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Volume 482: debated on Wednesday 5 November 2008

I am sure that the whole House will wish to join me in sending our profound condolences to the family and friends of the soldier from 2nd Battalion the Royal Gurkha Rifles who was killed in Afghanistan yesterday. In the week leading to Remembrance Sunday, we should remember the debt of gratitude that we owe to all those who have laid down their lives in service of our country.

Before I list my engagements, I am sure that the whole House will wish to join me in sending our sincere congratulations to Senator Barack Obama on winning the presidency of the United States and writing a new chapter in history in doing so. The bonds that unite the United States and the UK are vital to our prosperity and security and I know from talking to Senator Obama that he will be a true friend of Britain. The Government look forward to working with the new Administration as we both help people fairly through the downturn. I also want to pay tribute to Senator McCain, who has shown the characteristic dignity that has marked a lifetime of service to his country.

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.

May I add my condolences to the family of the dead soldier?

Over the next few weeks, the residents of Greater Manchester will have the opportunity to vote in the referendum on introducing congestion charging in return for £1.5 billion of Government investment in public transport. Many people support road pricing but do not support the scheme. Will the Prime Minister—[Interruption.]

Will the Prime Minister ensure that in the event of a “No” vote the people of Greater Manchester will have the opportunity to come back with an improved scheme without the concern that the Government might take the money away?

I know that the voting paper has options for a “Yes” vote and a “No” vote, but I am afraid that there is no option for a “Don’t know” vote. In the event of a “No” vote, it would be up to Greater Manchester authorities to decide whether they wanted to do further work on the proposals. The Government are in principle prepared to contribute, as the hon. Gentleman has said, up to £1.5 billion towards the Greater Manchester package, but that is dependent on the broad scope and nature of the package remaining the same. If Greater Manchester came back with a revised proposition, we would need to assess it on its merits.

The Prime Minister will be aware that this weekend South Africa will host the Southern African Development Community conference to discuss Zimbabwe and the atrocities in the Democratic Republic of the Congo. Will he continue to do all he can to ensure that the African leaders and the rest of the world realise that Zimbabwe, under the leadership of Morgan Tsvangirai, has resisted violence and stuck to peaceful and democratic means, and to ensure that that country is not sidelined because of what is happening in the DRC?

I welcome my hon. Friend’s long-term interest in Zimbabwe issues. I gather that the Speaker of the Zimbabwe Parliament is with us in this building today. I am determined that the international community act in a strong, united and decisive way on this issue. We have offered humanitarian aid—food aid going into Zimbabwe—but we regret that, despite all the discussions led by former President Mbeki, no agreement has yet been reached on the future of Zimbabwe and the personnel in the Government.

While we are determined to avoid a catastrophe in the Democratic Republic of the Congo—and we will take action as the Foreign Secretary said—by giving humanitarian aid and protecting civilians, and while Secretary-General Ban Ki-moon will visit the DRC in the next few days, a regional summit will be held to look further into this matter and a UN envoy will, I believe, be appointed very soon, I can assure my hon. Friend that we will not take our eyes off the humanitarian aid that we need to give to Zimbabwe and that we will not stop applying pressure for a political settlement that recognises the democratic will of the Zimbabwean people.

May I join the Prime Minister in paying tribute to the soldier from the Royal Gurkha Rifles who died in Musa Qala? We should honour his memory.

I join the Prime Minister in congratulating Barack Obama on his stunning victory in the American elections, and I also pay tribute to John McCain, not least for the gracious way in which he conceded. This really is an important moment—to have gone from the horror of segregation to the election of a black President in just four decades is an incredible transformation. It shows that the United States really is a beacon of hope, opportunity and change. I read this morning that the Prime Minister has sent a message to the President-elect; presumably it was not, “This is no time for a novice.”

What I said was that serious times needed serious people. Once again, the right hon. Gentleman has proved that he is not serious.

The Labour party—[Interruption.] You have made your strategic choice: it is called “more of the same” and it is sitting in front of you. You killed change when you bottled that election, and you buried change when you appointed Peter Mandelson.

