I beg to move,

That leave be given to bring in a Bill to permit the disturbance of bats and newts for specified purposes; and for connected purposes.

I should at the outset declare an interest, as I have been a member of the World Wildlife Fund, now called the World Wide Fund For Nature, longer than I have been a member of the Conservative party.

Shocking!

It is not shocking at all.

I am very fond of bats and newts and it still thrills me when I see them. As a child, I used to catch newts when doing what is now known as “pond dipping”. Like Ken Livingstone, I like newts and, on that basis, I would name this Bill the “Livingstone Mayoralty Memorial Newt Bill”.

Although there may be some amusement here, this is a very serious issue. What links great crested newts and bats is that they are both European protected species—EPS—and that gives strict protection under the European habitats directive.

I shall illustrate but two of many recent cases that explain the problem. First, last summer Mr. and Mrs. Histed, who live near Chippenham in Wiltshire, were flooded out of their house by 3 ft of water when a ditch blocked. Repairs to the house cost a quarter of a million pounds and, not unreasonably, they wished to unblock the ditch. However, they were refused permission by the Environment Agency, which ordered a “newt search”, forcing this pensioner couple to remain in a caravan.

Secondly, on the edge of my constituency, the Earl Shilton bypass was delayed three months after it was believed that great crested newts might be on site. The council spent £1.2 million erecting special newt fencing and traps, but it never found a single great crested newt.

That is hardly surprising, as anyone who knows anything about the life cycle of great crested newts will know that they can move 1,000 yd or more from their breeding sites. One might think that this newt must therefore be rare but, according to the Government, there are 66,000 great crested newt breeding ponds in England alone, and the Secretary of State for the Environment said in a letter to me that

“great crested newts are widespread in lowland England and in some areas are present in good numbers”.

Furthermore, the decline in these newts results from changed farming practices, which have caused ponds on farmland to be filled in. May I suggest that creating new ponds would be cheaper and more effective than expecting the Leicestershire council tax payer to fork out £1.2 million for nothing?

Bats—which are so beautiful flying at dusk—are also an EPS under the habitats directive. They are wild creatures whose natural habitat is roosting in caves or rotten trees. They existed long before man built houses and churches. Bats in the belfry may be a longstanding joke—of sorts!—but it is no joke in many churches.

I should like to draw particular attention to St Nicholas church in the hamlet of Stanford on Avon, 100 yd outside my constituency in the constituency of my hon. Friend the Member for Daventry (Mr. Boswell). The 14th century church is filled with the most marvellous monuments in alabaster and marble. There is an organ case from the chapel royal in Whitehall palace that was sold after the execution of King Charles I. Simon Jenkins gives the church four stars in his book, “England’s Thousand Best Churches”, but if the mediaeval stained glass had been in situ rather than being restored, he might easily have given it five stars. The church is part of our national heritage, and deserves to be preserved. I was there on Sunday, sitting next to a 16th-century tomb of a knight and his wife. The tomb was restored at great cost, which was partly met by taxpayers through English Heritage and the National Heritage Memorial Fund. Bat droppings are stuck all over the intricate tracery and writing on the tomb and can also be found all over the walls and often on the altar. That is very unpleasant and is a hygiene risk during communion.

Much worse is the damage being caused to another fine marble monument, which has been under a bat roost. The urine, which contains ammonia, has stained and scarred the marble and the monument itself is sometimes completely covered in piles of droppings; I am talking about not one or two, but bucketloads of droppings. I have a photograph that I am happy to show any concerned Member.

The church’s tiny congregation is unable to take any action because of the habitats directive. Natural England has not been helpful. It has suggested ludicrous gazebos over the monuments; I wonder how that approach would work with wall paintings similarly at risk in other churches. Helpfully, Natural England charged the church warden £525 for its useless advice. The taxpayer funds the restoration of churches through one Government body, but another Government body insists that they cannot be preserved from damage by bats. Even worse is the fact that the diocesan advisory committee for Coventry and Leicester wrote that the parochial church council

“should seriously consider declaring the church redundant”

because of the infestation. I shall be writing to the bishop.

Bats, of course, will live elsewhere. According to the Bat Conservation Trust,

“The Pipistrelle bat has probably declined as a result of modern agricultural practices”—

no mention is made of boring sermons in church. One can assist bats by putting up bat boxes and by leaving rotten trees to stand, and we should do such things.

My problem with both the EPS issues that I have mentioned is that the entire approach is disproportionate. The Department for Environment, Food and Rural Affairs tells me that it advocates a proportionate response regarding great crested newts, but I note that last year Taylor Woodrow was fined £2,000 for damaging a newt site in Essex.

If anybody doubts the ridiculous bureaucracy surrounding this issue, they should look at the way in which Natural England thinks one should deal with great crested newts. It recommends completing a “method statement” on an Excel-format spreadsheet template. There is not much common sense in that.

Furthermore, the Government’s Countryside and Rights of Way Act 2000 has made disturbing or handling the animals arrestable offences—someone could get a six-month jail sentence for pond dipping. Why is there not a proportionate response? The House might know that there was a derogation under the original legislation in 1994. Members might wonder what the European Court of Justice does, and now I can tell them: it judges these matters, and it overturned the proportionate approach and the derogation. It transpires, I regret to say, that this ridiculous situation is all down to the wicked European Union. [Interruption.] It is true.

Mankind can and should be able to live in harmony with the animal kingdom, including bats and newts. We should have a balanced approach so that, without harming newts or bats, people can get on with their lives. Our natural heritage, which I wish to see enhanced, can co-exist happily with our national heritage in churches in Norfolk, Stanford on Avon and elsewhere. It is ridiculous that some very intelligent, highly paid civil servant in Brussels, or indeed in Whitehall, should be laying down such detailed and foolish laws. In this case, the law really is an ass.

It’s batty!

Indeed.

My Bill would ensure that Ministers insisted on the reform of the European habitats directive and set up a more pragmatic, balanced approach, conserving our natural heritage of great crested newts and bats without the adverse consequences that I have illustrated.

