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I remind the hon. Gentleman that there have actually been quite a few occasions in the past when the current account deficit was higher than it is now. To give him one example, it was 3.8 per cent. in the third quarter of 2007, but it was 4.9 per cent. in 1989 and it is more than 5 per cent. now in the United States. Our strategy is to ensure strong competition in every UK market by promoting openness to free trade, minimising
product market regulation and ensuring that there are world-class competition authorities. That is the strategy we are pursuing and we will do so successfully.
Stewart Hosie (Dundee, East) (SNP): The Minister is right: for the first time in a number of years the trade deficit will narrow to about £50 billion for each of the next three years and there will be a net benefit to GDP growth rather than the 0.25 to 0.5 per cent. suppression that we seen since 2000. However, the forecasts in the pre-Budget report were made before the continuing collapse of sterling which makes imports much more expensive. Will the Treasury commit to give a new assessment early in the new year based on the current sterling situation?
Mr. Timms: Of course we will constantly monitor developments in the economy, as my right hon. Friend the Chancellor emphasised, but we stand by the forecasts we set out in the PBR and our strategy is absolutely the right one.
The Chief Secretary to the Treasury (Yvette Cooper): We have received representations covering a wide range of issues, including discussions with a series of national and international institutions which support the case for higher borrowing to support the economy.
Mr. Swayne: Does the Chief Secretary accept a representation from me that, by the Treasurys own figures, the national debt is set to double by 2012, to £1 trillion? Will she confirm that, for next year, Government borrowing as a proportion of our national income will be higher than when Denis Healey went to the International Monetary Fund?
Yvette Cooper: I should perhaps point out to the hon. Gentleman that borrowing as a proportion of gross domestic product will be not dissimilar to the level that it reached in the early 1990s, when, in fact, the Conservative party doubled the national debt in the space of just five years in response to a home-grown recession, when it did not have an international, world financial crisis to deal with on a scale that we have not seen for many generations. We think that the right thing to do is to increase borrowing right now to support the economy, so that we can come through this faster and stronger.
Mr. Graham Stuart (Beverley and Holderness) (Con): The German Finance Minister, in talking about the borrowing that the Government are proposing, described the result as a complete failure of Labour policy. Will the Chief Secretary perhaps explain in what way that was an internal political comment in the German context?
As my right hon. Friend the Chancellor has already explained, the Germans have in fact increased their support for the economy with a fiscal stimulus earlier this year. We think that they were right to do that, and we will judge them on what they do, rather than on what they say. It is rather amusing that Conservative
Members are now taking to quoting Europeans whom they would never have quoted before in support of their economic strategy, and they continue to be isolatednot just in Europe, but right across the worldin their opposition to action to help people through this and to support the economy right now.
Greg Mulholland: Figures released yesterday show that unemployment has risen to its highest level since 1997, with a 7 per cent. increase in the past three months in the Yorkshire and Humber region alonedevastating news for people just before Christmas, as well as a huge burden on the taxpayer. The economist, George Buckley, has said that, because unemployment is normally a lagging indicator,
to see so many job losses this early in the economic cycle is extremely worrying.
Mr. Darling: No. I believe that it is necessary, though, for us to do everything that we can to help people who lose their jobs. That is why, in the pre-Budget report, I set aside a further £1.3 billion to help the Department for Work and Pensions and Jobcentre Plus in particular, so that if people lose their jobs, we can help to match them with vacancies. It is worth bearing in mind that, even during the past month, more than 200,000 people went into workthey found new jobsand we need to ensure that we match those people who may lose their jobs with the vacancies currently in the economy. We are taking action, but, of course, the other action that we have taken to stabilise the banking system and provide wider support for business will help as well, but I am determined to do everything that we possibly can to ensure that we help people who lose their jobs.
T7.  Alun Michael (Cardiff, South and Penarth) (Lab/Co-op): Once crimes are committed, heavy costs fall to the criminal justice system, whereas the costs of prevention largely fall to other bodies and organisations. I am thinking of mental health, education and skills and community engagement. Will the Chancellor give fresh thought when making allocations to disbursing funds in ways that reward those organisations, bodies and agencies that work co-operatively and help the process of preventing crime and penalise those who insist on staying within their own silos?
The Chief Secretary to the Treasury (Yvette Cooper):
My right hon. Friend is right that we have far more effective results not only if we work on prevention, rather than on simply ameliorating the problems later on, but if we can get better co-ordination between agencies. That is why we have been supporting the local
area agreements between councils, the police and other local organisations and doing that more widely as well. We are keen to do more to ensure that funding works in that way and supports the kind of partnership action that can, as he says, deliver results.
