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Prime Minister

Volume 487: debated on Wednesday 11 February 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.

My constituents are fed up with irresponsibility from the bankers and the mistakes that are costing the country millions. Does my right hon. Friend accept that those allegations, including the most recent against Sir James Crosby, must be fully investigated to restore confidence in our banking sector?

It is right that we investigate serious allegations that are made about the banking system. These are serious but contested allegations; in relation to Sir James Crosby, these are allegations that he will wish to defend himself against, so it is right that he has stepped down as vice-chairman of the Financial Services Authority. It is important that the Financial Services Authority shows at this time that it is operating to the best standards possible. The Walker review that is being set up will look at exactly these matters—risk management, remuneration and the performance of boards—and I believe that the system of regulation in this country can and will be improved.

They can even plant questions at short notice. Let us be clear about what has happened. In the last half hour, Sir James Crosby, the man who ran HBOS and whom the Prime Minister singled out to regulate our banks and to advise our Government, has resigned over allegations that he sacked the whistleblower who knew that his bank was taking unacceptable risks. Does the Prime Minister accept that it was a serious error of judgment on his part to appoint him in the first place?

The allegations that were brought before the Select Committee on the Treasury were investigated by the independent KPMG in 2005. The allegations made by Mr. Moore were found not to be substantiated. That was an independent review, which was done by KPMG and reported to the Financial Services Authority. However, it is right that when serious allegations are made, they are properly investigated. No doubt the Treasury Committee will want to look at them; and no doubt the Conservative party will want to wait to see how that investigation takes place. The Walker committee will look at every aspect of banking regulation, which we know can be improved. The unfortunate thing is that every time we have called for more regulation, the Conservative party has called for less.

The Prime Minister talks about the KPMG investigation, but it was after that investigation that the bank virtually went bust. Taxpayers have poured billions of pounds into the bank. Not only was Sir James Crosby appointed as one of the top regulators in the country—and, I have to say, knighted by the Prime Minister for his services—but the Prime Minister has been relying on him for economic advice. Sir James Crosby was the man who was going to sort out the mortgage market, so will the Prime Minister confirm that, as well as standing down from the Financial Services Authority, Sir James Crosby is no longer one of his advisers? Is that the case?

Sir James Crosby did two reports: one for the Chancellor on mortgages, and one for me, when I was Chancellor, on security issues. He has completed these reports. He is no longer an economic adviser to the Government—[Hon. Members: “Ah!”] And he has only been so in the context of doing two reports. If I may say so, we are facing very big issues in the economy at the moment, and the way in which the Conservative party wants to trivialise them does it no merit.

There is nothing trivial about asking the Prime Minister about the man he appointed to regulate the banks. Why cannot the Prime Minister just admit, for once, that he made an error of judgment? Is this not a big part of the Prime Minister’s problem? Sir James Crosby has had the decency to resign. Why cannot the Prime Minister have the decency to admit that he got something wrong? Is this not part of the problem? There has been no apology about boom and bust, and no apology about Britain being better prepared. Even the bankers have apologised—when is the Prime Minister going to? Won’t you just admit, one more time, that it was a misjudgment to appoint him to all those roles?

Order. I must tell the Leader of the Opposition that the term “you” is not permissible. He should not use it—[Interruption.] Order. Be quiet! I have said this time and time again, and I will not say it again.

Yesterday, he heard the four leaders of the two major banks that were brought to the point of collapse apologising for what they have done. If we had not stepped in to save the banks, I would have had to apologise for not taking the action that was necessary, but we took the right action. I just want to ask him about the judgments that he took on all the big decisions over the last year. We nationalised Northern Rock a year ago, but the Conservatives opposed the measure. On the fiscal stimulus, when every other country in the world is acting, he opposed the measures that we took. On the whole range of measures that we are taking to deal with the fiscal stimulus that is necessary, including raising the pension and raising child benefit, they are opposing what we do. I think that he has to answer to the House himself for what he has got wrong.

I will tell him about the judgments that we have made. Voting against VAT—that was the right judgment. Supporting a national loan guarantee scheme—that was the right judgment. The Prime Minister says that the banks’ collapsing was nothing to do with him, but let us have a look at the judgments that he made when he was Chancellor. Who gave us the biggest budget deficit in the developed world? He did. Who left us the most personally indebted country in the world? He did. Who set up the regulatory system that has so failed? He did.

