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Oral Answers to Questions

Volume 522: debated on Wednesday 26 January 2011


The Secretary of State was asked—

Business Growth

1. What recent steps he has taken to promote business growth and inward investment in Scotland. (35124)

Before I answer the question, may I pay tribute to Mr Phil Gallie, whose passing has sadly been announced this week? He served this House and his party well while he was here, and he went on to serve his party and his constituents with distinction in the Scottish Parliament. He did that rare but important thing—while a feisty defender of his party’s positions on all sorts of things, he became popular across party lines. Our condolences go to his family.

Economic growth is at the centre of the Government’s agenda for this Parliament, and I promote that agenda in my regular engagements with the business community in Scotland and the UK and with international partners.

May I join the Secretary of State in his condolences to the family of Phil Gallie, a fellow Ayrshireman and someone I knew well?

The Secretary of State mentioned the efforts to promote jobs. Will he update the House on what he has done to follow up on the visit of the vice-premier of China, in particular on the trade links between Scotland and China?

A very significant part of the vice-premier’s visit, which of course we welcomed enthusiastically here in the United Kingdom, was that he started it in Scotland. I had the great privilege of welcoming him to the UK on behalf of the Government. In the course of that visit, we in Scotland and the rest of the UK were able to see very clearly the opportunities for us to develop our plan to be partners for growth, whether in renewable energy or in many other spheres.

May I add my condolences to those expressed to the family of Phil Gallie? He and I came into this place on the same day, and I have to say that he was more working-class than most Labour MPs are today, and a feisty fighter as well.

Does the Secretary of State think that inward investment to Scotland would be helped if Glasgow Prestwick airport were renamed Robert Burns airport?

From one great defender of Ayrshire to another. The family will be pleased to hear the hon. Gentleman’s tributes to Phil Gallie. As far as the hon. Gentleman’s idea for the renaming of the airport is concerned, I am sure that those who make such decisions will have heard him.

As the Secretary of State will know, the north-east of Scotland and Aberdeen is a powerhouse of the UK economy, providing much-needed tax revenues and inward investment. Crucial to the future of attracting inward investment is good communications technology. Will he meet me to discuss the barriers that mean that we have not yet seen the next generation of broadband reach Aberdeen and the north-east of Scotland?

First, I agree with my hon. Friend about the importance of Aberdeen and the regional economy not just for Scotland but for the UK as a whole. He is right to emphasise that. I met senior business leaders in Aberdeen only a few weeks ago, and we discussed how they could develop growth. Broadband is an important part of that, and he will be aware of our plans to speed up the introduction of superfast broadband. I would be delighted to meet him to discuss the matter further.

I associate myself and my colleagues with the condolences in relation to Phil Gallie’s death.

Does the Secretary of State understand that thousands of individuals and businesses the length and breadth of Scotland are suffering because of rocketing fuel prices?

I recognise that the increase in fuel prices is a real challenge for individuals and businesses, which is why the Government are looking carefully at ways in which we can tackle that issue, including proposals for a fuel duty stabiliser.

Two years ago the Liberal Democrats promised a rural fuel duty derogation. What specific action have the UK Government taken with the European authorities to secure that? Specifically, has a formal request been made to the European Commission to make it possible?

Referring to the hon. Gentleman’s earlier point, it is important for Scotland and the whole UK to get a fuel duty regime that reflects the challenges that exist, particularly in rural parts of the country. On the derogation specifically, he will be aware that the Government are working very hard to ensure that we can get the right processes in place in Europe, so that we get the pilot up and running as quickly as possible.

I welcome the Government’s moves towards a lower rate of fuel duty for the islands, but under the plans that they inherited from the Labour Government, fuel duty is due to go up by more than 4p a litre in the Budget. The rural economy could not stand such an increase, so I hope that the Secretary of State will tell the Chancellor not to go ahead with Labour’s 4p increase.

I know the particular challenges in my hon. Friend’s area, where some of the highest fuel prices in the whole country can be found. His representations to me and to the Chancellor are carefully noted, and of course the decision on the future of fuel duty will come in the Budget.

Good transport links to other parts of the UK are vital for the Scottish economy. As the Secretary of State is aware, I wrote to him and to the Secretary of State for Transport on Monday last week to express my concerns about reports that bmi is about to axe its Glasgow-Heathrow service, which will put more than 100 jobs at risk. To date, I have had no reply from either him or his colleague. Will he inform the House today what steps he and his Government are taking to persuade both bmi and BAA to save that vital transport connection?

I recognise the hon. Lady’s concerns, which are shared by people not just in Glasgow, but across Scotland. I have spoken to senior managers both at bmi and BAA, and it is clear that they have some very difficult contractual arrangements as a result of the review of landing charges at Heathrow. I am keen that they recognise—I impressed this upon them—the importance of those links to Glasgow and to Scotland.

I am grateful for the Secretary of State’s response, but given that there is increasing evidence that domestic air links between Scotland’s major airports and the UK’s largest airport might be substantially diminished, and the inevitable worries that increased fares will result if there is only one remaining carrier, will he undertake today to make contact with the EU, which is responsible for regulation, and ask it to consider possible changes better to protect strategically important domestic air links, and to ensure better competitive practices to protect Scotland’s economy and our customers?

If I may be forgiven, I am not sure that I remember the previous Labour Government doing that. I do not want us to lose sight of the fact that Glasgow, Edinburgh and other major Scottish cities have a range of links to different London airports—substantial links that we want to be enhanced and to grow. The issue that the hon. Lady raises is obviously one of concern, and the Government will continue to discuss it with the parties involved.

