis. I agree that there should be a proper role for the European Central Bank and a greater emphasis on fiscal burden-sharing, but there should also be a change of course on austerity, because only a balanced plan that puts jobs and growth first will succeed in getting the deficit down. When the International Monetary Fund, the OECD, the European Commission, the European Central Bank and even the United States are urging policies for jobs and growth, this Chancellor and this Prime Minister are looking increasingly isolated and out on a limb.

Since April 2010, in my constituency the number of job vacancies has risen by 316%, the number of apprenticeships has doubled, the number of jobseeker’s allowance claimants has fallen by 12%, and the number of claimants aged between 18 and 24 has fallen by 15%. Those are the facts. I understand why the right hon. Gentleman does not want to give Ministers any credit for that, but will he stop talking down the businesses and entrepreneurs in Portsmouth who have made it possible?

I am sure that the hon. Lady and I can agree on one thing. There has been a 130% rise in long-term youth unemployment—unemployment lasting more than six months—in her constituency over the last year. [Interruption.] It is up by 129% in her constituency, and that is really worrying. Constituencies of Members on both sides of the House saw the damage done by long-term youth unemployment in the 1980s, and we should act to prevent a repeat of that rather than being complacent.

Twice so far in his speech, the right hon. Gentleman has said that the problems in the UK are nothing to do with the eurozone. Will he therefore disown the remarks of the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), who said last week that the eurozone was having a major impact on British businesses and British families?

Calm down. Calm down, or we will start a debate about Remploy.

Of course the eurozone crisis is very serious and very dangerous for our economy and for all economies. That is why our Prime Minister and Chancellor should be at the table leading debates about the solution rather than carping on the sidelines, sitting like a teenager in the front of the car with headphones on while the crisis happens around them.

These are the facts. Last year, eurozone growth was faster than British growth and was revised up. Our growth was slower and was revised down. Last year, it was only the eurozone that prevented the British economy from going into recession earlier. Our domestic economy, excluding exports, was actually in recession for pretty much all of last year. The eurozone economy was growing when the British economy went into recession. Even today, the eurozone is not in recession and the British economy is. [Interruption.] The welfare Secretary has made a career of blaming Europe for everything that goes wrong in Britain, but I am afraid that this is a recession made in Downing street.

The Chancellor will also try to claim today—[Interruption.] Calm down. The Chancellor will also try to claim today that all this pain will be worth it in the end. However, we are paying a long-term price for the failures that we now see around us—the national debt higher; living standards down; long-term youth unemployment becoming entrenched; more than 24,000 companies out of business since he became Chancellor; investment plans cancelled or diverted overseas; our economy weaker; and capacity lost. I very much fear that when the economy finally recovers, as it eventually will, it will be more prone to inflationary pressures than otherwise, because of the failures of this Chancellor.

The right hon. Gentleman has mentioned exports. Does he not welcome the growth in exports and the new jobs being created at Jaguar Land Rover, Vauxhall, Nissan and Toyota, to mention but a few? Is he not sorry, and should he not say sorry to the British public, that 1.7 million manufacturing jobs were lost in this country on his party’s watch? Companies such as LDV, Peugeot and Rover closed down manufacturing while he was in government.

Of course I welcome the improvements that we have seen in manufacturing, and I think we could have a cross-party consensus that the previous Government’s decision to set up the Automotive Council and provide long-term strategic leadership has made a huge difference to the prospects for car investment in our country. Nissan; Rover—we made great progress. That progress is being continued, and we should all welcome that. However, I have to say, for all the complacency that we just heard in that intervention, is it any wonder that business organisations—[Interruption.] Government Members should listen.

The car scrappage scheme, the cut in VAT and the action to support Northern Rock and RBS were important decisions that stopped our economy going into depression. They were all opposed by the Conservatives. That is the reality.

I am grateful to the right hon. Gentleman. He seems to be enthused about the car scrappage scheme and what a roaring success it was. Will he therefore explain why Jaguar Land Rover sold about 12 additional cars as a result of that fantastic policy?

We were very proud of the investment that Jaguar Land Rover put into the west midlands as a result of the progress made and the support from Advantage West Midlands.

I think hon. Members will find that businesses in the west midlands will all agree that the abolition of Advantage West Midlands was one of the most stupid and short-sighted decisions made by this Government so far.

The economy is in recession and they hate it, and so do business organisations up and down the country. Is it any wonder that businesses have been so disappointed and upset by the Queen’s Speech of just two weeks ago? Let me quote the director general of the British Chambers of Commerce:

“There is a big black hole when it comes to aiding business to create enterprise, generate wealth and grow.”

Quite right, Mr Deputy Speaker.

There will be some parts of the Queen’s Speech dealing with Treasury matters which we will support. On banking reform, we will look forward to supporting legislation to strengthen capital ratios and promote competition, although it is now nine months since the final report of the Vickers commission, and we are still waiting for a response from the Chancellor of the Exchequer. However, after 18 months of flatlining, with our economy now in recession and business investment depressed, the question I ask—it is the question British business is asking too—is this. Where is the plan in the Queen’s Speech to restore confidence and promote business investment and jobs in Britain?

With net lending falling month on month—according to the Bank of England it has been down every month for over two years now—where is the action in the Queen’s Speech to promote small business lending? With youth unemployment now at a record high, and with yesterday’s figures confirming that long-term unemployment among young people is still rising, where is the legislation in the Queen’s Speech to get our young people back to work? Where is the legislation to repeat the bank bonus tax to fund a jobs guarantee for young people—or, for that matter, to cut taxes for small businesses hiring new workers, or to help the construction sector with a temporary cut in VAT? Our economy has ground to a halt and our construction sector is in great distress. Where is the plan to support jobs and growth by bringing forward new infrastructure projects? Where is the legislation to make our economy stronger and fairer for the future? Stronger corporate governance; a business investment bank; progress on high-speed rail; reforms in our universities to promote innovation—all are completely absent from this Queen’s Speech.

Does my right hon. Friend agree that young people in Scotland are facing the double whammy of a coalition Government who are complacent and a Scottish National party Government who are cutting further education funding?

I understand my hon. Friend’s concerns at the lack of a youth jobs plan in Scotland. We can understand that from the Conservatives, because they abolished the future jobs fund, but people will find it hard to understand why the Scottish National party Administration in Scotland have failed so woefully to do anything to tackle the challenge of youth unemployment.

The right hon. Gentleman referred to investment in this country in manufacturing. Does he agree with General Motors, which has specifically thanked the Government for making the UK a great place to invest in manufacturing and business? Indeed, General Motors has announced today that it will be manufacturing the new Vauxhall Astra at Ellesmere Port, very close to my constituency, providing 700 new jobs and securing thousands of jobs in the supply line. Does he welcome that?

Of course I welcome that. It is good to have more jobs in Britain. The thing that worries me is the 164% rise in long-term youth unemployment in the hon. Gentleman’s constituency. That is a very great concern.

I will make some progress.

Is it not the reality that we have an economy in recession and a Queen’s Speech that entirely failed to deliver on growth, jobs and investment? The Chancellor’s economic strategy is now in tatters, but have we had any admission in recent weeks that he got it wrong? We have had none. The Foreign Secretary says that British business needs to work harder, but it is this Chancellor who needs to work harder to get things right.

I will not give way.

Let me say this to the Chancellor. We all know why he has wanted to be a part-time Chancellor: in order to make room for his other role as the Conservative party’s part-time political strategist. But with the Budget botched, the Queen’s Speech a flop, the local elections a disaster for his party, and the economy back in recession, it is now dawning on all of us—I think it is dawning on many Conservative Members too—that he is not a very good Chancellor and not a very good political strategist either. Although should we really be surprised? This is the Chancellor who claimed to his colleagues that hiring Andy Coulson would be a triumph; that taking away child benefit from middle-incomes families would be a masterstroke; that saying that the economy was “out of the danger zone” was smart forecasting; and that cutting the top rate of tax in this Budget would wrong-foot Labour, and outfox his leadership rival Boris Johnson too. With judgment like that, perhaps the Conservative party does not need just a new political strategist; perhaps it needs a new Chancellor too.

No, I will not.

What an eight weeks it has been! The transformation has been startling, with the Chancellor’s long-held dreams turning to dust. He dreamed that his brilliant economic plan would bring unprecedented growth and finally deliver a Tory majority in 2015, and that a grateful Prime Minister would then stand aside, as he was finally cheered into 10 Downing street. How far away those dreams seem now!

I will not.

Last month YouGov asked 1,800 people whether they thought the Chancellor was very well suited to the job of Prime Minister. How many said yes? Just 1% did—18 people only. The question we must ask is this: who on earth were those 18 people? After that Budget, they must be vegan, health freak, cyclist millionaires who passionately hate cars, pasties and caravan holidays, and think that pensioners get a cushy deal. So, other than Steve Hilton, who are the other 17? Is this not the truth: that the Chancellor’s plan has failed, and he has been exposed not simply as unfair and out of touch, but as incompetent? This part-time Chancellor needs a new economic plan for jobs and growth. This part-time political strategist urgently needs a relaunch for him and for the Prime Minister. This Queen’s Speech delivers neither a new economic plan, nor an urgent relaunch. He and the Prime Minister should go back to the drawing board and think again.

I rise to support this Queen’s Speech, and I will say something about the Treasury Bills on banking and pensions that feature in it. But first I had better address, head on, the complete nonsense we have heard for the past 30 minutes. Given the claim by the right hon. Member for Morley and Outwood (Ed Balls) that the eurozone has had no impact on the economic difficulties in Britain, and his claim that his 13 years in government did nothing to lead to the debt and the deficit that this Government are trying to clear up, it is no wonder that there were some rather long faces on the Opposition Benches—[Hon. Members: “Where?”] Over there.

My hon. Friend the Government’s Treasury Whip has just received a text from a Labour Whip saying, “Please, please come to the Chamber for the start of the final day of the Queen’s Speech debate. Ed Balls is opening for us and really needs his support.”

May I explain to the hon. Member for Chelsea and Fulham (Greg Hands), who is sitting over there, that we have a very different and more effective way of whipping those on our Benches than he clearly has on his? Finally, as with everything to do with the economy, the Chancellor needs to pay more attention to detail, because that was not the right reading of the text. Indeed, it was not accurate, like much else he does.

The Labour party certainly does have a different whipping operation: it sends all its information to the other political parties.

Let us get back to discussing the economy. The central argument that the shadow Chancellor was trying to make, and the argument he makes in the amendment, is that the British economy is not as strong as the German economy—that is what we are all being asked to vote on tonight. He is absolutely right about that. The British economy is not as strong as the German economy, and I will tell hon. Members why. It is because for the past decade, in the good years, Germany fixed the roof when the sun was shining and he did not when he was in government.

I will tell hon. Members what happened when the right hon. Gentleman was in government. Over the decade before the crash, Germany maintained its share of world exports while Britain’s share almost halved; Germany was selling more than £10 billion of goods a year to China while Britain was exporting one fifth of that—indeed we were exporting more to Ireland than to Brazil, India, China and Russia put together; and Germany’s manufacturing sector grew by 34%, whereas our manufacturing sector not only did not grow but halved as a share of our total output, while our over-leveraged banking sector grew by 100%. Germany, after years of sustainable economic growth, entered the financial crisis with a budget surplus. Britain, in the years that he was in charge, led a debt-fuelled consumption that drove an expansion in deficit and in debt. Under Labour we entered the financial crisis with the largest budget deficit in the G7 and left it with the largest in the G20.

Instead of making us more like Germany, the right hon. Gentleman made us more like Greece when he was in the Treasury. Britain’s economy became over-borrowed, unbalanced and unsustainable. The person more responsible for that than anyone else active in politics today, the person who encouraged the borrowing, dismantled the banking regulation and gambled the futures of 60 million people on the City of London, is sitting right over there—the shadow Chancellor. It is the people on this side of the House who are clearing up the mess he left behind.

Does the Chancellor agree that one of the infrastructure failures left by the previous Government was the lack of direct flights from this country to the big, growing cities of China—there are many more flights from German cities to China—and that the Government will put that right in due course?

I certainly think that a lack of airport capacity is a challenge for this country, but one of the good things that may emerge from the bmi merger is that more slots may become available at Heathrow to open up routes to those cities in China. My hon. Friend makes the very good observation that we have to do much more to expand our exports and our links with the Chinas and Indias of this world. One of the good things that has happened in the past few years is that our exports to China and India are up by a third, and we need to see more of that.

In his speech, the shadow Chancellor dismissed the Governor of the Bank of England as plain wrong. Who appointed the Governor? Did the recommendation ever come across the desk of the shadow Chancellor when he was the political adviser in the Treasury? [Interruption.] We will find out. Yesterday the Governor said:

“We have been through…the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart”.

My message to the House today is that addressing those problems is not easy, but nor is it impossible. I will come on to talk about the eurozone, but first we must put our own house in order, and we are making progress on doing so.

Tony Blair says in his memoirs that from 2005 onwards Labour

“was insufficiently vigorous in limiting or eliminating the potential structural deficit”.

Does the Chancellor agree?

One of the difficulties is that some of the cuts that the Government have made are counter-productive in terms of trying to deliver economic growth. The Chancellor referred to this country’s relationship with India. I think that everybody in this House agrees that we need to do more business with Brazil, India, Russia and China. However, if their businessmen find it impossible to get a visa to get into this country or they encounter massive queues when they arrive at Heathrow because of the enormous cuts to the UK Border Force, they are not going to want to do business with this country. Stop cutting off our nose to spite our face.

There have been queues at Heathrow for far too many years, and of course those queues need to be addressed—[Interruption.] There have been queues for years. I agree with the hon. Gentleman that we need a visa regime that offers support to enterprising individuals—entrepreneurs, people who can bring real skills and value to this country—to come here, and that is precisely what the visa changes we have made will allow. But I have to say that we can have a visa regime that allows in the brightest and the best only if we can command public confidence that we are in control of our borders and that we have a cap on immigration numbers. Remarkably, not only has the Labour party set itself against a cap on benefits, which it will come to regret, but it has opposed the cap on immigration, and that is a huge mistake.

Let me discuss the progress we are making. As the Governor of the Bank of England reminded us, we inherited the largest budget deficit in peacetime but two years into this Government, we have cut the deficit by more than a quarter. In 2010, the state consumed 48% of national income in this country. Today, it consumes 43%. We took office when Britain’s market interest rates were the same as Spain’s. Two years later, our market rates are the lowest in our history and Spain’s are more than 6%. That is the practical benefit our fiscal credibility has brought.

When we came to office, manufacturing had been withering for years, but after two years this country is exporting more cars than it imports for the first time since 1976—the last time a Labour Government bankrupted this country and went begging to the IMF. Today—as Government Members have mentioned, but, strikingly, Opposition Members have not—we hear that when faced with the choice of which plant to invest in General Motors has chosen Ellesmere Port, in the county that I represent, Cheshire, as the site of their future. That is a successful industrial strategy at work, with Ministers, management, employees and employers working together to secure investment.

The chairman of Vauxhall has just said that the Government have put a strategy in place to attract inward investment and support manufacturing, which all helps to make the UK a great place to build cars.

