1. When he expects the Saville inquiry to make its final report; and what consideration he has given to bringing the inquiry to a conclusion. (248299)

Lord Saville informed me last November that he expects to submit his inquiry report this autumn. As I have made clear to Lord Saville, to the families involved and to the House, we are deeply disappointed by the continued delay in publication. However, I remind the House that it is in the interests of everyone that the independent inquiry works first and foremost to establish the truth of the events of that tragic day.

Given that the inquiry has now spent nearly £200 million and that a number of QCs have become millionaires on the back of it, what does the Secretary of State think will be achieved between now and the autumn that has not yet been achieved?

Because its contents remain a matter for the independent inquiry, I have no idea what will be achieved in relation to those contents. However, I can tell the hon. Gentleman that I am concerned about the costs. As a result, working with the inquiry, I have now arranged for the office in Northern Ireland to be closed, the size and costs of the accommodation in London to be significantly reduced and the IT contracts to be renegotiated. We will therefore make savings of about 20 per cent. of what would have been spent in the remaining months.

May I ask my right hon. Friend about any lessons that could be learned from the tragedy that the Saville inquiry is investigating? Is there any read-across to the inquiry by Sir Peter Gibson into the Omagh bombing, a statement on which was made this morning? That statement seems to have exonerated GCHQ from any of the allegations made by the BBC, among others. It seems that if there was any malpractice or any problems, they were more on the Royal Ulster Constabulary special branch front, and those issues were largely addressed by the 2001 reorganisation. Does my right hon. Friend agree about that?

I thank my right hon. Friend for providing me with the opportunity to make that read-across from Lord Saville’s work to the Omagh report, and I commend Sir Peter Gibson for the thorough and exhaustive way in which he has approached the task of considering lessons to be learned from the sharing of intercept material on the day, and around the time, of the Omagh bombing.

I ask the House to note that I have placed in the Library today not only my written statement but Sir Peter’s summary report and a response to it by the Chief Constable. I thank Sir Peter for his comprehensive work. It is difficult to make a direct read-across to Lord Saville, except to say that for those involved, it is important to produce material as quickly as we can.

May I echo what the Secretary of State has just said and add my thanks to Sir Peter for reporting so expeditiously? Does that not point to a lesson for the future? Does he agree that, as the Select Committee on Northern Ireland Affairs recently stated, no further major inquiries should be launched unless there is a unanimous desire for them among the parties in Northern Ireland?

May I take this opportunity to congratulate the Select Committee on its recent report, which rightly raised a number of these issues? It may be helpful if I inform right hon. and hon. Members that next week we expect Lord Eames and Denis Bradley’s Consultative Group on the Past to publish its report on the way forward. The Government look forward to that and will be studying its proposals carefully.

Does the Secretary of State agree that if members of the Conservative party are presenting themselves as being worthy of government, they should show better grace and reflection on the issue of the Saville inquiry, rather than constantly go on about the cost? They should show some consideration for the families and their quest for truth and for the vindication of the innocence of their loved ones, as well for as the wider fundamental issues that will hopefully be addressed in the report. Does he accept that many of us would have wanted an oral statement on the Gibson review, so that we could have shown our concern and consideration for the needs and rights of the Omagh families?

I thank the hon. Gentleman for his remarks and share his view of the importance of the work that is being done on the Saville inquiry. I remind the House that when the former Prime Minister established that independent inquiry, he said that it would have to be conducted

“without any preconditions as to what the outcome may be, so that the truth can be established and told.”—[Official Report, 29 January 1998; Vol. 305, c. 505.]

I should perhaps also tell the hon. Gentleman that my office is making arrangements to meet representatives concerned with those terrible events in Londonderry that day, so that we can talk through with them the arrangements for publication in the autumn.

The Secretary of State has referred twice to getting at the truth. Given the exceptional difficulty, if not impossibility, of doing that in all the inquiries, and given that the inquiry industry in Northern Ireland is blossoming to the extent of costing £60 million a year, does he accept that it is time to call a halt to investigating the past and instead to look to the future?

I am sure that many hon. Members share the hon. Gentleman’s concern about the amount of money involved. However, I caution against the use of the pejorative description of an “inquiry industry” simply because, although some may regard it as an industry, for the families affected, the victims and those whose lives have been destroyed by the troubles, it is essential to find ways to get at the truth. There may be better ways of doing that in future. If we can find ways that provide better value for the taxpayer, we have a duty to do that. However, first and foremost, we have a duty to do all that we can to provide justice for families, and for victims who needlessly lost their lives during the troubles.

The Secretary of State has referred to the families, but not to the former soldiers, some of whom are my constituents. For 11 years, they have had the threat hanging over their heads. I spoke to some of them this morning. They did their duty by their country but they feel that the Government have not done their duty by them. Will the Secretary of State please at least send a message to them that he understands their concerns and those of their families and do something to reassure them that the matter will be brought to a speedy conclusion? They are now in their 70s and some have already died. 1 Para has a reunion next month—please give its members a positive message.