Order. The right hon. Gentleman should follow the traditions of the House; I am not responsible for these matters.

Back to the business in hand. This week, the European Commission said that Britain faces a deeper recession next year than the United States, Japan or any major EU economy. The Prime Minister kept telling us that Britain was better prepared to face the recession. In fact, we are the worst prepared. Why was he wrong?

That was the only time I have ever heard the right hon. Gentleman quoting the European Commission. I have to tell him that the reason we are better prepared than other countries is that we have had low interest rates for years; we are now getting inflation down and it will come down further next year; we have high levels of employment—higher than in almost every other major industrial country; and we can come through this. At the same time, corporate balance sheets are strong outside the financial sector, and they are not in the position that they were in when the right hon. Gentleman was the adviser to the Chancellor in 1992. I also have to tell him that we are taking the long-term decisions for this country—on nuclear power, energy, infrastructure and planning—but we are not supported by the Conservative party.

The Prime Minister cannot hide from this: if we are better prepared, why is our recession forecast to be deeper? For years, he stood there reading out lists of countries that he told us we were beating. Yet according to the Commission, our recession next year will be worse than in Germany, France, Italy, Sweden, Spain, Greece or the United States. In fact, there are just two countries that we will do better than—Estonia and Latvia. They escaped the grip of Stalin; we are still in it. Just this weekend, the Prime Minister told people once again that Britain was “better prepared”. Why did he get it wrong?

I said that Britain is better prepared because of the reasons I have just given the right hon. Gentleman. He does not understand that since we rejected his policies and made the Bank of England independent and took the right course, we have had 10 years of economic growth, 10 years of stability, and 10 years in which 3 million jobs have been created. The right hon. Gentleman wants to compare the recent figures for European Union member states: Germany was in negative growth in the second quarter, France was in negative growth in the second quarter, Italy was in negative growth in the second quarter, and Ireland is in negative growth. We were not in negative growth in the second quarter.

The Prime Minister talks about his great decisions on the Bank of England; the terrible decision was to take it out of regulating the level of debt in the economy. Is not one of the reasons why our recession is predicted to be deeper that we have such high levels of personal debt? Will he confirm that we in fact have the highest level of household debt of any major economy? Does he not understand that we cannot build new Jerusalem on a mountain of debt?

If I can take debt overall in our economy—[Interruption.] The right hon. Gentleman usually likes to quote the International Monetary Fund, rather than the European Union. Let us look at debt levels in 2008: 37.6 per cent. public debt in the UK, compared with 55.5 per cent. in France, 56.1 per cent. in Germany, 101.3 per cent. in Italy and 94.3 per cent. in Japan. We have to look at personal and public debt together, and that is what we will do.

The IMF repeatedly warned this Government about the high levels of both personal and Government debt. I do not know why the Prime Minister did not just agree with my question, because this is what he said to the Labour conference in 1995. [Interruption.] It is another quote, and perhaps Labour Members would like to listen to it. These were the great words of the leader. [Interruption.] Why do Labour Members not listen for a change? [Interruption.]

Order. I want to hear what was said at the Labour party conference, because I am not allowed to be there.

I do not know why the right hon. Member for Normanton (Ed Balls), was shouting, but it was almost certainly “Balls”.

The Prime Minister said:

“I say to those who propose we simply tax, spend and borrow that it is because I care…about our responsibility to future generations that I tell you…we will not build the New Jerusalem on a mountain of debt”.

The facts are that we have the highest personal debt of any country in the world, one of the highest budget deficits in the world, and our regulation system has failed. In fact it failed so badly that the Prime Minister’s new Treasury Minister, Lord Myners, told the House of Lords this week that he wanted there to be a public inquiry into the regulatory failure. Can the Prime Minister tell us when we will have that public inquiry?

The Financial Services Secretary said no such thing, and I believe that the right hon. Gentleman is proving every time he speaks in the House that he is a novice in parliamentary procedure. When I referred to debt, I referred to low national public debt, and that is exactly what we have achieved since 1997 by reducing debt from 44 per cent. of national income to 38 per cent. this year. The Conservative party left us with higher levels of debt, and if the right hon. Gentleman wants to go back in history, he should remember his role as economic adviser to the Conservative Government when 3 million people were unemployed and, at the same time, we had interest rates at 18 per cent. As for borrowing, last week the shadow Chancellor said borrowing was the wrong approach. The Leader of the Opposition, however, said that borrowing

“is inevitable and you have to allow that to happen.”

