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9 Dec 2009 : Column 355

Q5. [304967] Keith Vaz (Leicester, East) (Lab): Last weekend a much-loved Leicestershire teacher, Mark Parker, died aged only 56 following a hypoglycaemic attack because of his diabetes. We currently spend £1 million an hour on treating diabetes-related illnesses, but there are still an estimated 7 million Britons with a pre-diabetes condition, probably including Members of Parliament. I was diagnosed only three years ago. What steps will the Government take to ensure that every person in this country has access to a diabetes test? That would save money, and in the long run save lives.

The Prime Minister: My right hon. Friend is right about the importance of dealing with diabetes. The test for identifying those at risk of developing type 2 diabetes is included in the NHS health check that will be offered to those aged 40 to 74. It will also assess people's risk of heart disease, stroke and kidney disease, and help individuals to manage that risk. We believe that we will be able to identify at least 20,000 cases of diabetes and kidney disease earlier, and that will be important for the health of our country and for preventing the further costs that result when people suffer from those diseases. Investment in that programme now will save money later, and it is the right way forward for the national health service to give people personal guarantees that they will have those health checks free of charge.

Q6. [304968] Mr. John Leech (Manchester, Withington) (LD): Given that the Prime Minister has said that front-line NHS services should not be affected by cuts, will he join me in condemning the decision by NHS Manchester to close the Burnage walk-in centre, against the wishes of local people?

The Prime Minister: I understand that the closure has been postponed to allow the primary care trust to inform the people about the alternative services that are available. We have invested an additional £250 million in 100 new GP practices in poorly serviced areas and in 152 new health centres. This is a matter for decision by the local NHS, together with patients and others. I understand that the hon. Gentleman said at the last election that a hospital in his area would close: that hospital is still in being.

Jeff Ennis (Barnsley, East and Mexborough) (Lab): Will the Prime Minister join me in congratulating American bedspring manufacturers Leggett & Platt on investing some $22 million in establishing their European headquarters in Grimethorpe in my constituency? That is mainly thanks to the efforts of Yorkshire Forward and the Barnsley development agency. Does he also agree with me that places such as Barnsley and Doncaster specifically, and Yorkshire and Humber in general, are still great places for foreign companies to invest?

The Prime Minister: This is exactly the policy that the Chancellor is pursuing, and that his pre-Budget report is about. It is about recovery from recession by investing in the future, and it is about getting growth in the economy so that we get new jobs in new areas. I applaud the work that my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) does. This is the party of jobs, whereas the Opposition would leave millions unemployed.

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Q7. [304969] Sir Alan Beith (Berwick-upon-Tweed) (LD): What is the Prime Minister prepared to do about the fact that some of the most vulnerable people who have the greatest difficulty in heating their homes pay the highest tariffs for their fuel, either because they have pre-payment meters or because they live in areas with no gas supply and do not have access to dual-fuel tariffs?

The Prime Minister: I am grateful that the right hon. Gentleman has raised that point, because the Energy Bill is an attempt to deal with some of the problems that arise and to ensure that the social tariff is far fairer for people with difficulties. However, I also have to remind him that into the homes of thousands-indeed, millions-of pensioners in the past few days has come the winter fuel allowance, which is paid to everyone over 60, and is higher for the over-80s. It is one contribution that we can make to help with the heating bills of the poorest in our society, but it is a contribution made to every pensioner and everyone over 60 in our country. I hope that there is now a consensus that that is the right thing to do.

Q15. [304977] John Mann (Bassetlaw) (Lab): When I was out with the police on a Friday night in my area, only 14 police officers were on duty in the division, out of a total complement of 2,380. Will the Prime Minister intervene directly and swiftly to sort out the organisational malaise that characterises Nottinghamshire police?

The Prime Minister: The Home Secretary tells me that Her Majesty's inspectorate of constabulary is looking into Nottinghamshire police at the moment, but I have to say that the whole purpose of neighbourhood policing, which we have developed over the past two years, is to get more police on the streets. For that, we need to invest in policing and emphasise the concept that the police serve the neighbourhood. That is exactly what we are doing.

Q8. [304970] Mr. Adam Holloway (Gravesham) (Con): Does the Prime Minister agree with Ben Bernanke that the Prime Minister's decision to strip the Bank of England of its supervising role led to a "destructive run" and a

The Prime Minister: No. I think that anybody who looks at the global recession knows that it started with the problems of the banking system in America, which spread right across the world. Our tripartite system is the right way to deal with these problems, because it brings together the Bank of England, the Financial Services Authority and the Treasury. I noticed that only yesterday the Leader of the Opposition changed the shadow Chancellor's policy on the future of the banking system, and that he also talked yesterday about introducing "flatter taxes". Flatter taxes mean less tax paid by the very wealthy. Before the Conservatives come to give us lectures on economic policy, they should go back to the drawing board.

Q9. [304971] Emily Thornberry (Islington, South and Finsbury) (Lab): Will my right hon. Friend give the public a guarantee that he will never lift the ban on hunting with dogs?

