Macroeconomic Situation


John Stevenson: It is a pleasure to follow Edward Miliband. He made an interesting speech, although I think he missed out one aspect that I will touch on.

I want to refer to the macroeconomic situation. The Government’s priority has been to reduce the deficit and to see debt falling as a percentage of GDP—something with which I completely agree and is definitely the right approach. We also have to recognise that the business cycle does exist, and that we are probably closer to the next recession than we are further from the previous one. We need robust finances to deal with and cope with that, as and when it comes. To a certain extent, the problem was in many respects created by the last Labour Government before the great recession when they were borrowing £40 billion a year at a time they should have been running a balanced budget. Had they actually been doing so, we would now be in surplus.

I support and encourage the Government’s aims because strong finances give a strong platform for the future. Indeed, strong finances require a strong economy. Government policy should be directed towards achieving this—it should be an economy for everyone. I will therefore concentrate on two specific things that I believe can help. First, we need to rebalance the economy and the country, which the right hon. Member for Doncaster North did not mention. The second issue is housing, which he did mention. These areas are interlinked as local government can and should play a key role in both.

The reality in our country is that we have a southern-dominated economy, and we have to acknowledge that there is underperformance by the regions to a certain extent. We do not want to diminish the success of the south—far from it, given its benefit to our economy overall—but we have to recognise that there is an underperformance in other parts of the country.

Julian Knight: I think that my hon. Friend is talking about productivity. Does he recognise that if we are to ensure that we have sound public finances in the future and that the debt-to-GDP ratio falls, we will need to increase our nation’s productivity, which means investing in the regions so that we bring up our national wealth?

John Stevenson: I completely agree—the central theme of my speech is exactly that. We have to recognise the success of the south of England and also make sure that other parts of the country are equally successful and drive the productivity goals that we all want.

There is a housing imbalance that we have to acknowledge as well. The south-east and the south are where we find housing pressures regarding demand and price. I shall therefore come on to how we can, I hope, address this, although I have to accept, acknowledge and support the initiatives that the Government have already brought in to help places like Carlisle. Tax cuts; raising the living wage above inflation; a job creation machine that is taking unemployment back to 1970s’ levels—these policies have helped the job security of the people of Carlisle, whose living standards have actually increased.

We have also seen the Government’s northern powerhouse initiatives. I commend the work of the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend Jake Berry, who is responsible for the northern powerhouse and takes a very positive and active approach to his role. The city growth deals also benefit various parts of the country. The Government’s borderlands growth initiative has been extremely welcome and well supported right across my region. Indeed, five councils are actively working together and have made a very positive submission to the Government. I look forward to reaching the heads of agreement in the new year and seeing some decent finance going into the region to help to support growth and productivity.

I believe that we can achieve so much more, however. Devolution is a Conservative principle. We want more powers devolved down to the regions—tax-raising powers, but also more responsibility for local government. We should be proactively promoting the unitisation of local government so that we have unitary authorities up and down the country. I am a great supporter of elected mayors. We have had success in that regard in the north of England, and I would like to see it spread right across the whole region. To take Cumbria as a simple example, we have seven councils and 400 councillors for half a million people, which is a completely ridiculous situation that is badly in need of reform. The difficulty is that while everybody in Cumbria recognises the need for reform, they cannot agree on what that reform should be. That is where central Government can help by giving a lead.

I want the Government to start to think more radically. Thinking about education, should we be saying to all schools in the north of England that they should become academies? We need to make sure that skills initiatives are locally based so that they are relevant to the local economy, not necessarily the national economy. The industrial strategy should be beefed up, for example so that we have a far more robust energy policy—again, that is very relevant to Cumbria. Should there not be financial incentives so that people who want to invest look to the regions and the north, rather than always to the south and London? How can we alter capital allowances, the planning laws, VAT, rates and national insurance to incentivise people to invest in the north? Of course, infrastructure spending can improve the economic performance of the regions. In my area, an application has been put in for housing infrastructure funding that would unlock the possibility of 10,000 new homes.

If businesses invest in the north, people will move to the north—they move to where there is economic activity. That would spread wealth and create a more balanced economy. People will move to the north rather than the south, relieving housing pressures down in the south. We will then have a stronger economy that produces better public services and a more balanced country. Government policy has recognised much of this, but I encourage Ministers to be more radical in recognising that local government can be a driver of change and a positive influence. I will certainly support the Government in taking a far more radical approach.


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