Calman Commission

2. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish Devolution; and if he will make a statement. (35125)

6. What progress the Government have made on implementation of recommendations of the Calman Commission on Scottish devolution; and if he will make a statement. (35129)

The coalition agreement contained a commitment to implementing the recommendations of the Commission on Scottish Devolution, which is also known as the Calman commission. The Government introduced the Scotland Bill on 30 November—St Andrew’s day—2010. The Bill will have its Second Reading in this House tomorrow and I look forward to hon. Members taking part in the debate.

I very much welcome the provisions in the Scotland Bill to make the Scottish Parliament more fiscally accountable, but can my right hon. Friend give me an assurance that the business community on both sides of the border will be fully consulted about the implementation of the tax powers, so that it does not suffer an undue administrative burden?

I welcome my hon. Friend’s comments—I know that he has more than a passing interest in those particular powers. I can give him absolutely the assurance that he wants. Through the high-level implementation group, which brings together experts from a range of bodies, and Her Majesty’s Revenue and Customs technical groups, we are consulting very carefully and taking on board all the comments being made.

Calman acknowledged that the Barnett formula no longer reflected need. As a consequence, constituencies such as mine—Warrington South—receive many millions of pounds per year less than equivalent constituencies in Scotland. Does the Minister have any plans to amend the Scotland Bill to put the allocation on to a basis of need?

All I will say to the Secretary of State is that that question is very wide of the considerations of the Calman commission, and I feel sure that he will be dextrous enough to provide an orderly reply.

The problem is that the recommendations of the Calman commission are not being implemented—they are not in the Scotland Bill. The proposal on the aggregates levy, the proposals for the devolution of the marine environment and the proposal on air passenger duty have all been abandoned. Is that a lack of imagination on the part of this Government, or merely a lack of ambition for Scotland?

We certainly do not lack ambition for Scotland. We have a set of proposals that are being thoroughly scrutinised in the Scottish Parliament, and from tomorrow, they will be scrutinised in the House as well. As far as the specifics are concerned, the hon. Gentleman will be aware that, in respect of the aggregates levy, we have said that given the current court case, it is inappropriate to devolve that just now, but we will do so in future. I recommend that he goes back to the Command Paper and studies it carefully.

Value Added Tax

3. What recent discussions he has had with the Chancellor of the Exchequer on the effect in Scotland of the increase in the basic rate of value added tax. (35126)

May I associate myself with the Secretary of State’s comments on Phil Gallie? Phil was a true, great Conservative in Scotland.

I have regular discussions with the Chancellor of the Exchequer on a range of issues. The VAT rise is a tough but necessary step towards Britain’s economic recovery. Income tax and national insurance increases would have had a more damaging impact on poorer people in our society.

Almost half the respondents to a recent survey by the Federation of Small Businesses said that they would increase prices because of the VAT rise, and 45% of those respondents said that the rise would decrease turnover and have an obvious impact in hindering job creation and growth. How can the Secretary of State and the Minister continue to sell out the people of Scotland and support this abysmal tax rise?

How can the hon. Gentleman continue to fail to take responsibility for his Government’s record, which took our country to the brink of bankruptcy and required the VAT rise to fill the black hole? If anyone is responsible for the issues that Scottish business currently faces, it is his Government.

Business Confidence

Returning the UK to sustainable economic growth is the Government’s overriding priority. The Government are doing everything they can to create the conditions that enable all businesses to be successful and create more jobs.

Business organisations have welcomed the Government’s plans to reduce the headline rate of corporation tax and simplify the tax system. Does the Secretary of State agree that cuts are vital for boosting enterprise?

I welcome my hon. Friend’s comments and reinforce the points made by my hon. Friend the Under-Secretary a moment ago. The priority for economic growth in this country is to cut the deficit of £155,000 million that we inherited from Labour. Cuts in corporation tax, reducing the national insurance burden and keeping interest rates low are important parts of the package.

Given the over-reliance on the public sector in Scotland, does the Secretary of State agree that the Scottish Government should be following the policies of the national Government by encouraging private sector investment and ensuring a balanced economy?

We certainly believe that the private sector has a central role to play in returning us to sustainable growth in this country, whether in Scotland or the rest of the United Kingdom. The Scottish Parliament debates the Scottish Government’s budget this afternoon and no doubt some of these points will be made in that debate.

Is the Secretary of State worried that the Scottish Government’s plans to introduce a business surcharge will damage business confidence?

The Scottish Government have received serious representations on their proposals, and I am confident that those will be debated extensively this afternoon.

A double dip in the housing market in Scotland would be a disaster for the country. What discussions has the Secretary of State had with Scottish banks about more flexible lending?

The hon. Gentleman will be more familiar than most with the situation that we inherited, in which bank lending—to businesses or to householders—was not in a good state. We are determined to increase the amount of lending and I have regular discussions with the banks on a range of issues. This issue is a central part of those discussions.

Does the Secretary of State accept that business confidence will have been extremely dented by yesterday’s appalling growth figure announcements? Does he now accept that the Government’s cuts go too far, too fast, and will the Government now pull back from this reckless course?

I recognise that yesterday’s growth figures were very disappointing. We have said for months that the recovery would be choppy. There are special circumstances about the weather in yesterday’s announcement, which she will be aware of, but if we do not tackle the deficit, introduce measures to help businesses to grow or invest in infrastructure and science funding, we will not get the recovery from the situation that we inherited from the Opposition.