We all applaud the deal at Vauxhall Ellesmere Port and I am glad that the Chancellor managed to get out—almost through gritted teeth—some acknowledgement of the contribution of the work force and the trade unions in achieving that. Does he speak to motor manufacturers? Does he know that what he has said about the great work they are doing being export-led is linked to the problems? Does he know what is happening to commercial vehicles and the problems the motor industry has in that regard? Finally, is he going to do anything about Lola, one of the most successful performance engineering companies in this country, which went into administration this week?

British car companies and their supply chain are doing incredibly well exporting their cars around the world as well as selling them at home. Instead of talking down an industry that is so important to the west midlands and to the rest of the country, the hon. Gentleman should be celebrating not just the decision about Ellesmere Port but the expansion of Nissan in Sunderland and the great news we have had about Jaguar Land Rover in Wolverhampton. Those are real success stories and those companies—Nissan, Jaguar Land Rover and Tata—have choices about where to invest all over the world. They could put that money anywhere but they are choosing to invest in the United Kingdom. We should be celebrating that fact today.

The company that the Chancellor has missed off the list is, of course, Ford in Bridgend, which has just had new investment. I must point out, however, that that investment was also there under the Labour Government over successive years. On Spain, will the Chancellor explain why in quarter 3 in 2009 to quarter 3 in 2010 growth in the UK was 3.2% and flatlining in Spain, whereas now it is 0.2% in Spain, which is much-maligned for obvious reasons, and we are in recession? What has happened in the first two years of his chancellorship to put us back behind Spain?

For a start, as of today Spain is in recession, so I am not sure that the hon. Gentleman’s point has a huge amount of force. This claim, which I guess is made only by Opposition Members whom I am looking at now, that the Labour party somehow bequeathed the new Government some enormous golden economic legacy and that we were incredibly fortunate to inherit this massive budget deficit and totally unbalanced economy with no real plan to deal with that debt or deficit—not that we have heard a plan today, either—is absolute nonsense.

We have also had the good news this week, which was of course not mentioned by the shadow Chancellor, that for the second month in a row unemployment has fallen and employment is up. We have 400,000 more people employed than two years ago, and 190,000 fewer people on welfare rolls. Yes, it is an exceptionally difficult economic time and the legacy of debt and disinvestment is a heavy one, but the tough decisions we are making are moving Britain in the right direction.

I too welcome the improvements in the manufacturing sector of the automotive industry. Does my right hon. Friend recognise that in the food and drinks sector, which is also in manufacturing, there have been enormous increases in the number of jobs and of exports?

I certainly do. Part of the work we published last autumn specifically supported what we can do in that sector. We are not ashamed to identify sectors where Britain has a competitive advantage and to see what we can do to enhance it.

Does the Chancellor not recognise that although everyone welcomes an increase in employment, wherever it comes from, this country has a crisis of underemployment and of people seeking full-time hours that they cannot get? It would have major implications for, among other things, the welfare bill, which his right hon. Friend the Secretary of State for Work and Pensions has quite rightly committed to trying to bring down, if we could help people work the hours they wish to work.

Of course we want to help people who are working part time to work full time, if that is what they wish, but four fifths of the people who have taken part-time jobs wanted to work part time. We absolutely must help the fifth who want to turn them into full-time jobs, but I would hope that the hon. Lady, too, welcomes the good news that unemployment has fallen.

On that point, will the Chancellor confirm that the total number of hours worked in our economy is now lower than it was two years ago?

As I was explaining, four fifths of those who work part-time are getting the part-time work they want. The right hon. Gentleman should celebrate the fact that 400,000 more people are employed than was the case two years ago. Why not get up and welcome that?

If the Opposition’s argument is that we need to do even more, I agree. In the past six weeks alone, we have opened 24 enterprise zones around the country, cut businesses tax to one of the lowest rates in the world, increased support for small business research and development, reformed employment law in the teeth of Labour opposition to double the period before unfair dismissal claims can be made, reinvigorated the right to buy, launched NewBuy mortgage schemes, awarded ultra-fast broadband grants to 10 of our largest cities, frozen council tax across England, launched a £20 billion national loan guarantee scheme that is already delivering cheaper loans to hundreds and thousands of businesses, and increased the personal allowance to cut tax for 20 million working people and lift 1 million of the lowest paid out of tax altogether, with another 1 million to come. That is just in the past six weeks.

Yes, the Government must work harder and do more. The world does not owe this country a living. We will do that, but we have done a great deal already.

What does the Chancellor say—apart from “Work harder”—to SMEs in my constituency that tell me that the single greatest contribution his Government could make to economic growth and the creation of jobs is to cut VAT?

This is what we have done for small businesses: we have cut the small companies tax rate, which was going to go up under the plans that we inherited and which the Labour party voted for in the previous Parliament; we have got rid of Labour’s jobs tax; and we have frozen the business rates. We will check the record carefully, of course, but I think that in his speech the shadow Chancellor was advocating an increase in national insurance.

When my hon. Friends pressed him to explain how he would pay for his package, he said, “We wanted to see national insurance go up.” If he wants to correct the record, he can tell us whether he wants national insurance to go up to pay for his package.

The Chancellor allocated £500 million for a national insurance tax cut for new firms that were taking on new workers. It has totally flopped and failed, with very little take-up. I said that we should use that £500 million to help existing small firms to take on new employees—a plan that would work, rather than a plan from this Chancellor that is failing. That says it all.

So the short answer is yes, he wants higher national insurance for businesses. How on earth will that help companies in the current economic environment? As I have said, we need to do more. We need to help to get more credit to businesses and to housing and infrastructure. We are going to use Britain’s low interest rates to work for us all and we are going to do more to reform our banking system—the epicentre of what went wrong when he was the City Minister.

Why does the Chancellor not bring some clarity to the debate by telling us how many businesses have actually been helped by his national insurance rebate scheme for small businesses? Was it the hundreds of thousands he promised? Will he give us the actual number?

I can tell the right hon. Gentleman that 15,000 businesses have been helped by that scheme. The economic policies that he has drawn up would hurt millions of businesses. What the Labour party wanted and what he campaigned for was an increase in national insurance for all firms and we stopped that.

On that point, will my right hon. Friend note that last month we had the largest number of new company formations in my constituency of Bedford? One reason for that is that they want stable, low, long-term interest rates, which this coalition’s policies are delivering.

My hon. Friend is absolutely right. That is precisely what businesses need—a stable economic environment in which we are not exposed to some of the financial problems that some eurozone countries face at the moment. The low interest rates and the credibility that our policy bring help every business, not only in Bedford but around the country.

Does my right hon. Friend agree that just as we need to rebalance our economy away from over-reliance on the public sector, we also need to rebalance our exports away from over-reliance on the eurozone at the moment? The latest figures suggest that this is already happening, with UK exports to non-EU countries up by 12% while those to the EU remain flat.

I agree with my hon. Friend that we need to diversify where our exports go, not just because of the problems in the eurozone but because this country should be taking greater advantage of the extraordinary growth in the Asian economies. It remains a staggering fact that we were exporting more to Ireland than we were to Brazil, Russia, India and China put together.

Let me make some progress and then I will take some more interventions. I want to say something about some of the Bills in the Queen’s Speech, as we are debating the Queen’s Speech. I want to talk particularly about the banking reforms—something else that the shadow Chancellor mentioned in only half a sentence, so we have no idea whether he supports the reforms or not. [Interruption.] Perhaps he can intervene and tell me when I have made these points.

First, we have the Financial Services Bill, which was carried over from the previous Session. It already seeks to rectify one of the greatest errors of policy making—the decision that the Labour party took in 1997 to remove banking supervision from the Bank of England. The Governor of the Bank commented on that in his lecture on the “Today” programme the other day. That Bill, which is crucial, brings prudential supervision back under the control of the Bank of England, giving it new powers to monitor the build-up of dangerous levels of debt and asset bubbles and to deal with them rather than, as last time, letting disaster strike.

In this Queen’s Speech, we prepare to go further and address the structure of banking itself. We will introduce the Bill that implements the reforms proposed by Sir John Vickers and his Independent Commission on Banking that ring-fences retail banks from the riskier investment banking arms and provides more loss-absorbing capacity so that private investors will bear losses, not the taxpayer. Taken together, those Bills seek to give Britain a safer, more competitive banking system and will allow our country to have successful banks with a global reach while better protecting the taxpayer at home should one of those banks fail. I hope the Bills will command broad support across this House.

I hope that the Bill to reform public service pensions also commands broad support across the House. After all, those reforms are based on the proposals of the Labour former Pensions Secretary, John Hutton. They provide for generous pensions and security in retirement for hard-working public servants that are quite frankly beyond the reach of almost all in the private sector.

Can the Chancellor really justify asking fire brigade workers, who undertake some of the most high-risk tasks in our society, to pay 13% of their income towards their pension?

We have to have public sector pensions that are affordable. The truth is that people are living longer in retirement, which is a good thing, and that if we want to maintain generous pension provision for firefighters and others we have to make reforms that mean the country can afford that. So, the answer to the hon. Gentleman’s question is yes, and we have been in a long and good negotiation with the Fire Brigades Union and others on those reforms. As I have said, we seek to make public sector pensions affordable and it is pretty striking if the tone of interventions from the Opposition is going to be that we do not have support for this far-reaching reform that will put public service pensions on a sustainable footing. Opposition Members are going to have to ask themselves whether they speak in this House for their tax-paying constituents or for the unions that sponsor them.

We look forward to hearing, in the wind-ups, from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom we welcome to his place. Perhaps he will tell us what Labour’s attitude to these Bills will be. We are sorry that he has been removed from his role as Labour’s policy chief. He is yet another Labour politician who has found that their career takes a knock when they try to tell their party some hard truths. He did extremely well in his new job of handing notes to the shadow Chancellor as he spoke today, but there was a time when he wrote his own notes rather than just handing them. There was the time when he wrote that note saying, “I’m sorry, there’s no money left”, but his party’s only message is to spend and borrow more. To be fair to him, he is the politician who tried to tell Labour to get serious about welfare reform and about dealing with the deficit. He was famous in my Department for the very precise memo he sent to civil servants on how to prepare his morning cappuccino and his afternoon espresso. How ironic that what did for him was his attempt to get Labour to wake up and smell the coffee. [Laughter.] I have to say that it was quite late last night when I thought of that one.

Who replaces the right hon. Gentleman as policy chief? The new policy chief for the Labour party is the hon. Member for Dagenham and Rainham (Jon Cruddas). We did some research on how he might approach the job and we found these illuminating remarks from a few weeks ago:

“What interests me is not policy as such; rather the search for political sentiment, voice and language; of general definition within a national story. Less ‘The Spirit Level’, more ‘What is England’.”

Well, that is clear then. Perhaps when the Opposition find out “What is England” they will let us all have the answer. The striking thing is that there is no policy from the Opposition at a time when tough decisions need to be taken about our country’s future and when far-reaching reforms need to be made to secure its prosperity.

The Chancellor is back on politics, where he is happiest. He got through some parts of the Queen’s Speech in about three paragraphs or sentences, I think. On policy, why will he not listen for once and do what we are saying? Why will he not extend to all small companies taking on new workers the national insurance discount, which is nowhere near being taken up yet, instead of dismissing that suggestion? It is a good idea, so why does he not take it on? Why does he not extend his initial idea and make it effective for once?

First, as I have said, we have used the money available to us in the balanced Budget to cut the small companies tax rate, which the hon. Gentleman wanted to go up. [Interruption.] He says, “Additional to that”; Labour’s policy was to increase the small companies tax rate. We have not done that. We have cut national insurance across the board for low and middle-paid employees by getting rid of Labour’s jobs tax—that applies whether they are employed in small or larger companies—and we have frozen business rates for smaller companies. So, we have done all those things, but I completely agree that we need to do more to help smaller companies by reducing the red tape burden on them and by helping to get credit to them. That is what the national loan guarantee scheme that was launched at the end of March is doing right now.

I am a proud Manchester United supporter. The players proudly wear “Aon”—the name of one of the world’s biggest insurers—on their shirts. Can my right hon. Friend tell us why that fantastic international company is closing its headquarters in the USA and moving it to the UK?

I am reminded that the players used to wear “AIG” on their shirts. Perhaps it is a sign of how things are improving that they now wear the name of a major Chicago-based insurer that has chosen to move its headquarters to London. We remember all the stories of companies that moved their international headquarters from Britain a few years ago; now they are coming back.

I want briefly to say something about the eurozone crisis.

In 2006, Lord Turnbull, who was at one stage Tony Blair’s Cabinet Secretary, said that borrowing

“crept up on us in 2005, 2006 and 2007, and we were still expanding public spending…You might have thought that we should be giving priority to getting borrowing under better control, putting money aside in the good years—and it didn’t happen.”

Does the Chancellor think the Opposition have learned anything since?

I suspect that the shadow Chancellor did not listen to Lord Turnbull when he was at the Treasury, and he certainly does not listen to him now.

May I take this opportunity to ask my right hon. Friend to pick up on something from the Budget? The Chancellor said that he hoped that the VAT on alterations to listed buildings would not have an impact on listed places of worship. The Churches estimate that the tax will cost them £20 million a year. Would my right hon. Friend be kind enough to update the House on what he is proposing to do to assist listed places of worship?

First, I pay tribute to my hon. Friend for his work as Second Church Estates Commissioner. He has been in discussions with me and the Treasury about how to make sure that we live up to the commitment I gave in the Budget that churches and other places of worship would not be impacted by the introduction of VAT on alterations to listed buildings. Of course, it is already charged on repairs to listed buildings. I have been in discussions with my hon. Friend and with the Bishop of London, whom the Churches asked to lead on that work, and I confirm that we have reached agreement. The Government will provide £30 million of grant to the listed places of worship scheme. That will be 100% compensation, exactly as we promised in the Budget, for the additional cost borne by churches for alterations. It should also go a long way towards helping the situation on repairs and maintenance, where in recent years they have not been able to get 100% compensation. We think it will deliver 100% coverage for repairs and maintenance. I thank my hon. Friend and the Churches for working with us on delivering what we promised in the Budget.

I am grateful to the Chancellor for giving way, and even more grateful to him for his statement. I congratulate him on the way he dug himself out of the hole into which he placed himself. May I use this opportunity not only to draw attention to those outside the House who campaigned on the change, but to the Second Church Estates Commissioner, who played his role in the negotiations superbly?

I certainly pay tribute to the Second Church Estates Commissioner. We were clear in the Budget that we wanted fully to compensate Churches for the impact of the change and I am glad that we have done so.

Now that the Chancellor has dug himself out of that hole, will he turn his attention to another one—the caravan tax? In my area of north Wales, the North Wales tourist board estimates that a 30% drop in sales, on the Chancellor’s figures, will lead to job losses and a reduction in the tourism industry. In the constituencies of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), and my hon. Friends the Members for Kingston upon Hull North (Diana Johnson) and for Kingston upon Hull East (Karl Turner), caravan manufacturing will go because of the tax. How will that help the growth economy the Chancellor seeks, and will he review the tax urgently?

