Skip to main content

Oral Answers to Questions

Volume 481: debated on Wednesday 29 October 2008


The Secretary of State was asked—

Post Office Card Account

1. What recent discussions he has had with the Secretary of State for Work and Pensions on the future of the Post Office card account in Scotland. (229804)

The contract for the new Post Office card account should be awarded to the Post Office because of its unrivalled geographical reach. If towns and villages across Scotland lose their post offices, they will often lose their shop, their only source of pensions and cash, and vital support for vulnerable people in those communities. Will the Minister make the Government understand that to take the Post Office card account away from the Post Office would be a betrayal of those communities?

I can understand the hon. Gentleman’s concerns, but as he will appreciate, we are currently undergoing a tendering process and it would not be appropriate for me to comment on that process, which we hope will complete later this year. I remind him that 27 bank or building society accounts can already be accessed through the post office network. We are committed to the idea that the universal access criterion must have priority.

The Minister will realise that it is crucial that the Post Office is put on a sound financial footing. For the next four or five years, POCA must be instrumental in ensuring that that is the case. Otherwise, sub-postmasters will voluntarily close post offices and we will find that our financial inclusion targets will not be met as a result. Will the Minister keep those comments in mind when she is discussing the issue with her ministerial colleagues?

My right hon. Friend has a strong record of supporting financial inclusion and I certainly take his comments on board. The fact that we have spent nearly £2 billion on the post office network since 1999 and are committed to a further £1.7 billion up to 2011 shows that we want to ensure that there is a strong, sustainable post office network that will be maintained not only now but beyond 2011.

Is the Minister aware of the letter written by George Thomson, the general secretary of the National Federation of SubPostmasters, to the Prime Minister, the Secretary of State for Work and Pensions and the Secretary of State for Business, Enterprise and Regulatory Reform, which sets out huge concerns about the delays in making a decision on POCA? POCA is important for sub-post offices, and the letter says that 10 per cent. of their income comes directly from POCA. The post offices are also the last financial institution in many of our villages following the withdrawal of the banks, which are receiving huge sums of Government money. Will the Minister impress on the Secretary of State for Work and Pensions the importance of a quick decision in favour of the Post Office?

The hon. Gentleman rightly indicates that the need to maintain universal access, particularly in rural areas, is important. That is why we have maintained a strong rural network: 95 per cent. of the rural population must be within 3 miles of a post office. However, it is also important that we have a sustainable network. The markets are changing and so are people’s shopping habits. That is why we are awaiting not just the tender process, which is required under EU law, but the Hooper review, which will point us in the direction that we must follow to ensure that we have a sustainable universal access network.

May I welcome the Secretary of State and the Minister to their offices? I want to place on record my appreciation of the Minister’s predecessor, the hon. Member for Inverclyde (David Cairns). He was a helpful and able Minister, and I shall certainly miss him.

At this time, our post offices need certainty, stability and an indication that they have a financial future. The Government’s deadline to receive those bids finished in March and for eight months we have had no announcements. If the Post Office loses this contract, the real losers will be our rural communities and dozens of post offices up and down the country. Is it not the case that the delay in the announcement and the very scheduling of the Glenrothes by-election at the same time as the presidential elections have nothing to do with the good people of Fife and everything to do with saving the political skin of the Prime Minister?

I thank the hon. Gentleman for his warm remarks of introduction and welcome, but I think that he got beyond himself. Last week, the Secretary of State for Work and Pensions firmly rejected any suggestion that there was any coincidence between the tender process and the by-election. The tender process is a complex legal issue that requires appropriate time and consideration. It is inappropriate for any Minister to interfere with or comment on that process. Unlike the Opposition, who wish to slash public spending, we have shown firm public commitment to the post office network throughout our tenure in government. The fact that we have invested £3.7 billion in that network is plain proof of that fact.

Banking Sector

3. What recent discussions he has had with the First Minister on the operation of the banking sector in Scotland. (229806)

I am in regular contact with the First Minister and discuss a variety of issues. The Scottish banking system is now well placed to combat these difficult times after the significant intervention by this Government to stabilise the market.

May I congratulate the Secretary of State on his appointment? Does he recall that the First Minister said earlier in the year that an independent Scotland could look forward to an “arc of prosperity” based on Ireland, Iceland and Scandinavia and underpinned by Scotland’s “world class” banks? Will he remind the First Minister in a telephone call today that the Scottish banks would not exist today if the UK Government had not moved quickly, and if they had not been underpinned by English taxpayers in our constituencies? Will he also remind him that it is time for him to abandon completely his misguided campaign—

Order. When there are long speeches instead of supplementary questions, other Back Benchers are going to be squeezed out.

I wish to thank the hon. Gentleman for his warm welcome for my appointment, and to place on record again my appreciation of the work done by my predecessor, my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne).

