Debate on the Address — [1st Day]

Part of Outlawries Bill – in the House of Commons at 3:21 pm on 3 December 2008.

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Photo of David Cameron David Cameron Leader of HM Official Opposition, Leader of the Conservative Party 3:21, 3 December 2008

I am coming to exactly that point, but let me tell the hon. Gentleman what we will do. Let us freeze the council tax for two years for every family in the country. Let us give small businesses a £10 billion VAT boost by letting them pay their bills late. Let us cut national insurance for the very small companies so that they do not have to fire people. Let us have a £3 billion jobs plan to use the money that will be spent on unemployment benefit to get people off the dole. Above all—and this is absolutely fundamental, although the Prime Minister does not understand it—let us have a truly massive Government-backed insurance scheme to get the money out of the banks and into small businesses. Those are five good reasons—perhaps the hon. Gentleman will listen to them and cross the Floor so that he does not have to lose his seat.

Everything that the Prime Minister has told us, not just in the past 10 years but in the past 10 weeks, has completely fallen apart. His latest claim—and I want to be fair to him by taking it apart—is that the political division is between action and inaction. That is typical of his approach. He cannot handle a real argument with a real alternative, but can only ever set up a straw man. We see it week after week at Question Time: he takes a set of beliefs that nobody holds—a set of propositions that no one agrees with and usually a set of things that nobody has said—and then proceeds to attack them.

That is a sign of his weakness, not of his strength. This recession was brought about by runaway borrowing and a massive failure of financial regulation, yet the Prime Minister's answer is more discretionary borrowing and a complete refusal to admit any mistakes in the regulatory system that he created.

The real solution, which we are putting forward, should lie in lower interest rates, massive Government-insured guarantees for bank lending, and support for families and businesses that does not permanently impair the public finances and the chances of recovery. That is the answer, and it is contained in the five points that I just outlined to Rob Marris. Only some boneheaded Whips' plant could argue that that is inaction; even the hon. Gentleman is nodding his head in agreement that what I have set out is not inaction—it plainly is not. The real division is between the right and the wrong action, between our long-term action that will really make a difference and the Prime Minister's short-term action taken just to get through tomorrow's headlines.

Let us take the situation with the banks. When will the Prime Minister accept what the whole country now knows—that his bank recapitalisation is not working? It rescued the banks but not the small and medium-sized firms. They cannot get the loans or overdrafts that they need, and the charges being levied on them are frankly outrageous.

The Government's response is to hold endless meetings with bankers that are conveniently briefed to tomorrow's newspapers to try to make the Prime Minister look good, but it is not making any difference. That is why we need, in this Queen's Speech, a Government insurance scheme to get the banks lending. That is long-term change, not short-term politics.

Now let us take the cut in VAT. The Prime Minister wanted a stimulus so a stimulus we had to have—the only problem being that borrowing money when we are already virtually broke to cut prices when they are already falling and then warning of tax rises that are coming down the road is not exactly stimulating. Instead, what we need in the Queen's Speech is a plan to reduce the future growth of public spending to show how we can keep taxes down in future—again, that is long-term change and not short-term politics.

What is the long-term consequence of the Prime Minister's failed Budget and short-term approach? It is a black hole in the public finances that everyone knows means taxes going up under Labour. The Government have already told us about the national insurance change, but that is not just a tax rise on anyone earning over £19,000—it is also a tax rise on every job in the country. Can anyone think of anything more stupid than putting a tax rise on jobs when the economy is going to be struggling to recover?

We all know what the secret tax rise is—VAT will first be raised to 18.5 per cent. and then to 20 per cent. [ Interruption. ] It is no good Labour Members shaking their heads, as we have all seen the Government order. This was not some leak to the Tory Front Bench; this was the Financial Secretary to the Treasury signing a document and putting it on the Treasury website. Who is the Prime Minister going to arrest for that one?

The Prime Minister's approach of making endless announcements to try to win short-term advantage depends on one crucial assumption, and it is one that I think he always gets wrong. He assumes that the British people are stupid and that they will not realise he will have to fill the black hole with higher taxes. He assumes that they do not notice when the Government present a tax-con rather than a tax-cut Budget, and that they will believe it when he tells them that all the problems come from America.

The Prime Minister thinks that British people are stupid, or that they do not see through him when he wanders off to Iraq to visit the troops in the middle of a Tory conference. However, he has to realise that if he takes people for fools, they will never take him for their Prime Minister.

A proper Queen's Speech would be honest about the state that the country is in. The truth is that the Prime Minister is borrowing so much because he has spent so much, and that he has spent so much because he has done so little to solve our social problems. Let us just look at those problems.

Welfare dependency is worse: there is more youth unemployment in Britain today than there was when the Government took office in 1997. That is why we need the Conservative plan for radical welfare reform, by giving the voluntary sector the power to go into our most deprived communities. On family breakdown, we have one of the worst records in Europe. That is why we need the Conservative plan to strengthen families, to end the couple penalty and to back marriage in the tax system.

What about health inequality? Surely a Labour Government would do something about that. Wrong. The gap in life expectancy between the richest and the poorest in our country is greater than at any time since the reign of Queen Victoria. That is why we need the Conservative plan to scrap the top-down targets and to stop doctors answering to Whitehall and get them answering to patients. All that needs to be underpinned by our plan to reconstruct a battered economy.