I have been asked to reply. My right hon. Friend the Prime Minister is today at the European Council. He will make a statement to the House on his return.
May I ask the Leader of the House, who is obviously sitting in Superman’s seat, whether she will look at the small business sector? I met a Northumberland jeweller in my constituency last week who has five workers, but who is thinking about laying two or three off. Can the Government do anything for these small businesses?
It is because of the importance of small businesses in our economy, particularly their importance as employers and given their impact on jobs, that we will do everything that we can to support them through what is undoubtedly a difficult time. One of the actions that we are taking is to ensure that Government and Government agencies pay their bills earlier, by cutting down the time that it takes the Government to pay from 30 days to 10 days. We want to ensure that we back small businesses up with more help through the European Investment Bank. One of the main reasons why we have been stabilising the banking system and buying shares in the banks is to ensure that they start lending again to small businesses at reasonable rates. We will do whatever it takes to back up our small business sector.
On the day we discover that unemployment has risen by 164,000—the largest rise in 17 years—it is a grim day for the British economy and a time of anxiety for many families, as hon. Members, this week in all parts of the House, will acknowledge. Given that many companies have been hit by the credit problems, as the hon. Member for Blyth Valley (Mr. Campbell) just mentioned, and that if they can be given some breathing space, job losses can be reduced, will the Government now reform the insolvency laws along the lines that we have proposed?
We have already changed the insolvency provisions for businesses, in the Enterprise Act in 2003; we have already taken action on that. We are very concerned about unemployment and we are not complacent at all about the situation, despite the fact that unemployment is considerably lower than it was in 1997.
There are two issues that I would like to point out to the House today. First, we are announcing £100 million extra to help those people who lose their jobs to retrain and get the skills that they need for new jobs. There are still 600,000 vacancies in the economy, and we need to help people who lose their jobs to get new ones. There will also be extra help for home owners who become unemployed. Instead of having to wait 39 weeks before they can get help to pay their mortgage, there will be help for them to pay their mortgage 13 weeks after they become unemployed.
Will the right hon. and learned Lady acknowledge that statements about 1997 might now be complacent, given the forecast from Capital Economics this morning? It states:
“We now expect unemployment to rise to 3 million by the end of 2010, exceeding the rise in the early 1990s”.
Will she also acknowledge that the £100 million programme announced by the Government this morning will be spread over three years, at £33 million a year? That will amount to £18 a year for each unemployed person. Will she also acknowledge that that money has already been allocated to the skills budget and has already been announced? Would it not therefore be a good idea to adopt our proposal, which the Federation of Small Businesses says
“should save thousands of jobs from going under”?
As I have said, we have already made the changes to the insolvency provisions, in the 2003 Enterprise Act. We are not complacent about the situation in the economy. We have made no bones about the fact that our economy is facing hard times, but the right hon. Gentleman should not write our economy off. Our economy is made of sterner stuff, and the Chancellor and the Prime Minister have said that we will take every action we can, not only to stabilise our economy nationally but to work internationally with other Governments to stabilise the global system. That is why the Prime Minister is not here today.
We understand why the Prime Minister is not here today. I am glad that the right hon. and learned Lady is not complacent, because she wrote in her blog in February that
“people know that there is global financial turbulence but are not worried about their own prospects in 2008”.
Perhaps she will now acknowledge that that is no longer the situation. If she will not adopt our proposed measures on insolvency, may I ask her about another group of people who have been hit by the economic crisis in recent days? They are the people who have retired from their jobs. One such group is the pensioners who are forced to buy an annuity on reaching retirement or on reaching the age of 75. They will be locked into a lower income for the rest of their lives. Last week, we proposed suspending the rule on this, and Ministers said that they were looking at the proposal. Will the right hon. and learned Lady now cut through the delay, announce a decision by the Government and tell us that the Government will suspend that rule in order to help the incomes of thousands of pensioners into the future?
The right hon. Gentleman mentioned the blog that I wrote earlier this year. While it is true that the global seeds of this problem—the increase in oil and food prices, as well as financial instability—have been coming over a period of time, the impact on family finances, businesses and jobs has been sudden, not only in this country but around the world.
The right hon. Gentleman mentioned pensioners. Yes, we are concerned about pensioners, who particularly feel the effect of the fuel increases. That is why we have increased the winter fuel payment. It is important to consider the question of the impact on people—albeit a small number of people—who have to buy their annuities within a certain period of time. I know that this is something that the Treasury is aware of, and I know that the Department for Work and Pensions is talking to the Treasury about the issue. But the most important thing is that we stabilise the markets so that shares can continue to be steady and their value can grow.
I am glad that the right hon. and learned Lady acknowledges the importance of the issue about pensions. However, it is all very well being concerned about it and looking at it. Have not the events of recent times shown that swiftness in decision making is at a premium? Will she therefore undertake to go back to her colleagues in the Treasury this afternoon? Since this matter was at the top of our concerns, as she herself said only last Thursday, and since many pensioners are worried about it, will she sort it out today with her colleagues, so that they can come back to the House this week to tell us that that rule has been suspended?
