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Mr. Redwood: I advised the Government and the Bank of England, long before the run on the Rock, that they needed to act as lender of last resort to ensure that there was no such tragedy. Why did they not do that? Why did they help to bankrupt that bank?
Ian Pearson: The right hon. Gentleman cannot get away from the fact that his party would have allowed Northern Rock to fail, because that was its stated view at the time; that it opposed the 2008 Act, which gave us the measures that were required to intervene in the case of Bradford & Bingley; and that, as he knows, just before the financial crisis his party made statements about the need for the complete deregulation of the mortgage market. They were not responsible judgments, and, overall, this is a matter of judgment.
Mr. Redwood: The Minister really should withdraw his remark about mortgages; the economic advice given was that we did not need the process regulation on mortgages, but needed tougher regulation of cash and capital, because we could see the tragedy coming. Now, will he apologise?
Ms Keeble: Does my hon. Friend agree with the reports by the Treasury Select Committee, which scrutinised the issue? Although we on the Committee found that complex considerations were at play, we did not find that people had given advance warning of the crisis, and we supported the Government's measured approach to many of the issues-in particular, their support for the banking industry.
Ian Pearson: My hon. Friend is absolutely right to refer to the Treasury Committee's work, and to the fact that its considered judgment supported the actions that we took. The powers that we took through the 2008 Act, and the actions that we took on Northern Rock and subsequently, were right.
Politics is about judgment and government is about making decisions, and the Government's judgment now is that it is right to support businesses and people through these difficult times. That is why we have taken action, for instance, on cutting VAT, putting an additional £1 billion each month into the pockets of shoppers and retailers; it is why we are spending £5 billion more on helping people get back to work; and why we are helping 300,000 people with their mortgages, helping
them to stay in their homes. We have supported the car industry through the scrappage scheme, provided additional support for business generally and, as I said earlier, given 150,000 companies more time to pay their bills.
Mr. Hands: The Minister threw out a large number of accusations about the Opposition's policies and said that we had not learned from the past. Will he therefore tell us which mistake he learned from when he decided to embark on a Government borrowing programme of £500 million a day?
I shall move on, however, and discuss borrowing and fiscal consolidation, because they are important issues. When we discuss them, we expose the fact that the Opposition have failed to make the basic judgments that are in the best long-term interests of the British people. We could have taken the decision to do nothing and let the recession run its course, which the Opposition, given their stance against the fiscal stimulus, consistently say they want us to do. However, that would have led to far higher unemployment and far more business failures. Our choices and actions are working, and, as the Chancellor has consistently maintained, they will help to deliver a return to growth around the turn of this year.
Christopher Fraser (South-West Norfolk) (Con): The Minister will recall that on Monday we had a very similar debate, tabled by the Opposition, in which Opposition Members spoke at some length and in some detail about our genuine concerns for business and enterprise in our constituencies. At the time, the Secretary of State for Work and Pensions conceded my point to her that she had not listened to the debate and was out of the Chamber. I asked her directly whether she would come back to us with written responses to the direct problems that we are suffering from in constituency by constituency.
Mr. Speaker: Order. I say to right hon. and hon. Members that, in any event and in all circumstances, an intervention should be brief, but, when we are talking about a topical debate, there is a particular onus and responsibility on Members to keep it short.
I am certainly aware of Monday's Opposition day debate, which focused on welfare and its role in securing the recovery. Today, we are talking about securing our economic future, and our measures to achieve that, which the Opposition opposed, are working. The International Monetary Fund, the National Institute of Economic and Social Research and a majority of City forecasters agree that the economy should begin to grow by the end of the year. However, there are still uncertainties and risks to confront, and no country can
be complacent. Unemployment is rising here and throughout the world, and we have to see the problem through. I think that it was Churchill who said, "When you are going through hell, you must keep going," and that is why at the Pittsburgh summit the G20 agreed that it was too soon to withdraw fiscal support-support that the Opposition do not even want to provide. Yet again, that agreement is in stark contrast to the Conservatives' argument today.
Joan Walley (Stoke-on-Trent, North) (Lab): Given the unprecedented challenge that we face in dealing with climate change, what are the Government doing, as we go through the recession and try to restore employment, to ensure that we have a green economy and sustainable environmental growth alongside the economic recovery?
