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Engagements

Volume 474: debated on Wednesday 26 March 2008

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

No one knows better than my constituents the huge effects that cross-channel co-operation and our new border controls have had on clamping down on illegal immigration, but there is more work to be done. What will my right hon. Friend be discussing tomorrow with our new friend, President Sarkozy, to continue the work of improving and reforming our immigration schemes, to strengthen our economies and to get a grip on the militants at Calais—[Interruption.]

Let me first of all thank my hon. Friend for his question, and welcome President Sarkozy and his wife to Britain. I believe that our talks in the next few days will be very constructive. My hon. Friend is absolutely right about illegal immigration and I hope that in our talks today and tomorrow, the President and I can agree to tighten up controls at Calais. I hope also that we can have an agreement that there will be no further immigration centres like Sangatte, and that they will not exist in the future. Given the present global financial turbulence and the fact that in one country in the last day interest rates have moved to 15 per cent., I also believe that it is right that France and Britain agree measures, which we can put to the international institutions over the next few days, that will strengthen the stability of our economies, deal with problems of lack of transparency in financial information and make sure that the European economies can continue to grow together. That is possible only because we want a Britain at the heart of Europe and not detached from Europe.

I join the Prime Minister in welcoming President and Mrs. Sarkozy to Britain.

It is now nearly eight months since the start of the credit crunch, and one of the key questions is how well prepared we are. Does the Prime Minister now accept that in terms of financial regulation, the UK has been shown to have some serious failings?

We have already looked at some of the changes that can be made, both in the Financial Services Authority—there is a report of the Treasury Committee today—and in the Bank of England. But if I may say so, if the right hon. Gentleman now looks around the world and sees what happened to Bear Stearns, sees that three banks have fallen in Germany and sees what happened to Société Générale in France, he will realise that we have been better protected than other countries against the global financial turbulence, and that that is precisely because we did not take the Opposition advice that would have caused instability.

People around the world are making a contrast between Bear Stearns, where a rescue was organised in just a few days, and Northern Rock, where there were months of dithering. I know that the Prime Minister created the regulatory system, but he needs to be frank about its failings. Today’s FSA report is a remarkable report, which says:

“The supervision of Northern Rock revealed the most significant combination of shortcomings”,

yet not a word about that from the Prime Minister. The director general of the CBI says that this was the first new test of the tripartite system, and it failed to deliver the goods. So that we are better prepared in future, does the Prime Minister agree that the Bank of England, not the Financial Services Authority, should be in charge of rescuing banks that fail?

First of all, until a few weeks ago the right hon. Gentleman supported what we did on Northern Rock, so it makes no sense for him to criticise now. Secondly, as far as the Financial Services Authority is concerned, it is true that it has been regulating for solvency, and it has done a good job. The problem arose in terms of liquidity, and that is where further efforts have got to be made. That is true, as the President of America’s report is saying, for the American financial system, and it is true of the French and the German financial systems as well. All countries are realising that more has to be done to protect against illiquidity, and they also know that there has to be greater transparency in the financial system. I repeat: the lessons that are being learned are being learned around the world.

The Conservative party published a document in the past two days saying that far from Britain doing badly, real living standards in Britain among pensioners had risen by £1,500 since 2001; for single women pensioners, by £1,000; and for couples, by £700. That is on page 16 of the Conservatives’ own document.

I tell you what that document said: it said that since this man became Prime Minister, the price of milk is up 17 per cent., the price of eggs is up 28 per cent. and the price of bread is up 34 per cent. That is the real cost of living under Labour.

In his answer, the Prime Minister said an extraordinary thing—that the Financial Services Authority has done a good job. What he has not read is the report out today by the Financial Services Authority that says:

“The Financial Services Authority is short of expertise in some fundamental areas, notably prudential banking experience and financial data analysis.”

Are not those the absolutely key things that are needed to be a regulator? Is not that why the Bank of England should be in charge of these rescues rather than the Financial Services Authority? The Chancellor—[Interruption.] They do not like to hear the extent of the failure of the system put in place by the Prime Minister. The Prime Minister and the Chancellor have made several U-turns recently; why do they not make one more U-turn and make the Bank of England responsible?

I know what the chairman of the right hon. Gentleman’s defence commission, Frederick Forsyth, meant when he said that David Cameron has a

“sketchy grasp of basic arithmetic”,

because he does not understand what is happening. The FSA has admitted that it must do more about liquidity problems, but every financial organisation around the world that is regulating markets is accepting the need to do more. He would be better addressing the real problems that we face—off balance sheet activities, write-offs that have not been properly declared, and credit rating agencies that have done the job of being advisers as well as raters. Those are the problems that have got to be addressed. Instead of just blaming the Financial Services Authority, he should look at the real problems that President Sarkozy and I will address. The real problems will not be solved by someone who has no basic grasp of arithmetic. [Interruption.]