As the right hon. Gentleman well knows, there is already VAT on caravans towed by cars, but there is a consultation on the change. It finishes tomorrow. It is partly due to the good work of my hon. Friends the Members for Beverley and Holderness (Mr Stuart) and for Boston and Skegness (Mark Simmonds), who urged longer consultation, that the period was extended. I propose to allow it to finish and then we will set out our response.

In this moment of honesty, perhaps the Chancellor will explain how he is going to dig himself out of the hole on the charities tax, the pasty tax and the top rate of tax? We should get it all out on the table.

I have spent the last 35 minutes explaining how I am digging the country out of the hole that the right hon. Gentleman put us into.

Let me say something about the eurozone crisis. When eurozone central bank governors and Finance Ministers openly speculate on the possibility of Greek exit, the genie is out of the bottle. That and the Greek elections make this a perilous time. We are clear about the three steps the eurozone needs to take if its currency is to function properly.

First, countries in the periphery with high deficits and uncompetitive economies need to confront their problems head-on, as Governments in Ireland, Spain and Italy are. We are doing it in Britain too, but the adjustment our country must go through is made easier by loose monetary policy and a flexible exchange rate. The countries of the eurozone do not have that to help them, so the core of the eurozone, and the European Central Bank, need to do more to support demand and share the burden of adjustment.

Of course, ideas such as the project bonds put forward by the new French Government are worthy of serious consideration, but, fundamentally, the German Finance Minister is right when he says that rising wages in his country and increased domestic demand there can play a substantial role.

Secondly, the eurozone needs to follow what I described a year ago as “the remorseless logic” of monetary union that leads to greater fiscal union. As I said in the same interview, forms of collective support and responsibility must be developed. I echoed the view in many eurozone countries when I spoke of the possibility of eurobonds.

Thirdly, all of us in Europe, including the United Kingdom, need to address our continent’s lack of competitiveness. That involves structural reform to welfare, pensions and labour laws, and completing single markets in services and digital. It means all Europeans, including Britons, rediscovering the ambition and the ethic that made our continent the dynamo of the world economy for so many centuries. It is not that dynamo today. As the Prime Minister says in his speech today:

“The eurozone is at a cross-roads. It either has to make up or it is looking at potential break up.”

No one should underestimate the huge risks of the latter, but Britain will be prepared for whatever comes. We are making the necessary contingency plans. We will take the steps needed to secure our economic stability and protect our financial system. Above all, we will go on with the progress we have made in the last two years on reducing the structural deficit, keeping our credibility in the bond markets and keeping our interest rates low.

The Chancellor seems to be setting out quite a significant shift in the Government’s policy on what should be happening in Europe, in particular urging the German Government to do things in relation to promoting growth that many of us have argued for several months. Interestingly, they are not to apply to this country. Will he confirm that this is a significant shift, and will he add to his list that it is now desperately important that the eurozone looks at the health of some of the banks in Europe? The Spanish started last week. I do not know whether they have the strength to do what is necessary, but unless the banking system is significantly shored up, if the problems spreading from Greece continue—contagion and so on—we could have another major banking crisis on our hands. That would be an utter disaster.

I very much agree with the sentiment that the former Chancellor expresses. In the autumn of last year, and indeed before that, the Prime Minister, myself and others in the Government did consistently say, in public as well as in private, that surplus countries in the core of the eurozone needed to do more; that the European Central Bank needed to do more—I said it in the House and we said it in the ECOFINs and European Councils that we attended.

What has changed this week is that, first, the Greek elections have brought back the fear of contagion that had never really quite abated, despite the action of the European Central Bank over Christmas. Secondly, over the weekend and at the beginning of this week, central bank governors and Finance Ministers in the eurozone itself were openly speculating on Greek exit, and that has, as I said, let the genie out of the bottle. Some of the things that we were happy to say in private we are now also willing to say in public, because the issue is out there—on the agenda. We have not put the issue out there in the public domain, but now it is out there, put there by other people. We have very clear ideas of what the eurozone needs to do to make their currency work.

The Chancellor is actually confirming what I thought. It is good that they are saying these things in public, but it does suggest that perhaps there is an opportunity to change direction in Europe. I know we will not agree about what is necessary in this country, but does the Chancellor agree with me that we need to be explicit now that austerity on its own will not work—we need policies of growth to go with it?

I completely agree that austerity alone is not enough, and that is why I have just been explaining how we have cut business taxes, set up enterprise zones, set up the national loan guarantee scheme and reformed the labour market. We have done all these things so that car companies expand their production and investment in Britain and choose Britain as a place to do business. Of course those countries in Europe need to undertake structural reforms to go alongside their efforts to get their public finances under control, but we have to ask ourselves this question: if you are running a high budget deficit in a single currency zone, and you do not have the support of loose monetary policy, you do need support from the core of the eurozone but to abandon a commitment to austerity will expose you to even greater pressure on the international money markets than those countries are already exposed to.

Is not another facet to this recovery very much the investment in apprenticeships that this Government have made, with 177,000 new apprenticeship places taken up in the last year, including ones in my constituency of Erewash?

First, my hon. Friend is absolutely right that one of the successes that we have had is the apprenticeship scheme, which is now working across all constituencies and supporting many hundreds of thousands of people. We will see what the facts are after the debate, but the information that we have just had says that what the shadow Chancellor was alleging in his intervention on me a few minutes ago is not true. The number of hours worked in this country has actually gone up over the last two years—up by 20 million hours. So on that note, there is a difference—

It is over the last two years. But this points to a greater truth: the right hon. Gentleman had 13 years to prove to the country that he had the right policies to run the British economy, and he delivered the greatest economic disaster in this country’s modern history.

I will finish now by saying this. We are reducing the structural deficit, keeping our credibility in the bond markets and our interest rates low. We are reforming our banks, helping our unemployed, supporting our businesses, and giving back to our country the prosperous future that the Labour party so cruelly snatched from them.

Order. I remind all Members that there is now a six-minute time limit on all contributions to the debate. A great number of Members wish to participate, so the limit does not have to be used in its entirety; that might ensure that more Members get in.

I shall start my remarks by talking about the announcement by General Motors about Vauxhall at Ellesmere Port. I represent many, many people who work there and I pay tribute to that excellent work force and the community around them who support them. Whilst I recognise the commitment of all politicians who have helped back Ellesmere Port, in Wirral all of us know somebody—a family member or a friend—who has worked incredibly hard for this, and it is those people I am thinking of most and congratulating today.

I would like to make a few remarks about unemployment. Our commentary on employment, I am afraid, often shows the limits of the way we do our politics. The news, and we ourselves, often obsesses about the figures—the monthly movement up and down—and whilst those are important indicators, of course, it is the trend that really matters. We often worry about the weather when we should be thinking about the climate that we are in, and sadly, the unemployment figures are worse than those for this time last year. According to the Library, the number of people claiming jobseeker’s allowance is now 106,000 higher than in April 2011. That is incredibly worrying. The Chancellor mentioned the figures for two years ago. Unemployment plateaued in 2010. It is growing again now and we need to worry about why.

To add to the problem that we have, our understanding of the impact of unemployment and the lack of the necessary jobs in our economy is limited. I recently tabled a parliamentary question, asking the Treasury what assessment the Department had made of the medium and long-term cost to the Exchequer of the current level of unemployment. That matters because unemployment has a wide range of impacts. The Treasury did not give me as full an answer as I would have liked. I would have liked to know how unemployment impacts on the health budget in the form of increased costs; how much funding is being made available for the regeneration that is needed; and the impact of unemployment on crime levels.

In the shadow Chancellor’s speech, he made much of the apparent increase in long-term youth unemployment. Is the hon. Lady aware of the cynical way in which the last Labour Government manipulated the figures for long-term youth unemployment by cynically bringing people in for a one-week training course and then restarting the clock immediately after, to keep the figures down? That was a cynical measure, which this Government have stopped.

I thank the hon. Gentleman for his intervention. I have thought a lot about youth unemployment over the past years. The former Government oversaw radical improvements, such as our intervention in the labour market with things like the new deal. I find it hard to characterise any of that work, which has been recognised around the globe, as cynical. I find that very difficult to believe.

I wanted to agree with my hon. Friend about the important and welcome news about Ellesmere Port, because like her, I have constituents who rely on the work that comes from Ellesmere Port. In her excellent speech, might she comment on the tax cut for millionaires that is paid for by pensioners? Does she agree that if that tax cut were reversed, the money would be better invested in jobs and growth of exactly the kind that she is calling for?

I thank my hon. Friend and Merseyside neighbour for his question. Like my constituents, I cannot understand this Government’s decision to give tax breaks to millionaires.

In light of the earlier intervention, I thought my hon. Friend might be interested to hear figures, provided to the Work and Pensions Committee yesterday by the Department for Work and Pensions, on the issue of people who had apparently been off benefit. In March 2010, there were 18,000 young people who could have been put in that category, and there are now 4,000 in terms of training allowances. That is a difference of 14,000. As I think my hon. Friend would agree, that hardly explains the rise in youth unemployment.

I thank my hon. Friend for that helpful and informative intervention.

When the Chancellor talked about a growing economy, one of my hon. Friends shouted, from a sedentary position, “Not in the north-east.” We need to recognise that worklessness does not impact equally on all communities. That is why when we think about the growth we need, policy needs to be tailored properly to the economy in each and every part of the country, so that the GDP growth we all hope for represents the whole of the UK. I suppose it is entirely possible that the UK will recover, but leave behind heavily blighted areas of our country.

A study of unemployment reveals a key flaw in the Government’s thinking. They have talked about “expansionary fiscal contraction”—in other words, to achieve growth, the Government need to slash their budgets and investment will flow in from foreign shores. I do not believe that that is consistent with the Government’s other stated aim: to rebalance the economy. Finance for those parts of our economy that have strengths in manufacturing but need regeneration is necessarily long term. Government industrial strategy should shelter our industry from global headwinds, not leave us vulnerable.

Fiscal contraction at the pace we have seen has harmed blighted areas that had only recently started to recover from the impact of previous Conservative Governments’ attitude to industry. In my area, I see the impact of the withdrawal of central Government from regeneration and the stopping of regional growth via regional development agencies. The responses built into local government that were designed to target deprivation, which clusters in particular parts of our country, were stripped away in the financial settlement.

In the Budget, the Chancellor introduced measures that took money out of the pockets of people on low and middle incomes in those parts of the country where we want to rebalance. That will not help. Someone in the Treasury has to take responsibility for looking at the macro impact of all the measures that are affecting those places that stand to be the worst affected by this Government. We have had a botched Budget and then a next-to-nothing Queen’s Speech, I am sorry to say. The Government will be judged by the people in Wirral and Merseyside not merely on the GDP figures, but on the actual development we see in our city. We must take account of the differential impacts of Government measures on different parts of the country with different economies; we must not focus only on the national picture.

My question for the Government is: will they meet the test of real economic development? Only that will promote the widespread employment that people want. People will judge this Government on the basis of whether or not they see their friends and family in employment.

We are all aware, of course, that the Government are having to make some very tough and difficult decisions. Some of them may question some of those individual decisions, but let us be in no doubt about why we are in the present situation. In 1997, we handed over an economy with no deficit and a national debt of £350 billion that was being paid off. By 2007, before any banking crisis had taken effect, the debt had risen to £650 billion, because supporters of the previous Government were spending, at a rate of £30 billion to £40 billion a year, money that they simply did not have. We all know what happened then: after the banking crisis, they went on the biggest spending spree in financial history, which left us with a debt of £1 trillion on the books—probably twice that when private finance initiative commitments are included—and a deficit of £160 billion a year.

The hon. Gentleman has said that the people of his constituency are pleased with the performance of his Government and his Chancellor. Is that why they actively rejected the Conservative party and the Liberal Democrats, so that they lost control of Monmouthshire county council?

Monmouthshire county council will have a Conservative-led administration, with help from our great friends in the Liberal Democrat party, with whom it is always a pleasure to work. They were not responsible for causing the mess left by Labour.

I want some answers from Labour Members. I want to know why they left us with a debt of £1 trillion and what exactly they intend to do about it. It seems to me that the basis of their economic theory is Enid Blyton’s “The Faraway Tree”, which children climb to find a land where everything is free and nothing has to be paid for. To me, that is a fairytale; to them, it is an economic theory. They think they can just carry on borrowing and borrowing, and put off until tomorrow what needs to be done today.

Can the hon. Gentleman explain why he felt it necessary to write in to his local paper apologising for the incompetence of his Cabinet colleagues? I thought for a moment that he was describing them, not turning his guns on us. Surely it is they who are incompetent—that is what he stated, in black and white.

I would never apologise for doing my job as a Back Bencher, which is to scrutinise and to point out that, on occasions, some Cabinet members have done things or prioritised certain policies with which I disagree. What Opposition Members should do is start to apologise, and not only for the £1 trillion debt. What about selling gold at $200 an ounce—400 tonnes of it? What about the £5 billion raid on private sector pensions, which has plunged people who worked in the private sector into poverty? Only one of them has apologised—the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who left a note saying, “Sorry, we’ve spent all the money.” That is not good enough.

No, I have no more time to give way.

I want to know why Labour Members still maintain that the banks are to blame, when, in all, just £120 billion was given to the banks out of a total debt of £1 trillion, almost 10 times more. They are following the policy of fools, knaves and despots throughout history started by Edward I, who blamed everything on bankers. The reality is that, every year, we are borrowing more from banks than we have given them. We get 10% of our revenue—£50 billion a year—from the banking industry. If Labour Members are allowed to destroy it, they will have to find cuts 10 times greater than the ones that we, unfortunately, have already had to make.

This Government are taking proper and concrete steps and I think that most Members present support almost all those measures. I totally agree with the decision to reform welfare spending, so that people have to go out to work, and at the same time to cap immigration, which has held down wages for the lowest paid, as even Opposition Members have been the first to accept. As one who has experience of trying to run a small business, I am delighted that the Government will do something to reduce the red tape of employment legislation, which makes many businesses reluctant to take people on. It is, of course, a pleasure to read about cuts in corporation tax and, yes, even the cut in tax for top rate taxpayers. We know that that is politically difficult to defend, but there is a strong economic argument for the measure, which is why Labour Members were not prepared to vote against it and will not now say what they would do.

In Wales the public sector is very large, and the Army forms a large part of that sector. I am worried to learn of proposals to amalgamate the Queen’s Dragoon Guards with another regiment. Many Welsh people are employed in the Queen’s Dragoon Guards, which is an excellent regiment. Since the battle of Agincourt, Wales has supplied men and women who have fought loyally for Britain, as I would have been happy to do in the Territorial Army—I saw no active service. I hope that the Chancellor will bear that in mind when the decisions are made.

I hope that the Chancellor will forgive me for expressing the hope that he will also look carefully at the carbon tax. I am one of a growing number of people who worry about the fact that there has been no increase in temperature for the past 12 years. It took me a while to get the figures from the relevant Government Department, but Members should have a look at the Met Office website. I worry about imposing on the manufacturing industry a tax that is not being imposed elsewhere in the world. I am not absolutely certain whether global warming is taking place or not, but I am certain that if we start imposing measures that are not imposed elsewhere, all that will happen is that manufacturers will go elsewhere and there will be no overall decrease in carbon dioxide emissions.