In the Secretary of State’s last answer, he referred to investment in infrastructure. He will know, from the Scottish business organisations that are in London today to appear before the Select Committee, that an important part of increasing confidence is having the right transport links and access to markets. Given that, and the future of the Secretary of State for Wales notwithstanding, will the Secretary of State clear up the confusion on his position on High Speed 2 and its extension to Scotland? I know from the discussions a couple of weeks ago that people from Glasgow and Edinburgh are slightly confused about where he stands. Can he clear this up and put on the record his support for High Speed 2 being extended to Edinburgh and Glasgow for the future of the economy of the whole UK?

I would not accuse the hon. Gentleman of wilfully misinterpreting the outcome of that particular meeting. I was pleased to arrange the meeting between the leaders of Glasgow and Edinburgh councils and my right hon. Friend the Secretary of State for Transport, who is sitting on the Front Bench. I am a passionate supporter of high-speed rail coming to Scotland, as is my right hon. Friend and the rest of the Cabinet.

Tuition Fees

5. What assessment he has made of the likely effect on universities in Scotland of the increase in the maximum fees chargeable by universities in England. (35128)

Education is devolved, and the hon. Gentleman will be aware that the Scottish Government are currently consulting on the future of higher education in Scotland. The UK Government are developing a White Paper on higher education in England that will fully consider the effect of their proposals on higher education in the devolved Administrations.

I am grateful to the Minister for that answer, although it was not quite an answer to my question. He will know, as I do, that the tripling of university fees in England will bring nothing but pain and misery to Scottish universities and Scottish students, whether in funding or support for students, or through the intolerable pressure on the Scottish Government to respond. What does he have to say to the university students who will suffer so much because of the appalling decision made by his party and the Scottish Liberals?

Higher education in Scotland is devolved. The UK Government are taking account of the impact of their policies in Scotland, but I tend to agree with Sir Andrew Cubie when he said that the Scottish Government were behind the curve in responding to the Browne report and bringing forward their own proposals. They are followers, not leaders. [Interruption.]

Order. There is a constant hubbub in the Chamber. People outside must think that it is extremely discourteous.

The Minister should be aware that what is not devolved are decisions on research funding—decisions that are arrived at here in Westminster and which will have an impact, not least for those Russell group universities in Scotland. Will he give us an undertaking that he will ensure that the Secretary of State for Scotland stays closely in touch with Mike Russell’s all-party working group at Holyrood, so that whatever the political composition after May, we get an outcome for Scottish universities that does not replicate the errors of policy judgment that have sadly been arrived at here?

I am happy to give my right hon. Friend an undertaking about the Scotland Office liaising with the relevant Scottish Parliament committee, and also to assure him that the Scotland Office works closely with Universities Scotland on all issues affecting universities in Scotland.

Bank Bonuses

8. What discussions he has had with ministerial colleagues on the level of employee bonuses to be paid by banks based in Scotland. (35131)

12. What discussions he has had with ministerial colleagues on the level of employee bonuses to be paid by banks based in Scotland. (35135)

With permission, Mr Speaker, I will answer Questions 8 and 12 together. I have regular discussions with ministerial colleagues on a range of issues. As the predominant shareholder in RBS, the Government expect the bank to be a back-marker and not a market leader on bonuses. People across the country are having to make adjustments as we come out of recession and repair our public finances. Everyone expects bankers to be part of this process.

Given that the Financial Services Authority report found that 1.1 million customer complaints were made against RBS in one year and that more than 50% were shown to have been dealt with inappropriately, does the Minister think it appropriate for RBS executives to receive lavish bonuses this year, and if not, what is he going to do about it?

As we have made clear, we have inherited an arrangement with RBS that was put in place by the last Government—the hon. Gentleman’s Government, not this one—to pay bonuses at market rates this year. We want to see bonuses lower this year than last year. That is absolutely clear-cut. As far as customer service is concerned, the hon. Gentleman makes an important point, and I am sure that RBS managers will have heard it.

With the collapse of the Bank of Scotland and the Royal Bank of Scotland, does the Minister agree that an independent Scotland would be as successful as Ireland and Iceland at the moment?

Driving Standards Agency

10. What recent discussions he has had with the Driving Standards Agency on its operations in Scotland. (35133)

I have had no such discussions with the agency. However, the hon. Gentleman will know from the Westminster Hall debate that he secured on the proposed closure of Arbroath and Forfar driving test centres that the Under-Secretary of State for Transport, my hon. Friend the Member for Hemel Hempstead (Mike Penning) has agreed to look further into the arrangements surrounding driving test centre closures.

The Minister is obviously aware that local driving test centres in rural areas such as Angus are being closed without any consultation whatever, with services moved to multi-purpose test centres. Does he accept that this is an unacceptable way for a Government agency to act? Will he press the Secretary of State for Transport, who I notice is sitting two along from him on the Front Bench, to impose a moratorium on closures until, at the very least, there is adequate consultation with local communities before the removal of such important services?

I commend the hon. Gentleman for his diligence in pursuing this issue, as he also did in his Westminster Hall debate. He knows that the Transport Minister took away the issues that he raised in that debate and agreed to look into them.

Energy Industries

11. What assessment he has made of the effects of the outcomes of the recent state visit to Edinburgh and London of the vice-premier of the People’s Republic of China on the renewable and low-carbon energy industries in Scotland. (35134)

China and the United Kingdom are key partners for growth in the future. This visit was another positive step in strengthening relationships, and it confirms Scotland’s reputation as a world leader in the continuing development and application of the new technology that helps to deliver clean green energy globally.

