The Department’s objectives remain the same as I said at the last Treasury questions.
Figures released yesterday show that unemployment has risen to its highest level since 1997, with a 7 per cent. increase in the past three months in the Yorkshire and Humber region alone—devastating news for people just before Christmas, as well as a huge burden on the taxpayer. The economist, George Buckley, has said that, because unemployment is normally a lagging indicator,
“to see so many job losses this early in the economic cycle is extremely worrying.”
Does the Chancellor agree with that? If he does, is the Government’s rescue package therefore simply not good enough?
No. I believe that it is necessary, though, for us to do everything that we can to help people who lose their jobs. That is why, in the pre-Budget report, I set aside a further £1.3 billion to help the Department for Work and Pensions and Jobcentre Plus in particular, so that if people lose their jobs, we can help to match them with vacancies. It is worth bearing in mind that, even during the past month, more than 200,000 people went into work—they found new jobs—and we need to ensure that we match those people who may lose their jobs with the vacancies currently in the economy. We are taking action, but, of course, the other action that we have taken to stabilise the banking system and provide wider support for business will help as well, but I am determined to do everything that we possibly can to ensure that we help people who lose their jobs.
My right hon. Friend is right that we have far more effective results not only if we work on prevention, rather than on simply ameliorating the problems later on, but if we can get better co-ordination between agencies. That is why we have been supporting the local area agreements between councils, the police and other local organisations and doing that more widely as well. We are keen to do more to ensure that funding works in that way and supports the kind of partnership action that can, as he says, deliver results.
The director general of the CBI has just sent a letter to all his members that says:
“Until this underlying issue—getting credit flowing around our economy—is resolved, economic activity cannot begin to recover”,
that the Government have failed to
“address the root of the problem”
and that, until they do,
“other government initiatives to mitigate the recession will be ineffective and expensive failures”.
When will the Prime Minister and the Chancellor swallow their pride, accept that the bank recapitalisation plan has not rescued the economy and introduce a national loan guarantee scheme, which we have proposed and which this country needs?
The purpose of the recapitalisation scheme, which was clearly stated when I set out the proposals in October, was to ensure that the banking system remained viable and to rescue it from imminent collapse. We did that, and other countries right across the world did the same. I said at the time, and I say again today, that we will continue to look at that scheme to see how it can be improved and further strengthened. The director general of the CBI, to whom I spoke last night, is quite right to say that we need to do more to ensure that banks lend in the wider economy. It is important that we ensure that banks are sufficiently strong to do that, but it is also important to make sure that lending takes place.
As for the hon. Gentleman’s proposal, it is an empty promise. He talks about a national scheme, yet he has quite explicitly said that the Conservative party would spend no more money; it would do absolutely nothing, so the promise that he makes is empty. Instead, he should perhaps pay greater heed to what the chairman of the CBI said—that although there might be a cost to the fiscal stimulus, the cost would be far greater if we did nothing.
The national loan guarantee scheme is supported by every single business organisation. It is exactly equivalent to the inter-bank guarantees that the Government have put in place, but does not add to public expenditure. It is consistent with what the Governor and deputy governor of the Bank of England have said this week. Is not the truth that the country has been in recession for six months, and Labour’s policies are not working? The Government said that they would get recapitalisation going to help start lending again, and lending is contracting. They said that their stamp duty holiday would restart the housing market, and it is plummeting. They said that they would pay bills to small businesses more quickly, and a survey today says that the situation is actually getting worse. They said that their massively expensive VAT cut would stimulate the economy, but their own former Minister, the right hon. Member for Birkenhead (Mr. Field), says that it is
“like spitting in the face of an economic hurricane.”—[Official Report, 17 December 2008; Vol. 485, c. 1139.]
Meanwhile, unemployment is soaring early in the cycle, and a Cabinet Minister says that Britain is facing the worst recession that we have ever known. Could the Chancellor explain why it is that all Labour Governments leave office with unemployment higher than when they entered office?
