The Economy

Part of Council Tax Rebate – in the House of Commons at 4:17 pm on 31st March 2009.

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Photo of George Osborne George Osborne Shadow Chancellor of the Exchequer 4:17 pm, 31st March 2009

If we had a true account of British Government debt that included the PFI and Network Rail liabilities, British debt would be significantly higher. Secondly, British debt is now rising at a faster rate than anyone else's because our budget deficit is higher than anyone else's. Surely the hon. Gentleman cannot be happy with the fact that this Government are running the highest budget deficit that Britain has known in peacetime—higher than when Denis Healey went to the IMF. Surely he cannot be happy with that.

As I was saying, European Governments are now lining up in agreement that there should not be a second fiscal stimulus, which completely shoots away the ground on which the Prime Minister thought that he would stand at the G20. Faced with that icy response, he went on that rather bizarre trip to south America last week. Even his most loyal henchmen would struggle to call that trip a success. First he went to a half-empty European Parliament and found that the response to his speech by a Conservative MEP got 1.6 million hits on the internet and no one noticed a word that the Prime Minister said. Then he crossed the Atlantic to continue his campaign for more spending, only to find that while he was away the Governor of the Bank of England had said that the country could not afford more fiscal stimulus, and in effect had cut up his credit card.

Finally, the Prime Minister made it to south America, where not only was he ticked off by the President of Brazil and stood up by Pelé, but the President of Chile gave him a lecture on sound public finances. Instead of addressing the G20 agenda, the Prime Minister was reduced to saying that he would reform the monarchy and that we would keep the Falkland Islands. That is how the chairman of the G20 used the week before the meeting to prepare for that summit. Where is the sense of priority in this Government?

What is left of the main economic argument that the Government have deployed against us since the autumn—that Britain needs to spend and borrow its way out of recession? It was striking at Treasury questions last week that, when pressed twice, the Chancellor could not bring himself to agree with the Governor of the Bank of England on fiscal stimulus. He was challenged twice to agree with the statement that the

"fiscal position in the UK is not one that would say, 'Well, why don't we just engage in another significant round of fiscal expansion?'"—[ Hansard, 26 March 2009; Vol. 490, c. 443-44.]

That is the argument that we have been making, and the Chancellor did not take the opportunity that he was given to agree with it. Indeed, when my hon. Friend Mr. Burns asked the Chancellor to express confidence in the Governor of the Bank of England, he ducked that question too.

I would have thought that the Chancellor of the Exchequer should see the Governor of the Bank of England as a key ally. For weeks, presumably with the Chancellor's knowledge, the Treasury has been briefing everyone that actually he agrees with the Governor, the CBI and all the other organisations that are lining up to say that this country cannot afford a second fiscal stimulus. The Chancellor's disagreement is not with the Governor, but with a Prime Minister who thinks that we can borrow our way out of debt.

Even if the right hon. Gentleman makes it to the next election and, by some remote possibility, his party wins that election, he knows that he will not be reappointed as Chancellor. Everyone knows who the Prime Minister's top choice as Chancellor is—the Secretary of State for Children, Schools and Families. This is the Chancellor's moment in that great office of state. Does he want to go down as the Chancellor who stood by and let his Prime Minister lead the country down the road to fiscal insanity, or as the one who did something to stop that Prime Minister? That is the choice that he has to confront in the next three weeks—does he do the right thing and face down his neighbour, in which case he will earn the gratitude of the country, or does he cave in? [Interruption.] Ann Coffey wants to talk about the measures that the Government are taking. Let me take one example, the working capital scheme.

For five months, since November, we have been calling for a national loan guarantee scheme to support businesses that need credit. In early January, the Government finally conceded that we had a point and promised a guarantee scheme of their own. It was called the working capital scheme and was supposed to start on 1 March. It did not, and businesses desperate for help were left out in the cold again. Then the Business Secretary reassured them and said, "Don't worry, the scheme will be operational in March as originally announced." It is now the last day of March, so where is the working capital scheme that was promised for 1 March and then promised to be delivered by the end of March? Companies are going bust and thousands of people are losing their jobs because businesses cannot get credit, and the scheme announced by the Government in January and promised for March has still not been delivered. That is a scandal.

Of course, that is the truth of so many Government schemes. The home owners mortgage support scheme, announced in December—not a single home owner has been helped. The automotive assistance programme was announced two months ago—still not a single loan has been made to car firms. The national internship scheme—it was never heard of again. The Government's slogan of "real help now" is a cruel joke to businesses and people losing their jobs up and down the country.

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