I thank the Secretary of State for his answer. Does he agree that investment worth £6 million in Scottish companies by the largest energy consumer in the world will provide a perfect showcase for the benefits of green technology? Does not the fact that Edinburgh seems set to see the creation of a renewable energy cluster in Leith docks further the case for the city to be the location for the new green investment bank? [Interruption.]

Order. There is far too much noise in the Chamber. That is unfair on the hon. Member asking the question, and on the Minister answering it. It also sends out a very bad signal to those listening to our proceedings.

Thank you, Mr Speaker.

On my hon. Friend’s first point, may I just emphasise what I said earlier, which was that the vice-premier was very impressed by what he saw of Scotland’s renewable energy sector when he visited Edinburgh, and not only by the presentations that he saw about the country’s potential but specifically by seeing the Pelamis factory in Leith? My hon. Friend also makes a strong and compelling case for the green investment bank, and we will announce details of that shortly. We look forward to making an announcement about its location at an appropriate moment.

I welcome the support that the Secretary of State has given to the establishment of the green investment bank headquarters in Edinburgh. Given that leading economists have said this morning that Scotland faces an even greater danger than the rest of the UK of a double-dip recession, does he accept that the decision on the location of the bank should be taken sooner rather than later? We want it to be set up so that we can have the advantage of the jobs that it will bring now, not in three or four years’ time.

Unlike the previous Government, we have actually made a firm commitment to the green investment bank, and we intend to deliver on that. We will be making further announcements on the detail as soon as possible.

Devolved and Reserved Powers

13. What recent representations he has received on the boundaries between devolved and reserved policy matters; and if he will make a statement. (35136)

The Commission on Scottish Devolution was established to look into this issue, and we are taking forward recommendations of the commission in the Scotland Bill.

Will my right hon. Friend take the opportunity to revisit the boundaries between reserved and devolved areas in farming matters? Does he believe that we in England could benefit from the way in which the common agricultural policy has been applied in Scotland?

The Calman commission looked at these issues across the full spectrum and determined that there was no need to make any changes in respect of agriculture, other than in certain aspects of animal health funding. [Interruption.]

Scottish Parliament (Financial Accountability)

14. What recent representations he has received from the Scottish Executive on the financial accountability of the Scottish Parliament. (35137)

The most recent such representations related specifically to the financial provisions of the Scotland Bill, received around the time of its introduction on 30 November 2010. Since May last year, Scotland Office Ministers have not received any representations from Scottish Ministers describing the detail or the estimated economic impact of any alternative proposals to deliver financial accountability to the Scottish Parliament.

On average, the Government spend about £7,000 a year per person in England, but they spend about £8,500 per person in Scotland. What comfort can the Minister give to my hard-pressed taxpayers in Harlow that their money is being spent wisely?

The Government understand that concerns have been expressed about the Barnett formula, but their priority is the stabilisation of the public finances. That is our priority for this Parliament.

While the VAT rise was swift, we are still waiting for the rural fuel derogation in the islands. In my constituency, fuel costs £1.45 a litre, but I have information that, in the tiny Faroe Islands, the price is 94p a litre for diesel and £1.10 for petrol. The islands control their own fuel taxation. Should not Scotland, with 5 million people, have at least the powers of an island group of 48,000?

I would have thought that the hon. Gentleman would be pleased that we finally have a Government who are taking forward the issue of fuel prices in remote and rural areas and who are looking to hold a pilot in constituencies such as his to establish how exactly it would operate in practice.

Chinese Vice-Premier (State Visit)

15. What the outcome was of the recent visit to Scotland of the vice-premier of the People’s Republic of China; and if he will make a statement. (35138)

I had a very constructive meeting with Vice-Premier Li Keqiang, which builds on the existing relationship between our countries. As I said in response to an earlier question, China and the UK are key partners in growth for the future.

While I welcome the commercial success of the Chinese deputy premier’s visit to Scotland and recognise the importance of China having good relations with Scotland, does my right hon. Friend agree that it is most important for the Government to continue to press the Chinese Government on the issue of human rights and also to call for the prompt release of the Nobel peace laureate, Liu Xiaobo?

I can reassure my hon. Friend that in the course of the extensive visit by the vice-premier, we not only focused on our important commercial ties and developing our partnership for growth, but took the opportunity to have an ongoing dialogue about human rights and other issues. We will continue to do that—and I believe we will be successful.

Prime Minister

The Prime Minister was asked—


I am sure the whole House will want to join me in sending our deepest condolences to all those affected by the appalling terrorist attack in Moscow on Monday. Our thoughts should be with the families of all those killed and injured, but especially with the family of Gordon Cousland of the United Kingdom. I spoke to President Medvedev on Monday evening and offered him our complete support in ensuring that the terrorists should never be allowed to win.

This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in the House, I shall have further such meetings later today.

On behalf of my colleagues, I wish to join in the tribute that the Prime Minister has paid. We would also wish to send our best wishes to a soldier from Northern Ireland who was injured in Afghanistan last week.

Every week, £600 million in fuel duty flows into the Treasury from hard-pressed motorists right across the United Kingdom. That is £600 million each week since the Prime Minister said that a fuel duty stabiliser was

“a sensible, balanced policy that protects families from big increases in the oil price.”

He has talked about a fuel duty stabiliser; he has promised it; he has answered questions on it—so when is he going to introduce it?

