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Volume 486: debated on Wednesday 14 January 2009

Before I list my engagements, I am sure that the whole House will wish to join me in sending our profound condolences to the families and friends of the servicemen killed in Afghanistan since we last met: Serjeant Christopher Reed of 6th Battalion The Rifles, and Corporals Robert Deering and Liam Elms, Lance Corporal Ben Whatley and Marine Travis Mackin, all from the Royal Marines. Afghanistan is the front line against the Taliban. These were brave and committed men, dedicated to their country and to their colleagues, and I know that the whole House will agree with me that we owe them, and all who have lost their lives, all our gratitude for all their services. Their lives will be remembered with pride.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today. I shall be meeting President Sarkozy this evening and visiting Chancellor Merkel on Thursday, and looking at what we can do to work for a ceasefire in Gaza as well as what the G20 will be able to do to deal with the global financial crisis.

I thank my right hon. Friend for his answer. May I, too, offer my condolences to the families affected?

Today’s announcement on support for small businesses will help some firms in Erewash, and will crucially help my constituents stay in work. However, can my right hon. Friend assure me that the help that is on offer will be properly targeted and focused on the businesses that need it most?

I am grateful to my hon. Friend, who has been a great supporter of business in her constituency. This is real help for business now. It is targeted and focused, it is funded and it is additional to what has been done before. It is real help to small businesses that are looking for help with their overdrafts or looking to invest in the future. It is real help for businesses that are looking for working capital over the next year, and will increase the supply of that by £10 billion. It is real help for high-technology firms that want their debt replaced by equity. We will buy shares in those companies, and there will be real help with credit insurance. This is real help now, to deal with specific problems—real help that is funded by Government.

Planted question, copied policy—what a pity the Government did not agree to a parliamentary statement to announce a good Conservative policy.

I join the Prime Minister in paying tribute to Marine Travis Mackin, Serjeant Chris Reed, Corporal Liam Elms, Lance Corporal Benjamin Whatley and Corporal Robert Deering. That so many lives have been lost in the past four weeks is a poignant reminder of the sacrifices that our troops are making in Afghanistan on our country’s behalf, and we pay tribute to them all.

At the start of this year, I would like to give the Prime Minister a chance to be straight about the recession that he said we would never have. Will he now finally admit that he was completely wrong to say that he had abolished boom and bust? That was wrong, wasn’t it?

This is a global financial crisis; it is happening in America, in Europe—in every part of the world. Let me tell the right hon. Gentleman one thing: nobody is copying Conservative party economic policy. He likes to think that people are. France is not copying Conservative economic policy; Germany is not copying Conservative economic policy; the current Administration in America are not copying Conservative economic policy and the future American Administration are not copying Conservative economic policy. No one except the right hon. Gentleman proposes to cut public spending at this time. The whole Conservative party policy is to cut public spending when we need it. One cannot fund support for business without the public expenditure to make it possible. The whole Conservative strategy is to cut when we need to invest.

The Prime Minister says that no one is copying our policies in a week when he has announced a pale imitation of our jobs package and of our loans package. It is not a butler they need in Downing street; it is a photocopier.

On boom and bust, does the Prime Minister not understand that, because he cannot be frank about the past, no one will believe him about the future? Is that not one of the reasons why it is so difficult to get confidence back in the economy? Evidence of the depth of this recession is mounting: nearly 10,000 more jobs lost in the past week, 10 more firms going bust compared with a year ago, and the worst survey since records began. The forecast of just seven weeks ago was that the economy would start to grow again at the end of June. Is the Prime Minister willing to repeat that forecast today?

I have said everywhere that that depends on the level of international co-operation that we can get. The right hon. Gentleman says that we are copying his policy on unemployment, but he wants to abolish the new deal, which is the basis of helping the unemployed. He wants to cut the budget of the Department for Work and Pensions, when it needs to do more to help the unemployed. One can pluck any figure out of the air about help one wants to give business, but if there is no money behind it and no possibility of funding, and one wants to cut the budget of the Department for Business, Enterprise and Regulatory Reform, which is doing the funding, it adds up to nothing. It is a do nothing policy. That is the Conservative party.

