The Prime Minister has indeed taken Britain from boom to bust. As we heard from my hon. Friend Mr. Osborne, today the IMF predicted that the global economy will shrink by 0.6 per cent. in 2009, compared with a figure of 3.8 per cent. in the UK. By contrast, the United States economy—I know that the Prime Minister likes to contrast us with the US—will contract by 2.6 per cent. Next year, however, while the rest of the world returns to growth, the UK will continue to shrink. As the economy shrinks, so do tax revenues, and tax revenues from the City alone are expected to drop by up to 40 per cent., with a loss of up to £25 billion.
Unsurprisingly, sterling has collapsed to a 23-year low of $1.35 from a peak of $2.11 under a year ago. Let me remind the Prime Minister that it was he who said, in 1992, that a weak currency arises from a weak economy, which in turn is the result of a weak Government. The problem began the day that the Prime Minister stepped into No. 11 Downing street. In making the Bank of England independent, removing debt management to the Treasury and removing day-to-day supervision of the commercial banks, he left the Bank, as my right hon. Friend Mr. Redwood pointed out, blind in one eye as to what the Government broker was up to, and blind in the other as to what was going on with the clearing banks.
It was the Prime Minister who set up the tripartite system of regulation between the Treasury, the Bank and the FSA, with no one ultimately taking responsibility when the economy began to unravel with the collapse of Northern Rock. Indeed, in his Mansion house speech of
"I want us to do even more to encourage...risk takers."
On that policy, he was certainly successful. As we heard, he sold gold at the bottom of the market, at an average price of $275 per ounce, when its price subsequently rose to almost $1,000 an ounce, costing the public purse £5 billion. He also abolished tax benefits that pension funds had gained from advance corporation tax, costing pensioners £5 billion a year and diminishing the value of personal savings by more than £100 billion. His tax credits system is in tatters, with more than two thirds of recipients receiving the wrong amount at one point. There have been £5.8 billion of overpayments, with £500 million written off so far and another £1.5 billion unlikely to be recovered.
In the meantime, debt ballooned. While the Prime Minister sought to maintain his golden rule of keeping net debt at about 40 per cent. of GDP, he put more and more debt off balance sheet so that by the time I wrote my pamphlet "The Price of Irresponsibility" for the Centre for Policy Studies last October he was hiding £2 off balance sheet for every £1 that he was keeping on balance sheet. Not surprisingly, he become known as the Enron Chancellor.
Today, the situation is even worse. If public sector pension liabilities and private finance initiative schemes are added to the on-balance sheet debt of recently nationalised banks, total debt today is not the £700 billion that the Government acknowledge but as my right hon. Friend the Member for Wokingham indicated, a whopping £4.6 trillion. In other words, it is not 40 per cent. of GDP or even 48 per cent., as the figure of £700 billion implies, but almost 300 per cent. That is about £200,000 for every household in the country.
According to some estimates, it will take us until 2030 to bring the debt to GDP ratio back to 40 per cent. That is the Prime Minister's legacy to our children and our children's children. Yet in October 2008 he said:
"I have to say to you that we face this situation as a country with relatively low national debt".
If that is the case, why is UK Government debt considered riskier than that of McDonald's?
What is the Government's solution? The VAT cut cost £12 billion, and in the words of President Sarkozy it has "absolutely not worked". The Monetary Policy Committee has cut interest rates to a record low without benefits being passed on to businesses and borrowers. I learned in a recent meeting with the Essex branch of the Federation of Small Businesses that many businesses are having either facilities withdrawn or spreads widened. A case in point is an automotive parts manufacturer in my constituency that has a £2 million loan outstanding. Notwithstanding the economic climate, it is still generating £2 million a year of cash flow, yet an internal decision taken at its bank that automotive loans should be withdrawn has meant that a perfectly healthy business is facing closure.
The banks are not reciprocating taxpayers' continued trust and investment in them by maintaining support for perfectly healthy businesses in my constituency, in Essex and up and down the country. The Government have made a number of headline-grabbing proposals, including those noted in the motion: the working capital scheme, the national internships scheme, the asset-backed securities guarantee scheme, the homeowners mortgage support scheme, the car manufacturers finance guarantee and so on. None of them has yet been implemented.
In the meantime, by scrapping the 10p tax rate the Government are hurting some of the lowest paid in our country. The problem is compounded by the record low interest rates, which are hurting millions of pensioners up and down the country, some of whom are receiving 0.1 per cent. interest on their savings accounts. Only two years ago, in a speech on
"If you work hard, you're better off. If you save, you're rewarded. If you play by the rules, we'll stand by you."
However, in all their proposals the Government are doing absolutely nothing for those who have been thrifty and saved all their lives, especially pensioners.
"return to the old boom and bust."—[ Hansard, 21 March 2007; Vol. 458, c. 816.]
Yet today we face one of the worst budget deficits in living memory, record borrowing both on and off balance sheet, a collapse in sterling, unemployment breaking the 2 million barrier—as Mr. Robinson acknowledged, it is likely to climb to 3 million—and an economy shrinking both this year and next at a rate greater than almost any other western economy.
Still the Prime Minister refuses to acknowledge that if he is not the cause of the collapse of UK plc, he is its architect. For that, at least, he should come to the House and apologise to the British people for taking Britain from boom to bust.
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