I am coming to the end of my little piece. I want to assure the Chancellor that we are his most loyal supporters, even if we occasionally quibble on certain issues. We are determined to face down the forces of financial chaos on the Opposition Benches. We know that every Labour Government have ended in utter financial catastrophe, whether because of Attlee using war loans to build the NHS on the back of American credit, Harold Wilson devaluing the pound and telling us it would stay the same, Jim Callaghan having to go cap in hand to the International Monetary Fund, as the Greeks are now doing, or the previous Prime Minister, himself a former Chancellor, who told us that he had ended boom and bust and then created one of the biggest booms in history, on the back of lax lending regulations and lax immigration controls, and then the biggest bust in history, which we now have to sort out.

We know, as do most people in this country, that, whether one is a nation, a company or an individual, it is impossible to go on spending more money than one earns. That is why Government Members will be loyally supporting the Government on the Queen’s Speech and making sure that we can build a better Britain, built on real growth, not debts that our children will have to pay off at some point in the future.

I want to make two points in this debate. The first is about youth unemployment. I will present some figures showing the rising cost of the Government’s economic failure. The second is that the neglect in respect of youth unemployment is mirrored by a misguided response to the storms in the eurozone.

I do not think that we need to debate whether youth unemployment is a big problem; it is a massive problem. As the Chancellor and others have said in previous debates, long-term youth unemployment is the greatest danger to not only our economic future, but our social future. Today, according to the Government’s own figures, 260,000 young people have been unemployed for more than a year, which means long-term unemployment. Another 200,000 have been unemployed for more than six months. The interesting, depressing and worrying thing is that the situation is getting worse. As recently as 2008, 6,000 18 to 24-year-olds had been claiming jobseeker’s allowance for a year. By April last year that figure had tripled. Over the past year—just 12 months—it has tripled again, to 55,000. In my constituency, this time last year there were 15 18 to 24-year-olds who had been claiming jobseeker’s allowance for over a year, but now the number is 250, which is a 1,500% increase. The total figure for youth unemployment is 1.3 million or 1.4 million, which comes from the labour force survey, but these are JSA claimants, because that is a claimant count figure.

As for the costs, in February this year I chaired the Association of Chief Executives of Voluntary Organisations commission on youth unemployment. We costed the levels of youth unemployment on the basis of the figures for the first quarter of 2011, which showed a net present value cost of some £28 billion. I asked the university of Bristol to rerun the figures for the last quarter of 2011, which it has done, and the calculation now stands at £30 billion. In the space of 2011, the net present value cost has gone up by £2 billion. That seems to me to be 2 billion reasons for a greater degree of urgency and effectiveness in Government policy.

The Minister responsible for employment says that we should be pleased with stability, but stability in this policy field means that the problem is festering and getting worse. The deputy leader of the Lib Dems, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), said we should celebrate the “huge success” of Government policy. The wage subsidy that was introduced in April is at best unproven. The majority of jobs under the apprenticeship drive are the result of jobs for the over-25s being rebadged, not new apprenticeships for the under-25s. The expertise in the voluntary sector is being squeezed out by the Work programme. Some 20% of voluntary sector providers have stopped providing under the Work programme. There is a gaping hole in Government policy on transport costs for people to get to interviews, never mind getting to work.

I make no apology for repeating this very basic fact: the Work programme, which is the Government’s flagship programme, helps one in 10 of the youth unemployed. Its success rate is 20%, according to the Government’s own figures. That means that one in 50 of the young unemployed are getting a job as a result of Government interventions. I say to the Chancellor—I am grateful that he has stayed for the debate—that there are three steps that he could take now. First, he could require all public contracts over £1 million to offer apprenticeships to young people. In his autumn statement last year he announced infrastructure expenditure, which is a good thing, but where are the apprenticeships to go with it? Secondly, he could bring forward from 2014 money to raise the size of the wage subsidy or the number of young people helped. In 1995, when his predecessor, the right hon. and learned Member for Rushcliffe (Mr Clarke), tried a wage subsidy, it helped only 6,000 young people. He will have to boost the effort to get take-up. Thirdly, he should bite the bullet and recognise that every study anywhere in the world has shown that for the long-term unemployed only a part-time job guarantee can ensure that one year’s unemployment does not become three, four or five years’ unemployment.

The right hon. Gentleman is making a compelling case, and I know that he has worked very hard on this matter in the past, but surely he recognises that the best way to solve this is to increase the number of apprenticeships, which the Government are doing, and that his Government encouraged young people to try to aspire to university and many of them, when they did not meet that aspiration, found that deflating.

I am grateful to the hon. Gentleman, who makes a perfectly intelligent point. It seems to me to be a good thing to raise university participation levels up to international standards, which is between 45% and 50%, but it is crucial for those who do not go to university that we have high-quality options for them. High-quality apprenticeships are an important part of that.

The leading countries of the world for higher education are, first, the United States, which has a 55% participation rate, and, secondly, France, which most people would recognise as having an outstanding higher education system. It has 48% participation. Korea, one of the new countries growing up in the world, has 80% participation in higher education. By the way, Scotland already has over 50% participation in higher education, so I do not believe that somehow English or UK young people are unable to benefit from higher education in the way that people in other countries can.

The Robbins report of 1963 said that higher education should be open to anyone with the ability to benefit, and that seems to me to be the right test. For the 50% who do not go on to higher education, we of course need high-quality apprenticeships, but I say to the hon. Member for Sherwood (Mr Spencer) that he should work with us to raise the quality of apprenticeships, because too many apprenticeships are at too low a level and are not leading to the kinds of life chances that we want to see.

It is true that our levels of youth unemployment are not the levels of Spain and Greece—thank God for that —but in 600 wards in this country one in three young people are not in education, employment or training. It is not the 50% or 55% of the Greeks or the Spanish, but one in three. I do not believe that Europe should be the benchmark for levels of youth unemployment.

I also say to the Chancellor that Europe cannot be the alibi for the collapse of our economy at home over the past 18 months. If we look at the growth measures since his first spending review in the autumn of 2010, we will see that we are actually doing worse than comparator countries, and I do not just mean Germany. In the 18 months since the 2010 spending review, we have had worse growth than France, Poland, Sweden, Austria and Slovakia. I will compute the Spanish figures announced today, but until those figures were announced we even had lower growth than Spain. Our growth was worse than the EU 27 average, the eurozone average and the G7 average.

The Chancellor’s claim about the problem that the eurozone mess is causing for our economy is actually undermining his own promise to rotate our economy from domestic demand to external demand. The question is: what should we do about that? He says that the lesson is to stay the course. I say that when the external environment changes, we should change course. The storm in Europe is not a reason for us to stick to plan A; it is a reason to shift to plan B. There is a warning in the travails of the eurozone, but not the one that the Government claim there is. Debts are rising today in Spain, Portugal, Italy and Ireland because fiscal policy is exacerbating the downturn in the economic cycle. The Prime Minister said in his speech today that we are “on track”, but Conservative austerity is not working at home and collective austerity is not working in Europe.

I believe that our absolute requirement in the light of the real and serious risks we face is to pitch policy—fiscal policy, monetary policy, industrial policy and banking policy—against the tide of the economic cycle. We need to argue for that abroad and at home. We heard a shift today from the Chancellor about what should happen abroad. We should be embracing President Hollande, not snubbing him. We should be anti-austerity and pro-reform. That is the right position for Europe and the right position for Britain, because there are no islands in the modern economy. It is not ideology; it is maths. And judging by the Gracious Address, it is time for the Government to go back to the classroom.

I welcome the overall thrust of this Queen’s Speech and, in particular, the fact that it concentrates on the need for growth, more jobs and private-sector, wealth-producing buoyancy, which we did not see for a very long time under the watch of the previous Government. I must say that, yes, I do my best to be honest with the people I represent—

I do—they will tell you that, Sir—as you did when you said that there was no money left. We are both honest men.

I wish that the shadow Chancellor would welcome some of the achievements that the people of this country welcome; it is foolish of him not to do so when there are considerable signs of recovery. It simply lowers the esteem in which all politicians are held, and I urge him, and the Opposition Front Bencher who responds to this debate, to take that into account.

There are welcome signs of recovery. The private sector has created more than 500,000 jobs since the general election; the International Monetary Fund forecasts that the UK will grow at twice the speed of Germany and three times that of France; borrowing costs have fallen, investment has been increasing and only yesterday we saw a drop of 45,000 in the number of unemployed people in the first quarter of this year. All those things are welcome, but it would be refreshing to hear Opposition Front Benchers greet them with some enthusiasm—although I doubt that they will.

The truth of the matter is that consumers and businesses are saying, “To hell with it; we’ve got to get on with life,” and that is one reason why we are seeing some of the green shoots of recovery. Now we need to nurture them and ensure that they continue to grow and bear fruit.

The situation is fragile, and no one would say otherwise. Consequently, I urge the Government and the Chancellor to do more. We will not achieve growth with new laws. The previous Government tried that for 13 years, and we saw what happened. This place does not create the growth; it simply sets the atmosphere and ambience for it. So I appeal to the Chancellor to recognise that we need to change the culture regarding entrepreneurialism and the attitude to small businesses, and indeed serious and important recommendations on doing so are coming forward from various parts of the House.

We must also understand the needs of small businesses, because therein lies our best chance of growing jobs and the well-being of this nation.

Does my hon. Friend agree that there is nothing that a small businessman would like to do more than to employ a young, new worker? What would my hon. Friend suggest to the Chancellor can be done with employment regulations, so that we get our businesses employing people more easily?

I welcome that important point, because I was about to turn to that very area. More can be done, and we do indeed need to reduce the regulatory burden and to strengthen the business environment.

I welcome in the Queen’s Speech the proposed measures to deal with executive pay and employment tribunals, but I still do not understand why the Government are obsessing about maternity and paternity leave, especially for very small businesses. I simply point out that many people meet in the workplace and set up a family life together, and, if a small business employing 10 people loses 20% of its work force for six months, temporary labour cannot be used as a replacement. That simply does not happen.

One trend in the employment figures over recent months has been that female unemployment has risen faster than male unemployment, and that it is decreasing less quickly. Detaching women from the labour market, as the hon. Gentleman seems to suggest we do by weakening maternity rights, will surely make the situation worse.

I do not suggest that at all. What I suggest is that we understand the real needs of small businesses. If we want them to grow and create jobs for both men and women, we need to ensure that they are released from much of the burden that they face at the moment. I ask the hon. Lady to consider that burden, because it is a considerable one for small businesses—I have worked in the sector pretty much all my life and founded two such businesses. We need to release small businesses from that burden, so I would particularly welcome their being excluded from the sort of burdens that paternity leave suggests. The Opposition need to get real in that respect.

I turn to the attitude of the banks and financial services.

No, I am not going to give way. I have given way twice, so the hon. Gentleman will respect the fact that time is of the essence.

Small businesses have not had the support and understanding of the financial services sector. Again and again the banks tell us that 85% of applications for money are met, and of course that is true.

My time is running out; I know the hon. Gentleman understands.

Yes, 85% of those applications that are finally made are met, but many people go along to the bank and are told before they reach the application stage that they are not going to get the money, so they never apply. The figures are twisted, and we need to understand that.

On regulation, I welcome the Government’s attitude to one-in, one-out, but they could do much more for small businesses by recognising that they would be the great engine of growth if they were only released. They could be excluded from many of the regulations that apply to business generally, and I urge the Chancellor to press that point in Cabinet.

Members will not be surprised that I now turn to my constituency. We are trying to create a new approach to jobs and development by establishing Northampton Alive, a project involving 15 major developments, part of which is the enterprise zone that, thank God, this Government allowed us to create in Northampton—the largest in the country. We have also introduced, however, a forum for the leading 60 to 80 people in the town, so that every six months of this major project, which lasts for 15 years, they get the opportunity to provide their input and to take ownership of their town, the new developments affecting it and the new job opportunities that will ensue.

Finally, local measures matter. We can do more locally, and I encourage the Chancellor to urge local authorities and local people to take up that challenge.

Before I begin my remarks on the Queen’s Speech, I should like to compliment my right hon. Friend the Member for South Shields (David Miliband) on his very good speech. We all have opinions, but to put the facts in such a clear fashion that cannot be argued with proves why he is a loss sitting on the Back Benches. I am not a natural supporter of his, as he knows, but the Front Bench is his place, not the Back Benches—[Interruption.] It is a shame; that is absolutely right.

This Queen’s Speech is almost a re-run of the Budget speech. There are three financial Bills: the pensions Bill, the banking reform Bill, and the enterprise and regulatory reform Bill. This last has parts that may be acceptable, although they will have to be teased out and looked at, but other parts are worrying. Of the remaining Bills, some are good or desirable in their own fashion. In the context of the dangers and difficult problems facing the British economy and the need to get growth and a rebalancing of the economy, the Queen’s Speech offers very little. That is very disappointing, and it will make the public, who are worrying about their families, their homes, their futures and their children’s futures, wonder about how out of touch the House of Commons is with their worries.

The Queen’s Speech projects our spending the majority of our time on a Bill to reform the House of Lords. How sensible will that seem to the families out there who are treading water financially? We must remember that 80% of the public sector cuts are still to come, so we are not at the worst stage; we have almost not even started. Yet this Bill, on which there is no consensus in the House and which is fiercely opposed by Members from all parties, will take up a lot of time here and in the House of Lords. One wonders why we are doing it. The public will ask, “Have they nothing better to do?” As a result, we will not have a social care Bill in this Session—that is a disgrace—and nor will we have a higher education Bill, which would be crucial to the growth strategy. No one can say that the Government have got their priorities right.

My right hon. Friend the Member for Edinburgh South West (Mr Darling) got something that Labour Members have long wanted—an acceptance from the Chancellor that growth is necessary to run alongside the cuts. That was quite an achievement and quite good news. The sad news, however, is that when the Chancellor read out all the measures that he felt would deal with growth, they were all on the supply side, not the demand side. It is clear that the big corporates are flush with money and could invest today and tomorrow, but they are not doing so because they have no confidence in the economy and there is no demand in the economy. The sooner that confidence is brought back, and the sooner the Chancellor understands that he has to put demand into the economy to get people into jobs with money and the confidence to spend, the better.

I thank my hon. Friend—a fellow former Lawside RC academy pupil and Dundonian—for giving way. From 2005 to 2010, I never had any business people coming to my surgery. Since 2010, an ever-increasing number of have been coming to tell me that they are not getting a fair deal from the banks. Does my hon. Friend share that experience?

As a member of the Treasury Committee, I can tell my hon. Friend that we argue every month with the Governor of the Bank of England and appeal to him to do something about the banks, which are not lending to small businesses at the level that they promised and have been allowed to get away with it without any complaint from the Government.

If Government Members think that it is partisan to say that there is no plan for growth and no understanding of growth, let me read out what the Secretary of State for Business, Innovation and Skills said in a letter to the Prime Minister regarding industrial policy. He wrote:

“I sense however that there is still something…missing—a compelling vision of where the country is heading beyond sorting out the fiscal mess; and a clear and confident message about how we will earn our living in future.”

