Gary's News and views

Gary Streeter MP for South West Devon

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.


Thursday, 24 November 2011

Next week the Chancellor will stand at the despatch box and deliver his autumn statement: a kind of mini-budget. What should it say?
The context will be a difficult one: the euro zone crisis is clearly hitting our own economy and 2012 looks like being a very tough year.
If as a result we slide back into recession or just stand still, it is likely that unemployment will climb and with it the welfare bill. At the same time tax revenues would fall and we would start to fall behind in trying to reduce the deficit – i.e. the gap between what government spends and what it gets in, which all has to be borrowed, and is £140 billion this year. Some will argue that we have to borrow more to spend more in trying to kick start the economy, but higher borrowing would send immediate jitters to the market and the cost of UK government borrowing would increase (as it has in other European countries) which would mean us spending more on interest payments and setting of a vicious spiral.

So what would you do? The focus has to be on helping the private sector expand. The only thing that can help us balance the books is if the 3 million plus small and medium size businesses all start to do better and take on more employees which would increase tax revenues and reduce welfare payments. I hope the Chancellor will announce a number of ways to make it easier for companies to hire new employees and reduce the cost and bureaucracy surrounding employment. This is what firms I speak to are crying out for.

But there is a problem. Employers tell me constantly that too many of our own young people do not want to work, so if we expand the private sector many of the jobs will go to enthusiastic young people from Eastern Europe who have not (yet) been blighted by the welfare dependency disease that affects some of our own ( a small but rising minority). So the economy would expand, but the welfare bill would remain the same. This will not do. We urgently need to speed up government reforms to the benefit system to incentivise all those currently claiming benefits to do their best to work.

Most young people are keen to work and as always it is the minority spoiling things for the majority. It is time for radical change.

posted by Gary @ 09:24