Let us have a look at another of the Prime Minister’s judgments. The Prime Minister and the Chancellor have told us repeatedly that the economy will start to grow again at the beginning of July this year. The Schools Secretary, the man who was the Prime Minister’s chief economic adviser at the Treasury for so many years, says that we are heading for the worst recession in 100 years. Does the Prime Minister agree with his Schools Secretary?

Let us look at the judgments that he mentioned. On VAT, the Governor of the Bank of England and the Institute for Fiscal Studies have just said that it was the right decision to make. There is more money in people’s pockets as a result of it. It is only the Conservative party, which has always put up VAT, that believes that the answer can never be to reduce VAT. Let us look at what we have done for business. We have introduced a loan guarantee scheme that is £1 billion. We have introduced a Bank of England facility that will start on Friday that is £50 billion, and 56,000 companies have already benefited from the schemes that we have brought in. If we had taken the advice of the Conservative party, no money would have been used. As Barack Obama said only yesterday, doing nothing is not an option.

Let us have a little look at who backs the Prime Minister’s judgment on VAT. The Dutch say that it was

“not a very wise thing to do”.

The Germans—[Interruption.] These are his friends, by the way; I am not even talking about his enemies. The Germans say that the debt will take a generation to pay off, and the French President says that the Prime Minister is “ruining” the economy—[Interruption.]

Order. Hon. Members should not shout down the Leader of the Opposition. It is not allowed—[Interruption.] Ms Keeley, you are usually very quiet; I do not think that you should push your luck.

They should listen to the French President. This is what he said. He said that the Prime Minister was “ruining the economy” and that he, the President, would not be “repeating Gordon Brown’s mistakes”. What mistakes was he referring to?

The one pro-European that the right hon. Gentleman did not mention who supported the VAT change was the shadow shadow Chancellor, the shadow Business Secretary. I think it is remarkable—we really need to look at this—that at the point when we most need an injection of resources into the economy, the Conservative party is setting its face against ordinary families in this country who now have £20 more a month in their pockets. The people of this country will remember that the Conservatives opposed the VAT cuts; they opposed the rise in pensions; they opposed the rise in child benefit; they opposed the extra billions that we are spending on public investment; and they did so in circumstances where they knew that we have one of the lowest public debts of major countries in the world, not one of the highest.

The Prime Minister cannot get his facts right. The fact is that we have the biggest budget deficit of any country outside Egypt, Pakistan and Hungary—and two of them are already in the International Monetary Fund. Let us deal with a few more of the facts that the Prime Minister just gave us. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) voted against the VAT cut in this House. The Prime Minister never gets his facts right; he told us the other day that he was like Titian aged 90, but the fact is that Titian died at 86. For all we can see in the Government’s response to this recession, they have appointed the wrong people, they have made the wrong decisions, they cannot give us a straight answer about the mess we are in, and they never apologise for anything. Now everyone can see the price that is being paid, as thousands of businesses go bust and people are made unemployed up and down our country. Is it not clear that incompetence plus arrogance equals 2 million unemployed?

What did the Leader of the Opposition say to the Conservative party conference? He said:

“Everyone knows that business need deregulation… Who’s standing in the way? The great regulator… Gordon Brown.”

He went on to say that we had to deregulate the wealth creators. At this point, when the right hon. Gentleman is calling for more regulation, perhaps he would be honest enough to admit that he has been calling for the last few years for total deregulation of many of the businesses in this country. As far as judgment is concerned, let me just say that his judgment on Northern Rock was to let it collapse; his judgment on regulation is to deregulate as much as possible; and his judgment on the fiscal stimulus is doing nothing. The decisions that he has made on the global financial crisis have been wrong, wrong and wrong every single time.

The Prime Minister will be aware that it is almost 18 months since the Law Lords made a decision denying compensation to people suffering from pleural plaques as a result of negligent exposure to asbestos. Does he agree with me that we can restore justice and fairness only if that Law Lords’ decision is overturned?