Hon. Members may know act IV, scene i of “Macbeth”:

“Fillet of a fenny snake

In the cauldron boil and bake;

Eye of newt, and toe of frog,

Wool of bat, and tongue of dog”.

The issue is not about putting bats and newts in cauldrons, but there is toil and trouble. Let us have some common sense instead.

Question put and agreed to.

Bill ordered to be brought in by Mr. Andrew Robathan, Sir Patrick Cormack, Christopher Fraser, Mr. Tim Boswell and Robert Key.

Protection of Bats and Newts

Mr. Andrew Robathan accordingly presented a Bill to permit the disturbance of bats and newts for specified purposes; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 17 October, and to be printed [Bill 125].

I inform the House that in both debates I have selected the amendments in the name of the Prime Minister.

I beg to move,

That this House expresses its deep concern at the rapidly rising cost of living; recognises the pressures this places on wage-earners and pensioners, especially those on the lowest incomes; acknowledges the danger to the UK economy of entrenching inflation through excessive wage claims in response to rising prices while understanding the concern of people who find their living standards squeezed; and therefore regrets the inability of the Government to provide assistance and support to hard-pressed families because of what the OECD describes as ‘excessively loose fiscal policy’ pursued by this Government over the years of economic growth.

The cost of living is back at the top of the political agenda and on the front pages of all our newspapers. When I first became aware of political debate in my early teens, the economy dominated the agenda and the battle to control inflation dominated the economic policy debate. It influenced almost every aspect of that debate; it toppled Governments and shaped our national institutions. Indeed, for many of us, it shaped our perceptions for half a lifetime. Then, after the Conservative Government introduced inflation targeting in 1992 and the incoming Labour Government reinforced that move in 1997 by creating the independent Monetary Policy Committee of the Bank of England, it ceased, for a decade or more, to be an issue on the political radar screen.

How tempting it was, therefore, to believe the rhetoric of the then Chancellor, our Prime Minister, that the dragon of inflation had really been slain—that the sunlit uplands of endless economic growth, low interest rates and appreciating asset values had been reached without the unwelcome spectre of inflation spoiling the view. Indeed, the Prime Minister built his entire reputation on the claim to have been the man who delivered economic stability—who ended boom and bust. Well, not any more.

Will the hon. Gentleman accept that the former Chancellor built his reputation on the independence of the Bank of England, which the hon. Gentleman’s party did not support at the time, and that that has been a major weapon against inflation?

If the hon. Gentleman had been listening, he would have heard me say a few moments ago that inflation targeting was introduced by a Conservative Government and reinforced by independence of the Bank of England, which we, in turn, are now committed to reinforcing still further in a way that this Government have resisted.

Does my hon. Friend remember that, far from creating an independent Bank of England, the Chancellor gutted and filleted it, taking away debt management and nationalising it into the Treasury, and taking away day-to-day banking supervision, so that the Bank was blind and deaf in the money markets when the credit crunch hit? Is not that a major problem?

My right hon. Friend is absolutely right. As he will know, we have been arguing for some time that the responsibility for rescuing a failed bank under the proposed new system must lie with the Bank of England, not the regulator. We are delighted that the Chancellor appears at last to have come round to accepting the logic of that position.

The former Chancellor’s reputation is unravelling before his eyes. The man who rode the Asian tiger of imported deflation bleats that what is happening in Britain today is all someone else’s fault—from the credit crunch, to the fuel price at the pumps, to the soaring cost of food and spiralling home heating bills. He was the lucky Chancellor whose good fortune was to preside over the greater part of what the Governor of the Bank of England has called the NICE—non-inflationary, consistently expansionary—years, and whose misfortune is now to have his legacy exposed as a sham, because when the wind blew the economic house that Gordon built turned out to be made of straw.

The hon. Gentleman calls the former Chancellor the lucky Chancellor, but when we set his record beside those of Charlie McCreevy and Brian Cowen as Finance Ministers of the Republic of Ireland, we see that the growth that he achieved was only half what they achieved. He was not that lucky or that golden—in fact, I would contend that he was a bit rusty.

The hon. Gentleman makes a point. By “lucky Chancellor” I simply mean that he was riding the crest of a wave of imported deflation, which created many of the conditions upon which he built his claimed reputation. The hon. Gentleman is absolutely right to point out that UK economic growth, like UK productivity growth, has been poor over the past decade compared with many of our competitors.

The economy is firmly back on the agenda. Inflation is booming on the high street and the Prime Minister’s reputation for economic competence is bust. The cost of a shopping basket of groceries has rocketed by 12.6 per cent. according to The Grocer—that well-known authority on grocery prices—while fuel and domestic energy prices are up 17 per cent. and 9 per cent. respectively, with a further increase of at least 40 per cent., or around £400, for an average household predicted in domestic gas prices for the coming winter. Worse than that, the cost of a basket of 40 essentials has increased by 19.8 per cent. over the last year, piling the pressure on the most vulnerable consumers—those on low and fixed incomes. Bread is up 29 per cent., eggs are up 48 per cent, butter is up 30 per cent. and transport costs are up 16 per cent. The Daily Mirror’s cost of living index shows most people faced a rise of 11.6 per cent. over the last year, not the official 3.3 per cent. I think that even the Government are likely to agree that that is unlikely to be a Conservative plot.

A family that spent £100 a week on food or drink a year ago has to find an extra £1,000 this year for the same items. There are some positive consequences. Apparently, more people are growing their own vegetables—one in three of us according to a survey in The Daily Telegraph, with nearly half motivated by cost. But there are some not so positive consequences. Bargain hunters are moving away from fresh foods and resorting to cheaper options. Frozen fish sales are up 11 per cent. on a year ago. A survey of citizens advice bureaux in England and Wales suggests that a growing number of people are having difficulty in paying for, and are seeking help with, essential household bills.

Does the hon. Gentleman agree that among the most vulnerable groups—those who are hit hardest—are disabled people, who have higher energy costs and often higher food costs as well? Inequality among the most vulnerable has widened.