Although this is my first time at the Dispatch Box as Secretary of State for Scotland, I know very well that I am not accountable for the words, deeds or actions for Scotland’s First Minister. However, I am aware that he has compared Scotland to Iceland, Ireland and Norway. Of course, Iceland is now bankrupt as a country, Ireland faces an austerity budget—[Interruption.] I hear an hon. Gentlemen shouting, “Tell us about Norway!” Well, the Norwegian Foreign Minister has today told us all about Norway, and said that the Scottish National party must stop making vacuous comparisons between Norway and Scotland.

Finally, the hon. Member for North-West Norfolk (Mr. Bellingham) talked about English taxpayers subsidising Scottish banks, but he will be aware from his insight into his own constituency that the Royal Bank of Scotland-NatWest has four branches in his area, and HBOS has one. This is an international problem that needs international solutions. It affects all our constituencies, including his own.

I congratulate the right hon. Gentleman on his well deserved appointment. He has moved from defending an indefensible Union to upholding a vital Union. Does he agree that the Scottish banking sector has fared better in this financial crisis because Scotland is part of the UK than it would have done had Scotland been independent?

I absolutely agree. The UK has invested £37 billion in Scotland’s banking sector, and that is greater than the entire Scottish Government budget. The entire cost of the investment package is estimated at £100 billion, which is more than the annual budget for the whole of Scotland. I disagree, of course, with the hon. Gentleman’s earlier comment. We spent many long months debating whether the UK would be better off outside the EU, but I think we all now agree that Scotland is better off in the UK.

May I thank my right hon. Friend for his active involvement in the banking crisis? Does he agree that the futures of the Royal Bank of Scotland and Halifax Bank of Scotland are of huge significance to Edinburgh, the south-east of Scotland and to the Scottish economy as a whole? Will he continue to work with the Prime Minister and the Chancellor to support the banking system and above all to sustain as many financial sector jobs as possible in Scotland for the long term?

My right hon. Friend has a long history of campaigning on these issues, and he has taken a close interest in the current difficulties faced by Scottish banks and banks throughout the UK. I look forward to discussing these matters with him in further detail over the weeks ahead. Unfortunately, however, some people involved in international banking and banking institutions in the UK took reckless decisions that put at risk other people’s savings and mortgages. While risk is an essential part of a market, taking irresponsible risks with other people’s well-being must come to an end.

May I first congratulate my right hon. Friend on his new appointment as Secretary of State for Scotland? I am delighted to see him at the Dispatch Box. Does he agree that the Scottish banking situation is so important that we cannot just leave it to Adjournment debates in the House of Commons? Will he therefore have a word with the Leader of the House to have a Scottish Grand Committee called as quickly as possible, so that we can discuss the matter?

Serious times call for serious measures. Where I can, I try to say clearly that as Secretary of State for Scotland I will work with anyone who is working on behalf of Scotland, which is why I convened the first ever gathering of CBI Scotland, the Scottish Trades Union Congress and the First Minister to demonstrate that, where we can, we should be working together. That is the approach that I shall take every day in this job.

We have to look for additional ways to discuss the problems facing Scottish banks, and if my hon. Friend thinks that calling the Scottish Grand Committee is part of the solution, I look forward to his making that case. I would of course have no hesitation in appearing before the Scottish Grand Committee.

On behalf of my party, I welcome the Secretary of State and his Under-Secretary to their new positions and pay tribute to their predecessors. They left the Government in different circumstances, but they gave distinguished service to the Government in their time and I very much hope that they will continue to be part of Scotland’s political debate.

Has the Secretary of State seen reports in The Scotsman today, indicating new interest in parts of the HBOS group, namely from Clerical Medical and Insight Investment? Does he accept that that is a further alteration to the situation that pertained when the takeover by Lloyds TSB was first mooted and, accordingly, that it requires to be looked at again seriously? In that context, will he urge his right hon. Friend Lord Mandelson to publish the Office of Fair Trading report so that if we are to abandon competitiveness in the banking sector we at least know why?

We wish to see stability in the banking system in Scotland, throughout the United Kingdom and much more widely. Part of that stability would guarantee security for savers, investors, mortgage holders, staff and small businesses across the UK. The argument that HBOS’s business model would not be able to survive the current economic climate has been well rehearsed, but the fact is that only one concrete offer is on the table. That is an issue for the boards of the two banks and the shareholders—it is not for the Government to dictate—but although there is press speculation about other bids, there is only one firm bid on the table at the moment.

I, too, add my congratulations to my right hon. Friend on his new position as a full-time Secretary of State for Scotland.

I do not want us to underestimate the importance of the comments made by the Norwegian Foreign Minister, reported in today’s press. When my right hon. Friend next meets the First Minister, will he raise those comments and expose the credibility of the First Minister’s arguments? Perhaps he will go one step further and say not only that it is economically unsound to make those comparisons but that it is economically illiterate.

