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Prime Minister

Volume 487: debated on Wednesday 28 January 2009

The Prime Minister was asked—


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.

What we know from previous recessions is that the people who suffer most are those who have the least. So may I urge my right hon. Friend to ensure, in his forthcoming meetings and discussions with world leaders, that tackling the waste of poverty at home and abroad is now a top priority?

I applaud the work that my right hon. Friend does as chairman of the all-party committee on poverty and international development. It is precisely because of the dangers and risks to people who are poor and unemployed that we are taking the action that we are taking—raising the pension and pension credits, raising child benefit and child tax credits, helping the unemployed and making sure that small businesses have the finance that they need. That is part of the plan that we are introducing now that is being adopted in many countries of the world to help those who are poor and unemployed. To protect savers by capitalising the banks, to ensure real help to families and businesses now, and at the same time to extend lending to small businesses and homeowners—that is the plan that will ensure recovery not just nationally but, when it is adopted, internationally.

In the last week we have discovered that Britain is facing the deepest recession in a generation. We have had the worst manufacturing figures since 1975, and this morning the Institute for Fiscal Studies said that the country’s debt burden will take a whole generation to pay off. How deeply will the economy have to contract before the Prime Minister finally admits that there is indeed an economic bust?

May I quote from the IFS “Green Budget”? [Hon. Members: “No!”] They do not like it. It says:

“Our central forecast is that the UK will avoid deep and prolonged recession thanks to the enormous monetary and substantial fiscal stimuli already agreed.”

If we had taken the right hon. Gentleman’s advice and done nothing, it would have been a deeper recession.

The Prime Minister seems to be denying now that a recession is taking place. Extraordinarily complacent! I asked a very specific question about his definition of a economic bust—and I have discovered that he was asked that question before, in front of the Treasury Committee, and for once in his life he actually answered it. I have the transcript; let me read it to him. He referred to reductions in GDP of 1.5 per cent. He was asked by my hon. Friend the Member for Chichester (Mr. Tyrie):

“So that is the minimum definition of a ‘bust’?”

And the Prime Minister replied, “Yes.” Now we know that the economy shrank by 1.5 per cent. in the last quarter alone, will he finally admit something that every economist, every business and every family in the country knows to be true—that, even on his own definition, he did not abolish boom and bust?

This is a recession that is facing every country and continent in the world, and everybody except the Conservative party agrees that it is not a unique United Kingdom phenomenon; it is something that has got to be dealt with internationally. The right hon. Gentleman mentioned the Institute for Fiscal Studies; it also said:

“In current circumstances, the cost of doing nothing…is larger than the cost of acting”.

That is the rebuttal of the Conservative policy of doing nothing.

Does the Prime Minister not understand the damage that he does to himself, and to his credibility, when he says things that are self-evidently nonsense? It is self-evidently nonsense to say that about the Opposition. Our jobs plan has been copied in his jobs plan. Our loan guarantees have been copied in his loan guarantees. When he says these things about the Opposition, he does not damage us; he damages himself. That is why his poll ratings are going back to Michael Foot levels. Let me ask him one more time. Even one of his own advisers said this week:

“It’s against Gordon’s nature to do a mea culpa but at some stage we’ve got to find the words”.

Why does he not find the words now? You didn’t abolish boom and bust, did you?

Order. The Leader of the Opposition knows the rules of the House, and he knows how to phrase a question. [Interruption.] Order.

I have said that this is a deep recession. I have also said the truth—that it is hitting every country in the world. I think that the Leader of the Opposition would recognise that we were the first to act to deal with the recapitalisation of the banks and to stop savers losing their money. He supported that until last week, when he walked away from that position. We were also the first to recognise that there needed to be a fiscal stimulus. He will see today that countries that he often quotes, such as Canada, are now announcing a big fiscal stimulus. He will also see that it is right to extend lending. That is the way forward. We can play his game of student politics as long as he wants to play it, but what the country is interested in is whether we will take the action that is necessary to get us out of the difficulties. We are taking the action. His policies would cut public investment at a time when we need it: in other words, he would do nothing to help.