The hon. Gentleman is absolutely right and I shall say something about that in a moment.

Ctizens advice bureaux reported a sharp increase in the number of mortgage arrears problems, which were up 35 per cent. in the first two months of 2008, compared with the same period in 2007. They also report a continuing increase in problems relating to basic essentials, such as gas, electricity, water, telephone and council tax debts. The CAB’s briefing reports that the combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit. Bureaux reported that they had dealt with 215,000 new debt problems in the first two months of 2008 alone and the report goes on to list examples that all have one thing in common: people on low or fixed incomes who are living at the margin of economic viability. For many people, the surge in living costs is turning a situation that is just manageable into one that is not.

We have tabled this motion to give the House an opportunity to debate the soaring cost of living and the Government’s lack of room for manoeuvre in responding to it. The first part of the motion expresses the House’s deep concern at the rapidly rising cost of living. To be candid, there are two reasons for that concern. The first, as the CAB report demonstrates, is a compassionate concern because inflation hits hardest those with the least bargaining power: pensioners on fixed incomes, the lowest paid in the most marginal jobs and people with long-term disabilities who are living on benefits. When an economic shock strikes, those groups, by definition, will be the least able to cope with it and the least likely to have any savings cushion. All of us in Parliament must voice their concerns and fears because they have little bargaining power themselves.

There is, however, a more calculating economic reason for the rising cost of living. Rapidly rising inflation also affects those with more bargaining power in the employment marketplace. Their response to the rapidly rising cost of living poses the genuine threat to our future economic stability, hence the second part of the motion, which acknowledges the dangers of a wage-price spiral.

As the economy slows and earnings stagnate while prices rise inexorably, the average family is already £400 a year worse off than it was a year ago. The current official retail prices index inflation is 4.3 per cent. a year, but the expectation of future inflation is as important as the level today in determining the behavioural responses to it. Every hon. Member knows from discussions with constituents that people’s perception of price increases and their expectations of future inflation are far higher than the official data suggest—unsurprisingly, in view of the figures that I have cited.

Mounting evidence shows that rising prices are feeding into higher wage demands and settlements. Pay rises in the energy, water, chemicals and engineering sectors in the quarter to April were at or above current inflation. The recent Shell tanker drivers’ settlement has subsequently added a further turn of the ratchet. The Incomes Data Services data, which were published this morning, show how many private sector settlements now include RPI linking, reigniting memories of the disastrous flirtation with indexation in the 1970s.

Yesterday’s announcement of a vote for industrial action by local authority workers rejecting a 2.45 per cent. pay offer underlines the scale of the challenge that the Chancellor will face as he repeats his exhortation for pay rises to be kept in line with the Government’s 2 per cent. inflation target, even as inflation looks set to reach double that figure. The prospect of a summer of discontent looms and Conservative Members wait with interest to see how a Labour Government, desperate for cash from the unions to save the Labour party from bankruptcy, will deal with the new militancy on wages on top of the already aggressive demands for further competitiveness-eroding employment legislation.

Last week, the Governor of the Bank of England gave a frank appraisal of the threat to Britain’s economy from the rising cost of living. With consumer prices index inflation up from 1.8 per cent. to 3.3 per cent. in the past nine months and a raft of further price increases to feed through, the Governor warned of the dangers of a wage response, which would mean that the jump in food and oil prices was embedded in our economy through an old-fashioned wage-price spiral, with wage earners trying to compensate themselves for rising prices, thus ensuring the further erosion of the value of their wages.

Let me take the opportunity to say from the Dispatch Box that the Governor of the Bank of England is right. Given that growth is slowing significantly below the Treasury’s Budget estimate, if the inflationary pressure that has surged through into the index in the past months is reflected in future wage rises, Britain risks revisiting the 1970s, with entrenched inflation and stagnant growth—stagflation in all its horror. By warning of his determination to stick to the Chancellor’s inflation target, the Governor is effectively throwing down the gauntlet to the unions, with the clear threat, “Go for the inflation-matching wage rises and I will bust you with growth-killing and unemployment-creating interest rate increases.” They should listen to the Governor of the Bank of England.

We will support the Government when they do the right thing on pay restraint, as my right hon. Friend the Leader of the Opposition said yesterday. However, after two years of stagnant real wage increases, let us be clear about what the Chancellor is demanding. As with taxes, so with wage policy—let us have an end to stealth and a new openness; an explanation of policies, tough or tender, up front and without spin. I put it to the Chief Secretary that the Chancellor is demanding a cut in living standards—is not that the essence of a demand for below inflation wage settlements? Is not the legacy of the Prime Minister’s 10 years in the Treasury falling living standards for British workers? Yes, inflation has to be controlled, so that Britain can maintain its competitiveness and be in a position to respond when the upturn comes. That means difficult times ahead. The truth is that the Government are in no position to help out and soften the blow of this painful adjustment to economic reality.

Obviously our country faces great challenges, and the hon. Gentleman is right: people are hurting. He talks about openness of policy, so could he tell the House the extent to which he thinks any Government can alleviate the sorts of difficulties that our country faces, and what his party’s policies are to address them? The Conservative party motion puts forward no policies, whereas the Government amendment sets out four of the steps that the Government have taken to try to address the issues. If we are to have open debate and openness about policies, for which the hon. Gentleman calls, could he tell us his party’s policies?

The hon. Gentleman asks what the solutions to the problems that we face are. He is right in one sense: there are no easy or quick solutions and no magic wands. The essence of our argument against the Government is that we have entered this downturn—and it is a downturn—uniquely ill prepared to deal with it. The Prime Minister did not fix the roof while the sun was shining, and the British people will pay the price for the lack of preparedness of the British economy.

What the hon. Gentleman says is exactly what he and his hon. Friends keep saying. What particular cuts would have been made by a Conservative Government in the past 10 years? What expenditure would not have been incurred, to make the savings that would have achieved his objective? [Interruption.]