I do not think that the Prime Minister or my colleagues in the Treasury need any advice from me on that point; nor do I think that they need any from the right hon. Gentleman. He can rest assured that they will act not only swiftly, but sure-footedly. There is a serious situation across the board—whether it be in respect of jobs, small businesses, the housing market, charities or local government—and we are determined to take the action that is necessary, not only nationally, but internationally, to see this country through.
We look forward to the action—[Interruption]—instead of concern and talking, which is all we have had so far at today’s Question Time. Small businesses and pensioners are two of the casualties of an economy built on debt, so what exactly do the Government mean when they say that they are insisting that institutions which are being bailed out will maintain borrowing at 2007 levels—the year at the height of the boom that has turned to bust? Is that not irresponsible? Why did Baroness Vadera of the other place say that there was
“no requirement for banks to lend forcibly”,
while the Chancellor was saying that lending would be maintained “at 2007 levels”? Who is speaking for the Government and what are their policies on the lending of those banks?
Let me explain to the right hon. Gentleman and the House. Having ensured that money goes in via the Bank of England so that extra liquidity is available, having ensured that loans are made available on a guaranteed basis at commercial rates and having made provision for buying shares, we want to make sure that, after this Government’s actions, instead of the banks just sitting on the capital, they actually lend it to small businesses and home owners. What would be the point of Government action if it did not make a difference to the people who are feeling the pressure of the global credit crunch? What has been written into the agreement with the banks in which we have taken shares is that they should, at reasonable rates, re-establish credit lines to the housing market and to small businesses. When it comes to Government debt, which the right hon. Gentleman also mentioned, I do not regret and we do not resile for one minute the investment in our schools and the public investment in our hospitals.
Over the last 11 years, during which we were investing in hospitals and schools, we were also paying off Government debt. In 1997, public debt as a share of GDP was 43 per cent, and we reduced it to 37 per cent. We are now in a position to allow Government debt to rise in order to back up the economy in the way that is necessary. On Monday, the right hon. Gentleman’s party backed the measures we took to help to get the financial services working properly. It is a shame that he does not back the means to achieving that end.
Of course we backed those measures, but the Government are no longer in a position to boast about their economic record when taxes have risen by more than £5,000 for every family in the country since 1997, when the World Economic Forum says that 104 other countries are better prepared than us for the economic downturn, when debt has risen remorselessly, when unemployment is rising at the fastest rate for 17 years and when inflation has trebled since 1997. Against that background, is it not time to acknowledge that the claim to have abolished boom and bust was one of the most foolish, one of the most hubristic and one of the most irresponsible claims ever made by a British Prime Minister?
I think that this is a serious moment for the economy and that it requires action from the Government, but the right hon. Gentleman should not write Britain off or compare us unfavourably with other countries. The Prime Minister will take action to protect this economy, and he will also work with the other European countries to ensure that international action is taken. It could possibly be said that, in that respect, he is a man with a plan.
Fifty-five thousand members of RAF Bomber Command lost their lives in world war two, yet today there is still no national memorial paying tribute to the sacrifice made by those brave men and women in defence of our nation. Will my right hon. and learned Friend join me in supporting the RAF Bomber Command memorial fund as it seeks to raise £2.5 million for such a memorial, and will she ensure that the Ministry of Defence consults the memorial fund properly before finally deciding on a location?
I can give my hon. Friend the assurance that I will see that the Ministry of Defence thinks very carefully about that request, and looks favourably on it. We must ensure that we recognise and continue to pay tribute to those who, like the 55,000 whom he mentioned, have paid with their lives for this country.
How really prepared are the Government to deal with the hundreds of thousands of people who are now losing their jobs, given that they have just completed a massive cut in the staff of benefit offices and jobcentres? While the two measures that the right hon. and learned Lady has announced today are very welcome, can she give us an absolute assurance that people approaching those services in search of financial help and emergency loans—which does not mean waiting for 13 weeks—will be dealt with promptly, efficiently and sympathetically, as the bankers were this week in their hour of need?
The hon. Gentleman is absolutely right. The action taken in respect of the banks was taken not just for the sake of the bankers, although the financial services industry is a large and important employer, but so that we could get credit flowing back into small businesses and the housing market.
The hon. Gentleman asked an important question about the services and support that will be given to people—not just talked about—when they face the awful prospect of being without jobs. I would say that there are improved and increased services for each individual from the Department for Work and Pensions, not just as a result of the important work of Jobcentre Plus, but in the private and voluntary organisations that work alongside people who have lost their jobs to ensure that those people have the skills and the confidence to obtain their next jobs.
We are not complacent about today’s job figures, which are definitely very concerning, but there are still 600,000 vacancies in the economy.