The only change they represent is that they change their minds every week.

The Prime Minister says that I have in some way misrepresented what Lord Myners said. Let me explain exactly what he said. In the other place, Lord Lea asked him:

“If we are going to hold inquiries, do we not need a wider public inquiry?”

Lord Myners replied:

“My Lords, I agree with my noble friend.”—[Official Report, House of Lords, 3 November 2008; Vol. 705, c. 16.]

That is what he said. [Interruption.] That is the whole thing. He said we should have a public inquiry, and we should have one. Is not the truth that in Britain people are losing their homes, small businesses are closing, unemployment is rising and manufacturing output is falling again and that, by refusing to hold a public inquiry, the Prime Minister is yet again demonstrating that he cannot provide the change people want? On the day the American people voted for change, are not people in this country entitled to ask how much longer they will have to put up with more of the same from a Government who have failed?

The reason why the American people have voted is that they want progressive policies. They voted for a fiscal stimulus, opposed by the conservative; they voted for a rise in minimum wage, opposed by the conservative; they voted for regulation of pensions and mortgages, opposed by the conservative; they voted for tax credits, opposed by the conservative. The truth is that the Conservative party’s policies are rejected in America and in Britain by people who do not want to pursue them.

If the right hon. Gentleman will forgive me, on this day of all days, I believe that we should end this exchange by recognising the truly historic significance for America of the decision that has been made by the American people. They have demonstrated again and again the enduring strengths of their democracy and their values, and we will work closely with the new Administration, because their progressive policies are similar to ours.

Like the banks, the energy companies need considerable regulation. What can my right hon. Friend do to control gas and electricity prices for my poor families and pensioners?

We have already raised the winter allowance for pensioners, and it will be paid in the next few weeks; that is £250 for the over-60s and £400 for the over-80s. We are already coming down hard on the gas and electricity companies so that social tariffs—that is, the same rate as last year—are available to many low-income families in this country. We are continuing to talk to the electricity and gas companies about how the £900 million levy that we charged upon them can be used to give greater help to people who are poor or low-income, and to families on modest incomes as well. We will continue to do what we can to help people through these difficult times.

I would like to add my own expressions of sympathy and condolence to the family and friends of the soldier from the Royal Gurkha Rifles who tragically lost his life in Afghanistan this week. Of course, I would also like, on behalf of all Liberal Democrats, to join in congratulating Barack Obama on his extraordinary victory as the new President of the United States, and to wish him luck, because the hopes and expectations that people have of him to change America and change the world are immense.

The Prime Minister just said that he shares lots of policies with the new President-elect, so he will be aware that the central policy that Barack Obama fought on in his election was to cut taxes for people on low and middle incomes, paid for by the very wealthy. Why will the Prime Minister not do the same here?

What Barack Obama did not fight on was a policy for £20 billion of public spending cuts, and that is the effect of the policy of the Liberal party.

The fact is that this Prime Minister has fixed things so that a millionaire pays less in tax on their capital gains than their cleaner does on their wages. He is not learning from Barack Obama; he is copying the Conservatives, who want to cut more taxes for millionaires and not give an extra penny to anyone else. So will he cancel his special tax breaks for the very wealthy to put more money into the pockets of hard-pressed families right now?

I think that the right hon. Gentleman is a bit behind the times. We raised capital gains tax from 10 per cent., and at the same time we took action on non-domiciles in the United Kingdom, but I have to remind him that a tax and spending policy must add up. If he is going to propose £20 billion of public spending cuts, he is out of touch with the British people.

Is it not 40 years ago that Martin Luther King said, “I have a dream”, and was that dream not fulfilled in the election yesterday? Given that the Prime Minister will be in the United States on 15 November for a financial conference with President Bush, will he also take time to see the President-elect to discuss the many issues of foreign policy that we have together?