Only one of us was a student politician—and he has never grown out of it. What is interesting about today is that in answer to the first question the Prime Minister denied that this was a deep recession, and in answer to the third question he said that it was a deep recession. I suppose that with this Prime Minister, that is progress. He talks about the global recession, and I want to ask him about that. In the same evidence to the Treasury Committee, he actually gave a definition of boom and bust. Let me read out what he said. [Interruption.] It will end when he admits that he did not abolish it; that is when it will end. What he said was:

“what I mean”—[Interruption.]

They probably wanted a definition; here it is:

“what I mean by ‘boom bust’…is running a policy where you allow the economy to grow too fast and then it sinks far further than it has in other countries, even when there is a world downturn”.

Is that not exactly what is happening right now? Yes, of course there is a world downturn, but our economy is sinking further and faster than the rest, so even on the Prime Minister’s own definition, is it not true that he led us into boom and bust?

America went into recession more than a year ago. The euro area went into recession more than six months ago. This is a deep world recession, and I would explain to the Leader of the Opposition that past recessions in Britain have been caused by high inflation. They have been caused, as they were in the early ’80s and the early ’90s, by the Government allowing inflation to get out of control and interest rates having to rise. He should know: he was in the Treasury in the early ’90s. This recession is not caused by high inflation; if anything, inflation is going to be near zero this year. This recession is not caused by high interest rates. This recession is a result of a global financial crisis. If he does not recognise that, he will not begin to be able to discuss or decide on the answers. I suspect that it is because he does not understand that that the Conservative policy is doing nothing.

We have had all the Prime Minister’s economic understanding—and that is what led us into the mess that we are in now. The fact is that he let debt get out of control. He keeps saying that this recession all came from America. It was not America that gave us the biggest Budget deficit in the world. It was not America that made us the most indebted country in the world. It was not some American who designed our regulatory system that failed; it was him. If he will not retract something stupid that he said in the past, let me ask him about something crass and insensitive that he said this week. He said that thousands of people losing their jobs, homes and businesses was simply down to the

“birth pangs of a new global order”.

Would not anyone hearing that conclude that the Prime Minister cares more about his global grandstanding than about other people’s jobs?

If the Conservative party is not prepared to accept that this is a global recession that requires global action, it will get nowhere. Our public debt is lower than that of America, France, Germany and Japan. He should not be going around the country saying the opposite of what is true. At the same time, the measures that we are taking to deal with this global recession are measures that other countries are now taking, following us. The one thing that other countries are not doing is following the Conservative policy of doing nothing, which is not only the wrong thing, but a disastrous course for this country.

I do not know where the Prime Minister gets his figures from. This year he is going to borrow 8 per cent. of GDP. That is the same amount as a Labour Chancellor borrowed and ended up back at the International Monetary Fund. Those are the figures; that is the truth. In the past three months alone, 4,000 businesses went bust, more than 11,000 homes were repossessed and almost a quarter of a million people lost their jobs, but the message from the Prime Minister seems to be, “Don’t worry, you’re just the birth pangs of a new global economic era.” Today we are told that the debt that he is building up will take a generation to pay off. What we have had from the Prime Minister is denial about the past—continuing today—failure in the present and debt for the future. Should those not be the death throes of a failed premiership?

Order. Members will not shout anyone down in the Chamber. It is wrong to do that—[Interruption.] Order. Do not start defying the Chair.

This is a global recession, not just a UK recession, and the answer, as the IFS said today—the right hon. Gentleman quotes the IFS—is not to do nothing, but to take all the action that is necessary. I see no one else around the world supporting his proposal to do nothing. Indeed, the shadow shadow Chancellor has been giving interviews explaining what should be done. Does he support the VAT measure? Yes, he did. Does he support the fiscal stimulus? Yes, he did. Does he support our policy of helping children without the married couple’s allowance? Yes, he did. Does he support European co-operation to deal with the downturn? Yes, he does. He, at least, has the semblance of a policy. The Leader of the Opposition would do absolutely nothing.

Is the Prime Minister aware that Jaguar Land Rover welcomed the measures that he announced yesterday, particularly on green technology? Is he also aware that there will still be some anxiety in Coventry and the west midlands until people see the final outcome of yesterday’s package?