Until this underlying issuegetting credit flowing around our economyis resolved, economic activity cannot begin to recover,
address the root of the problem
other government initiatives to mitigate the recession will be ineffective and expensive failures.
When will the Prime Minister and the Chancellor swallow their pride, accept that the bank recapitalisation plan has not rescued the economy and introduce a national loan guarantee scheme, which we have proposed and which this country needs?
Mr. Darling: The purpose of the recapitalisation scheme, which was clearly stated when I set out the proposals in October, was to ensure that the banking system remained viable and to rescue it from imminent collapse. We did that, and other countries right across the world did the same. I said at the time, and I say again today, that we will continue to look at that scheme to see how it can be improved and further strengthened. The director general of the CBI, to whom I spoke last night, is quite right to say that we need to do more to ensure that banks lend in the wider economy. It is important that we ensure that banks are sufficiently strong to do that, but it is also important to make sure that lending takes place.
As for the hon. Gentlemans proposal, it is an empty promise. He talks about a national scheme, yet he has quite explicitly said that the Conservative party would spend no more money; it would do absolutely nothing, so the promise that he makes is empty. Instead, he should perhaps pay greater heed to what the chairman of the CBI saidthat although there might be a cost to the fiscal stimulus, the cost would be far greater if we did nothing.
Mr. Osborne: The national loan guarantee scheme is supported by every single business organisation. It is exactly equivalent to the inter-bank guarantees that the Government have put in place, but does not add to public expenditure. It is consistent with what the Governor and deputy governor of the Bank of England have said this week. Is not the truth that the country has been in recession for six months, and Labours policies are not working? The Government said that they would get recapitalisation going to help start lending again, and lending is contracting. They said that their stamp duty holiday would restart the housing market, and it is plummeting. They said that they would pay bills to small businesses more quickly, and a survey today says that the situation is actually getting worse. They said that their massively expensive VAT cut would stimulate the economy, but their own former Minister, the right hon. Member for Birkenhead (Mr. Field), says that it is
like spitting in the face of an economic hurricane.[ Official Report, 17 December 2008; Vol. 485, c. 1139.]
Meanwhile, unemployment is soaring early in the cycle, and a Cabinet Minister says that Britain is facing the worst recession that we have ever known. Could the Chancellor explain why it is that all Labour Governments leave office with unemployment higher than when they entered office?
Mr. Darling: What the hon. Gentleman says might have more strength if he was prepared to do something to help the economy, businesses and people; he is not prepared to do so. He talks about a scheme for national lending, yet he has quite explicitly said that there will be no more money to support it. That is an empty promise. We are supporting the economy and are helping people. We have recapitalised the banks, which has prevented many banks from collapsing. We are taking steps to extend lending. The measures that we have taken in relation to VAT, to cutting income tax for basic rate taxpayers, and to helping businesses will all help in the face of a global downturn, the like of which we have not seen for generations. The Conservative party is making it quite clear that if it were in office, the choice that it would make is to do absolutely nothing to help people. [Interruption.] That is what the Conservatives did in the 1980s and the 1990s. They can shout and bawl all they like, but the fact remains that the Conservatives approach is wrong, muddled and would not help the British economy or the people of this country.
Harry Cohen (Leyton and Wanstead) (Lab): Earlier, the Chancellor said that the US regulatory authorities have some questions to answer about the Madoff $50 billion fraud, but at least over there they prosecute their fraudsters. Madoff was prosecuted, as was Conrad Black and the chief of Enron. The City of London has a lamentable record when it comes to investigating, prosecuting and convicting City fraudsters. Will the Chancellor or other Ministers look into that, and improve the situation, so that those associated with fraudulent activities that have led to the credit crunch here in the UK are prosecuted?
Mr. Darling: Earlier this year, in the summer, I set out proposals to strengthen the powers available to the Financial Services Authority, so that if there is wrongdoing in markets it can take action and, if necessary, make criminal prosecutions.
T2.  Richard Ottaway (Croydon, South) (Con): In the pre-Budget report, the Government announced value-for-money savings of £5 billion. Is the Chancellor aware, however, that this week the Public Accounts Committee found that a cost-saving initiative at the Department for Transport cost one and a half times the sum of money that it was trying to save? On that basis, the savings initiative will cost taxpayers £7 billion. Does that not prove that this is a say-anything, achieve-nothing Government?