My hon. Friends behind me are throwing out a few suggestions: the refurbishment of the Ministry of Defence headquarters, identity cards and money wasted on computer systems that never work. If the hon. Gentleman thinks back, he will remember that my party’s manifesto at the last election set out some clear proposals for cutting costs and waste in government. However, we want to look to the future and talk about the policies that we need to adopt to prevent a repetition of this situation, so that we never return to this position again, by setting out a long-term policy to share the proceeds of economic growth, so that in future we do not borrow through a boom and leave ourselves unable to respond to the kind of situation that the Government now face.

The incoming new Labour Government promised my constituents, particularly the low-paid and those living in isolated rural areas, that they would be wise spenders, not big spenders. Those people feel absolutely let down by a Government who were supposed to be there to look after the least well-off, when it is the least well-off who are paying the highest price for that Government’s failure.

My hon. Friend expresses eloquently the concerns of his constituents and those of many other of my hon. Friends’ constituents.

Does my hon. Friend also share my concern about the sheer levels of national debt that the socialists have incurred over the past 10 years? We now owe more than £700 billion, which has obviously put them in a straitjacket, which means that they cannot inject liquidity into the economy when we face a recession.

My hon. Friend is right. I will return to that issue in a moment, because that is the essential point. Although we agree with the Government about the need to avoid a wage/price spiral and the need for wage restraint, they have put themselves into a position in which they simply do not have the tools available to respond to the pressure that families and businesses are feeling.

Will the hon. Gentleman give way?

I will in a moment, but I want to make a little progress.

The Government have no room for manoeuvre, because they did not act prudently during what the Governor of the Bank of England called the NICE years. Fiscal policy is now alarmingly loose and monetary policy very tight in response—the classic hallmarks of a basket-case economy. Yet the Government still seem to be displaying just the tiniest bit of self-satisfied complacency. In their amendment to the motion, the Prime Minister invites the House to note that

“unemployment, inflation and interest rates”

are

“all at historically low levels”.

But what matters to people now is that interest rates are the highest in the G7, unemployment is rising and the inflation rate is double what the Government inherited 11 years ago. Their amendment boasts about the measures that they are taking to support families and business, including increased tax allowances and winter fuel payments, yet those are the very measures that the Chancellor was forced to concede to buy off the rebellion on his own Back Benches over the 10p tax rate.

Interestingly, the amendment describes the extra winter fuel payments and increased tax allowances as measures that the Government

“will continue to take to support families and individuals”.

At first they said that they could not reopen the Budget, but then they did. Then they said they had no money, but when the political chips were down, they found some. Then they told us they would not announce until the pre-Budget report whether the additional winter fuel payments and increased tax allowances would be ongoing. Now they have done so, in this amendment. When the Chief Secretary to the Treasury responds to the debate, will she confirm that this is a policy announcement, and that the extra winter fuel payments and increased tax allowances are measures that the Government will continue to take to support families and individuals? And if that is the case, will she tell us what the cost will be for next year and the year after?

I keep hearing from the Conservatives the mantra that the Government should have fixed the roof when the sun was shining. Will the hon. Gentleman comment on this quote from Michael Portillo, the then shadow Chancellor, in 2000, when the budget surplus was at its height and the sun was shining most strongly? This is what he said:

“Conservatives will tax less, spend better and deliver more…We will cut taxes on business, so that they can compete and create prosperity and jobs. We will reform Labour’s taxes on entrepreneurs…We will encourage savings…We will help pensioners and hard-working families. We will restore a married couple’s allowance. We will cut the duty on fuel. That gives you a flavour of my budgets!”

He did not sound as though he intended to put a lot of money aside for the lean years.

The gentleman in question went on to try his luck, lose and depart from these Benches. The Conservative party, too, has moved on in the past few years. We are always happy when Labour or Liberal Democrat Members offer quotes that merely serve to emphasise the extent to which my right hon. Friend the Member for Witney (Mr. Cameron) has changed the direction of the Conservative party.

Will the hon. Gentleman give way?

No, I want to make some progress.

Where did it all go wrong? The Prime Minister must ask himself that question every morning when he wakes up. It went wrong because he swallowed his own line on boom and bust. He started behaving as though the good times—the NICE years—were here for ever, and there were no rainy days to prepare for, and no roof to fix while the sun was shining. He borrowed through a boom, apparently oblivious to the need to prepare for the possibility that it would not be perpetual. Now he can stick “inappropriate pro-cyclical fiscal policy” on his mantelpiece next to “post-neoclassical endogenous growth theory”—[Interruption.] I think I said it okay, didn’t I? For seven consecutive years he predicted that the deficit would turn into surplus three years out, and for seven consecutive years that target was rolled forward. He offered jam tomorrow, like putting a carrot in front of the donkey. While competitors and trading partners such as Australia, Sweden, the Czech Republic, Denmark and South Korea used the worldwide boom in trade and economic growth to pay off their public debt—making them well placed to weather the slowdown—he rolled out more, right the way through the good years.

So, as a third of OECD countries face the economic slowdown with their budgets in surplus, Britain, with over 3 per cent. of GDP, has the largest public sector net borrowing requirement of any country in the world bar Hungary, Egypt or Pakistan, making Italy look like a paragon of fiscal virtue.

We all recognise that we have economic difficulties, but I noticed that when the hon. Gentleman responded to my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) who asked about alternatives, he started to talk very vaguely about ID cards and that sort of thing, and in response to the hon. Member for Taunton (Mr. Browne) he mentioned the manifesto. All that he talked specifically about was cutting waste—an argument that is always used. May I remind the hon. Gentleman that in 1997 we inherited a situation in which 50p in every pound went to pay off debt? The hon. Gentleman did not touch on those things. The Conservatives borrowed their way through the ’80s and the ’90s, so what is their solution to the problem now, as it is worldwide?

I am not really sure that I understand the point of that intervention, but I would say this to the hon. Gentleman. We have set out a very clear policy of sharing the proceeds of economic growth and we want it to go forward. It is a rule that will prevent us from getting into the same kind of trouble that the Prime Minister has got this Government into. I shall explain in a few moments, if I may, what I think has gone wrong.

