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I support the measures taken by the Government. They had to take those measures; when we look at history or at documentaries about the 1930s, we can see
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why the Government have to do what they have got to do. Any measures that the Government take will never be perfect, but nevertheless, they have to get the central thrust of what they are doing right or, as some people have predicted, we could end up in a situation comparable with that of the 1930s.

That takes me to the issue of Northern Rock, an issue which the Opposition have always ducked. Northern Rock gave the public a snippet, as it were, of what could be around the corner, which could be compared with the 1930s. Let us remember that people were queuing up to withdraw their money from Northern Rock, and that a number of societies were in the same boat. Let us remember that the Opposition dithered when we eventually took some action to stabilise that situation, and that they criticised us for doing so. When we listen to the Opposition, we are led to believe—the previous speaker just said it—that everything is the Government’s fault. There is a big, wide world out there. Apparently, we are insulated from that, and everything we do has no bearing on the world, but in actual fact the world has a big bearing on us. The situation started about two years ago, when India and China were forcing up commodity prices. The Opposition conveniently forget about that little thing that happened two or three years ago. It had a knock-on effect on oil prices, and we all know the story of how those prices then went through the roof.

We must not forget that the major problem started with mortgages in America, and others cannot duck the truth, as much as they would like to, because if they do not recognise it, they will never get a solution to the problem. We could give a litany of what has happened since then. The Government have been operating in a difficult situation, trying to persuade people that their course of action is the right one, with little support from the Opposition. As I remember, their support lasted only 10 days before the Leader of the Opposition withdrew it.

Let us take the other argument that the Opposition use quite a lot, which is that we did not prepare for a rainy day. We did, because we followed a Tory budget for two years—people tend to forget that. For every pound that was paid in tax, 50p of it was to pay off Government debt. We also invested for that rainy day, when we were able to, by spending on schools and the health service. The Conservatives cannot run away from the fact that we did invest for a rainy day. We also invested in modern technology and research and development, which our major industries rely on. Universities rely on that money, because it is part of their seedcorn funding. We also invested in skills and a number of other areas of the economy. At the end of the day, to suggest that the Government did not prepare for a rainy day is slightly misleading to say the least. It is totally misleading to say that if everything had been right in this country, somehow everything else in the world would have been okay, because the fact remains that the problems started outside this country, and I have highlighted a few examples of that.

Earlier today, the shadow Chancellor said that the Conservatives cared about families, decent housing and so on, and that Conservative local authorities would do the same sort of thing. However, in Coventry, for example, they have spent £40 million out of £70 million of
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reserves and they are introducing £9.4 million in spending cuts, which could affect 189 jobs, such as neighbourhood wardens. It will also affect youth services and library hours, and lead to cuts in certain areas of education, foster and social care. I know that my hon. Friends are waiting to get into the debate, but I wanted to highlight Coventry city council proposals and suggest that it look at them again.

9.10 pm

Mary Creagh (Wakefield) (Lab): It is a pleasure to speak after my hon. Friend the Member for Coventry, South (Mr. Cunningham), who represents the area where I went to school in the 1980s. My family weathered the terrible recession of that time and saw the devastation of the car industry—the plant at Massey Ferguson, the Alvis tanks factory and the car body factory were all closed.

A series of devastating public sector spending cuts resulted in teachers’ strikes, and many of my friends and I missed out on large parts of our education. Opposition Members perhaps have not suffered a teachers’ strike, but when that happens, children go into school at the beginning of the week, pick up their work for the rest of the week, do it quickly that afternoon and go off to play for the rest of the day. As a 12-year-old, it was a recipe for happiness, but I am sure that it had a devastating and long-lasting impact on many of the people with whom I was at school. I would also like to share the fact that in 1982, I had to buy my own O-level physics textbook. In 1982, £12 was a lot of money for a 14-year-old who earned £1.50 from a paper round. Many of us can remember other recessions. The recession of the 1980s was perhaps not as desperate as that of the 1930s, but there was 20 per cent. unemployment in Northern Ireland and 16 per cent. unemployment in north-east and north-west England.

I shall consider two issues: the temporary reduction in VAT and, if time permits, the welfare reform proposals. The Government have done the right thing with the temporary cut in VAT because it will reduce prices and improve consumer spending. The measure is not about people buying 25 cappuccinos, as the hon. Member for Croydon, Central (Mr. Pelling) rather facetiously implied, but about 25 people who would not otherwise buy cappuccinos doing so. We need to allow people to keep making the discretionary expenditure that they would otherwise not make. Increasing the higher rate of income tax to 45 per cent. for those earning above £150,000 is a bold, positive and progressive move by the Government that will ensure that the pain of this recession is shared by the few, as well as the many—to paraphrase a famous new Labour phrase.

