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“The coverage of the FSA will be huge; its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all.”
That, at least, is one of the answers to the question posed by the hon. Member for Twickenham (Dr. Cable) a few moments ago. My right hon. Friend also said that he feared
“that the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[ Official Report, 11 November 1997; Vol. 300, c. 731-32.]
That was what my right hon. Friend said in 1997. The warning was there; it was clear; it was on the record; and it has, alas, proved to be absolutely prescient.
The second main reason for our current plight is the level of indebtedness that we as a country, collectively through our Government and as individuals, have incurred. Here, too, there were warnings, and they, too, are on the record; I am afraid that some of them came from me. I drew attention on 9 July 2002 when I was shadow Chancellor to the savings ratio, which was then at an all-time low; it has hit many more all-time lows since. On 30 July 2003, I warned that savings had halved under Labour, that the Government were borrowing more and that families were getting deeper in debt. On 17 March 2004, replying to the Budget, I said that it was
“a credit-card Budget from a credit-card Chancellor”—[ Official Report, 17 March 2004; Vol. 419, c. 337.]
When I proposed at the 2005 election that a Conservative Government would make £12 billion of savings, I said that £8 billion of them would go not to cut taxes but to reduce Government borrowing, which was far too high.
Of course, I was not always thanked—I suppose I did not expect to be—for my pains. Anatole Kaletsky in The Times, for example, complained that throughout my tenure as shadow Chancellor, I had been issuing dire warnings about the economic and financial outlook. I had said, he complained, that Labour economic policies were doomed to failure, that overtaxed consumers were living in a fool’s paradise of unsustainable borrowing and that the British economy and the Government’s popularity were kept afloat artificially by a bubble of house prices and mortgage debt. He said that if the Tories started thinking along those lines, we would be making a big mistake. Well, of course, in terms of the outcome of the 2005 election, he was absolutely right, but was he right in the wider sweep of history? I simply set what I said on the record and leave others to decide who it was that was making the big mistake.
Throughout all this time, of course, the Prime Minister was proclaiming that he had put an end to boom and bust—and you know, Mr. Deputy Speaker, I do not think he was trying to deceive us; I think he genuinely believed it. Perhaps the worst thing he did was deceive himself. It was because he was genuinely convinced that he had ended the economic cycle that he did not fix the roof while the sun was shining. After all, if we think that the sun is never going to stop shining, why on earth would we bother to fix the roof? As we know, the Prime Minister is still in a state of denial. That is not the least of the reasons why he is incapable of leading the country out of the mess we are undoubtedly in. It is, I am afraid, a very big mess indeed.
A good deal of the comment on the current crisis seems to revolve around the question: how long will it last? It seems to me that another question is at least as important: what will come after it? The suggestion that is often implicit in the first of those two questions is that next year or the year after, we shall return to the world that we knew two or three years ago. That notion seems to me to be completely misplaced. We will be in a new world, a different world, with challenges every bit as formidable as those we face at the moment. We will be able to overcome those challenges only if we have leadership that is prepared, in the words of the excellent speech made the week before last by my hon. Friend the shadow Chancellor,
“to confront some uncomfortable truths and tell people what they may not want to hear.”
The mess that my right hon. Friends will have to clear up after the next election will present them with a very difficult task, but I am sure that they will not be daunted. They will, after all, simply be discharging the age-old and historical responsibility of the Conservative party to clear up the mess that Labour has left behind. That is something that we have done before, time after time. It is, in essence, what the Conservative party is for. It is what we exist to do: to clear up the mess that Labour always leaves behind.
The sooner we have that election, and the sooner my right hon. Friends can get on with discharging that historical responsibility, the better it will be for everyone in our country.
3.55 pm
Laura Moffatt (Crawley) (Lab): I did not doubt that there would be a fair smattering of the “I told you so’s” in today’s debate, and I am afraid we have heard quite a few from Conservative Members so far.
It was interesting to listen to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). I do not think we are judged solely on what might be called the “I told you at such-and-such a point that it was all going to go wrong” basis; I believe that we are also judged on the basis of the actions that we take. I well remember that when people around me in my local communities in Crawley were suffering devastation, little help—in fact, none—came from the then Government. In Crawley, the wise words sound a little hollow.
This is a hugely difficult time for families. We are suffering in our communities. I say “we” because my own family is faced with redundancy, and with having to make very difficult decisions. Few Members on either side of the House will not have been affected by the global downturn, and the important thing for us to decide now is what action to take to ensure that we recover, become strong and can face the future with pride, and that people are fitted out with the skills that they need in order to move on.
As Members of Parliament, we have an important role to play in our communities. We should be able to ensure that people have access to the schemes that are appropriate for them—that those schemes are clearly signposted. I hope and believe that Labour Members, at least, have been proactive in going out and explaining to local businesses what schemes are available.