I am grateful to my hon. Friend, who undoubtedly underlines the significance of what has happened in the United States: more people voting than ever before; the first black President elected by the American people; and more young people engaged in political debate than ever before. I will continue my discussions with Senator Obama, the President-elect, and I hope to talk to him very soon.

Q2. The Prime Minister knows that since 1997 opportunities to learn and skill in the workplace, in communities and in further education colleges have been restricted. He looks surprised, but Government figures show that numbers in FE colleges alone fell by 20 per cent. last year, and the National Institute of Adult Continuing Education says that 1.5 million places have been lost in adult education since 2005. Why has he so savagely cut adult education, when, given that Brown’s bust means that more people will need to reskill and retrain, it is vital that we provide those opportunities? (233008)

There are more people in education than ever before. I hope that the hon. Gentleman will go back to look at the statistics, which show that the number of young people and the number of adults who have been benefiting from our courses since 1997 is far greater than was ever the case in the years before—we wish to continue that. One example of this is the apprenticeship, which is available to adults as well as to young people. We have trebled the number of apprenticeships in recent years.

President-elect Obama has consistently opposed the war in Iraq since 2002, and he has made it his stated policy to withdraw all US combat troops by April 2010. That is a very significant policy change. Does my right hon. Friend consider it a change in which we should all believe?

I announced in July that, as we completed our mission in Iraq, there would be a fundamental change in what our troops do in the first half of next year. We have, of course, completed a lot of work in training the Iraqi forces, and we will continue to do that until completion. We wish to pass control of the airport across to Iraqi authorities. We wish to help to speed up economic development in Basra, and we wish to see the local elections take place. We have moved from a role in combat to one of overwatch, and we will have a further fundamental change of mission next year.

Q3. The Prime Minister keeps seeking to reassure home owners and small businesses by urging the banks to pass on rate cuts to their borrowers, but the Abbey National is putting up its lending margins today. Why does he keep making such meaningless reassuring noises, when he cannot even persuade his own banks—the ones he owns—to pass on their rate cuts? (233009)

First, we do not own the Abbey National bank; it is owned by Santander. The second thing that I must point out to the hon. Gentleman is that interest rates have been cut from 5¾ per cent. to 4½ per cent, and the Bank has said that there is more scope for interest rate cuts. May I explain to the Conservatives what we have been trying to do in the past few weeks? We have been trying to get the liquidity into the system, recapitalise our banks and then get them to resume the lending that is necessary. The LIBOR has decreased from 6.25 per cent. to 5.25 per cent. We are starting to make progress, but I agree with what he says: that we want the banks and building societies to pass on the interest rate cuts to their mortgage holders.

Does my right hon. Friend agree that the President-elect’s inspirational address identified a number of key objectives, one of which was to help “a planet in peril”? Does my right hon. Friend agree that this time of economic downturn is one in which to invest in infrastructure for a low-carbon future, both in the public and private sector, and to work with the new US Administration on a new green deal that would benefit us all?

That is exactly what we want to do. We are committed to an 80 per cent. cut in carbon emissions by 2050. I believe that the policy is similar to that of the incoming US Administration. We want to work together towards an agreed solution in Copenhagen next year. We recognise that there are benefits in jobs, as well as in reductions in carbon emissions. That is why a new deal for the environment in America and Britain can create thousands of jobs for people in both continents.

Q4. The Prime Minister has guaranteed British savings in the Icelandic bank, Icesave. When will he do the same for the 1 million blameless people who have seen their pensions savings decimated in Equitable Life? (233010)

Q5. More than 70 Members have signed early-day motion 2189 calling for the inclusion of the marine Bill in this year’s Queen Speech. Will the Prime Minister assure us that the Bill will be included and that it will give adequate protection to our marine wildlife? (233011)

I know that my hon. Friend has taken a great interest in these matters. We are discussing them with the devolved Administrations to deliver a coherent approach across the United Kingdom. The Government continue to prepare the Bill for introduction early in the fourth Session and do not intend to reduce its scope or coverage.