The Prime Minister swallowed his own line on boom and bust. He apparently believed that the good times would never end, and instead of putting something by for the more difficult times that were bound to come, he just went on spending and borrowing right the way through the boom.

rose—

I want to make some progress.

Britain, with 3 per cent. of GDP as a net borrowing requirement, is going into an economic slow-down in a very serious fiscal position. In 1989-90, the Budget was in surplus as we moved into a period of economic slow-down. Where the Government have led, the consumer has followed, piling up a mountain of debt on the back of asset price inflation, with 175 per cent. of personal disposable income in household borrowing—the highest ratio in the world. The Government cannot help households because they have over-borrowed, and households cannot help themselves as the squeeze tightens because they have over-borrowed as well.

Will the hon. Gentleman give way?

Let me make my point, and then I will.

As well as being unable to help people, the Government are actively reinforcing the inflationary pressures and thus the risk of a wage response. Consumer prices index inflation at constant tax rates is 3.1 per cent., which means that if taxes remained at the rates prevailing at the beginning of this year, inflation would be 0.2 per cent. lower than it is today.

The issue of diesel prices has moved up the political agenda. That is hardly surprising, because the figures show that before tax the UK has lowest diesel prices in the EU, but after tax is added they are the highest. With inflation expectations so important, the Government must look again, as they surely will be forced to do by their own Back Benchers, at the swingeing road tax increases for next year and the year after, which are doubling the road tax for about a million older cars and raising it on the overwhelming majority.

What the hon. Gentleman is failing to point out to the House is that at the beginning of the 1997 cycle, Conservative debt was more than 41 per cent. of gross domestic product. Under Labour in this cycle, it is less than 37 per cent. The cost of servicing that Conservative debt was 9 per cent.; now it is less than 6 per cent.—a saving of around £23 billion to put into services each year. The hon. Gentleman may be shaking his head, but the truth is that debt levels under the Conservatives were astronomical compared with debt levels today, and he should admit that fact.

We have to remember that nowadays there is a huge concealment of Government debt off balance sheet, through the private finance initiative and other mechanisms. What I remember of 1997 is rising economic growth, falling unemployment, falling youth unemployment, falling inflation, and inflation half the level it is today. That is the legacy that I remember, which the hon. Gentleman’s Prime Minister has squandered.

To clarify the point that my hon. Friend is making, may I add that the figure is, I believe, not 40-odd per cent. of GDP but about 110 per cent., if we include all the debt that this Government have put off balance sheet?

My hon. Friend is right. If we strip out the Enron accounting we will get to some very different figures, which few Labour Members will want to quote back at us.

Will the hon. Gentleman give way?

I want to finish, as many hon. Members would like to speak.

There are other practical steps that the Government could take to help, such as promoting greater awareness of the best tariffs available from gas and electricity suppliers, adopting the proposal made by my right hon. Friend the Member for Witney (Mr. Cameron), the Leader of the Opposition, to include in gas and electricity bills information on average consumption levels of similar properties and a roll-out of smart metering to help people to manage their energy consumption better. However, the sad truth is that the Government have boxed themselves in. Excessively loose fiscal policy has left the UK, in the words of Alan Greenspan, “more exposed” than the US and facing difficulties that, in the words of the OECD, will be “larger than elsewhere”.

So here we are, with a Labour Prime Minister who for the last decade has been lecturing his neighbours on the continent on how to do it, now being slammed by the OECD for excessively loose fiscal policy, disciplined by the EU for the size of our deficit and, more importantly, unable to take action of the kind that more prudent Governments are taking to help their citizens and businesses when they most need it, not just because Governments are there to help their citizens, but because that is the best way to counter the pressure for inflationary wage increases.

With the cost of living set to go on rising as growth stagnates, there are just two possible outcomes: either real living standards will fall in the immediate future or inflationary wage rises will defer the moment of pain, and in the process risk destroying Britain’s competitiveness, and thus its prospects beyond the current downturn. The Government need to be frank with the electorate about the situation. Either way, the British public will know who to blame: a Prime Minister whose sole legitimacy was the claimed ability to manage the economy, but whose economic incompetence has left Britain and its citizens so ill prepared for the economic slow-down that we now face.

I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

“notes the significant increases in world prices, with the oil price rising 80 per cent. and food prices up 60 per cent. in the year to May 2008; notes that the Governor of the Bank of England’s letter to the Chancellor dated 16th June 2008 said that 1.1 per cent. of the 1.2 per cent. increase in inflation over recent months was due to world food and energy prices, and that the Government was right to tackle the rises with action on an international level, including urgently looking for a successful conclusion to the Doha round of negotiations in the World Trade Organisation and examining the impact of biofuels on food production; supports the Government’s global leadership on these issues; recognises the pressure that these increases in world prices put on family budgets; further notes the measures that the Government will continue to take to support families and individuals, including pensioners and businesses, throughout the UK, including through extra tax credits, increased tax allowances, winter fuel payments and increases in child benefit; further notes that the most important support for working families is a strong and stable economy; and supports the Government’s actions that have delivered unemployment, inflation and interest rates all at historically low levels, helping millions of families into stable home-ownership and sustainable employment.”

This is an important debate at a time when families across the country face pressure from rising world food and fuel prices. Those prices are going up across the world, not just here in Britain. Oil prices have nearly doubled in a year. Whereas a barrel of oil cost $10 a decade ago, a few weeks ago the price rose by that much in one day alone. That puts up the cost of petrol at the pump, as well as the cost of gas and electricity bills, which have themselves risen by 15 per cent. and more than 12 per cent. respectively in the last 12 months.

The Minister mentions the rising price of oil in world markets, but my constituents face prices per litre for diesel and petrol that are 30p more expensive than in the Irish Republic. Will she accept her responsibility and that of her Government in relation to the pump prices that people face?

Right across the country, there are pressures that people face—at the petrol pump, but also with their utility bills. There are also different parts of the country that show disparities in the prices that they face, which do not appear to be justified by ordinary economic factors. We are keen to look further into that. Discussions have taken place on the issue.

