Budget Resolutions and Economic Situation — Amendment of the law

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 1:46 pm on 22nd April 2009.

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Photo of John McFall John McFall Chair, Treasury Committee, Chair, Treasury Committee 1:46 pm, 22nd April 2009

There is a major difference. We have a global crisis—it is being experienced across the whole world. I was in the United States last week and people are talking about the budget deficit being 12 per cent., the sustainability of US accounts and the stress testing of US banks, so certainly we are in a different world. If people do not grasp the fact that we are in a global downturn and that we are avoiding a depression in the world rather than a recession, they have not got it.

I would rather see public borrowing to keep young people out of unemployment as I witnessed it when I was a school teacher in the 1970s and 1980s. Let me characterise that. Walking down my local high street, I would meet pupils whom I taught 10 or 15 years previously. I would be introduced to their wives and children, but then they would turn round and tell me that they had not had a job.

I want that type of society to be dispelled. I want to ensure that we have a society where young people have an opportunity and an ambition that they can realise. To do that, we must ensure that we assist them in every way we can with the public finances. That is hugely important. At the end of the day, as Martin Wolf said recently in the Financial Times, given that the Government can borrow at a lesser rate of interest than others, we can see borrowing as an investment for the future, whereby we keep people in jobs and get tax revenues back, which will assist the Government when growth returns to the economy.

I have been asking for a Budget that will ease the pain of the recession and help those who are feeling it most keenly by keeping them in their jobs and in their homes. I have been seeking a Budget that protects the most vulnerable people in our society and that prepares the economy for the future—an economy that is changing enormously. I welcome the comments and commitments made by the Chancellor regarding climate change and green technology.

The Chancellor's announcements regarding the steps that he will be taking to support the labour market are welcome, but I feel that we have to be alert and that perhaps more has to be done. We had the news this morning that unemployment is 2.1 million. That is still rising, despite the fact that some are saying that the economy will turn at the end of the year. We will still face rising unemployment, so this is a crisis with a human face. Unemployment can cause massive psychological and emotional strain. As we know, it affects not only the unemployed, but their families and friends and their wider communities. It has a particularly lasting impact on young people, so it is important that the Government help young people. The measures announced today are welcome in that regard.