Q6. Does the Prime Minister accept that when Major Morley was forced to deploy his troops in Snatch Land Rovers, he was given no choice, contrary to all the ministerial assurances given to commanders in the field that they would have whatever equipment they required? (233012)

That was a sad incident involving the deaths of young people serving our country. However, in recent years, we have done our best to provide the necessary equipment. We have spent more than £1 billion on new vehicles for operations. In 2006, we ordered 108 Mastiffs and, in 2007, took steps to increase vehicle numbers. We ordered 150 Ridgbacks and the first Jackals as part of a constant review of capability. In June, operational commanders were asked by the Defence Minister to look again at our vehicle options. More armoured vehicles were decided upon, and last week we were able to announce the purchase of nearly 700 vehicles and an upgrade of more than 200 vehicles. That is a total of 1,200 new vehicles, and that is why the Conservative Chairman of the Defence Committee said:

“The personal equipment that our Armed Forces now have is better than it’s ever been.”

Is my right hon. Friend aware that those of us who are pro-American hope that the very welcome result of the presidential election will result in the United States regaining the respect of the international community? When the new President-elect takes office next year, I hope that one of the first steps he will take will be to end the torture of political prisoners. That would be a very welcome step.

Q7. Up to £200 million given by the public to charities has been frozen as a result of the banking crisis. Will the Government introduce measures to support that vital sector before it has to start cutting services to the people most vulnerable to a deep recession, for which the Prime Minister has prepared us so badly? (233013)

I, too, want to do my best to help charities. We created Gift Aid, which allowed them to get very considerable relief, and over recent years we have given substantial money to work in partnership with charities. Of course, we will consider anything that helps to protect the charitable sector, and we are already considering a number of measures through which to do so.

Q8. Does the Prime Minister agree that it is quite remarkable that, after the economic tsunami lapped the shores of every continent, countries of the left, right and centre—[Interruption.] (233014)

Is it not quite remarkable that Governments of the left, right and centre have adopted our policy of taking over banks and recapitalising them? We are fixing not only our own roof here in Britain, but roofs around the world.

We are doing our best to work with other countries. One of the reasons I went to the Gulf was to talk to other countries about how we can better prepare for the future. The Conservative party opposed all our measures on Northern Rock, and on the banking crisis and HBOS. The shadow Chancellor opposed what we did on share speculation. Conservative Members also opposed what we did on regulation—they wanted deregulation. They have no answers to the problems facing the country.

Does the Prime Minister agree that it would be an absurd dumbing down of the principle of democracy if last week he felt himself able, quite rightly, to express his views about the antics of Russell Brand and Jonathan Ross as employees of the independent BBC but felt himself unable this week to express his views about the increasingly obvious fact that the independent Bank of England has moved too slowly and by too small a margin to reduce interest rates?

May I just quote back to the right hon. Gentleman what the shadow Chancellor said when the Bank of England was made independent? He said that it was independent to make its decisions, and that is the way that it should be.

Q9. The whole House was delighted by the commitment made by my right hon. Friend the Secretary of State for Health to ending prescription charges for all cancer patients, but there are other long-term patients who want to know whether the Government will extend that to them as well. Will the Prime Minister adopt a phrase from Senator Obama and say, “Yes, we can”? (233015)

We are committed to greater fairness in the NHS, and we know the worries of people who have long-term illnesses. We have agreed to abolish prescription charges for all cancer patients next year, and we are committed to abolishing charges for everyone with a long-term condition as we deliver savings in the drugs budget over the coming years. [Interruption.] The Conservatives are clearly not interested in the future of the NHS. We created it, and we are interested.

In what way does the Prime Minister expect the nature of the special relationship with America to change under President Obama?

We have worked very closely with America over the past few months on the economic crisis. President Bush has called the leaders’ meeting in Washington, and there has been a co-ordinated cut in interest rates, led by the central banks of America. Britain and Europe. I believe that, over the next few months, we will have to work even more closely to deal with the international and national repercussions of what is happening in the economies of the world. Senator Obama has already indicated that he wishes more co-ordinated global action on these matters, and I believe that we will be able to work together very closely and lead the world in taking us through these difficult times.