He clearly and comprehensively set out five areas where there should be investment, the final one being investment in the construction of houses, which he said would get people into work and have an effect on the supply chain. None of those issues appears in the Queen’s Speech or was addressed in the Budget. If the Government cannot trust and listen to their own Business Secretary about how to get an industrial policy for growth, what chance do the people of this country have?

It is a pleasure to participate in the final day of the Queen’s Speech debate, where we focus on the economy. Occurring as it is just after the May elections, there is a tendency not only to look at the new policies that have come forward but to take stock of the Government’s performance to date.

An important match took place at the weekend—the Chancellor may have taken an interest as his constituency is not far away—which determined the outcome of the premier league. If we had taken the half time score to be the final outcome, we would have drawn very much the wrong conclusions. The same can be said of the economy. We must work towards a full programme across the Parliament, and at the moment we are halfway through that political cycle. Let us be fair: the 3 May local elections represented a tough result for the Government. I am sure that whole House will unite in delight at the re-election of Boris Johnson. [Interruption.] I am glad that everyone concurs. We look forward to his waving the Olympic flag once again, having seen him do that in Beijing.

Does my hon. Friend agree that it is important that the Government are taking long-term decisions and looking at the long-term interests of UK plc?

I am grateful for that intervention.

Labour Members may be rejoicing in their election results, but before they start measuring the curtains for No. 10 it is worth noting that they fell well below the magic number of 40%. That suggests that those results were more about sending a message to the Government of the day than voting for an alternative. Of course people are worried about jobs, the cost of living, rising fuel prices and generally making ends meet, and we must not lose sight of that. The results therefore reflect a backlash against the establishment which is having to implement these very difficult decisions.

Three observations can be drawn from the results. First, such backlashes are often witnessed. Back in the days of Margaret Thatcher, she went down to 24% in the polls but then continued to win general elections. Likewise, in 2000 the Tories managed to get 40% only to lose the general election in 2001. Secondly, the electorate should be cautious about listening to Labour’s alternative economic strategy of spending more, because it is that sort of irresponsible stewardship that got us into the financial crisis in the first place. Thirdly, the Government need to listen and must not be distracted by less important issues. They must focus on the priorities of the economy, education, welfare, reducing crime, and the NHS.

My hon. Friend is making a compelling case. I know that he has a great interest in tourism and leisure. Does he agree that it is imperative that the Government make a decision soon on airport capacity in the United Kingdom, in particular in the south-east, to drive economic growth, jobs and the renaissance of our economy over the coming years?

My hon. Friend makes an important point. This is a busy year for tourism in Britain and we must get those aspects right. This is not the first time that those points have been mentioned in this debate, and I think that the Chancellor has taken them on board.

The other thing I would like to point out about the local elections—this will be the same in future elections—is the deluge of news that has been thrown at us by the 24-hour news industry. We must think about how the message is managed, not just about the message itself. The Budget is remembered more for Labour’s sensationalist catchphrases, which have been heard again today, than for its game-changing announcements, such as the increase in the personal allowance, which will affect 24 million people; the largest single rise in pensions ever; and the cuts in corporation tax, which make us the most competitive country in the G8.

The latest phrase that Labour is peddling, which has leaked into the media, is “double-dip recession”. If I took my son, Alex, to the fairground and we went on a rollercoaster called “The Double Dip”, he would be pretty disappointed—even at the age of three—if the second dip was eight times smaller than the first. Labour is being disingenuous with the figures and undermines our economy by constantly peddling that phrase. [Interruption.] I hear Labour Members grumbling, so perhaps we should look at the figures. The Q1 results for 2012 were better than the GDP growth results for 2011, which suggests that the graph is going in the right direction.

The hon. Gentleman is certainly making a case. Will he tell us the cash value of the decline in GDP in the last quarter? How much did it cost our country in lost production?

I remind the right hon. Gentleman that the recession that lasted for five quarters, for which he was directly responsible, gave us a GDP growth figure of minus 2.3%. The figures that we are dealing with now are minus 0.3% and minus 0.2%. That means that we are heading in the right direction. It might technically be a recession of two quarters, but Labour is talking down the economy, which is not what the British electorate want to hear.

It is thanks to the measures that this Government are implementing that our economy is growing faster than that of the eurozone, twice as fast as Germany’s and three times as fast as that of France. Our borrowing costs have fallen to record lows, and thanks to the management of the deficit, we are able to retain our triple A rating. And yet, Labour are keen to peddle the idea that there is no plan for a recovery. That argument has just been put forward by the hon. Member for Leeds East (Mr Mudie).

I will give some examples of what the plan is. I have mentioned how we are managing the deficit so that borrowing costs are low. We are also creating one of the most competitive business tax systems in the developed world; cutting red tape by scrapping unnecessary and out-of-date regulations, which are costing UK businesses more than £350 million; and creating one of the most educated and flexible work forces in Europe by creating apprenticeship schemes and energising our schools system through the academy programme. Of course, we are also boosting investment and exports to rebalance the economy by setting up enterprise zones across the country, developing regional growth funds and replacing the regional development agencies with the more effective local enterprise partnerships. I certainly welcome the one that has just been launched in Dorset, which is already starting to release faster broadband and upgrade the county’s infrastructure.

Again, the hon. Gentleman is repeating a point that has been made by Labour and that the Chancellor has already heard.

To be fair to other Members who want to get in, I will conclude by saying that we need to remain firm on our plan. We need to focus on where we want to be in 2015. It was courageous of the Government to set out a plan for growth and I commend it to the House.

It is a great pleasure to speak in this debate, which is definitely the most important debate on the Queen’s Speech as far as my constituents—and, I suspect, all of our constituents—are concerned.

The constituency where I live is considered to be in the top 10 unemployment blackspots in the country. In north Ayrshire, there are currently 5,555 claimants chasing 313 jobs. The position that my constituents face is similar to that faced by the constituents of many hon. Members, irrespective of which part of the country they live in, but if we listened to Government Members we might think we are living in a very different economic situation. Yet again, they have used the occasion to show their complacency on the economic situation and how out of touch they are with many of their constituents, who they well know are struggling.

I am disappointed by the Queen’s Speech. Like many, I was underwhelmed when I listened to the announcements by the lack of proposals for legislative measures to try to address the serious problems that our country faces. Many of the speeches have repeated the speeches on the Budget we heard not so long ago. The Government had an opportunity to offer a grand vision of how they will move us forward, but they have failed yet again to make any significant proposals that will help to get us out of this dire economic situation. My hon. Friend the Member for Leeds East (Mr Mudie) has already quoted the Business, Innovation and Skills Secretary, but I agree with the latter that something important is missing, namely a “compelling vision” of where the country is heading.

I shall not necessarily talk about specific proposals in the Bills included in the Queen’s Speech, because the point I am making is on the lack of necessary measures. The hon. Member for Northampton South (Mr Binley), with whom I sit on the Business, Innovation and Skills Committee, spoke about the concerns of businesses and the banks’ failure to lend to small businesses. Yet again, there are no significant measures in the Queen’s Speech to force banks to lend to small businesses. Small businesses come to MPs’ surgeries because they are having difficulty getting loans from banks, but some no longer see the point of contacting politicians because they have done so many times, and the Government’s attempts to get banks to lend, such as Operation Merlin, have completely failed.

There was a lengthy debate yesterday on the decrease in living standards up and down the country, the collapse in wages and the Government’s failure to address the problems that our constituents face. In almost every area of Government policy, there is a failure to focus policy to help businesses to survive and develop.

On green jobs, the Proven wind turbine factory, which operated until last autumn, was a success story for Ayrshire. There were technical problems with one of the wind turbines that the company operated, but the company was one of the first in that field and very much a success story for Scotland. However, its future is uncertain. It had to fold—an Irish company has taken it over, but it will not continue as substantially as before. Those who set up and ran Proven say that the problem that led to its demise was the failure to get funding from the banks, because the banks failed to accept that there was a long-term future for the business because of the Government’s feed-in tariff policy and their approach to solar power.

The Government need to do better. They need to come forward in every area of policy with a plan that will get this country on its feet again.

The key to jobs and growth is wealth creation. We create wealth by digging it up, growing it or making things. Everything else is just moving it around. That is why I welcome the Government’s focus on real wealth creation, especially manufacturing.

Labour has been highly critical of almost everything done by the Government, but it is hard to discern what its programme or vision would be. I suppose we can tell a lot about its vision from what it did when it had its hands on the levers for 13 years. It had 13 long years in which to create the society it wanted, so what did it look like in the end? It loosened bank regulation, and further to help its friends in the City it scrapped the public interest test on takeovers in 2002, meaning that many of our cash-generative businesses are now foreign owned, especially in utilities and infrastructure.

Labour decimated manufacturing, taking it from 22% to 11% of the economy, which had knock-on effects for many other sectors, such as logistics. It left Hartlepool, Middlesbrough and Redcar and Cleveland in the weakest 10 of the 324 local economic areas. It widened the gap between the north and the south and the rich and the poor, and widened health inequalities. It created a benefits culture in which work did not pay for many people and having children became almost a career option in towns such as Redcar.

What about the tax system? Today, we again heard from the Opposition the mantra, “Tax cuts for millionaires.” I do not think that friends or even enemies of the right hon. Member for Wokingham (Mr Redwood) would describe him as left-wing, yet in his alternative Queen’s Speech the other day he called for a return to the former Prime Minister’s favoured tax levels—a top rate of income tax of 40% and capital gains tax at 18%. So how did millionaires fare under Labour? They had a 40% top tax rate until the last month of its 13 years. After the recent cut, it stands at 45%. It levied an 18% rate on capital gains—a lower rate than their cleaners and drivers would pay on their income. This Government have lifted that to 28%.

Under Labour, millionaires could put £250,000 a year into a pension scheme and get tax relief. The cut to £50,000 by this Government has raised £4 billion from the rich. They received child benefit and paid 2.5% less tax on their spending. They could get unlimited taxpayer support for gifts to charities, including family- controlled trusts, public schools such as Eton and, as in the case of Andrew Lloyd Webber, a huge art collection, some of which he rents back cheaply to his own house. Add to that numerous loopholes, and millionaires must want Labour back as fast as possible. Meanwhile, people on the minimum wage were paying £700 a year in tax.

It was one of Labour’s great achievements and one I totally support, but I do not support a tax level of £700 a year on the minimum wage, which was in place when the previous Government left office.

What do all these failures in Labour’s vision have in common? Apart from the takeover test, they are all being tackled by the Government. Of course we are doing a lot more than that to stimulate jobs and growth. We are dealing with Labour’s shocking education legacy, as a result of which employers, even in high unemployment areas such as mine, say they cannot find the people they need. We are starting from the bottom. The pupil premium is proving such a help to children in deprived areas. We are encouraging science study in school—it is already up 80%. The National Citizen Service is giving young people confidence in those all-important softer skills. We have made huge investments in apprenticeships, the number of which has more than doubled in my constituency.

We are dealing with Labour’s neglect of manufacturing. We have heard the good news today about Vauxhall and the Business Secretary’s involvement in it. He has also intervened recently in the bioethanol industry, and we will shortly see the restart of a plant in my constituency on which 2,000 jobs depend. We are also pushing green technology. I can look out my office window in Redcar and see 27 giant offshore wind turbines being constructed. Construction is about to start on a £500 million biomass power station at Teesport. The other day I met representatives of the Forewind company, which is starting a massive project on the Dogger bank and wishes to bring power ashore through my constituency. I thoroughly welcome the announcement in the Queen’s Speech of the green investment bank, which will bring more jobs and growth to this vital sector.

The Government are investing in technology and innovation centres, including a centre for process innovation in my constituency. They are investing to improve rail freight infrastructure from Teesport and have created enterprise zones, including three in my constituency at Wilton, Kirkleatham and South Bank. The regional growth fund has already given more help to manufacturing in the Tees valley than we ever saw under the north-east’s regional development agency, and I welcome the extra £1 billion that has been allocated. The work is being co-ordinated by the excellent new local enterprise partnership for the Tees valley.

The Government are beating the bushes to generate international trade, and we are beginning to see the fruits of that activity. Exports to non-EU countries are at record levels, and we now have the first net trade surplus on cars since 1976. The north-east region is already in trade surplus, and the figures will soon include the £20 million-worth of steel a week that is being exported to Thailand from the newly reopened Redcar steel works. The first ship left yesterday.

Private sector jobs are being created—there have been about 500,000 since the general election—but unemployment is still way too high, especially in the north- east and especially among the young and the long-term unemployed. My constituency still has the second highest unemployment level among those of Government Members, and that remains a high priority for me. I was therefore delighted to see a drop of another 85 in the figures yesterday.

As we watch the Olympics, the carbon fibre bikes, the Kevlar canoes, the space-age swimsuits, the polyurethane footballs and the Paralympian equipment will be a reminder of the vital role that chemistry and the process industries play, and will play in the recovery. There is optimism in the north-east’s process industries, and the position could be made even stronger by a Teesside carbon capture and storage network. I look forward to the result of the call for bids for that project. Large UK companies are ready to invest billions in it.

Times are tough for the economy as a whole, not least because of the debt burden. The eurozone is in chaos and there is still a lot more to do, but this Queen’s Speech contains more steps in the right direction and I commend it to the House.

Today’s debate on jobs and growth is of huge importance not only to the constituents of Redcar but to those in Barking and Dagenham in my constituency. All too often, particularly in this Chamber, people believe that London’s streets are paved with gold, and that there is little poverty or joblessness in the capital. All too often, again in this Chamber, people believe that the challenges facing Londoners are concentrated in the inner boroughs. Sadly, and with a strong sense of anger and frustration, I must tell the House that the reality for families in Barking and Dagenham demonstrates that those beliefs are not only misguided but just plain wrong.

Any set of statistics will demonstrate a high level of joblessness in my constituency and, under this Government’s legislative programme, there is little hope for the future. A datablog published by The Guardian shows that Barking and Dagenham is ranked eighth out of 326 local authorities for long-term unemployment, and 11th for child poverty. If we look at the latest unemployment figures, we see that the unemployment rate in my constituency, across all people of working age, is almost double the national average, and that the number of people on jobseeker’s allowance for 12 months or more has doubled in the past year.

Growth and jobs are vital for my constituents, yet they have become the victims of the Government’s stubbornly blinkered and highly ideological approach to the economy. This involves putting tax cuts for the rich before job creation for the poor, putting deficit reduction before poverty reduction and putting the interests of the few before the well-being of the many. Without active Government intervention, my constituents will find it harder than most to find the jobs that they need to pull themselves out of poverty. Almost 60% of 19-year-olds do not have a level 3 qualification, nearly half the people of working age who are out of work have no qualifications at all, and one in four of my constituents work in the public sector. Faced with cuts in public sector jobs, cuts in training and employment opportunities, a failed growth strategy, little business investment and miserable levels of bank lending, the future for them is bleak.

