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Mr. Woodward: First, I thank the hon. Gentleman for his role in helping the Executive to continue to function during a number of difficult months. In relation to the remarks he made at the beginning of his question, of course people should stand up for their values and beliefs, but in Northern Ireland it is a case not only of standing up for our values and beliefs but of being prepared to understand the other person’s point of view. If there is a major lesson to be learned from the past few months, it is that it is possible to stand up for our beliefs and values but that it is also possible to
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respect the beliefs and values of a different community, and of a different party, and to find a resolution that will allow both parties to be satisfied and for everyone in Northern Ireland to share in the peace.

Mark Durkan (Foyle) (SDLP): I join the Secretary of State in welcoming the positive turn of events this week that will see the Executive meet again after 22 weeks. Does he agree that it was no active leadership that prevented the Executive from meeting during that time of pain for the economy, public services and the voluntary sector, and is he confident that there will be no slippage or slipperiness in the process outlined by the First and Deputy First Ministers and that a time scale is envisaged if not actually expressed?

Mr. Woodward: I thank the hon. Gentleman for his contribution to enabling the First and Deputy First Ministers to reach agreement yesterday on finding a way forward on the devolution of policing and justice. In relation to timetables and dates, I caution him and other hon. Members that the agreement reached yesterday by the First and Deputy First Ministers was carefully put together to recognise the respective positions of both parties and to recognise that the way to deal with that was to put in place a process that would build community confidence. I remind the hon. Gentleman of the words used yesterday by both the First Minister and the Deputy First Minister—they both want devolution without undue delay.

Mrs. Iris Robinson (Strangford) (DUP): Everyone welcomes the progress that has been made in Northern Ireland, but does the Secretary of State agree with me that the real transition to full democratic progress will come only when the Assembly coalition moves from being a mandatory one to being a voluntary one, with parties having the same objectives?

Mr. Woodward: I am tempted to say that we should learn to walk before we run, but if the hon. Lady’s ambition is to reach that destination sooner rather than later, and if she believes that that will succeed, we really have made terrific progress in Northern Ireland.

Mr. Eddie McGrady (South Down) (SDLP): Like the Secretary of State, I welcome the agreement made yesterday between the Democratic Unionist party and Sinn Fein to reinstitute the Executive. It is great that the solution has come from the parties that created the problem in the first place. Notwithstanding that, I hope he agrees that it is most important to the economic welfare of Northern Ireland, which is the kernel of this question, that they quickly work through the business of five months’ government. He has already said that he, the Chancellor and the Prime Minister will do all they can to help the economy, but will he say what additional funding—in particular, for policing—they hope to provide? Also, will he indicate the timetable for the implementation of the agreement made yesterday?

Mr. Woodward: I am grateful for the hon. Gentleman’s help and support, especially through the challenges of the past few months. On his questions regarding funding and the issues facing the Northern Ireland Executive, as I have already said, the Executive will now start to meet again, starting on Thursday. They used to meet fortnightly,
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but I understand from the First Minister that they will now meet weekly until all the backlog of business has been cleared. I look forward to learning more tomorrow, when the Executive meet, but I understand that there is a number of matters on the timetable other than devolution of policing and justice that will be covered.

On the hon. Gentleman’s question about funding for policing, my right hon. Friends the Prime Minister and the Chancellor have been working extremely closely with me during the past few months to ensure that devolution is allowed to succeed in Northern Ireland, not only in policing and justice, but in every area, to ensure peace and prosperity for every community.

Mr. Alistair Carmichael (Orkney and Shetland) (LD): May I place on the record my party’s welcome for yesterday’s news, which is as welcome as it is overdue? Despite the substantial progress that we have seen, however, policing in Northern Ireland is still not normal. As a consequence of the actions of a tiny number of dangerous individuals, police officers daily face a threat to their lives, merely because they are police officers. Will the Secretary of State therefore give an undertaking that, as well as devolving the powers relating to policing and criminal justice, we will devolve a budget that is sufficient to meet the very particular needs of Northern Ireland? [ Interruption. ]

Mr. Speaker: Order. There are hon. Members in the Chamber who want to hear Northern Ireland questions and answers. It is unfair that there should be so many conversations going on.

Mr. Woodward: Thank you, Mr. Speaker.

Last year my right hon. Friend the Chancellor made it possible for me to give the Police Service of Northern Ireland a budget that many other chief constables would envy. The hon. Gentleman will know that the crime figures for Northern Ireland—especially those for violent crime—are extremely low compared with other parts of the United Kingdom.

