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As for immigration and asylum, we make the decisions on that policy. We have introduced a points system, which means that people from outside the European
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Union without skills to offer to the country are not invited into the country. I believe that the points system—and the obligations that people have to accept as part of their citizenship—is a far fairer way of going about the issue than the policies of the Conservative party. As for the Irish Republic, it is a matter for them what they do. The right hon. Gentleman will remember that, on a previous occasion, the Irish Republic decided to have a second referendum. It is therefore a matter for them.

As far as the right hon. Gentleman’s comments on the economy are concerned, let me just say that the reason we can borrow at this time is that our levels of national debt are low. That is the right policy. I noticed that, on the radio this morning, he could not make up his mind from one minute to the next whether it was the right policy to borrow for this. It is because we have cut the levels of national— [ Interruption . ] Let me just read the IMF’s figures to the House so that there is absolutely no doubt about this. These are the recently published net debt comparisons for 2008. The figure for the United Kingdom is 37.6 per cent.; for France, 55.5 per cent.; for Germany, 56.1 per cent.; for Italy, 101.3 per cent.; for the USA, 46.3 per cent.; and for Japan, 94.3 per cent. It is because we cut the national debt over the last few years that we are able to do the right thing. Even if the right hon. Gentleman cannot make his mind up about it today or tomorrow, it is the right thing to do to deal with this problem.

I would have thought that, after weeks of discussing these issues, the right hon. Gentleman would understand that we cannot solve this problem unless we get to the root cause—[Hon. Members: “It’s you!”] This is an Opposition who will not face up to their responsibilities. The problem cannot be solved unless we get to its root cause. We can do a great deal with initiatives to help small businesses, to help mortgage holders and to help people in jobs, and we will do that—as we have done with small businesses—by drawing on the European funds, by cutting the time by which payment has to be made by Government Departments, by increasing the funds available to the small business loans guarantee scheme and by more measures that we can take. We can take action that will help home owners, as we have done over repossessions, and that will help jobs, as we will do with an extension of the new deal, but the problem can be solved only by getting to the root cause.

The root cause of the problem—which did start in the United States of America, despite the right hon. Gentleman’s wish to avoid that question—was the irresponsible and undisclosed lending that took place in the private sector. The solution to that is not the one or two initiatives that the Opposition want to take; it is to recapitalise our banks, to ensure that lending can start again, and to ensure that there is confidence in the banking system. It is to adopt the very reforms that I have mentioned today. People must have confidence when they go to their bank that their savings are safe and secure, and that is why it is necessary not simply to recapitalise the banks but to take action to ensure that there is reform of the system as a whole.

The all-party support that we had for our measures lasted for a few days. The Opposition could rise to the challenge of giving bipartisan support for only a few days, but I have to tell them that everybody’s judgment
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is being tested here. I have to remind them that, when we took the decision on Northern Rock, they opposed it. When we took the decision on Bradford & Bingley, they opposed it. When we intervened to deal with speculation in the shares market, they opposed it—[Hon. Members: “Rubbish!”] The night before— [ Interruption. ]

Mr. Speaker: Order. Let the Prime Minister speak.

The Prime Minister: The night before we took that decision, the shadow Chancellor was on “Newsnight” saying that it would be the wrong course of action. I see that Opposition Members are silent now. When we intervened to improve regulation, the Conservative party’s policy think-tank decided that it would be better to reduce the regulation of mortgages and pensions. And that is where we are. So when we look at the issues ahead, let us look at the judgments being made. I say to the House that this cannot be sorted out without global action as well as national action. I hope that the Opposition understand that that is what is necessary for the future.

Mr. Nick Clegg (Sheffield, Hallam) (LD): I am grateful to the Prime Minister for his statement. The summit was indeed a breakthrough. It was the first time I can remember in 10 years that the Prime Minister seemed to enjoy the company of other EU leaders— [Interruption.] Well, he cancelled his appearance at Prime Minister’s questions to get there early. As a lifelong pro-European, I have been waiting to hear the Prime Minister recognise and celebrate the fact that no Government of this country of whatever party can deliver what the British people want without our playing a positive, engaged and central role within the EU. I regret that it took economic disaster to make the Prime Minister appreciate that fact, but I none the less acknowledge that he did so.

In the past, I have been dismayed by the way the Prime Minister has copied the wrong ideas and ignored the right ideas. He copied the wrong idea from the Conservatives to give inheritance tax cuts to the very wealthy and he ignored advice from us, stretching back years, but coming particularly from my hon. Friend the Member for Twickenham (Dr. Cable), about the unsustainable nature of the credit and housing boom, when this lot—the official Opposition—sat on their hands and said nothing. So I am glad that the Prime Minister has got a lot better at copying: he was right to copy the Swedish model of bailing out the banks, as they did in the 1990s, and I am glad that he persuaded other European leaders to copy his copy.

It was significant that President Sarkozy invited the Prime Minister to the eurozone meeting. The eurozone group will obviously be the forum at which many discussions about the future regulation of our financial services sector will take place. What arrangements has the right hon. Gentleman made with the Government of Sweden—and the Czech Republic, which will hold the EU presidency next year—to have further access to the eurozone group so that he can participate in those discussions next year, too?