It is important to bring forward spending on large infrastructure projects because that will enable construction companies that have been badly affected by the recession to remain in business. It is crucial that £3 billion is invested in our motorways, social housing, schools, hospitals and energy efficiency. The phrase of the hon. Member for Tatton (Mr. Osborne) that we did not fix the roof while the sun was shining has become rather hackneyed, but I can tell him that, as a Labour Government, we have invested money in repairing schools and hospitals. Again, Opposition Members might not have had the pleasure of going to an outside lavatory at their school—I am sure that the Eton Rifles and the Bullingdon boys
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were not allowed to do that—but in some schools, the classrooms were out of action for years at a time because of leaks in the roof.

At Pinderfields hospital, Wakefield, which I visited two weeks ago with the Secretary of State for Health, a £250 million contract has been put in place and the infrastructure—the bones of the hospital—are in place. That hospital had not received any major building investment since almost the second world war—and that investment had consisted entirely of prefabricated portakabins. When I visited to celebrate the NHS’s 60th birthday this summer, we went to a children’s ward where the beds had previously been lost because the rain was getting through a hole in the roof. That is one of the challenges that doctors, nurses and care professionals in Wakefield faced in delivering health services, but now we are talking about the roof in Pinderfields hospital being physically fixed through a £250 million investment from the Government.

Last week, my right hon. Friend the Secretary of State for Children, Schools and Families announced new money for play areas. Wakefield will receive £1.1 million of investment this year, rather than in 2010-11, in 22 areas. In Kirklees, which I also represent, and the wards of Denby Dale and Kirkburton, £2.2 million will be invested in 28 play areas and two adventure playgrounds. I am determined not to let the Tory-Lib Dem coalition on the council allow my rural children to miss out.

It is also good that we are providing £15 million for free debt advice, which has been an issue in Wakefield. People trying to access debt advice at Wakefield’s citizens advice bureau currently face a three-week wait, which I raised with Treasury Ministers in the House in October. That demonstrates the nonsense of the Opposition, who published a paper in the summer calling for the deregulation of the mortgage market. We are all now only too aware of the dangers that such an approach would bring.

I have only 20 seconds left, so I will miss certain sections of my speech, but I want briefly to mention welfare reform, which is vital. It is difficult to get people back into work during a recession, but we cannot allow worklessness to become an ingrained habit, as the Conservatives did in the ’80s and ’90s. They want spending cuts, but I say that it is better to increase the national debt than to have 200,000 people losing their homes or one in 10 people unemployed. It is better that the national debt should rise than that entire sections of the manufacturing and coalmining industries should be left to wither on the vine: doing nothing is simply not an option. We in the Labour party have an action plan. Only time will tell whether it will be enough, but the “no action” plan from the do nothing party would seriously let down the people of this country.

9.17 pm

Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): If anyone had any doubts about the clear contrast between the approaches of the main parties towards dealing with the financial crisis and the recession, those doubts will not exist after today’s debate. As my hon. Friend the Member for Wakefield (Mary Creagh) pointed out, in spite of repeated requests and challenges in this debate, neither Tory Front Benchers nor Tory Back Benchers have proposed any programme to deal
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with the situation. All we have heard is an occasional reference to the loan guarantee scheme, which was hardly the centrepiece of the speech that the hon. Member for Tatton (Mr. Osborne) made earlier. I wonder whether that proposal is rapidly going the way of the employment creation scheme, which the Conservatives proposed a few months ago, but which seemed to disappear from their agenda once it was dissected by the Federation of Small Businesses.

The ability to access the credit needed to continue operating is essential to all businesses. Ensuring that banks can continue to provide businesses with support and with access to credit is crucial, but only as part of a package. It is certainly not the only solution or the panacea that it would appear to be to the Conservatives, from the limited suggestions that they have made this evening. I speak to small businesses in my constituency, and access to credit and the rates that some are being charged for overdrafts and loans are central to their concerns. Above all, however, what both small and big businesses want are customers. Businesses want people to buy from them. Retailers want people to go into shops—that is where the reduction in VAT is important. Businesses in the non-retail sector want people to buy their products and services.

