Economic Affairs and Work and Pensions

Debate between Nadhim Zahawi and Lord Darling of Roulanish

Tuesday 8th June 2010 Commons Chamber

[Mr Darling]

I think it was providing a response to a parliamentary question from my right hon. Friend that obliged me to read the report. I remember spending two days reading it and giving my decision. However, I do not have the benefit of the advice I received, which I now need to remind me why I refused his request at that time. All I can say is that I refused his request for entirely the right reasons but, 10 years later and in the spirit of freedom of information, I am not saying that it definitely should be looked at, but the present Chancellor or whoever is dealing with the issue should look at the matter and perhaps 10 years further on someone else looking at that report might reach a different conclusion. I reiterate, whatever decision I reached was right for the reasons I gave at the time.

May I also tell the Chancellor that it would be helpful if he took the opportunity to spell out the Government’s policy on the banks in which the Government have shareholdings—Northern Rock, Lloyds, the Royal Bank of Scotland—because that is a matter of interest, especially now that RBS is talking about disposing of its Williams & Glyn’s branches and others? I believe it is the view of both main political parties that there ought to be more competition in the system, so a clear statement on Government policy on how we do that would be helpful. We do not want to end up selling a tranche of banks to another big UK operator, because that would mean that we would not get the competition we want.

I was interested to re-read last Friday the Business, Innovations and Skills Secretary’s criticism of the banks’ failure to lend, but it is not entirely clear to me what the new Government are doing to increase bank lending. It would be useful to hear from the Chancellor, or at least one of his colleagues, in the fairly near future on that.

However, the main focus of today’s debate is, inevitably, the economy, as it was in Treasury questions for the past hour or so. Yesterday, predictably, the Prime Minister, as the Chancellor did today, sought to lay the blame for everything the new Government plan to do on the previous Government. There is nothing new in that: new Governments frequently blame their predecessors and it is the easiest thing in the world to do. It is equally unsurprising that the Prime Minister and the Chancellor should go around the country and other parts of the world and say, “The situation is much, much worse than we thought. It’s all terrible and we will have to do terrible things.” By a stroke of good fortune, they have the Liberal Democrats to front up some of the difficult decisions they must take.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Did not the shadow Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), rather than the new Government, reveal the desperate state in which the shadow Chancellor left the country’s finances?

[Mr Darling]

Forgive me if I have misunderstood the hon. Gentleman, but throughout the three years when I was Chancellor, I do not think that I ever, on any occasion, concealed from anyone the difficulties that we and other economies would face as a result of the deepest global downturn in the past century. There can be no doubt about that.

However, I should tell the hon. Gentleman and his colleagues that by 2008, it was clear that this country, and every other major developed country in the world, faced the catastrophic consequences of the failure of the banking system. Had we not taken action to stabilise the banking system—many of those decisions were opposed by the Conservatives—and to ensure that we supported our economy when private sector investment dried up and died away, we would have had a situation in which recession tipped into depression. That is why we took the action that we did. We were right to do so, and the Conservatives were wrong to oppose us. Our economy is now growing, and as I said earlier, unemployment is half that in the downturn of the 1990s, and borrowing is coming down, because of the action we took in 2008 and 2009. We took that action along with most developed countries.