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The Economy

If both distinguished former Treasury Ministers—to varying degrees of distinction—will allow me, I shall make a little progress. I know that lots of hon. Members wish to speak, given that we have not had a debate on the economy since December. I am sure that the hon. Member for Coventry, North-West (Mr. Robinson) will wish to tell us all about how successful the Government schemes for the car industry are proving at the moment. Let me deal with the second major question: do the Government understand that the model of debt-fuelled growth that they pursued for 10 years is fundamentally broken and needs to be fixed? Judging from the Prime Minister’s increasingly contorted answers to the questions of blame, the answer is no—indeed, his answer seems to amount to, "I’m sorry I didn’t get other leaders to agree with me earlier." That is not much of an apology. He, alone in the country, still maintains that there was nothing wrong with the British economy and with the way in which he regulated financial services in the country, and that we are simply the unwitting victims of a recession that came from America. That is his argument, although I note that he left it out of his speech to the American Congress—I guess that speech will not be appearing in the next edition of "Courage". The problem with the argument that the recession came from America is that it does not explain some basic facts. Of course there has been turmoil in the world financial system and huge problems in America, but was it America that caused British families to become more indebted than American families or that caused British house prices to rise twice as fast as US house prices? Was it America that caused British banks to lever up 37 times their capital—almost double the leverage of their US counterparts? Was it America that gave Britain the largest budget deficit in the developed world? Was it an American politician who said with the hubris of "peace in our time" that he had "abolished boom and bust"? No, it was a British politician. The Turner report, which was published at midday, blows apart the Prime Minister’s claim that all was well with the British economy until we were hit by a transatlantic storm. It supports the Conservative argument that the problems in the British economy are deep-seated and that the model of growth pursued over the past decade is fundamentally broken.