My hon. Friend is absolutely correct. On behalf of everyone on our side of the House, I pay tribute to her for her brilliant work over nine years as a member of the Government in various posts. She is right to draw attention again to the comments of the First Minister. In his first speech as First Minister, he said:

“Scotland can…be part of northern Europe’s arc of prosperity. We have three countries, Ireland to our west, Iceland to our north and Norway to our east. We can join that arc of prosperity.”

It is no wonder that many commentators now talk about an arc of insolvency—the SNP vision of a North sea bubble has well and truly burst.

I begin by welcoming the right hon. Gentleman to his new role. It is particularly welcome on the Conservative Benches that there is once again a stand-alone Secretary of State for Scotland. Scotland’s interests cannot be adequately represented in the Cabinet along with those of the armed forces or any other nation or region of the United Kingdom.

May I also welcome the Under-Secretary of State for Scotland, and briefly pay tribute to the two predecessors at the Department? The right hon. Member for Kilmarnock and Loudoun (Des Browne) played a pivotal role in the establishment of the Calman commission, which will benefit all the people of Scotland. The hon. Member for Inverclyde (David Cairns) lost his job for speaking the truth, and he is not the first Member of this House to have done so. In that vein, I share the Secretary of State’s views about the irresponsibility of the First Minister’s comments on the “arc of prosperity”, but does the Secretary of State agree that the Prime Minister was equally irresponsible to claim that boom and bust had been abolished? Did that not contribute to the devastating effect of the credit crunch on the Scottish banks?

I thank the hon. Gentleman again for putting on record his appreciation for the work of my predecessor, and for his kind words of welcome to my hon. Friend the Under-Secretary and me. The fact is that Scotland is stronger in the United Kingdom at times of difficulty, and more prosperous in the United Kingdom at times of economic prosperity. I disagree with the hon. Gentleman’s assessment of the Prime Minister’s contribution. The fact is that the UK is showing the world

“the way through this crisis.”

The shadow Secretary of State guffaws at that comment, but those are not my words; a gentleman called Paul Krugman, the winner of the Nobel prize for economics, made those comments earlier in the week. Whose economic judgment should I accept—that of the hon. Gentleman or that of a winner of the Nobel prize for economics? I will let the House make that judgment for itself.

Economic Situation

4. What recent discussions he has held with Scottish Executive Ministers on the condition of the economy in Scotland. (229807)

I called a meeting last week with the Scottish Government, the Scottish Trades Union Congress and CBI Scotland to discuss the pressures in the Scottish economy. I also sit full time on the UK Government’s National Economic Council.

I am grateful for the fact that one of the Secretary of State’s first acts in his new post was to agree to come to Ayrshire to discuss with local businesses their concerns about the current financial situation. In his recent discussions with the First Minister, the CBI and the STUC, did they discuss support for those who have recently become unemployed, not just in the financial services sector but in places such as the coalfield area in my constituency, which suffered mass unemployment during the dark Tory years?

I look forward to visiting Ayrshire shortly. My hon. Friend referred to the fact that unemployment went up across many parts of the United Kingdom last week, after years of growth in employment. In response, the British Government published a £100 million training plan, the Welsh Government published a £30 million training plan, and the Scottish Government issued a press release. That is not the action of a serious Government. The fact is that there are enormous challenges, and one such challenge in the current economic crisis is to ensure that those who are economically on the bottom rung of the ladder do not become dislodged and take a generation to recover. I am determined to work with everyone and anyone, across Scotland, to make sure that that does not occur.

I welcome the meeting that the Secretary of State had last week with Scottish business leaders and trade unions. Is it planned that such meetings will be held regularly? Did he use the opportunity to ask Scottish businesses whether they would be better served by the Government borrowing to pay for increased spending on unemployment benefit, which is what his party wants to do, or by our taking the immediate practical steps on VAT and national insurance for small businesses that the Leader of the Opposition set out in his visit to Glenrothes?

Of course we intend to repeat the meeting, and CBI Scotland will host the next one; that is a welcome step. The fact is that net debt was 43 per cent. of gross domestic product in 1996-97, and today it is 36 per cent. The UK’s net debt is lower, as a percentage of GDP, than that in the euro area and in all G7 countries except Canada. It is important that we borrow to invest in public services. That is a striking contrast with what happened under a previous Government, who invested in failure. Unemployment was at 3 million; incapacity benefit trebled; and unemployment was considered a price worth paying. That price will never be paid, and is never considered worth paying, by a Labour Government.

I welcome my right hon. Friend to his position as Secretary of State. Given recent economic events, is it not the case that the First Minister of Scotland could be compared to an eight-year-old child with a bean rack?

HBOS and Lloyds TSB

6. What discussions he has held with ministerial colleagues on the proposed merger of HBOS and Lloyds TSB. (229809)

The merger of HBOS and Lloyds TSB is a commercial decision for the boards and shareholders of those banks. We want stability in the UK banking system and protection for savers, mortgage holders, staff and businesses.

I welcome the Secretary of State and the Minister to their new positions, and would like to put on the record the admiration that our party had for their two predecessors.