The hon. Gentleman has been unstinting in his advocacy for the work of the security forces. I again put on record my admiration for the way in which our security forces have responded over many years to terrorism in Northern Ireland. Undoubtedly, there are lessons for us all to learn from mistakes that may have been made, but the support of the Government and the House for our armed forces has been and remains unshakeable.

The hon. Gentleman mentioned the concern that some of those to whom he spoke expressed. It is a matter of parity that, just as I am prepared to meet families from Derry to discuss arrangements for publication, if he would like to bring a delegation to meet me to discuss that, I would be more than happy to meet with it.

2. What recent steps his Department has taken regarding the strategic review of parading carried out by Lord Ashdown; and if he will make a statement. (248300)

I met Lord Ashdown last week and he updated me on the ongoing work of the review. I welcome the progress made, and look forward to receiving the final report when the review group has concluded its work.

I thank the Minister for that reply. He knows that I sent him some proposals about the ongoing Garvaghy road parade in Portadown. Will he agree to meet me and a small delegation to discuss them further?

I know that the hon. Gentleman is keen for a resolution on the Drumcree parade, and I pay tribute to him for his efforts in discussions with me and others, including members of the Portadown District Orange Lodge, who have also made considerable efforts. Of course, I am happy to meet him and consider his views. In the end, determination of parades is a matter for the Parades Commission and, again, I take the opportunity to join him in encouraging all individuals and organisations to get into dialogue about the issue as soon as possible.

Does the Minister agree that the Parades Commission has done an extremely good job in difficult circumstances and that any tinkering with its work may well have a downside rather than an upside?

I readily join my hon. Friend in paying tribute to the Parades Commission, and especially to its chairman, Roger Poole, for its unstinting efforts to ensure that we have peaceful parading in Northern Ireland. It is worth reflecting on the fact that the Whiterock parade, which went so dreadfully wrong, happened only a little over three years ago. Everybody has worked hard in those three years to ensure peaceful parading in Northern Ireland, but we have made it clear that, if there is a consensus about an alternative system for regulating parading and having oversight of it, we are prepared to consider it. Lord Ashdown has been given that task, and I hope to receive his report in due course.

One of the proposals in the interim report by Lord Ashdown is to transfer responsibility for decisions on parading to the First Minister and Deputy First Minister. If that happens, would they have to be in agreement when deciding on parades and the details of parades, as they have to be on many other issues? Given the time-limited nature of the process for making decisions on parades, seeing as there are so many of them, what would happen if the First Minister and Deputy First Minister could not reach such agreement?

It is important to understand what was actually in the interim report from the parading review group. It proposed that the administration of applications for parades should be overseen by local councils and that the system for the resolution of disputes should be overseen by the Office of the First Minister and Deputy First Minister. That does not mean political interference or adjudication; rather, it is a question of administration. We know that the review group has consulted on that proposition. We await its final report to see whether its views have changed or whether its recommendations have been refined. However, I am sure that the hon. Gentleman will join me in urging everybody in Northern Ireland to try to reach a consensus, so that we can make further progress.

My hon. Friend has been very careful in what he has said about the Parades Commission and in how he has structured his answers, but some people say that the Parades Commission should be abolished, so perhaps he could tell me this: what is the Government’s position on the Parades Commission?

I normally try to take some care with the words that I use, particularly in the Chamber. As I said to my hon. Friend the Member for Belfast, South (Dr. McDonnell) earlier, the Government fully support the Parades Commission and believe that it has done an extremely good job in difficult circumstances. However, we know that there are people and organisations in Northern Ireland that do not share that view. If it is possible for all the parties and all sections of the community to arrive at a consensus on an alternative system, we will obviously be prepared to consider it, because in the longer term we need a sustainable approach to parading. We cannot lurch from parade to parade and season to season, unsure about the future. We have to have a sustainable approach to parading, so that peaceful parading can be guaranteed.

3. What discussions he has had with the Police Service of Northern Ireland on extending the deadline for loyalist paramilitary decommissioning. (248301)

I hold regular discussions with the Chief Constable on a range of matters, including decommissioning. Having weighed all the advice that I have received, including that from the Independent International Commission on Decommissioning, I have made it clear that we will not seek renewal of the order on decommissioning beyond the next 12 months.

Since the Northern Ireland peace process began more than a decade ago, the people of Northern Ireland have been promised a deal, which is to say a compromise on political issues in return for the decommissioning of the vicious paramilitary groups whose activities have scarred Northern Ireland for far too long. The public have delivered their side of the deal, so why are the Government prevaricating on their side?

