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Economy: Growth

Volume 730: debated on Tuesday 11 October 2011


Asked By

My Lords, the simple answer is that this Government already have a strategy. The Plan for Growth, published alongside Budget 2011, set out the Government’s plan to put the UK on a path to sustainable, long-term economic growth. As my right honourable friend the Chancellor of the Exchequer reiterated last week, we have a credible plan to reduce the deficit and tackle our debts. We are creating the right conditions to enable growth which is driven by investment and exports and is more evenly balanced across the UK and the sectors.

My Lords, having witnessed almost zero growth during the 17 months of this Government and with pleas from influential Conservative Back-Benchers and sympathetic industry bodies for a coherent economic plan, is it not time for a radical response from the Government to what the Governor of the Bank of England has described as possibly the worst ever financial crisis by the establishment of a national infrastructure and investment bank to generate jobs and employment in this country? I remind the House that we have a duty to the more than 1 million young people in this country—a record level of unemployment not seen since the 1980s—to help them to inherit a worthy future rather than an economic and social graveyard.

The noble Lord has outlined exactly what we are striving to achieve. Without doubt, we are looking across the whole of the education and skills system to consider how to maximise economic growth and we shall be reporting on that in the autumn. He asks what we have achieved. As I have already said, the Business Secretary, Vince Cable, has today announced a £170 million package to drive future growth in manufacturing; we have reduced the main rate of corporation tax from 28 to 26 per cent and it will go down to 23 per cent; a £2.5 billion business growth fund has been launched; and we have already announced 24 enterprise zones in the country, helping to create thousands of new jobs by 2015, which will attract hundreds of new start-up firms with simplified planning rules, superfast broadband and more than £150 million in tax breaks for new businesses over the next four years. I have a longer list, but I am sure that someone else will wish to ask a question. I hope that the noble Lord feels encouraged by my answer.

My Lords, is it not the case that the Government have got their policies in the wrong order? Instead of pursuing deficit reduction in the short term and growth in the medium to longer term, should they not be pursuing growth in the short term and deficit reduction in the medium to longer term?

Reduction equals low interest rates, my colleague beside me murmurs. Without doubt, we are trying to get Britain back on track. It will take time, but we are determined to do it deeply and well. The Plan for Growth is based around four ambitions: creating the most competitive tax system in the G20; making the UK the best place in Europe to start, finance and grow a business; encourage investment and exports as a route to a more balanced economy; and creating a more educated workforce that is the most flexible in Europe. We are the first to start that; we were one of the first to go into this recession; and, with this Government in charge of this country, we will be one of the first out.

My Lords, is not the truth of the matter that it is extremely difficult to get growth in a situation where half the national income is being spent by the Government and the national debt has been doubled in every Parliament? That is the inheritance which this Government have been handed. Has my noble friend seen the ideas put forward by Sir Brian Souter, who started with nothing but a loan from a parent, and who has built a major business in our country? He suggests that the enterprise allowance scheme should be extended so that loans that are provided by relatives are eligible for the scheme. As almost anyone who starts a business knows, it is very hard to get money other than from a relative, and yet they are excluded from the scheme. Is this not an idea that could actually make a difference?

I am very interested to hear what my noble friend has said. We are looking at all sorts of ideas to start bringing us forward. As you say, Brian Souter would have said, “Get on your bus”, not, “Get on your bike”.

If the noble Baroness cared to have a word with her noble friend Lord Sassoon, who is sat next to her, he would explain that there is no chance whatever of her growth strategy working while the deficit reduction plan is so inflexible. As the noble Lord, Lord Low, has said so well, without growth we have a growing deficit. Please have a word with the noble Lord, Lord Sassoon. If he is being honest, he will tell the noble Baroness the truth.

I am very lucky indeed to have a colleague like my noble friend Lord Sassoon to work with and to depend on. The Plan for Growth lays the foundations for a stable and rebalanced economy. As the Prime Minister said last week, we have a plan to achieve strong, sustainable and balanced growth and we are sticking with it.

Does the Minister agree that Whitehall has a very poor track record in getting major infrastructure projects moving forward expeditiously? Can she therefore tell us what steps BIS is taking to support the initiative of the Chief Secretary to kick start 40 major infrastructure projects?

He is doing everything he can. It is a good question and I am happy to respond to it. We are obviously committed to an export-led recovery, which is important to us. The Plan for Growth and the Trade and Investment White Paper have set out how we can better exploit opportunities in this area. I shall respond to the noble Lord’s specific point in more detail.

We are making policies for now, looking forward. I am not sure, looking backwards, that there are too many lessons to be learnt from recent years.

My Lords, third time lucky. I welcome the recent decision to increase quantitative easing since an increase in the money supply is essential if growth is to be sustained. Does my noble friend agree that fears that this will increase inflation need at least to take into account the very high level of excess capacity in the economy, which will be used if the Government adopt a policy of quantitative easing?

I absolutely agree with my noble friend. Quantitative easing is a positive move to help the British economy. The evidence shows that it should keep interest rates low and boost demand, which will help families, too, at a very difficult time.