If people could still get petrol at £1.15 a litre, 70p of that would be Government taxes, which have been going up this year when the Government claim to be worried about the plight of the motorist. Why do they not simply get their tax down, because that is the dominant part of the price at the pump?

As the right hon. Gentleman knows, we have delayed the fuel duty increase, and fuel duty has fallen in real terms over many years as a result of the decisions that we have taken. The issue that faces people at the petrol pump is not fuel duty, but the fact that we have seen such substantial increases in the price of oil, which is affecting countries right across the world.

The Chief Secretary is a reasonable person, and knows that hundreds of thousands of people across the country, in every part of the economy but notably in the national health service and social services departments, are subsidising their employers every time they fill up their cars with petrol that they use in the course of their work, because the approved mileage allowance payment scheme, set in 2002 at 40p a mile for the first 10,000 miles, has not been upgraded. Last year there was a review, which has not been published. I have tabled a parliamentary question asking the Department to publish that review, and have not been answered for three weeks. If she wants to take us into her confidence, could she not publish that report so that we can see why the Treasury has refused to take the simple step of upgrading such mileage allowances so that some of the poorest people in society no longer subsidise their employers?

I am happy to look into the point about the review and to write to the hon. Gentleman about it. Again, however, the fundamental problem faced not just by this country but right across the world is the soaring price of a barrel of oil. Fuel duty is 16 per cent. lower in real terms than it was in 1999. Every country in the world is facing problems. Egypt, Haiti and the Philippines have had riots over food prices as a result of the pressure on commodity prices. In Spain and Italy, major protests have taken place about the cost of petrol. Countries right across the world are affected, and that is feeding into domestic inflation in this country too.

On that point, is not the pertinent issue that other countries, particularly the United States, have in their armory fiscal policy to alleviate the credit squeeze? They are in a position to do that, but we are not, as a result of our Government’s fiscal management.

I want to come on to that point, because it is important. As a result of changes to tax credits, tax allowances and so on, we are putting money into the economy this year, and such support is right. The record of the hon. Gentleman’s party on fiscal policy and debt management, however, was atrocious. Under this Government between 1997 and 2007 public sector borrowing was 1.2 per cent of GDP, whereas under the last Conservative Government between 1992 and 1997, public sector borrowing was considerably higher at 6 per cent. of GDP, and that is why debt was also considerably higher. He is therefore in no position to provide lessons on management of fiscal policy.

Will the Chief Secretary give way?

I will give way on one last point, and then make some progress.

The Chief Secretary has referred repeatedly to the price of petrol and diesel. What plans does she have to help essential users such as road hauliers and those in the farming industry in the short term, to help them to overcome the petrol costs crisis?

As the hon. Gentleman will know, such users can claim back VAT, and there is support in place to do that. We must recognise, however, that such price increases are having an impact across the economy, on businesses as well as on households. That is why it is important that sensible decisions are taken not just in this country but globally, to try to get through the problems that we face as rapidly as possible.

The problem affects not just oil, but food. Global food prices have also risen by over 40 per cent. in the last year, with basics such as rice and wheat hitting new highs. The increased price of bread and eggs in the shops has an impact on families. The Governor of the Bank of England has said that the inflation increase that we have seen is accounted for by

“large and until recently unanticipated increases in the prices of food, fuel, gas and electricity.”

Those components alone account for 1.1 percentage points of the 1.2 percentage points increase in the CPI inflation rate since last December.

The price rises are having an effect across the world. Those on fixed incomes, and particularly pensioners, who are often on fixed incomes and might be on lower incomes than households across the board, face particular pressures when they look at their gas and electricity bills and worry about prices as winter approaches.

Will the Minister give way?

I shall be happy to give way after I have made a little progress.

The world economy faces rising prices, and at the same time we are having to deal with an ongoing global credit squeeze that is having an impact on mortgage lending. As a result the British economy faces tougher times ahead, and like other countries we will need to respond to that. However, we face these challenges in a much stronger position than our position in earlier decades. Overall inflation stands at 3.3 per cent.; the Governor of the Bank of England has said that he expects it to rise to 4 per cent. before falling again towards the target next year. Our inflation rate is still lower than the rates in the United States and the eurozone, and very different from the rate in the 1980s and 1990s.

The Minister says that we face these pressures in a stronger position than other countries, but Alan Greenspan says that the United Kingdom is more vulnerable than other major economies. I understand that Alan Greenspan is, or was, an adviser to the Prime Minister. Is he wrong?

Last month’s report from the International Monetary Fund stated:

“For over a decade, the United Kingdom has sustained low inflation and rapid economic growth—an exceptional achievement…the fruit of strong policies and policy frameworks, which provide a strong foundation to weather global”

challenges.

Let us examine the position from which we start, compared with that of previous decades. While the CPI inflation rate is now 3.3 per cent., it was 8.5 per cent. in April 1991, and for nearly two years it was more than twice as high as it is now. The retail prices index inflation rate is now 4.3 per cent. It peaked at over 20 per cent. in 1980 and averaged 6.4 per cent. from 1979 to 1997, compared with an average of 2.8 per cent. since. We should now be supporting the pensioners who experienced the breaking of the link between pension and earnings, cuts in their pensions and persistent high-inflation problems throughout the Conservatives’ time in office, rather than listening to lessons from the Conservatives, whose record on both inflation and the management of public finances is one of which they should be ashamed.

Does it not occur to the Minister that the hostile public sentiment being directed at the Government is partly due to the fact that, while everyone understands that big global problems are affecting the economy at the moment, during the good times for the Government over the past 10 years they never observed that they were being assisted by benign economic conditions throughout the world, but tried to take the credit for all that was going well?

I certainly think it worth reflecting on some of what has happened over the last 10 or 11 years. There have been benefits from world commodity prices, largely thanks to developing countries. There have also been significant benefits as a result of our making the Bank of England independent—a decision which, as the hon. Gentleman will recall, was opposed by his party—and there have been changes to support more competitive and global markets across the board. During the same period we have dealt with global challenges: for example, the bursting of the dotcom bubble and the events of 9/11, which pushed other countries into recession. Over the past 11 years other countries have experienced recession, while the United Kingdom has continued to experience strong economic growth throughout. We have weathered global storms before, and have done so better than other countries.