It is time that the Prime Minister and the Chancellor realised that one of the real problems facing Britain is their economic mismanagement. It is frankly pathetic to listen to the Prime Minister of the United Kingdom read out quotes from a novelist when he ought to be reading out from the Financial Services Authority’s report. A key point in terms of how well prepared we are is the size of the Government’s budget deficit. Out of 55 major world economies, only three economies have a bigger budget deficit than Britain. That is why he is putting up taxes. Most other countries are helping families with the cost of living; this Government are hitting them. Can he name one other major country that has just introduced a Budget putting up taxes? Name one.

We are injecting more money into the economy this year. We are not taking money out of the economy; we are cutting the basic rate of income tax to 20p. Let us compare what was happening during the last world downturn: 15 per cent. interest rates, 10 per cent. inflation, 3 million people unemployed, public spending being cut, and taxes rising dramatically with VAT on fuel. Let us compare that with what is happening now: we have low inflation, low interest rates, the highest levels of employment in our history, unemployment at its lowest since 1975 and public services continuing to expand. If the right hon. Gentleman does not accept that today, he should remember that he said on Monday on BBC Radio London:

“Interest rates still look low historically”.

We have kept interest rates low.

Not only has the Prime Minister not read the report from the Financial Services Authority, it is pretty clear that he has not read his own Budget. Pages 111 and 112 of the Red Book show taxes going up in the Budget. Everybody knows that taxes have just gone up. Every time you fill up the car, taxes have gone up; every time you buy a car, taxes have gone up; every time the family goes shopping, and so on. No wonder every pub in Britain is trying to ban the Chancellor from having a pint. The Prime Minister has not answered a single question so let us just try this once again. Can he name one other major country that is responding to the downturn by putting up taxes? Name one.

We are injecting more money into the economy—the right hon. Gentleman simply does not understand basic arithmetic. The basic rate of income tax is going down to 20p. Let us look at our record. Inflation in Britain is 2.5 per cent, in America it is 4 per cent. and in the euro area it is over 3 per cent. So which country has the lowest rate of inflation of the major countries? It is Britain. We have kept interest rates low, and whereas unemployment is 8 per cent. in Germany, 8 per cent. in France and rising in America, it is at its lowest in Britain since 1975, at half the rate of our European partners. That is a Government who are better prepared for a world downturn. The problem is that the Conservatives want £10 billion of tax cuts, they want to say that they will raise public expenditure, they want to say that borrowing should fall and they say that they want tax cuts at the moment to boost the economy. That is the same recipe that they followed in 1992, and it led to the worst recession since the war. And who was the economic adviser to the Treasury at the time? None other than the Leader of the Opposition.

The Prime Minister has not answered the question. He cannot name one other major country that is putting up taxes in a downturn. He asked for some basic arithmetic; I will give him some. One Prime Minister plus one Chancellor equals economic incompetence. Every other Government have put aside money in the good years to build up their surpluses. Instead, this Government, at the end of a period of worldwide economic growth, have achieved a unique double: the highest tax burden in our history and the biggest budget deficit in western Europe. Does he feel any responsibility for any of this, or is he totally incapable of admitting his mistakes?

The highest tax burden in our country happened under a Conservative Government in the 1980s. The rising deficit in the world is a rising deficit in America, which will be higher than ours. I just wish the right hon. Gentleman had known something about economics when he came to this House and started to tell us what to do. The truth is that we have cut corporation tax from 30p to 28p, and we will cut income tax from the beginning of April from 22p to 20p. All he can give us is slogans and not substance; the Conservatives have learned nothing from their experience of the 1990s.

Are the Government on course to deliver the Prime Minister’s commitment to take all vulnerable households out of fuel poverty by 2010?

In the Budget, we put in more money to help low-income households deal with their fuel bills. We have done more to deal with the problems of homelessness and fuel poverty in the last 10 years than the Conservatives ever did in 18 years. In the Budget, we raised the winter fuel allowance, we raised the amount of money available for insulation and we will continue to do more to meet our social housing targets.

Home repossession orders now stand at 100,000—the same as in 1990—and house prices are falling faster than they were even then. Does the Prime Minister still deny that the crisis facing British home owners today looks at least as bad as the Tory recession of the early 1990s?

I do not know when the Liberal party will ever learn. Interest rates were 18 per cent. at one point in the early 1990s; they are 5.25 per cent. today. The number of repossessions in the last year was 27,000; in the first two years of the 1990s, it was 200,000. We are dealing with a quite different situation and the reason is that we did not take the advice of the Liberal party, but pursued policies for economic stability.

Is complacency the only thing that the right hon. Gentleman has to offer the thousands of British families who are frightened of losing their homes? Will he now instruct the Bank of England to take house prices into account when setting interest rates, to stop the boom and bust in the housing market? Will he also stop banks from repossessing homes at will and force them to explore all other options to keep British families in their homes?