My hon. Friend has been a great supporter of the car industry and its development in his own city and round the country. I believe that the car industry is a sector with a strong future. That is why we want to unlock loans of up to £1.3 billion, guaranteed for low-carbon initiatives in cars. That is also why we are giving loans and guarantees of up to £1 billion for lower carbon initiatives for non-European Investment Bank projects. That is why we are discussing training grants, which would be in addition to short-time working, so that we can help people in jobs to keep their jobs. We will do everything we can to help the car industry. This is the difference. We know that in times like these we must act to help—but I am not sure that the Conservatives support us in this.

Does the Prime Minister think it is right that some Members of the upper House can use their status as non-domicile non-residents to get out of paying their full taxes here in this country?

In that case, will he—[Interruption.] Hang on. Millions of ordinary British taxpayers are filing their tax returns this week. They are the ones who deserve a tax break, not the super-rich. So will the Prime Minister support our private Member’s Bill to force peers, who make the laws of this country, to pay their full taxes in this country?

Where I would disagree with the right hon. Gentleman is to say that we are helping ordinary taxpayers in this country. We are raising personal allowances so that people will pay less tax; they will rise again in April as a result of the decisions in the pre-Budget report. We have cut VAT—and, if I may say so, the Institute for Fiscal Studies says today that that is a far more effective stimulus than critics are saying. Of course, we are also raising pensions and child benefit. Yes, we should take action against tax havens, but, yes also, we are helping ordinary taxpayers in this country.

Q2. In the current global economic instability, will the Prime Minister intervene rapidly to ensure that women workers who fear job losses get help to keep their jobs, learn new skills and keep the family income coming in? (251626)

My hon. Friend is absolutely right. The success of recent years has been that a large number of women who previously never had the chance of getting into work, partly because there was no child care and partly because there was no training, have had the chance to get into work. As people have to look at new job opportunities—and there are half a million vacancies—we want to help them, particularly those who have training needs and those who need child care help, into the jobs that are available. That was very much part of the package that my right hon. Friend the Secretary of State for Work and Pensions introduced a few weeks ago. We will keep the new deal, we will make it more flexible and we will spend the £500 million that my right hon. Friend allocated so that we can help women and men to get the jobs that they need.

Q3. Why, according to the International Monetary Fund, the OECD and the European Union, is Britain heading for a longer and deeper recession than any of its competitors? (251627)

I have just cited the Institute for Fiscal Studies, which said—[Interruption.] They do not like hearing a statement—[Interruption.] First of all, our Institute for Fiscal Studies said that we would avoid a longer and deeper recession by means of the fiscal stimulus that we are taking. That is exactly the same view as has been expressed by the International Monetary Fund. I am afraid that the Conservatives are living in a dream world if they believe, one, that this is purely a British problem, and two, that the answer to it is doing nothing. They have to go back to the drawing board and think again.

My right hon. Friend the Prime Minister is aware of the tragic humanitarian crisis in Gaza. Does he share the anger of thousands of my constituents and millions of people across Britain at the BBC decision to refuse to air the Disasters Emergency Committee Gaza appeal? Does he agree with me that the corporation’s decision has damaged the reputation of the BBC both at home and abroad?

It is not for us to interfere with the independence of the BBC and Sky, which made the decisions about whether they would broadcast the appeal on Gaza. But what I can say is this: we are making the appeal as widely known as we can through our own information services. At the same time, we have put £28 million into helping with humanitarian aid in Gaza. The situation that has been found is one where children have to be flown to hospital, where unexploded bombs have to be dealt with and where humanitarian aid and food has to be provided immediately. I think it would be the wish of all people in this House for this to be done as speedily as possible.

Order. The hon. Gentleman must withdraw that remark. It is not a proper thing to say. Try to rephrase the question in another way.

I withdraw that remark, Mr. Speaker.

This week, Labour peers stand accused of selling the law of the land for cash. Does the Prime Minister still claim, like his predecessor, that Labour is whiter than white?

Baroness Royall, the Leader of the House of Lords, has taken immediate action to deal with the problem. All of us are deeply concerned. These are serious allegations, which have to be dealt with. That is why we immediately set up the committee on privileges to look at how a proper code of conduct could be introduced; that is why we investigated the interests, which is happening under Baroness Prashar; and that is why Lady Royall said this morning:

“If the current allegations are proven, we may need as well to consider emergency sanctions”.