Let us be clear about what the purpose of this process is. We all want to see every gun and every weapon removed from the streets. The decommissioning order provides an additional route towards seeking that goal. The record of achieving decommissioning over the years has been successful. I have to weigh the advice of the Chief Constable, as well as that of the IICD and the other bodies that give me security advice, about whether they believe that it would be useful to continue for another year to provide that additional way of getting weapons off the streets. It does not prevent the police from doing their work and removing those weapons, which are of course illegal, but if it provides an additional route that may be successful in removing the guns, it would be foolish of me to ignore that advice.

Is the Secretary of State aware that there is no belief in the community in Northern Ireland, in the PSNI, in the Police Federation or in the loyalist communities that decommissioning will take place between now and 2010? Is he aware that 29 police officers are under threat at the moment and that five face death threats from loyalists? The police say that they know where the weapons are. What democratic Government would stand back and allow those weapons to be used, as they were in Belfast, where four blast bombs were used last month, and in the many other crimes involving weapons that have also occurred? The community in Northern Ireland is subjected to extortion and the presence of brothels and drugs by the paramilitaries. We will not tolerate the extension if we can do anything about it. The Secretary of State should revisit his intentions in that respect.

I am grateful for the hon. Gentleman’s advice and I am sorry that I am going to take this opportunity to disagree with him. In relation to the work of the PSNI, let me simply say that everyone in the House admires the bravery of the men and women of the PSNI, which continues to be quite extraordinary on the streets of Northern Ireland. In relation to the specifics, however, the PSNI’s record in combating loyalist criminality and paramilitary activity has been a very good one. In the last year alone, 15 loyalists were arrested and firearms, ammunition and explosives were seized. It acts on the evidence and material that it is given. Let me say to him that it is also very important to recognise that the Independent International Commission on Decommissioning, which has been very successful in bringing about decommissioning, continues to give me advice that we should prevail with one more year. I have made it clear that this is the last year; at the end of this 12 months, that is it—the end of this process.

The Secretary of State will be aware of the very strong opposition of the Police Federation to the extension of the decommissioning legislation, which comes after attacks on police officers and the intimidation of police and prison staff by those connected to loyalist paramilitary groups. My party is not convinced about the extension of this legislation. Can the Secretary of State give us any evidence that the loyalist paramilitaries are now in a position to decommission their weapons?

I will meet the Police Federation on Monday next week to discuss the representations that it has made on this matter. May I counsel the hon. Gentleman, his party and other hon. Members—I am slightly hesitant to say this, but I use my words very precisely and carefully—that the Independent International Commission on Decommissioning has confirmed to me that it is currently making meaningful progress, and I hope to report to the House in future on that progress?

The Secretary of State will be aware of the growing number of loyalist death threats to members of the PSNI. What message would he send out today from his office to those brave policemen? Will he ensure that members of the PSNI receive the same support and protection as the former Royal Ulster Constabulary did in the face of IRA death threats?

I am sure that all hon. Members would wish to express their gratitude to the men and women of the PSNI. It remains a matter of fact that the greatest threat to those officers, as expressed in the last year, has come from those paramilitary criminal organisations such as the Real IRA and the Continuity IRA. They are the organisations that have despicably, and in a cowardly way, attacked police officers at traffic lights when they were dropping off their children at school. They have fired shots into the chest of one police officer who is very lucky still to be alive. In another case, an explosive device was placed under an officer’s car and his partner was nearly murdered by it. PSNI members do very brave things for the people of Northern Ireland and this country every day, and we will do everything we can to protect the lives of those brave men and women.

I am sure that the Secretary of State will agree that loyalist or republican paramilitary activity is unacceptable. Will he look again at extending this decommissioning period, because not a single political party in Northern Ireland wants it, and many of the police from whom I have had communications certainly do not want it? Is it not a very delicate matter to permit a further extension when we know that decommissioning is necessary and not to decommission is unacceptable?

The hon. Gentleman rightly draws attention to the very delicate balance on whether we will achieve more by renewing the order for a final 12 months—and it is a final 12 months—or by moving in the other direction. As I say, I have decided, on balance, that we should proceed in that way, but this is based on very specific advice from the commission. If that advice should result in an act of decommissioning, I say to the hon. Gentleman that if my not renewing the order were to result in those weapons not being destroyed and put for ever beyond use, I think we would be failing the people whom we are actually trying to protect.

Is my right hon. Friend not aware of the major concerns in nationalist communities among those who want to see the peace process move on—for example, by removing the peace walls—about the thought that there are loyalist paramilitaries with weapons preventing those developments? Will he reconsider his decision?

As I have said to the House, given the very specific advice I am being given by the commission that it is currently engaged in meaningful dialogue that will result in weapons being removed from the streets, if that is our goal, it would be very foolish of me to ignore that strong advice.

May I join the Secretary of State in paying tribute—[Interruption.]

Order. There is far too much noise in the Chamber; it is unfair to hon. Members.

Thank you, Mr. Speaker.

