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The real risk of a jobless recovery in 2011

Posted by William Bain, MP for Glasgow North East, at 00:57, Fri 7 January 2011:

As we begin this new year with the hike in VAT to its highest ever level in Britain of 20%, and the reality of the Tory-led Government’s severe cuts in public expenditure about to hit home, the questions starting to be posed in many hard-pressed Scots households this January are – how much are our finances going to be squeezed by rising inflation, food and fuel prices when wages for many will be frozen? Will interest rates rise and make the cost of our mortgage or credit card borrowings soar? Most importantly, where are the jobs that the Tories and Liberals promised would be created, particularly for young people? These could soon become the voices of the squeezed majority in Britain in 2011.

There are two key points to make on the economy. Firstly, the pace of the Tory plans to cut the deficit is too steep, and will cost too many jobs now. Labour’s alternative is to cut the deficit by half by the end of this Parliament, and to permit a further £7bn to be invested in capital projects than the Government is prepared to spend, which would support jobs in the construction sector, and give us the modern infrastructure we need to produce growth in this Parliament. Tory cuts which lead to higher Tory unemployment will not cut the deficit. The crisis which we have observed across the Irish Sea is a powerful lesson about the effect of such deflationary policies.

Secondly, the Tory plans are unfair and target the wrong people. The Institute for Fiscal Studies have labeled the overall path of the Government’s tax and spending policies as regressive. Research from the TUC shows that women, families with children, and the low-paid will bear the biggest brunt of the cuts. As my written question in November exposed, the Government proposes removing the mobility component from more than 60,000 Disability Living Allowance claimants in council funded nursing homes, harming the quality of life of vulnerable disabled people by as much as £18.95 or £49.85 per week. Taken as a whole the Government’s welfare cuts remove £18bn from the poorest over the course of the Parliament, substantially more than it is prepared to levy on taxing the banks, who bear a great responsibility for the economic crash in the first place. This week’s VAT bombshell detonated by the Tories and Liberals will cost ordinary families on average an extra £7.50 per week on the goods we all have to buy.

This is a year in which we have to restore trust in politics given the brazen broken promises of the Tories and Liberals on VAT, education cuts, tuition fees, and tax credits. We can do so by reforming our institutions, by giving the Scottish Parliament the enhanced financial powers and accountability it needs to help grow Scotland’s economy, by turning the House of Lords from Britain’s biggest quango into a modern, democratically elected second chamber, and by ending the scandal of MPs being elected with the support of less those half of those who turn out to vote, by changing the voting system for electing MPs through a Yes Vote in May’s referendum.

But we also need to make it easier for the public’s voice to be heard in politics. Labour has begun the biggest policy consultation in our history as we turn our unshakeable commitment to a fairer Britain into new policies on jobs, wages, working patterns, equality, public services and the environment. We want to bring this conversation on Britain’s future from Parliament Street to your street in 2011.

The Tories know how to cut, but they have few plans on growth or sustainable jobs in new industries. As I raised with the Chancellor at Treasury Questions before Christmas, the Government’s Growth White Paper is still a work in progress, not published as promised, for the country to debate. Similarly, the Treasury is backing away from Labour’s plans for a Green Investment Bank with sufficient capital to generate the sustainable jobs in renewable energy and green technology which should be at the heart of a sustained recovery and a more diversified economy.

Glaswegians may not be able to change the UK Government this year, but with our votes, we can make the Tories and Liberals listen. Let our powerful message be – change course on jobs and growth, before it is too late for this generation of Glasgow’s young people.