I welcome those latter comments, but I sense that the Minister does not realise that there is a very real emergency. Given that there is that very real emergency, why do the Government—and also the Conservatives—insist on this absurd monastic vow of silence that means never even talking about interest rates? There are millions of people out there worrying about their homes and their businesses, and clamouring for a deep cut in interest rates to prevent this recession from turning into a deep slump.
I do not accept the hon. Gentleman’s assertion about the Government’s unpreparedness. The Government worked for a number of weeks to ensure that we could take action to stabilise the banking system, and that is what was announced to the House on Monday. The purpose was to ensure that money was lent to small businesses so that they could continue to flourish and play the part that they play in the economy, and continue to employ people.
I do not really know what the hon. Gentleman is talking about in relation to interest rates. There was an interest rate cut last week, and it was co-ordinated with other central banks across Europe and in America.
My hon. Friend makes an important point, and I think that all hon. Members are concerned about charities and the effect on them of the collapse of the Icelandic financial services industry. Small charities will get the same protection as individuals; they will get 100 per cent. protection for their deposits. We are taking steps to protect larger charities by freezing the assets of the Icelandic banks and by lending £100 million while the unfreezing of those assets is sorted out. Treasury officials have been sent to Reykjavik to try to ensure that the situation is resolved, and the Minister for the Cabinet Office has met the leaders of the charitable sector. He has issued a written statement, and he will keep the House updated.
The action we have taken in relation to the financial services system has not just been to protect individuals, important though that is, but also to ensure that there is not a whole-scale loss of confidence in the entire banking system. We have been concerned to address not only individual loss, but systemic failure.
My hon. Friend is right that we need action not only by the Government—and we are taking that action—but by the energy companies. He is also right that increased fuel bills hit hardest those who can least afford it. We are taking action. As he knows, we have increased the winter fuel allowance for pensioners, and we have also set up a home insulation package. We expect the falling oil prices to feed through into gas and electricity prices. While the Government will play their part, we know that the eyes of everyone in the House, as well as those of the Government, will be on the energy companies to make sure they play their part too.
It is quite wrong for the hon. Gentleman to say that the Government must take responsibility for a financial banking system crisis whose origins clearly were global and whose impact has also been global. On regulation of the financial industry, the hon. Gentleman might remember that there were seven regulators before we set up the Financial Services Authority, and it was very important as part of improving regulation to bring them all into that one regulatory body.
My hon. Friend makes an important point. The space industry is important. It is in the forefront of science and scientific jobs, and I wish it success with its conference—and perhaps I may express the hope that the summit will boldly go where no summit has previously gone.
Many of my constituents at Bradford & Bingley and other local businesses face a very uncertain future. Given that the Prime Minister egged on the housing bubble and the economic bubble by claiming that he had personally ended boom and bust, and given that it was his tripartite system of regulation that failed so spectacularly, will the Government take any responsibility for the economic problems that my constituents are facing?
I do not accept that the economic crisis that has currently hit this country is the responsibility of the 1 million extra home owners in this country. I do not accept that for a moment. The hon. Gentleman should recognise that the economic circumstances that face this country, although they are national in their impact, are global in their origin.
I welcome my hon. Friend’s drawing the attention of the House to the national minimum wage increase this month. I understand that something like 90,000 people in Scotland will see their pay go up as a result of the rise. The minimum wage is important for Northern Ireland, Scotland, Wales and the whole of England, and we have no intention of letting it wither away. When it comes to difficult economic times, those on low incomes will get help, and I think we can expect those on the highest incomes to show restraint.
We are undoubtedly facing uncertain times right across the United Kingdom. Does my right hon. and learned Friend agree with me, my colleagues and many people in Northern Ireland that we face an additional problem? Under the devolutionary arrangement that we currently have, many Departments have packages in place that will help people through the problems that we will face over the winter and in the next year, but they are being blocked from using them because of the activities of Sinn Fein.
My right hon. Friend the Secretary of State for Northern Ireland reminds me that the Executive need to meet and devolution of policing needs to take place. The Secretary of State is a member of the National Economic Council, and therefore the question of the economic impact on Northern Ireland is very much in the Government’s mind.
The hon. Gentleman is right to draw attention to the whole point of this Government action. It is not for its own sake but actually for the results that it will achieve. We are determined, and indeed agreements have been entered into, that credit will start flowing again to small businesses and to the housing market, in order that we can stabilise the economy and see it through this difficult time.
What we owe to the people in Iraq, to the other countries alongside which our soldiers are working and to our armed forces is to work to ensure that we have stability and peace in Iraq, so that Iraq can take over its own security and policing as soon as possible and our troops can then come home.
Whatever outrageous fortunes the global economy may blow our way, will my right hon. and learned Friend commit herself again to this Government’s aim of eradicating child poverty by 2020 and confirm that that commitment will not be violated?