I met my hon. Friend last week and we talked about this very issue. It is very important that we get a resolution following the court judgment on pleural plaques. The Secretary of State for Justice has been looking at this matter and talking to his colleagues right across Government about the implications of what can be done, and I can assure my hon. Friend that an announcement will be made very soon.

Since the Queen’s Speech a few months ago, the Government have been churning out on average three new announcements each and every day. Will the Prime Minister tell me how many of those initiatives are being put into practice?

As I said a few minutes ago, more than 50,000 companies are benefiting from the measures that we have taken. Those measures include the new enterprise scheme; they include the working capital scheme that is being opened up in the next few days; and they include what we have done with the Inland Revenue and others to help people with the costs that they face at this time. I hope that the right hon. Gentleman will agree that we are not only helping businesses in this country, but we are helping people when they become unemployed. In only the past few weeks, we have put in an extra £500 million to help them. I hope that the right hon. Gentleman will also see the help that we are giving people with their mortgages, which is designed to keep the problem of mortgage arrears and repossessions down.

Let us look at some of the Prime Minister’s big announcements. He said that he would get the banks lending again; they are not. He said that he would get tough on bankers’ bonuses, yet he is letting them keep millions in bonuses in return for a cynical apology. He said that he would create 100,000 new jobs, yet with unemployment today standing at almost 2 million and rising, our young people of today will be tomorrow’s jobless generation. It is bad enough to be a do-nothing party; is it not even worse to be a say-anything, do-nothing Prime Minister?

I have tried to explain in recent weeks that the problem with bank lending is actually the loss of foreign banking and non-banking capacity in this country. Half the lending in mortgages and half the lending to businesses came from that source. When that source leaves, as the Irish, American and other banks have left the country or have run down their capacity, the existing banks must do more.

I can tell the right hon. Gentleman that the banks in which we have an interest are lending more than they were. The problem is that we must build out of a gap in capacity that existed because of the loss of foreign lending. I hope that the right hon. Gentleman will understand that that is what is happening at the moment. We are trying to sign lending agreements with the banks.

As for the right hon. Gentleman’s other allegations, if I had taken his advice we would have made the wrong decisions.

It is right that there is outrage over the fact that the highly paid bankers who helped to create the current crisis are considering being paid huge bonuses, but does my right hon. Friend agree that the bank workers at the lowest end of the scale should not be penalised for their bosses’ failures?

Let me tell the House what we have done since October. I think that this must be made absolutely clear. First of all, on the boards of banks in which we have an interest no cash dividends are being paid, no cash bonuses are being paid and no share options are being paid. We have laid that down as a condition to each of the banks in which we have taken an interest. Meanwhile—I think that the House will want to know this—the four chairmen and chief executives of the two banks that we have taken over have all left, the board of HBOS no longer exists and seven people have left the board of the Royal Bank of Scotland in the past few days. Our determination is to make sure that the banking system is built on better fundamentals than in the past.

As for bonuses, while I am aware that there are thousands of poorly paid bank employees in this country who rely on their bonuses, we must ensure that we protect the public interest as we look through what is being proposed by the Royal Bank of Scotland and other banks. I assure my hon. Friend that we are determined not only to make our banks clean of the problems that have existed, but to ensure that they operate on good principles and that the rewards are only for good, sustainable, long-term benefits that accrue to the company and not for short-term deals.

Q2. Does the Prime Minister recall that when the Home Office announced 15 months ago that over 7,500 illegal immigrants were working in the security industry—including one who was guarding his car—he and his Ministers announced immediate and tough action? Can he tell the House how many of those people have been deported? (255801)

I shall write to the hon. Gentleman on that very matter, but what I will say is that once the problem was identified, we took action immediately.

Q3. When I visited Jobcentre Plus in Washington, I saw for myself that the recent loss of 1,200 jobs at Nissan has been a bitter blow for the north-east, especially after 10 years of consistently falling unemployment across the region. May I ask the Prime Minister to echo my appreciation for the sterling work done by the people in Jobcentre Plus, and may I press him further to see what more he and the Government can do to protect jobs and keep people working in the north-east? (255802)

It is right to say that for every person who is made unemployed there is sadness and sorrow, and we will do what we can to help people back to work as quickly as possible. It is right to say that employment has risen in my hon. Friend’s region over the past 10 years, but it is also right to say that the car makers and other industries are facing very big problems. Our determination is to give people help—help enabling them to stay in jobs where that is possible, help enabling them to get new jobs, and help enabling those who are already unemployed to get work as quickly as possible. When I met the members of the National Employment Panel this morning to discuss exactly these issues, many employers said that as a result of the 500,000 vacancies in the economy, they would be able to help people to get back into work.