Ian Pearson: My hon. Friend is absolutely right to point out the need to create green jobs in supply chains and to tackle the major climate change issues that the world faces, while providing employment opportunities in the United Kingdom. I hope to explain in more detail how we will address that. It is important that, until the recovery is entrenched, we continue to help businesses and families who are struggling to deal with the impact of the downturn.
Mr. Andrew Love (Edmonton) (Lab/Co-op): This is an apposite moment for my hon. Friend to give way, because I did not want to leave the subject of the stimulus without recording the horror of all independent commentators at the thought that the priority of any incoming Conservative Government would be the deficit, rather than securing the growth that is absolutely necessary if Britain's economy is to survive and thrive in the future.
Ian Pearson: My hon. Friend is absolutely right. We need to focus on the future and the steps that we need to take not only to get us through the recovery in the best possible shape, but to ensure that we lay firm foundations so that the UK can be competitive in the future.
As the world's economy emerges from the downturn, major new opportunities for British businesses will emerge, including, as my hon. Friend the Member for Stoke-on-Trent, North (Joan Walley) said, initiatives to green our economy. However, global competition is getting tougher, technological change is always accelerating and, as other countries invest and raise their skill levels in high-value sectors, we cannot afford to stand back. That is why we must continue to invest to ensure a sustainable future and to build our future economic strength, as my hon. Friend the Member for Edmonton (Mr. Love) rightly said.
Mr. Jim Cunningham (Coventry, South) (Lab): The Minister, like me, is a west midlands MP. What is he doing to try to stimulate the west midlands economy, particularly manufacturing? To give him credit, I must say that he has done a lot for the car industry, but will he say something about small businesses and so forth?
The west midlands is an important part of the UK economy, and the fiscal stimulus measures that the Government are taking are all helping our industry. My hon. Friend will be aware of the scrappage
scheme, which has been widely welcomed in the west midlands. The region has had a very tough time during the economic recession, suffering more than many others in the economy, and that is why it is fundamentally important that we continue to up our skill levels in the west midlands and, more broadly, throughout the United Kingdom. That is also why we continue to support our companies. Those policies and spending decisions-the judgments that we are making-would be placed under threat if we followed the judgments of the Conservatives, who just want to cut, cut and cut again.
Jim Sheridan (Paisley and Renfrewshire, North) (Lab): Will the Minister expand on his earlier statement about helping some 150,000 small businesses by allowing them time to pay their bills? Does that also apply to Her Majesty's Revenue and Customs, which is pursuing companies in my constituency that are keen to pay their taxes but are experiencing short-term cash-flow problems? Does HMRC go out of its way to help those small businesses?
Ian Pearson: Yes, HMRC has been extremely active in wanting to work with companies and defer payments where that can help a company and provide it with the breathing space that it needs. As I said, more than 150,000 businesses have benefited, and a figure in excess of £2.3 billion has been deferred in the way of tax. If my hon. Friend has specific examples of companies with problems and wants to talk to me about them, I will ensure that they are investigated. If support can be provided to viable businesses through deferring tax payments, that is what should be happening. I am happy to take that forward with him directly.
Mr. Nigel Dodds (Belfast, North) (DUP): The Minister is talking about what can be done to get us through the current difficulties. Was he alarmed by the comments made by Mervyn King the other day when he said that the lessons have not been learned by the banking sector and that we could find ourselves in this situation again? Getting through this banking crisis is one thing, but what has been done to ensure that we do not get into another one in future?
Ian Pearson: The Government have already taken steps internationally and domestically, through regulation by the Financial Services Authority, to deal with the banking crisis. The Governor of the Bank of England, the Treasury and the FSA-the tripartite authorities-are absolutely committed to ensuring that we do not return to the past. We have said very publicly that it cannot be business as usual for the banks. In his speech on Monday, the Governor posed some interesting questions as part of a general debate. We have some differences of opinion on separation, but in essence there is not a lot of difference between what he is saying and what the Government believe in terms of the actions that are already taking place-and there is more action in the pipeline, as the hon. Gentleman will be aware.
Mr. Jim Cunningham: Coming at this from a different angle, can the Minister give some indication of when the banks will start paying back the money that taxpayers loaned them in the first place, and whether any bank, to date, has done that?
Ian Pearson: As the House will be aware, we have significant stakes in Royal Bank of Scotland and Lloyds Banking Group. We have clearly stated that we want those entities to be returned to the private sector, and I am sure that that will happen in due course. However, there must be an orderly process. We must first sort out the problems in those banks, and we will then ensure that they are returned to the private sector at a time and in a way that delivers best value for the taxpayer.