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The Prime Minister: I am surprised that a political party wants to fight the next election on withdrawing the ban on fox hunting. In fact, that is that party's only
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job creation policy-to create a quango to run fox hunting. I believe that it is making a terrible mistake, and it will pay for it at the next election.

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Pre-Budget Report

12.32 pm

The Chancellor of the Exchequer (Mr. Alistair Darling): Today's pre-Budget report takes place at a critical time for our economy and for our country. Governments across the world have taken co-ordinated steps to deal with the biggest financial crisis for over half a century. In the UK, our action has reduced the impact of this downturn on families and businesses, but there is still much uncertainty, so the task today is to ensure the recovery and promote long-term growth.

To promote growth, we need to invest in the dynamic sectors of the future-in digital, bio and low-carbon technology-and I will announce measures that will support those industries. To promote growth, we also need to invest in the skills of young people to prevent a lost generation of youth unemployment. I will announce measures to guarantee work opportunities for the young. To promote growth we also need to maintain support until the recovery is secured and to halve the deficit over four years, in an orderly way that does not threaten investment vital to our future. The choice is between going for growth and putting the recovery at risk-to reduce the deficit while protecting front-line services, or cuts that put those services in danger. The choice is between two competing visions. This pre-Budget report is about building a fairer society and securing opportunity for all.

When I delivered the pre-Budget report just over 12 months ago, we were faced with the sharpest and most widespread global downturn in generations. The near collapse of the financial system quickly fed through into the wider global economy. World trade went down sharply and unemployment sharply up across the world. Families and businesses in every continent felt the pain.

Governments around the world intervened to rescue the banking system. We supported our economies with tax cuts, increased Government spending and co-ordinated action to lower interest rates and to boost money supply. No choices were easy choices; indeed, some even argued that we should not have acted at all. But as a result of those actions, there is growing evidence that global confidence is returning. The US housing market, which triggered the crisis, is stabilising-so is the housing market here. Global manufacturing is up almost 6 per cent., world stock markets by 30 per cent.

As the world's largest financial centre, the turmoil in the banking sector has had a substantial effect on the UK. With more home owners here than in Europe, a global slump in property prices hit confidence hard in this country. As the sixth biggest exporter of goods and the second largest exporter of services, our trade has been hit. But as demand picks up abroad, as is already happening, British businesses will benefit. So I am confident that the UK economy will start growing by the turn of the year.

However, across the world, there remain risks to recovery. Oil prices are volatile. Recent market reaction to financial problems in Dubai highlights just how fragile world confidence remains. So while I am confident that the UK economy is on the road to recovery, we cannot be complacent. We must continue to support the
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economy until recovery is established. To cut support now could wreck the recovery. That is a risk that I am not prepared to take.

This time last year, we recognised the exceptional trading difficulties that businesses here were facing. In the past, inaction by Government to support firms led to widespread-and avoidable-business failure. I was determined that we did not repeat that mistake. So in an unprecedented move, I cut VAT to 15 per cent. for a year, to put more than £11 billion into the pockets of consumers and retailers. That countered the impact on businesses of the global credit squeeze and the collapse in consumer demand when it was needed most. I can confirm that VAT will return to 17.5 per cent. on 1 January, as planned. I have no other changes in VAT to announce.

To ease problems with cash flow and access to bank lending, we deferred tax rises and extended tax allowances for businesses. Because we chose to intervene, the rate of business insolvencies is far lower than would have been expected. In the recession of the early 1990s, proportionally twice as many businesses went under. While some measures such as the VAT cut and the working capital and trade credit insurance schemes are finishing, it is right to extend others while uncertainty remains. The time-to-pay scheme has helped more than 160,000 businesses spread their tax payments over a timetable that they can afford. They can get additional time when they need it most and, because firms continue trading, the likelihood of companies paying the tax owed increases, so I have decided that the scheme will be extended for as long as it is needed.

Last year, I temporarily increased the threshold for empty property relief to help small businesses. I can announce that it will be extended, so that for 2010-11, empty commercial properties with a rateable value below £18,000 will be exempt from business rates. Seventy per cent. of all empty properties will continue, therefore, to be exempt. I have one further announcement to help small businesses. I have decided to defer the increase in corporation tax for smaller companies. That will leave the 2010 rate unchanged for 850,000 small businesses, helping them until the recovery is secured.

In the early 1990s, hundreds of thousands of families lost their homes. I did not want to see that repeated, so we introduced a range of measures to allow families to stay in their homes and to help young couples on to the housing ladder. As a result, repossessions are now running at around half the rate of the recession of the early 1990s. By the time the stamp duty holiday finishes at the end of this month, I expect 240,000 home buyers to have been helped. But with unemployment still likely to rise, it would not be right to withdraw all support now for home owners.

Last year I improved the scheme giving support for mortgage interest, to provide better cover for mortgage interest payments for those who had lost their jobs. More than 220,000 people have been helped so far. I have decided that that additional support will be extended for a further six months. There will, of course, be a cost to that and other continued Government support, but the cost to families of losing their home would be immense, and it would be a false economy for the country. The more successful these measures are in restoring confidence to the housing market, the lower the cost will be to the Exchequer.