May I join the Secretary of State in paying tribute to the bravery of the PSNI in the work it does? Does he not think, however, that that bravery deserves a bit more than a few nods and winks from these thugs and racketeers before he is prepared to extend for a further 12 months the 11 years that they have already had to decommission their weapons? He knows that we have rarely departed from our support for the Government in the peace process, but I put him on notice today that unless he comes up with something more substantial than he has done so far, he will put this measure through without any support from the Liberal Democrat Benches.

I hear the word of warning from the hon. Gentleman, and I take it seriously, but I would simply say this to him: we have succeeded in bringing about peace in Northern Ireland by all the political parties in this House working together. It is through that work that we have established the various bodies that have supervised and brought about the continuing peace process. If it is the view of the Independent International Commission on Decommissioning that we should prevail for 12 more months because it is currently engaged in meaningful discussions, I would urge him to think a second time as to whether now, rather than in the last 10 years, he chooses to ignore not my advice, but the advice of the commission.

Eleven years on from the agreement, it is unacceptable that there are armed gangs operating in any part of Northern Ireland. The Secretary of State has just mentioned new evidence that has convinced him that the amnesty should be extended. Will he give us some of that evidence now?

The purpose of sharing with the House the advice from the Decommissioning Commission is to encourage Members of this House to listen very carefully to that advice, as well as to me. I am not in a position to disclose the commission’s current negotiations, but I simply say to the hon. Gentleman that there are channels available to him through which I am prepared, and happy, to engage.

The Chief Constable has consistently said that anyone who has guns should give them up immediately. One officer has been shot in the back, and five have had to be rehoused. By extending the amnesty period, the Government are letting down local communities and the police who are trying to protect them. These are parasitical gangsters, drug dealers and protection racketeers. They do not deserve another extension. As we are strongly opposed to what is proposed, will the right hon. Gentleman consider withdrawing this statutory instrument?

I do not know whether the hon. Gentleman has a hearing difficulty, but as I have just explained to him, it is advice to us from the commission that has ensured that, on balance, we have made this decision. In my last answer, I made the offer to the hon. Gentleman to discuss further details with him, through the usual channels, but if he really thinks it would be helpful for me to make public now the content of discussions that might result in guns being removed from the streets, I have to question what his motives are. If his motive is to remove the guns, I suggest that he listens to the advice from the commission. On the other hand, if his intention is simply to proceed with a decision he made before that information emerged, I am afraid that even I am unable to help him.

4. What recent discussions he has had with the First Minister on the Bombardier project. (248302)

For the purposes of clarification, I should say to the hon. Gentleman that Bombardier is not a project; it is actually a global aviation company that has been, and continues to be, very successful around the world, not least in Belfast, where its pioneering new project will create up to 1,200 new jobs, and up to almost 3,000 new jobs in the UK as a whole.

An article in The Guardian on 31 December had the headline, “DUP was rewarded by government for backing 42 days, claims first minister”. According to the article, he said that

“his party’s decision to support counter-terrorism bill helped deliver major economic investment for Northern Ireland”.

He also said that the Government

“came up with the goods in terms of the Bombardier deal ... they bent over backwards to help us.”

Whatever the merits of this investment, does not the Secretary of State agree that this smells of pork barrel politics at its worst and without principle?

It is perhaps encouraging to see that the hon. Gentleman now takes to reading his information about Northern Ireland in The Guardian. Clearly the one big difference between his party and the Labour party is that what we were prepared to do consistently since 2004 with Bombardier was to hold discussions to see how we could help bring jobs to Northern Ireland. Significantly, thanks to the assistance of my right hon. Friend the Prime Minister and the Government since 2004, which has allowed the company to secure the investment that has come to Northern Ireland, up to 1,000 new jobs will come to Northern Ireland. I am very sorry that where the Conservatives will do nothing, we will secure the jobs for the future.

Q1. If he will list his official engagements for Wednesday 21 January. (249482)

Before I list my engagements, I am sure the whole House will wish to join me in sending our profound condolences to the brave families and friends of the servicemen killed in Afghanistan in the past week—Captain Tom Sawyer, Corporal Danny Winter and Corporal Richard Robinson. They were courageous and committed men, who were dedicated to their country, to their colleagues and to the cause of peace. We owe them and all who have lost their lives our gratitude for their service and sacrifice, and we will remember them with pride.

I know that the whole House and the British people will wish to join the Government in sending their best wishes to President Obama at the start of his presidency. I can assure the whole House that we will maintain and strengthen the special relationship between our two countries. The importance that President Obama places on urgent action on the economic recovery, on environmental stewardship and on the fact that citizenship carries with it responsibilities as well as rights will have a resonance in every part of the world.

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.

Why is the Prime Minister whipping his party to vote to keep MPs’ expenses secret? When it comes to freedom of information, why should there be one law for the people and another for the politicians?

I should tell the hon. Gentleman the real facts: our proposals are for more transparency than the Conservative party’s proposals were and for more transparency than is the case in most Parliaments in the world. That is why we will publish a revised Green Book with clear rules, and there will be enhanced audit by the National Audit Office. We will put the proposals to the House on a free vote. We thought we had agreement on the implications of the Freedom of Information Act as part of this wider package. Recently, the support that we believed we had from the main Opposition party was withdrawn. I believe that all-party support is important on this particular matter, on which we will continue to consult.