As important as EU action is, it is action to help ordinary families in this country now that must be taken. Will the Prime Minister—I have pressed him on this before—cut taxes for people on low and middle incomes to get money into the pockets of people who need it by closing the loopholes that benefit only the
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very richest in this land. Does he also agree that British families struggling to heat their homes this winter will be angry that the so-called single market in Europe still leaves us with the fastest rising prices in Europe. When will he deliver the fairer truly competitive energy market we all need?

This summit was originally initiated to tackle energy and climate change, but that was sidelined, understandably, to focus on the economy. There are now rumours that the EU will ask developing countries to shoulder a big chunk of the burden of our commitment to cut carbon emissions. Will the Prime Minister confirm that he will not be party to any buck-passing of Europe’s environmental obligations on to developing countries?

Finally, although I welcome, of course, the commitment made at the summit to diversify our energy supply, will the Prime Minister accept that committing billions of pounds of British taxpayers’ and other EU taxpayers’ money to underwrite the nuclear industry will simply mean that there is not enough money to roll out the green renewable energy sources we so desperately need?

The Prime Minister: I would take the right hon. Gentleman’s party more seriously if the major item at his party conference had not been to cut public spending by £20 billion—with all the damage that would do to the ordinary families he claims to represent.

As far as specific issues about the eurozone are concerned, of course we will work with other countries, where it is appropriate to do so, and in the spirit of European co-operation to solve our problems, but the right hon. Gentleman has not fully understood that this is a global problem that needs global action as well as European action. That is why it is important to have an international leaders meeting and why it is important to agree on the reforms that are necessary. People will have confidence in the international financial system only if we root out the problems that made this become a crisis in the first place.

The right hon. Gentleman mentioned Britain’s inflation rate. The problem we have faced over the last year is a problem that all countries have faced—rising oil prices as well as rising food prices. The fact that the price of oil is now coming down means that petrol sold at the pumps is coming down in price. I would like it to come down faster, as would other Labour Members. At the meeting on Friday, we will be pressing OPEC not to cut production, but to enter into a dialogue with the consumer countries.

As to the other issues that the right hon. Gentleman raised—tax cuts for ordinary families, for example—he will know that 22 million families are receiving £120 in tax cuts during the course of the next few months. He will also know that the quickest way of getting money to the poorest families in this country has been through the tax credit system, which has given money to 6 million families and taken large numbers of people out of poverty. I hope that the right hon. Gentleman will give more support to the tax credit system in future.

The right hon. Gentleman says that climate change was not given the attention that it deserves at the European Council, but it was. There were long discussions on Wednesday night and Thursday morning about how we can meet our climate change obligation. We stand firm behind our objectives, and we will ensure that the future mechanisms will encourage—and force, if necessary —other European countries to meet their obligations.

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We cannot meet our climate change objectives and achieve energy security and affordability in prices without the use of nuclear power, and the sooner that both Opposition parties realise that, the better for our country.

Ms Patricia Hewitt (Leicester, West) (Lab): I warmly welcome the action that my right hon. Friend has taken to stabilise the banking system. Can he tell the House what he will do to ensure that cuts in headline interest rates are translated into effective cuts in the interest rates charged to home owners and businesses, in order to avoid what happened during the last Conservative recession, when a large number of solvent but illiquid businesses went bankrupt?

The Prime Minister: I am grateful to my right hon. Friend, who served with great distinction in the Treasury, as well as at the Department of Trade and Industry and the Department of Health. She is absolutely right: the aim of the recapitalisation of the banks, and the other action that we are taking, is to ensure the flow of money to small businesses and families in our economy. It is to deal with the problem that she raises of affordable money, the source of which is banks that have in so many cases stopped lending for the time being.

We are trying to restructure the banks by recapitalising them and by signing an agreement with them that they will ensure that they resume lending to small businesses. That is central to what we are doing, and I am grateful that the rest of the European Union has taken such action as well. It has happened in other countries, too. South Korea, Australia and New Zealand have adopted the policy, as well as America. The key is getting the resumption of lending to take place at affordable prices, and my right hon. Friend is right to say that small businesses cannot afford the penal interest rates that we saw at the beginning of the 1990s.

Sir Malcolm Rifkind (Kensington and Chelsea) (Con): Does the Prime Minister acknowledge that this is the first global financial crisis in over 100 years that cannot be resolved by the United States and the western European powers alone, but must include China? As China is not a member of the G8, and is unlikely to be one soon, does he accept that it is not simply a question of inviting it to the international leaders group? As thought is given to a whole new international financial structure, China must be as involved as western Europe and the United States in the discussions that take place.

The Prime Minister: As the right hon. and learned Gentleman knows, the G20, which was set up after the Asian crisis, includes China in its membership, and rightly so. The Financial Services Forum includes Hong Kong as one of its members because it is one of the financial centres of the world. If there is to be an international leaders meeting, I am convinced that it would be incomplete without the presence of some of the new major economies that are making their mark in the world. The lesson of recent financial events is that global action is necessary to deal with a global problem, which means that, at a macro-economic level as well as in the reform of the international financial system, we need the support of the Asian countries. I am grateful that he agrees with me about that.