I do not believe in making tax changes outside a Budget, which is the proper way we do things in this country. There is a strong case for looking at this area, because I want to see a situation where, when oil prices rise, we try to help motorists and share the burden with them. The hon. Gentleman quite rightly reminded me of something I said, so perhaps I can remind him of something he said, as he stood on a manifesto that emphasised the need to “reign back public spending” and stated:

“A key priority of the next Government must be reducing debt”.

I agree with that.

I am delighted that the Government’s new enterprise allowance will be announced and will begin in my home area of Merseyside on Monday. Will not initiatives like that that spark enterprise and start businesses in some of the most deprived parts of the country?

My hon. Friend is right. I hope that Labour Members will encourage people to start up businesses and get enterprise going, as it is a private sector-led recovery that this country needs. We should also give special help to areas such as hers, which I visited recently, to try to ensure that we do everything to help growth in Merseyside and improve the prospects of the Atlantic gateway—a very exciting prospect for her area and for everyone who lives and works on Merseyside.

I join the Prime Minister in sending deepest condolences to the families of those killed in the bombing at Moscow airport. Our thoughts are particularly with the fiancée, family and friends of Gordon Cousland.

Will the Prime Minister explain to the House what, in his view, is the cause of yesterday’s disappointing growth figures?

First, they are disappointing growth figures—and they are disappointing even excluding what the Office for National Statistics says about the extreme weather. The point I would make is that this country has a very difficult economic situation for two main reasons. First, we have the biggest budget deficit in Europe, and we have to get to grips with it, which is difficult. Secondly, we had the biggest banking boom and the biggest banking bust anywhere in Europe, and we have to deal with that. As my right hon. Friend the Chancellor, the Governor of the Bank of England and I have all said, it is inevitable that, as we recover from those things, it will be choppy and it will be difficult. The worst thing to do would be to ditch our plans on the basis of one quarter’s figures.

The Prime Minister has been going around for months saying that our economy is out of the danger zone. Only a month ago, he told the House:

“It is because Britain’s economy is out of the danger zone and recovering.”—[Official Report, 15 December 2010; Vol. 520, c. 901.]

May I ask him to confirm that? He said that if we set aside the bad weather, the figures were not good. In fact, if we set aside the bad weather, growth was completely flat. There was no growth in the last quarter of 2010: no growth at all.

That is exactly what the figures show, yes.

The right hon. Gentleman asked about the danger zone. The point that I would make is this. Britain is no longer linked with countries such as Greece, Ireland and Portugal. Everyone was clear about the position before the last election. The Institute of Directors, the Confederation of British Industry and the Governor of the Bank of England all said that there was no credible plan to deal with the deficit.

If you do not deal with your debts, you will never have growth. That is the truth, and the right hon. Gentleman knows it.

The Prime Minister does not get it. If you do not have growth, you will never cut the deficit. That is what we saw in the last quarter of 2010.

As millions of families and businesses are worried about their livelihoods and see unemployment rising, inflation rising and growth stalled, what the country wants to know from the Prime Minister is whether he is going to change his strategy in any way in order to get the economy moving.

What we need to do in our country is get the deficit down, and at the same time do everything that we can to encourage growth. Let me read to the right hon. Gentleman what the head of the OECD said about the British economy, because I think that it is absolutely vital. He said:

“the UK was exceptional in terms of its needs of fiscal consolidation because the deficit had gone completely out of control.”

He also said:

“I think dealing with the deficit is the best way to prepare the ground for growth in the future. In fact, if you don't deal with the deficit you can be assured that there will not be growth because confidence will not recover.”

This man, who is entirely independent and in charge of the OECD, is giving us good advice, and I advise the right hon. Gentleman—as he has a new shadow Chancellor and can make a new start—to follow it.

The difference is that when we left office the economy was growing. Now the Prime Minister is in office, and it is not.

I have a very specific question to ask the Prime Minister. He has already made clear his decision on VAT, but he still has a choice to make about whether to go ahead with the decision to take another £20 billion out of the economy this year when the recovery is fragile. Is he telling the House and the country that he is determined to go ahead, irrespective of the figures and irrespective of what people up and down the country are feeling?

We have now heard what I think we are going to hear a lot more of: the theory that there was a golden inheritance from the Labour party. That is one of the most laughable propositions that I have ever heard put in the House of Commons.

We will not forget that we had the biggest budget deficit in the whole of Europe, and that we were spending £120 million every day just on the interest on that deficit. We inherited a situation in which, because of the regulation carried out by the right hon. Gentleman and the shadow Chancellor when they were in the Treasury, we had the biggest boom and the biggest bust in our banking system. We had a growth model that was based on uncontrollable boom in housing, uncontrollable boom in financial services, uncontrolled public spending, and uncontrolled immigration. We inherited a completely bust system from the two people who worked in the Treasury throughout the last Labour Government.

I suppose we can take it from that answer that the Prime Minister is not going to change course. He is not going to do anything to bring about growth in the economy. This is how out of touch he is. What people up and down the country are saying is that he is going too far and too fast with deficit reduction, and that that is what is inhibiting growth in this country.

The evidence shows that while cuts are being made in the public sector and while jobs are being lost in the public sector, jobs are not being created in the private sector. Why does not the Prime Minister, just for once, put his arrogance aside, and admit that he knows how to cut jobs but has absolutely no idea how he is going to create them?