Tuesday 27 January is Holocaust memorial day, and events will be taking place across the country. What will my right hon. Friend be doing to mark and to commemorate the occasion? Will he join me in commending the work of the Holocaust Educational Trust, which does so much to educate and inform our young people about the horrors of the holocaust?

To commemorate Holocaust memorial day, there will be a debate in this House next Thursday. I was very privileged to be involved with the original funding of the Holocaust Memorial Day Trust’s work in education, which enables us to send, from schools in every part of the country, young men and women to see for themselves at first hand what happened at Auschwitz and then to report back to their fellow students in their schools and colleges. This is an important contribution in ensuring that people will never forget the millions of lives lost as a result of anti-Semitism, prejudice and discrimination.

May I join the Prime Minister in paying tribute to the three servicemen who have been killed in Afghanistan in the past week—Captain Tom Sawyer, Corporal Danny Winter and acting Corporal Richard Robinson? Our thoughts should be with their families at this time.

I agree with the Prime Minister that the whole House will be united in sending our best wishes to President Obama, who starts work with the good will of people throughout the world.

Today’s rise in unemployment of 78,000 in a single month reminds us of the recession’s real effect on families throughout the country. With the pound falling, debt rising, and new forecasts showing that our recession will be deeper than elsewhere, it is clear that the British economy faces dark days indeed. Does the Prime Minister accept that the market and public reaction to the latest set of Government initiatives suggests that there is no real confidence that Government policies are working?

Every job lost and every redundancy is a matter of regret and sadness for us all. That is why we will do everything in our power to help people who have been made unemployed back into work. We may not be able to help them to keep their existing jobs, but we will help them to get new jobs. That is why the latest measures that we have taken include help for people in work, help for people to move into work, and help for people to get new skills for work. That is what we should do to help people as we take them through this difficult time.

I believe that the indication that President Obama has given in the past few days that he will take the fiscal stimulus action that we have taken, and action in relation to banks in the way that we have done, shows that the world can work together to deal with the problem. The one thing that President Obama did not say in his speech yesterday was, “Fellow Americans, let’s do nothing.”

I can tell the right hon. Gentleman one thing that President Obama will not be doing. He will not be putting up national insurance contributions on people earning £19,000 or £20,000 because the country is so bust.

Let me ask the Prime Minister again about the market reaction to his announcements. On Monday, he announced a package to help banking, but since then the Royal Bank of Scotland has lost two thirds of its value, Lloyds TSB has lost half its value, and the pound lost nearly 4 per cent. in one day. Is not one of the problems with the Prime Minister’s announcements that there is so little clarity? Let me take one element of what he announced on Monday to support the banking system—only the Prime Minister could laugh at those plummeting prices. Can he confirm that he announced an insurance scheme for toxic assets without saying what he is insuring, what the premiums are, what the exposure is, or how long it will last? Is that not a staggering lack of detail?

I should explain to the right hon. Gentleman—he has the benefit now of a new shadow shadow Chancellor to help him on his way—[Laughter.] I should explain that when markets fail and banks are unable to do the job for which they are intended, the only agency that can step in is the Government. If the Government do not take action, no one else will. That is the lesson that has been learned in every single country of the world, and that is the lesson that President Obama said yesterday is the work that will be pursued in America.

On the action that we have taken on banks themselves, every guarantee that we have made is set against the banks’ assets. In the insurance policies that we have signed there is a fee, and every loan is to be paid for as a result of the credit that we have extended. The right hon. Gentleman referred to the asset purchase scheme, and what we actually announced on Monday was a process by which we will talk to the banks in individual detail, and we will look at their assets and liabilities with them. We will therefore conduct the audit of the banks’ finances that he says is necessary. We will report back to the House on the nature of the insurance scheme that we agree, and the risks will be shared with the banks in the scheme. It is similar to schemes that are being adopted in other countries, and that may continue to be adopted in America and elsewhere. I believe that it is the right thing to do, but the right hon. Gentleman must decide which central proposition he agrees with—that the recession must take its course, or that, when markets fail, Governments must step in.

The fact is that this recession is getting worse. The Prime Minister talks about action, but the fact is that when we suggested a national loan guarantee scheme, he attacked it—and he has now introduced it. We suggested changing the terms of the bank recapitalisation; he attacked that idea, but he has now introduced it. We said that he needed to extend the special liquidities scheme; he attacked it, but he has now introduced it. The fact is that he is behind the curve on every single issue.

I am delighted that the Prime Minister has mentioned my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). The difference between this former Chancellor and that former Chancellor is that this one left a golden legacy and that one wrecked it.