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Mr. George Mudie (Leeds, East) (Lab): The whole House should congratulate and thank the Prime Minister and the Chancellor for their sound judgment and political courage in giving the leadership that has stabilised the financial markets.

Chris Huhne (Eastleigh) (LD): Give him a job.

Mr. Mudie: Yes, why not?

Wisely, the package that rescued the bankers had a price, which was help to householders, those with mortgages and small businesses. Last week, the Select Committee on Treasury met representatives of the building societies and, sadly, they seemed to be very complacent about the trauma caused by repossessions and the growing number of them. They seemed to be unaware of the need to revisit their lending policy, or lack of one. Will the Prime Minister assure us that they will be tied to the agreement that they have made?

The Prime Minister: I am grateful to my hon. Friend for the leadership role that he plays on the Treasury Committee, and for his knowledge of these matters. He is absolutely right: in these difficult times, when interest rates are relatively low in comparison with rates during previous downturns, it is right to ask the building societies and banks to take a careful look at their policy on repossessions. It is right to consider—as does the communiqué signed by the Council of Mortgage Lenders and others—that repossessions are the last resort, not the first resort. We will ensure with the measures that we have taken, such as reducing the number of weeks for which people must be unemployed to receive help with their mortgages, that we do all that we can to help home owners in this country.

Mr. Richard Spring (West Suffolk) (Con): Following the point raised by my right hon. Friend the Member for Witney (Mr. Cameron), can the Prime Minister explain the mechanism of distribution by the European Investment Bank to small businesses, many of which are in crisis? Why have only three British banks been licensed to deal with the process so far?

The Prime Minister: That is exactly what we are dealing with now. I have been involved in the process for some weeks, first because I wanted the EIB to agree to frontload the money that is available over the next four years—which has been agreed—secondly, because I wanted the EIB to take a greater share of the risks than it does at present, and thirdly because we wanted an increase in the number of intermediaries in Britain that can access the EIB money and then pass it on to small businesses. In other words, we wanted, and are trying, to devise a package that will lead to the involvement of other intermediaries—that is, other banks in Britain.

Sir Stuart Bell (Middlesbrough) (Lab): Can the Prime Minister confirm that the motto of the European Union is “unity in diversity”? In the initial part of this world financial crisis, did we not see disunity in adversity? Building on the question from my hon. Friend the Member for Leeds, East (Mr. Mudie), may I suggest that we should congratulate not only the Prime Minister but President Nicolas Sarkozy on the leadership that they have given in this matter? As for the Prime Minister’s role, not only has he given leadership here for the
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British banking system, but he has given partnership for Europe and also for the United States. Is it not now appropriate to move to the third stage of world regulation of the banking sector, for which he has been asking for the past 10 years?

The Prime Minister: Because the Conservatives have the wrong analysis of the problem with which we are dealing, they cannot understand the importance of the global action that we are now contemplating and wanting other countries to follow. I hope that they will reconsider their position on these issues, because without a restoration of confidence in the banking system, which includes the restructuring, but also the reform measures about which we are talking, it will be more difficult for every continent in the world to escape from this global downturn. I therefore hope that all parties can agree—as I thought they had agreed a few days ago—that the international financial system is in need of the reforms that we are suggesting.

I praise President Sarkozy of France for his leadership in calling the meetings. He met President Bush in America on Saturday. We are working very closely together, as are those in the other European countries, including Chancellor Merkel and Mr. Berlusconi from Italy, in trying to agree a set of European reform measures that we can put to the rest of the world. I think that, in this particular set of circumstances, all countries now recognise the importance of change—a change that, if I may say so, we have proposed for nine years, since the Asian crisis.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): The Prime Minister referred to lengthy discussions on climate change. Is he going to use some of his new-found super-powers to persuade all 26 neighbours to adopt the climate change targets that his Government, whose initiative I welcomed, adopted on Thursday? Is he proceeding along those lines, or is he perhaps going to be more Flash Harry than Flash Gordon?

The Prime Minister: I said to the European Council when we discussed the issue that there would be a new American President in January, and both candidates want to see major change in the position on climate change at the Copenhagen summit. Europe must have a common position that we can put to the European summit then. I believe that countries are aware of their responsibilities. Obviously there will have to be some flexibility in how people meet their targets, but I think that people are now seized of the need for a European position to be established well in advance of Copenhagen.

Dr. Gavin Strang (Edinburgh, East) (Lab): Can my right hon. Friend confirm that the Council took note of a report from the presidency on the oil price and its volatility, and requested the Commission to promote transparency of commercial oil stocks? Does that refer to stocks within all the member states of the European Union, will there be an attempt to estimate stocks outside the EU, and does my right hon. Friend believe that the EU can make a contribution to help us to achieve our objective of security of supply in energy and to meet our climate change commitments?

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