What the hon. Gentleman says might have more strength if he was prepared to do something to help the economy, businesses and people; he is not prepared to do so. He talks about a scheme for national lending, yet he has quite explicitly said that there will be no more money to support it. That is an empty promise. We are supporting the economy and are helping people. We have recapitalised the banks, which has prevented many banks from collapsing. We are taking steps to extend lending. The measures that we have taken in relation to VAT, to cutting income tax for basic rate taxpayers, and to helping businesses will all help in the face of a global downturn, the like of which we have not seen for generations. The Conservative party is making it quite clear that if it were in office, the choice that it would make is to do absolutely nothing to help people. [Interruption.] That is what the Conservatives did in the 1980s and the 1990s. They can shout and bawl all they like, but the fact remains that the Conservatives’ approach is wrong, muddled and would not help the British economy or the people of this country.
Earlier, the Chancellor said that the US regulatory authorities have some questions to answer about the Madoff $50 billion fraud, but at least over there they prosecute their fraudsters. Madoff was prosecuted, as was Conrad Black and the chief of Enron. The City of London has a lamentable record when it comes to investigating, prosecuting and convicting City fraudsters. Will the Chancellor or other Ministers look into that, and improve the situation, so that those associated with fraudulent activities that have led to the credit crunch here in the UK are prosecuted?
As the hon. Gentleman will know, and as the Public Accounts Committee will be aware, the Government have in fact achieved more than the original targets for the Gershon savings, which were more than £20 billion; there has been considerable independent examination of that. Furthermore, we are on course to deliver more than £30 billion in efficiency savings as part of the comprehensive spending review, and we have set these further targets now as part of the pre-Budget report. That contrasts with the approach of the hon. Gentleman’s party; his party leader said:
“It cannot and must not simply be about ‘efficiency savings’”—
presumably, his party prefers service cuts.
I agree with the hon. Lady that we want to keep investing to support green jobs. That is a great opportunity for us for the future; it is certainly an issue on which the new Department is working hard. We need to continue to invest in things such as the capital projects. That is why a major part of the fiscal stimulus was bringing forward capital programmes to support jobs. However, it is also right to put money into people’s pockets right now, very quickly, to help support the economy. Hon. Members on both sides should recognise that the scale of the economic challenges that face every single country in the world means that we have to take a whole range of measures. That is the best way to get the kind of action that we need and to help us come through this situation faster.
Despite the Chancellor’s efforts to recapitalise the banks—and he has done everything that he can in that direction—is it not the case that banks must not enter into a reckless round of lending, but look for good companies, which will be around at the other side of this recession, to take advantage of his generosity at this point? Is it not also the case that banks rightly recognise that too many boardrooms are stuffed with old Etonians who have no idea of how to deal with modern business, but allow themselves to be fooled by greed and avarice and go into schemes that lose billions for their country?
Speak for Loretto!
I do think that it is important—[Interruption.] Mr. Speaker, you have only to look at the behaviour of those on the Opposition Front Bench to see how fit they are to run anything. I agree with my hon. Friend. Although we want to encourage banks to lend into the wider economy, banks need to be certain that they engage in responsible lending and do not end up lending money to people who cannot repay the loans that they take out.
It is exactly because it is important to make sure that we pursue every avenue in tackling waste and inefficiencies that we have the Public Accounts Committee, the National Audit Office and the Audit Commission. It is right that there should be all those organisations and that they should do their jobs in pursuing such matters. It is also right that Departments need to take greater action to root out waste wherever they find it. That is why we have set the further target of another £5 billion of efficiency savings in 2010.
I had hoped that we would be able to make a statement on Equitable Life before the recess, and it is a matter of regret to me that we have not been able to do so. I apologise to the House and to the Prime Minister for the fact that it has taken a little bit longer than I would have liked to get the policy options to a stage where we can make a firm decision and issue a statement. My right hon. and learned Friend the Leader of the House has announced that a statement will be made when we come back after the Christmas recess, and I am sure that that will be the case.
I agree with the hon. Gentleman. We need to ensure that we support jobs in all parts of the country, including the highlands and islands of Scotland. The nationalist Administration could do far more than they are doing. For example, we have said that we want to bring forward public investment; they have said in principle that they are prepared to do that but have yet to come up with specific proposals. Moreover, their reforms of the private finance initiative have meant, in effect, that a lot of investment has been sterilised. It is high time that they realised the importance of getting on with supporting the whole Scottish economy as well as that of the highlands and islands.