The Prime Minister said that the insurance scheme was a temporary measure. His City Minister, Lord Myners, said that it could last for up to nine years. How can the Prime Minister describe something as temporary that might last for nine years?

First, the shadow Business Secretary called the Conservative European policy “crackpot”, “dotty” and “absurd”. I know that they are trying to find a way of sitting together but they do not agree with each other’s views on Europe and many other things.

As for the action that we have taken, let me quote a member of the Conservative party who has to make decisions. The Mayor of London said:

“It’s absolutely right that there’s a huge problem in trying to get credit flowing and the Government is doing what it can.”

That was the Mayor of London. He went on to say:

“if we get it right and we invest in the right things…and…make sure…that we drive forward the projects of infrastructure that we want to see developed over the next ten years, London could emerge…more competitive and better placed”.

The Mayor of London is far from saying that we should not invest in public infrastructure, while the Conservative party says that we should not invest in infrastructure. The Mayor of London and the Conservative party hold totally different views.

Let me tell the right hon. Gentleman something that the Mayor of London, the former Chancellor and I all agree about: the Prime Minister is making a complete mess of the economy. When it comes to these great infrastructure projects, who just put back the carrier programme? Who cancelled the widening of the motorways? It was this Government, because they have run out of money.

The Prime Minister gave me absolutely no answer to my question about the insurance scheme. People want detail because they want to know that their money is being put to good use. This is not the first time that the Prime Minister has announced measures to bail out the banks. In the first bank bail out, he put £37 billion of taxpayers’ money into the banks. He said that the shares that the Government bought would

“grow in value over the next period of time”.

Will he confirm that, as matters stand, the taxpayer has actually lost more than £20 billion?

I was very grateful for the support that the Opposition party gave to the recapitalisation of the banks three months ago. I suppose that I should not be surprised that the minute there is a difficulty, they withdraw their support from the right proposal. The recapitalisation of the banks was the right thing to do. The right hon. Gentleman has no other policy that would replace that policy. We are right to continue to support the banks so that they can lend to people in this economy, and the measures that we have announced this week are the right measures to take us forward.

The right hon. Gentleman is completely isolated from every major party in every country in the world. Every country understands that when the private sector and the markets fail, and particularly when banks fail, the Government have a duty to act. He wants to cut public investment while others want to increase it. He wants to withdraw help from the unemployed while we want to give it. As far as the banks are concerned, he does not know what his policy is because it changes from one day to the next.

The Prime Minister talks about being isolated, but does he not realise that he is the only person in the country who thinks he is doing a good job? [Interruption.] There was not exactly a roar of approval from behind him. The whole point about the first recapitalisation was that it was meant to get the banks lending. It has failed to do that, as even the Prime Minister has admitted. Let me put the question again. The shares were worth £37 billion. They are now worth less than £17 billion. Will he confirm—it is simple maths—that, as things stand, the taxpayer has lost more than £20 billion?

The point of the recapitalisation of the banks—[Interruption.] I am sorry that the Conservatives do not want to understand economics. The purpose of the recapitalisation of the banks—[Hon. Members: “Answer!”] They should really grow up and face up to the big issues. The point of the recapitalisation of the banks was to stop them collapsing. If we had taken the right hon. Gentleman’s advice and not put our stake into the banks, they would have collapsed. Thousands more people would have been worse off and thousands more businesses would have suffered. As a result of what we have done no saver has lost any money. What is his alternative to the capitalisation of the banks?

If you want to ask us questions, have an election! The fact is—[Interruption.]

Order. Let the Leader of the Opposition speak.

The fact is that the Prime Minister is completely unwilling to answer the most basic questions about what the recapitalisation has cost so far, and what it might cost in the future. This comes at a time when the whole country is asking whether the Government know what they are doing. Is that surprising when we have the Employment Minister saying—today of all days!—that he can already see light at the end of the tunnel? Is it surprising when we have the Business Minister talking about the “green shoots of recovery”, or the Housing Minister—she is not in her place—saying that there is a new boom in the housing market? Meanwhile, we have a Prime Minister who thinks that he has saved the world.

Is it not the case that the British people are losing confidence in the Prime Minister and the Government? Is it not right to say that, without confidence, we will not get a recovery?

The right hon. Gentleman has not one idea about how to begin to sort the problem out. I asked him what he would do in place of the recapitalisation of the banks, and he had no idea what he would do. Only this week, the secretary general of the CBI said:

“The Government needed to be bold and it has been. These measures are the essential pre-cursors for economic stability which will expand the availability of credit”.

We are doing what other countries are doing. The only thing that the right hon. Gentleman says is that we should do nothing. He spends all his energies going around the country telling people that nothing can be done about this recession. We will act, but the Opposition will not. He is out of step with the rest of the world, and he is out of his depth.

Were the Serious Organised Crime Agency, the Financial Services Authority or our security and intelligence services fast asleep, or were they part of a cover-up in relation to Lloyds TSB’s illegal handling of money from Iran to get round sanctions? Surely we need a statement about why this bank—no individual has been prosecuted in the UK—laundered in America $300 million of Iranian money and money from London that related to the Sudan. I think we should be told.