The public sector also has a vital role to play in providing a stimulus to the economy in our communities. Not surprisingly, those of us who speak regularly to businesses, as most of us do, will report that businesses with a relatively high proportion of their trade deriving from the public sector are weathering the downturn better than many others. This underlines the particularly important role of public sector spending on infrastructure in the present circumstances. That is why the boost to such public sector spending is a vital part of the programme, and I welcome the priority that the Government have given to it. We have seen the emphasis on investment in infrastructure in the short term, but we now need to turn to a strategy for continued investment in the medium term as well. Whatever the trajectory of the present recession might be, it is clearly going to take some time to recover from the difficulties that we now face. I certainly support infrastructure investment as a major theme of the Government’s activity, and I look forward to more of the same in due course.

The need for investment in infrastructure is particularly important to those of us who represent constituencies in Scotland. In England, we see new schools and hospitals continuing to be built, and we shall see investment in transport and other key sectors of the economy. In Scotland, however, we face a different situation. Although we can see that kind of investment in building projects going ahead in our constituencies at the moment, the public sector investment programme will begin to peter out in the next year or so, just at the time when we need a boost to infrastructure investment in our communities.

Over the past year and a half, the Scottish National party Government have been ideologically pursuing their so-called Scottish futures trust, a device that is meant to bring investment in public sector facilities in all our constituencies, but that has, to date, not delivered one single brick, despite the spending of about £30 million in preparatory work. Not one project has yet been agreed, and even the SNP Government themselves have now accepted, in their transport strategy that was announced last week, that some of their major programmes
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cannot be funded by the mechanism that they had hoped to use. As a result, not only transport programmes but many other capital spending programmes—which are vital not only for the facilities that they offer but to the building industry—are now subject to a great deal of uncertainty.

As I have said, there are signs that the SNP Government are beginning to rethink their approach to public sector investment in Scotland. I welcome that, and if we are indeed seeing a new sense of reality in the SNP Government about the need to invest in public sector infrastructure in Scotland, not only the Labour party but the construction industry and business in Scotland will welcome it. At the end of the day, we can have our debates here in the House of Commons, in which the Opposition parties will understandably challenge the actions and policies of the Government, but when the UK Government and the Government in Scotland are of different political colours, it is essential for those of us who represent Scottish constituencies that they work together. We must ensure that the initiatives taken by the Secretary of State for Scotland to bring together key organisations in the poverty sector are followed up by similar initiatives in infrastructure investment and in the financial services industry in Scotland.

I urge the Minister to convey to the Secretary of State for Scotland the need for the initiatives that have been introduced to deal with poverty in Scotland to be taken forward into the infrastructure industries and the financial services industry, so that we can adopt the joint approach that this Government want to see. We must ensure that the SNP Scottish Government are challenged to join us in meeting the needs of our communities in Scotland.

9.24 pm

Mr. Mohammad Sarwar (Glasgow, Central) (Lab): The UK and, indeed, the wider global economy are entering an exceptionally difficult and uncertain time. This global economic downturn has, in one way or another, affected the lives of many businesses and families throughout the world, including those residing in the United Kingdom. Although the problem started with the sub-prime housing market in the United States, globalisation caused the problems to spread quickly and to affect the world economy, placing a tight squeeze on the availability of credit. That has resulted in the collapse of several major international financial institutions, and an accompanying collapse of market confidence. Unprecedented sums of Government finance have been provided to assist in the recapitalisation of our banks. At the same time, mortgage approvals and lending in general have declined, and home repossessions are on the increase. Interest rates for businesses and families are still fairly high. Lenders are slow to pass on their cuts to consumers, and when they finally do, they do not pass them on in their entirety.

Furthermore, a substantial number of small businesses say that their overdraft charges are higher than they were a year ago despite central bank rate reductions. Interest rates for loans, credit cards and store cards are typically very high, and have remained so despite the recent rate cuts. All that has compounded the problems of a slowing property market that is also currently suffering a decline.

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The pre-Budget report set out a positive and much-welcomed plan of action in the shape of the substantial £20 billion fiscal stimulus package to be introduced between now and April 2010 to counter the effects of the recession and to aid the economic recovery. The package includes a permanent £600 increase in the income tax personal allowance, a temporary reduction in VAT, no significant changes in vehicle excise duty until after 2010, the bringing forward of child benefit and child tax credit increases, and a one-off £60 winter payment to pensioners on top of an increased winter fuel allowance payment.

