By Tim Montgomerie
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There was more gloomy economic news yesterday with new data suggesting that, in the words of Allister Heath, "manufacturing output is shrinking disastrously". There are also growing fears that the Olympics might be having a very negative short-term impact on the economy. London's shops, restaurants and theatres are reportedly struggling while record TV audiences for the time of year suggest that a large number of us aren't putting in the normal working hours. Crisp sales for couch potatoes might be booming but the rest of the economy might be taking another hit. And then there's the small matter of the Eurozone. Ahead of another "crucial" meeting of the European Central Bank a commentator describes it as a "crunch meeting". How many times have we heard that?
This morning on ConservativeHome the Tory MP for Central Devon and also, significantly, a Parliamentary Private Secretary, Mel Stride, urges the Chancellor to do "something pretty dramatic to pull us out of the current economic mire". Mr Stride, who was a successful businessman before becoming an MP in 2010, is careful to support the Chancellor's overall fiscal envelope but he also lists areas where further action is needed:
- "We should," he writes, "have another Government Spending Review in which we aggressively push funds to those departments that can encourage private sector growth and away from those that consume";
- More controversially he recommends that "we should also look at more aggressive off-balance sheet financing" – all in the context of "pumping up the kind of demand that quickly employs people and avoids demand leakage outside of the domestic economy";
- He emphasises encouraging housebuilding, noting that the UK built up to 300,000 houses per year during the 1930s when we last faced a great worldwide recession. Current annual housebuilding is just 100,000. Mel Stride suggests "a specific housing focused scheme along the lines of the government’s ‘funding for lending’ approach to boosting bank lending" might be considered.
- Finally, without going into specifics, Mr Stride wonders whether the right balance between spending cuts and tax rises has been struck. By setting a target for the state share of GDP of 35% (a target recently promoted by Liberal Democrat David Laws) he suggests economically-damaging tax rises might be avoided.
I'm not sure what the Chancellor will think of such public advice from a PPS but Mr Stride's intervention is a sign of growing concern within the parliamentary party that the Coalition could be doing more.
Comments on this thread are closed so that we just have one conversation on Mr Stride's ideas; beneath his own article.