- November 9, 2012
- Posted by: Mark Drakeford AM
- Category: News
Dydd Mawrth, 6 Tachwedd 2012
Tuesday, 6 November 2012
Mark Drakeford: Minister, in your foreword to the consultation, you rightly point to the impact of the unprecedented economic crisis in which we find ourselves on regeneration policy in Wales. The consultation document sets out the scale of the challenge facing Welsh communities in an era of deliberately inflicted austerity. I just want to say a little more about that, before turning to some of the specific ideas that the document sets out. The document aims to develop policy in an era in which £2 billion is to be taken out of the purchasing power of the least well-off households in Wales, and in a period in which disposable incomes for households on low to middle incomes will fall in real terms by 8% between 2009 and 2015. We know that we live in an era in which there is an unprecedented rate of underemployment in the economy; 2 million people now record themselves as wanting to increase their employment hours—the highest since that figure began to be recorded in 1992. For all the extra jobs that have been created in the British economy, the total hours worked remains well below that attained before the global economic downturn in 2008.
The extra jobs that have been created are linked to very particular groups and places. Employment growth is fastest for groups aged above 50. Bank of England figures show that growth in private sector jobs is almost exclusively in high-skill occupations. Younger people looking for an entry-level job in places away from the south-east of England will look in vain for any share in the crumbs that have fallen from the Chancellor’s table.
Below the surface, something else is going on. Employment may be rising, but output in the British economy is absolutely stagnant. This means that, when the economy finally throws off the stranglehold that the coalition’s policies have placed on it, the upturn is likely to be a jobless one. Extra demand will be met first by making productivity gains, returning to trend growth and making good the 11% loss in productivity that has been a feature of the British economy since 2007, and then by extending the part-time hours of those already in employment. Little wonder that the Resolution Foundation recently concluded that, even when there is a return to economic growth, some communities will actually experience permanent recession.
Antoinette Sandbach: I am grateful to the Member for giving way. Do you agree, Mark Drakeford, that it is better to have growth based on output than on debt?
Mark Drakeford: I simply think that it is a completely false antithesis. You cannot grow your way out of a recession, unless you are prepared to borrow. You can borrow money at unprecedentedly low interest rates. Now is the time for any sensible Government to be doing sensible borrowing for investment; that is the way to growth.
Against the background of the British Government’s refusal to recognise that simple economic truth, I give thanks that here in Wales we have a Government that is prepared to use the power of collective public effort to protect the interests of the most vulnerable places and the people who live in them. The great Nobel-prize-winning American economist Joseph Stiglitz demonstrated earlier this year the complete folly of believing that public spending crowds out private investment. In fact, exactly the opposite relationship holds good in the real world. It is public investment in infrastructure and services that allows private investment to be crowded in. It is the absence of Whitehall public provision that keeps private investment away.
It is the willingness to mobilise the solutions that such public investment can bring that makes me optimistic about what this policy can achieve, even in these difficult times. It can do so through Communities First, which the document endorses and which I have a very fine example of in the Cardiff West constituency in Ely and Caerau. It can do so through collaboration between authorities, across services and geographical boundaries. It can do so by using European funding to best possible effect. Yesterday, there was a very interesting debate at the Deputy Minister’s ministerial advisory group on Europe, which we plan to continue on Thursday of this week in the funding forum. The concentration of funding—thematically or spatially—is consistent with the future policy that this document sets out. I am grateful to you, Minister, for offering us the chance to debate it here today.