As Chair of the Public Accounts Committee, I also know that when the Government talk about private sector job creation, the reality is something else. Many of the new private sector jobs are simply public sector jobs that have been transferred to the private sector as a result of the Government’s privatisation programme. We have only to look at the Audit Commission, at the privatisation of the Work programme and of prisons, and at private contractors providing health care to NHS patients to see that many of the so-called new private sector jobs are jobs funded by the public purse. That is scarcely a surge in private sector growth.

The Government claim that they are running the biggest-ever welfare-to-work programme with the Work programme. Let us inject a bit of reality into that claim. I shall look at the Work programme both as a constituency MP and as Chair of the Public Accounts Committee. I have always been an optimist, but I have grave concerns about whether this will be an effective value-for-money programme. Ministers claim that it is value for money because it is paid by results, but surely the programme’s purpose is to get people into work, not to cut the welfare-to-work budget. If we end up spending less, we will do so by achieving less. A detailed look at the programme shows that one in four of those referred will get a job anyway, with public money being spent both on the attachment fee and on the placement. Unemployment is much higher, so referrals are greater and more money is going to private providers, but with fewer people placed in a job.

The right hon. Lady talks about value for money, but does she not agree that the prime providers of the Work programme will be paid only if, first, they get people into jobs and, secondly, they sustain those people in jobs for two years, which will provide the bulk of the money. That sounds like good value to me. Does she disagree?

I have two points on that. First, it is not good value if people do not get into work, which is the whole purpose of the programme, and, secondly, one in four of those who get into work would have done so anyway without any intervention at all. Given the black box nature of the programme, we will not know whether people have actually been given support. All the indications I have seen suggest that that is highly unlikely. We are beginning to get evidence to show that the more difficult cases are being parked, simply because all the money is focused on those most likely to get into work.

Does my right hon. Friend share my concern that Work programme providers are reporting that when they do succeed in getting people into work, it is usually short term and temporary? If people are cycling round and round the programme, that is certainly not good value for money.

We have been looking into the issue of whether short-term or part-time work is being provided. When I tried to meet prime providers locally, they would not tell me how many people had been referred to them, how many people they had got into work or how long those people had been in work. The Government claim to be committed to transparency, but any decent assessment of the Work programme is greatly inhibited by such lack of transparency.

Finally, I shall speak about Barking and Dagenham as an excellent example of where opportunities exist for the Government to stimulate jobs and growth. We might have lost many Ford jobs over time, but we have massive potential for expansion, with Barking Riverside, Dagenham dock and Barking town centre. The lack of public sector investment in infrastructure and services, however, is the major barrier to achieving growth and jobs. There is potential in Barking Riverside, with planning permission granted by the local council for 11,000 new homes, but at the current rate of building it will take 50 to 60 years before the scheme is completed. If those homes were built, it would stimulate jobs and help to tackle housing need.

We cannot get the school that we need in order to assure families who move into the area that their children will have a school place; we cannot get the transport infrastructure we need through the docklands light railway extension, because there is no money there; and we cannot get the Mayor to do anything to stimulate private sector house building. What we need is action, not words. Not a penny of the regional growth fund moneys has come to an area like ours, which needs a huge amount of resources.

I am conscious that many Members want to speak, so let me briefly say in conclusion that although the hon. Member for Redcar (Ian Swales) devoted about half his speech to the previous Government, we are now two years into this Government—and things have got only worse. During the two years on their watch, living standards for hard-working families in Barking and Dagenham have declined. Since they came into office, people’s hopes for a better future—with jobs for their children, homes for their families, and economic growth for their children and grandchildren—have been smashed.

The Queen’s Speech has nothing to say to the people of Barking and Dagenham. It does nothing for a community where needs are great. It fails the hard-working families of my constituents, it fails the businesses in my borough, and it fails to meet the aspirations and needs of future generations who will make Barking and Dagenham their home.

The right hon. Member for Barking (Margaret Hodge) used the term “victim”, and also spoke of a lack of hope. That is a theme to which I shall return later. I think that we should be very careful in our choice of words, given how corrosive they may be in the world out there—the real world, not the Westminster bubble.

In difficult economic times, we should not be seeking quick fixes. It is important that we continue to build the foundations that are necessary for economic recovery. The solution to a debt crisis should never be more debt.

Does my hon. Friend agree that part of the Government’s problem is the fact that the last Government borrowed in good years, and had borrowed some £40 billion before we even entered the recession?

That is an excellent point, and it is not made only by Members of Parliament. Hamish McRae, the acclaimed journalist, made it in The Independent during 2003 and 2004. He regularly asked readers what had happened to those golden economic rules—but that is by the by, and we cannot change it.

I want to raise an issue which I spoke about during the Budget debate. We are right not to allow protectionist rhetoric to creep into our political system, and continually to challenge protectionism abroad. That is crucial to the rebalancing of our economy to change it from an economy that spends on imports to one that earns through exports. I am encouraged to note that British exports rose by £50 billion last year, and that unemployment has fallen by over 45,000 in the first quarter.

I believe that there are two areas in which the Gracious Speech can make a real difference: the creation of the right conditions for private sector investment, and investment in our work force and the work force of tomorrow. Analysts have estimated that UK businesses have cash assets of more than £750 billion, equating to nearly half our GDP, and that investing just £20 billion of that in the UK could deliver a 1% increase in growth. We need to ask the difficult question: why are these cash-rich institutions not investing domestically?

The answer begins with the boom that preceded the recession. Unlike booms preceding earlier recessions, that boom was financed by public and private debt, which has continued to depress household borrowing and spending. The IMF’s analysis of advanced economies over the past 30 years concluded that recessions preceded by an unsustainable increase in household debt tended to be more severe and protracted. That is because as long as households pay down debts and increase savings, demand will remain weak.

One explanation for the weakness of private investment is concern among companies about the future availability of bank finance. They are becoming more reticent in their investment strategies, and are using cash as an insurance against a crisis. The situation is not helped by fears of contagion, or by the lack of liquidity in the banking sector. A solution to the problem would be the creation of a banking system that improved lending and the supply of credit. The introduction of a ring fence around retail banking separating retail banking services—such as deposit holdings and lending—from investment would pave the way for a more competitive banking system.

Tellingly, the removal in 1999 of the Glass-Steagall Act, which separated deposit holdings and lending from investment, changed the landscape of banking in America. It allowed larger investment institutions to enter the deposit and loan markets, creating a grab for small banks. In 1999, there were 19 significant large banks in America; today there are four. The picture in the UK is similarly worrying. Although there are smaller banks in the UK and the US, large banks have consolidated their position, creating market dominance. The consolidation of banking on such a scale is bad for businesses and bad for lending. With only a handful of lenders, concern arises about the availability of credit. We often talk about how banks are too big to fail, but rarely do we talk about banks being too big to be effective. Banks can only be described as quasi-public institutions, and will be accountable to the public long after they are sold. They are the engine of any economy, as they provide credit, investment and savings. We need a banking sector that not only serves shareholders, but benefits the wider economy.

I would also like to discuss how investing in the UK should involve our work force today and the work force of tomorrow. On a personal note, I recently held a jobs fair in Wolverhampton. We had more than 1,500 young people attending and more than 30 employers. One conversation I had on that day still sticks in my mind. It was with a young person from Wolverhampton who said, “I want to thank you, Mr Uppal, for organising this. You’ve given me hope.” When the Leader of the Opposition stands up and says that there is no hope in the Budget or the Queen’s Speech, the effect is deeply corrosive. I know that the situation in places such as Wolverhampton is challenging, but to dismiss people and just wipe away their dreams so quickly and flippantly is very damaging. Sometimes politicians in this House need to think carefully about the terminology they use.

We all appreciate that the Opposition have a job to do in holding us to account. However, it is important that we do not respond with knee-jerk reactions, but instead always look at the broader picture of what we are doing for the economy and not look to make political capital out of the situation. Investing in the work force of tomorrow means preparing young people for work today. Careers events in schools, inviting local companies to speak at schools, and lessons on interview and presentation skills could all help, and not just in year 11, but early on, when children are starting to think about options and subjects. It is not about getting young people to pick a career early on; it is about them knowing that their options will help them to make the right choices and give them goals for the future. If young people know that maths and science are essential for accessing the type of job they are considering, such subjects will seem more beneficial.

Ensuring a skills base for the future to drive Britain’s industry and manufacturing is evidently important, and recent reports point to a skills gap. It is disappointing to hear companies say that they cannot find the skilled people they need, especially when that is coupled with high unemployment. The west midlands is a great base for manufacturing, and, with the introduction of the i54 site, we can only improve on this. Taking the long-term view on jobs and growth—helping young people to get the best possible start early on—can only be beneficial in preventing them from ending up not in work, training or education.

Let me finish by saying, for the second time in this Chamber, that when it comes to the difficult decisions, at least those of us on the Government Benches are walking the walk, whereas Opposition Members are just talking the talk.

If I had been standing in this House a month or even a fortnight ago to speak about the prospects for jobs and growth, I might have expressed the opinion that the entire credibility of the Government now stood at a crossroads. A month on, however, I believe that we are well beyond that point. The Budget, followed by the local government elections and the collection of sideshows that make up the Queen’s Speech, have made it clear that the Government have abdicated any responsibility for trying to generate any real growth in our economy.

As Labour Members warned when the coalition came to power, the policies adopted by the Government were effectively an enormous gamble with the future of our nation’s economy. We also warned that whereas the richest and most privileged in our society would be spared the costs of that gamble, the poorest and most vulnerable would be expected to pay the costs. We predicted that the experiment—the gamble—was doomed to failure. However, heedless of the warnings, and driven by an ideological desire to shrink the state, the Government pressed ahead, determined to use the excuse of the budget deficit to drive through their political agenda, oblivious to the damage to our economy.

Is the hon. Gentleman simply following the mantra that we should have borrowed even further, on top of the £160 billion that we were already borrowing when his colleagues left office?

I can tell the hon. Gentleman what I would do: invest to save to grow, and then reap the benefits of that growth through the taxation system.

We warned that the Government’s policy was wrong, but I do not think any of us predicted just how wrong, just how disastrous its impact would be and just how much more difficult things would become in regions such as the north-east of England. The impacts on the young, as so clearly outlined by my right hon. Friend the Member for South Shields (David Miliband), are much greater in regions such as the north-east, yet Government Members seem completely oblivious to what is happening in these regions.

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output is said to be behind the contraction, but it is not the only factor. BBC economics editor Stephanie Flanders says that the situation

“adds to the picture that the economy is bumping along the bottom”.

At Prime Minister’s questions, the Prime Minister has said the figures were “very, very disappointing”—that is perhaps the understatement of this Parliament. He went on to say:

“I do not seek to excuse them, I do not seek to try to explain them away…there is no complacency at all in this Government in dealing with what is a very tough situation that, frankly, has just got tougher.”—[Official Report, 25 April 2012; Vol. 543, c. 944.]

He said it was “painstaking, difficult work”, but the Government would stick with their plans and do “everything” that they “can” to generate growth.

I am surprised that the Prime Minister was disappointed —what did he expect? The economic outcome of his policies was completely expected by many commentators. The outcome was highly predictable. The Prime Minister needs to recognise that it is his Government who have caused this recession in Britain and that it is his policy that has taken us back into recession. He needs to accept responsibility, and to accept that cutting deeper and deeper is the problem, not the solution and that to continue blindly will only damage our economic prospects yet further.

The Leader of the Opposition hit the nail on the head when he said the economic figures were “catastrophic”. He said that

“this is a recession made by”—

the Prime Minister—

“and the Chancellor in Downing street.”

He went on to say that it is their

“catastrophic economic policy…that has landed us back in recession”.—[Official Report, 25 April 2012; Vol. 543, c. 944.]

The Office for National Statistics has said that the output of production industries decreased by 0.4%; construction decreased by a full 3%; and output of the services sector, which includes retail, increased by only 0.1%, after falling a month earlier. Those figures are slightly worse than many expected, but the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted.

The UK economy has been bumping along the bottom for more than a year and is struggling to gain any momentum. The preliminary figures from the ONS are consistent with the messages coming from official and private data, which say that the UK was once again relying heavily on services and consumption by households. That suggests that the recovery will continue to be weak. Demand is very weak. UK business is sitting on a cash mountain but will not invest because there is no demand in the domestic market. So we very much welcome the growth of exports in the car sector, but the fact that such exports are outstripping the domestic market is not really that great news, because the depression of the domestic market is the real problem. We do not have demand.

The ONS figures also demonstrate clearly that the fall in Government spending has contributed to the particularly large fall in the construction sector. Some Government Members have tried to question the ONS figures and argue that the position is not so bleak, but they are burying their heads in the sand. Joe Grice, chief economic adviser to the ONS, has vigorously defended the figures. He said the construction data were based on a survey of 8,000 companies and had been carefully checked and double-checked.

We are in a very difficult situation. All across Britain and Europe people are rallying to challenge the consensus on austerity, because it is nonsense. The election of the new President in France, who is committed to a policy focused on growth, challenges the failed orthodoxy of austerity; the election and protests in Greece, the protests in Spain and the state elections in North-Rhine Westphalia in Germany last Sunday are shouting to us that a change of direction is absolutely necessary.

The Government could, if they so chose, focus on growth, but they do not do so. The fact that they choose austerity—that they choose destruction rather than investment—is wilful, and it is clearly a political choice. But there is an alternative and I beg them, on behalf of regions such as the north-east and on behalf of my constituents, to change tack—we need growth.

I am grateful for the opportunity to speak in this important debate. All too often, when we talk about the economy we speak in terms of GDP figures, confidence indices and the like, and they are very important, but we should always remember that this is about people’s lives and aspirations.

Employment in Warwick and Leamington has held up well over the past few years. In May 2010, 2,002 people were claiming jobseeker’s allowance. In March 2012, that had fallen to 1,646. Warwick and Leamington has climbed nearly 100 places and has gone from having the 414th highest level of unemployment among constituencies in the UK to having the 507th. I believe that that is a tribute to the inventiveness of our local businesses, the hard work of our local jobcentres and the determination of local residents to find work. However, while there is reason for optimism, we must also be aware of the challenges.

The number of those claiming JSA over the past 12 months has risen from 265 to 310 and although that figure has fluctuated, it makes it clear that we need to continue to build an economy that can create long-term and sustainable jobs, particularly for our young people. It will not be surprising to Members to learn that, as the co-chair of the associate parliamentary manufacturing group, I believe that manufacturing is the key to creating that sustainable labour market.

Although we all agree that there needs to be economic growth, we do not wish to achieve that through just any type of growth. We should not think of our situation merely as a short-term problem that needs short-term solutions, whether that involves stimulating demand or supporting the supply side.

Manufacturing is best placed to support the objective of increased employment for a number of reasons. First, manufacturing is strongest in those areas where private sector employment has been weakest. In the midlands, the north, Scotland and Wales, manufacturing occupies a bigger part of the economy than in London and the south-east. If we can increase manufacturing growth, it is likely that employment gains will be better spread across the country and we will tackle those parts that have traditionally suffered from structural unemployment.

