Oral Answers to Questions

Edward Miliband Excerpts

Wednesday 26th January 2011 Commons Chamber

[The Prime Minister]

My hon. Friend is right. I hope that Labour Members will encourage people to start up businesses and get enterprise going, as it is a private sector-led recovery that this country needs. We should also give special help to areas such as hers, which I visited recently, to try to ensure that we do everything to help growth in Merseyside and improve the prospects of the Atlantic gateway—a very exciting prospect for her area and for everyone who lives and works on Merseyside.

[Edward Miliband (Doncaster North) (Lab)]

I join the Prime Minister in sending deepest condolences to the families of those killed in the bombing at Moscow airport. Our thoughts are particularly with the fiancée, family and friends of Gordon Cousland.

Will the Prime Minister explain to the House what, in his view, is the cause of yesterday’s disappointing growth figures?

[The Prime Minister]

First, they are disappointing growth figures—and they are disappointing even excluding what the Office for National Statistics says about the extreme weather. The point I would make is that this country has a very difficult economic situation for two main reasons. First, we have the biggest budget deficit in Europe, and we have to get to grips with it, which is difficult. Secondly, we had the biggest banking boom and the biggest banking bust anywhere in Europe, and we have to deal with that. As my right hon. Friend the Chancellor, the Governor of the Bank of England and I have all said, it is inevitable that, as we recover from those things, it will be choppy and it will be difficult. The worst thing to do would be to ditch our plans on the basis of one quarter’s figures.

[Edward Miliband]

The Prime Minister has been going around for months saying that our economy is out of the danger zone. Only a month ago, he told the House:

“It is because Britain’s economy is out of the danger zone and recovering.”—[Official Report, 15 December 2010; Vol. 520, c. 901.]

May I ask him to confirm that? He said that if we set aside the bad weather, the figures were not good. In fact, if we set aside the bad weather, growth was completely flat. There was no growth in the last quarter of 2010: no growth at all.

[The Prime Minister]

That is exactly what the figures show, yes.

The right hon. Gentleman asked about the danger zone. The point that I would make is this. Britain is no longer linked with countries such as Greece, Ireland and Portugal. Everyone was clear about the position before the last election. The Institute of Directors, the Confederation of British Industry and the Governor of the Bank of England all said that there was no credible plan to deal with the deficit.

If you do not deal with your debts, you will never have growth. That is the truth, and the right hon. Gentleman knows it.

[Edward Miliband]

The Prime Minister does not get it. If you do not have growth, you will never cut the deficit. That is what we saw in the last quarter of 2010.

As millions of families and businesses are worried about their livelihoods and see unemployment rising, inflation rising and growth stalled, what the country wants to know from the Prime Minister is whether he is going to change his strategy in any way in order to get the economy moving.

[The Prime Minister]

What we need to do in our country is get the deficit down, and at the same time do everything that we can to encourage growth. Let me read to the right hon. Gentleman what the head of the OECD said about the British economy, because I think that it is absolutely vital. He said:

“the UK was exceptional in terms of its needs of fiscal consolidation because the deficit had gone completely out of control.”

He also said:

“I think dealing with the deficit is the best way to prepare the ground for growth in the future. In fact, if you don't deal with the deficit you can be assured that there will not be growth because confidence will not recover.”

This man, who is entirely independent and in charge of the OECD, is giving us good advice, and I advise the right hon. Gentleman—as he has a new shadow Chancellor and can make a new start—to follow it.

[Edward Miliband]

The difference is that when we left office the economy was growing. Now the Prime Minister is in office, and it is not.

I have a very specific question to ask the Prime Minister. He has already made clear his decision on VAT, but he still has a choice to make about whether to go ahead with the decision to take another £20 billion out of the economy this year when the recovery is fragile. Is he telling the House and the country that he is determined to go ahead, irrespective of the figures and irrespective of what people up and down the country are feeling?

[The Prime Minister]

We have now heard what I think we are going to hear a lot more of: the theory that there was a golden inheritance from the Labour party. That is one of the most laughable propositions that I have ever heard put in the House of Commons.

We will not forget that we had the biggest budget deficit in the whole of Europe, and that we were spending £120 million every day just on the interest on that deficit. We inherited a situation in which, because of the regulation carried out by the right hon. Gentleman and the shadow Chancellor when they were in the Treasury, we had the biggest boom and the biggest bust in our banking system. We had a growth model that was based on uncontrollable boom in housing, uncontrollable boom in financial services, uncontrolled public spending, and uncontrolled immigration. We inherited a completely bust system from the two people who worked in the Treasury throughout the last Labour Government.

[Edward Miliband]

I suppose we can take it from that answer that the Prime Minister is not going to change course. He is not going to do anything to bring about growth in the economy. This is how out of touch he is. What people up and down the country are saying is that he is going too far and too fast with deficit reduction, and that that is what is inhibiting growth in this country.

The evidence shows that while cuts are being made in the public sector and while jobs are being lost in the public sector, jobs are not being created in the private sector. Why does not the Prime Minister, just for once, put his arrogance aside, and admit that he knows how to cut jobs but has absolutely no idea how he is going to create them?

[The Prime Minister]

The right hon. Gentleman has got to stop writing his questions before he comes to the Chamber and actually listens to the answer. He asks about changing course, and I have to say to him that he seems to have replaced a shadow Chancellor who did not understand Labour’s programme with one who does not agree with it. He asks specifically about cuts next year. Let me just remind him that it is Labour’s own plan for significant cuts in spending to start in April this year. He shakes his head, but that is his plan, which he is meant to be committed to. If he is now saying that that has all gone and Labour is just going to spend more and borrow more, he ought to tell us. As far as I can hear, his only plan is to borrow money we have not got, to spend money on things we cannot afford, and not to do the work we need to do to sort this economy out.

[Edward Miliband]

I am surprised that the Prime Minister is raising personnel issues this week of all weeks, because who has made the right judgment, me, who appointed the shadow Chancellor, or him, who clung on to Andy Coulson for months?

When people listen to the Prime Minister they know what the right hon. Member for Haltemprice and Howden (Mr Davis) meant when he said that the Prime Minister and Chancellor

“don’t have a sense of what a large part of the country”

feels. They are out of touch with people’s lives, they are taking a reckless gamble, and what these figures show is that for millions of people up and down the country it is hurting but it is not working.

[The Prime Minister]

If it was such a good decision to have the right hon. Member for Morley and Outwood (Ed Balls) as shadow Chancellor, why did the right hon. Gentleman not appoint him in the first place?

Let me just make the point that the absolute key for this country and our economy is two things: we have to deal with our deficit; and we have to help deliver growth from our private sector. I think that the right hon. Gentleman should listen to what the Governor of the Bank of England said last night in his speech. [Interruption.] Perhaps Labour Members will want to listen to the Governor of the Bank of England, who said:

“The UK economy is well-placed to return to sustained, balanced growth over the next few years”.

He said that this was partly as a result of the

“credible…path of fiscal consolidation”.

He continued:

“the right course has been set, and it is important we maintain it.”

I prefer the advice of the Governor of the Bank of England to that of the man sitting opposite.