Those are the steps that we are taking. I hope that it is true of all parties in the House that we wish to root out any mistakes that have been made, and ensure that they do not happen again.

Given the announcement this week of devastating job losses at Corus, over 500 of which are in my constituency in Llanwern, will the Prime Minister meet, as a matter of urgency, a group of MPs from the all-party steel and metal related industries group to consider what support can be given to this crucial part of our manufacturing base—and, crucially, to the steelworkers who have stuck with Corus through thick and thin and who now need our help?

We have talked to Corus, and we have said that whether it is through the Department for Business, Enterprise and Regulatory Reform, the regional development agencies in Wales and in other parts of the country, or Jobcentre Plus, we will do everything we can. Steel is absolutely crucial to the manufacturing future of this country. We know from Tata, the owners of Corus, that it wishes to keep the steel plants moving forwards. Following the jobs summit, we are already working with Corus to look at what could be done to help with training costs for the future. I assure my hon. Friend that I will be very happy to meet her all-party group of MPs.

Q5. Does the Prime Minister agree that there can never be an equivalence between terrorists, on the one hand, and the innocent victims of terror, on the other? Does he therefore acknowledge the deep hurt and offence that has been caused by the obnoxious proposal in the Eames-Bradley report published today on the past in Northern Ireland, which suggests a £12,000 payment to all relatives of everyone killed, regardless of their status—which effectively does away with the distinction between murderers and those whom they went out to murder and kill? Will he reject any definition of victimhood which elevates terrorists to the same status as those whom they targeted for murder and violence? (251630)

There can be no justification for terrorist violence, and there will be no justification ever given for it. The issues raised in the report published today by Bishop Eames and Mr. Bradley are very serious indeed, and I understand why one of their recommendations has evoked such controversy in Northern Ireland. The Government will consider the report with great care, and we will reply in due course. I believe that some of the recommendations will be acceptable to all parties, such as settling outstanding cases, pushing forward with reconciliation, and having a reconciliation fund that will help different groups to come together so that we can get away from the incidents of the past. I will never forget the thousands of innocent victims in Northern Ireland. I know that the hon. Gentleman speaks for the whole community in Northern Ireland when he says that we must respect the fact that innocent people lost their lives, and that that should never be forgotten.

Does the Prime Minister recall that in the 1980s this country was the world leader in the development of clean coal technology via the fluidised bed plant at Grimethorpe colliery in my constituency? That was until the Thatcher Government pulled the plug on the funding. We now have another opportunity to lead the world, but this time in the development of carbon capture and storage. Will the Prime Minister reassure the House that, in contrast to what the Tories did with clean coal technology, this Government will not let the country down on that important issue?

My hon. Friend is absolutely right. History will show that we did need coal, and we did need the new coal technologies. I am sorry that in the ’80s the clean coal technology projects were abandoned in that way. However, we are now looking at carbon capture and storage. He is absolutely right that this is a transformational technique for dealing with carbon emissions. We will make an announcement in due course and try to persuade our European colleagues, who have set up a fund for the purposes of sponsoring carbon capture and storage, that Britain deserves to have one of the first demonstration plants.

Q6. Which of these should concern the Prime Minister the most: powerful criticism of the south-west regional spatial strategy by hon. Members of all parties; the fantasy economic growth rate of 3.2 per cent. per annum that it is using; the green light that it has given developers to neglect the social urban and village housing that we actually need and head straight for treasured local countryside and green belt, damaging everything—[Interruption.] (251631)

Order. The hon. Gentleman must ask a question. [Interruption.] Well, perhaps the Prime Minister can try to answer it now.

May I say that in the hon. Gentleman’s constituency, even after the recent rises in unemployment, long-term unemployment is still 75 per cent. down on what it was in 1997? We will of course look at what he says about the strategy and all the facts that he brings to bear on it, but no Government have done more to support industry and public investment in the region, and we will continue to do so.