Secondly, the nature of manufacturing is changing. It requires greater skills and higher levels of education. The UK Commission for Employment and Skills estimates that by 2017 the percentage of manufacturing jobs in high-end occupations—mostly degree-level employment—will rise from 27% today to 37%. That means there will be about as many people in high-end occupations in manufacturing as there will be in low-end occupations.

Thirdly, work within manufacturing is often higher paid than that in services. Average weekly earnings, including bonuses, in the manufacturing sector were £532 compared with £449 in the services sector. Finally, manufacturing jobs have a significant spillover effect into other parts of the economy. They enable the creation of services and other sectors around those jobs and help to provide pillars on which other parts of the economy can build. That increase in manufacturing employment presupposes manufacturing growth, and while I do not have the time to consider that in this speech, it is something to which I hope to return in the near future.

If we want to prepare our work force, and particularly our young people, for work in manufacturing, we need to ensure that we take steps now to support that aim. One of the best ways that we can do that is to support apprenticeships. However, we must ensure that they are the advanced and higher levels of apprenticeships so that we meet the increase in the number of higher level positions. According to the latest data, there were 200,300 apprenticeship achievements in 2010-11. However, only 1,000 were higher level apprenticeships. The number of advanced level apprenticeships completed was around 33% of the total and we need to ensure that, as we increase the total number of apprenticeships, that figure is not diluted.

The best way to support jobs and growth, however, is to give more support to our small and medium-sized manufacturers so that they can take on new employees. More grants should be given to small and medium-sized enterprises and manufacturers to train the new staff they hire, particularly those who have been long-term unemployed or who are aged between 18 and 25. Unlike larger businesses, SMEs often are not able to rely on the economies of scale that can reduce training costs. This presents a significant barrier not only to increasing employment but also to growth. I hope that the Government will look at ways of increasing the support we can give to SMEs in this regard with greater financial incentives for those higher-end qualifications that will become more important in the years ahead.

I believe that any long-term improvement in our economy has to be built on manufacturing if it is to be sustainable and create the kind of jobs we need to diversify our labour market. Increasing our manufacturing sector and reskilling our labour force will not be quick or cheap but that does not make it any less necessary. Although we face times of public stringency, we should not defer investment. That will only mean that we have to wait longer for the rebalancing to happen. I am confident that if both sides of the House can work together, support the manufacturing agenda and provide the long-term political buy-in that the industry wants in order to make long-term investment decisions, we can achieve the outcomes that we all want.

One reason why there has been such a negative reaction to the Queen’s Speech, particularly from business, now that we are again in the midst of recession is the absence of measures to boost growth. There was a particularly exasperated reaction from the director general of the British Chambers of Commerce, which my right hon. Friend the Member for Morley and Outwood (Ed Balls) quoted at the beginning of the debate, straightforwardly accusing the Government of playing short-term politics instead of boosting the economy. A lot of people thought there would be a boost to the economy in this Queen’s Speech, but it simply was not there. The problem is that the Government’s policy has not delivered. We were told after the election that the policy being introduced would deliver a steady and sustained economic recovery with low inflation and falling unemployment. Unfortunately, that simply has not happened. The shadow Chancellor and the former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), warned that the policy put the recovery at risk. They have been proved right and Ministers have been proved wrong.

There are other reasons for the Government’s dramatic loss of popularity, one of which is a sort of policy incoherence across government, with different Departments going in contradictory directions. Let me give an example: people receive tax credits only if they work more than a certain number of hours. The previous Government set the threshold at 16 hours per week, but the Minister who is winding up the debate has announced that when universal credit is introduced in October next year there will be no hours thresholds. Support will be available only for people working very few hours, and the Secretary of State for Work and Pensions has perfectly fairly presented that as one of the virtues of his new system. However, the Chancellor, who opened the debate, has gone in the opposite direction. He has raised the threshold from 16 hours to 24 hours a week and more than 200,000 households have lost out. They cannot both be right, although one of them might be. The announcement from the Department for Work and Pensions goes in the opposite direction to the Treasury’s. No. 10 ought to have spotted that and sorted it out. People see that incoherence across government.

My right hon. Friend the Member for Barking (Margaret Hodge), who chairs the Public Accounts Committee, made some telling observations about the Work programme. We know remarkably little about what is happening in that programme because the Government have banned Work programme providers from publishing any data. When under pressure in January, the Minister with responsibility for employment promised guidance to allow them to publish, which they want to do. When he was pressed again he said that the guidance would appear by the end of April, but we are now in the middle of May and it still has not appeared, so providers in the Work programme have no way of comparing their performance with that of others. My right hon. Friend said that she could not find out what was happening in her constituency and every other MP is in the same boat. Jobcentre managers have no idea what is happening in the Work programme in their area, and the effectiveness of the Work programme is being weakened as a result.

This week, a very good charity working with homeless people, St Mungo’s, has resigned from the Work programme. It had three separate contracts with three Work programme prime providers, but in the 11 months since the Work programme started the charity has not had a single individual referred to it by any of those three prime providers.

I am listening with great interest to my right hon. Friend, not least because I have heard similar things in my constituency, not just about the voluntary sector but about experienced private providers. Does he think it is time that the Government started doing a proper job for the third sector? They want to involve it in the big society, but they are cutting its legs off.

My hon. Friend is absolutely right. Step one would be to allow the data to be published. Instead of banning everybody from saying what is happening, the Government should let us have some numbers so that we can see what is going on. That would offer the chance for clarification.

I am grateful to my right hon. Friend for making those points about St Mungo’s. I took the trouble to visit the project in Hackney, and I was very impressed by what was being done for people with long-term dissociation from society to give them skills and jobs. It is a tragedy if the charity has decided that the Government have nothing to offer them. The project is wonderful and the Government, given all their rhetoric, should be supporting it wholeheartedly.

My hon. Friend is right. Not one person has been referred to St Mungo’s since the Work programme started. If the homeless are not being referred to St Mungo’s, we can be very confident that they are not being helped by anybody, and that is at the heart of what is going wrong. We certainly need guidance so that people can start telling us what is going on in the Work programme.

The hon. Member for Wolverhampton South West (Paul Uppal) is rightly concerned about the challenges of securing investment. I am disappointed that no communications Bill was announced in the Queen’s Speech. A year ago yesterday, the Department for Culture, Media and Sport announced the first stage of what it described as a

“comprehensive period of consultation that will inform a Parliamentary Bill.”

Unfortunately, no such Bill has been announced.

The Communications Act 2003, which I was responsible for, is excellent, but technology has moved on and the regulation needs updating. The problem is clearly highlighted by the failure on 4G mobile services. Capital Economics estimates that a go-ahead for 4G in the UK would trigger private sector investment of more than £5 billion and raise gross domestic product by the end of the decade by half a percentage point. It says:

“The UK is off the international pace. The technology has already been deployed commercially by more than 50 operators in over 30 countries.”

In the UK, we still do not know when the spectrum auction, and liberalisation of restrictions on existing spectrum, will go ahead. We cannot afford further delay. The destructive promotion, which we have unfortunately seen, of the narrow interests of individual operators must now give way to the speediest possible implementation, allowing investment to be made. One of the benefits will be viable access to superfast broadband for a significant part of the country where landline services will not be available in any reasonable time scale.

We shall need new legislation and I hope that Ofcom and the DCMS will press ahead to make sure that the changes that are needed—the auction and liberalisation of the existing spectrum—proceed without further delay. We have waited long enough already.

I welcome the inclusion in the legislative programme of the draft Groceries Code Adjudicator Bill, following the initiative of the previous Government.

As the right hon. Gentleman is aware, small firms have suffered at the hands of the giant supermarkets for far too long. The Bill lacks the teeth to allow the ombudsman to fine large supermarkets. Does he agree that the ombudsman needs those enforcement powers?

The hon. Gentleman makes a telling point. The legislation will have to be scrutinised closely and we will need to make sure that it delivers on the purpose for which it is being introduced.

I have to express my regret at the lack of a Bill that would put into law the commitment to raise the international development budget to 0.7% of GDP. The Secretary of State for International Development has made that promise and I hope it will come forward.

Mr Speaker, I draw your attention and that of other Members to the fact that I am an adviser to a venture capital fund and also to my other entries in the Register of Members’ Financial Interests.

I support everything in the Queen’s Speech that will deal with improving jobs and achieving growth in our country. I hope that is the only partisan point that I shall make because I would like to talk a little bit about the use of language, and then advise hon. Members about a very practical way that Members of Parliament can play a role in achieving the goals that we all seek in terms of enhancing jobs and creating growth.

Let me start, if I may, with language. It is always important, in trying to solve a problem, to use words in the correct way and in ways that make sense, because if we do not do that, of course we will not solve the problem. Sadly, we have a major problem with the language when it comes to jobs and growth, starting with the word “austerity”, which has been much used today in a number of speeches.

A dictionary definition of austerity, in its economic context, is:

“An economic policy by which a Government reduces the amount of money it spends by a large amount.”

In popular discourse that is a description of the coalition Government’s economic policies. The trouble is that it is not a correct description of the coalition’s policies. Over the period of this Government, total public spending will increase, not decrease, from £670 billion to £734 billion. If we choose to measure it in terms of public borrowing as a percentage of GDP, the reduction in the UK will be significantly less than that of Greece, Portugal and Ireland. “Austerity” is therefore a good catch-phrase, but it is not an accurate way to describe coalition policies. That is compounded by a false choice that is presented to the public: austerity versus growth. I think that is a false and misleading set of alternatives to present, because growth is an objective that all policies seek to achieve, and a better description of the policy alternatives that are being put forward is, on the one hand, growth based on living within our means, and on the other, growth based on borrowing.

The BBC, if I may say so, is particularly noteworthy in its use of these false comparisons. On 12 May Gavin Hewitt, who is the BBC’s European editor, had a column entitled “Growth versus austerity”. On 4 May, Stephanie Flanders, the BBC’s economics editor, commented:

“It’s not only Labour politicians who say this”.

in the debate about the trade-off between austerity and growth.

Yesterday evening, a debate on BBC’s “Newsnight” featured a huge animated set of scales with “austerity” on one side trying to be balanced with “growth” on the other. That is not the BBC bias of which the Mayor of London has recently spoken, but it is misleading propaganda being put to the British public.

I now turn to a practical idea that all Members of Parliament should consider in their constituencies. I am drawing on some of my experience in Bedford, and on Monday at 3 o’clock I shall be holding a workshop to describe that in more detail to hon. Members. I looked at the comparative advantages that Bedford had in terms of economics. We do not have much. We do not have a university science park, we do not have a lot of inward investment, and we do not have a big employer, but people have a willingness to invest in and grow local businesses. We are in the process of creating a Bedford business enterprise investment scheme fund—a policy introduced by the Labour Government and enhanced by this Government. That is an excellent scheme, to encourage people to invest in local businesses. The idea of the fund is to get people to put money into their local business because they want to see them grow. There is a sense of civic duty that motivates people, and the fact that they have idle balances sitting in the banks, earning very low interest rates, is a very good economic incentive for people to do that.

A Member of Parliament can act as a great initiator, champion and cheerleader for this initiative, drawing together a local advisory board of business people to run the fund, seeking out partners for the fund to help to popularise it in the community, and finding new businesses that the fund can invest in. In Bedford, we have set a target of raising £500,000, and we are well on our way to achieving that.

I believe that if other hon. Members engage in that sort of action, it will mean that MPs, who are often criticised for lacking real world experience and being out of touch, will be seen in their local communities doing something practical to help people. If we put a network of projects together, we could seek support for this excellent initiative from the regional growth fund so that we have a constellation of local groups across the country where local people come together to support—commercially—the growth of local businesses in their community. If people would like to learn more, I shall be happy to explain on Monday at 3 o’clock in the Thatcher room.

To say that the Queen’s Speech was disappointing is not quite to plumb the depths of the inadequacy it demonstrated. Without being able to speak for Her Majesty, I am solidly assured that she would not have made the long and arduous journey from Buckingham palace had it not been for the certainty that I would be taking her photograph as she arrived here. Really, it was not worth her while to come down here for such a rag-bag of petty measures.

The Queen’s Speech was pathetic. It was pathetic because it is now about all the coalition can agree on. The glad confident morning of 2010 has given way to the bleary bickering, downward slope and near break-up of 2012. It was pathetic because it contained nothing about growth, the major problem in our economy, except for the ability to fire people, adding to the unemployment rolls. It was pathetic because it ignored the damage that two years of this Government’s disastrous economic policies have already done. My right hon. Friend the Member for Morley and Outwood (Ed Balls) set that out admirably.

Two years in, here we are in a double-dip recession, with youth unemployment reaching one in four—the rate is higher in Grimsby. The Office for Budget Responsibility is having to spend all its time revising its predictions downwards because they are no longer adequate for this Government’s failures. “I’m walking backwards for Christmas” should be the OBR’s theme song, were it not for the fact that it mentions Christmas—there is no Christmas at the end of this process. The economy has shrunk by 4%, and that is cumulative over the period, so the total shrinkage must be about 10% or more. A much smaller economy is bearing the same burden of debt, so our ability to pay it has shrunk and the standard of living of everyone in this country has shrunk. Hard-working families—non-working families, as well—are facing a burden of cuts and high inflation.

For me, sitting here today is a re-run of 1980-81, watching Conservative Members clutching at any pathetic straw, any pathetic glimmer of hope in the encircling darkness, to cheer themselves up. Margaret Thatcher had the Falklands to rescue her from that dilemma, but I doubt that this Government will have a Falklands to save them, because what they are producing is a decline—a shrinking—of the British economy and of everybody’s standard of living, all in the name of a neo-liberal ideology of rolling back the state. That ideology is plainly inadequate, wrong, prejudiced and damaging, because the only way out of our current situation is growth—economic growth, which increases our ability to pay off debt, as our Government paid off debt between 1997 and 2000. It is growth that revives the economy, growth that generates jobs, and growth that the people now want, but we will not get it if we follow this Government’s agenda.

I have done extensive research and can pronounce, with real authority, that the economy now needs three things: first, demand; secondly, demand; and thirdly, demand. Without the prospect of demand, business will not invest; the banks will not lend; closures on the high street and in the productive economy will continue; and firms will not spend their resources. No one will create jobs without demand to ensure the prospect of profit. Lack of demand clouds every prospect in this nation today.

How can we best achieve demand? My right hon. Friend the Member for Morley and Outwood has set out a five-point plan, which I heartily agree with. I would go further by borrowing more and spending more. I would give a two-year national insurance holiday for the employment of young people and for areas of the country in recession. I would boost the regional growth fund, whose achievements are pathetic, particularly in Yorkshire and Humberside, which got only 6,300 jobs, or about the same as the south-west and less than the north-west, both of which have lower unemployment rates than we do.

I would also borrow to build houses. We need a big housing programme of the kind that took us out of recession in the 1930s. The housing report published this week showed the problems and how they are accumulating. We cannot solve them unless we build houses for people who cannot afford to buy, who now make up the great majority of the population. To do that we can raise money through housing loans for councils, or we could take some of the money that is put into the banks through quantitative easing and give it to housing contracts instead, which will then be paid off over a period of time. The message to the Government that I wish the Queen had given is simply, as Bob Dylan put it: “Turn, turn, turn.”