The point is that the Prime Minister is achieving nothing. The whole House will have heard that he will not repeat the Chancellor’s forecast of just seven weeks ago. The explicit reason that the Chancellor gave in his pre-Budget report for his forecast being more optimistic than almost anybody else’s was his measure to cut value added tax. That VAT cut has been condemned by retailers, attacked as “fatuous” by a former Trade Minister and ridiculed by shoppers. Worse, it is adding £12.5 billion to Government debt. Is it not now clear that the centrepiece of the Government’s strategy to fight the recession is an expensive failure?

We raised the pension by £60—the Conservatives opposed it. We raised child benefit from 1 January—they opposed it. We are raising tax allowances in April—they opposed it. We are investing more in the economy and they are opposing that.

As for VAT—[Interruption.] Incidentally, it was promoted not just by us but by the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), and Lord Lamont, who said:

“If there are to be any tax cuts, my first candidate would be VAT”.

So the Conservative party is not exactly united on that. The right hon. Gentleman may think that VAT is unimportant, but at the end of every week, the typical family has more than £5 extra in their pockets. It may not matter to the people on the Opposition Front Bench that £5 extra is in people’s pockets—that is £275 a year, as a result of the cut in VAT. It is more money for everyone in the community, not just the few whom they support, and more money so that people can make choices about what they spend. If we take together all the measures that we have taken, and look at every other country in the world, we find that they want fiscal expansion and that the Conservative party is the only party that wants public spending cuts. The Conservatives are out of touch with the rest of the world; they are completely isolated.

There is no other country in the world that is proposing to cut 2.5 per cent. off VAT. There is no other country in the world that is having to put up taxes on people earning £19,000 and £20,000 because it is so bankrupt. It is the Prime Minister who is completely isolated.

I thought that the Prime Minister might mention the former Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke)—my forecast is slightly better than the Prime Minister’s—and I checked what he said on the day of the pre-Budget report. He said that the fiscal stimulus was “not affordable” and a “reckless gamble” and that it would make the recession “worse” and

“the recovery…long and painful”.—[Official Report, 24 November 2008; Vol. 483, c. 511.]

That is what he said—and by the way, this was the Chancellor who gave this Prime Minister a golden inheritance that he ruined. Only the Prime Minister could smile at ruining a golden inheritance.

Let us look at what the retailers say about this VAT cut. The head of Marks and Spencer says that the VAT cut has

“not made a material difference”.

The head of Sainsbury’s describes it as an “annoyance”. These are the very people it was meant to help, yet they are condemning it. Is it not time to admit that the Prime Minister has wasted £12.5 billion in an appallingly expensive failure?

Let us be clear, first, about what the former Chancellor said:

“I may be in a minority,”


“I would look at a…temporary reduction in VAT which is the best way of stimulating spending, consumer spending which helps businesses”.

That is exactly what he said, and so did Lord Lamont. My point is that we have spent £1 billion on this. It is a tax cut for the whole year which adds up to £12 billion. It is £275 in people’s pockets, as a result of the effect on the typical family. The right hon. Gentleman may think that it is irrelevant, but people in my constituency and others think that it is important. He opposes, let us remember, the £60 increase in the pension, the rise in child benefit that we brought about and a fiscal stimulus, because he wants to cut public spending. He is totally on the wrong side of the argument. Even the monetarists in America are now supporting the need for the stimulus. If he wants to be outside the consensus about what needs to be done, let it be; but people will remember that at a time of difficulty for the British people, the Conservatives wanted to cut the very services on which the British people depend.

It is not that I think that the VAT cut is irrelevant; it is that the leaders of the biggest retail chains in Britain all think that it is not working and that it is irrelevant. The truth is that the Government’s policies are achieving nothing. They announced a stamp duty holiday and the housing market got worse; they announced a bank bail-out, yet the banks are not lending; they announced a jobs summit on the day when thousands of jobs were lost. It is not just that the Prime Minister is running round like a headless chicken, making one bogus announcement after another, doing nothing for confidence. Is not the worst thing of all this: by spending £12.5 billion by cutting VAT, is he not just building up debts for Britain’s children in a vain attempt to save his own skin?

The only party that can help Britain’s children is the party that is increasing child benefit, investing in the child trust fund, investing in Sure Start and investing in nursery education—all the programmes that the Conservative party will cut. I hope that the Conservative party will wake up to an economic reality: that it cannot promise £50 billion to business and then say that it is to be funded by absolutely nothing. That is a do nothing policy. The Conservatives are the do nothing party. They would leave people defenceless in the face of a global financial crisis. Other countries will not do that. We will not walk by on the other side. The Conservatives would; we will not.