I thank the Secretary of State for his answer. The merger of HBOS and Lloyds TSB will, of course, have to be voted on by shareholders; I understand that the meetings will take place in mid and late November. I am sure that the Secretary of State will agree that all the information should be available to the shareholders before the votes take place. Will he impress on the noble Lord Mandelson, the Secretary of State for Business, Enterprise and Regulatory Reform, the need to publish the Office of Fair Trading report on competition in advance of the shareholder meetings?

It is important that we have a wide conversation about Scotland’s economy and Scotland’s future. Again, the matters mentioned are for the boards and shareholders of those two great institutions.

Until now, the Scottish National party’s argument about economics has relied entirely on oil and Iceland. Every family in Scotland knows that a household budget cannot be organised on enormous fluctuations in oil prices, which stood at $150 a barrel a year ago and now stand at $59 a barrel. Iceland as a country is on the verge of bankruptcy. On the particular point about the banks’ merger, I should say that it is important that information should be available and that shareholders should make their decisions in an informed way.

I congratulate the Secretary of State on his new position. Will he work with the Unite union to make sure that the jobs of those in the banking industry throughout the United Kingdom are protected? Spivs and speculators have been destroying jobs in the industry, and we do not want to lose any more.

My hon. Friend is right: it is important that we should have such conversations with trade unions. That is why on the very day when my right hon. Friend the Chancellor made his announcement about bank recapitalisation, I invited both the trade union Unite and the trade union Accord to meet me at the Scotland Office in Edinburgh. We discussed the type of issues that my hon. Friend has rightly raised today.

Is the Secretary of State not forgetting that British taxpayers are about to become a shareholder in HBOS and that they should have a view on the matter? Given that competition rules are being set aside, is it not important to ensure that every possible option—including maintaining HBOS as an operating entity in its own right—is considered, to ensure that consumers have the full range of choice in the future?

The right hon. Gentleman is absolutely right. There has been enormous UK taxpayer investment in saving those two great financial institutions. I think he will agree that only through the power and influence of a United Kingdom Government and a UK economy are we able to make such enormous investment in those institutions. Lloyds has confirmed that the HBOS part of the business will continue to use the Mound as its Scottish headquarters and that it will continue to publish Scottish banknotes. I remind the House again that there is currently only one offer on the table which can be considered by the board and the shareholders—and that remains a fact, regardless of any press speculation.


7. What recent discussions he has had with representatives of the energy sector on Scotland’s future energy needs. (229810)

Meetings are currently being arranged with the energy industry. My right hon. Friend the Secretary of State will also be attending the oil and gas UK supply chain conference on 12 November in Aberdeen.

I am glad to hear that because obviously the oil and gas industry is important for Aberdeen and the whole economy of the north-east of Scotland. I hope that there is a long future for the industry in the North sea—[Interruption.]

Thank you, Mr. Speaker. I hope that there will be a long future for the offshore oil and gas industry, which is so vital to the economy of my constituency. However, does my hon. Friend agree that it would be a mistake to base a whole economy on a very volatile resource?

My hon. Friend has a fine record of working for the oil industry in Aberdeen and for her constituents. As she rightly points out, the oil industry remains a vital industry in Scotland, but it is important that it has a stable investment and tax structure, which the UK framework currently provides. The oil fund to which the First Minister has made reference has suddenly disappeared from his press releases, and now we have the request for £1 billion regurgitated from six months ago. I think we can all draw our own conclusions.

Prime Minister

The Prime Minister was asked—


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.

Small businesses, which are essential to jobs in my constituency, are suffering from high raw material prices, high energy prices and, in some cases, reduced demand. What steps is my right hon. Friend taking to ensure that the support that we have given to the banks is reflected in the support that banks give to small businesses during this difficult time?

My hon. Friend is absolutely right. Central to the recovery of jobs is the resumption of lending by banks to businesses. I discussed that not only as a national problem, but a problem in many countries, with President Sarkozy when I met him last evening. We have all taken measures to recapitalise our banks and to ensure stability. We continue to work on increasing access to funding. Having recapitalised the banks, we want to ensure that they will extend availability of credit at competitive prices. Further announcements will be made tomorrow when we have a meeting with the banks.

We are also considering new mechanisms by which, for example, the European Investment Bank can give financial support where traditional institutions are not able to do so. We urge banks not to change the terms and charges for existing lending to small businesses in our country. The President and I also talked about the role of fiscal policy in the future. I have been discussing that with other leaders. It is right that fiscal policy supports monetary policy at this time.

If the Prime Minister wants to help small business, he can start by cancelling his plan for putting up the rate of corporation tax for small business.

In the past fortnight we have learned that housing repossessions are up 71 per cent., unemployment is rising at its fastest rate for 17 years and the economy is shrinking. Will the Prime Minister now finally admit that he did not abolish boom and bust?