Looking to the future, we have ambitious plans for investing in skills in our work force, boosting research and development, and rolling out high-speed broadband. Among a range of actions, we have said that we will guarantee a job or training place to 18 to 24-year-olds out of work for a year.
I want to stress to the House that we are continuing to invest in Britain's critical national infrastructure at this crucial time as we recover from the current crisis. That will be fundamental to underpinning our country's economic future. As we set out in the Budget, following almost a decade of rising capital investment, net investment next year-£36 billion-is close to that spent in 2008-09; and in 2011-12, well into what we hope will be a recovery, it will be close to that spent in 2007-08. That investment, which would be cut if the shadow Chancellor had his way, is providing much-needed support to thousands of UK construction workers. Meanwhile, the Conservatives have a warped sense of priorities in wanting to give a £200,000 tax cut to the 3,000 wealthiest estates.
It was, and continues to be, the right judgment to support families, businesses and jobs to get through the downturn as soon as possible and in the best possible shape. It was also the right decision to prevent the collapse of the banking system, because the impact of a collapse on households and businesses would have been catastrophic. It is right, too, to invest in Britain's future. But we also have to make the tough decisions to take action on the deficit once the recovery is secured. We must live within our means, because money will be tighter in the years to come, and that means that choices will be even more important. We have already set out a responsible reduction plan to halve the deficit over four years, we have announced tax increases for those on the highest incomes that will take effect once the economy is growing again, and we will take the tough decisions on public spending for the years ahead. We are determined to take a responsible approach to reducing the fiscal deficit that will not damage the public services on which people rely. We will cut costs and unnecessary programmes, but continue to invest in front-line services. These decisions will be based on our values of fairness and responsibility. We will continue to make the right choices for recovery and for Britain's future.
The shadow Chancellor's judgment has been wrong throughout the financial crisis: wrong on deregulation, wrong on Northern Rock, and wrong on the fiscal stimulus. Now his policies would kill the recovery, cutting support at the worst possible time for the economy and for people in Britain. Winston Churchill once said:
"Success is the ability to go from one failure to another with no loss of enthusiasm."
Judged by that yardstick, the shadow Chancellor is a success. However, I think that the general public will increasingly want to question his judgment over the coming months, and we certainly relish that debate.
Mr. Greg Hands (Hammersmith and Fulham) (Con): That was an extraordinary speech from the Minister, full of quotes from Winston Churchill without quite the style to match them. He provided an incredible example of retro-politics. It is as though he has gone back to the position that the Government held back in the spring, which was to deny the fact that there were any problems with public sector borrowing and the public sector deficit. Indeed, his only mention of the C-word-cuts-was in relation to Conservative policies rather than his own. As was confirmed by the Prime Minister's conference speech, we seem to have gone back in time to when the Government's own figures strongly laid out the fact that cuts would have to be made.
Conservative Members very much welcome this opportunity to debate the economy. Too often in the past 18 months, the Chancellor and his helpers have sought to avoid debate or tried not to be here for the debates held in Opposition time. My right hon. Friend the shadow Leader of the House noted earlier that only four Labour Members spoke in the full Opposition day debate on the economy on Monday. I await with interest how many we will have today.
Mr. Swayne: I think that my hon. Friend is rather harsh. I can understand Labour Members' unwillingness to attend given that when Ministers are asked perfectly straightforward questions they do not give an answer. I asked the Minister a perfectly straightforward question about PAYE, and he avoided answering it. Why should Labour Members turn up? They have got the message and gone elsewhere.
Mr. Hands: My hon. Friend makes the point precisely. Labour Members are so disheartened by the Government's performance in the spring, during the party conference season and in the debate on Monday that they have voted with their feet.
Let us be clear about one thing: the Government arranged this debate because they think that there is light at the end of the tunnel. We would welcome that, so let us hope they are right, but we should also be absolutely clear that until now the tunnel has been very long and dark indeed.
Mr. Hollobone: Unemployment in Kettering constituency is now twice what it was when the current Government came to power. Why does my hon. Friend think the recession has been deeper and longer in Britain than in any of our major competitors?
Mr. Hands: My hon. Friend makes an interesting point, and I shall discuss unemployment in due course. The Government prepared us poorly for the recession that was coming. The Prime Minister boasted of having abolished boom and bust, but I am afraid that we have now had the biggest bust of the lot.
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