The particular challenges that we face at the moment—the dual challenges of increasing world prices and a global credit crunch—are also posing considerable challenges to every other country in the world, but over the last 11 years income per head of population has grown faster in this country than in any other G7 country. In 1997 we were bottom of the G7 prosperity league; now we are second to top. We begin this period with employment at a record high, rather than the record unemployment that we experienced in earlier decades.

None of that should cause us to underestimate some of the challenges that we will face as a result of these global problems, and the need to respond to them. No national Government can act alone to stop a global slowdown, and no national Government can act alone to solve problems caused by rising world commodity prices. What we can do, however, is work with the rest of the world—with our global and European partners—and take action here at home to support the economy and the families who face difficult times.

Pensioners in Clacton face a fall in their standard of living. Their incomes are by and large fixed, but the costs of energy and utility bills and council tax bills have shot up. Apart from offering pensioners free swimming, what does the Minister think can actually be done to try to help their situation?

As the hon. Gentleman will be aware if he has talked to pensioners in his constituency, we have increased the pension credit, as a result of which some pensioners are £2,000 a year better off than they would have been in 1997. We have also introduced the winter fuel payment, which will be increased this year by £50 for the over-60s and by £100 for the over-80s, particularly because we know that pensioners will be facing winter fuel bill pressures as a result of rising oil prices. We have increased the pensioner tax allowance this year as well. We have, therefore, already done a lot to support pensioners. [Interruption.] My party colleagues on the Back Benches are reminding me of other measures, such as concessionary fares, free bus passes and the Warm Front programme to help pensioners insulate their houses. [Interruption.] Yes, TV licences, too, and free eye tests. This Government have introduced a whole series of measures that the Conservative party did not introduce in order to help support pensioners. We want to continue to support pensioners, because we recognise that pensioners on fixed incomes face the greatest pressures.

rose—

rose—

I have given way to the hon. Member for Na h-Eileanan an Iar (Mr. MacNeil) once already, so I shall give way to my hon. Friend the Member for Coventry, South (Mr. Cunningham) instead.

My right hon. Friend lists what we are doing for pensioners, and I am sure that the Government understand that there are both fuel and economic problems. Will she also mention what she is doing for women between the ages of 60 and 64, because that is important, too, and people are concerned about it?

My hon. Friend is right. As well as the winter fuel payment increase, we have increased the tax allowance; my right hon. Friend the Chancellor announced that.

It is also worth pointing out that the Conservative party’s own research document on the cost of living was forced to admit that since 2001-02 pensioner couples are in real terms £30 a week better off and single women pensioners are £21 a week better off. Those are not our figures; they are the figures that the Conservative party produced on the impacts on pensioners.

rose—

Members will appreciate that I have given way a lot, and I know that many Members want to speak, but I shall give way to my hon. Friend the Member for Hastings and Rye (Michael Jabez Foster).

I am grateful to my right hon. Friend. May I remind her of the deal she has done with the energy companies? The poorest pensioners in my constituency are getting 15 per cent. reductions in their fuel bills as a result of the social tariffs she has brought about.

My hon. Friend is right. After this year’s Budget, we held discussions with the utility companies, and as a result of working with them they have agreed to treble the amount of investment they are putting into assistance for the most vulnerable households—those on the lowest incomes, and those at greatest risk in terms of fuel poverty—in order to help them with their fuel bills this year. That is hugely important, and it needs to be seen alongside work to reduce the demand for electricity and higher heating levels by improving insulation through the Warm Front programme and also the requirement on the energy companies to put more money into insulating people’s homes.

rose—

I must make a little progress before giving way again. I will take more interventions later, if I can.

The fundamental problem is that the world is not producing enough food or energy to meet rising demand, particularly with the growing demand from developing countries as well. We need to act at international level to help increase production in the short term. That means working with international partners to remove some of the barriers preventing increased supply. On food prices, the UK will work with other countries to put forward proposals for increasing agricultural production at next month’s G8 summit. We have already committed to doubling investment in agricultural research to help improve efficiency and production over the next five years. We are continuing to press for reform of the common agricultural policy, because it is unacceptable that the EU continues to apply high tariffs to many agricultural imports, particularly at a time of such high prices.

On oil, we are pressing for the removal of barriers that are preventing an increase in supply. This weekend, the Prime Minister was in Saudi Arabia making the case for greater transparency in the provision of data on oil supply and demand.

We are continuing to press for further energy market liberalisation in the EU, so that consumers and businesses do not lose out as a result of inefficient and expensive gas and electricity markets. Of course, in the medium term we need to do more to reduce our dependency on oil and gas both in Britain and across the world, for the sake not simply of the world economy but of the planet. That is why we will be setting out further proposals on renewable energy later this week.

On the rising price of oil, a claim is being made in the US that some of this increase is due to speculation in the oil futures market, and the Fed lays considerable blame for this on the London oil futures market, which it claims is under-regulated and wants greater regulation of. Will the right hon. Lady comply with that?

The Financial Services Authority has been looking at this issue, and there are different views on speculation. There is also an underlying view that there are long-term problems here, regardless of the impact of short-term speculation, which mean that we are overly dependent on oil and gas not simply as a nation, but across the world. We need to do more to address that and to improve energy efficiency, while also recognising some of the pressures in the market that prevent increasing responsiveness to price signals in the energy market but also in food production.

Will my right hon. Friend give way?

I will, but then I need finally to make progress.

I am grateful to my right hon. Friend. She has read out a long list of what the Government are trying to do to assist in this difficult situation. Does she agree with me that the official Opposition are not fit for government, given that they cannot put forward any policies? They decry jam tomorrow when in fact, all that they are talking about is proceeds of growth, which is a “jam tomorrow” policy if ever I heard one. They are the ones who caused the roof to be leaking in the first place, which we fixed literally and metaphorically around the country. They say that we need to tighten fiscal policy, but they do not even say whether they will put taxes up or cut spending. With a rhetorical flourish, the hon. Member for Runnymede and Weybridge (Mr. Hammond) sets out his policy to address the huge problems associated with the cost of living—smart metering. That is their policy.