My hon. Friend is making very detailed allegations. Our sanctions policy against Iran has been one of the toughest in the world. It is tough on banks, tough on oil companies and tough on other institutions. I will of course look at the allegations that he has made, but I can tell him that we and other countries are leading the world in the sanctions against Iran.

I should like to add my own expressions of sympathy and condolence to the family and friends of Captain Tom Sawyer, Marine Danny Winter and Corporal Richard Robinson, all of whom tragically lost their lives in Helmand province this last week. I should also like to join in welcoming the inauguration of President Obama, and I especially welcome his early announcement of the suspension of all military tribunals at Guantanamo Bay.

The British economy is now standing at the edge of a cliff. It is clear that international markets believe that many of our banks are effectively broke, and that is pushing confidence in the pound and in the Government’s finances to an all-time low. Will the Prime Minister accept that his announcements and half-measures have created confusion and uncertainty, when the country desperately needs clarity and certainty at this very dangerous time?

I shall just repeat what Richard Lambert, the head of the CBI, said. He said that these measures

“if fully implemented…should stem a further downward recessionary spiral and provide a stable economic platform on which the UK can trade through this difficult period.”

The right hon. Gentleman has to understand that we have done three things. The first is that we have recapitalised the banks to stop them collapsing. We have done that not to help bankers but to ensure that people who rely on the banks, and who have their savings in them, can be secure.

The second thing that we have done is give real help to families and businesses through this difficult period, when it is right that the Government should intervene; only the Conservative party seems to oppose that. The third thing that we have done is take measures to extend lending to businesses and families. Lending to businesses now takes the form of the Bank of England being in a position to lend to non-bank institutions and to lend directly to companies through the corporate bond market. We have created the asset insurance scheme so that we can give more certainty for the future about how we will deal with the problem of assets. All those things are done so that the banks can be stronger to extend lending. I believe that that the right hon. Gentleman will find that other countries around the world are doing the same.

I am grateful to the Prime Minister for his reply, but does he not see the extreme danger in any remaining ambiguity in the Government’s response? Does he agree with me, and the Chair of the Treasury Committee, that that must now mean the full, if temporary, nationalisation of our weakest banks without any further delay?

The issue is the extension of lending; that is the issue before us. The agreements that we have signed with the banks already are, I believe, agreements that are being honoured at the moment. I have to say to the right hon. Member that the problems is that when the banking crisis started, foreign banks that were operating in Britain reduced their capacity in Britain. Non-banking institutions that were lending in Britain for mortgages and companies reduced their capacity, so even if the Royal Bank of Scotland, Lloyds TSB, Barclays or those other banks increased the capacity substantially, we would have suffered a loss, just as every other country has suffered a loss of foreign capacity. That is the problem that we are trying to deal with. The problem is the resumption of lending; that is still the problem that has to be dealt with, whatever the status of the banks.

Will the Prime Minister agree with me that people all around the world will have been moved by the inauguration of President Obama? There are many reasons to welcome his inauguration, but one is that when a man whose father, 60 years ago, could not have been served in restaurants in Washington becomes President of the United States, we can all of us, in our communities, turn to our children and say, “Yes, you can.”

I am very grateful to my hon. Friend for showing the historic nature of the moment that we are seeing in America. This is the first black President of the United States of America. Let us not forget the history books: the White House was built by slaves, and it is now occupied by the first black American President.

Q2. At the same time as the Prime Minister pleads with President Obama for a special relationship, is not his own relationship with the British public irretrievably breaking down? Have we not reached hideous levels of insensitivity when the Prime Minister, in the very week when unemployment is heading to 2 million, and when our constituents and our constituency businesses are deeply concerned about their finances, requires—indeed, demands—that his own Members of Parliament keep their expenses secret? (249483)

The hon. and learned Gentleman misunderstands what we are doing and the transparency that we are providing in the expenses. I said earlier that the main Opposition party and the Government had discussions about the statutory instrument. The Opposition party gave the impression that it was supporting that statutory instrument but it has now withdrawn its support for it. It is right, then, to seek all-party agreement on that, and that is exactly what we are doing. Far from spending a great deal of time this week on the issues that he is talking about, I am spending my time dealing with the problems of the British economy, and that is what I will continue to do.

Can the Prime Minister tell us what action will be taken again those bankers who have run their banks into the ground? Those Tory fat cats cannot blame—[Interruption.]

Order. Let the hon. Gentleman speak. I want to hear what he is saying.

Those Tory fat cats at the banks, represented by the Conservative party, cannot blame the trade unions this time for the almighty mess that this country is in. In another generation, they would have been described as the enemy within.

This problem has not been caused by inflation in our economy or in other economies. It is a global banking crisis that must be dealt with by global co-operation, and I am pleased that President Obama and others want to see that co-operation happen.