Q4. In response to my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg), the Prime Minister mentioned housing, but although he announced a mortgage deferral scheme two months ago, it still has not happened. He said that he would protect the low paid, yet council house rents are increasing massively this year. He said that he would increase house building, yet only half as many houses were built last year as the year before. Is this a failure of management, or a failure of leadership? (255803)

On 1 January, we introduced the new scheme that will help people who are unemployed with their mortgages. That is now working; at 13 weeks, people will get help with their mortgages. We also negotiated with a number of building societies and banks that they will enforce a moratorium on those payments that it is necessary to make in situations where we can avoid repossessions. We are now bringing through the Banking Bill, which is in the House of Commons this week, and it contains the measures that will enable us to go further and provide a better insurance scheme for people who have problems with their mortgages. We have taken the action that is necessary, and we will continue to take whatever action is necessary. The hon. Gentleman should be supporting us, not criticising us.

Q5. Extensive gritting took place throughout my Greater Manchester constituency during the recent wintry weather, keeping roads open and services running. We should contrast that with the chaos in our capital city, London, where the tube was closed and bus services did not run. The Mayor blamed that on the divine; does the Prime Minister think that that embarrassment was down to an act of God or the inaction of Boris? (255804)

The combination of the policy of the Mayor of London with those of the Conservative party to cut public spending now would mean that Londoners would be in a far worse position, if ever we had the misfortune of having a Conservative Government. It should be pointed out to the people of London, and to the people of the country, that if the Conservatives were in government, they would in a few weeks’ time be cutting local council funding plans, cutting police, cutting schools and cutting transport—they would be making cuts to vital services at a time when people need those services most. That is the Conservative party we know.

Q6. Will the Prime Minister tell the House what steps the Government are taking to ensure that allegations of war crimes in Gaza are investigated by the International Criminal Court? Have the Government asked the Security Council to refer these allegations to the ICC? (255805)

The position is, first, that the United Nations Secretary-General has asked for an inquiry into what happened, and particularly into what happened to the UN headquarters in Gaza, and, secondly, the Israeli Government have announced an inquiry into their actions. We must await the results of these inquiries.

Q7. Does my right hon. Friend share the pride in Grenadier Guardsman Scott Blaney from my constituency of Nuneaton, who has just returned to duties after having lost a leg while on operations in Afghanistan? Does my right hon. Friend further agree that we should be doing as much as we possibly can to get all our injured Army personnel back to work once they have recovered from their injuries? (255806)

My hon. Friend is absolutely right. I have visited Birmingham, where people who have been injured in Iraq or Afghanistan have been given help to recuperate and get back either into the armed forces or into work. Seeing the progress that people who have been severely injured have made is a very moving experience. I think the whole House will be proud of the 22-year-old Guardsman Scott Blaney, who has been standing guard at the Tower of London this week despite all the injuries that he has suffered. He is a shining example of the bravery, fortitude and determination of our armed services.

Will the Prime Minister consider providing Government help to enable medium-sized businesses to increase the pay to their workers on short-time working, as that might help stem the flow of redundancies of skilled, and possibly irreplaceable, staff?

The hon. Gentleman is right that there are things that can be done in this area. First, I ask him to look at the working capital scheme for medium-sized businesses, which will give them access to working capital—loan capital—over the period of the next year or two. I also remind him of the Inland Revenue scheme that allows a deferral of taxation, but we are also looking at how our training grant system can provide help for half a day or one day a week to allow workers to be kept on in industries that would otherwise be laying people off. In each area where we can take action, we will take action, and I will be very happy to look at any proposal that the hon. Gentleman puts forward.

Q8. My right hon. Friend knows that on Teesside the renewables and biofuels industry is both vibrant and growing. The Teesside Ensus plant alone will produce a third of the UK’s bioethanol demand—the equivalent of taking 300,000 cars off the road—while using soy animal feed in a significant form, which will reduce deforestation. What are the Government— (255807)

Order. The hon. Lady must be fair to other Back Benchers. When a supplementary is too long, it is unfair to them.

