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3. Jo Swinson (East Dunbartonshire) (LD): What recent discussions he has had with the Chancellor of the Exchequer on measures to encourage banks to lend to small businesses in Scotland. [279146]
The Parliamentary Under-Secretary of State for Scotland (Ann McKechin): Mr. Speaker, since I came to the House I have much appreciated the friendship and support that you have shown, as one of my neighbouring MPs. I thank you for that.
My right hon. Friend the Secretary of State has regular discussions with the Chancellor on a range of issues. Since the start of the year, the Government have introduced a range of measures to help increase liquidity and ease credit conditions for business.
Jo Swinson: Like other hon. Members, I have huge amounts of correspondence from constituents with viable small businesses who are desperate to get credit but are being offered loans only on ridiculous termsanything between 7 and 23 per cent. above base rate. On 15 October, the Leader of the House said:
One of the main reasons why we have been...buying shares in the banks is to ensure that they start lending again to small businesses at reasonable rates. We will do whatever it takes to back up our small business sector.[ Official Report, 15 October 2008; Vol. 480, c. 790.]
When will the Government start doing whatever it takes?
Ann McKechin: The hon. Lady should look at the facts. The Government created the enterprise finance guarantee specifically for companies that cannot access commercial lending. To date, more than 187 firms in Scotland have benefited from loans of more than £25 million. In addition, the business support payment scheme from the tax office has helped 9,000 Scottish firms defer £167 million. I have been advised by the Royal Bank of Scotland that in the past year its lending to small and medium-sized enterprises in Scotland has increased by close to £100 million, and that it anticipates lending an additional £250 million to the Scottish SME sector this year alone.
Michael Connarty (Linlithgow and East Falkirk) (Lab): Is my hon. Friend aware that many company owners who come to me complain that the terms and conditions of the enterprise finance guarantee are horrendous, as has been said? Furthermore, they are being asked to put up their family homes as a guarantee for the loans, although they have substantial equity in their own companies. Is it not unacceptable that people should be asked to put forward their family homes as a guarantee for money that, frankly, is being given to them at the behest of the Government, who saved the banks in the first place?
Ann McKechin: My hon. Friend raises a legitimate concern, although the taking of securities over domestic property by commercial lenders has always been a fairly standard practice over many years. We are ensuring that the banks in which we have a national stake will lend guaranteed amountsmore than £11 billion in the case of Lloyds TSB and more than £16 billion in the case of the Royal Bank of Scotland. We continue to press to ensure that that money gets through to the businesses that need it the most.
Mr. Alistair Carmichael (Orkney and Shetland) (LD): The Minister invites my hon. Friend the Member for East Dunbartonshire (Jo Swinson) to look at the facts. The fact is that every week every Member of this House hears from a small or medium-sized enterprise that is not able to grow or is having its existence threatened because of banks failures to lend. That failure to lend and to support SMEs must be addressed, because todays figures demonstrate that, as unemployment in Scotland rises at twice the rate of that in the rest of the United Kingdom, it is having tragic consequences for thousands of Scots every month.
Ann McKechin: Last year this Government invested £50 billion in Scottish banksequivalent to £10,000 for every man, woman and child. The first thing we had to do was to stabilise the banking system to allow our businesses to survive. We appreciate that the credit situation has been difficult. However, Iain McMillan, the director of CBI Scotland, recently said:
In discussion with our members in Scotland, we have found that concerns are easing about access to finance, but there are still some concerns about the cost of credit.
We are continuing to work very closely with the banks, and we believe that we will see an increase in lending over the next few months.
Rosemary McKenna (Cumbernauld, Kilsyth and Kirkintilloch, East) (Lab): May I add my voice to all the tributes that have been paid to you, Mr. Speaker? I look forward to bumping into you in my constituency.
Does my hon. Friend share the view that the scale of what has been done to support the banks in the United Kingdom makes a very powerful and persuasive case for the protection of Scotlands interests within the United Kingdom?
Ann McKechin: Yes, absolutely. Were it not for the strength of the United Kingdom, Scottish finance by itself would not have been able to provide the £50 billion that was essential to maintain the Scottish banks. As I said, that amounts to £10,000 for every man, woman and child in Scotland, and it shows the benefit of working together in partnership. [ Interruption. ]
Mr. Speaker: Order. Could I ask the House for some quietness? There are peoples livelihoods at stake, and they have got to be discussed here in the House.
4. Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): What assessment he has made of the effect on the budgets of local authorities in Scotland of recent changes to Government funding allocations. [279147]
The Secretary of State for Scotland (Mr. Jim Murphy): Local authority finance is devolved and as such is a matter for the Scottish Government.
Mr. MacNeil: Local councils, including my own, Comhairle nan Eilean Siar, are going to face real cuts through the Westminster cut in Scotlands budget. I am not sure that the right hon. Gentleman will campaign on this next year if he finds himself in opposition, but will he use his remaining time in government to do the right thing by protecting Scotlands front-line services and funding? Will he stand up to the Treasury, or are we going to hear more excuses?