Q3. Fair’s fair: we must all welcome the action that the Government are taking to get money flowing into small businesses and to keep people in work. The Prime Minister is doing that to help small businesses, not fat cats, but may I press him on behalf of pensioners, who also suffer from the recession? Will he meet me and Age Concern so that we can look at ways of further helping pensioners on issues such as meeting their fuel costs and on savings interest? Doing something constructive is much better than doing nothing. (249484)

I am grateful for the hon. Gentleman’s question. The Sun said only a few days ago that there was only one MP who was more independent of the Conservative party Front-Bench positions than him, and that was the right hon. and learned Member for Rushcliffe (Mr. Clarke), now the shadow Business Secretary. With reference to pensioners, we have increased the winter allowance this year—£60 extra is going to pensioners now. We have also increased the pension from April. We will do everything we can to help pensioners with their savings. That is why we have the individual savings accounts for pensioners, and we have raised the pensioners’ tax allowances so that 60 per cent. of pensioners pay no tax at all. We will do everything that we can in the next few months to help them. The hon. Gentleman is an Independent Member, so he, like those on the Labour Benches, can criticise the Conservatives for not supporting the £60 extra that we are giving to pensioners.

The people of Gaza want to see aid and trade flowing across their borders again. The people of Israel rightly demand an end to rocket attacks on Israeli towns. Does my right hon. Friend agree that neither side will get those assurances in the long term unless we do more to neutralise the toxic influence of Iran in the region? Can he tell us what more he intends to do, besides the sanctions that he has already imposed, to neutralise that influence?

I believe the international community has to show great unity in isolating Iran, not only for the position that it takes on nuclear weapons but for its attitude to Israel. The best way to isolate Iran in the middle east is by finding a settlement between the Palestinians and the Israelis, whereby the middle east countries and the Arab countries can become united in supporting the two-state solution that other people have proposed.

Since the ceasefire, it is important that Israeli troops leave Gaza as quickly as possible. It is important that the crossings are opened. That is being discussed at meetings in Egypt tomorrow. It is also important that the peace process is moved forward. Although this may seem one of the most distant prospects at the moment, I believe we have a duty to use this opportunity to get countries to talk together about the process of peace. But the most important, urgent thing is the humanitarian aid that must be brought into Gaza. We have trebled our support for humanitarian aid, we are helping to transfer children from Gaza into hospitals, we are trying to get rid of the unexploded bombs in the area by working with people in the region, and at the same time we will give all the food aid and all the support aid we can. There has been a terrible catastrophe over recent weeks. We must do everything that we can now to help the people of Gaza, while at the same time stopping rocket attacks from Gaza into Israel. We must see that the ceasefire holds and then brings forward the process of peace.

Q4. The Prime Minister’s constituents may well benefit from substantial extra European regeneration funding because Scotland, along with Wales and Northern Ireland, has put in a bid to get unused European money, which is available for hard-hit areas. Will he reconsider the Government’s decision not to make a similar application for the north of England, which desperately needs that investment? Why should England lose out? (249485)

We have successfully lobbied for the European Investment Bank to double the support for cars that have green technology and manufacturing processes. That will help car companies in the north-east. I am not aware that a north-east company has had any application for European Investment Bank support rejected. I hope they will make such applications, and I am happy to talk to the right hon. Gentleman about the economy of the north-east and what we can do to help it.

Q5. The Prime Minister has to take advice from time to time, but if he took advice from the national newspapers and the Leader of the Opposition to do nothing for the economy, what plight would this country be in now? Will he take advice from me and some of my hon. Friends and nationalise all the banks? (249486)

President Obama and many countries around the world will be putting forward programmes for public investment in the future: public works programmes, investment in environmental technologies, investment in roads, transport, schools and hospitals. That is what we will do to keep jobs moving in the economy. It is unfortunate, as my hon. Friend says, that there is one party that opposes public investment in the future, and indeed would cut public investment at the time we need it most, and it is unfortunate that the Conservative party is isolated across the world.

The value of Railtrack was talked down by the previous Deputy Prime Minister so that the company could in effect be renationalised. Is that what the Prime Minister and the Chancellor are doing to our banks?

No.

Q6. May I join in the tribute to those who have lost their lives in Helmand in the past week? Many in the banking sector who have covered things up and given bad advice have paid a price in terms of lost jobs and reputation, but others seem to have got off scot-free. What is being done to drive up performance and behaviour across the banking sector so that our constituents can have confidence that the billions of pounds of their hard-earned taxes that are being used to bail out the banks is money well spent? (249487)

That is exactly the matter that is being discussed now internationally to agree common standards of disclosure, common standards of transparency, common standards of risk management by the banks and common standards of responsibility to be taken by board members. We will do better by getting an international agreement on these standards and I believe that that will feature in our discussions at the G20 summit on 2 April.

Before we hear a point of order, will Members please leave the Chamber quietly?