I have already told the right hon. Gentleman: we have had the longest period of growth in the history of this country. We have created 3 million jobs during that period, and we have been able to double public investment in education, health and transport. If we had taken his advice, we would not have nationalised Northern Rock and we would not have taken the action to deal with the problems of HBOS and other banks—and he would have loosened the regulation on banks at a time when everybody is saying to increase it. I am not going to take any advice from the Leader of the Opposition on these matters.

How can the Prime Minister not admit that there is an economic bust when 120 homes are being repossessed every day and when the Bank of England says that 1.2 million people are going to go into negative equity? If he cannot admit what he got wrong in the past, why will anyone listen to him about the present or the future?

Let me turn to the Prime Minister’s fiscal rules, which allowed him to pile up this huge borrowing in a boom. He said that his fiscal rules were

“the basis on which I think people have seen this Government as competent”.

He said that they were right for every stage of the economic cycle, and he absolutely guaranteed—that is the word that he used—that he would not break them. Does he accept that the fiscal rules are now dead?

First of all—[Hon. Members: “Answer!”] I think that the Opposition should listen for a minute, and maybe they will learn something. First of all, the cause of the crisis that we are facing started in the private banking sector, not with national Governments. If the Leader of the Opposition does not understand that that is the problem, he will not be able to come to a proper solution, because the solution lies in recapitalising the banks, then ensuring that they start lending again. If we could have a sensible debate about the matter across the Floor of this House, and he removed the partisan way in which he is dealing with it, as he promised to do—[Interruption.] He was the man who was going to end the Punch and Judy show, and he was the man who was going to have a bipartisan approach.

As for the fiscal rules, we have met them in the last 10 years. If I may remind the right hon. Gentleman, borrowing has been 1 per cent. under the Labour Government during the last 10 years; it was 3 per cent. under the Conservative Government. They broke the roof; we fixed it.

The Prime Minister says—[Hon. Members: “More!”] There’s plenty more.

The Prime Minister says that he wants us to listen; we have been hearing about his fiscal rules for 10 years. He stood there and lectured us about the brilliance of his fiscal rules. Why will he not now admit that they are dead? Let us just remember them—he used to be so proud of them. Rule 1 was, “Only borrow to invest”; now he is having to borrow to pay for unemployment benefit. That rule is dead. Rule 2—[Interruption.] They do not like being reminded about their own fiscal rules. They used to enjoy the lectures so much. Rule 2 was, “Don’t have debt over 40 per cent. of national income.” Even on his own fiddled figures, that rule is now dead. Why will he not admit that the rules failed to deliver responsibility in the good years and that, as soon as the bad times came, they collapsed completely?

May I just remind the right hon. Gentleman of what he said only a few days ago? [Hon. Members: “Answer!”] It is important to the issue. He said:

“Borrowing…is inevitable and you have to allow that to happen. Those automatic stabilisers as Keynes called them, those have to operate.”

He is saying that, but the shadow Chancellor said this morning in a newspaper that borrowing is the wrong approach. The right hon. Gentleman said a few days ago that it is the right approach. When will they get their act together and show that they have one coherent policy?

The Prime Minister cannot tell us whether his fiscal rules are alive or dead or in some sort of suspended animation. We have established that he has broken his fiscal rules, and we have established that he led the economy from boom to bust; now let us look at what he is going to do about it. Does he agree that you cannot spend your way out of a recession?

I just repeat what the right hon. Gentleman said. [Hon. Members: “Answer!”] If he said:

“Borrowing…is inevitable and you have to allow that to happen. Those automatic stabilisers…have to operate”,

that means we have to spend in a way that takes us through this economic crisis. If he does not understand what he said a few days ago, perhaps his meetings with the shadow Chancellor during the past few days have not been about economics at all.

I asked the Prime Minister whether he agreed that you cannot spend your way out of a recession. Why did he not just say yes? I have a quote for him. It is something that he said in 1997—[Hon. Members: “Ah!”] Oh, it was 10 years ago, so it does not count—is that the new rule? This was not some off-the-cuff speech; it was at the Labour party conference, as Chancellor of the Exchequer. He said,

“we have learned from past mistakes…you cannot spend your way out of recession”.

Is not the truth that the Prime Minister has been going round telling everyone that he is the new John Maynard Keynes with a plan for a spending splurge? Meanwhile, the pound has fallen further than in any previous devaluation, and the Chancellor is having desperately to back off. So can he confirm: is he planning a spending splurge or not?

And he is quoting Keynes. I thought the right hon. Gentleman said that he supported Keynes on when the automatic stabilisers should work. Let me remind him again of the Conservative party position. The person who shadowed for the shadow Chancellor last week said in an interview to the BBC:

“To increase borrowing to deal with an economic downturn—that’s a perfectly sensible thing to do.”

A few minutes later, he said:

“Increasing borrowing is not a strategy for dealing with the recession.”

The Conservatives are nowhere on policy to deal with the problem.