The right hon. Gentleman has got to stop writing his questions before he comes to the Chamber and actually listens to the answer. He asks about changing course, and I have to say to him that he seems to have replaced a shadow Chancellor who did not understand Labour’s programme with one who does not agree with it. He asks specifically about cuts next year. Let me just remind him that it is Labour’s own plan for significant cuts in spending to start in April this year. He shakes his head, but that is his plan, which he is meant to be committed to. If he is now saying that that has all gone and Labour is just going to spend more and borrow more, he ought to tell us. As far as I can hear, his only plan is to borrow money we have not got, to spend money on things we cannot afford, and not to do the work we need to do to sort this economy out.

I am surprised that the Prime Minister is raising personnel issues this week of all weeks, because who has made the right judgment, me, who appointed the shadow Chancellor, or him, who clung on to Andy Coulson for months?

When people listen to the Prime Minister they know what the right hon. Member for Haltemprice and Howden (Mr Davis) meant when he said that the Prime Minister and Chancellor

“don’t have a sense of what a large part of the country”

feels. They are out of touch with people’s lives, they are taking a reckless gamble, and what these figures show is that for millions of people up and down the country it is hurting but it is not working.

If it was such a good decision to have the right hon. Member for Morley and Outwood (Ed Balls) as shadow Chancellor, why did the right hon. Gentleman not appoint him in the first place?

Let me just make the point that the absolute key for this country and our economy is two things: we have to deal with our deficit; and we have to help deliver growth from our private sector. I think that the right hon. Gentleman should listen to what the Governor of the Bank of England said last night in his speech. [Interruption.] Perhaps Labour Members will want to listen to the Governor of the Bank of England, who said:

“The UK economy is well-placed to return to sustained, balanced growth over the next few years”.

He said that this was partly as a result of the

“credible…path of fiscal consolidation”.

He continued:

“the right course has been set, and it is important we maintain it.”

I prefer the advice of the Governor of the Bank of England to that of the man sitting opposite.

Thank you, Mr Speaker.

Is not the lesson from the noble Baroness Thatcher that, when you have set an economic course, you should stick to it—“there is no alternative”?

My hon. Friend has a huge following in all parts of the House. The point he makes is important: it is that whatever your plans to encourage growth in the economy—we have the lowest corporate tax rate in the G7, we have abolished Labour’s jobs tax, and we are investing in science and skills, all of which are necessary—without a plan to deal with the deficit, they are nothing.

Q2. I think the Prime Minister would accept that he has had better weeks. He has lost the support of the CBI because he does not have a growth strategy; the economy has taken a highly predictable downturn; he has lost his Essex man; and I understand that there were forecasts of snow for the end of the week. Is there anyone remaining in the Government who still understands or is in touch with the concerns of ordinary people, whose jobs are under threat because of his policies? (35932)

The point I would make is that the CBI says very clearly that it is absolutely essential that we get to grips with the deficit. What it said at the time of Labour’s last Budget was that there was not a credible plan; it believes that there now is a credible plan. This is not going to be easy. The Labour party is committed to cuts from April this year. This will not be easy, but it has to be done.

Q3. The Conservative-Liberal Democrat coalition that has been running Reading borough council since last May has uncovered the fact that over the past 12 years the previous Labour administration spent £1.4 million of taxpayers’ money funding the salaries of three full-time union officials. Does the Prime Minister agree that that is an inappropriate use of taxpayers’ money and that full-time union officials should be paid for by union subscriptions? (35933)

My hon. Friend makes a very good point. It seems that in local government the Labour politicians pay the unions, whereas in national politics the unions pay for the Labour politicians. It is nice work if you can get it.

Q4. The Government have switched the indexation of benefits and public sector pensions from the retail prices index to the lower consumer prices index, but when it comes to hiking up petrol, they continue to use the higher retail prices index. In the interests of fairness, how can the Prime Minister justify using the higher indexation for petrol? Should the Government not at the very least use one or the other? (35934)

I can give the hon. Gentleman one tip. Before writing the question, it is always good to work out one’s own party’s policy. The Opposition are now committed to increasing benefits by CPI rather than RPI. His party is backing our policy and is far from opposing it.

Q5. Recent work by the Nuffield Foundation has shown that Britain has the lowest proportion of 16 to 18-year-olds studying mathematics of any of our competitor countries in the OECD. Just as bad, we have a chronic shortage of maths teachers in our schools. What action are the Government going to take on this issue? (35935)

My hon. Friend makes a very good point. The Nuffield Foundation has produced an extremely worthwhile report on how badly we are doing with maths teaching and in terms of the number of people studying maths. We will be taking a series of steps to sort this out, which will be announced by my right hon. Friend the Education Secretary. One is to expand Teach First, which is an excellent scheme to get graduates from our best universities into schools, and which, for the first time, will include primary schools. Many of them will be maths teachers. We also want to raise the bar for teachers as regards the qualifications they need to teach maths. That is vital in our country and my hon. Friend is right to highlight the issue.

Q6. Last Friday, I visited my constituent Vera Gaskin at her Livingston home. Mrs Gaskin has hepatitis C, having contracted it in 1985 through a transfusion of contaminated blood. She had been diagnosed with Hodgkin’s disease at the time. Of course, her situation is not dissimilar to that of the several thousands of people who also suffered due to the tainted blood scandal of the 1970s and 1980s. Sadly, many have passed away since. Obviously, I am aware of previous debates in the House on the matter and the statement by the Health Secretary on 10 January, but this does not bring closure to many victims and their families. Will the Prime Minister personally prioritise this matter, work with the devolved Administrations and introduce a proper compensation scheme, thus finally bringing justice to the innocent victims of this terrible tragedy? (35936)

I thank the hon. Gentleman for that question. He has had constituents come to him about this extremely difficult issue and I have had exactly the same experience in my constituency. Although previous Governments had put arrangements in place, there was a basic unfairness, particularly towards those who caught hepatitis C, because the evidence about what happens to people with AIDS and hepatitis C has changed over the years. I was pleased that my right hon. Friend the Health Secretary made the statement last week that we would increase what was being given to those suffering from hepatitis C. I am not sure that there is ever a level of payment that will bring closure for such an appalling accident, but I believe that the conditions in this country were different from those in other countries that campaigners often compare it with, such as the Republic of Ireland. I think we have the right answer.