Hundreds of thousands of innocent Tamil civilians are under siege in Sri Lanka because of the aerial bombardment by the Sri Lankan Government. Last Sunday, the editor of the leading newspaper there was assassinated. He said, in an obituary written before he was killed, that this was due to the forces of the Government. Will the Prime Minister please use his good offices, either unilaterally or through the European Union, to call for a ceasefire so that all those involved in this conflict stop their violence, so that peace can return to that beautiful island?

I know, from talking to my right hon. Friend on many occasions about this, how strongly he feels about what is happening in Sri Lanka. I agree with him about the terrible violence that is happening there. I also agree with him about the need for a ceasefire. I will be talking to President Sarkozy and Chancellor Merkel, and that will be one of the issues that I will raise with them.

I should like to add my own expressions of sympathy and condolence to the families and friends of Corporal Robert Deering, Lance Corporal Ben Whatley, Corporal Liam Elms, Serjeant Christopher Reed and Marine Travis Mackin, all of whom tragically lost their lives serving this country and the people of Afghanistan in Helmand province.

Taxpayers have already had to sink £37 billion into our banks to get them lending again, so today they will be wondering why on earth they should risk a further £10 billion, just to get the banks to do what they promised to do in the first place. Why is the Prime Minister playing copycat with the leader of the Conservatives when he should be playing hardball with the banks?

I have just explained that the Conservative scheme is completely unfunded, and the right hon. Gentleman had better look at what he would put up to help people in this difficult situation. As far as the banks are concerned, the £10 billion is working capital that will go to firms over the course of the next year. The business guarantee scheme is to help firms that want to convert their overdrafts into loans, or that need investment capital. We will buy shares in high-technology companies that have a viable future, so that they can transfer their debt into equity. These are the things that we can do practically. Since November, 20,000 firms have already benefited from the cash-flow promises that we made in the Budget that we would give deferral of taxation to people who were facing a need for working capital or for cash flow. So far from not taking action, 20,000 firms have already benefited.

Here is what he should do—[Interruption.] He should stop telling the banks to hoard cash and to lend it out at the same time, and he should use one of the part-nationalised banks as a state bank to lend money directly to viable British businesses. I put that to him, right here, two months ago, and he did not listen. Is it not time that he did?

I admire the right hon. Gentleman’s certainty, but let me just say this: we have asked the two banks in which we have shares to maintain the lending of 2007, which was a high level of lending both to businesses and to mortgage lenders. I believe that that is what they are doing at the moment, and we are monitoring what they are doing every week. As for placing further conditions on the banks, so that we can get more lending into the economy, we are making available the money that we have announced today, which will go to small businesses themselves. That is an important element of helping small businesses through these difficulties, but we will not hesitate to look at other measures that are necessary to get the financial system moving. All around the world, people have recapitalised the banks. All around the world, getting the funding moving is the important question. I believe that the measures we have taken today will make a difference, but we will not hesitate to take further measures when they are necessary.

Will the Prime Minister bear it in mind that, in the past three weeks, the Israeli forces have killed 1,000 people in Gaza, 300 of whom were children, and denied medical aid, food and energy and blockaded the people during the past year? These are war crimes. They have committed acts against the people of Gaza that ought to be referred to the International Criminal Court. Will the Prime Minister join the calls to ensure that that takes place?

We took action in drafting the resolution that went through the United Nations last week. Words cannot describe the feeling that families will have as a child dies, or at the level of civilian deaths and casualties and the displacement of 90,000 people in Gaza, but our resolution sought to call for an immediate ceasefire, to recognise the damage that had been done and was being done, and to call for humanitarian action—a call that I repeated when I talked to Prime Minister Olmert last night and asked him to increase the humanitarian action and to take the necessary action to achieve a ceasefire.

The reason why we supported the UN measure was that the Arab countries were also prepared to sign up to two things that are very important to any sustainable ceasefire. The first is an end to arms trafficking and particularly the destruction of the tunnels in Gaza. I talked to President Mubarak yesterday about what we can do and how we can help to achieve that. Secondly, of course—[Interruption.] I think this is important, as we will also need international support to execute the opening of the crossings. It is important that we have the support of the Arab League countries as well as the other countries that signed that motion. In other words, we are doing everything that we can to make possible an immediate ceasefire.