So that is the new fiscal rule—never answer the question. The Prime Minister has been caught red-handed—he spun a line about a spending splurge to try to look as if he had a plan, but the Treasury Secretary said that the Government would not “increase” but “maintain” spending. He has been caught irresponsibly spinning about irresponsible spending. Is not the truth that he has got not a plan but a giant overdraft? Is it not the case that thousands of people are losing their homes and their jobs because the Prime Minister’s irresponsible boom has turned to bust?

The thousands of people in our country who are worried about their homes and their jobs will want to know that they have a Government who are prepared to take the action that is necessary to deal with the problem. The Conservative party says that borrowing is the wrong approach; I say that it is right to take the action that is necessary to lead us through the difficulties. The Conservative party has no policy. It is not prepared for government—it is not even prepared for opposition.

I know that the Prime Minister has a lot on his plate, but I would like him to know the outcome of the referendum in Stoke-on-Trent last Thursday. The people voted to go ahead to have a leader and a cabinet to run the council from next summer. In these difficult times, will my right hon. Friend give the people of Stoke-on-Trent his assurance that the Government will do everything they can to work in Stoke-on-Trent to draw a line, move forward and deal with all the economic issues that we face?

My hon. Friend has spoken to me about those things on several occasions. It is right that all parties work together to come through the difficult times. We will do whatever we can to help the industries of Stoke come through the difficult times that they face.

As we heard earlier, the Prime Minister does not seem to distinguish between good public spending and bad public spending. At a time when every penny of public money needs to be spent wisely, he wants to waste £13 billion on an NHS computer system that does not work, £12 billion on a surveillance database, which will spy on everybody in the country, and billions more on ID cards. He could redirect all that money to the things that people really need in a recession: homes for hard-pressed families; good child care, so that people can go out to look for work; and training for people who have lost their jobs. At a time when all British families have to rethink their spending plans, is it not time for him to rethink his?

I do not recognise the figures that the right hon. Gentleman gives us. The only figure that matters in this debate is that the Liberal party wants to cut £20 billion out of public spending. That would be the wrong course for this country.

This country is in much worse shape than I feared if it has a Prime Minister who cannot tell the difference between redirecting and cutting public money. Grandiose plans for public spending might help in the long term, but low and middle-income families need more money in their pockets right now. Why does he not have the courage to close the multi-billion pound tax loopholes that benefit only the wealthy? That way, he could deliver big tax cuts for people who desperately need help. It would not require extra Government borrowing, it is fair and it would be good for the economy. Why will not the Prime Minister give people on ordinary incomes some of their money back?

We have been closing tax loopholes in every Budget for the past 11 years. We are putting an additional amount of money into the economy: 22 million people are getting a tax cut of £120, the winter allowance will be £250 for over-60s and £400 for over-80s, and we are helping low-income families with their fuel bills. The right hon. Gentleman cannot wish away the policy that he announced at his conference: to cut public spending by £20 billion. That is the wrong policy for this country at this time.

Q2. Last week in Blackpool, I sat down with my further education college to discuss its £100 million Government-funded redevelopment and its hopes for higher education expansion, which are both key to Blackpool’s regeneration. What can the Prime Minister now do to accelerate investment in such projects, as part of his strategy to combat the economic downturn, as opposed to the Opposition, who do not have a clue? (231035)

We are continuing to spend huge amounts of money on regeneration and education, and that is the right thing to do—to prepare and equip ourselves for the global challenge that lies ahead. It is also right that we raise the education leaving age to 18, to enable people who are in work at 16 and 17 to get skills one day a week, to enable people to access part-time learning as well as full-time learning and to give opportunity to all, not just to some. I regret the fact that the Liberal party and the Conservative party seem to be for opportunity for some. We are for opportunity for all.

Q3. In his first statement to the House after becoming Prime Minister and in the Green Paper on the constitution that accompanied that statement, the Prime Minister said that he wanted to rebalance power between the Government and Parliament. He said that he wanted Parliament to have a greater ability to hold the Government to account. Two weeks ago, the Government announced that the House would sit for 128 days next year—the smallest number of sittings in a non-election year since the second world war. Does he see any tension between those two propositions? (231036)

We moved power from the Executive to the legislature; for example, in decisions about peace and war, and also decisions about treaties. That is what I meant. If the House of Commons can do its business efficiently in 128 days, that is the right course of action.

My right hon. Friend is very aware of the anxiety felt by many small investors in Icesave. We all have constituents with their life savings there. Mine have told me that they are anxious about developments and they are not being told very much, particularly about the structure of the scheme. Can my right hon. Friend confirm please that progress is now being made on the compensation scheme and that investors will be kept advised?

The Financial Services Authority has made an announcement about how it will deal with the problems that are faced by UK retail investors in those Icelandic banks. That statement was made last week and I am very happy to meet my hon. Friend to talk about these issues.