But the way to deal with the economic problems is to keep inflation low and to keep interest rates low, and that is exactly what we have done. Inflation is lower than in the rest of Europe and lower than in America. That is why interest rates have managed to come down twice in the past few months, whereas that has not been possible in the euro area. I tell the right hon. Gentleman this: we take seriously our responsibility to home owners in this country. That is why there are 1.5 million more home owners now than there were in 1997, why interest rates are on average half what they were in the Conservative years and why mortgage rates are lower than they were on average in those 18 years. We will continue to ensure that inflation and interest rates are low, to the benefit of home owners. One way we will do that is by not taking the advice of the Liberal party.

Q2. After cancer and heart disease, the fear of falling victim to stroke is one of the greatest anxieties felt by elderly people. In Greater Manchester, the decision will be taken shortly to establish three new specialist stroke centres. The Prime Minister will know of the outstanding work done by the stroke service at Fairfield hospital in my constituency. Does he agree that Fairfield will be an ideal location for one of the new specialist stroke centres? (196464)

I know that my hon. Friend will push the case hard for Fairfield general hospital, which I understand does a very good job. There is a Manchester-wide integrated stroke service strategy to be published. We have already put in £105 million of Government funding to support the general stroke strategy. Up to 6,000 deaths could be avoided as a result, and 15,000 strokes could be averted through preventive work. That is why we will take seriously not only what my hon. Friend says about his hospital, but the need to improve stroke services throughout the country. That is possible only because we are increasing the money available to the national health service.

Would the Prime Minister give to the people of Northern Ireland the assurance today that the Government will not countenance supporting any attempt to use the embryo Bill to legalise abortion in Northern Ireland through back-door legislation, keeping in mind that all parties in Northern Ireland are opposed to this? Surely that decision should be made by Stormont, and Stormont alone.

First, this is the first time that the right hon. Gentleman has been in the House since he announced that he was giving up his job as First Minister, and I want to thank him for everything that he has done as First Minister. The whole House—indeed, the whole of the United Kingdom—owes him a huge debt of gratitude for the way he has brought together the parties in Northern Ireland and been a very successful First Minister over the past few months.

The matter of an amendment on abortion to the Human Fertilisation and Embryology Bill is a matter for this House. I do not believe that the House will wish to change its mind on these issues, but that is a matter of a free vote of the House of Commons.

Q3. Does the Prime Minister think that energy companies should do more to help vulnerable groups deal with the cost of their fuel? Does he think that they should all introduce standard social tariffs to assist such people, and if they do not, is he prepared to legislate? (196465)

This is exactly the area where we are working with the energy companies at the moment. We are talking to them, and we have said that they need to deliver a package of social assistance to vulnerable households that will increase their spending from £56 million a year to £150 million a year. We want the energy companies that have benefited from the windfall as a result of the European licence trading in relation to climate change to put an extra £100 million a year into helping the very households that my hon. Friend is talking about. That is on top of the winter allowance, which we have just increased, and on top of the help with insulation that we are giving. I understand how difficult it is for people at the moment. Oil, gas and coal prices have risen by between 60 and 80 per cent. around the world. That is why, with the winter allowance and the extra £100 million that the energy companies will be expected to put in, we will do our best by those people who face, or are threatened by, fuel poverty in this country.

Q4. I have an interest to declare on this question. If the media were to be believed a few months ago, the ravages of dental decay were becoming widespread. The Prime Minister will be aware that fluoridation is generally considered to be the best way to prevent that disease. The Water Act 2003 promised to bring in fluoridation, but not a single water supply has been fluoridated since then. Will the Prime Minister confirm that he agrees with the need for fluoridation, and will he meet a small delegation to discuss the changes needed to implement it? (196466)

I am personally very sympathetic to what the hon. Gentleman says. I have seen the benefits of fluoridation myself. One reason for us putting extra money from the health budget into fluoridation is to encourage that to happen around the country. I would be very happy to meet a delegation, as the hon. Gentleman suggests. Also, the Health Secretary has just told me that £14 million of extra money is being put in to help with this, and that is one way in which we can encourage local authorities and others to take up fluoridation. It is a good thing for the teeth of the people of this country.

Did the Prime Minister hear the very warm words—almost a love letter—that President Sarkozy sent to Britain via the “Today” programme this morning? When he meets the President, can we reciprocate? Does he agree that the default setting for our political class, for Whitehall and, above all, for the media is often to express contempt and derision for France? Can we not try to turn the entente cordiale of the last century into an entente amicale, or even an entente fraternelle, for this century?

My right hon. Friend is absolutely right. President Sarkozy and his French Government and our Government have a great deal in common and a shared agenda for the future. We will be discussing co-operation on matters relating to energy and security. We will also be discussing how we can work together on the environment and the economy. I believe that, coming out of these talks, we will find a shared agreement to move things further. I believe in the international institutions when it comes to the reform of the economy, and we will now vote together on crucial areas in which we must reform the international economy. My right hon. Friend is absolutely right to say that the entente cordiale is moving into a new era, and I hope that Members on both sides of the House will welcome that, but it does require Britain to be at the centre of Europe and not isolated from it.