Because of our ambitious carbon emissions targets—one for 2050 and one for the earlier period—we have a duty to invest, as well as the benefit from investing, in the low-carbon industries of this country. My hon. Friend is right to say that where we can gain advantage from investing in new environmental technologies that will benefit either the car or other vehicles, or businesses in general in our country, it is right to do so. We will shortly be publishing our proposals on how we can contribute to the development of a low-carbon economy for the future.

Q9. Thousands of dairy farmers wake up every morning throughout the United Kingdom wondering whether this will be the day when the herd that they have so lovingly built up over their lifetime will be slaughtered because of a positive reaction to a test for bovine TB. When will this urban-centric Government put in place effective policies to deal with that dreadful disease? (255808)

As the hon. Gentleman knows, the means of dealing with that disease have been hotly debated over the years. I am happy to look at any proposals that he has for the future, but may I say that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has regular discussions with the National Farmers Union on those very issues, and the investment that we have made in rural areas would be cut by the Conservative party?

Will my right hon. Friend commend the Tarmac cement plant in my constituency for its announcement of 60 new apprenticeships this year? Will he also commend the 100 businesses from Nottinghamshire and Derbyshire that came together recently to hear about the Train to Gain project? Does he agree that investment in skills now—recession or no recession—is the key to prosperity in the future?

My hon. Friend may have noticed an advertisement from the CBI and other organisations saying that it is time to invest in the future—it is time to invest in the skills of the future. We are increasing apprenticeships this year, as a result of the decisions that we have made, by 35,000, so that there is not a cut in training during a period of downturn. We are also investing more in Train to Gain to enable people not only to continue in work, but to get the skills for the future. I must repeat to the House that if we had followed the advice of the Conservative party, we would be cutting these programmes when they are desperately needed now.

Q10. Why has a former trustee of a secretive overseas bank that specialises in tax evasion been appointed to manage the taxpayers’ stake in our banking industry? (255809)

Q11. I am sure that my right hon. Friend would agree that we must not let the financial crisis deflect us from tackling climate change. I do not know whether he is aware that companies involved in developing low-carbon technologies are suffering from the credit crunch and that projects are at risk. Will he undertake to ensure that the Government do all that they can to give these companies the support that they need in order to deliver? (255810)

My hon. Friend is absolutely right; there is a growing low-carbon environmental sector in this country that we need to support. It is worth about £100 billion and employs about 800,000 people, and we will do what we can to support it, even if the Conservative party seems to have a huge disinterest in the environment now.

Q12. In 2006, as many as one in six prisoners were released before they were halfway through their sentence—in 2007, that had risen to more than one in three prisoners. Can the Prime Minister explain to the House why he thinks it is a good idea to let so many prisoners out of jail early? (255811)

The early-release scheme proposals were agreed by the House. We have said that we will look at them as we build new prison places. We are already building new prison places and, if I may say so, far from being soft on prisoners, there are now 20,000 more people in prison now than there were when we came to power.

I call David Chaytor: he is not here. I call John Mann: he is not here. I call Gordon Prentice: you are here.

I have been here for the last five weeks, Mr. Speaker. [Laughter.]

Does my friend believe, as I do, that we need a mandatory register of lobbyists, independently managed and enforced? Will he introduce legislation without delay?

I agree that we have to take very seriously the problem of lobbyists and what they are doing in both the House of Lords and the House of Commons. We will have to look at all the measures that could make the system work better. I am happy to look at my hon. Friend’s proposal and see what we can do.

Can the Prime Minister confirm that 150,000 work permits were issued to non-EU citizens last year—roughly four times the level under previous Governments, Labour as well as Conservative? How does that fit with his vision of reducing our unemployment rate?

We have just introduced a points system that means that unskilled workers will not get into the country—under the circumstances that the hon. Gentleman is talking about—unless they have a contribution to make. We are the first Government to do that, and it is the right thing to do. The hon. Gentleman will see the impact of the points system in the future. Despite all the figures that are bandied about, the percentage of non-UK nationals employed in the UK is 8 per cent., which is lower than in many of the countries with which people compare us.