As the hon. Gentleman will know, and as the Public Accounts Committee will be aware, the Government have in fact achieved more than the original targets for the Gershon savings, which were more than £20 billion; there has been considerable independent examination of that. Furthermore, we are on course to deliver more than £30 billion in efficiency
savings as part of the comprehensive spending review, and we have set these further targets now as part of the pre-Budget report. That contrasts with the approach of the hon. Gentlemans party; his party leader said:
It cannot and must not simply be about efficiency savings
T3.  Jo Swinson (East Dunbartonshire) (LD): The economic downturn is hitting East Dunbartonshire hard. Flexible Ducting has announced the closure of its Milngavie plant with the loss of 85 jobs, and unemployment has risen by 36 per cent. in the past year. Instead of tinkering, with a VAT cut, surely the Chancellor should invest the money to kick-start the economy by investing in green initiatives to create jobs, cut energy bills and tackle climate change.
Yvette Cooper: I agree with the hon. Lady that we want to keep investing to support green jobs. That is a great opportunity for us for the future; it is certainly an issue on which the new Department is working hard. We need to continue to invest in things such as the capital projects. That is why a major part of the fiscal stimulus was bringing forward capital programmes to support jobs. However, it is also right to put money into peoples pockets right now, very quickly, to help support the economy. Hon. Members on both sides should recognise that the scale of the economic challenges that face every single country in the world means that we have to take a whole range of measures. That is the best way to get the kind of action that we need and to help us come through this situation faster.
Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op): Despite the Chancellors efforts to recapitalise the banksand he has done everything that he can in that directionis it not the case that banks must not enter into a reckless round of lending, but look for good companies, which will be around at the other side of this recession, to take advantage of his generosity at this point? Is it not also the case that banks rightly recognise that too many boardrooms are stuffed with old Etonians who have no idea of how to deal with modern business, but allow themselves to be fooled by greed and avarice and go into schemes that lose billions for their country?
Mr. Darling: I do think that it is important [Interruption.] Mr. Speaker, you have only to look at the behaviour of those on the Opposition Front Bench to see how fit they are to run anything. I agree with my hon. Friend. Although we want to encourage banks to lend into the wider economy, banks need to be certain that they engage in responsible lending and do not end up lending money to people who cannot repay the loans that they take out.
T4.  Mr. Michael Jack (Fylde) (Con):
This week, the Public Accounts Committee has alerted us to the fact that the Department for Transports initiative on shared services is to cost the taxpayer £81 million. In the same week, the Department for Environment, Food and Rural Affairs has been fined £75 million
because of its failure to deliver on the Rural Payments Agency. What steps is the Chief Secretary to the Treasury taking to make certain that those Departments bear proper responsibility for that profligate waste of the publics money? Who is going to resign, and what will she do to prevent such things from happening in future?
Yvette Cooper: It is exactly because it is important to make sure that we pursue every avenue in tackling waste and inefficiencies that we have the Public Accounts Committee, the National Audit Office and the Audit Commission. It is right that there should be all those organisations and that they should do their jobs in pursuing such matters. It is also right that Departments need to take greater action to root out waste wherever they find it. That is why we have set the further target of another £5 billion of efficiency savings in 2010.
T6.  Mr. Andrew Mackay (Bracknell) (Con): Way back in July, the parliamentary ombudsman published a telling report on Equitable Life. That was immediately followed by a promise from the Leader of the House that the Government would respond with a statement from the Dispatch Box in the autumn. That did not happen, and during the Queens Speech debate the Prime Minister clearly and twice repeated that there would be a statement before Christmas. Why is the Chancellor defying his Prime Minister?
The Economic Secretary to the Treasury (Ian Pearson):
I had hoped that we would be able to make a statement on Equitable Life before the recess, and it is a matter of regret to me that we have not been able to do so. I apologise to the House and to the Prime Minister for
the fact that it has taken a little bit longer than I would have liked to get the policy options to a stage where we can make a firm decision and issue a statement. My right hon. and learned Friend the Leader of the House has announced that a statement will be made when we come back after the Christmas recess, and I am sure that that will be the case.
T8.  Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): People in the highlands and islands want to see all levels of government working together to tackle the economic crisis. Will the Chancellor therefore join me in condemning the Scottish Governments decision to cut nearly £100 million from the budget of Highlands and Islands Enterprise over the next three years, at a time when that organisation should be helping the local economy? Will he work with the Highland council to help it to bring forward measures to boost the local housing market, particularly through construction, so that we can help to create jobs in a sector where there have been huge job losses in my area over the past few months?
Mr. Darling: I agree with the hon. Gentleman. We need to ensure that we support jobs in all parts of the country, including the highlands and islands of Scotland. The nationalist Administration could do far more than they are doing. For example, we have said that we want to bring forward public investment; they have said in principle that they are prepared to do that but have yet to come up with specific proposals. Moreover, their reforms of the private finance initiative have meant, in effect, that a lot of investment has been sterilised. It is high time that they realised the importance of getting on with supporting the whole Scottish economy as well as that of the highlands and islands.
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