Of course we are impatient. If one person comes to us who has applied for a mortgage protection scheme and has failed to meet just one of the criteria—not
having negative equity, for instance—that is a huge disappointment, although it should not prevent us from fighting to try to ensure that the home of that person and his or her family is secured. Impatience is expressed by Members throughout the House, including—quite rightly—the Opposition; but the Opposition speak as though nothing is being done, which is certainly and absolutely untrue. Business Link has been doing enormously good work in the south-east, carrying out health checks on our businesses to ensure that they are in the best possible position to fight off the recession. It does that work free of charge, providing invaluable advice and help.
Christopher Fraser (South-West Norfolk) (Con): Can the hon. Lady explain how the Government’s proposed increase in business rates will help small businesses to get out of the economic mess in which the Government have left them?
Laura Moffatt: I thank the hon. Gentleman for giving me the opportunity to say that we have also allowed businesses to defer rate payments so that they can plan for the future. They are expected to pay a reasonable amount in proportion to what they contribute to the community, but we are ensuring that they are not pressed too hard in difficult times. We heard from my right hon. Friend the Chief Secretary just how money has gone into that scheme, and I am very pleased that it has.
The good thing about the organisations in our communities is that they have not just been writing to us, although I think we have all received letters from the Federation of Small Businesses about various schemes. They are also getting out and explaining to businesses just what is available to them. That is the difference between the Conservative and Labour positions: we have schemes and plans that are available, and business organisations are able to share information on them. Geoff Williamson, the chairman of my local small business federation, sees me in good times and bad. He visits me, and is able to talk about issues relating to the economy all of the time, which gives us a much better relationship when things are not so good.
Mr. Binley: The hon. Lady always speaks up bravely on behalf of her constituents, but does she recognise that the building up of debt is a dangerous thing in itself for a business, because it could mean that it becomes legally not able to trade if the debt is too much and is unsustainable? Therefore, the projects she talks about, to do with holding back payment and building up such debt, could be the very death knell of the businesses she wishes to save.
Laura Moffatt: I am very grateful to the hon. Gentleman for that intervention, because it gives me another opportunity to say not only that Business Link can advise on issues to do with debt, but that other organisations, such as the Institute of Directors, are very clear that, for a healthy business, not building up debt to begin with is the right way to go. Having an enormous amount of debt and then having to defer further payments is a difficult position to be in, but we need to have these devices in place to allow businesses to plan for difficult times. That is exactly what we should be doing: giving this direct help to our businesses in our towns, cities and rural communities.
A lot more needs to be happening, too. To deny that and say that public expenditure should be cut is a travesty of justice in respect of what is happening in many of our communities. Members always campaign for investment in their constituencies, of course, but if we do not make that investment at this important time, we will be creating tremendous difficulties for ourselves. Not investing in public services and cutting public investment would choke off many of the fantastic initiatives that are going ahead.
I was listening to an Opposition Member saying that the proposed redevelopment of his college is not going forward. Well, that is not true of Central Sussex college in Crawley. We have an enormous proposal coming forward; it is planned work. It is an excellent college: it has just had a fantastic Ofsted inspection and is now rated as “good”. In particular, the inspectors say that it is preparing people for the workplace—it is giving young people the ability to do the jobs that are needed so that they are in a position to feed our economy.
Mr. Philip Hammond (Runnymede and Weybridge) (Con): We are, of course, all delighted about the good news for the hon. Lady’s local further education college—which obviously will have nothing at all to do with the fact that her constituency is the most marginal Labour seat in the country. Can she confirm, however, that she is aware that the rebuilding schemes of 155 other colleges that have had first-stage approval in principle are not now going ahead at the current time?
Laura Moffatt: I am explaining that I know that my college—Central Sussex in Crawley—is going ahead with such work. [Interruption.] My hon. Friend the Member for Northampton, North (Ms Keeble) says that that is also the case in Northampton. Frankly, the hon. Gentleman’s comments do not do justice to the principals, such as Dr. Russell Strutt at Central Sussex college. The college covers the constituency of the hon. Member for Mid-Sussex (Mr. Soames), among many others, and it is moving forward with its investment. This is not just about my constituency, and the comments made by the hon. Member for Runnymede and Weybridge (Mr. Hammond) do not do the college justice.
Businesses can get themselves into a position in which they thrive and thus survive this appalling global recession by making sure that training is a continuing part of their business. It is at the core of making sure that the work force is able to rise to the occasion when needed. That is why it is so important to see the work being done in Crawley on apprenticeships. A growing number of companies are expanding their apprenticeship programmes to ensure that they are fit for the future. I am proud to say that both of the two producers of linear accelerators in Crawley, Varian and Elekta, have thriving apprenticeship schemes that our young people are desperate to get on because of the quality of the jobs.