Mr. Murphy: As I said at this Dispatch Box just 10 minutes ago, the Scottish Governments budget has doubled over the past decade because of Labour investment; and, even despite the efficiencies that are to take place, it will increase again next year. The hon. Gentleman talks about choices. In the next few months, Scotland will face a clear choice between a Labour Government and the Conservative party. No one in Scotland believes that that rump over there is going to end up governing the United Kingdom. The fact is that the Scottish National party wants to see, and is determined to see, a Conservative Government returned to Westminster, because that suits its narrow political purposes.
Mr. Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): Mr. Speaker, may I join those who pay tribute to you in saying that I am extremely grateful for your many acts of kindness to me, which began when I made my maiden speech from the back row of the Opposition Benches?
Will my right hon. Friend the Secretary of State confirm that allocations to local authorities will still be made by the devolved Executive in Holyrood, and that they remain twice the amount that they were 10 years ago, and very much more than when I was president of the Convention of Scottish Local Authorities?
Mr. Murphy: My right hon. Friend has enormous experience from when he was president of COSLA. The fact is that, as I have alluded to and as he said, the Scottish Governments budget continues to increase. We do, of course, look for additional ways to support local government, and tomorrow I will be hosting a job summit about how to support Scotlands long-term unemployed through this recession. Local authorities have an enormous role to play in that in Scotland and throughout the United Kingdom.
5. Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): What assessment he has made of the effect on the housing market in Scotland of the fiscal measures introduced in the 2009 Budget. [279148]
The Parliamentary Under-Secretary of State for Scotland (Ann McKechin): The UK Governments assessment is that the Budget measures are providing real help now to existing and aspirant home owners.
Mark Lazarowicz: Is my hon. Friend aware of the alarming findings reported in todays edition of The H erald about the low take-up of schemes to help home owners in Scotland? Will she discuss with the Scottish Government ways of ensuring that my constituents and hers can get the same benefits that home owners are getting in other parts of the UK?
Ann McKechin:
I very much share my hon. Friends concerns about the report that was issued today and reported in T he Herald. Some 81 per cent. of agencies helping people across Scotland said that they knew that conditions imposed in the scheme were much more difficult for the people in the most desperate need and facing repossession. I do not want to see home owners in Scotland getting less protection than is already enjoyed in England. That is why I hope that the Scottish
Government will act very quickly on the recommendations made by the repossessions working group and provide free legal advice in any court proceedings to everyone facing repossession.
Q1. [280103] Dr. Alan Whitehead (Southampton, Test) (Lab): If he will list his official engagements for Wednesday 17 June.
The Prime Minister (Mr. Gordon Brown): Before I list my engagements, this is your last Prime Ministers questions, Mr. Speaker. The whole House will have a chance to acknowledge your great contribution to public life in a few minutes time.
This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.
Dr. Whitehead: Mr. Speaker, may I add my appreciation of your kindness and generosity towards me and many other hon. Members in your time as Speaker?
In view of recent speculation, can the Prime Minister assure me that budgets relating to the support of green energy development and combating climate change will be maintained and enhanced over the next three years? Would he reflect on what the United Kingdoms ability to meet its carbon budget commitments would be if such funding were cut by, say, 10 per cent.?
The Prime Minister: In the Budget we committed an additional £1.4 billion of support for the low-carbon economy. That would not have been possible if we had followed the advice of the Opposition to make cuts of 5 per cent. this year. It would be impossible in the future if we went for the plans that have been suggested by the shadow Health Secretary to cut departmental expenditure by 10 per cent. We are for investing in the environment, not for using the money for inheritance tax cuts for the very few.
Mr. David Cameron (Witney) (Con): Welcome to Prime Ministers planted questions! [Interruption.] Some Labour MPs were a bit confused: when they were told about Mr. Ten Percent, they thought it meant his opinion poll ratings.
In our exchanges last week, the Prime Minister read out figures for total Government spending after 2011. Does he agree that, using the Treasurys own forecasts for inflation, those figures mean that spending is going to be cut in real terms?
The Prime Minister: I welcome this debate about public spending. I relish the chance to debate policy for once with the Opposition. The first thing that the right hon. Gentleman has to confirm is that he is cutting spending this year.
Mr. Speaker: Order. Let the Prime Minister speak. That is the best waywe hear what the Prime Minister has to say. [Interruption.] I am not responsible for his answers.
The Prime Minister: The first thing that the right hon. Gentleman has to confirm is that he would cut spending by 5 per cent. this year. That means that vital services would be losing money. I welcome the debate that we are having in this country. We are investing to get ourselves out of the recession; the Opposition would cut, and they would make the recession last longer. That would lead to higher debts and higher deficits that would have to be spent for. As for spending beyond 2011, the right hon. Gentleman knows the truth: he wants to spend less10 per cent. less in most Departmentswhereas we want to spend more.