On dissident activity, the threat posed to police officers in Northern Ireland is higher today than at any point in the past six years. The men and women of the PSNI do an exemplary job, and the Chief Constable, Sir Hugh Orde, has provided exemplary leadership for those men and women. We owe them a huge debt. I regret that now, in the last throes of this process, we will see a last throw from dissidents—a last attempt to undermine the work of the politicians in Northern Ireland. We stand absolutely resolute in our determination to ensure that those isolated criminals, who have no support in the community, do not succeed.

Mr. Laurence Robertson (Tewkesbury) (Con): May I give a warm welcome to the announcement made yesterday, which will enable policing and justice to be devolved in due course, and also enable the Executive to meet? Hopefully, when they can meet, they will be able to concentrate on the economy, regardless of when policing and justice is devolved. More than two thirds of Northern Ireland’s gross domestic product is generated by the public sector. What can the Government do to help the private sector increase its activities, so that the people of Northern Ireland can enjoy greater prosperity?

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Mr. Woodward: I thank the hon. Gentleman for his very generous comments about the historic agreement reached yesterday. On the economy, my right hon. Friend the Prime Minister is of course working closely with me to ensure that we provide all the help we can for people in Northern Ireland during the downturn. In relation to the private sector, I simply point to one example: the work being conducted by the American Government to bring investment to Northern Ireland. I would like again to put on the record my thanks to the American Government, to President Bush and to the special envoy Paula Dobriansky, who has ensured that everything that can be done to bring private sector investment from the United States is done in Northern Ireland, and will continue.

Prime Minister

The Prime Minister was asked—


Q1. [236806] Mr. Philip Dunne (Ludlow) (Con): If he will list his official engagements for Wednesday 19 November.

The Prime Minister (Mr. Gordon Brown): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Mr. Dunne: Can the Prime Minister explain why the pound has lost over a quarter of its value against the US dollar in less than four months? Does he still believe what he said in 1992—that

The Prime Minister: I would advise Conservative Members not to talk down the pound, and I advise them to take the advice of Lady Thatcher, who said that

and talking sterling down was

Q2. [236807] Mr. Gordon Marsden (Blackpool, South) (Lab): A strong skills base in both services and manufacturing is key to the recovery strategy that the Prime Minister is pursuing at home and abroad. It is also key to regenerating towns such as Blackpool. Does he agree that this is a time to expand, not contract, investment in skills and apprenticeships, particularly in the public sector, but also in small firms? Unlike the Conservative party, we need action, and we need it now.

The Prime Minister: I think what people want is real help for families and real help for businesses now, and I think people are beginning to understand that what is happening in the global economy is that while last year we had a major inflationary problem because of oil prices and food prices, in the coming year, inflation will fall. It will enable us to apply fiscal policy in support of monetary policy. What I mean by fiscal policy is real help and real support to families and businesses now. That is the way for the economy to grow in the future.

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Mr. David Cameron (Witney) (Con): May I start by thanking the Prime Minister for agreeing to the full, independent inquiry into baby P that I asked for here last week? This was never about politics; it was about getting to the truth, and I am grateful that we are to have that inquiry.

Does the Prime Minister agree that bank reconstruction, which we all support, has not yet had the desired effect, in ensuring that lower interest rates are passed on to businesses, and that credit is genuinely freed up?

The Prime Minister: First, on baby P, I think there is unity and common ground in this House on the fact that we have got to act quickly on the report on Haringey that is to come, and that Lord Laming’s work round the country is essential. We will look at what he says very carefully indeed. It is in all our interests that where there is failure, we change the system, and where people are to blame for failures, they are held accountable.

As for the banking system, I think that we were right to recapitalise the banks. This act has now been followed in every country of the world. The issue now is how the banks will resume funding to small businesses and home owners, and we are in discussion with the banks—every one of the banks—about, first of all, how HBOS-Lloyds TSB and Royal Bank of Scotland can achieve their promise that their lending and marketing of lending activity will be at the 2007 level, and, secondly, how all the banks can resume funding. We will bring forward proposals very soon indeed.

Mr. Cameron: I am grateful for what the Prime Minister says about the tragic case in Haringey and the need for proper accountability and responsibility, and there will be all-party support for that.

On the issue of talking to the banks, let me give the Prime Minister two specific cases that we have been in touch about this morning. First, a manufacturer in Lancashire, employing 120 people, is now being charged £16,000 for a modest overdraft facility. Even more dramatically, a small business in Leicestershire wrote to us saying that it had never breached its banking covenants and never exceeded its overdraft limit, yet its overdraft facility had been withdrawn and cheques had bounced. Do not such cases show that what has been done so far, which we support, has not yet worked properly, and that we need to do more on the credit side to ensure that such small businesses are not strangled?