Q7. The Corus job losses are a bitter blow, and all our efforts must now be dedicated to helping the steelworkers and their families. But even in this difficult time, should not our message be that Britain is the right place to invest and the right place to grow a business, and that the British people are worth backing? Despite the doom-mongers opposite, our society is not broken and we are determined to come through this economic downturn successfully. (251632)

Yes. Those who talk Britain down will regret doing so, because we are a resilient and determined society. We know that we can come through these difficulties, and we know also that we have the industries that are the basis for future growth. I believe that the British people will come together around the plan that will take us through this downturn.

In 1997 the Prime Minister said that he “relished” the prospect of abolishing the “unaccountable and unelectable” Members of the House of Lords. Why is it that after 12 years of a Labour Government we still have an unelected Chamber, double standards on financial disclosure and no way of removing peers who break the law?

We have put forward our proposals for the reform of the House of Lords. They were in a paper that was issued a few months ago. In that paper there is also the proposal on sanctions for Members of the House of Lords who commit criminal offences. Baroness Royall has today put forward proposals for new codes of conduct and for new rules that include the ability to expel Members of the House of Lords from their duties if they are guilty of an offence, and she has said that in the cases that we now know about, she is prepared to bring forward emergency sanctions to deal with those issues. I believe that when a problem is identified, we are taking the action necessary.

Q8. What assurances can the Prime Minister give my constituents that Government-funded construction projects such as the Biddulph health centre in my constituency will go ahead as soon as possible? These projects will give a much-needed boost to the construction industry and, in the case of Biddulph, ensure that my constituents have a really important health centre for their health needs. (251633)

I believe that that is a £10 million project that will help my hon. Friend’s constituents and bring better health care in her constituency. The important thing that the Health Secretary is making absolutely clear is that these health projects are moving forward. We are not cutting investment in them, they are moving ahead, and all the health service investment that we want to see happen has been budgeted for and will go forward. It cannot be said that a party that wants to cut public expenditure and public investment has any answers to the problems of our country.

Q9. One way to stimulate the economy in the north and south, tackle pollution and reduce the demand for increased airport capacity would be to invest in a national high-speed rail link. Why, after 12 years of this Labour Government, are we still waiting? (251634)

The hon. Gentleman will know that when the Secretary of State for Transport announced the proposals on Heathrow, he also announced our proposals to set up a company to pursue a high-speed rail link, and that is exactly what we intend to do. We are prepared to make a commitment to that project, and all the work that is now starting is designed around getting high-speed rail links moving forward.

Q11. What are the implications of the economic downturn for the private finance initiative, and will my right hon. Friend consider investigating the PFI contract with the Norfolk and Norwich hospital to see whether it might be a good deal to buy it out at this stage? (251636)

The Treasury is looking at PFI issues that arise from the loss of lending capacity in the economy, but the Health Secretary assures me that the project that my hon. Friend mentioned will go ahead.

Q10. If all our problems come from America and the rest of the world, why is the pound falling so sharply against the dollar and the euro? (251635)

If I could just say—[Hon. Members: “Answer!”] The experience of targeting the pound and the exchange rate has not been particularly beneficial for this country. Targeting the Deutschmark and the exchange rate mechanism, and then membership of the ERM, did not work. So we are not targeting the pound, but inflation. That is the Bank of England’s role, and I believe that it is best way to bring about a recovery in the economy. I caution the hon. Gentleman and his party against any policies that would target sterling.

Q12. My right hon. Friend will be aware of proposals in the Welfare Reform Bill to oblige drug addicts to accept treatment and rehabilitation in order to receive their full benefits. What can he do to persuade the Scottish National party Administration in Holyrood that that policy is both popular and the right thing to do? (251637)

I would urge all councils to engage with the Department for Work and Pensions on those issues. The policy recognises that just keeping drug addicts on benefits is not the answer to their problems. They need the treatment that is necessary and the support for that. That is exactly why we have changed the policy to make it possible for people to get the treatment and to give them support while they are doing that. That is the right policy for the future of this country, whatever the Scottish National party says.

What is the sterling value of an ounce of gold today, and what was it when the Prime Minister started selling our gold reserves in July 1999?

It was right to diversify our portfolio. [Hon. Members: “Answer.”] One thing we did was buy euros, and the hon. Gentleman will be sad to hear that the value of euros is up in our portfolio.