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The best way of avoiding repossessions is to help people to stay in work or re-enter the labour market quickly. Such a deep global recession was always going to have a damaging impact on employment. The bleak news last week that Corus is to shut its Teesside plant underlined the fact that the reduction in global demand will have an impact on jobs for some time to come. That is why, yesterday, I agreed with the Secretary of State for Business, Innovation and Skills to provide £30 million from within existing resources to help industry in Teesside.

No Government, even during times of the strongest economic growth, can prevent every job loss. Unemployment has risen in the UK and will keep rising for some time, but it remains lower than it was in France, Canada, the United States and the euro area. In fact, even now, there are some 2.5 million more people in work than there were in 1997. Because of our values of fairness and opportunity, promoting employment has always been, and remains, a top priority for this Government. Unemployment can never be a price worth paying.

As the global recession hit our country, we responded by bringing forward investment in vital infrastructure projects to protect jobs, and finding an additional £3 billion to help people to find new work more quickly. We expanded the Jobcentre Plus network and offered support through the rapid response service to staff in 3,000 firms hit by redundancies. Help including training, volunteering and recruitment subsidies has been offered for those still unemployed after six months.

It is clear that we are making a difference. Unemployment has increased much less than expected by independent forecasters. If we had seen the same rate of job losses, relative to GDP, as we saw in the early 1990s, four times as many people would have lost their jobs. Despite the severity of the global recession, the claimant count today stands at 1.6 million, compared with the 3 million reached in 1985 and 1992. Our comprehensive support means that a short spell in unemployment is not turning into a lifetime on benefits, as happened in the recessions of the '80s and '90s. Indeed, more than 3 million people have been helped off the claimant count in the past year.

Despite this support, there are groups who need more help. Past recessions have had a very damaging impact on young people, who should have been starting their working lives, but instead were unemployed. Our package of support for the young already includes a place for every 16 and 17-year-old in education or training. I intend to provide funding so that this guarantee will be available to school leavers again next September. In the Budget, I went further and announced that every 18 to 24-year-old would be guaranteed work or training after 12 months out of work. I do not want them to have to wait that long, however, so I am going to bring that forward. I have decided that, from next month, no one under 24 needs to be unemployed for longer than six months before being guaranteed work or training.

In the past, older people were allowed-indeed, often encouraged-to drift into permanent unemployment, but we cannot afford to write off their experience. So we will ensure that the over-50s receive specialist and tailored support to equip them with the confidence and skills they need to get a job. We also want to encourage those who want to stay working part-time after they reach retirement age, and to make work pay for everyone,
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regardless of their age. To make it easier for those over 65 to receive the working tax credit, we will reduce the minimum number of hours they need to work to be eligible.

We chose not to let people sink when they lost their jobs, but to intervene to help them to stay afloat. That is good for the individuals and their families, and also for the wider economy, boosting spending and, in turn, creating new jobs. The more successful our targeted support, the more likely that the rise in unemployment will be lower than expected and therefore cost the country less, as has already happened. Government action has made a real difference.

The worldwide recession has had an impact on all families, and it is often the most vulnerable who are affected the most, including those on modest incomes who have been put on shorter hours. The Government's flexible tax credits system has risen to the challenge of the downturn, delivering substantial support to families to compensate for that loss of pay. I can tell the House that so far this year, because of tax credits 400,000 families whose income has fallen have benefited from that extra help-on average by £37 more per week. For those who doubt the value of tax credits, here is the proof that they work.

The recession has also had other effects. For the first time in half a century, the retail prices index has been negative for much of the year. That helps families with the cost of essential goods, but many benefits and tax credits are also linked to the September RPI. RPI inflation last September was minus 1.4 per cent. That would have meant no increase in those benefits in April. I do not believe that such a freeze would be fair, so I can confirm that the basic state pension will not be frozen, but will rise by 2.5 per cent. in April-a real-terms increase of nearly 4 per cent.

I can also tell the House that, from the time of the Budget, I will cut bingo duty from 22 to 20 per cent.- [Interruption.]Obviously a popular measure. I also want to help families in receipt of other benefits linked to the inflation figures, such as child benefit and some disability benefits, so those benefits will rise by 1.5 per cent. in April.

We are committed to helping people back into work, and making work pay. I have decided to roll out across the country a guarantee that anyone in work will always be better off than they were on benefits. If that is not happening already, they will be guaranteed extra money from the Government, making sure that work really does pay for everyone and encouraging more people to re-enter the labour market. So we are continuing to provide targeted support for people and businesses, as we secure the recovery.

Across world economies, the first half of this year saw a sharper deterioration than had been expected. That was also true here in the UK. Up to the third quarter of this year, the global recession has meant a cumulative economic contraction of 3.2 per cent. in the United States, 5.6 per cent. in Germany, 5.9 per cent. in Italy and 7.7 per cent. in Japan. Over the year as a whole, the UK economy is expected to have contracted by 4.75 per cent. this year, but as I forecast at the Budget, I expect a return to growth in the fourth quarter.

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