Q4. Does the Prime Minister agree that it is an absolute disgrace for the Black Police Association, which has been in receipt of substantial public funds, actively to discourage black and Asian people from joining the Metropolitan police? (231037)

We want to encourage more black and Asian people to join the police and we will continue to do that. Obviously I will look into what the hon. Gentleman says about the association, but it is important that the message goes out from all parties in the House that we want as many black and Asian people as possible to apply to join the police and to be recruited.

The Prime Minister will know that there is currently a large deployment of men and women serving in Afghanistan from Plymouth and the south-west. What assurances can he offer them, their families and the House that the Government will continue to invest in the equipment that they need to match the professional skills and dedication that they bring to the very difficult job that they do on our behalf?

My hon. Friend has done a great deal, visiting Afghanistan and representing many of her constituents in her area. One of the issues in Afghanistan that we have had to deal with is the provision of properly protected vehicles for our armed forces. I am pleased today to be able to announce the planned investment of more than £700 million to deliver new and improved protected vehicles to our armed forces, particularly in Afghanistan. We will be buying 700 new vehicles and upgrading more than 200 more. In the face of new and developing threats, that will mean that our armed forces have the best practical protection for the work that they do. I hope that all parts of the House will favour that.

Q5. Yesterday, along with other Derbyshire MPs, I met the chief constable of Derbyshire and the police authority. By their own admission, the Government underfund Derbyshire police by £5 million a year. As a result, Derbyshire is the fourth lowest funded police authority in the country and has the 14th lowest number of police officers per head of population. Will the Prime Minister order an inquiry into this travesty and ensure that the people of Derbyshire receive the funding and the police numbers that his Government say that they need to ensure public safety? (231038)

There are more police in this decade than at any time in our history, and more community support officers. That has been possible only because we have doubled the budget on police in the past 10 years. Not only do we have more police, but crime has come down as a result of their visible presence on the streets. We would not be able to afford the police services that we want in any part of the country if we took the advice of the Liberal leader to cut £20 billion out of public spending.

Is the Prime Minister aware that, between July and September this year, the BP oil company made a profit of £6.4 billion? When many pensioners and poor, vulnerable people in my constituency are suffering and wondering how they are going to pay to heat their homes this winter, is it not about time that the Government introduced a windfall tax on companies such as BP?

We have applied a levy to the utility companies to enable us to spend more on heating for pensioners and others in the winter months. The fact is that oil prices are coming down. Oil is now $60 a barrel, whereas it used to be $150, and it is important that those price cuts are passed on to all customers. We cannot take the advice of the shadow Chancellor on this matter. He resurfaced—or tried to resurface—with a statement that the price of petrol should go down, yet his fuel duty stabiliser would mean that the price of petrol would now automatically go up by 5p a litre—[Interruption.] He cannot deny it. That is why people doubt the judgment of the Conservative party.

Q6. In 1976, the United Kingdom was humiliated when the last Labour Government had to approach the International Monetary Fund to be bailed out. Should—God forbid —this Labour Government similarly have to go to the IMF for a bail-out, would the Prime Minister resign? (231039)

I think the hon. Gentleman should be remembering 1992, when the present Leader of the Opposition stood beside the then Chancellor of the Exchequer and, having tried to set interest rates at 18 per cent., they were unable to keep Britain in the European exchange rate mechanism. That led to 3 million unemployed, and that is the moment that the Conservatives should be remembering.

Q7. I am sure that my right hon. Friend will agree that vulnerable workers should be free from exploitation, whatever the economic climate. Will he therefore join Labour Members in welcoming the adoption of the temporary agency workers directive by the European Parliament last week? That follows two private Members’ Bills in this House: my own and that of my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller), who has also pursued this issue. Will my right hon. Friend now outline to the House how and when the directive will be implemented into UK law, so that it can be of benefit to up to 1 million such workers up and down the land? (231040)

Members on both sides of the House should remember that the CBI was also supportive of this arrangement. We will bring forward legislation in the next Session of Parliament to implement it. As is the usual practice with EU directives, there will be a detailed consultation on the UK implementation. I think that, given the agreement that has been achieved across business in this country, both sides of the House should support the agency workers directive.

Will the Prime Minister join me in welcoming the decision by the Army to organise a homecoming parade in the city of Belfast? Does he recognise that the troops from Northern Ireland who have performed so well and so bravely in Iraq and Afghanistan come from both sections of our community? The decision taken by Sinn Fein to run a counter-parade and protest is therefore all the more preposterous, and has heightened tensions in Northern Ireland as a whole. Will the Prime Minister join me in urging people in Northern Ireland to ensure that we have a peaceful Sunday, and that everyone has due respect for the role that has been played by our brave troops, particularly in Iraq and Afghanistan? I have seen the role that they have played in the reconstruction of Afghanistan and the work that they are doing in mentoring the Afghan army. Will he urge everyone to do nothing to drag us back to the bad old days?