Q7. The mobility component of disability living allowance for people in care homes is being reviewed. Whatever improvements are made, will the Prime Minister assure me that disabled people in care homes will still have access to individually tailored mobility support, and that that will be, as the coalition agreement implies, at no extra cost to them or their families? (35937)

I am grateful for my right hon. Friend’s question. The intention here is very clear: we want to ensure that the treatment of people in hospital is the same as the treatment of people in residential care homes in terms of the mobility component of DLA. That was behind the announcement we made, and that is what we want to make sure happens.

The Prime Minister may be aware that one of the Members elected to this House has decided to emigrate, and he may want to chalk that up as one of his achievements. The hon. Member for Belfast West (Mr Adams) seems to be extremely embarrassed about applying for an office for profit under the Crown although he has shown no such embarrassment in profiting from his office in this House for many years at taxpayers’ expense. When will the Prime Minister deliver on his pre-election pledge to hard-pressed taxpayers that he will abolish parliamentary money for parliamentary purposes going to those who do not fulfil their parliamentary duties?

First of all, just in case everyone has not caught up with the news, the right hon. Gentleman is quite right that the hon. Member for Belfast West has accepted an office of profit under the Crown, which is of course the only way to retire from this House. I am not sure that Gerry Adams will be delighted to be a Baron of the Manor of Northstead, but none the less, I am pleased that tradition has been maintained. On the very serious point that the right hon. Gentleman makes about allowances, in my view we should be aiming for all Members who are elected to take their seats in this House. That is what should happen and if some Members have a problem with what that entails, they ought to look at a remedy for that and should come and talk about it. That is the most important thing we could achieve.

Q8. Will the Prime Minister join me in congratulating Vaynor first school in Redditch, where I am chairman of the governors, on having recently received a good Ofsted report despite the continual lack of fairer funding from the Labour party? Will he also welcome the extra funding that will be heading to Worcestershire schools, due to the pupil premium, totalling more than £3 million? (35938)

My hon. Friend makes a very good point, and I hope that everyone in the House will be able to welcome the fact, first, that the amount of spending per pupil will continue, even though we have a very tough and difficult situation in our country. Over and above that, there will be a pupil premium payment—something that the Labour party did not do in 13 years of being in power. This money will go to those from deprived backgrounds in schools all over our country, and not just in inner-city areas; as she says, her constituency will benefit. I think the whole House should celebrate that.

The former investigating officer is now on the payroll of News International and three senior editors have been identified in relation to phone hacking—is it not time that another police force took over the inquiry? You have the status to make it happen, Prime Minister. What are you afraid of?

Let me be absolutely clear: phone hacking is wrong and illegal, and it is quite right that the Director of Public Prosecutions is reviewing all the evidence, which should be followed wherever it leads. I do not think it is necessarily fair to say that the police have not been active—after all, there have been prosecutions, convictions, and indeed imprisonments—but the law is quite clear and the prosecuting authorities should follow it wherever it leads.

Q9. Tomorrow is Holocaust memorial day—the anniversary of the day on which Auschwitz was liberated. Will my right hon. Friend join me in paying tribute to the Holocaust Education Trust and its work to ensure that the lessons of the holocaust are not forgotten? (35939)

I know that my hon. Friend speaks for the whole House when he raises the brilliant work that the Holocaust Education Trust does. I think this is a good time to pay tribute to the, sadly very few, holocaust survivors left. I had the huge privilege of meeting one, Trude Levi, yesterday in No. 10 Downing street. To hear the story of what those people went through, what they escaped, and in many cases what they had to go through even after they escaped, is truly humbling. We must never forget—not just because of what happened in Europe in the holocaust, but because too often there is genocide in our world today; we need to be permanently reminded of that fact.

Q10. The Prime Minister, the Chancellor and the majority of the Cabinet grew up in secure worlds of economic wealth and privilege. Does the Prime Minister agree that today’s young people face economic uncertainty and high youth unemployment? Is youth unemployment a price worth paying? (35940)

It never is—but youth unemployment has been a structural problem in our country for years. Under the previous Government, when the economy grew for many years, youth unemployment was worse at the end of that growth than it was at the beginning. Then, of course, it rocketed during the recession. We need a serious examination of how we can reduce the number of people who are not in education, not in employment and not in training. Rather than trading slogans across the House, it would be better to work out why the number has gone up in good times and in bad.

Q11. Unlike the NHS or my local council, a Sue Ryder hospice in my constituency, Manorlands, is not able to reclaim the VAT that it has paid. May I ask the Prime Minister to examine the issue and try to create a level playing field for health care charities? (35941)

I know this is an issue that many hon. Members care about deeply. We should all pay tribute to the hospice movement and what it does, working with our health service. It is important that we do everything we can to cut red tape and allow charities to thrive. Charities can and do reclaim some of their VAT, but in considering a bigger exemption such as my hon. Friend speaks about, we have to look at the consequences both for the state sector and the private sector, and their relationship with the voluntary sector, before we can take such a step.