Mr. Cameron: Absolutely no answer to the question. For the time that Peter Mandelson allows the Prime Minister to go on doing the job, he should at least answer the question. Every year, at every Budget, the Prime Minister stood there and read out figure after figure for total spending and told us it was an increase in real terms. Now he stands there, reading out figures for total spending, without admitting that they represent a real-terms cut. The country will conclude that he is taking them for fools. Everyone knows that what matters is spending over and above inflation. Let me ask him again: does he now accept that his spending plans from 2011 mean a real-terms cut? The Chancellor says that they are a cut. Are they?
The Prime Minister: The first thing we are absolutely sure of is that, regardless of economic circumstances, employment, investment and inflation, the Conservatives will cut expenditure by 10 per cent. The right hon. Gentleman said it himself last weekTory cuts versus Labour investment. Now let me read out the figures for current expenditure. Current expenditure will grow every year to 2013-14, not just in cash terms but in real terms. Capital expenditure will grow until the year of the Olympics. After that, it will be less but asset sales will make up much of the difference. So we are increasing current expenditure, and increasing capital expenditure up to the Olympics. Unfortunately, the right hon. Gentlemans proposal is to cut expenditure by 10 per cent. He had better admit the truth: he is cutting expenditure by 10 per cent.
Mr. Cameron: It sounds more and more desperate. Whichever way we look at the figures, the Government plan to cut spending. Let us consider capital and current spending. Capital spending will go from £44 billion in 2009-10 to £22 billion in 2013. That is a massive cut. Now let us look at current spending. We must exclude debt interest and paying for unemploymentwhat the Prime Minister used to call the bills of social failure. When we do that, we see that current spending is also being cut. Capital spendingcut; current spendingcut. Those are Labour cuts. Let me ask the Prime Minister againthe question will not go away until he answers it. Will he admitI would not listen to the Secretary of State for Northern Ireland, the right hon. Member for St. Helens, South (Mr. Woodward); he was pretty useless when he worked for us and he is still pretty useless. The question will not go away. Will the Prime Minister accept that his spending plans from 2011 mean a real-terms cut?
The Prime Minister:
What the right hon. Gentleman is saying to ushe had better listen to the debate because it will go on for many monthsis that, regardless of growth, employment, interest rates or inflation, he is
dogmatically set on a 10 per cent. cut in most departmental expenditures. Let me read out the real-terms current expenditure: 603 to 629 to 633 to 638 to 642. What is that but a rise in real-terms current expenditure? I have already explained about capital expenditure and what is happening after the Olympics, but gross investment, real terms [Interruption.] The right hon. Gentleman has not produced one figure yet and I have just given him the figures in the Red Book63, 55, 49and we will make that up by the asset sales that we have already announced in the pre-Budget report. I have to tell him that current expenditure will continue to rise in cash and real terms. The issue is that the Conservatives will cut current expenditure in real and cash terms. It is exactly what I saidTory cuts, Labour investment. What is worse is that they would cut expenditure so that they can help the few with inheritance tax cuts, while we are the party of the many. Let him say that he is abandoning inheritance tax cuts.
Mr. Cameron: Every commentator and every economist has concluded that the Prime Minister is wrong and looks increasingly ridiculous. Let us take just one. Last week, Robert Chote, the director of the Institute for Fiscal Studies, said that
judging from his performance at Prime Ministers questions on WednesdayGordon Brown needs some help to interpret his own Chancellors Budget.
Let us take one of the Prime Ministers former Treasury Ministers, whom he appointed to work with him in Treasury. The right hon. Member for Bolton, West (Ruth Kelly) said that
as the Budget made clear, the only way to clear a huge debt overhang in the medium term will be to cut billions of pounds from public spending.
Why does the Prime Minister find it so impossible to give a straight answer and be straight with the British people?
The Prime Minister: I am the person who is giving the House the figures. The right hon. Gentleman has given not one figure to back up his proposition. The only figure that we have had is the admission by the shadow Health Secretary that he would cut public expenditure in vital Departments by 10 per cent. What we will not be doing is cutting expenditure by 10 per cent.
Let me tell the Leader of the Opposition what the real-terms rise in current expenditure is, and perhaps at some point he will listen: 603 to 629 to 633 to 638 to 642. These are rises in expenditure after inflation has been taken into account. Once again, he is trying to hide the fact that he has got 10 per cent. cuts. His is the party of cuts; we are the party of investment. Because he wants to use the cuts to pay for inheritance tax, let us remember once again: the Conservatives are the party of the few and we are the party of the many.
Mr. Cameron: The right hon. Gentleman is just sinking and sinking. He thinks that everyone is so stupid that they will not notice that once we take out debt interest and unemployment benefit, the Departments of all those Ministers on the Treasury Bench will be cut, cut, cut. That is the truth. Why does the Prime Minister not just stand back for a moment and ask why he is so distrusted? It is not actually the recession: there is a recession all over Europe; and yet no other European leader [ Interruption. ]
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