It is a pleasure to follow my colleague on the Public Accounts Committee, who I always feel puts the “Great” in Great Grimsby.

A number of Members raised the issue of credit for small businesses. The hon. Member for North Ayrshire and Arran (Katy Clark) focused on that, without wanting to give a specific solution, as did her colleague, the hon. Member for Leeds East (Mr Mudie), and, on the Government Benches, my hon. Friend the Member for Northampton South (Mr Binley). But the debate so far has not focused on one of the chief impediments to credit for small businesses: the high capital requirements imposed on banks, which makes it expensive for banks to give credit to small businesses, particularly those deemed to be high risk. To put that in context, at the moment around one quarter of Royal Bank of Scotland’s corporate book is designated as high risk.

It is not just a small sector of the small business and corporate market that is having difficulty accessing credit. The reason for that really goes back to the financial crisis. I think that the right hon. Member for Edinburgh South West (Mr Darling) was correct, following the collapses of 2008, to take a more risk-averse approach to capital requirements, and that led to the requirements we see today. The point I want the House to focus its attention on is whether we can bring greater urgency to the resolution mechanisms that apply to banks, including looking at living wills so that purchasers are in place if a bank gets into trouble, enabling others to step in and take the liability on and away from the taxpayer. If we take the liability from the taxpayer and give banks greater security by pooling assets through insurance mechanisms, we can take a less risk-averse approach to capital requirements. That, in turn, means that banks will be under less pressure to call in loans.

One of the consequences of banks calling in loans is the forced sale of assets, with businesses selling at a time not of their choosing and when the price is not right. Currently, when businesses seek credit to expand, often only short-term credit is available. Banks do not want to lend for the long term in case there is a deterioration—the eurozone is the most visible risk—and by lending short term they can churn loans and impose brutal charges. The impediment to businesses that want to expand and take on additional staff—a business’s biggest overhead is usually employing staff—is the lack of capital. Seeking that capital is therefore difficult. Banks do not want to lend because of the costs that they incur, and if they do lend they pass the costs on to small businesses through brutal charges and wide spreads in interest.

If our Front-Bench team can accelerate some of the special mechanisms that are available through the pooling of risk, through living wills and through identifying purchasers, we will avoid some of the risk that we saw with the Royal Bank of Scotland. Scandalously, for example, after the Treasury undertook 10 months of intensive work, Sir Nicholas Macpherson could not rely on what the balance sheet said the assets were valued at. The scale of the regulatory collapse that we faced and the continued uncertainty of the risks means we now need to put in place those resolution mechanisms if we are to get credit flowing into the small-business sector.

Let me give an example from my own constituency to bring this issue to life. Just this week, a business got in touch, telling me that its site was cramped and that it had borrowed just under £2 million to expand. Its turnover is up, and its profits are up, to £500,000 a year, but it can get only short-term loans on that £2 million. It cannot therefore expand its staff, despite the opportunities its new site offers, because of the spread of interest and the brutal charges attached to that £2 million loan. So I say to our Front-Bench team, let us speed up the resolution mechanisms, reduce the charges from banks lending to high-risk businesses and, as a result, let the credit flow to those businesses so that they can expand and deliver the jobs and growth that Members on both sides of the House seek to achieve.

Given that the economy is in recession, with the first double dip for 37 years, that long-term unemployment is at its highest since 1996 and that 1 million young people are out of work, it is shocking that the Queen’s Speech contains no measures to deal with those problems and, therefore, utterly fails to address the crisis that millions face.

I wish to focus my remarks on unemployment and, in particular, on youth unemployment and the Government’s failure to understand that there is an unemployment emergency in our country. We have had a Budget and a Queen’s Speech that have failed to deliver on jobs and desperately needed economic growth. Not only is that complacent; the Government do not seem to understand that every day they waste in failing to take comprehensive action to get our economy moving again, and our people into work, represents a tragic waste of talent, aspiration and confidence for more and more of our citizens.

My constituency has the highest rate of unemployment in the country, at 21.6%, and youth unemployment is at 11.2%—that is, 2,200 young people looking for work. From March last year to March this year, there was an 84% increase in the number of young jobseeker’s allowance claimants out of work for more than six months, and a shocking 91% increase in the number of unemployed young people out of work for one year or longer. Youth unemployment alone is set to cost Birmingham as a city £400 million in the coming decade.

Behind each statistic is a young person, bruised and battered by their experiences of job hunting under this Government and terrified that they will be part of the lost generation. They tell me that they have worked hard, overcoming difficult social and family circumstances to get qualifications, only to find that none of it matters. It is depressingly normal for young people in my constituency to tell me that they might as well not have bothered, that their effort has been wasted and that they do not know where to turn.

A climate of fear is already brewing among young people still at school, who despair that their chances of getting on have been kicked away by the cuts to education maintenance allowance and the trebling of tuition fees. They watch their older siblings getting into debt and sending off CV after CV with no luck and no hope, and fear that they will end up in the same boat.

Yet the Government do nothing but create more damage. They cut the future jobs fund, which was making a real difference in my constituency, as soon as they came into office, saying that, at £6,500 per job created, it was simply too expensive. Last week, the National Audit Office told us that the Government’s flagship regional growth fund will create 41,000 jobs, not the 500,000 that the Government originally claimed. The NAO also said that most of these jobs would have been created in any event and that each of them will cost us £33,000, with a cost, in some cases, of as much as £106,000 per net additional job. So the Government got rid of something that was making a real difference, saying that it was too expensive, and brought in something that is even more expensive but is not making the difference they said it would. That proves that they are not only out of touch and complacent but incompetent.

Unlike Labour’s proposal for a real jobs guarantee, the Government’s youth contract does not guarantee a job; it is merely a subsidy to an employer who is hiring a young person which covers only half their wages and does not create a new job. Labour’s plan for a real jobs guarantee would go much further, guaranteeing a job after 12 months of unemployment and covering the full wages for the employer.

In failing to deal with youth unemployment, the Government are storing up problems for the future, because if we allow the young unemployed of today to become a lost generation, they will be the long-term workless of tomorrow. As I have seen in my own constituency, which already suffers from long-term worklessness, getting back into work people who have been out of work for significant periods, or who have never been in work, is a significant challenge that costs huge sums. Problems that have been a generation in the making will take at least that long to fix, so it is far better, on every measure, to stop us getting to that point in the first place.

The young unemployed in my constituency and across our country were looking for a change of course and a sense of hope, but I am afraid that in this Queen’s Speech there is neither change nor hope—just a confirmation that this Government do not listen, do not care, and do not have a clue.

I had intended to speak about a number of issues in relation to the Queen’s Speech, but I will concentrate on three specific points because the time limit has been curtailed.

Before I do so, I should like to respond to a comment by the hon. Member for Linlithgow and East Falkirk (Michael Connarty), who said that the changes to public sector pensions would demand of some workers a 13% contribution towards their pensions. I entirely accept that a 13% contribution would be a significant sum of money. It is important to say, however, that our proposed changes to public sector pensions will protect those pensions. Labour Members should contrast the 13% requested in relation to public sector pensions with the equivalent contribution of about 38% that would be required of a private sector worker. I honestly believe that our proposed changes to public sector pensions will be the saviour of the system rather than its enemy, because people working in the private sector—taxpayers working extremely hard to try to pay their way—will feel increasing resentment unless there is an increased level of fairness between those in the public sector and those in the private sector.

On jobs and growth, I want to talk about two issues. First, there is a serious problem in relation to bank lending for small businesses. My constituency in north Wales is extremely dependent on small businesses—more so than on the public sector. There are not many constituencies in Wales where one can say that private sector employment is greater than public sector employment. People from those small businesses come to me time and again complaining that they are not getting support from the banking system. We have a Bill in the Queen’s Speech to deal with banking reform, but it is absolutely crucial that any changes do not make it even more difficult for small businesses to attract finance. Following on from the comments by my hon. Friend the Member for North East Cambridgeshire (Stephen Barclay), in my experience the problem has been not only a lack of long-term support from the banking system but an unwillingness even to offer short-term support.

I heard the bizarre example recently of a business in the tourism sector that employs more than 40 members of staff and that, despite the recession, has increased its turnover and its profitability by taking important steps to deal with its cost base, and yet its bank expects it to renew its overdraft facility monthly. It would be a challenge for anybody running a business that employs 40 people to plan for the future if they had to deal with their bank on the basis of a monthly renewal of their overdraft facility. The bank in that example is 94% owned by the state. I find that situation unacceptable.

When we consider the reform of the banking system, it is therefore imperative that we ensure that support is available for the small business community. In my constituency, growth will come from the small business community or it will not come at all.

Secondly, I will talk about the need to reduce regulation. I take exception to the comments of the hon. Member for Great Grimsby (Austin Mitchell), who complained that there was not enough in the Queen’s Speech. In my view, the important thing for a Government is not to legislate all the time. I assure him that nobody comes into my constituency office saying, “Please, please, we want more legislation.” What they want is for us to enact the promises that we made in the first Queen’s Speech and to deliver on behalf of the country. One thing that we said we would do for the small business community was to deliver on the burden of regulation.

In the Budget, the Chancellor made an effort to deal with some of the VAT anomalies. On the back of the two months that he has enjoyed as a result of some of the proposed changes, he might not want to visit VAT again. However, I say to him that there are anomalies in the VAT system that need to be dealt with, some of which affect the ability of small businesses to grow. The anomaly that I want him to deal with, which would boost growth in constituencies such as mine, is the way in which the VAT threshold damages businesses that aspire to grow. A small business that hits the £76,000 threshold has to get its turnover up to £100,000, otherwise it will be worse off as a result of being successful. If a small business turning over £76,000 decides not to grow because the implications for its bottom line would be bad, it will not employ more people and it will not contribute to economic growth. We need to deal with VAT anomalies, but let us start with one that is a barrier to growth.

The hon. Member for Bournemouth East (Mr Ellwood) hinted that the local elections results in May were not bad for the Conservative party. It strikes me that the loss of 1,000 council seats is not a ringing endorsement of the Government’s economic policy. What people were talking about in those polls was, of course, the economy.

I will not, because there is not enough time.

People were also talking about unemployment in those polls. Unemployment in my constituency is at 8.2%. That compares with 3% when the Labour Government were in power.

I will address my short remarks to the alternative. The Government have taunted the Opposition, saying that we do not have an alternative. Opposition Members have been arguing the case for an alternative. The Labour Government in Wales are giving us an alternative. For the past year, they have been doing the sort of things that are necessary to stimulate the economy and provide jobs.

The hon. Member for Warwick and Leamington (Chris White) talked about small businesses. If he came to Wales, he would see that there is a small and medium-sized enterprises investment fund of £40 million. We have talked about the two-year-old regional growth fund in England, which has spent £200,000 to create just one job. In Wales, there is the £15 million Wales economic growth fund, which has already received 500 applications, including from my constituency, where a leading precision engineering company has invested nearly £800,000 in machinery, of which £250,000 came from the Wales economic growth fund. There is a £40 million stimulus package for young recruits and the skills growth Wales programme. There is capital investment for schools, social housing and energy efficiency. In England, the future jobs fund has been scrapped. In Wales, it continues as the jobs growth Wales fund, which will benefit 4,000 young people a year. Wales has its first ever national infrastructure plan, under which £90 million will be spent on capital projects.

Wales is also encouraging the third sector. In my constituency, the First Minister opened the Marie Curie Cancer Care national support call centre, which has created 140 jobs. This very morning, all Welsh Members of Parliament were invited to a meeting with Welsh university vice-chancellors. The universities in Wales are working with the Welsh Government, the UK Government and local government to create jobs. The contrast is between what the UK Government are not doing and what the Welsh Labour Government are doing. Why on earth cannot the Government here in England have the same sort of schemes we have in Wales to stimulate the economy and growth and ensure more jobs?

The mood is shifting. It shifted in the local government election results in England, Wales and Scotland. It has shifted in the United States, and in Europe with the election of François Hollande. The message that comes loud and clear from those countries and our own people is that we must change. The winds of change, as a Conservative Prime Minister once said, must now be heeded. Unless the Government understand the need for that change, it is simply not credible that any sort of growth will occur in the next few years.

The alternative is there, but the Government are reluctant, stubborn and foolish enough not to accept it. Unless they do, we will go deeper and deeper into recession.

I welcome the measures set out in the Queen’s Speech to address jobs and growth, particularly the banking reform Bill and the enterprise and regulatory reform Bill. I also welcome the rise in employment announced yesterday, and I hope we will see a rise in full-time as well as part-time employment next month.

The Government are doing a lot to address long-term unemployment among the young—a problem that beleaguered and bedevilled the previous Government—but I agree with the right hon. Member for South Shields (David Miliband) that far more needs to be done. The Government have done a lot on apprenticeships, which is to be welcomed. I congratulate the Government overall on trying to rebalance the economy. We should have more people in our economy creating wealth rather than spending it, so we need to get the balance right between private sector and public sector employment.

It is questionable whether the current tax regime for business will be sufficient to grow the economy in the way that all hon. Members would like. I welcome the Government’s announcement on corporation tax, but my view is that it might not be enough to create the growth the country needs. Perhaps they need to look again at the corporation tax rate and the timetable for introducing it. I would like to see a 20p corporation tax rate introduced from April next year, and the higher rate—not the alternative rate—to be reduced from 40p to 36p from April next year.

That would affect revenue in the short term—some might say that that will add to the deficit—but in the medium term, and quite quickly, as people are rewarded for their risk, entrepreneurship, creativity and innovation, and as the economy grows on the back of that, revenues for the Exchequer would increase. We need more courage and less timidity in the Government’s tax plans and strategy.

I would like the business rate freeze extended for small businesses and our struggling high streets. I welcome the fact that the Government have extended it again for this year, but we must look again and probably extend it to the following year.

The Chancellor rightly mentioned the eurozone—I am moving away from my notes, which is quite dangerous. I have spoken out before on the International Monetary Fund. Whatever has been said, there is absolutely no doubt that some IMF contributions have been used as a back-door bail-out for the euro. Why do I say that? What is the evidence? Three eurozone countries have received bilateral loans from the IMF because their economies are failing, and they are failing in part because of their membership of the euro. A one-size-fits-all monetary policy for the whole of Europe was always a political project. It cannot be right to apply an interest rate in Germany reflecting the unique circumstances of the German economy to the unique and particular circumstances of, for example, the Portuguese economy or—perhaps more on our minds today—the Greek economy. That is the fundamental point. The euro is a political project that has gone horribly wrong, as many people warned that it would. We have heard a lot about new, bigger firewalls, but those will not deal with the underlying structural problems of a lack of competitiveness in Europe and the failed political dream—or, some might say, nightmare—that is the euro.

Finally, the European Investment Bank, although an important institution, should not be used as a new, indirect bail-out mechanism for a failing euro or eurozone. We are one of the four largest contributors to the EIB. Yes, it is important, but it should not be used as a back-door mechanism to save a failing euro. We want the euro to succeed. At the moment, we need to address the underlying problem.