I commend the Government for having addressed some of the key economic issues. They have provided greater protection for bank depositors by guaranteeing deposits of £50,000, reaffirmed the commitment to investment in public services, and taken steps to pump liquidity back into the market. I also welcome the introduction of the new charter for mortgage holders, announced last week, which is designed to prevent hard-working families from having to face the fear of home repossession.

The charter provides three practical safety pillars for home owners: an agreement by the banks to hold back repossession proceedings until three months after the home owner falls into arrears; a new pre-action protocol making it clear that repossession is to be pursued only as a last resort with free debt advice available in every court and judges expecting lenders to exhaust all other options first; and the opportunity to defer a proportion of interest payments for up to two years, with the Government guaranteeing banks against the risk of loss from such deferred interest payments.

The charter has been welcomed by market specialists, and is testament to the pledge of my right hon. Friend the Prime Minister to provide real help for families during these very difficult times. In contrast, the Leader of the Opposition has shown that not only does he not understand the nature of the economic problems, but he does not care about lessening its possible effect on families.

However, we must be prepared to go further in our efforts to assist businesses and families. We must ensure that the banks play their part in meeting the needs of consumers in what is proving to be a very demanding time for our economy. At present they are failing to do so, as they have not resumed lending to the levels seen before the credit crunch. They have also been unwilling for a second time to pass the full amount of the Bank of England interest rate cuts to consumers. My right hon. Friend the Prime Minister has rightly said that that is unacceptable. It is reassuring to see a new lending panel chaired by the Chancellor and Lord Mandelson set up to monitor lending levels, but, given the emerging evidence that overdraft limits for small businesses are being reduced and, in some cases, withdrawn completely, it is more essential than ever for us not to allow viable businesses to fold owing to a lack of credit.

We must take a more robust approach. The banks should be fully aware that if they fail to act in accordance with the strings attached to their rescue plan, we will seriously begin to consider some of the suggestions recently made by market specialists to the Treasury Committee. They include introducing credit market control measures and appointing Treasury officials to
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sit on banks’ executive boards. I am not a fan of bank nationalisation, but if the banks do not behave, the option of full nationalisation should be adopted to make them start lending again.

9.30 pm

Dr. Roberta Blackman-Woods (City of Durham) (Lab): I shall endeavour to keep my remarks brief, but I want to say a few words about the economic measures outlined in the Queen’s Speech and the pre-Budget report, and also to touch on other key issues in the Government’s programme.

I think there is consensus on the fact that we are in very serious economic times, but there certainly is not consensus on how to deal with that. I strongly support the Government’s commitment to act decisively to make sure that we enter economic recovery as soon as possible. That is in stark contrast to the approach of the do nothing Tories. The Government are offering real help for those who are being affected by the economic downturn, and I especially welcome the measures aimed at families, pensioners and small businesses, such as the £60 pensioner’s payment, increasing child benefit, more loans and deferred tax payments for small businesses, bringing forward £3 billion-worth of capital projects and, more recently, credit card protection. I know that that will be welcomed by my constituents, many of whom have recently come to my surgeries to talk to me about the actions of credit card companies.

That is all real action to help. Apparently, however, the Tories would rather we followed their path and did absolutely nothing. We in Durham still remember the “unemployment is a price worth paying” Tories and we do not want them back. At a time of economic hardship, a great deal of attention is rightly focused on how to deal with economic problems, but we must also pay attention to the role that public spending can play in reducing unemployment.

My hon. Friend the Member for Leyton and Wanstead (Harry Cohen) was right to focus on the role that public spending can play in providing infrastructure. We need this investment in infrastructure to continue. In Durham, we are currently consulting on the building of two new schools; one is to serve Durham city and is jointly sponsored by the county council and the university. This is a necessary investment for the future, not wasteful public expenditure as the Tories would have us believe.

Education is crucial to economic development. From Sure Start for pre-schoolers through the school system and on to apprenticeships and university courses, we must continue investing in training and education, because that prepares our young people and adults for the future economy. That is why I very much welcome the Government’s children, skills and learning Bill, and in particular the attention that is being put on apprenticeships as a key measure in helping to engage young people and adults in training, to improve their chances of employment in our future economy.

The Government have high aspirations for every child in the country. By providing better education and training, they are challenging the underlying causes of poverty and helping children and young people to raise their own aspirations. It is essential that we reduce the educational attainment gap; it must be closed if social mobility is to be improved.

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