Q2. In July 2007, the Prime Minister promised to lay before Parliament an annual report detailing Ministers’ interests. Why, 18 months later, are we still waiting for one? (246426)

I congratulate my right hon. Friend on the publication of the “New Opportunities” White Paper. Does he agree—I have an instinct on this one—that although social mobility is of course a matter of social justice, it is also a matter of simple economic common sense?

I would have thought that there would be all-party support for the “New Opportunities” White Paper. It is, after all, about helping children and particularly infants get the best possible chance in life by extending play groups, Sure Start and nursery education. It is about giving people the best teachers at their schools and giving people the chance to get the benefit of the best education that is possible. It is about giving more people the chance to go to university and college or into apprenticeships—and there were precise announcements yesterday about what can happen. It is also about giving people a second chance if they missed out at the beginning. I am sorry that the Conservative party could not support the “New Opportunities” White Paper. Again, it would cut spending in the very areas that we need to expand for the sake of both the society we live in and the country’s economy.

Q3. The Prime Minister will recall that on 27 February last year, he said:“The message should go out today clearly that decisions in this country should be made in the Chamber of this House and not on the roof of this House.”—[Official Report, 27 February 2008; Vol. 472, c. 1082.]Will he now make a pledge that any further expansion at Heathrow will be subject to a vote in this Chamber? (246427)

The hon. Gentleman—I think—knows the procedure that we are following on this. First, there was a decision in principle—subject to air noise, subject to pollution and subject to access. The Secretary of State is examining this matter and he will report to Parliament. There will be a debate about what he says in the questions that follow. Then, if the matter were accepted and a proposal were put by the Secretary of State, it would go to a planning inquiry.

Will the Prime Minister send best wishes to President-elect Obama for his inauguration next Tuesday, and will he work with him to secure lasting peace in the middle east?

I have had the advantage of talking to President Obama about some of these issues. The whole House will want to welcome the new President. We hope to work very closely with him. There are major international issues, but the first and most immediate is the middle east. I believe that the relationships between Britain and America will strengthen over the years.

Q4. Seventy per cent. of imported pork is produced to animal welfare standards that would be unlawful in this country. [Interruption.] Given the Environment Secretary’s recent comments that we need clearer food labelling, which my Food Labelling Bill with all-party support would have provided, does the Prime Minister agree that now is the time for compulsory country-of-origin labelling to give a fair deal to British consumers, British farmers and British meat? (246429)

If I may say so, that was an appropriate question from the aptly named Member. The Department is in active discussions with all parties on this issue, and we are also in discussion with the supermarkets. We want an agreed set of voluntary criteria that will allow consumers to make informed choices and support our farmers. I believe that UK producers set the standard for compassionate pigmeat production when we introduced new welfare standards, but all EU member states must be compliant with the new EU legislation. We will insist that standards be met.

For too many of my constituents, the worst consequence of the last recession in the early ’90s was losing their home as a result of repossession. Can my right hon. Friend reassure us that in this downturn, either the loss of a job or a dramatic reduction in family income, will not necessarily result in the loss of the family home?

That is why on 1 January we introduced a new measure so that at a point of 13 weeks from when someone becomes unemployed, they will get support directly for their mortgage. It is a far more generous scheme than we had a few years ago. Our determination is that nobody who is attempting to pay their mortgage will lose their house as a result of being jobless.

At the same time, we recognise that people in work, where one in the family is not working, may suffer a loss of income as well. We are looking to the building societies for a moratorium on repossessions. We are looking for a very precise code that can deal with this problem, and we are prepared to back financially measures that will allow people to extend their mortgages at a time of difficulty.

I accept that this costs money and that it is necessary to fund it. We are prepared to make available the funding necessary in the interests of working people. Not all parties, unfortunately, agree with us.