The Prime Minister: I have said all along that the banks have got to accept their responsibilities. We have done what we can; they have to accept their responsibilities to act in a responsible and fair manner. I shall be happy to look at the individual cases to which the right hon. Gentleman has referred, but I have to say that we have expanded the small firms loan guarantee system to small businesses, that we have drawn on a European facility that could be worth up to £4 billion to help small businesses, that we already monitor what the banks are actually doing in every individual area, and that we will continue to monitor their work very closely. I have to say also that despite the Opposition’s predictions, the Bank of England has also reduced interest rates, and that must flow through to small businesses, as it has to home owners.

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Mr. Cameron: The Prime Minister says that we have done what we can. My question is, do not we need to go ahead and consider doing more? Is the Prime Minister considering—[Hon. Members: “Doing more?”] Yes. This is about small businesses in the real world that are struggling and want to know how we are going to get credit moving again. Is the Prime Minister prepared to consider more direct measures to get lending to business restarted, including the establishment of new institutions to underwrite lending, so that businesses can get the money that they need? At the same time, can he tell the House whether he is contemplating any further taxpayer investment in the banking system?

The Prime Minister: The reason I mentioned what we have already done was to remind the House of the action that has been taken, which the Opposition unfortunately opposed. The issue now is providing real help—as I said early on—for small businesses and for families, and, to make that real help possible, there will have to be some fiscal expansion. If the Leader of the Opposition is now telling me that he will support that fiscal expansion to make it possible, that is a change from yesterday, but a welcome change, indeed. We will take all the measures that are necessary to help small businesses get the loan capital that they need, but the Opposition are going to have to be consistent: if they are asking for fiscal action now, that is the opposite of what they were doing yesterday.

Mr. Cameron: I was asking about the constructive measures that need to be taken on bank lending, and I do not think that we really got much of an answer. The right hon. Gentleman did not answer the question about whether additional taxpayer support needs to go into the bank system, and people might draw their own conclusions from that.

Let us turn to the pre-Budget report—I know that the Prime Minister is keen to, and I know that he is desperate to go on this borrowing binge. Everyone wants to know how he is going to pay for it. The employment Minister, the Business Secretary and the Chancellor have all said that taxes will have to rise. Is that not true?

The Prime Minister: First of all, on small businesses, let us—

Hon. Members: Answer.

Mr. Speaker: Order. The Prime Minister is answering. I can hear him answering. [ Interruption.] He may not answer the way that hon. Members want him to, but he is answering.

The Prime Minister: We are calling for action on small businesses. That means that there will have to be a fiscal expansion to help small businesses. The problem is that the Conservative party has set its face against a fiscal expansion. Why are we proposing a fiscal expansion, and why are the Conservatives opposing it? The reason is to bring back growth into the economy, and the best way of dealing with tax issues is to secure growth in the economy and to secure tax revenues. The Conservatives are the do-nothing party when it comes to now, and they will let the country down by their actions.

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Mr. Cameron: It is amazing for a former Chancellor, but I think that the Prime Minister has forgotten the difference between monetary policy and fiscal policy. He has forgotten— [Interruption.]

Mr. Speaker: Order. The Leader of the Opposition.

Mr. Cameron: He loves to lecture on economics, but for him it is actually all about the politics. Let me say to him— [Interruption.] He has made his choice about fiscal policy, and now he has to tell us how he is going to pay for it. The Business Secretary—not a man known for his candour—said this:

In plain English, that means tax rises. On this side of the House, we have made our choice—it is called spending restraint. Is it not clear that the Prime Minister favours tax rises?

The Prime Minister: The Leader of the Opposition, on 30 September— [Interruption.] Oh yes. He said:

plans—a “lightweight” response to the problems that we have at the moment.

Let me tell the right hon. Gentleman the difference between monetary and fiscal policy. He proposes that we only use monetary policy, yet only a few days ago the shadow Chancellor was saying that it would be impossible for the Bank of England to cut interest rates because of our fiscal action; the Bank cut interest rates by the largest margin for years, 1.5 per cent. As for the present circumstances, everybody in every continent around the world is saying very clearly that monetary policy is not enough. The right hon. Gentleman wishes only to use monetary policy, but everyone—right-wing Governments and left-wing Governments—is saying that monetary action will not be enough, and that is why we need to use fiscal policy. That is real help for people and for families now. If he is setting his face against that, he is setting his face against helping families and business through the difficult downturn that they face.

Hon. Members: More!

Mr. Speaker: Order. The Leader of the Opposition.

Mr. Cameron: The Prime Minister is so fond of trading quotes; let me give him one that I found from just yesterday. This is the former economic adviser to his own Government, Derek Scott. He was asked— [Interruption.]

Mr. Speaker: Order. The Leader of the Opposition.

Mr. Cameron: He was asked about the Government’s claim that this recession was largely not of their making. His answer was that that was “largely drivel, frankly”. That is what he said. Let me use some words that the Prime Minister might be very familiar with. They are these:

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