My hon. Friend is right—there was a distinct absence of alternatives and proposals from the Conservative party that would actually help either the UK economy or the global economic situation.

We will continue to support the Bank of England through the monetary policy framework, and we are urging a responsible and disciplined approach to pay on both the private and public sectors. From the boardroom down, people do need to recognise the importance of this, of avoiding a return to the destructive wage spirals that we saw in previous decades, and of the Bank of England’s being able to respond within the monetary framework. That is why we have welcomed the three-year pay deals in a series of areas in the public sector.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) was keen to protest the Opposition’s strong support for wage restraint, probably in some determination to correct the hon. Member for Tatton (Mr. Osborne), who told the BBC,

“I’m not against opening negotiated pay deals”,

sending a much looser signal about their commitment to support for wage restraint at a difficult time. We are increasing borrowing to support the economy, and that is the right thing to do at this stage in the economic cycle. We have delayed the increase in fuel duty, and we have increased tax credits and allowances for pensioners and cut the basic rate of tax. In addition, the Chancellor has increased the tax allowance for this year not just for those affected by the 10p rate, but for all basic rate taxpayers, putting £120 into the pockets of some 22 million people. The overall tax burden, which is less than it was during most of the 1980s, is set to fall this year.

The impact of all this is that families with children will see their tax bills fall, in many cases by several hundred pounds a year, giving them more support at a time when there are difficulties in terms of pressures on the cost of living.

I am listening carefully to what the right hon. Lady is saying. Will she answer the question that I put to her? Will she confirm that, in asking people to settle for wage increases lower than the rate of inflation, the Chancellor is asking them to take a cut in living standards?

I should point out to the hon. Gentleman that his own party’s research document has recognised that in real terms, since 2001-02—even in advance of some of the most recent changes that we have set out—families with children are better off than they were in 1997, or in 2001-02. They are seeing real improvements in their income and their support. For example, lone parents are £12 a week better off and couples with children where one parent works full time can be more than £700 a year better off. That is why we are also providing people with additional support through tax credits. I should point out to the hon. Gentleman that this extra support being provided through tax credits, and by increasing child benefit in the next year and the winter fuel payment this year, is funded by the increase in alcohol duty that Conservative Members have opposed. They are opposing our measures to provide additional support to families at a time when people are under pressure, particularly from their winter fuel bills.

It is worth reflecting, as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) suggested, on what the Conservatives’ remedy might be. They have said that they would not put up alcohol duty and would have lower borrowing—not that they can point to any kind of historical record to support their position. We must remember that this is a party that has never proposed lower borrowing. Instead, it has repeatedly proposed spending increases and tax cuts at the same time—that would push borrowing up. Over the past 12 months alone, the Conservatives have called for £10 billion of extra spending on unfunded tax cuts. At the previous election, just at the time they now say they would have cut borrowing, they were actually calling for billions of pounds in extra borrowing—the independent Institute for Fiscal Studies costed their tax and benefit plans alone at an extra £5 billion. In 2005, they were also planning billions of pounds of extra spending on top of that, on things such as the pupil passport and the patients passport for private care, not to mention defence, the right to buy, tuition fees and offshore processing centres for asylum seekers.

At the 2001 election it was the same story: a £3 billion unfunded tax cut on savings, which would help those on the highest incomes, but billions of pounds more spending on asylum seekers’ reception centres, defence and other areas. The Conservatives would not have cut borrowing; instead, they promised again and again to dig themselves a massive black hole for the public finances. So much for telling us to fix the roof; they promised to dig up the foundations.

This Government did invest in fixing the roof. Not only did we mend the hospital roofs, the school roofs and the council house roofs that the Conservative party neglected and abandoned, but we invested in the infrastructure and skills that the British economy needs. We have been operating within our fiscal rules to bring down debt substantially and to cut the bills of the economic failure and high unemployment that we inherited from the Conservatives. That is why we have the flexibility to support the economy right now.

Britain, like other countries, is facing a difficult time as a result of world economic problems. Families across Britain are facing the pinch. They are facing higher prices as a result of increasing world food and fuel prices, but these world economic problems need a serious response—with substance, not just showmanship, and with serious policies not just spin—to help households and businesses through the more difficult times. That is why the House should reject the posturing of the Conservative party and back the Government amendment.

The hon. Member for Runnymede and Weybridge (Mr. Hammond) gave a clear and forceful critique of Government economic policy, much of which I agreed with and so do not need to repeat. I am thinking in particular of the sense of hubris that derived from the claims about there being no more boom and bust and about the best economic performance since the Hanoverians, and the contrast with today’s reality.

There is one commodity that is not in scarce supply at the moment, and that is criticism of the Government, so I do not need to add to a glut in the market. I shall concentrate instead on scrutinising more closely what the Conservatives are offering as an alternative economic strategy and the terms of their motion. I think that there is a genuine interest, both positive and negative, in what an alternative Government might have to offer. Perhaps I could start by dealing with the phrasing of the motion, by which I am genuinely a bit confused. The first five lines seem eminently sensible and fair, but the motion then goes on to talk about “excessively loose fiscal policy” with approval. The correct policy response to excessively loose fiscal policy—this is presumably what the Conservatives think the Government should have done, and is what the Conservatives would have done and would now do—is to use a combination of higher taxes and reduced spending. That is the opposite to loose fiscal policy. But the motion does not say that. It says that what the Government should have done—what the Conservatives would presumably have done—is to provide assistance and support to hard-pressed families, which involves cutting taxes and increasing spending. Within the same sentence, we have two diametrically opposed macro-economic policies—

Was the hon. Gentleman asleep when the Conservatives produced endless proposals for getting better value for money and having fewer administrators, fewer targets, fewer quangos, fewer ID cards and all the other claptrap that has wasted billions?