Q5. Will the Prime Minister confirm that as we face the deepest recession in a quarter of a century, the project to rebuild St. Helier hospital—a snip at £150 million, just 100th of the amount spent on the VAT reduction—will receive his support and will receive the signature of his Chancellor on the £150 million cheque at the appropriate moment, thereby providing real jobs for local people and new hospital beds for local patients? (246430)

The hon. Gentleman is right: this is a major investment that the trust board has approved—I believe that it is £140 million for St. Helier hospital. It means a brand new state-of-the-art building that will house the majority of the hospital’s wards and clinics. I believe that the business case has been approved by the primary care trust and the acute trust board. It has now been submitted for consideration, and then it will come to the Department of Health for approval. I gather that he met the Secretary of State for Health last night to discuss it, and we will ensure that no barriers are put in the way of the discussion that needs to take place.

Q6. I join those who have paid tribute to those service personnel who have lost their lives and been injured, and I speak particularly for Plymouth MPs when I say that our thoughts are with the close friends and family of Marine Mackin. The Prime Minister referred to the measures being taken now, including the VAT reduction, to give real help to my constituents, but can he assure the House that he will continue with the high levels of investment in schools, hospitals and infrastructure? (246431)

We are investing £10 billion more in the coming year than last year in public services. There will be more investment in our schools and our education provision than at any time in our history—this year and then next year. [Interruption.] The Leader of the Opposition says that there will be a lot less next year. Yes, there would be a lot less if he were in power, but the fact of the matter is that there will be a lot more as a result of the decisions that we have made.

There is clearly a philosophical difference here. We believe, at a time of difficulty, that it is our duty to help people and to help people get through a downturn. We believe that we have learned from the mistakes that the Conservatives made in the 1990s and 1980s about what it is right to do. We will not desert people at a time of need; we will invest. It is unfortunate that there is not an all-party consensus on that.

Q7. Several thousand people in Swindon are directly or indirectly employed by the motor industry. Much help has already been given by the regional development agency and the Government office, but what further plans does my right hon. Friend have to help this important industry during the global economic downturn? (246432)

My hon. Friend—who is the Member of Parliament for South Swindon—is absolutely right. Two issues face the car industry at the moment. One is a shortage—[Interruption.] Opposition Members laugh when we talk about the car industry. The first issue is a shortage of demand for cars; the second is the availability of credit for people buying cars. We have been talking to the various car companies and we will make announcements in due course, but those two problems must be dealt with. In terms of the car credit problem, which relates to loans for car purchase, this is basically a market that is outside the traditional banking industry, and we must look at what we can do to prevent it from freezing in the way other markets have. This is a detailed and technical question about how we can get help into the car loan industry, but we are looking at it very carefully.

Some firms in the car industry have already asked us about help with training skilled workers so that they can rebuild, and build, their skills during the period of downturn, and we are also prepared to provide that. In other words, we will do what we can to help.

Next week the new President of the United States of America will take office. What differences are there between him and the Prime Minister, apart from the Prime Minister’s having inadvertently said that he had already saved the world and the President’s having said that he needs to do so?

I am looking forward to working with President Obama. I also pay tribute to what President Bush has done—he was the first to recognise the importance of dealing with international terrorism after 11 September 2001—but a new Administration have policies for a fiscal stimulus, and that will help Northern Ireland as well as the rest of the United Kingdom. If all the economies can work together in co-ordination, the benefit of what we do individually can be magnified a great deal.

I believe that the work that the Obama Administration are about to do to build a stronger economy will be complemented by what we can do in Europe, and by what China and other countries can do. I believe that the consensus throughout the world will be not only that we needed to recapitalise the banks, but that we need the very fiscal stimulus that, unfortunately, not all Members can support.

Q8. The Prime Minister may be aware that DK Eyewitness, the world’s best-selling guide book publisher, recently declared Bristol one of the world’s top 10 cities to visit in 2008. He is more than welcome to check out its recommendation himself whenever he wishes. More important is the fact that our city has also been shortlisted for the title of European green capital of the year, and has been voted the United Kingdom’s most sustainable city. Does the Prime Minister agree with me, and with the people of Bristol, that green jobs and sustainable development are the way out of the present economic downturn? (246433)

I am grateful to my hon. Friend, and I look forward to visiting Bristol very soon. As for the environment, my hon. Friend is absolutely right. I believe that as we come out of this downturn, one of the triggers for further growth can be investment in the environment. We are going to invest in green and environmental technologies: on that we have an agenda in common with President Obama. I believe that when we meet at the G20 summit in April there will be general agreement that one of the ways in which we can increase demand in the world economy and create jobs for the future is by investing in our environmental industries, and we will certainly do that.