I want every Sunday to be a peaceful Sunday in Northern Ireland, and I want us to work together to ensure that we can undertake the remaining stages of the devolution that will make stability for the longer term possible. I also agree with the right hon. Gentleman that the troops in our armed forces deserve the support of every community from which they come. Where there have been parades in the different cities and towns of this country, not only have they been peaceful but large numbers of people have turned out because they want to give support to our troops and show them that they have the confidence of the British people. I want that to be a feature of our life in every part of the United Kingdom for many years to come.

Q8. In these difficult financial times, I know that we have to extract value for money wherever we can and that difficult decisions will have to be made. We also face the threat of climate change, which puts extra demands on the economy and what the Government have to finance. May I draw my right hon. Friend’s attention to my early-day motion 2351—“Climate change and the UK’s contribution to the Kopernikus satellite programme”? It is a very important scientific programme to monitor, given the impact of climate change—[Interruption.]—so would it be possible for me and a small delegation of British scientists to meet the Prime Minister to discuss the importance of this programme to the UK economy? (231041)

I am very happy to do so, and I must say that I thought climate change was an issue that both sides of the House wanted to take action on. We recognise the importance of understanding and monitoring climate change. No decision has yet been taken on the level of UK funding, but a final decision will be taken in advance of the ministerial meeting in late November. I applaud my hon. Friend for everything he has done to raise these issues—through the European Space Agency’s programme and the wider work that he does on the environment. I used to think that the Tories supported a green policy, but now I am not so sure.

Q9. The Prime Minister says that he wants a third runway at Heathrow, so why are his Ministers lobbying against that, yet remaining part of his Government? (231042)

We said as a Government that we supported a third runway in principle. After all, there are five runways in Amsterdam, five in Paris and four in Frankfurt—and we are talking about only a third runway at Heathrow. We also said, however, that we would look into all the environmental considerations, which is what we are doing at the moment. We will come back to the House in due course.

Q10. This morning, together with other hon. Members, I attended the David Black award, which is a celebration of the British pig industry and quality standard charter marks. They support farmers who are committed to high animal welfare, quality control and traceability of their products. Does the Prime Minister share my concern that Government procurement figures show that 76 per cent. of bacon products and 39 per cent. of pork products do not come from quality pork standard mark suppliers? As my right hon. Friend helps out different sectors of industry, will he ensure that procurement supports British farmers? If the Government do not stand up for them, why should anybody else? (231043)

I thank my hon. Friend for campaigning on behalf of that industry. Everybody knows that British bacon is best.

The Prime Minister will be aware of the widespread public concern about foreclosures on mortgage properties, particularly by banks such as Northern Rock. Is he aware that some other debts—unsecured debts such as those on store cards—are being purchased by debt factoring companies, which are then applying to the courts for attachment to properties, subsequently obtaining possession of them for trivial debt? Is that a correct interpretation of the law, and if it is, does not the law need to be changed?

I am aware of that problem; we are looking into it. I believe that changes will be needed in practice.

Q11. Representatives of small businesses in my constituency are still contacting me to say that new loan arrangements are either being refused by the banks or agreed on harsher terms. Will the Prime Minister assure me that he and the Chancellor of the Exchequer will do what they can to ensure that the agreement with the banks feeds through to small businesses? (231044)

This is the central issue that must be dealt with in the next few days. We have given liquidity to the banks and recapitalised them, so now we must have their resumption of lending. If that can be achieved by their taking new decisions to lend, that is exactly what should be done. At the same time, we will look into other instruments through which banks or other financial institutions can give money to small businesses to increase their cash flow. We will look at everything necessary, so that further to the recapitalisation of the banks, we have the necessary resumption of lending.

I tried to phone Postwatch this morning to ask how to appeal against some of the post office closures in my area only to find that Postwatch had effectively ceased to exist—before the consultation had concluded. Is that fair?

I know that appeals made against closures have been successful in 44 cases. I will talk to the hon. Gentleman about how he can direct his own appeal.

Q12. On Monday, a family living in my constituency almost lost their home as a result of a 3 per cent. increase in their fixed mortgage rate, a bank that refused to negotiate, and a judge who told them to get it over quickly. Will my right hon. Friend, as a matter of urgency, redouble his efforts to make it clear to both banks and judges that we will intervene to safeguard homes, and that, unlike the Conservative party, we will not leave our families to sink or swim? (231045)

It is for precisely the reasons given by my hon. Friend that the judiciary have issued a new instruction that repossession must be the last resort, not the first resort, and that banks must consider alternative means of funding and other means by which mortgages can be paid over a longer period if necessary. I hope that we will also deal with some of the problems faced by people in the same position as my hon. Friend’s constituents.

We are changing the point at which unemployment benefit can be supported by mortgage interest repayment help. The new system will begin on 1 January, and will apply to people who have been unemployed for 13 weeks. We are taking the actions that are necessary, including, from the beginning of January, buying up old houses that are on the market so that we can encourage the housing market to move forward. I believe that we are taking the policy initiatives—[Interruption.] The Opposition may shout, but they have no policies.