There is plenty that can be happening in our constituencies. I am always the first to say that we need to get more of these initiatives in place more quickly. One of the roles of a Member of Parliament is to ensure that if we have particular concerns, we can get to the heart of government and to our business organisations, in order to assist those in difficulty.
Local authorities have an important role to play. When issues emerge to do with the delivery of schemes put in place by the Government, it is often because the schemes are being delivered by other institutions. It is difficult to keep a handle on just how institutions such as local authorities are performing and how quickly they are ensuring that all the initiatives are in place. I ask the Minister to ensure that we audit all those organisations—both county councils and borough councils—to see how quickly they are putting in place some of the fantastic schemes available to us.
It would be very silly to assume that it is just working-class and other families who are suffering in this recession. We have to accept that there are those who are managing businesses who are in some difficulty. I have spoken to people running businesses who are close to tears when they feel that their business is on the edge. It is always really helpful to get Business Link involved to give them help and advice—that has been incredibly useful. When the economy is in difficulty, we need to think about the softer side: how do we support people in difficult times and give them the necessary help and advice? This morning, I spoke to the Rev. Jonathan Baldwin, who is the chaplain at Gatwick airport, and heard about the invaluable support that he is giving to managers and workers at the airport. We need to thank such people in this House, because although this global downturn is causing enormous pain and hardship, there are people out there who are keen to assist in ways for which we will never be able to thank them; we must know that they are in place, working.
The work of the jobcentres has also been invaluable. I have been visiting them often and keeping an eye on the cases about which I have concern. The jobcentre in Crawley has responded enormously well, particularly to things such as the collapse of XL Airways. That was a devastating experience in Crawley, but the jobcentre opened its office at the weekend, interviewed XL Airways people who had lost their jobs in such a horrible way and got them into new jobs as quickly as it possibly could. The staff went much further than we would expect of public servants, and I thank them for the work that they do.
There are clear dividing lines on this; we are able to discuss the initiatives available to us only because there are initiatives available to us. The proposals described by the hon. Member for Tatton (Mr. Osborne) are worthless with nothing to back them up. I am proud of the work that is being done. It is devastating to see the families affected at this time, but my hon. Friends and I shall work tirelessly to talk up the economy—and the contribution that people make to it—and to ensure that we are on their side.
4.10 pm
Mr. John Redwood (Wokingham) (Con): Let us first of all get rid of some of the nonsensical soundbites that the Government offer us a substitute for serious analysis and debate. I am glad that the Government no longer talk of “no more boom and bust”. Even they see how absurd that is, but it is disappointing that they still tell us that they made the Bank of England independent. As my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) explained, the Government did grave damage to the Bank of England, which we highlighted at the time and continue to highlight.
In the report by the group I chaired, which the Govt often misquote, we made a big thing about how the Bank of England was gravely damaged in 1997, which made it very likely that when a crisis struck the Bank would be unable to handle it properly. It was damaged not only by the removal of responsibility for financial regulation of the clearing banks—something that a central bank needs to do so that it knows the day-to-day positions and the true financial state of those banks—but by the removal of the responsibility to manage public debt. Anyone who understands money markets knows that public debt is the life and substance of the money market. The Bank of England was blind and deaf in its own money markets, because it was no longer in daily contact with clearing banks—one side of the equation—and nor was it handling minute by minute the Government debt requirements. No wonder it made an awful mess of the money markets in 2007 and 2008. No wonder it was not sighted in the massive credit explosion that the regulators allowed the banks to perpetrate, and that created this immediate crisis.
We now have two more soundbites substituting for serious policy and analysis. One is that this is a global crisis, as if in some way that excuses the Government of all responsibility. Their refusal to understand that we have a worse version of the crisis than others is extremely depressing. Their refusal to admit that the global recession is happening for different reasons in different places means that they will find it very difficult to tackle the problem here in Britain. They do not seem to understand that the crisis is very different in Japan, Germany and China—the successful saving and exporting countries—from the crisis in Britain, the US, Ireland and Spain, the over-borrowed, over-extended credit countries.
The exporting countries merely face the very serious problem that their export markets are temporarily very badly damaged, but they have strong fiscal positions and strong savings, while the heavily borrowed countries have a double crisis. We have the downturn in activity, like the successful exporting countries, but we also have extreme credit crunch problems, meaning that we do not have the financial flexibility to pump up our economies and return to previous levels of activity. The levels of activity reached in 2006 and 2007 were unrealistic, and were sustained on a sea of debt and those funny instruments that were allowed by the Government’s regulation.
The Government now say that the problem was created by deregulators, as if a deregulatory Government had been in charge in Britain for the past 11 years. However, never has more regulation been put on the statute book than in the past 11 years. Every feature of the financial regulatory system that they inherited was taken apart and recreated with far more cost, far more expense, many more regulators and far more complexity. Anything that has gone wrong on their regulatory watch is the result of their style and choice of regulation, and it certainly was not deregulatory.
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