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.
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 Recently, the support that we believed we had from the main Opposition party was withdrawn.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?
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.
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.
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.
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.
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.
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.
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.