Will the Prime Minister join me in welcoming the visit of the Prime Minister of Bangladesh to the United Kingdom and to Parliament? Apparently, a few years ago, when she came to Prime Minister’s questions, she was so impressed that she decided to institute it in Bangladesh. I am not sure whether she has changed her mind since. Can he give the House an assurance that he will continue to build on the strong bilateral links between Britain and Bangladesh?

I thank the right hon. Gentleman for his question. The Prime Minister is very welcome to Britain and also welcome to be watching our deliberations today. As the right hon. Gentleman says, whether she will go away feeling proud and excited by what the mother of Parliaments does on Wednesday at 12 o’clock is another question. She has already had a very good meeting with my right hon. Friend the Deputy Prime Minister. Relations between Britain and Bangladesh are good, and we need to expand them still further.

Q12. My constituents, Ben Oldroyd and Matthew Carr, are autistic and have Asperger’s syndrome. They have asked for my help because they want to visit schools in the Selby district to speak to pupils and staff and give them their experience of living with autism and the challenges that they face with that condition. They have already received praise from the head of Brayton high school. Does my right hon. Friend agree that such an initiative could be extremely good news for schools and the teaching profession? (35942)

I thank my hon. Friend for his question, which raises an important point. We made good steps during the last Parliament, with the Autism Bill promoted by the now Secretary of State for Wales, my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), but there is a huge amount that can be done by people themselves to get a greater understanding of autism and Asperger’s, not least because there is such a huge spectrum and such a big difference between the children suffering from those conditions. I am sure the work to which my hon. Friend refers is extremely worth while.

Last week the Prime Minister said something that I agree with: he said that we needed to do something about loan-sharking, so will he join me next week in supporting the motion to cut the cost of credit and support the poorest consumers in Britain with protection from those companies?

At the risk of building on what is clearly a blossoming friendship already, I will look carefully at what the hon. Lady says. On the issue of controlling loan sharks, one part should be encouraging credit unions. There is all-party support for that. Sometimes we have to be careful as we regulate that we do not drive out responsible operators and bring in loan sharks, so we must get the balance right. I will look carefully at what the hon. Lady is saying and perhaps get back to her.

Q13. Last week the Public Accounts Committee found that the previous Labour Government had pushed through private finance initiative deals without offering any alternative, and often regardless of expense or value for money. The result has cost the taxpayer billions of pounds too much. Does the Prime Minister share my view that there should now be a full investigation of why and how that happened? (35943)

I thank my hon. Friend for his question. The Public Accounts Committee can do a lot of that work by unveiling some of the appalling decisions that were made, which were just about off-balance-sheet accounting, rather than good value for money. I see the shadow Chancellor nodding, but he was in the Treasury when all that happened. As in so many cases, what we will find is that the mistakes that we now have to pay for are the responsibility of Gordon Brown’s two henchmen sitting on the Opposition Front Bench.

Q14. The Prime Minister used to talk rather a lot about fairness, but he has not done so well on performance, so here is a test for him. The banks have walked away from the talks on bankers’ bonuses. What will he do about it? (35944)

The talks are ongoing, and I will tell the right hon. Gentleman what I want. I want the banks to pay more in tax, and they will pay more in tax, up from £18 billion last year to £20 billion next year. He says they have walked away; they have not. These talks are ongoing, and I want to see the taxes go up, the bonuses come down, but vitally, the lending increase. I am confident that we will achieve all those three goals.

I know that the Prime Minister regards Blackpool as a special place, as indeed he should. Does he agree that it is about time that Blackpool’s unique status as the first working-class seaside resort should be recognised with UNESCO world heritage status?

My hon. Friend makes a powerful case for his constituency. I have a warm feeling whenever I think of Blackpool, because of the many conferences that I have attended there and the time that I have spent there. I understand, as I know he does, the pressures that it faces because of changing patterns of tourism and development, and the Government are committed to helping Blackpool to map out a strong future. It is also wonderful to see Blackpool in the premier league where they belong.

Q15. With the economy shrinking by 5% and inflation rising, having followed Ireland on the path of cutting too fast and too deep, are we not now in danger of following Ireland further down that slippery slope? (35945)

I am sorry to tell the hon. Lady that the 5% reduction was under her Government, not this Government. If the former shadow Chancellor’s primer has gone missing, perhaps she could get hold of a copy. When we came to office in May, the idea that there was some acceptable plan to reduce the deficit is a complete fiction. Let me just give her this one figure. If we went ahead with the plan of halving the deficit in four years, in four years’ time our deficit would be bigger than Portugal’s is now. Does anybody think that that is a credible path back to growth and confidence? It is not.

One of the most important strands in the Government’s growth strategy has been the creation of 75,000 additional apprenticeships. Does the Prime Minister agree that the forthcoming national apprenticeship week and the Gloucestershire apprenticeship fair represent a great opportunity to get young constituents to earn while they learn, especially in the manufacturing sectors, which are growing faster now than at any time under the previous Government?

My hon. Friend makes an excellent point. In the spending review, we had to take difficult decisions, particularly on welfare and pay, but as a result we are able to expand the number of apprenticeships to a record level, an extra 75,000. Yes, the growth figures are disappointing, but manufacturing and exports are up, and we are starting to rebalance the economy away from the unsustainable booms that we had under the Labour Government.

Order. Before the right hon. Member for Rotherham (Mr MacShane) asks his urgent question, I appeal to hon. and right hon. Members who are leaving the Chamber to do so quickly and quietly, so that those who are interested in the next business can attend properly to it. A quiet and speedy exit is required.